Gran Tierra Energy(GTE) - 2025 Q1 - Quarterly Results

First Quarter 2025 Performance Overview This section provides an overview of Gran Tierra Energy Inc.'s Q1 2025 performance, highlighting strong operational execution, financial discipline, and key achievements Message to Shareholders Gran Tierra Energy Inc. demonstrated strong Q1 2025 operational execution and financial discipline, prioritizing debt reduction and shareholder returns through a front-loaded capital program and exploration success - The company's Q1 2025 performance was characterized by strong operational execution and disciplined financial management, supported by a front-loaded capital program with up to five active rigs[3] - Key priorities include lowering leverage through debt reduction and generating returns via a share buyback program[3] - Focused exploration efforts continue to yield successful results, reinforcing asset quality and long-term value creation strategy[3] Key Operational Highlights Gran Tierra achieved record Q1 2025 production of 46,647 boepd, continued exploration success, and strengthened its balance sheet with $77 million cash and a new $75 million credit facility - Achieved Record Total Company Average Quarterly Production of 46,647 boepd[5] - Ecuador Exploration Success Continues with Additional Oil Discoveries in Iguana Block[5] - Exited the Quarter with $77 Million in Cash, Paid Down $27 Million of Debt, and secured a New $75 Million Credit Facility[5] Operational Review by Region This section reviews Gran Tierra's Q1 2025 operational performance across Ecuador, Colombia, and Canada, highlighting drilling successes and production optimizations Ecuador Operations Gran Tierra successfully drilled two additional oil discoveries, Iguana B1 and B2, in Ecuador's Iguana Block, achieving record drilling times and producing approximately 1,684 bopd - Successfully drilled two additional oil discoveries, Iguana B1 and Iguana B2 wells, on the Iguana Block[6] - Combined wells produced an average of ~1,684 bopd over 30 days from the U-Sand formation[6] - Iguana B1 well was drilled and completed in record time and under budget, setting a new pace for Ecuador exploration[6] Colombia Operations In Colombia, Gran Tierra successfully drilled three wells at Cohembi North Pad, completed the Cohembi Central Processing Facility, and increased Acordionero field production by 2% QoQ through waterflood optimization - Successfully drilled the first three of five wells from the Cohembi North Pad, 60% faster and under budget[6] - Cohembi civil, electrical, and mechanical field works reached 100% mechanical completion[10] - Acordionero field production increased 2% from Q4 2024 to 13,824 boepd in Q1 2025, with current production (April 2025) at ~14,500 boepd (5% increase) from Q1 average due to waterflood optimization[10] Canada Operations In Canada, Gran Tierra successfully drilled two Lower Montney wells at Simonette, exceeding type curves with 814 boe/d gross production, acquired 21 prospective land sections, and participated in two successful Clearwater wells - Successfully drilled and completed two Lower Montney wells at Simonette, with average gross production of 814 boe/d (84% liquids) after 21 days, surpassing prior offset well performance by 80% and exceeding budgeted type curves[10] - Acquired 21 sections of prospective land in Central Alberta, adding over 50 potential drilling opportunities[10] - Participated in the successful drilling of two gross (0.5 net) wells at Clearwater, including a 4-legged injector for a waterflood pilot and a 14-legged non-op well to test heavy oil productivity[10] Financial Performance Analysis This section analyzes Gran Tierra's Q1 2025 financial performance, covering consolidated highlights, funds flow, debt, capital expenditures, and detailed revenue and expense analysis Consolidated Financial Highlights Gran Tierra reported a Q1 2025 net loss of $19 million, an improved Adjusted EBITDA of $85 million, and a significant 175% QoQ increase in net cash from operating activities to $73 million Q1 2025 Consolidated Financial Highlights | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :-------------------------------- | :------ | :------ | :------ | | Net Income (Loss) | $(19) million | $(34) million | $0 million | | Adjusted EBITDA | $85 million | $76 million | $95 million | | Net Cash Provided by Operating Activities | $73 million | $26.6 million | $60.8 million | - Total average WI production was 46,647 boepd, 14% higher than Q4 2024 and 45% higher than Q1 2024, driven by Canadian production and Ecuador exploration success[10] - Net Debt to Adjusted EBITDA (twelve-month trailing) was 1.9 times, with a long-term target of 1.0 times[10] Key Financial Metrics Deep Dive Gran Tierra's Q1 2025 Funds Flow from Operations increased 25% QoQ to $55 million, supported by $77 million cash and $110 million undrawn credit, while capital expenditures rose to $95 million and oil sales increased 16% QoQ to $171 million Funds Flow, Cash & Debt, and Liquidity This section details Gran Tierra's Q1 2025 funds flow from operations, cash balance, total debt, net debt, and liquidity position Funds Flow from Operations and Cash/Debt | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :-------------------------- | :------ | :------ | :------ | | Funds Flow from Operations | $55 million | $44 million | $74 million | | Cash Balance (as of Mar 31) | $77 million | - | - | | Total Debt (as of Mar 31) | $760 million | - | - | | Net Debt (as of Mar 31) | $683 million | - | - | - Funds flow from operations increased 25% from Q4 2024 but decreased 26% from Q1 2024 due to lower oil prices[12] - Repaid $25 million of 6.25% Senior Notes due 2025 and repurchased $2 million of 9.5% Senior Notes due 2029[12] - Secured approximately $110 million in undrawn credit and lending facilities, including a new $75 million reserve-based lending facility in Colombia[12] Capital Expenditures and Share Buybacks This section outlines Gran Tierra's Q1 2025 capital expenditures and share buyback activities, reflecting investment in development programs and shareholder returns Capital Expenditures | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :----------------- | :------ | :------ | :------ | | Capital Expenditures | $95 million | $79 million | $55 million | - Capital expenditures increased due to the Canadian development program, active Ecuador exploration, and Cohembi field development in Colombia[12] - Repurchased 453,050 shares in Q1 2025, contributing to approximately 5.2 million shares (15% of shares outstanding on Jan 1, 2023) repurchased since January 1, 2023[12] Revenue and Expense Analysis This section provides a detailed analysis of Gran Tierra's Q1 2025 oil sales, South American quality and transportation discounts, operating expenses, and transportation expenses Oil Sales and Expenses | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :------------------------------------ | :------ | :------ | :------ | | Oil Sales | $171 million | $147 million | $158 million | | South American Quality & Trans. Discounts | $11.58/bbl | $13.94/bbl | $15.36/bbl | | Operating Expenses | $67 million | $61 million | $48 million | | Operating Expenses (per boe) | $15.89/boe | $16.39/boe | $16.40/boe | | Transportation Expenses | $7 million | $4 million | $4.5 million | - Oil sales increased 16% QoQ and 8% YoY, driven by 45% higher sales volumes and tightening oil differentials, offsetting lower Brent pricing[12] - South American quality and transportation discounts decreased to $11.58 per bbl, down from $13.94 in Q4 2024 and $15.36 in Q1 2024, indicating improved realized prices[12] - Operating expenses increased 11% QoQ and 39% YoY in total, primarily due to new Canadian operations and increased production volumes, but decreased 3% on a per boe basis compared to Q1 2024 and Q4 2024[12] - Transportation expenses increased 62% QoQ and 51% YoY due to new Canadian operations and higher sales volumes in Ecuador[12] 2025 Outlook and Guidance This section presents Gran Tierra's reconfirmed 2025 consolidated and country-specific guidance, including production targets, commodity price assumptions, capital expenditures, and free cash flow projections Consolidated 2025 Guidance Gran Tierra reconfirms its 2025 consolidated guidance, projecting 47,000-53,000 boepd production, $240-280 million in capital expenditures, and $20 million free cash flow under a $75/bbl Brent oil price base case 2025 Consolidated Guidance (Base Case) | Metric | Base Case | | :-------------------------------- | :-------- | | Brent Oil Price ($/bbl) | 75.00 | | WTI Oil Price ($/bbl) | 71.00 | | AECO Natural Gas Price ($CAD/thousand cubic feet) | 2.50 | | Production (boepd) | 47,000-53,000 | | Operating Netback ($ million) | 430-470 | | EBITDA ($ million) | 380-420 | | Cash Flow ($ million) | 260-300 | | Capital Expenditures ($ million) | 240-280 | | Free Cash Flow ($ million) | 20 | | Number of Development Wells (gross) | 10-14 | | Number of Exploration Wells (gross) | 6-8 | Budgeted Costs per boe (2025) | Cost Category | Costs per boe ($/boe) | | :---------------------- | :-------------------- | | Lifting | 12.00-14.00 | | Workovers | 1.50-2.50 | | Transportation | 1.00-2.00 | | General and Administration | 2.00-3.00 | | Interest | 4.00-4.50 | | Current Tax | 2.00-3.00 | Country-Specific 2025 Guidance Gran Tierra's 2025 country-specific guidance projects Canada contributing 18-19 kboepd, Colombia 25-27 kboepd, and Ecuador 4-7 kboepd, with Colombia expected to have the highest realized price and operating netback 2025 Budget by Country - Base Case | Metric | Canada | Colombia | Ecuador | | :-------------------------- | :------- | :------- | :------- | | Production (kboepd) | 18 - 19 | 25 - 27 | 4 - 7 | | Realized Price ($/boe) | 22 - 24 | 51 - 53 | 43 - 45 | | Operating and Transportation Expense ($/boe) | 10 - 12 | 19 - 21 | 12 - 14 | | Operating Netback ($/boe) | 10 - 14 | 30 - 34 | 29 - 33 | - Canada's production is comprised of approximately 50% natural gas, 21% oil, and 29% natural gas liquids[13] Supplementary Information This section provides detailed financial and operational tables, definitions of non-GAAP measures, clarifications on oil and gas information, forward-looking statements, and corporate contact details Detailed Financial and Operational Tables This section offers comprehensive financial and operational data, including consolidated results and specific breakdowns for South American and Canadian operations, enabling detailed performance analysis Consolidated Financial Data This section presents consolidated financial data for Gran Tierra, including net income, sales, operating netback, Adjusted EBITDA, cash from operations, capital expenditures, and production Consolidated Financial Data (Three Months Ended) | Metric | March 31, 2025 | March 31, 2024 | December 31, 2024 | | :------------------------------------------ | :------------- | :------------- | :---------------- | | Net Income (Loss) ($000s) | $(19,280) | $(78) | $(34,210) | | Oil, Natural Gas and NGL Sales ($000s) | $170,533 | $157,577 | $147,290 | | Operating Netback ($000s) | $96,268 | $104,527 | $82,241 | | Adjusted EBITDA ($000s) | $85,162 | $94,792 | $76,168 | | Net Cash Provided by Operating Activities ($000s) | $73,230 | $60,827 | $26,607 | | Capital Expenditures ($000s) | $94,727 | $55,331 | $78,579 | | Average Daily WI Production Before Royalties (boe/d) | 46,647 | 32,242 | 41,009 | | Cash Netback ($/boe) | $13.04 | $25.13 | $11.90 | South American Operational Data This section provides detailed operational data for Gran Tierra's South American operations, including oil sales, operating netback, production, and royalty rates South American Operational Data (Three Months Ended) | Metric | March 31, 2025 | March 31, 2024 | December 31, 2024 | | :------------------------------------------ | :------------- | :------------- | :---------------- | | Oil Sales ($000s) | $138,671 | $157,577 | $128,335 | | Operating Netback ($000s) | $83,540 | $104,527 | $73,607 | | Average Daily WI Production Before Royalties (boe/d) | 29,686 | 32,242 | 29,695 | | Royalties, % of WI Production Before Royalties | 20% | 20% | 19% | | Operating Netback ($/boe) | $30.79 | $35.37 | $27.61 | - South American average realized price was $51.11/bbl in Q1 2025, down from $53.32/bbl in Q1 2024[17] Canadian Operational Data This section details operational data for Gran Tierra's Canadian operations, including oil, natural gas, and NGL sales, operating netback, production, and royalty rates Canadian Operational Data (Three Months Ended) | Metric | March 31, 2025 | March 31, 2024 | December 31, 2024 | | :------------------------------------------ | :------------- | :------------- | :---------------- | | Oil Sales ($000s) | $21,269 | $— | $14,832 | | Natural Gas Sales ($000s) | $7,561 | $— | $3,546 | | NGL Sales ($000s) | $7,997 | $— | $4,193 | | Operating Netback ($000s) | $12,728 | $— | $8,634 | | Average Daily WI Production Before Royalties (boe/d) | 16,961 | $— | 11,314 | | Royalties, % of WI Production Before Royalties | 13% | —% | 14% | | Operating Netback ($/boe) | $8.33 | $— | $8.30 | - Gran Tierra entered Canada with the acquisition of i3 Energy, which closed October 31, 2024, hence no comparative data for Q1 2024[20] - Canadian average realized price for crude oil was $65.23/bbl, natural gas $1.69/mcf, and NGLs $17.67/bbl in Q1 2025[19] Non-GAAP Measures Definitions and Reconciliations This section defines and reconciles non-GAAP financial measures, including Funds Flow from Operations, Operating Netback, Net Debt, Cash Netback, EBITDA, and Adjusted EBITDA, which provide supplemental financial performance information - Non-GAAP measures like Funds Flow from Operations, Operating Netback, Net Debt, Cash Netback, EBITDA, and Adjusted EBITDA are used to analyze financial performance but do not have standardized meanings under GAAP[19][31] - Operating netback is defined as oil sales less operating and transportation expenses[32] - Cash netback is defined as net income or loss adjusted for various non-cash items and other specific expenses/gains[33] - EBITDA is net income adjusted for DD&A, interest, and income tax; Adjusted EBITDA further adjusts for non-cash lease expense, lease payments, foreign exchange, stock-based compensation, transaction costs, other gains/losses, and unrealized derivative instruments[33] Presentation of Oil and Gas Information This section clarifies the presentation of oil and gas information, including boe conversion ratios, preliminary well test results, and the definition of "potential drilling opportunities," emphasizing their non-indicative nature for future commercial recovery - Boe conversion ratio of 6 Mcf natural gas to 1 boe is based on energy equivalency, not value equivalency at the wellhead, and may be misleading if used in isolation[35] - Well test results and log interpretations are preliminary and not necessarily indicative of long-term performance, ultimate recovery, or commercial quantities[36] - "Potential drilling opportunities" refer to unbooked locations internally estimated for drilling, with no certainty of resulting in additional reserves, resources, or production[39] Forward-Looking Statements and Legal Advisories This section outlines forward-looking statements regarding business strategy, capital spending, liquidity, and commodity prices, highlighting material factors, assumptions, and risks that could cause actual results to differ - The press release contains forward-looking statements regarding business strategy, capital spending, liquidity, and commodity prices, based on expectations and assumptions about operational, regulatory, and industry conditions[26] - Important factors that could cause actual results to differ materially include operational difficulties (e.g., guerilla activity, strikes), global and regional changes in demand/supply/prices, commodity price volatility, and geopolitical events[27][28] - Gran Tierra disclaims any intention or obligation to update or revise forward-looking statements, except as required by applicable law, and cautions that financial outlooks should not be used for purposes other than those disclosed[29][30] Corporate Information and Contacts This section provides details on upcoming events, corporate resources, and contact information, including the Q1 2025 results conference call, sustainability report, and investor relations contacts - Gran Tierra will host its first quarter 2025 results conference call on Friday, May 2, 2025, at 9:00 a.m. Mountain Time[21] - The 2024 Sustainability Report and Corporate Presentation are available on the Company's website[22][23] - Gran Tierra Energy Inc. is an independent international energy company focused on oil and natural gas exploration and production in Canada, Colombia, and Ecuador, with common stock trading on NYSE American, TSX, and LSE under GTE[24]