Gran Tierra Energy(GTE) - 2025 Q2 - Quarterly Results

1. Executive Summary & Operational Highlights The company achieved record Q2 2025 production and strong operational results across its international portfolio 1.1 Message to Shareholders Gran Tierra achieved record Q2 2025 production through strong operational execution in Colombia, Ecuador, and Canada - Gran Tierra delivered record-setting production in Q2 2025, reflecting strength across its diversified portfolio in Colombia, Ecuador, and Canada[3] - In Ecuador, the company is building on Iguana Block discoveries with planned drilling of two high-impact exploration wells in the Charapa Block later in 2025[4] - In Colombia, successful development drilling at Costayaco and Cohembi validates disciplined reservoir management[4] - Canadian Montney and Clearwater assets delivered encouraging results, with three gross wells (1.2 net) brought on stream, outperforming expectations[5] - The company continues portfolio optimization with the signed disposition of UK North Sea assets, expected to close in Q3 2025[5] 1.2 Operational Update & Key Highlights The company reports record quarterly production, strong financial metrics, and key operational advancements across its assets Q2 2025 Key Operational & Financial Highlights | Metric | Value | Change (vs. Q1 2025) | Change (vs. Q2 2024) | | :-------------------------------- | :-------------------- | :------------------- | :------------------- | | Total Company Average Quarterly Production | 47,196 boepd | +1% | +44% | | Funds Flow From Operations | $54 million | -3% | +17% | | Adjusted EBITDA | $77 million | -9% | -25% | | Operating Costs per boe | $13.42 | -16% | -17% | | Net Loss | $(13) million | -33% (less loss) | N/A (vs. $36M income) | - Achieved a company record of 32 million person-hours without a lost time injury since 2022[7][8] - In Ecuador, civil works are underway for drilling two exploration wells in the Charapa Block (Conejo prospect), expected to commence late Q3 2025[8][9] - In Colombia, the Costayaco-63 well is producing ~800 bopd and Costayaco-64 is producing ~1,300 bopd[12] - Cohembi program saw average drilling costs reduced by 47% from the prior operator and a waterflood response increasing production by over 2,600 bopd gross[12] - Acordionero production averaged ~14,200 bopd, up from ~13,800 bopd in Q1 2025, due to increased total fluid production and water injection[12] - In Canada (Simonette), the first two Lower Montney wells were completed and brought on stream in April 2025, outperforming management's current type curves[12] 2. Financial Performance Overview This section details the company's Q2 2025 financial results, including key metrics, sales, expenses, and cash flow 2.1 Key Financial Metrics The company reported a net loss of $13 million, with decreased Adjusted EBITDA and Funds Flow from Operations Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :----------------------------------- | :------ | :------ | :------ | | Net Income (Loss) ($M) | (13) | (19) | 36 | | Adjusted EBITDA ($M) | 77 | 85 | 103 | | Funds Flow from Operations ($M) | 54 | 55 | 46 | | Net Cash Provided by Operating Activities ($M) | 35 | 73 | 73 | | Capital Expenditures ($M) | 51 | 95 | 61 | | Oil, Natural Gas and NGL Sales ($M) | 152 | 171 | 166 | | Operating Expenses per boe ($) | 13.42 | 15.89 | 16.17 | | Operating Netback ($/boe) | 21.39 | 22.70 | 38.80 | | Cash Netback ($/boe) | 12.95 | 13.04 | 15.85 | - As of June 30, 2025, the Company had a cash balance of $61 million, total debt of $807 million, and net debt of $746 million[15] - Gran Tierra repurchased 239,754 shares of common stock during the Quarter, contributing to approximately 5.2 million shares repurchased since January 1, 2023[15] South American Quality and Transportation Discounts ($/bbl) | Differential | Q2 2025 | Q1 2025 | Q2 2024 | | :--------------------------------- | :------ | :------ | :------ | | South American Quality & Transport | 10.30 | 11.58 | 12.79 | | Castilla | 4.73 | 5.34 | 8.21 | | Vasconia | 1.71 | 2.27 | 4.00 | | Oriente | 7.26 | 7.65 | 8.38 | - Operating expenses per boe decreased by 17% YoY and 16% QoQ, marking the lowest per boe expense since Q1 2022[17] 2.2 Consolidated Financial Data (Table) This section provides a consolidated overview of Gran Tierra's financial and operational performance Consolidated Financial and Operational Highlights | Metric (000s) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Three Months Ended March 31, 2025 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------- | :------------------------------- | :------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Net (Loss) Income | $(12,741) | $36,371 | $(19,280) | $(32,021) | $36,293 | | Oil, Natural Gas and NGL Sales | $152,481 | $165,609 | $170,533 | $323,014 | $323,186 | | Operating Expenses | (55,855) | (47,035) | (67,354) | (123,209) | (95,501) | | Transportation Expenses | (7,618) | (5,690) | (6,911) | (14,529) | (10,274) | | Operating Netback | $89,008 | $112,884 | $96,268 | $185,276 | $217,411 | | Adjusted EBITDA | $76,987 | $103,004 | $85,162 | $162,149 | $197,796 | | Net Cash Provided by Operating Activities | $34,677 | $73,233 | $73,230 | $107,907 | $134,060 | | Funds Flow from Operations | $53,906 | $46,167 | $55,344 | $109,250 | $120,474 | | Capital Expenditures | $51,170 | $61,273 | $94,727 | $145,897 | $116,604 | | Free Cash Flow | $2,736 | $(15,106) | $(39,383) | $(36,647) | $3,870 | | WI Production Before Royalties (boe/d) | 47,196 | 32,776 | 46,647 | 46,923 | 32,509 | | Production NAR (boe/d) | 39,800 | 26,002 | 38,563 | 39,185 | 25,923 | | Sales (boe/d) | 38,331 | 25,191 | 39,024 | 38,676 | 25,635 | | Cash Netback ($/boe) | $12.95 | $15.85 | $13.04 | $12.99 | $20.54 | 3. Regional Operational Performance This section details the operational and financial results for the company's South American and Canadian assets 3.1 South American Operations South American operations generated $71.5 million in operating netback on 29,700 boepd of production South American Operational Information | Metric (000s) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Three Months Ended March 31, 2025 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Oil Sales | $118,187 | $165,609 | $138,671 | $256,858 | $323,186 | | Operating Expenses | (42,554) | (47,035) | (50,827) | (93,381) | (95,501) | | Transportation Expenses | (4,176) | (5,690) | (4,304) | (8,480) | (10,274) | | Operating Netback | $71,457 | $112,884 | $83,540 | $154,997 | $217,411 | | Capital Expenditures | $49,327 | $60,806 | $64,984 | $114,311 | $116,137 | | WI Production Before Royalties (boe/d) | 29,700 | 32,776 | 29,686 | 29,693 | 32,509 | | Production NAR (boe/d) | 24,491 | 26,002 | 23,842 | 24,168 | 25,923 | | Sales (boe/d) | 23,022 | 25,191 | 24,303 | 23,659 | 25,635 | | Brent ($/bbl) | $66.71 | $85.03 | $74.98 | $70.81 | $83.42 | | Operating Netback ($/boe) | $27.81 | $38.80 | $30.79 | $29.34 | $37.07 | 3.2 Canadian Operations Canadian operations generated a $17.6 million operating netback on 17,496 boepd of production Canadian Operational Information | Metric (000s) | Three Months Ended June 30, 2025 | Three Months Ended March 31, 2025 | Six Months Ended June 30, 2025 | | :------------------------------------ | :------------------------------- | :-------------------------------- | :------------------------------- | | Oil Sales | $23,196 | $21,269 | $44,465 | | Natural Gas Sales | 6,894 | 7,561 | 14,455 | | NGL Sales | 6,364 | 7,997 | 14,361 | | Royalties | (2,158) | (4,966) | (7,124) | | Oil, Natural Gas and NGL Sales After Royalties | $34,296 | $31,861 | $66,157 | | Operating Expenses | (13,301) | (16,527) | (29,828) | | Transportation Expenses | (3,442) | (2,607) | (6,049) | | Operating Netback | $17,553 | $12,727 | $30,280 | | Capital Expenditures | $1,796 | $29,360 | $31,156 | | Crude Oil (bbl/d) | 4,335 | 3,623 | 3,981 | | Natural Gas (mcf/d) | 50,124 | 49,860 | 49,992 | | NGLs (bbl/d) | 4,807 | 5,029 | 4,917 | | WI Production Before Royalties (boe/d) | 17,496 | 16,961 | 17,230 | | Production NAR (boe/d) | 15,309 | 14,721 | 15,017 | | Sales (boe/d) | 15,309 | 14,721 | 15,017 | | West Texas Intermediate ($/bbl) | 63.81 | 71.47 | 67.60 | | AECO Natural Gas Price (C$/GJ) | 1.60 | 2.05 | 1.82 | | Operating Netback ($/boe) | $11.03 | $8.33 | $9.72 | 4. Liquidity and Risk Management The company outlines its strategies for enhancing liquidity and managing commodity price risk through its hedging program 4.1 Funding and Credit Facilities Gran Tierra is enhancing liquidity via a new prepayment facility and has maintained its Canadian credit facility - Gran Tierra signed a mandate letter for a $200 million prepayment facility backed by crude oil deliveries, expected to close in Q3 2025[12] - The Canadian credit facility's borrowing base was confirmed at an unchanged C$100 million, with C$50 million in available commitments[12] 4.2 Hedging Program The company's risk-managed hedging strategy protects cash flow and provides downside price protection - The company's disciplined, risk-managed hedging strategy contributed a $14 million derivative hedging gain during the Quarter[12] Hedging Program Details | Asset | Period | % Hedged | Weighted Average Floor ($/bbl or $/GJ) | Weighted Average Ceiling ($/bbl or $/GJ) | | :-------------------------- | :------------- | :------- | :------------------------------------- | :--------------------------------------- | | South American Oil (Brent) | H2 2025 | ~50% | $63.16 | $76.50 | | South American Oil (Brent) | H1 2026 | ~33% | $61.67 | $75.58 | | Canadian Oil (WTI) | H2 2025 | ~60% | $61.67 | $72.37 | | Canadian Oil (WTI) | H1 2026 | ~50% | $56.82 | $72.01 | | Canadian Gas (AECO) | H2 2025 | ~40% | $2.82 | $2.96 | | FX Hedges (COP to USD) | 12-month (from Apr 2025) | $10M/month | 4,430 | 4,705 | 5. Non-GAAP Measures & Legal Disclosures This section provides reconciliations for non-GAAP measures and includes important legal advisories 5.1 Non-GAAP Measures Explanation and Reconciliation This section defines and reconciles non-GAAP financial measures used to analyze performance - Non-GAAP measures like Funds Flow from Operations, Operating Netback, Net Debt, Cash Netback, EBITDA, and Adjusted EBITDA do not have standardized meanings under GAAP[22][33] Cash Netback Reconciliation ($000s) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Three Months Ended March 31, 2025 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Net (Loss) Income | $(12,741) | $36,371 | $(19,280) | $(32,021) | $36,293 | | DD&A expenses | 68,635 | 55,490 | 72,202 | 140,837 | 111,640 | | Deferred tax expense (recovery) | 2,453 | (51,361) | (4,712) | (2,259) | (37,882) | | Stock-based compensation expense (recovery) | 546 | 6,160 | (517) | 29 | 9,521 | | Amortization of debt issuance costs | 4,082 | 2,760 | 3,833 | 7,915 | 6,066 | | Non-cash lease expense | 1,725 | 1,381 | 1,736 | 3,461 | 2,794 | | Lease payments | (1,545) | (1,311) | (1,567) | (3,112) | (2,369) | | Unrealized foreign exchange loss (gain) | 3,114 | (3,323) | 1,687 | 4,801 | (5,589) | | Other loss | 38 | — | 52 | 90 | — | | Unrealized derivative instrument (gain) loss | (12,401) | — | 1,910 | (10,491) | — | | Cash netback | $53,906 | $46,167 | $55,344 | $109,250 | $120,474 | EBITDA and Adjusted EBITDA Reconciliation ($000s) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Three Months Ended March 31, 2025 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Twelve Month Trailing June 30, 2025 | | :------------------------------------ | :------------------------------- | :------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------------ | | Net (Loss) Income | $(12,741) | $36,371 | $(19,280) | $(32,021) | $36,293 | $(65,098) | | DD&A expenses | 68,635 | 55,490 | 72,202 | 140,837 | 111,640 | 259,816 | | Interest expense | 24,366 | 18,398 | 23,235 | 47,601 | 36,822 | 91,245 | | Income tax expense (recovery) | 4,648 | (9,072) | 3,553 | 8,201 | 8,323 | 41,267 | | EBITDA | $84,908 | $101,187 | $79,710 | $164,618 | $193,078 | $327,230 | | Non-cash lease expense | 1,725 | 1,381 | 1,736 | 3,461 | 2,794 | 6,590 | | Lease payments | (1,545) | (1,311) | (1,567) | (3,112) | (2,369) | (5,778) | | Foreign exchange loss (gain) | 3,716 | (4,413) | 3,838 | 7,554 | (5,228) | 3,974 | | Stock-based compensation expense (recovery) | 546 | 6,160 | (517) | 29 | 9,521 | 215 | | Other loss | 38 | — | 52 | 90 | — | 90 | | Unrealized derivative instrument (gain) loss | (12,401) | — | 1,910 | (10,491) | — | (7,117) | | Adjusted EBITDA | $76,987 | $103,004 | $85,162 | $162,149 | $197,796 | $325,204 | Funds Flow From Operations and Free Cash Flow Reconciliation ($000s) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Three Months Ended March 31, 2025 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Twelve Month Trailing June 30, 2025 | | :------------------------------------ | :------------------------------- | :------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------------ | | Net (Loss) Income | $(12,741) | $36,371 | $(19,280) | $(32,021) | $36,293 | $(65,098) | | DD&A expenses | 68,635 | 55,490 | 72,202 | 140,837 | 111,640 | 259,816 | | Deferred tax expense (recovery) | 2,453 | (51,361) | (4,712) | (2,259) | (37,882) | 7,735 | | Stock-based compensation expense (recovery) | 546 | 6,160 | (517) | 29 | 9,521 | 215 | | Amortization of debt issuance costs | 4,082 | 2,760 | 3,833 | 7,915 | 6,066 | 14,767 | | Non-cash lease expense | 1,725 | 1,381 | 1,736 | 3,461 | 2,794 | 6,590 | | Lease payments | (1,545) | (1,311) | (1,567) | (3,112) | (2,369) | (5,778) | | Unrealized foreign exchange loss (gain) | 3,114 | (3,323) | 1,687 | 4,801 | (5,589) | 2,497 | | Other loss | 38 | — | 52 | 90 | — | 90 | | Unrealized derivative instrument (gain) loss | (12,401) | — | 1,910 | (10,491) | — | (7,117) | | Funds flow from operations | $53,906 | $46,167 | $55,344 | $109,250 | $120,474 | $213,717 | | Capital expenditures | $51,170 | $61,273 | $94,727 | $145,897 | $116,604 | $285,471 | | Free cash flow | $2,736 | $(15,106) | $(39,383) | $(36,647) | $3,870 | $(71,754) | - Net debt as of June 30, 2025, was $746 million, calculated as total debt ($807 million) less cash and cash equivalents ($61 million)[36] 5.2 Forward-Looking Statements and Legal Advisories This section contains forward-looking statements and highlights factors that could cause different results - This press release contains forward-looking statements regarding business strategy, future operations, capital spending, liquidity, and expectations for 2025[27] - Important factors that could cause actual results to differ materially include integration challenges, operational disruptions, and global market conditions[28][29] - Forward-looking statements are based on certain assumptions and are subject to risks and uncertainties beyond Gran Tierra's control[30] - Forecasts of expected liquidity and credit facility balances are considered future-oriented financial information and are highly subjective[31] 5.3 Presentation of Oil and Gas Information This section clarifies the presentation of oil and gas information, including boe conversions and metrics - Boe conversions (6 Mcf: 1 boe) are based on energy equivalency and may be misleading as an indication of value[37] - References to hydrocarbon evidence or oil pay are not necessarily indicators of commercial recoverability or estimated volume[38] - Oil and gas metrics like operating netback and cash netback are non-standardized and may not be comparable to other companies[39][40] 6. Corporate Information This section provides details for the upcoming conference call and corporate contact information 6.1 Conference Call & Corporate Presentation Gran Tierra will host a conference call on July 31, 2025, to discuss its Q2 2025 results - Gran Tierra will host its Q2 2025 results conference call on Thursday, July 31, 2025, at 9:00 a.m. Mountain Time[23] - The Company's Corporate Presentation has been updated and is available on www.grantierra.com[24](index=24&type=chunk) 6.2 Contact Information & About Gran Tierra This section provides contact details and a brief overview of Gran Tierra Energy Inc - For investor and media inquiries, contact Gary Guidry (President & CEO) or Ryan Ellson (EVP & CFO) at +1-403-265-3221[25] - Gran Tierra Energy Inc. is an independent international energy company focused on oil and natural gas exploration and production in Canada, Colombia, and Ecuador[25] - SEC, Canadian, and UK filings are available on their respective regulatory websites[26]