Gran Tierra Energy(US:GTE)2024-08-01 20:37Financial Data and Key Metrics Changes - Gran Tierra reported a net income of $36 million or $1.16 per share for Q2 2024, with operating net back increasing to $113 million from $105 million in the prior quarter [4][6] - The company generated oil sales of $166 million, a 5% increase from the previous quarter, driven by higher Brent pricing, which averaged $85.03 per barrel, up 4% [6][7] - Capital expenditures for the quarter were $61 million, up from $55 million in the prior quarter [6][9] - The company had a cash balance of $115 million and net debt of $521 million, with a trailing net debt to EBITDA ratio of 1.3 times, expected to decrease to less than 1 times by year-end 2024 [6][9] Business Line Data and Key Metrics Changes - Total average working interest production was 32,776 barrels of oil per day, a 2% increase compared to the prior quarter and up 4% on a per share basis since Q2 2023 [9][10] - Operating expenses decreased by 3% to $47 million compared to the prior quarter, while transportation expenses increased by 24% to $5.7 million due to low water levels in the Magdalena River [11][13] Market Data and Key Metrics Changes - The company experienced a narrowing of quality and transportation discounts per barrel to $12.79 from $15.36 in the prior quarter [7] - The operating net back per barrel increased by 10% to $38.80 from the previous quarter [7] Company Strategy and Development Direction - Gran Tierra is focused on a high-impact exploration campaign, including the Arawana discovery and a five-well drilling campaign in the Suroriente Block [4][6] - The company plans to drill additional exploration wells in Ecuador and complete civil works for infrastructure development in the Cohembi pad [8][10] - An S-3 shelf prospectus was issued to renew the company's shelf perspectives for an additional three years [8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the second half of 2024, highlighting ongoing positive performance from core fields and recent exploration successes [10][16] - The tax strategy implemented allowed the company to preserve $85 million of non-capital losses for future use, providing a tax benefit in a higher tax rate environment [5][18] Other Important Information - The company has repurchased approximately 3.9 million shares, or 11% of outstanding shares, since January 1, 2023, with 400,000 shares repurchased during the quarter [7] - The Charapa B6 well is showing encouraging results, with excellent oil shows throughout the Hollin formation [15] Q&A Session Summary Question: Production outlook for the second half of the year and tax moves - Management reiterated confidence in production guidance for the year, with ongoing testing of new exploration wells [17][20] - The tax strategy allowed for the preservation of non-capital losses and acceleration of long-term receivables, resulting in no cash outflow despite a current tax expense [18] Question: Capital expenditures and working capital expectations - Management is comfortable with the current capital guidance and does not expect a reversal of working capital relief in the following quarters [20]