Gran Tierra Energy(US:GTE)2022-11-04 01:49Financial Data and Key Metrics Changes - Gran Tierra achieved $94 million in funds flow and $37 million in free funds flow for Q3 2022, with a net income of $39 million, reflecting a 10% increase from Q3 2021 [8][11] - The company generated $168 million in oil sales, up 24% year-over-year, but down 18% from the previous quarter [12] - The average Brent oil price was $97.70 per barrel, a 33% increase from a year ago, but down 13% from the prior quarter [10] - The company exited the quarter with $118 million in cash and net debt of $462 million, with a 2.9% reduction in total outstanding shares [9] Business Line Data and Key Metrics Changes - Total average production in Q3 was 30,391 BOPD, a 5% increase from Q3 2021, but flat compared to Q2 2022 [11] - The Suroriente Block in Colombia faced disruptions, impacting production by approximately 920 BOPD [11][29] - Capital expenditures for Q3 were $57 million, lower than the previous quarter's $65 million, as major development programs were completed [13] Market Data and Key Metrics Changes - The company's quality and transportation discount widened to $13.37 per barrel in Q3, up from $13 per barrel in the prior quarter [10] - Operating netback for Q3 was $44.26 per barrel, a 28% increase year-over-year, while cash netback per barrel was $33.42, down from $37.71 in the prior quarter [12] Company Strategy and Development Direction - Gran Tierra is focused on enhancing recovery in major fields and expanding waterflood projects, with plans for 2023 development and exploration capital programs [15][34] - The company is monitoring potential changes in Colombia's tax regime but remains optimistic about the long-term investment environment [15][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a strong finish for 2022, with current production averaging approximately 32,000 BOPD [15] - The company is optimistic about exploration results in both Colombia and Ecuador, with plans for further drilling [18][20] Other Important Information - Gran Tierra repurchased approximately $20.1 million face value of senior notes, generating interest savings of about $3 million [14] - The company plans to continue share repurchases and bond buybacks, depending on market conditions [36] Q&A Session Summary Question: Increase in lifting costs - Management attributed the increase to global inflation and noted that as production ramps up, per unit costs will decrease [26][27] Question: Production impact due to operational disruptions - Disruptions were primarily in the Suroriente Block due to blockades against the central government, impacting production by around 920 BOPD [28][29] Question: Year-end cash position guidance - Management expects to achieve a cash position of about $190 million, with contributions from working capital and tax refunds [30] Question: Future production expectations for FY '23 - Management indicated that guidance for 2023 will be released in mid-December, with a focus on expanding waterfloods and recovery [32][34] Question: Bond repurchase strategy - Management plans to continue bond repurchases and share buybacks, balancing capital allocation based on market conditions [35][36] Question: Exploration commitments in Ecuador - The company has a commitment of 14 wells in Ecuador, with plans for additional drilling based on success [49] Question: Production ramp-up from Ecuador - Management indicated that production could ramp up quickly following positive test results from ongoing drilling [54][55] Question: Impact of new tax structure - Management is reluctant to quantify potential impacts until legislation is finalized, with more clarity expected in December [60][61]