Gran Tierra obtains a 20-year contract extension for Suroriente de Colombia

Inspenet, April 20, 2023

Gran Tierra Energy Inc. reported that it signed an agreement with Ecopetrol SA of Colombia to retain the Canadian company’s operation of the Suroriente block for 20 more years, with an initial investment of USD 123 million.

Gran Tierra acquired the private company Suroriente in 2019, which since then has increased the company’s gross oil production by 32% for this year, according to the multinational.

“The additional term of the contract allows for long-term investment in infrastructure and work programs to improve oil recovery efficiency in existing fields and appraisal drilling to potentially extend the useful life of the fields,” the statement said.

The initial capital financing in the deal will be spent over three years from the effective date of the extension, to be determined after government approval of the contract, Gran Tierra said. The Calgary-based company expects to cover the investment with its internal cash flow.

“Since becoming an operator, Gran Tierra has been able to increase gross oil production by 100 percent from an average of 6,203 barrels of oil per day (bopd) in February 2019 to an average of 8,167 bopd during the first quarter. from 2023, an increase of 32 percent,” the statement said.

Gran Tierra has a 52 percent stake in the Suroriente project and national oil company Ecopetrol owns the remaining 48 percent. Gran Tierra held a 15.83 percent stake prior to the 2019 acquisition.

Gran Tierra, whose common shares are listed in Toronto, London and New York, said its stake in Suroriente covered proven plus probable reserves of 6.1 million barrels of oil as of 2018.

He said that the contract extension “further strengthens and consolidates Gran Tierra’s position as a first-tier operator and the main holder of the contracted area in the Putumayo basin and provides continuity to the Company’s long-term commercial relationship with Ecopetrol. ”.

“The deal represents a unique and significant opportunity in Colombia in terms of scale and growth potential, while maintaining our long-term partnership with Ecopetrol in the prolific Putumayo basin,” said Gran Tierra President and CEO, Gary Guidry, in Tuesday’s announcement.

Gran Tierra acquired the Suroriente operation from Vetra Exploración y Producción Colombia SAS (Vetra E&P). In addition to Suroriente, the 2019 Colombian transaction initially valued at USD 104.2 million involved the sale to Gran Tierra of Vetra E&P’s 100 percent interest in the Llanos-5 block, Vetra E&P’s 50 percent interest in the Putumayo-8 block and all of Vetra Energía SL’s shares in its wholly owned subsidiary Vetra Southeast SLU, according to a filing with the US Securities and Exchange Commission.

Gran Tierra produced 31,700 barrels of oil per day on average in the first quarter of 2023.

“Production on the Suroriente Block averaged approximately 8,167 bopd gross (4,247 bopd WI) during the quarter, its second highest quarterly production average since the second quarter of 2015, despite no development wells being drilled since the first quarter. 2018,” it said in an April operational update.

Gran Tierra posted its highest net income on record in 2022 at $139 million. Its production last year averaged 30,746 bopd, a 16 percent year-over-year increase driven by drilling in Colombia’s Acordionero and Costayaco fields. Gran Tierra raised $711.4 million from oil sales, 50 percent more than in 2021, according to its results published on February 21.

“Based on successful development and exploration drilling in 2022, as previously forecast, Gran Tierra expects production of 32,000-34,000 bopd in 2023, an increase of 4-11 percent over 2022,” it said in the statement. Full year earnings report.

Gran Tierra was trading 1.626 percent lower on the Toronto Stock Exchange, 1.11 percent lower on the New York Stock Exchange and stable on the London Stock Exchange at Tuesday’s closing prices. .


Photo: ShutterStock

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