We drilled explorationeight development and five water injector wells in the Putumayo-1 Block (Vonu-1), Putumayo-7 Block (Confianza-1), Putumayo-4 Block (Siriri-1) and Midas Block (Ayombero-1) Two of these wells are currently on production (Vonu-1 and Confianza-1) and we are currently evaluating Siriri and testing Ayombero.

The table below shows the break-down of our 2024 capital program. In December 2017, we announced our 2018 capital budget. We expect the following ranges for our 2018 capital budget:program:

Our base capital program for 2024 is $210 million to $240 million for exploration and development activities. Based on the midpointmid-point of the 2024 guidance, the capital budget is forecasted to be approximately 60% - 70% directed to development and 40% - 30% to exploration. Between 30% and 35%exploration activities. Approximately 20% of the 2018development activities included in the 2024 capital program isare expected to be directed to facilities with approximately 75% of this investment expected to be dedicated to the ongoing facilities expansion at the Acordionero Field.support future production growth and enhance recovery factors.

We expect our 20182024 capital program to be fully funded by cash flows from operations.

We are an international exploration and leverage ofproduction company focused on hydrocarbon development in proven, under-explored conventional basins which have access to established infrastructure and competitive fiscal regimes. Our mandate is to develop high-value resource opportunities to deliver top-quartile returns. We intend to continue to high-grade our financial strength.portfolio, with a continued focus on operational excellence, safety, and stakeholder returns. The senior management team has a proven track record in developing technically difficult reservoirs, enhanced oil recovery, and operating in remote locations in demanding jurisdictions. We aim to have a meaningful and sustainable impact through social investments within the communities we operate. Our “Beyond Compliance Policy” focuses on our commitments to environmental, social, and governance excellence.

The following table provides a summary of our exploration commitments for certain blocks as atof December 31, 2017:2023:

Colombian royalties are regulated under Colombia Law 756 of 2002, as modified by Law 1530 of 2012. All discoveries made subsequent to the enactment of Law 756 of 2002 have the sliding scale royalty described below. Discoveries made before the

The ANHAgencia Nacional de Hidrocarburos (National Hydrocarbons Agency) (“ANH”) contracts to which we are a party all have royalties that are based on a sliding scale described in Law 756 of 2002. This royalty worksThese royalties work on an individual oil field basis starting with a base royalty rate of 8% for gross production of less than 5,000 bopd. The royalty increasesBOPD, increasing in a linear fashion from 8% to 20% for gross production between 5,000 and 125,000 bopdBOPD and is stablefixed at 20% for gross production between 125,000 and 400,000 bopd.BOPD. For gross production between 400,000 and 600,000 bopdBOPD the rate increases in a linear fashion from 20% to 25%. For gross production in excess of 600,000 bopdBOPD the royalty rate is fixed at 25%. The Santana and Nancy-Burdine-Maxine Blocks have fixed rates for existing production of 32% and 20%, respectively. New discoveries and incremental production are subject to sliding scale royalties duly approved by the ANH. In addition to the sliding scale royalty, the following blocks havethere are additional x-factor royalties:economic rights of 1%

for Llanos-22, Putumayo-2, Putumayo-4, Putumayo-7, Putumayo-21 and Putumayo-7: 1%; Sinu-1VMM-24; 2% for Llanos-85; 3% for VMM-2, 5% for Putumayo-1; 12% for Putumayo-31; 31% for Llanos-1 and Llanos-10: 3%; Putumayo-31: 12%; Sinu-3:17%; Llanos-1: 31%; Llanos-53: 33%; Llanos-70: 31%; Putumayo 25: 19%; Santana: 32% and Nancy-Burdine-Maxine: 20% for existing production and sliding scale for new discoveries or incremental production duly approved by ANH.Llanos-70.

For gas fields, the royalty is based on an individual gas field basis starting with a base royalty rate of 6.4% for gross production of less than 28.5 MMcf of gas per day. The royalty increases in a linear fashion from 6.4% to 20%16% for gross production between 28.5 MMcf of gas per day and 3.42 Bcf712.5 MMcf of gas per day and is stable at 16% for gross production between 712.5 to 2,280 MMcf of gas per day. For gross production between 2.28 to 3.42 Bcf of gas per day, the rateand then increases in a linear fashion from 16% to 20%. for gross production between 2,280 to 3,420 MMcf of gas per day. For gross production in excess of 3.42 Bcf3,420 MMcf of gas per day the royalty rate is fixed at 20%.

An additional royalty (the “HPR royalty”Additional high price rights (“HPR”) applies onare applicable to exploration and production contracts signed under the new ANH oil regulatory regime in 2004 and onwards when cumulative gross production (net of royalty) from an Exploitation Area is greater than five MMbbl5 MMbbls of oil and WTI reference prices exceedprice exceeds the trigger price defined in the contract. For exploration andThe HPR is calculated using the associated production contracts awardedmultiplied by the Q factor, which is calculated as follows:

In addition to these government royalties and rights, our original interests in the Guayuyaco and Chaza Blocks acquired on our entry into Colombia in 2006 are subject to a third party royalty. The additional interests in Guayuyaco and Chaza that we acquired on the acquisition of Solana in 2008 are not subject to this third party royalty. The overriding royalty rights start with a 2% rate on working interest production less government royalties. For new commercial fields discovered within 10 years of the agreement date and after a prescribed threshold is reached, Crosby Capital, LLC (“Crosby”) reserves the right to convert the overriding royalty rights to a net profit interest (“NPI”). This NPI ranges from 7.5% to 10% of working interest production less sliding scale government royalties, as described above, and operating and overhead costs. No adjustment is made for the HPR royalty.HPR. On certain pre-existing fields, Crosby does not have the right to convert its overriding royalty rights to ana NPI. In addition, there are conditional overriding royalty rights that apply only to the pre-existing fields. Currently, we are subject to a 10% NPI on 50% of our working interest production from the Costayaco and Moqueta Fieldsfields in the Chaza Block and 35% of our working interest production from the Juanambu Fieldfield in the Guayuyaco Block and overriding royalties on our working interest production from the Guayuyaco Fieldfield in the Guayuyaco Block.

The Putumayo-7 Block isand Putumayo-1 Blocks are also subject to a third party royalty in addition to the government royalties.royalties and rights. Pursuant to the terms of the agreement by which the interests in the Putumayo-7 Block were acquired, a 10% royalty on production from the Putumayo-7 Block is payable to a third party. The terms of the royalty allow for transportation costs, marketing and handling fees, government royalties (including royalties payable to the ANH pursuant to Section 39 of the contract for the Putumayo-7 Block - the “Rights Due to High Prices”) and taxes, (otherother than taxes measured by the income of any party, and other than VATvalue-added tax (“VAT”) or any equivalent)equivalent, to be paid in cash or kind to the Government of Colombia (or any federal, state, regional or local government agency) and ANH, and a 1% ’X’‘X’ factor payment to be deducted from production revenue prior to the royalty being paid to a third party.

We currently hold Participation Sharing Contracts (“PSC”) for the three Blocks (Charapa, Chanangue and Iguana) in the Oriente Basin in Eastern BrazilEcuador. Unlike traditional PSCs, these contracts do not include cost oil or royalties. Instead, the entire production is placed into a profit-sharing pool that is split between the Company and the government based on a percentage derived from a biddable price component and a production component. The biddable price component is a sliding scale that is based on the Oriente oil price ranging from $30 per bbl to $120 per bbl, with the Company’s production share varying between 87.5% and 40%, respectively. The Company’s share in production would only drop below 50% if the StateOriente oil prices exceed $100 per bbl. The production component is a tier-based mechanic increasing from 0% to 6% based on the PSC’s daily production. For the year ended December 31, 2023, the share of Bahia.production retained by the government of Ecuador was recorded as royalties in-kind.

Our principal executive offices areoffice is located in Calgary, Alberta, Canada. The Calgary office lease will expire on November 29, 2022. We also have office space30, 2028. Office leases in Colombia.Colombia and Ecuador will expire on February 28, 2026, and June 30, 2025, respectively.

The primary internal technical person in charge of overseeing the preparation of our reserve estimates is the Vice President, Asset Management. He has a B. Eng (Hons) degree in mechanical engineeringBachelor of Geological Engineering, graduating with Great Distinction, and is a professional engineer and memberMasters of the Association of Professional Engineers, Geologists and Geophysicists of Alberta.Chemical Engineering (petroleum). He is responsible for our engineering activities, including reserves reporting, asset evaluation, reservoir management, and field development. He has over 2030 years of experience working internationally in the oil and gas industry.industry with extensive experience in reservoir management, production, and operations.

We have developed internal controls for estimating and evaluating reserves. Our internal controls over reserve estimates include: 100%All of our reserves are evaluated by an independent reservoir engineering firm, at least annually;annually. We have developed internal controls over estimation and reviewevaluation of reserves. Our internal controls are followed, includingover reserve estimates include an independent internal review of assumptions used in thefor reserve estimates and presentation of the results of this internal review to our reserves committee. Calculations and data are reviewed at several levels of the organizationCompany to ensure consistent and appropriate standards and procedures. Our policies are applied byto all staff involved in generating and reporting reserve estimates including geological, engineering and finance personnel.

The process of estimating oil and gas reserves is complex and requires significant judgment, as discussed in Item 1A.1A “Risk Factors”. The reserve estimation process requires us to use significant decisions and assumptions in the evaluation of available geological, geophysical, engineering, and economic data for each property. Therefore, the accuracy of the reserve estimateestimates is dependent on the quality of the data, the accuracy of the assumptions based on the data, and the interpretations and judgment related to the data.

Proved reserves are reserves which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward from known reservoirs under existing economic conditions, operating methods, and government regulations prior to the time at which contracts providing the right to operate expires, unless evidence

indicates that renewal is reasonably certain. The term “reasonable certainty” implies a high degree of confidence that the quantities of oil or natural gas actually recovered will equal or exceed the estimate. To achieve reasonable certainty, we and the independent reserve engineers employed technologies that have been demonstrated to yield results with consistency and repeatability. Estimates of proved reserves are generated through the integration of relevant geological, engineering, and production data, utilizing technologies that have been demonstrated in the field to yield repeatable and consistent results as defined inby the SEC regulations. Data used in these integrated assessments included information obtained directly from the subsurface through wellbores, such as well logs, reservoir core samples, fluid samples, static and dynamic pressure information, production test data, and surveillance and performance information. The data utilized also included subsurface information obtained through indirect measurements, such as seismic data. The tools used to interpret the data included proprietary and commercially available seismic processing software and commercially available reservoir modeling and simulation software. Reservoir parameters from analogous reservoirs were used to increase the quality of and confidence in the reserves estimates when available. The method or combination of methods used to estimate the reserves of each reservoir was based on the unique circumstances of each reservoir and the dataset available at the time of the estimate. Probable reserves are reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered. Estimates of probable reserves which may potentially be recoverable through additional drilling or recovery techniques are by nature more uncertain than estimates of proved reserves and accordingly are subject to substantially greater risk of not actually being realized by us.

The following table sets forth our estimated reserves NAR located in Colombia and Ecuador which were 100% oil as of December 31, 2017.2023:

The product prices that were used to determine the future gross revenue for each property reflect adjustments to the benchmark prices for gravity, quality, local conditions and/or distance from market. The average realized prices for reserves in the report are:

These prices should not be interpreted as a prediction of future prices, nor do they reflect the value of our commodity derivative instruments in place as of December 31, 2017.prices. We do not represent that this data is the fair value of our oil and gas properties or a fair estimate of the present value of cash flows to be obtained from their development and production.

Colombia

We have entered into numerous sales agreements to sellfor our production from MMV and the Putumayo Basin with domestic customers selling crude oil produced in the Chaza and Guayuyaco Blocks (the “Putumayo production”).for export purposes. These agreements are subject to renegotiation for terms between three to twelve and thirty months and generally contain mutual termination provisions with 30 days'90 days’ notice. The volume of crude oil contemplated in these sales agreements does not include the volume of oil corresponding to royalties taken in kind, butin-kind and since October 2022 does include volumes relating to HPR royalties.

We receive revenues for our Colombian and Ecuador oil sales in U.S. dollars. Oil prices for sales of our crude oil are defined by agreements with the purchasers of the oil andoil. They are based generally on an average price for crude oil, usingreferenced to ICE Brent, with adjustments for differences in quality, specified fees, transportation fees, and transportation tax. Pipeline tariffs are denominated in U.S. dollars, andwhile trucking costs are in Colombian Pesos.Pesos in Colombia and U.S. dollars in Ecuador.

The oil and gas industry is highly competitive. We face competition from both local and internationalmultinational companies. This competition impacts our ability to acquire properties, contract for drilling and other oil field equipment, and secure trained personnel. Many competitors, such as Ecopetrol, Colombia'sColombian and Ecuadorian national oil company,companies, have greater financial and technical resources. Our larger or more integrated competitors may be able to absorb the burden of existing, and any changes to, federal, state and local laws and regulations more easily than we can, which could adversely affect our competitive position. Our ability to acquire additional properties and to discover reserves in the future will depend on our ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment. There is substantial competition for land contracts, prospects, and resources in the oil and natural gas industry, and we compete to develop and produce those reserves cost effectively.cost-effectively. In addition, we compete to monetize our oil production: for transportation capacity and infrastructure for the delivery ofto deliver our products, to maintain a skilled workforce, and to obtain quality services and materials.

We have one reportable segment basedBased on the geographic organization, Colombia. Prior toColombia is the sale of our Brazilonly reportable segment. We also have Participation Sharing Contracts (“PSCs”) for the three Blocks in Ecuador. For the years ended December 31, 2023, 2022 and 2021, the Ecuador business unit effective June 30, 2017was not significant and was included in our Peru business unit effective December 18, 2017, Brazil and Peru wereColombia reportable segments. Information regarding our geographic segment, including information on revenues, assets, expenses and net income, can be found in Note 3 to the Consolidated Financial Statements, Segment and Geographic Reporting, in Item 8. “Financial Statements and Supplementary Data”, which information is incorporated by reference here. Long livedsegment. Long-lived assets are Property, Plant and Equipment, which includesinclude all oil and gas assets, furniture and fixtures, automobiles, computer equipment, and computer equipment.capitalized leases. No long livedlong-lived assets are held in our country of domicile, which is the United States of America. “All Other” assets include assetsAssets held by our corporate head office in Calgary, Alberta, Canada.Canada, were not significant as of December 31, 2023, and 2022 and were included in the Colombia reportable segment under “other” category. Because all of our exploration and development operations are in Colombia and

Ecuador, we face many risks associated with these operations. See Item 1A.1A “Risk Factors” for risks associated with our foreign operations.

The oil and gas industry in both Colombia and Ecuador is heavily regulated. Rights and obligations with regardrelating to exploration, development, and production activities are explicit for each project; economics areis governed by a royalty/royalty and tax regime. Various government approvals are required for property acquisitions and transfers, including, but not limited to, meeting financial and technical qualification criteria in order to be certified as an oil and gas company in the country. Oil and gas concessions are typically granted for fixed terms with an opportunity for extension.

We operate in Colombia through Colombian branches of the following entities: Gran Tierra Energy Colombia Ltd.,GmbH, Gran Tierra Operations Colombia Inc.GmbH, and Petrolifera Petroleum (Colombia) Limited. Gran Tierra Energy Colombia Ltd. and Gran Tierra ColombiaResources Inc. These entities are currently qualified as operators of oil and gas properties by the ANH. The entities operate under a special regime for hydrocarbon companies in Colombia that entitle them to collect proceeds from oil sales abroad in U.S. dollars.

In Colombia, the ANH is the administrator of the hydrocarbons in the country, as delegated by the Ministry of Mining and Energy, and therefore is responsible for regulating the administration of Colombian oil and gas industry, includingcontracts and managing all exploration lands. Since 2003, Ecopetrol, the Colombian national oil company, has beenis a public company listed in the Colombian and United States stock markets, owned in majority by the state with the main purpose of exploring and producing hydrocarbons similar to any other integrated oil company. In addition, Ecopetrol is a major purchaser and marketer of oil in Colombia and directly or through its subsidiaries operates the majoritymost of the oil pipeline transportation and refining infrastructure in the country. Ecopetrol Group also owns a majority stake in the Colombian energy transmission sector.

When operating under athe ANH contract, the contractor is the owner of the hydrocarbons extracted from the contract area during the performance of operations, except for royalty volumes which are collected by the ANH (or its designee). The contractor can market the hydrocarbons in any manner whatsoever, subject to a limitation in the case of natural emergencies where the law specifies the manner of sale. Under the Ecopetrol contract, each party owns its working interest of the hydrocarbons extracted.

Our activities are subject to laws and regulations governing environmental compliance quality, waste and pollution control in the countries where we maintain operations. Our activities with respect to exploration, drilling, production and facilities, including the operation and construction of pipelines, plants and other facilities for transporting, processing, treating or storing oil and other products, are subject to stringent environmental regulation by regional and federal authorities in Colombia.Colombia and Ecuador. Such regulations relate to mandatory environmental impact studies, the discharge of pollutants into air and water, water use and management, the management of non-hazardous and hazardous waste, including its transportation, storage and disposal permitting for the construction of facilities, recycling requirements and reclamation standards, and the protection of certain plants and animal species as well as cultural resources and areas inhabited by indigenous peoples,people, among others. Risks are inherent in oil and gas exploration, development and production operations. These risks include blowouts, fires, or spills. Significant costs and liabilities may be incurred in connection with environmental compliance issues. Licenses and permits required for our exploration and production activities may not be obtainable on reasonable terms or onin a timely basis, which could result in delays and have an adverse effect on our operations. Spills and releases of petroleum products into the environment of petroleum products can result in remediation costs and liability for damages. The costs of remedying such conditions may be significant, and remediation obligations could adversely affect our financial condition, results of operations and prospects. Moreover, violations of environmental laws and regulations can result in the issuance of administrative, civil or criminal fines and penalties, as well as orders or injunctions prohibiting some or all of our operations in affected areas. In addition, indigenous groups or other local organizations could oppose our operations in their communities, potentially resulting in delays which could adversely affect our operations.new developments. Governmental or judicial actions may influence the interpretation and enforcement of environmental laws and regulations and may thereby increase licensing and compliance costs. We do not expect that the cost of compliance with regional and federal provisions, which have been enacted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment or natural resources, will be material to us.

We have implemented a company wide web-based reporting system which allows us to track incidents and respective corrective actions and associated costs. We have a Corporate Health, Safety, and Environmental Management SystemPolicy and Plan as well as a Corporate Environmental Management Plan (EMP)(“EMP”). The EMP is based on the environmental performance standards of the World Bank/IFCBank International Finance Corporation and reflects best industry practices. We have an Environmental Management System which is ISO14001:2015 certified representing compliance with internationally recognized industry best practice, as well as the environmental risk management program in place as well asand robust waste management procedures. Air, soil and water testing occuroccurs regularly and environmental contingency plans have been prepared for all sites and ground transportation of oil. We have a regular quarterly comprehensive reporting system, reporting to executive management as well as a committeethe Health Safety and Environment Committee of the Board.Board of Directors. We have a schedule of internal and external audits and routine checking of practices and procedures and conduct emergency response exercises.

We file or furnish annual, quarterly and current reports, proxy statements and other documents with the SEC. We make available free of charge through our website at www.grantierra.com our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed or furnished with the SecuritiesSEC. Our Code of Business Conduct and Exchange Commission (“SEC”).Ethics, our Corporate Governance Guidelines, our Audit Committee Charter, our Compensation Committee Charter and our Nominating and Corporate Governance Committee Charter are also posted to the governance section of our website. Our website address is provided solely for informational purposes. Information on our website is not incorporated into this Annual Report or otherwise made part of this Annual Report. We intend to use our website as a means for distributing information to the public for purposes of compliance with Regulation FD.Fair Disclosure.

In addition, the SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding us. Any materials we have filedissuers that file electronically with the SEC, may be read or copied at the SEC’s Public Reference Roomincluding us.

 

Substantially all of our revenues are derived from the sale of oil. The current and forward contract oil which price is based on world demand, supply, weather, pipeline capacity constraints, inventory storage levels, geopolitical unrest, world health events and other factors, geopolitical unrest, all of which are beyond our control. Historically, the market for oil has been volatile and the market is likelyexpected to continue to be volatile in the future.remain so. Furthermore, prices which we receive for our oil sales, while based on international oil prices, are established by contracts with purchasers with prescribedand include the deductions for quality differentials and transportation. The differentials and transportation and quality differentials. These differentialscosts can change over time and have a detrimental impact on realized prices.

Future decreases in the prices of oil, or sustained low prices, periods of extended pricing volatility, and increasing borrowing costs may have a material adverse effect on our financial condition, the future results of our operations (including rendering existing projects unprofitable)unprofitable or requiring temporary suspension of fields), financing available to us, and quantities of reserves recoverable on an economic basis, as well as the market price for our securities.

 

We make estimates of oil and natural gas reserves, upon which we base our financial projections and capital expenditure plans. We make these reserve estimates using various assumptions, including assumptions as to oil and natural gas prices, drilling and operating expenses, capital expenditures, taxes and availability of funds. Some of these assumptions are inherently subjective, and the accuracy of our reserve estimates relies in part on the ability of our management team, engineers and other advisors to make accurate assumptions. Wells that are drilled may not achieve the results expected. Economic factors beyond our control, such as world oil prices, interest rates, inflation, and exchange rates, will also impact the quantity and value of our reserves.

The process of estimating oil and natural gas reserves is complex and requires us to use significant decisions and assumptions in the evaluation of available geological, geophysical, engineering and economic data for each property. As a result, our reserves estimates are inherently imprecise. All categories of reserves are continually subject to revisions based on production history, results of additional exploration and development, price changes and other factors. When producing an estimate of the amount of oil that is recoverable from a particular reservoir, probable reserves are those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered. Possible reserves are even less certain and generally require only a 10% or greater probability of being recovered. Estimates of probable and possible reserves are by their nature much more speculative than estimates of proved reserves and are subject to greater uncertainties, and accordingly the likelihood of recovering those reserves is subject to substantially greater risk.

Our future success depends on our ability to find, develop and acquire additional oil and natural gas reserves that are economically recoverable. Producing oil and natural gas reservoirs generally are characterized by declining production rates that vary depending upon reservoir characteristics and other factors. Our future oil and natural gas reserves and production, and therefore our cash flowflows and results of operations, are highly dependent on our success in efficiently developing and exploiting our current reserves and economically finding or acquiring additional recoverable reserves. The value of our securities and our ability to raise capital will be adversely impacted if we are not able to replace our reserves that are depleted by production. We may not be able to develop, exploit, find or acquire sufficient additional reserves to replace our current and future production.

Exploration, development and production costs (including transportationoperating and workovertransportation costs), marketing costs (including distribution costs) and regulatory compliance costs (including taxes) will substantially impact the net revenues we derive from the oil and natural gas that we produce. These costs are subject to fluctuations and variations in different localesthe areas in which we operate, and we may not be able to predict or control these costs. If these costs exceed our expectations, this may adversely affect our results of operations.

Our future reserves will depend not only on our ability to develop and effectively manage then-existing properties, but also on our ability to identify and acquire additional suitable producing properties or prospects, to identify and retain responsible service providers and contractors to efficiently drill and complete our wells and to find markets for the oil and natural gas we develop and to effectively distribute our production into our markets.

Oil and natural gas exploration involves a high degree of operational and financial risk. These risks are more acute in the early stages of exploration, appraisal and development. It is difficult to predict the results and to project the costs of implementing an exploratory drilling program due to the inherent uncertainties and costs of drilling in unknown formations the costs associated withand encountering various drilling conditions, such as over-pressured zones andunexpected formations or pressures, premature decline of reservoirs, the invasion of water into producing formations, tools lost in the hole, and changes in drilling plans and locations as a result of prior exploratory wells or additional seismic data and interpretations thereof.

Our business requires significant capital expenditures,Oil and we maynatural gas exploration, development and production operations are subject to the risks and hazards typically associated with such operations, including, but not have the resources necessarylimited to, fund these expenditures.

Losses resulting from the occurrence of any of these risks may have a material adverse effect on our exploration activity may require us to commit to certain capital expenditures,business, financial condition, results of operations and prospects.

Although we may lose our contract rights if we do not have the required capital to fulfill these commitments. If themaintain well control and liability insurance in an amount of capital we are able to raise from financing activities, together with our cash flow from operations, is not sufficient to satisfy our capital needs (even to the extent that we reduce our activities), we mayconsider prudent and consistent with industry practice, liabilities associated with certain risks could exceed policy limits or not be required to curtail our operations.

We operate our business in Colombia, where allAll of our proved reserves and production are currently located in Colombia and Ecuador; however, we may eventually expand to other countries. Exploration and production operations are subject to legal, social, security, political and economic uncertainties, including terrorism, military repression, social unrest and activism, illegal blockades, strikes by local or national labor groups, interference with private contract rights, , extreme fluctuations in currency exchange rates, high rates of inflation, exchange controls, changes in tax rates, changes in laws or policies affecting environmental issues (including land use and water use), workplace safety, foreign investment, foreign trade, investment or taxation, as well as restrictions imposed on the oil and natural gas industry, such as restrictions on production, price controls and export controls. When such disruptions occur, they may adversely impact our operations and threaten the economic viability of our projects or our ability to meet our production targets.

Both Colombia has experienced and Ecuador may in theexperience future experience political and economic instability. This instabilityColombia has experienced social, economic and security turmoil related to security, guerilla and narcotrafficking. Political changes because of future electoral processes could result in new governments or the adoption of new policies, laws or regulations that might assume a substantially more hostile attitude toward foreign investment, including but not limited to: the imposition of additional taxes;taxes as was the case in 2022; nationalization; changes in energy or environmental policies or the personnel administering them; changes in oil and natural gas pricing policies; and royalty changes or increases. In an extreme case, such a change could result in termination of contract rights and expropriation of foreign-owned assets or renegotiation or nullification of existing concessions and contracts. There will be national elections in Colombia in 2018, resulting in a new country president who may take positions on oil and gas issues that are contrary to our interests. Any changes in the ruling government, oil and gas or investment regulations and policies or a shift in political attitudes in countries in which we operateColombia or Ecuador are beyond our control and may significantly hamper our ability to expand our operations or operate our business at a profit. Colombia has investment protection treaties in place with the United States and Canada as well as a history of sanctity of contracts.

We rely on local infrastructure and the availability of transportation for storage and shipment of our products. This infrastructure, including storage and transportation facilities, is less developed than that in North America and may be insufficient for our needs at commercially acceptable terms in the localities in which we operate. Further, we operate in remote areas and may rely on helicopters, boats or other transportation methods. Some of these transport methods may result in increased levels of risk, including the risk of accidents involving serious injury or loss of life, and could lead to operational delays which could affect our ability to add to our reserve base or produce oil or serious injury or loss of life and could have a significant impact on our reputation or cash flow. Additionally, some of this equipment is specialized and may be difficult to obtain in our areas of operations, which could hamper or delay operations, and could increase the cost of those operations.

To enjoy the support and trust of local populations and governments, we must demonstrate a commitment to:to providing local employment, training and business opportunities; a high level of environmental performance; open and transparent communication; and a willingness to discuss and address community issues including community development investments that are carefully selected, not unduly costly and bring lasting social and economic benefits to the community and the area. Improper management of these relationships could lead to a delay or suspension inof operations, loss of license or major impact to our reputation in these communities, which could adversely affect our business. For example, in 2017, we postponed the exploration drilling program at Prosperidad-1 in the Llanos basin due to road blockades and civil disruption along the route to the well site. We cannot ensure that similarsuch issues or disruptions will not be experienced in the future, and we cannot predict their potential impacts, which may include delays or loss of production, standby charges, stranded equipment, or damage to our facilities. We also cannot ensure that we will not experience protests or blockades erected by criminal groups or cultivators of illegal crops, in response to the Colombian government's eradication of such crops, if such crops are grown in proximity to roads required to access our operations. In addition, we must comply with legislative requirements for prior consultation ofwith communities and ethnic groups who are

For over 50 years, the Colombian government was engaged in a conflict with two main Marxist guerrilla groups: the Revolutionary Armed Forces of Colombia ("FARC") and the National Liberation Army ("ELN"). Oil pipelines have historically been primary targets of guerrilla activity. On September 26, 2016, the Colombian government and the FARC signedterrorist activity in Colombia. Although a peace agreement (the "Peace Agreement") and, on November 30, 2016, the Peace Agreement was ratified by Colombia'sthe Colombian government in 2016, the result of which was the demobilization and disarmament of the FARC. A ceasefire negotiated between the ELNRevolutionary Armed Forces of Colombia (“FARC”), there continue to be examples of violence against pipelines and the Colombian government recently endedother infrastructure that has been attributed to former FARC dissident groups and itother illegal groups. It is not currently known whether or to what degree violence will resultcontinue and whether and to what degree that violence may impact our operations. Notwithstanding the Peace Agreement ratified and the ongoing efforts to implement such Agreements, increased eradication by the Colombian government of illicit crops, as well as the continuing attempts by the Colombian government to reduce or prevent activity of guerrilla dissidents and of farmers, such efforts may not be successful and such activity may continue to disrupt our operations in the future or cause us higher security costs and could adversely impact our financial condition, results of operations or cash flows.

Colombia and Ecuador have experienced social turmoil related to changes in economic policy, which have resulted in illegal road blockades throughout the countries, and illegal invasions to private property and impacting regions where our operating

Colombia and Ecuador also hasboth have a history of security problems. Our efforts to ensure the security of our personnel and physical assets may not be successful and there can also be no assurance that we can maintain the safety of our field personnel or our contractors'contractors’ field personnel and our Bogota and Quito head office personnel or operations in Colombia and Ecuador or that this violence will not adversely affect our operations in the future and cause significant loss. If these security problems disrupt our operations, our financial condition and results of operations could be adversely affected.

MostAll of our revenue is generated outside of Canada and the United States. The cash generated from operations abroad is generally not available to fund domestic or head office operations unless funds are repatriated. At this time, we do not intend to repatriate further funds, other than to pay head office charges, but if we did, we might have to accrue and pay withholding taxes in certain jurisdictions on the distribution of accumulated earnings. Undistributed earnings of foreign subsidiaries are considered to be permanently reinvested and a determination of the amount of unrecognized deferred tax liability on these undistributed earnings is not practicable. On December 22, 2017, the budget reconciliation statute commonly referred

We may pursue strategic acquisitions as part of our business strategy from time to as

We intend to pay for future acquisitions using cash, stock, notes, debt, assumption of foreign earnings and has no local impact in those non-US jurisdictions.  While our analysisindebtedness or any combination of the Tax Act’s impactforegoing. To the extent that we do not generate sufficient cash internally to provide the capital we require to fund our growth strategy and future operations, we will require additional debt or equity financing. This additional financing may not be available or, if available, may not be on terms acceptable to us. Further, high volatility in the capital markets and in our cash tax liability and financial condition hasstock price may make it difficult for us to access the capital markets at attractive prices, if at all.

We use digital technologies and software programs to interpret seismic data, manage drilling rigs, conduct reservoir modeling and reserves estimation, as well as to process and record financial and operating data. We depend on digital technology, including information systems and related infrastructure as well as cloud application and services, to store, transmit, process and record sensitive information (including trade secrets, employee information and financial and operating data), communicate with our employees and business partners, analyze seismic and drilling information, estimate quantities of oil and gas reserves and for many other activities related to our business. The complexities of the technologies needed to explore for and develop oil and gas in increasingly difficult physical environments, and global competition for oil and gas resources make certain information attractive to thieves. Our business processes depend on the availability, capacity, reliability and security of our information technology infrastructure and our ability to expand and continually update this infrastructure in response to our changing needs and therefore it is critical to our business that our facilities and infrastructure remain secure. While we have implemented strategies to mitigate impacts from these types of events, we cannot guarantee that measures taken to defend against cybersecurity risks and threats will be sufficient for this purpose. The ability of the information technology function to support our business in the event of a security breach or a disaster such as fire or flood and our ability to recover key systems and information from unexpected interruptions cannot be fully tested and there is a risk that, if such an event actually occurs, we may not be able to address immediately the repercussions of the breach or disaster. In that event, key information and systems may be unavailable for a number of days or weeks, leading to our inability to conduct business or perform some business processes in a timely manner. Moreover, if any of these events were to materialize, they could lead to losses of

sensitive information, critical infrastructure, personnel or capabilities essential to our operations and could have a material adverse effect on our reputation, financial condition or results of operations.

Our employees have been and will continue to be targeted by parties using fraudulent “spoof” and “phishing” emails to misappropriate information or to introduce viruses or other malware through “trojan horse” programs to our computers. These emails appear to be legitimate emails but direct recipients to fake websites operated by the sender of the email or request that the recipient send a password or other confidential information through email or download malware. Despite our efforts to mitigate “spoof” and “phishing” emails through policies and education, “spoof” and “phishing” activities remain a serious problem that may damage our information technology infrastructure.

Our oil and natural gas exploration and production operations are subject to complex and stringent laws and regulations. In order to conduct our operations in compliance with these laws and regulations, we must obtain and maintain numerous licenses, permits, approvals and certificates, including environmental and other operating permits. We may not be able to obtain, sustain or renew such licenses and permits on a timely basis or at all. We may also have licenses and permits rescinded or may not be able to renew expiring licenses and permits. Failure or delay in obtaining or maintaining regulatory approvals or permits could have a material adverse effect on our ability to develop and explore on our properties, and receipt of drilling permits with onerous conditions could increase our compliance costs. Loss of permits for existing drilling, water injection or other activities necessary for production may result in a decline of our production levels and revenues or damage to the well structure. Regulations and policies relating to these licenses and permits may change, be implemented in a way that we do not currently anticipate or take significantly greater time to obtain. There can be no assurance that future political conditions in Colombia and Ecuador will not result in changes to policies with respect to foreign development and ownership of oil, environmental protection, health and safety or labor relations, which may negatively affect our ability to undertake exploration and development activities in respect of present and future properties, as well as our ability to raise funds to further such activities.

Governments around the world have become increasingly focused on regulating greenhouse gas (“GHG”) emissions and addressing the impacts of climate change in some manner. Colombia has enacted legislation related to GHG emissions and has also passed legislation requiring the country to generate 77% of its energy from renewable resources and reduce deforestation

areas where our assets reside, we could incur increased expenses, our operations could be materially impacted, and demand for our products could fall. In 2023, El-Niño-induced drought across Colombia, the decrease in power generated from hydroelectricity increased power costs, which resulted in higher operating expenses.

Shares of our Common Stock are listed on the NYSE American, the TSX and the LSE. While the shares of Common Stock are traded on such markets, the price and volume levels could fluctuate significantly on any market independently of the price or trading volume on other markets. Investors could seek to sell or purchase shares of Common Stock to take advantage of any price differences between the NYSE American, the TSX and the LSE through a minority equity investmentpractice referred to as arbitrage. Any arbitrage activity could create unexpected volatility in Sterling, andthe price of the shares of Common Stock on any of these exchanges or the volume of shares of Common Stock available for trading on any of these markets. In addition, shareholders in any of these jurisdictions will not be able to transfer such shares of Common Stock for trading on another market without effecting necessary procedures with our inability,transfer agent or limited ability, to control the operations or management of Sterling mayregistrar. This could result in our receiving or retaining less than the amount of benefit we expect.

None.

 

We have several other lawsuits and claims pending. Although theThe outcome of thesethe lawsuits and disputes cannot be predicted with certainty, wecertainty; We believe the resolution of these matters would not have a material adverse effect on ourthe Company’s consolidated financial position, results of operations, or cash flows. We record costs as they are incurred or become probable and determinable.

Not applicable.