UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

(Mark One)

 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended SeptemberJune 30, 20222023

or
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from __________ to __________
 
Commission file number 001-34018
 
GRAN TIERRA ENERGY INC.
(Exact name of registrant as specified in its charter)
 
Delaware98-0479924
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
500 Centre Street S.E.
Calgary,AlbertaCanadaT2G 1A6
 (Address of principal executive offices, including zip code)
(403) 265-3221
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001$0.01 per shareGTENYSE American
Toronto Stock Exchange
London Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.         Yes   No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes     No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.                                                                  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).      Yes No

On October 31, 2022, 368,898,619July 26, 2023, 33,287,055 shares of the registrant’s Common Stock, $0.001$0.01 par value, were issued.




Gran Tierra Energy Inc.

Quarterly Report on Form 10-Q

Quarterly Period Ended SeptemberJune 30, 20222023

Table of contents
 
  Page
PART IFinancial Information 
Item 1.Financial Statements
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.Quantitative and Qualitative Disclosures About Market Risk
Item 4.Controls and Procedures
PART IIOther Information
Item 1.Legal Proceedings
Item 1A.Risk Factors
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Item 5.Other information
Item 6.Exhibits
SIGNATURES
1


 CAUTIONARY LANGUAGE REGARDING FORWARD-LOOKING STATEMENTS
 
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts included in this Quarterly Report on Form 10-Q regarding our financial position, estimated quantities and net present values of reserves, business strategy, plans and objectives of our management for future operations, covenant compliance, capital spending plans and benefits of the changes in our capital program or expenditures, our liquidity, the impacts of the coronavirus (COVID-19) pandemic and those statements preceded by, followed by or that otherwise include the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “target,” “goal,” “plan,” “budget,” “objective,” “could,” “should,” or similar expressions or variations on these expressions are forward-looking statements. We can give no assurances that the assumptions upon which the forward-looking statements are based will prove to be correct or that, even if correct, intervening circumstances will not occur to cause actual results to be different than expected. Because forward-looking statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. There are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from the forward-looking statements, including, but not limited to, our operations are located in South America and unexpected problems can arise due to guerilla activity, strikes, local blockades or protests; technical difficulties and operational difficulties may arise which impact the production, transport or sale of our products; other disruptions to local operations; global health events (including the ongoing COVID-19 pandemic); global and regional changes in the demand, supply, prices, differentials or other market conditions affecting oil and gas, including inflation and changes resulting from a global health crisis, the Russian invasion of Ukraine, or from the imposition or lifting of crude oil production quotas or other actions that might be imposed by OPEC, such as its recent decision to cut production and other producing countries and the resulting company or third-party actions in response to such changes; changes in commodity prices, including volatility or a prolonged decline in these prices relative to historical or future expected levels; the risk that current global economic and credit conditions may impact oil prices and oil consumption more than we currently predicts, which could cause further modification of our strategy and capital spending program; prices and markets for oil and natural gas are unpredictable and volatile; the effect of hedges; the accuracy of productive capacity of any particular field; geographic, political and weather conditions can impact the production, transport or sale of our products; our ability to execute its business plan and realize expected benefits from current initiatives; the risk that unexpected delays and difficulties in developing currently owned properties may occur; the ability to replace reserves and production and develop and manage reserves on an economically viable basis; the accuracy of testing and production results and seismic data, pricing and cost estimates (including with respect to commodity pricing and exchange rates); the risk profile of planned exploration activities; the effects of drilling down-dip; the effects of waterflood and multi-stage fracture stimulation operations; the extent and effect of delivery disruptions, equipment performance and costs; actions by third parties; the timely receipt of regulatory or other required approvals for our operating activities; the failure of exploratory drilling to result in commercial wells; unexpected delays due to the limited availability of drilling equipment and personnel; volatility or declines in the trading price of our common stock or bonds; the risk that we do not receive the anticipated benefits of government programs, including government tax refunds; our ability to obtain a new credit agreement and comply with financial covenants in itsour credit agreement and indentures and make borrowings under any credit agreement; and those factors set out in Part II, Item 1A “Risk Factors” in this Quarterly Report on Form 10-Q and Part I, Item 1A “Risk Factors” in our 20212022 Annual Report on Form 10-K (the “2021“2022 Annual Report on Form 10-K”), and in our other filings with the Securities and Exchange Commission (“SEC”). during the current fiscal year. The unprecedented nature of the COVID-19 pandemic andcurrent volatility in the worldwide economy and oil and gas industry makes including the unpredictable nature of the resurgence of cases, possible variants and governmental responses, it more difficult to predict the accuracy of forward-looking statements. The information included herein (other than in the context of the financial statements) is given as of the filing date of this Quarterly Report on Form 10-Q with the SEC and, except as otherwise required by the federal securities laws, we disclaim any obligation or undertaking to publicly release any updates or revisions to or to withdraw, any forward-looking statement contained in this Quarterly Report on Form 10-Q to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based.

GLOSSARY OF OIL AND GAS TERMS
 
In this document, the abbreviations set forth below have the following meanings:
 
bblbarrel
BOPDbarrels of oil per day
NARnet after royalty
 
Sales volumes represent production NAR adjusted for inventory changes. Our oil and gas reserves are reported as NAR. Our production is also reported NAR, except as otherwise specifically noted as "working“working interest production before royalties."royalties”.


2


PART I - Financial Information

Item 1. Financial Statements
 
Gran Tierra Energy Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(Thousands of U.S. Dollars, Except Share and Per Share Amounts)
Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
OIL SALES (Note 7)$168,397 $135,319 $548,751 $327,435 
 
EXPENSES
Operating41,837 38,448 116,266 95,366 
Transportation2,417 3,130 7,764 8,731 
Depletion, depreciation and accretion45,320 38,055 128,499 98,300 
General and administrative (Note 10)8,114 6,497 30,286 25,991 
Foreign exchange loss1,489 2,650 486 15,824 
Derivative instruments loss (Note 10) 2,603 26,611 47,540 
Other financial instruments gain (13,634) (12,425)
Gain on repurchase of Senior Notes
(Note 5)
(2,598)— (2,598)— 
Interest expense (Note 5)11,421 13,608 35,743 41,355 
 108,000 91,357 343,057 320,682 
INCOME BEFORE INCOME TAXES60,397 43,962 205,694 6,753 
INCOME TAX EXPENSE (RECOVERY)
Current (Note 8)16,820 — 63,072 (14)
Deferred (Note 8)4,914 8,955 36,868 26,809 
21,734 8,955 99,940 26,795 
NET AND COMPREHENSIVE INCOME (LOSS)$38,663 $35,007 $105,754 $(20,042)
NET INCOME (LOSS) PER SHARE
 - BASIC$0.11 $0.10 $0.29 $(0.05)
 - DILUTED$0.10 $0.10 $0.28 $(0.05)
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC (Note 6)367,305,426 366,992,802 367,754,192 366,985,646 
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED (Note 6)371,310,738 367,740,722 372,387,904 366,985,646 
Three Months Ended June 30,Six Months Ended June 30,
 2023202220232022
OIL SALES (Note 6)
$157,902 $205,785 $302,092 $380,354 
 
EXPENSES
Operating48,491 39,494 89,860 74,429 
Transportation3,691 2,513 6,757 5,347 
Depletion, depreciation and accretion (Note 3)56,209 42,216 107,930 83,179 
General and administrative (Note 9)9,866 9,836 22,562 22,172 
Foreign exchange loss (gain)4,707 2,722 6,409 (1,003)
Derivative instruments loss (Note 9) 5,172  26,611 
Other gain (Note 4) — (615)— 
Interest expense (Note 4)12,678 12,194 24,514 24,322 
 135,642 114,147 257,417 235,057 
INTEREST INCOME647 — 1,415 — 
INCOME BEFORE INCOME TAXES22,907 91,638 46,090 145,297 
INCOME TAX EXPENSE
Current (Note 7)19,757 25,425 37,363 46,252 
Deferred (Note 7)13,975 13,241 29,252 31,954 
33,732 38,666 66,615 78,206 
NET AND COMPREHENSIVE (LOSS) INCOME$(10,825)$52,972 $(20,525)$67,091 
NET (LOSS) INCOME PER SHARE (1)
 - BASIC$(0.33)$1.44 $(0.61)$1.82 
 - DILUTED$(0.33)$1.42 $(0.61)$1.80 
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC (Note 5)33,299,505 36,857,138 33,872,270 36,798,229 
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED (Note 5)33,299,505 37,423,360 33,872,270 37,297,769 
(1) Reflects our 1-for-10 reverse stock split that became effective May 5, 2023. See Note 5 in the notes to the condensed financial statements for further discussion.

(See notes to the condensed consolidated financial statements)
3


Gran Tierra Energy Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(Thousands of U.S. Dollars, Except Share and Per Share Amounts)
As at September 30, 2022As at December 31, 2021 As at June 30, 2023As at December 31, 2022
ASSETSASSETS  ASSETS  
Current AssetsCurrent Assets  Current Assets  
Cash and cash equivalents (Note 11)$118,173 $26,109 
Restricted cash and cash equivalents (Note 11)1,142 392 
Cash and cash equivalents (Note 10)Cash and cash equivalents (Note 10)$68,529 $126,873 
Restricted cash and cash equivalents (Note 10)Restricted cash and cash equivalents (Note 10)1,142 1,142 
Accounts receivableAccounts receivable10,694 13,185 Accounts receivable6,753 10,706 
InventoryInventory18,704 14,526 Inventory22,532 20,192 
Taxes receivable (Note 3)52 45,506 
Other current assets (Note 10)12,035 2,083 
Taxes receivableTaxes receivable82 54 
Other current assets (Note 9)Other current assets (Note 9)9,108 9,620 
Total Current AssetsTotal Current Assets160,800 101,801 Total Current Assets108,146 168,587 
Oil and Gas PropertiesOil and Gas Properties  Oil and Gas Properties  
ProvedProved933,343 859,580 Proved1,045,686 1,000,424 
UnprovedUnproved111,531 131,865 Unproved66,091 74,471 
Total Oil and Gas PropertiesTotal Oil and Gas Properties1,044,874 991,445 Total Oil and Gas Properties1,111,777 1,074,895 
Other capital assetsOther capital assets11,143 4,352 Other capital assets29,787 26,007 
Total Property, Plant and Equipment (Note 4)1,056,017 995,797 
Total Property, Plant and Equipment (Note 3)Total Property, Plant and Equipment (Note 3)1,141,564 1,100,902 
Other Long-Term AssetsOther Long-Term Assets  Other Long-Term Assets  
Deferred tax assetsDeferred tax assets17,713 61,494 Deferred tax assets12,924 22,990 
Taxes receivable (Note 3)25,952 17,522 
Other long-term assets (Note 10)17,873 12,497 
Taxes receivableTaxes receivable40,014 27,796 
Other long-term assets (Note 9)Other long-term assets (Note 9)6,717 15,335 
Total Other Long-Term AssetsTotal Other Long-Term Assets61,538 91,513 Total Other Long-Term Assets59,655 66,121 
Total AssetsTotal Assets$1,278,355 $1,189,111 Total Assets$1,309,365 $1,335,610 
LIABILITIES AND SHAREHOLDERS’ EQUITYLIABILITIES AND SHAREHOLDERS’ EQUITY  LIABILITIES AND SHAREHOLDERS’ EQUITY  
Current LiabilitiesCurrent Liabilities  Current Liabilities  
Accounts payable and accrued liabilitiesAccounts payable and accrued liabilities$181,017 $148,694 Accounts payable and accrued liabilities$197,797 $167,579 
Current portion of long-term debt (Note 5) 66,987 
Derivatives 2,976 
Taxes payable (Note 3)25,888 6,620 
Other (Note 6 and 10)15,381 2,710 
Taxes payableTaxes payable30,442 58,978 
Equity compensation award liability (Note 5)Equity compensation award liability (Note 5)4,976 15,082 
Total Current LiabilitiesTotal Current Liabilities222,286 227,987 Total Current Liabilities233,215 241,639 
Long-Term LiabilitiesLong-Term Liabilities  Long-Term Liabilities  
Long-term debt (Notes 5 and 10)575,684 587,404 
Long-term debt (Notes 4 and 9)Long-term debt (Notes 4 and 9)585,807 589,593 
Deferred tax liabilitiesDeferred tax liabilities22,241 28 
Asset retirement obligationAsset retirement obligation58,657 54,525 Asset retirement obligation66,845 63,358 
Equity compensation award liability (Note 6 and 10)17,826 13,718 
Equity compensation award liability (Note 5)Equity compensation award liability (Note 5)5,708 16,437 
Other long-term liabilitiesOther long-term liabilities7,302 3,397 Other long-term liabilities8,131 6,989 
Total Long-Term LiabilitiesTotal Long-Term Liabilities659,469 659,044 Total Long-Term Liabilities688,732 676,405 
Contingencies (Note 9)
Contingencies (Note 8)Contingencies (Note 8)
Shareholders' Equity  
Common Stock (Note 6) (368,882,887 and 367,144,500 shares issued, 358,149,185 and 367,144,500 outstanding of Common Stock, par value $0.001 per share, as at September 30, 2022, and December 31, 2021, respectively)10,272 10,270 
Shareholders' Equity (1)
Shareholders' Equity (1)
  
Common Stock (Note 5) (33,287,055 and 34,615,116 issued, 33,287,055 and 34,615,116 outstanding shares of Common Stock, par value $0.01 per share, as at June 30, 2023, and December 31, 2022, respectively)Common Stock (Note 5) (33,287,055 and 34,615,116 issued, 33,287,055 and 34,615,116 outstanding shares of Common Stock, par value $0.01 per share, as at June 30, 2023, and December 31, 2022, respectively)10,237 10,272 
Additional paid-in capitalAdditional paid-in capital1,290,711 1,287,582 Additional paid-in capital1,254,449 1,291,354 
Treasury Stock (Note 6)(14,365)— 
Treasury Stock (Note 5)Treasury Stock (Note 5) (27,317)
DeficitDeficit(890,018)(995,772)Deficit(877,268)(856,743)
Total Shareholders’ EquityTotal Shareholders’ Equity396,600 302,080 Total Shareholders’ Equity387,418 417,566 
Total Liabilities and Shareholders’ EquityTotal Liabilities and Shareholders’ Equity$1,278,355 $1,189,111 Total Liabilities and Shareholders’ Equity$1,309,365 $1,335,610 

(1) Reflects our 1-for-10 reverse stock split that became effective May 5, 2023. See Note 5 in the notes to the condensed financial statements for further discussion.
(See notes to the condensed consolidated financial statements)
4


Gran Tierra Energy Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Thousands of U.S. Dollars)
 Nine Months Ended September 30,
 20222021
Operating Activities  
Net income (loss)$105,754 $(20,042)
Adjustments to reconcile net income (loss) to net cash provided by operating activities: 
Depletion, depreciation and accretion128,499 98,300 
Deferred tax expense36,868 26,809 
Stock-based compensation expense (Note 6)6,376 6,597 
Amortization of debt issuance costs (Note 5)2,769 2,682 
Unrealized foreign exchange loss6,138 16,945 
Gain on repurchase of Senior Notes
(Note 5)
(2,598)— 
Derivative instruments loss26,611 47,540 
Cash settlements on derivatives instruments(26,611)(45,041)
Other financial instruments gain (12,425)
Cash settlement of asset retirement obligation(1,673)(483)
Non-cash lease expenses2,009 1,222 
Lease payments(1,134)(1,239)
Net change in assets and liabilities from operating activities (Note 11)72,838 17,956 
Net cash provided by operating activities355,846 138,821 
Investing Activities  
Additions to property, plant and equipment(163,717)(109,650)
Proceeds on disposition of investment, net of transaction costs 14,632 
Changes in non-cash investing working capital (Note 11)3,255 709 
Net cash used in investing activities(160,462)(94,309)
Financing Activities  
Repayment of debt (Note 5)(67,623)(40,125)
Re-purchase of Senior Notes (Note 5)(17,274)— 
Re-purchase of Common Stock (Note 6)(14,365)— 
Proceeds from issuance of Common Stock, net of issuance costs2 — 
Proceeds from exercise of stock options1,292 19 
Lease payments(1,991)(1,269)
Net cash used in financing activities(99,959)(41,375)
Foreign exchange loss on cash, cash equivalents and restricted cash and cash equivalents(1,996)(528)
Net increase in cash, cash equivalents and restricted cash and cash equivalents93,429 2,609 
Cash, cash equivalents and restricted cash and cash equivalents,
beginning of period (Note 11)
31,404 17,523 
Cash, cash equivalents and restricted cash and cash equivalents,
end of period (Note 11)
$124,833 $20,132 
Supplemental cash flow disclosures (Note 11)  
 Six Months Ended June 30,
 20232022
Operating Activities  
Net (loss) income$(20,525)$67,091 
Adjustments to reconcile net (loss) income to net cash provided by operating activities: 
Depletion, depreciation and accretion (Note 3)107,930 83,179 
Deferred tax expense (Note 7)29,252 31,954 
Stock-based compensation expense (Note 5)1,817 6,546 
Amortization of debt issuance costs (Note 4)1,800 2,018 
Unrealized foreign exchange gain(7,548)(498)
Other gain (Note 4)(615)— 
Derivative instruments loss (Note 9) 26,611 
Cash settlements on derivatives instruments (26,392)
Cash settlement of asset retirement obligation(156)(242)
Non-cash lease expenses2,253 1,158 
Lease payments(1,242)(732)
Net change in assets and liabilities from operating activities (Note 10)(25,836)56,329 
Net cash provided by operating activities87,130 247,022 
Investing Activities  
Additions to property, plant and equipment(136,627)(106,682)
Changes in non-cash investing working capital (Note 10)9,088 10,964 
Net cash used in investing activities(127,539)(95,718)
Financing Activities  
Debt issuance costs (Note 4)(1,873)— 
Repayment of debt (Note 4) (67,525)
Re-purchase of Senior Notes (Note 4)(6,805)— 
Re-purchase of shares of Common Stock (Note 5)(10,825)— 
Proceeds from exercise of stock options5 1,285 
Lease payments(3,035)(1,261)
Net cash used in financing activities(22,533)(67,501)
Foreign exchange gain (loss) on cash, cash equivalents and restricted cash and cash equivalents5,759 (680)
Net (decrease) increase in cash, cash equivalents and restricted cash and cash equivalents(57,183)83,123 
Cash, cash equivalents and restricted cash and cash equivalents,
beginning of period (Note 10)
133,358 31,404 
Cash, cash equivalents and restricted cash and cash equivalents,
end of period (Note 10)
$76,175 $114,527 
Supplemental cash flow disclosures (Note 10)  

(See notes to the condensed consolidated financial statements)
5


Gran Tierra Energy Inc.
Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)
(Thousands of U.S. Dollars)
 
Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended June 30,Six Months Ended June 30,
2022202120222021 2023202220232022
Share Capital(1)Share Capital(1)  Share Capital(1)  
Balance, beginning of periodBalance, beginning of period$10,272 $10,270 $10,270 $10,270 Balance, beginning of period$10,272 $10,272 $10,272 $10,270 
Issuance of common stock (Note 6) — 2 — 
Issuance of common stock (Note 5)Issuance of common stock (Note 5) —  
Re-purchase of shares of common stockRe-purchase of shares of common stock(35)— (35)— 
Balance, end of periodBalance, end of period10,272 10,270 10,272 10,270 Balance, end of period$10,237 $10,272 $10,237 $10,272 
Additional Paid-in CapitalAdditional Paid-in Capital  Additional Paid-in Capital  
Balance, beginning of periodBalance, beginning of period1,290,075 1,286,235 1,287,582 1,285,018 Balance, beginning of period$1,291,973 $1,289,162 $1,291,354 $1,287,582 
Exercise of stock optionsExercise of stock options9 10 1,292 18 Exercise of stock options5 303 5 1,283 
Stock-based compensation (Note 6)627 648 1,837 1,857 
Re-purchase of shares of common stockRe-purchase of shares of common stock(38,107)— (38,107)— 
Stock-based compensation (Note 5)Stock-based compensation (Note 5)578 610 1,197 1,210 
Balance, end of periodBalance, end of period1,290,711 1,286,893 1,290,711 1,286,893 Balance, end of period$1,254,449 $1,290,075 $1,254,449 $1,290,075 
Treasury StockTreasury StockTreasury Stock
Balance, beginning of periodBalance, beginning of period— — —  Balance, beginning of period$(38,035)$— $(27,317)$— 
Purchase of treasury shares (Note 6)(14,365)— (14,365) 
Purchase of treasury shares (Note 5)Purchase of treasury shares (Note 5)(107)— (10,825) 
Cancellation of treasury sharesCancellation of treasury shares38,142 — 38,142 — 
Balance, end of periodBalance, end of period(14,365)— (14,365) Balance, end of period$ $— $ $— 
DeficitDeficit  Deficit  
Balance, beginning of periodBalance, beginning of period$(928,681)$(1,093,303)$(995,772)$(1,038,254)Balance, beginning of period$(866,443)$(981,653)$(856,743)$(995,772)
Net income (loss)38,663 35,007 105,754 (20,042)
Net (loss) incomeNet (loss) income(10,825)52,972 (20,525)67,091 
Balance, end of periodBalance, end of period(890,018)(1,058,296)(890,018)(1,058,296)Balance, end of period$(877,268)$(928,681)$(877,268)$(928,681)
Total Shareholders’ EquityTotal Shareholders’ Equity396,600 238,867 396,600 238,867 Total Shareholders’ Equity$387,418 $371,666 $387,418 $371,666 
(1) Reflects our 1-for-10 reverse stock split that became effective May 5, 2023. See Note 5 in the notes to the condensed financial statements for further discussion.

(See notes to the condensed consolidated financial statements)

6


Gran Tierra Energy Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Expressed in U.S. Dollars, unless otherwise indicated)
 
1. Description of Business
 
Gran Tierra Energy Inc. a Delaware corporation (the “Company” or “Gran Tierra”), is a publicly traded company focused on international oil and natural gas exploration and production with assets currently in Colombia and Ecuador.

2. Significant Accounting Policies
 
These interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The information furnished herein reflects all normal recurring adjustments that are, in the opinion of management, necessary for the fair presentation of results for the interim periods.

The note disclosure requirements of annual audited consolidated financial statements provide additional disclosures required for interim unaudited condensed consolidated financial statements. Accordingly, these interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements as at and for the year ended December 31, 2021,2022, included in the Company’s 20212022 Annual Report on Form 10-K.

The Company’s significant accounting policies are described in Note 2 of the consolidated financial statements, which are included in the Company’s 20212022 Annual Report on Form 10-K and are the same policies followed in these interim unaudited condensed consolidated financial statements. The Company has evaluated all subsequent events to the date these interim unaudited condensed consolidated financial statements were issued.

3. Taxes Receivable and Payable

The table below shows the break-down of taxes receivable and payable, which are comprised of value added tax (“VAT”) and income tax:

(Thousands of U.S. Dollars)As at September 30, 2022As at December 31, 2021
Taxes Receivable
Current
VAT Receivable$52 $21,918 
Income Tax Receivable 23,588 
$52 $45,506 
Long-Term
Income Tax Receivable$25,952 $17,522 
Taxes Payable
Current
VAT Payable$6,425 $6,620 
Income Tax Payable19,463 — 
$25,888 $6,620 
Total Taxes Receivable net of Taxes Payable$116 $56,408 







7


The following table shows the movement of VAT and income tax receivables for the period identified below:

(Thousands of U.S. Dollars)VAT Receivable (Payable)Income Tax ReceivableTotal Net Taxes Receivable
Balance, as at December 31, 2021$15,298 $41,110 $56,408 
Collected through direct government refunds(376)(99)(475)
Collected through sales contracts(124,655)— (124,655)
Taxes paid (1)
103,537 29,881 133,418 
Current tax expense— (63,072)(63,072)
Foreign exchange loss(177)(1,331)(1,508)
Balance, as at September 30, 2022$(6,373)$6,489 $116 
(1)VAT is paid on certain goods and services and collected on sales in Colombia at a rate of 19%

4. Property, Plant and Equipment

(Thousands of U.S. Dollars)(Thousands of U.S. Dollars)As at September 30, 2022As at December 31, 2021(Thousands of U.S. Dollars)As at June 30, 2023As at December 31, 2022
Oil and natural gas propertiesOil and natural gas properties  Oil and natural gas properties  
ProvedProved$4,500,932 $4,302,473 Proved$4,765,640 $4,617,804 
UnprovedUnproved111,531 131,865 Unproved66,091 74,471 
4,612,463 4,434,338  4,831,731 4,692,275 
Other(1)
Other(1)
44,550 34,943 
Other(1)
65,816 61,386 
4,657,013 4,469,281 4,897,547 4,753,661 
Accumulated depletion and depreciation and impairment(3,600,996)(3,473,484)
Accumulated depletion, depreciation and impairmentAccumulated depletion, depreciation and impairment(3,755,983)(3,652,759)
$1,056,017 $995,797 $1,141,564 $1,100,902 
(1) The “other” category includes right-of-use assets for operating and finance leases of $22.4$44.9 million, which had a net book value of $9.9$28.6 million as at SeptemberJune 30, 20222023 (December 31, 20212022 - $13.9$38.9 million, which had a net book value of $3.9$24.6 million).

For the three and ninesix months ended SeptemberJune 30, 2023 and 2022, and 2021,respectively, the Company had no ceiling test impairment losses. The Company used ana 12-month unweighted average of the first-day-of the month Brent prprice prior to the ending date of the periods ice June 30, 2023, and 2022 of $94.85$88.52 and $60.12$87.88 per bbl, respectively, for the purposespurpose of the September 30, 2022 and 2021 ceiling test calculations, respectively.calculations.


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5.4. Debt and Debt Issuance Costs

The Company’s debt as at SeptemberJune 30, 2022,2023, and December 31, 2021,2022, was as follows:
(Thousands of U.S. Dollars)(Thousands of U.S. Dollars)As at September 30, 2022As at December 31, 2021(Thousands of U.S. Dollars)As at June 30, 2023As at December 31, 2022
Current
Revolving credit facility$ $67,500 
Unamortized debt issuance costs (513)
$ $66,987 
Long-TermLong-TermLong-Term
6.25% Senior Notes, due February 20256.25% Senior Notes, due February 2025$279,909 $300,000 6.25% Senior Notes, due February 2025$271,909 $279,909 
7.75% Senior Notes, due May 20277.75% Senior Notes, due May 2027300,000 300,000 7.75% Senior Notes, due May 2027300,000 300,000 
Unamortized debt issuance costsUnamortized debt issuance costs(11,572)(14,030)Unamortized debt issuance costs(10,830)(10,992)
568,337 585,970 561,079 568,917 
Long-term lease obligation(1)
Long-term lease obligation(1)
7,347 1,434 
Long-term lease obligation(1)
24,728 20,676 
$575,684 $587,404 
$575,684 $654,391 
Total debtTotal debt$585,807 $589,593 
(1) The current portion of the lease obligation has been included in accounts payable and accrued liabilities on the Company’s balance sheet and totaled $2.6$7.8 million as at SeptemberJune 30, 20222023 (December 31, 20212022 - $3.3$4.8 million).

During the three months ended SeptemberAs of June 30, 2022,2023, the Company terminated its prior revolvinghad a credit facility agreement and entered into a new credit facility agreement with a market lender in the global commodities industry. The credit facility has a borrowing base of up to $150 million, with $100 million as an initial commitment available at SeptemberJune 30, 2022,2023, and an option for an additional $50 million upon mutual agreement by the Company and the lender. The credit facility bears interest based on the secured overnight financing rate posted by the Federal Reserve Bank of New York plus a credit margin of 6.0%6.00% and a credit-adjusted spread of 0.26%. Undrawn amounts under the credit facility bear interest at 2.1%2.10% per annum, based on the amount available. The credit facility is secured by the Company’s Colombian assets and economic rights. It has a final maturity date of August 15, 2024, which may be extended to February 18, 2025, upon the satisfaction of certain conditions. The availability period for the draws is six months commencing the date ofunder the credit facility.facility expires on August 20, 2023. As of SeptemberJune 30, 2023, and December 31, 2022, the credit facility remained undrawn.

Under the terms of the credit facility, the Company is required to maintain compliance with the following financial covenants:

i.Global Coverage Ratio of at least 150% is, calculated using the net present value of the consolidated future cash flows of the Company up to the final maturity date discounted at 10% over the outstanding amount on the credit facility at each reporting period. The net present value of the consolidated future cash flows of the Company is required to be based on 80% of the prevailing ICE Brent forward strip.

ii.Prepayment Life Coverage Ratio of at least 150%, calculated using the estimated aggregate value of commodities to be delivered under the commercial contract from the commencement date to the final maturity date based on 80% of the prevailing ICE Brent forward strip and adjusted for quality and transportation discounts over the outstanding amount on the credit facility including interest and all other costs payable to the lender.

i.Liquidity ratio where the Company’s projected sources of cash exceed projected uses of cash by at least 1.15 times in each quarter period included in one year consolidated future cash flows. The future cash flows represent forecasted expected cash flows from operations, less anticipated capital expenditures, and certain other adjustments. The commodity pricing assumption used in this covenant is required to be 90% of the prevailing ICE Brent forward strip for the projected future cash flows.

As of September 30, 2022, the Company was in compliance with all the above covenants.Senior Notes

During the three and six months ended SeptemberJune 30, 2022,2023, the Company re-purchased in the open market $20.1nil and $8.0 million, respectively, of 6.25% Senior Notes for cash consideration of $17.3 million, including interest payable of $0.1$6.8 million. The re-purchase resulted in a $2.6$1.1 million gain, which included the write-off of deferred financing fees of $0.3$0.1 million. The re-purchase gain was recorded in “other gain” in the Company’s condensed consolidated statements of operations. The re-purchased 6.25% Senior Notes were not cancelledcanceled and wereare held by the Company as treasury bonds as of SeptemberJune 30, 2022.

2023.

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Interest Expense

The following table presents the total interest expense recognized in the accompanying interim unaudited condensed consolidated statements of operations:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
(Thousands of U.S. Dollars)(Thousands of U.S. Dollars)2022202120222021(Thousands of U.S. Dollars)2023202220232022
Contractual interest and other financing expensesContractual interest and other financing expenses$10,670 $12,701 $32,974 $38,673 Contractual interest and other financing expenses$11,659 $11,063 $22,714 $22,304 
Amortization of debt issuance costsAmortization of debt issuance costs751 907 2,769 2,682 Amortization of debt issuance costs1,019 1,131 1,800 2,018 
$11,421 $13,608 $35,743 $41,355 $12,678 $12,194 $24,514 $24,322 

6.5. Share Capital
Shares of Common Stock
Shares issued andat December 31, 202236,889,862 
Shares re-purchased(2,274,746)
Shares outstanding at December 31, 20212022367,144,500 34,615,116
Shares issued on option exercise1,738,387589 
Shares issued at September 30, 2022re-purchased368,882,887 (1,328,650)
Treasury stock(10,733,702)
Shares issued and outstanding at SeptemberJune 30, 20222023358,149,18533,287,055 
On May 5, 2023, the Company completed a 1-for-10 reverse stock split of the Company’s common stock. As a result of the reverse stock split, every ten of the Company’s issued shares of common stock were automatically combined into one issued share of common stock, without any change to the par value per share. All share and per share numbers have been adjusted to reflect the reverse stock split. The Company’s outstanding options were also proportionately adjusted as a result of the reverse stock split to increase the exercise price and reduce the number of shares issuable upon exercise.
During the three monthsyear ended September 30,December 31, 2022, the Company implemented a share re-purchase program (the “2022 Program”) through the facilities of the Toronto Stock Exchange (“TSX”) and eligible alternative trading platforms in Canada. Under the 2022 Program, the Company iswas able to purchase at prevailing market prices up to 36,033,9693,603,396 shares of Common Stock, representing approximately 10% of the issued and outstanding shares of Common Stock as of August 22, 2022. The 2022 Program will expire on August 31,expired in May 2023 or earlier if thewhen 10% share maximum was reached. Re-purchases are subject to the availability of stock, prevailing market conditions, the trading price of the Company’s stock, the Company’s financial performance and other conditions.

During the three and ninesix months ended SeptemberJune 30, 2022,2023, the Company re-purchased 10,733,70220,439 and 1,328,650 shares at a weighted average price of $1.34$5.27 and $8.15 per share. The re-purchasedshare, respectively (three and six months ended June 30, 2022 - nil). As of June 30, 2023, all 3,603,396 shares were held by the Company and were recorded as treasury stock as of September 30, 2022.were canceled.

Equity Compensation Awards

The following table provides information about performance stock units (“PSUs”), deferred share units (“DSUs”), and stock option activity for the ninesix months ended SeptemberJune 30, 2022:2023:
PSUsDSUsStock OptionsPSUsDSUsStock Options
Number of Outstanding Share UnitsNumber of Outstanding Stock OptionsWeighted Average Exercise Price/Stock Option ($)Number of Outstanding Share UnitsNumber of Outstanding Stock OptionsWeighted Average Exercise Price/Stock Option ($)
Balance, December 31, 202130,365,196 5,710,764 17,848,722 1.20 
Balance, December 31, 2022Balance, December 31, 20223,152,823 656,186 1,730,286 11.52 
GrantedGranted6,841,907 683,233 2,814,947 1.40 Granted1,504,546 46,290 407,627 8.59 
ExercisedExercised(4,396,646)— (1,738,387)0.74 Exercised(1,523,408)— (589)7.93 
ForfeitedForfeited(1,282,224)— (264,858)1.24 Forfeited(21,574)— (22,336)5.79 
ExpiredExpired— — (1,322,620)2.78 Expired— — (129,943)24.87 
Balance, September 30, 202231,528,233 6,393,997 17,337,804 1.16 
Balance, June 30, 2023Balance, June 30, 20233,112,387 702,476 1,985,045 10.11 

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For the three and ninesix months ended SeptemberJune 30, 2022,2023, there was $0.2$0.3 million of stock-based compensation recovery and $6.4$1.8 million of stock-based compensation expense, respectively. For the three and ninesix months ended SeptemberJune 30, 2021, there2022, stock-based compensation expense was $1.1$2.0 million and $6.6$6.5 million, of stock-based compensation expense, respectively.

10


At SeptemberAs at June 30, 2022,2023, there was $16.4$10.5 million (December 31, 20212022 - $11.8$10.5 million) of unrecognized compensation costs related to unvested PSUs and stock options, which are expected to be recognized over a weighted-average period of 1.61.9 years. During the ninesix months ended SeptemberJune 30, 2022,2023, the Company paid out $15.1 million for PSUs vested on December 31, 2022 (six months ended June 30, 2022 - $2.4 million for PSUs vested on December 31, 2021 (nine months ended September 30, 2021 - $0.6 million for PSUs vested on December 31, 2020)2021).

Net (Loss) Income (Loss) per Share

Basic net loss or income (loss) per share is calculated by dividing net loss or income (loss) attributable to common shareholders by the weighted average number of shares of common stock issued and outstanding during each period.

Diluted net loss or income per share is calculated using the treasury stock method for share-based compensation arrangements. The treasury stock method assumes that any proceeds obtained on the exercise of share-based compensation arrangements would be used to purchase common shares at the average market price during the period. The weighted average number of shares is then adjusted by the difference between the number of shares issued from the exercise of share-based compensation arrangements and shares re-purchased from the related proceeds. Anti-dilutive shares represent potentially dilutive securities excluded from the computation of diluted incomeloss or lossincome per share as their impact would be anti-dilutive.

Weighted Average Shares Outstanding

Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended June 30,Six Months Ended June 30,
2022202120222021 2023202220232022
Weighted average number of common shares outstandingWeighted average number of common shares outstanding367,305,426 366,992,802 367,754,192 366,985,646 Weighted average number of common shares outstanding33,299,505 36,857,138 33,872,270 36,798,229
Shares issuable pursuant to stock optionsShares issuable pursuant to stock options11,330,144 1,574,305 12,024,315  Shares issuable pursuant to stock options 1,180,686  1,235,124
Shares assumed to be purchased from proceeds of stock optionsShares assumed to be purchased from proceeds of stock options(7,324,832)(826,385)(7,390,603) Shares assumed to be purchased from proceeds of stock options (614,464) (735,584)
Weighted average number of diluted common shares outstandingWeighted average number of diluted common shares outstanding371,310,738 367,740,722 372,387,904 366,985,646 Weighted average number of diluted common shares outstanding33,299,505 37,423,360 33,872,270 37,297,769

For the three and ninesix months ended SeptemberJune 30, 2022, 6,161,672 and 5,863,881 options, respectively (three and nine months ended September 30, 2021- 16,362,882 and2023, all options, respectively), on a weighted average basis (three and six months ended June 30, 2022, 609,291 and 573,843 options, respectively), were excluded from the diluted (loss) income (loss) per share calculation as the options were anti-dilutive.

7. Oil Sales6. Revenue

The Company’s revenues are generated from oil sales at prices that reflect the blended prices received upon shipment by the purchaser at defined sales points or defined by contract relative to ICE Brent and adjusted for Vasconia or Castilla (Colombia sales) or Oriente (Ecuador sales) crude differentials, quality and transportation discounts and premiums each month. For the three and ninesix months ended SeptemberJune 30, 2022,2023, 100% (three and nine months ended September 30, 2021 - 100%) of the Company’s revenue resulted from oil sales.sales (three and six months ended June 30, 2022 - 100%). During the three and ninesix months ended SeptemberJune 30, 2022,2023, quality and transportation discounts were 14%18% and 13%20% of the average ICE Brent price (three and ninesix months ended SeptemberJune 30, 20212022 - 16%12%), respectively. The increase in quality and 15%, respectively).transportation discounts were primarily a result of higher Vasconia and Castilla discounts.

During the three months ended SeptemberJune 30, 2022,2023, the Company’s production was sold primarily to one major customer in Colombia, representing 98% of the total sales volumes (three months ended SeptemberJune 30, 20212022 - two customers, representing 63%55% and 25%44% of the total sales volumes).

During the ninesix months ended SeptemberJune 30, 2022,2023, the Company’s production was sold primarily to twoone major customerscustomer in Colombia, representing 71% and 29%98% of the total sales volumes (nine(six months ended SeptemberJune 30, 20212022 - two customers, representing 68%56% and 24%43% of the total sales volumes).

As at SeptemberJune 30, 2022,2023, accounts receivable included nil of accrued sales revenue related to September 2022June 2023 production (December 31, 20212022 - nil related to December 20212022 production).

10
8.


7. Taxes

The Company'sCompany’s effective tax rate was 49% 145% for the ninesix months ended SeptemberJune 30, 2022, 2023, compared to 397%54% in the comparative period of 2021.2022. Current income tax expense was $63.1$37.4 million for the ninesix months ended SeptemberJune 30, 2022,2023, compared to a small recovery$46.3 million in the corresponding period of 2021,2022, primarily due to an increasea decrease in taxable income.

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The deferred income tax expense for the ninesix months ended SeptemberJune 30, 2022,2023, was mainly the$29.3 million primarily as a result of tax depreciation being higher than accounting depreciation and the use of tax losses to offset taxable income in Colombia.

The deferred income tax expense in the comparative period of 20212022 was also$32.0 million as the result of tax depreciation being higher compared to accounting depreciation and the use of tax losses to offset taxable income in Colombia.

For the ninesix months ended SeptemberJune 30, 2022,2023, the difference between the effective tax rate of 49%145% and the 50% Colombian tax rate was primarily due to an increase in non-deductible foreign exchange adjustments, the impact of foreign taxes, non-deductible royalties in Colombia and non-deductible stock-based compensation. These were partially offset by a decrease in valuation allowance.

For the six months ended June 30, 2022, the difference between the effective tax rate of 54% and the 35% Colombian tax rate was primarily due to an increase in the impact of foreign taxes, foreign translation adjustments, increase in the valuation allowance, non-deductible third-party royalties in Colombia other permanent differences, and non-deductible stock-based compensation which were partially offset by a decrease in foreign currency translations.

For the nine months ended September 30, 2021, the difference between the effective tax rate of 397% and the 31% Colombian tax rate was primarily due to the non-deductibility of derivative instrument losses and financing costs; foreign currency translation adjustments, and stock-based compensation. These were partially offset by a decrease in the valuation allowance and the non-taxable portion (50%) of the unrealized gain on PetroTal Corp. shares.

9.8. Contingencies

Legal Proceedings

Gran Tierra has a number ofseveral lawsuits and claims pending, including a dispute with the Agencia Nacional de Hidrocarburos (National Hydrocarbons Agency) (“ANH”) relating to the calculation of high price share royalties. Although thepending. The outcome of thesethe lawsuits and disputes cannot be predicted with certainty,certainty; Gran Tierra believes the resolution of these matters would not have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows. Gran Tierra records costs as they are incurred or become probable and determinable.

Letters of credit and other credit support

At SeptemberJune 30, 2022,2023, the Company had provided letters of credit and other credit support totaling $109.8$109.4 million (December 31, 20212022 - $103.0$111.1 million) as security relating to work commitment guarantees in Colombia and Ecuador contained in exploration contracts and other capital or operating requirements.

10.9. Financial Instruments and Fair Value Measurement

Financial Instruments

Financial instruments are initially recorded at fair value, defined as the price that would be received to sell an asset or paid to market participants to settle liability at the measurement date. For financial instruments carried at fair value, GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad levels:

Level 1 - Inputs representing quoted market prices in active markets for identical assets and liabilities
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the assets and liabilities, either directly or indirectly
Level 3 - Unobservable inputs for assets and liabilities

At SeptemberJune 30, 2022,2023, the Company’s financial instruments recognized on the balance sheet consist of cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, other long-term assets, accounts payable and accrued liabilities, other short-term payables, long-term debt asset retirement obligation, long-term equity compensation reward liability and other long-term liabilities. The Company uses appropriate valuation techniques based on the available information to measure the fair values of assets and liabilities.

11


Fair Value Measurement

The following table presents the Company’s fair value measurements of its financial instruments as of SeptemberJune 30, 2022,2023, and December 31, 2021:2022:

12


As at September 30, 2022As at December 31, 2021
(Thousands of U.S. Dollars)
Level 1
Assets
Prepaid equity forward - current (2)
$7,398 $— 
Prepaid equity forward - long-term(1)
12,339 7,578 
$19,737 $7,578 
Liabilities
DSUs liability - long-term(3)
$7,736 $4,346 
6.25% Senior Notes230,925 273,672 
7.75% Senior Notes234,000271,500 
$472,661 $549,518 
Level 2
Assets
Derivative asset(2)
$ 219 
Restricted cash and cash equivalents - long-term(1)
5,518 4,903 
$5,518 $5,122 
Liabilities
Derivative liability$ $2,976 
Revolving credit facility 66,987 
PSUs liability - current (4)
13,6572,710
PSUs liability - long-term(3)
10,089 9,372 
$23,746 $82,045 
Level 3
Liabilities
Asset retirement obligation - current(4)
$1,724 $— 
Asset retirement obligation - long-term58,657 54,525 
$60,381 $54,525 
(Thousands of U.S. Dollars)As at June 30, 2023As at December 31, 2022
Level 1
Assets
Prepaid equity forward (“PEF”) - current (1)
$4,898 $5,981 
PEF - long-term(2)
 9,975 
$4,898 $15,956 
Liabilities
6.25% Senior Notes$233,502 $243,801 
7.75% Senior Notes227,321 241,455 
$460,823 $485,256 
Level 2
Assets
Restricted cash and cash equivalents - long-term(2)
$6,504 $5,343 
(1)The long-termcurrent portion of restricted cash and Prepaid equity forward arePEF is included in the other long-term assets on the Company’s balance sheet
(2)Included in the other current assets on the Company’s balance sheet
(3)(2) Long-term DSUs and PSUs liabilities are included in theThe long-term equity compensation award liability on the Company’s balance sheet
(4)Current portion of PSU liabilityrestricted cash and asset retirement obligation arePEF is included in the other short-term liabilitieslong-term assets on the Company’s balance sheet

The fair values of cash and cash equivalents, current restricted cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their carrying amounts due to the short-term maturity of these instruments.

Restricted cash - long-term

The fair value of long-term restricted cash and cash equivalents approximate itsapproximated their carrying value because interest rates are variable and reflective of market rates.

Prepaid Equity Forward (“PEF”)PEF

To reduce the Company’s exposure to changes in the trading price of the Company’s common shares on outstanding PSUs and DSUs, the Company entered into a PEF. At the end of the term, the counterparty will pay the Company an amount equivalent to the notional amount of the shares using the price of the Company’s common shares at the valuation date. The Company has the discretion to increase or decrease the notional amount of the PEF or terminate the agreement early. As at SeptemberJune 30, 2022,2023, the Company’s PEF had a notional amount of 161.0 million shares with a fair value of $19.7$4.9 million (As at December 31, 20212022 - 101.6 million shares with a fair value of $7.6$16.0 million). During the three and ninesix months ended SeptemberJune 30, 2022,2023, the Company recorded a $2.6$4.1 million and $5.3$5.8 million gain,loss, respectively, on the PEF in general and administrative expenses (three and nine
13


six months ended SeptemberJune 30, 2021- $0.62022 - $5.2 million loss and $0.7$2.7 million gain, respectively). The fair value of the PEF asset was estimated using the Company’s share price quoted in active markets at the end of each reporting period.

DSUs liability

The fair value of DSUs liability was estimated using the Company’s share price quoted in active markets at the end of each reporting period.

PSUs liability

The fair value of the PSUs liability was estimated based on a pricing model using inputs such as Company’s share price and PSUs performance factor.

Senior Notes

Financial instruments not recorded at fair value at SeptemberJune 30, 2022,2023, were the Senior Notes (Note 5)4).

At SeptemberJune 30, 2022,2023, the carrying amounts of the 6.25% Senior Notes and the 7.75% Senior Notes were $275.5$268.9 million and $292.9$293.9 million, respectively, which represented the aggregate principal amount less unamortized debt issuance costs, and the fair values were $230.9$233.5 million and $234.0$227.3 million, respectively.

Restricted cashDuring the three and six months ended June 30, 2023, the Company did not incur any gains or losses related to derivatives (three and six months ended June 30, 2022 - long-term$5.2 million and $26.6 million, respective loss related to commodity price derivatives).

The fair value of long-term restricted cash and cash equivalents approximated their carrying value because interest rates are variable and reflective of market rates. The fair values of other financial instruments approximate their carrying amounts due to the short-term maturity of these instruments.
12


Asset retirement obligation

The Company’s non-recurring fair value measurements include asset retirement obligation. The fair value of an asset retirement obligation is measured by reference to the expected future cash outflows required to satisfy the retirement obligation discounted at the Company’s credit-adjusted risk-free interest rate. The significant level 3 inputs used to calculate such liabilities include estimates of costs to be incurred, the Company’s credit-adjusted risk-free interest rate, inflation rates, and estimated dates of abandonment. Accretion expense is recognized over time as the discounted liabilities are accreted to their expected settlement value, while the asset retirement cost is amortized over the estimated productive life of the related assets.

11.10. Supplemental Cash Flow Information

The following table provides a reconciliation of cash and cash equivalents and restricted cash and cash equivalents shown as a sum of these amounts in the interim unaudited condensed consolidated statements of cash flows:
As at June 30,As at December 31,
(Thousands of U.S. Dollars)(Thousands of U.S. Dollars)As at September 30,As at December 31,(Thousands of U.S. Dollars)2023202220222021
2022202120212020
Cash and cash equivalentsCash and cash equivalents$118,173 $16,208 $26,109 $13,687 Cash and cash equivalents$68,529 $108,558 $126,873 $26,109 
Restricted cash and cash equivalents - currentRestricted cash and cash equivalents - current1,142 392 392 427 Restricted cash and cash equivalents - current1,142 1,142 1,142 392 
Restricted cash and cash equivalents -
long-term (1)
Restricted cash and cash equivalents -
long-term (1)
5,518 3,532 4,903 3,409 
Restricted cash and cash equivalents -
long-term (1)
6,504 4,827 5,343 4,903 
$124,833 $20,132 $31,404 $17,523 $76,175 $114,527 $133,358 $31,404 
(1) Included in other long-term assets on the Company’s balance sheet

Net changes in assets and liabilities from operating activities were as follows:
14


Nine Months Ended September 30,Six Months Ended June 30,
(Thousands of U.S. Dollars)(Thousands of U.S. Dollars)20222021(Thousands of U.S. Dollars)20232022
Accounts receivable and other long-term assetsAccounts receivable and other long-term assets$2,811 $(18,582)Accounts receivable and other long-term assets$3,898 $2,356 
DerivativesDerivatives(16,594)(2,427)Derivatives 4,254 
Inventory(3,252)(2,920)
Prepaids(2,773)42 
PEFPEF11,887 (11,215)
Prepaids & InventoryPrepaids & Inventory(3,035)(3,811)
Accounts payable and accrued and other long-term liabilitiesAccounts payable and accrued and other long-term liabilities37,862 14,417 Accounts payable and accrued and other long-term liabilities(3,383)8,264 
Taxes receivable and payableTaxes receivable and payable54,784 27,426 Taxes receivable and payable(35,203)56,481 
Net changes in assets and liabilities from operating activitiesNet changes in assets and liabilities from operating activities$72,838 $17,956 Net changes in assets and liabilities from operating activities$(25,836)$56,329 

Changes in non-cash investing working capital for the ninesix months ended SeptemberJune 30, 2022,2023, were comprised of an increase in accounts payable and accrued liabilities of $3.7$9.1 million and an increase in accounts receivable of $0.4 million (nine(six months ended SeptemberJune 30, 2021,2022, an increase in accounts payable and accrued liabilities of $0.6$11.2 million and a decreasean increase in accounts receivable of $0.1$0.2 million).

The following table provides additional supplemental cash flow disclosures:
Nine Months Ended September 30,
(Thousands of U.S. Dollars)20222021
Cash paid for income taxes$29,881 $20,433 
Cash paid for interest$31,455 $37,259 
Non-cash investing activities:
Net liabilities related to property, plant and equipment, end of period$33,397 $29,420 

Six Months Ended June 30,
(Thousands of U.S. Dollars)20232022
Cash paid for income taxes$71,457 $20,468 
Cash paid for interest$20,406 $21,975 
Non-cash investing activities:
Net liabilities related to property, plant and equipment, end of period$64,206 $41,106 
1513


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
The following discussion of our financial condition and results of operations should be read in conjunction with the “Financial Statements” as set out in Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as the “Financial Statements and Supplementary Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II, Items 7 and 8, respectively, of our 20212022 Annual Report on Form 10-K. Please see the cautionary language at the beginning of this Quarterly Report on Form 10-Q regarding the identification of and risks relating to forward-looking statements and the risk factors described in Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q, as well as Part I, Item 1A “Risk Factors” in our 20212022 Annual Report on Form 10-K. On May 5, 2023, the Company completed 1-for-10 reverse stock split of the Company’s common stock. As a result of the reverse stock split, every ten of the Company’s issued shares of common stock were automatically combined into one issued share of common stock, without any change to the par value per share. All share and per share data included in this quarterly report have been retroactively adjusted to reflect the reverse stock split.

Financial and Operational Highlights

Key Highlights for the thirdsecond quarter of 20222023
Net incomeloss in the thirdsecond quarter of 20222023 was $38.7$10.8 million or $0.11$(0.33) per share basic and $0.10 per share diluted, compared to a net income of $35.0$53.0 million or $0.10$1.44 per share basic and $1.42 per share diluted in the thirdsecond quarter of 20212022
Income before income taxes in the thirdsecond quarter of 20222023 was $60.4$22.9 million compared to an income before income taxes of $44.0$91.6 million in the thirdsecond quarter of 20212022
During the thirdsecond quarter of 2022,2023, we re-purchased $20.1 million of 6.25% Senior Notes for a cash consideration of $17.3 million and re-purchased 10,733,70220,439 of our common shares at a weighted average price of $1.34$5.27 per share
Funds flow from operations(2) increaseddecreased by 36%49% to $93.7$53.1 million compared to the thirdsecond quarter of 20212022 and decreased by 10%12% from $60.0 million in the prior quarter. During the quarter, funds flow was reduced by $12.8 million of realized foreign exchange loss primarily associated with the payment of income taxes in the second quarter of 2022
During the third quarter, the Company generated $36.7 million of free cash flow(2). For the nine months ended September 30, 2022, the Company generated $121.0 million of free cash flow(2). Free cash flow was partially used for the re-purchase of Senior Notes and shares of Common Stock
NAR production for the thirdsecond quarter of 2022 was 23,4722023 increased by 17% to 27,204 BOPD, which was comparablecompared to 23,37223,215 BOPD in the third quarter of 2021 and 23,215 in the second quarter of 2022 and increased by 7% from the first quarter of 2023
Sales volumes for the thirdsecond quarter of 2022 were 23,5162023 increased by 19% to 27,271 BOPD which were comparable, compared to 23,833 22,847 BOPD in the third quarter of 2021 and 3% higher than 22,847 in the second quarter of 2022 and increased by 8% from the first quarter of 2023
Oil sales were $168.4$157.9 million, 24% higher23% lower compared to $135.3 million in the third quarter of 2021, as a result of a 33% increase in Brent price, offset by a 16% increase in quality and transportation discounts. Oil sales decreased by 18% compared to $205.8 million in the second quarter of 2022 as a result of a 13% decrease in Brent price and 3% higher quality and transportation discounts.
Operating expenses were $41.8 million, 9% higher than $38.4 million in the third quarter of 2021, due to increased workovers and higher lifting costs as a result of higher environmental, community aids, and lower recoveries from partners in the Suroriente Block as a result of social blockades. Operating expenses increased by 6% from $39.5 million in the second quarter of 2022, primarily due to a 31% decrease in Brent price, an increase of 8% in the quality and transportation discounts and offset by 19% higher workover activities duringsales volumes. Oil sales increased by 10% from $144.2 million in the currentfirst quarter of 2023 due to a 8% higher sales volumes and lower quality and transportation discounts
TransportationOperating expenses decreasedincreased by 23% compared to the third quarter of 2021. During the third quarter of 2021, alternative transportation routes were utilized due$48.5 million or by $0.54 per bbl to the maintenance of the Impala terminal, which had higher transportation costs$19.54 per bbl. Comparedbbl when compared to the second quarter of 2022, transportationprimarily as a result of higher lifting costs offset by lower workover activities. Operating expenses decreased by 4%increased from $41.4 million or $18.26 per bbl in the prior quarter, primarily due to higher lifting costs
Transportation expenses per bbl increased by $0.28 in the usesecond quarter of alternative2023 due to higher transportation tariffs affecting Acordionero sales, utilization of new transportation routes which resulted in lower transportationfor new exploration wells and Ecuador sales when compared to the second quarter of 2022 and increased $0.14 from the first quarter of 2023 due to higher trucking costs inresulting from utilization longer distance delivery points and depreciation of U.S. dollar against the current quarterColombian peso
Operating netback(2) increased by 32%decreased to $124.1$105.7 million compared to $93.7 million in the third quarter of 2021 and decreased 24% from $163.8 million in the second quarter of 2022 and increased from $99.8 million in the prior quarter
Adjusted EBITDA(2) increased by 48%decreased to $121.2$84.5 million compared to $81.8 million in the third quarter of 2021 and decreased by 13% from $140.1 million in the second quarter of 2022. The trailing twelve-month2022 and decreased from $88.7 million in the prior quarter. During the quarter, Adjusted EBITDA was $462.3reduced by $12.8 million resultingdue to realized foreign exchange loss primarily associated with the payment of income taxes in Net Debt(2) to Adjusted EBITDA(2) of 1.0 times.the second quarter
Quality and transportation discounts for the thirdsecond quarter of 20222023 increased to $13.37$14.10 per bbl compared to $11.51 per bbl in the third quarter of 2021 and $13.00 per bbl in the second quarter of 2022, primarily as a result of the widening of the Castilla and Vasconia differentials and decreased from $18.45 per bbl in the prior quarter
General and administrative expenses (“G&A”) before stock-based compensation increased by 52% compared to the third quarter of 2021 due to higher costs for special projects and lease obligations in the current quarter. G&A expenses before stock-based compensation increased by 6% or $0.06 per bbl from22% compared to the second quarter of 2022 primarily due to higher costs forattributed to optimization projects and decreased by 15% from the first quarter of 2023
Capital additions for the thirdsecond quarter of 20222023 were $57.0$65.6 million, an increase of 64%1% compared to the thirdsecond quarter of 2021, as a result2022, and decreased 8% from the first quarter of 2023 due to the acceleration of the 2023 drilling program in the Acordionero field and exploration wells in Colombia and Ecuador and decreased 13% from the secondfirst quarter of 20222023
1614


(Thousands of U.S. Dollars, unless otherwise indicated)(Thousands of U.S. Dollars, unless otherwise indicated)Three Months Ended September 30,Three Months Ended June 30,Nine Months Ended September 30,(Thousands of U.S. Dollars, unless otherwise indicated)Three Months Ended June 30,Three Months Ended March 31,Six Months Ended June 30,
20222021% Change202220222021% Change
20232022% Change202320232022% Change
Average Daily Volumes (BOPD)Average Daily Volumes (BOPD)Average Daily Volumes (BOPD)
ConsolidatedConsolidatedConsolidated
Working Interest (“WI”) Production Before RoyaltiesWorking Interest (“WI”) Production Before Royalties30,391 28,957 30,607 30,123 25,501 18 Working Interest (“WI”) Production Before Royalties33,719 30,607 10 31,611 32,671 29,988 
RoyaltiesRoyalties(6,919)(5,585)24 (7,392)(6,948)(4,531)53 Royalties(6,515)(7,392)(12)(6,085)(6,301)(6,962)(9)
Production NARProduction NAR23,472 23,372 — 23,215 23,175 20,970 11 Production NAR27,204 23,215 17 25,526 26,370 23,026 15 
Decrease (Increase) in InventoryDecrease (Increase) in Inventory44 461 (90)(368)(141)(105)(34)Decrease (Increase) in Inventory67 (368)(118)(355)(143)(236)39 
Sales(1)
Sales(1)
23,516 23,833 (1)22,847 23,034 20,865 10 
Sales(1)
27,271 22,847 19 25,171 26,227 22,790 15 
Net Income (Loss)$38,663 $35,007 10 $52,972 $105,754 $(20,042)628 
Net (Loss) IncomeNet (Loss) Income$(10,825)$52,972 (120)$(9,700)$(20,525)$67,091 (131)
Operating NetbackOperating NetbackOperating Netback
Oil SalesOil Sales$168,397 $135,319 24 $205,785 $548,751 $327,435 68 Oil Sales$157,902 $205,785 (23)$144,190 $302,092 $380,354 (21)
Operating ExpensesOperating Expenses(41,837)(38,448)(39,494)(116,266)(95,366)22 Operating Expenses(48,491)(39,494)23 (41,369)(89,860)(74,429)21 
Transportation ExpensesTransportation Expenses(2,417)(3,130)(23)(2,513)(7,764)(8,731)(11)Transportation Expenses(3,691)(2,513)47 (3,066)(6,757)(5,347)26 
Operating Netback(2)
Operating Netback(2)
$124,143 $93,741 32 $163,778 $424,721 $223,338 90 
Operating Netback(2)
$105,720 $163,778 (35)$99,755 $205,475 $300,578 (32)
G&A Expenses Before Stock-Based CompensationG&A Expenses Before Stock-Based Compensation$8,284 $5,444 52 $7,847 $23,910 $19,394 23 G&A Expenses Before Stock-Based Compensation$9,549 $7,847 22 $11,196 $20,745 $15,626 33 
G&A Stock-Based Compensation (Recovery) Expense(170)1,053 (116)1,989 6,376 6,597 (3)
G&A Stock-Based Compensation ExpenseG&A Stock-Based Compensation Expense317 1,989 (84)1,500 1,817 6,546 (72)
G&A Expenses, Including Stock-Based CompensationG&A Expenses, Including Stock-Based Compensation$8,114 $6,497 25 $9,836 $30,286 $25,991 17 G&A Expenses, Including Stock-Based Compensation$9,866 $9,836 — $12,696 $22,562 $22,172 
Adjusted EBITDA(2)
Adjusted EBITDA(2)
$121,236 $81,804 48 $140,113 $380,727 $160,007 138 
Adjusted EBITDA(2)
$84,522 $140,113 (40)$88,677 $173,199 $259,491 (33)
Funds Flow From Operations(2)
Funds Flow From Operations(2)
$93,746 $69,103 36 $103,625 $284,681 $121,348 135 
Funds Flow From Operations(2)
$53,106 $103,625 (49)$60,016 $113,122 $190,935 (41)
Capital ExpendituresCapital Expenditures$57,035 $34,839 64 $65,199 $163,717 $109,650 49 Capital Expenditures$65,565 $65,199 $71,062 $136,627 $106,682 28 
(1) Sales volumes represent production NAR adjusted for inventory changes.

(2) Non-GAAP measures

Operating netback, net debt, EBITDA, adjusted EBITDA, and funds flow from operations and free cash flow, are non-GAAP measures that do not have any standardized meaning prescribed under GAAP. Management views these measures as financial performance measures. Investors are cautioned that these measures should not be construed as alternatives to oil sales, net (loss) income (loss) or other measures of financial performance as determined in accordance with GAAP. Our method of calculating these measures may differ from other companies and, accordingly, may not be comparable to similar measures used by other companies. Disclosure of each non-GAAP financial measure is preceded by the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure.

Operating netback, as presented, is defined as oil sales less operating and transportation expenses. Management believes that operating netback is a useful supplemental measure for management and investors to analyze financial performance and provides an indication of the results generated by our principal business activities prior to the consideration of other income and expenses. A reconciliation from oil sales to operating netback is provided in the table above.

Net debt as of September 30, 2022, was $461.7 million, calculated using the sum of 6.25% Senior Notes and 7.75% Senior Notes, excluding deferred financing fees of $579.9 million, less cash and cash equivalents of $118.2 million.


17



EBITDA, as presented, is defined as net (loss) income or loss adjusted for depletion, depreciation and accretion (“DD&A”) expenses, interest expense and income tax expense. Adjusted EBITDA, as presented, is defined as EBITDA adjusted for non-cash lease expense, lease payments, unrealized foreign exchange gain or loss, stock-based compensation expense or recovery, unrealized derivative instruments gain or loss gain on re-purchase of Senior Notes, other financial instruments gain or loss and other loss.gain. Management uses this supplemental measure to analyze performance and income generated by our principal business activities prior to the consideration of how non-cash items affect that income and believes that this financial measure is useful supplemental information for investors to analyze our performance and our financial results. A reconciliation from net (loss) income (loss) to EBITDA and adjusted EBITDA is as follows:

 Three Months Ended September 30,Three Months Ended June 30,Nine Months Ended September 30,Twelve Months Rolling Ending September 30,
(Thousands of U.S. Dollars)202220212022202220212022
Net income (loss)$38,663 $35,007 $52,972 $105,754 $(20,042)$168,278 
Adjustments to reconcile net income (loss) to EBITDA and Adjusted EBITDA
DD&A expenses45,320 38,055 42,216 128,499 98,300 170,073 
Interest expense11,421 13,608 12,194 35,743 41,355 48,769 
Income tax expense21,734 8,955 38,666 99,940 26,795 53,799 
EBITDA (non-GAAP)$117,138 $95,625 $146,048 $369,936 $146,408 $440,919 
Non-cash lease expense851 408 747 2,009 1,222 2,454 
Lease payments(402)(384)(388)(1,134)(1,239)(1,516)
Unrealized foreign exchange loss6,636 3,465 4,341 6,138 16,945 11,072 
Stock-based compensation (recovery) expense(170)1,053 1,989 6,376 6,597 8,175 
Unrealized derivative instruments (gain) loss(219)(4,729)(12,624) 2,499 (12,088)
Gain on re-purchase of Senior Notes(2,598)— — (2,598)— (2,598)
Other financial instruments (gain) loss (13,634)—  (12,425)15,794 
Other loss — —  — 44 
Adjusted EBITDA (non-GAAP)$121,236 $81,804 $140,113 $380,727 $160,007 $462,256 
15


 Three Months Ended June 30,Three Months Ended March 31,Six Months Ended June 30,
(Thousands of U.S. Dollars)20232022202320232022
Net (loss) income$(10,825)$52,972 $(9,700)$(20,525)$67,091 
Adjustments to reconcile net (loss) income to EBITDA and Adjusted EBITDA
DD&A expenses56,209 42,216 51,721 107,930 83,179 
Interest expense12,678 12,194 11,836 24,514 24,322 
Income tax expense33,732 38,666 32,883 66,615 78,206 
EBITDA (non-GAAP)$91,794 $146,048 $86,740 $178,534 $252,798 
Non-cash lease expense1,109 747 1,144 2,253 1,158 
Lease payments(636)(388)(606)(1,242)(732)
Unrealized foreign exchange (gain) loss(8,062)4,341 514 (7,548)(498)
Stock-based compensation expense317 1,989 1,500 1,817 6,546 
Unrealized derivative instruments (gain) loss (12,624)—  219 
Other gain — (615)(615)— 
Adjusted EBITDA (non-GAAP)$84,522 $140,113 $88,677 $173,199 $259,491 

Funds flow from operations, as presented, is defined as net (loss) income or loss adjusted for DD&A expenses, deferred income tax expense or recovery, stock-based compensation expense or recovery, amortization of debt issuance costs, non-cash lease expense, lease payments, unrealized foreign exchange gain or loss, derivative instruments gain or loss, cash settlement on derivative instruments gain on re-purchase of Senior Notes, and other financial instruments gain or loss.gain. Management uses this financial measure to analyze performance and income generated by our principal business activities prior to the consideration of how non-cash items affect that income and believes that this financial measure is also useful supplemental information for investors to analyze performance and our financial results. Free cash flow, as presented, is defined as funds flow less capital expenditures. Management uses this financial measure to analyze cash flow generated by our principal business activities after capital requirements and believes that this financial measure is also useful supplemental information for investors to analyze performance and our financial results. A reconciliation from net (loss) income (loss) to funds flow from operations and free cash flow is as follows:
 Three Months Ended June 30,Three Months Ended March 31,Six Months Ended June 30,
(Thousands of U.S. Dollars)20232022202320232022
Net (loss) income$(10,825)$52,972$(9,700)$(20,525)$67,091 
Adjustments to reconcile net (loss) income to funds flow from operations
DD&A expenses56,20942,21651,721107,930 83,179 
Deferred income tax expense13,97513,24115,27729,252 31,954 
Stock-based compensation expense3171,9891,5001,817 6,546 
Amortization of debt issuance costs1,0191,1317811,800 2,018 
Non-cash lease expense1,1097471,1442,253 1,158 
Lease payments(636)(388)(606)(1,242)(732)
Unrealized foreign exchange (gain) loss(8,062)4,341514(7,548)(498)
Derivative instruments loss5,172 26,611 
Cash settlements on derivative instruments(17,796) (26,392)
Other gain(615)(615)— 
Funds flow from operations (non-GAAP)$53,106$103,625$60,016$113,122 $190,935 










18
16


 Three Months Ended September 30,Three Months Ended June 30,Nine Months Ended September 30,
(Thousands of U.S. Dollars)20222021202220222021
Net income (loss)$38,663 $35,007 $52,972 $105,754 $(20,042)
Adjustments to reconcile net income (loss) to funds flow from operations
DD&A expenses45,320 38,055 42,216 128,499 98,300 
Deferred tax expense4,914 8,955 13,241 36,868 26,809 
Stock-based compensation (recovery) expense(170)1,053 1,989 6,376 6,597 
Amortization of debt issuance costs751 907 1,131 2,769 2,682 
Non-cash lease expense851 408 747 2,009 1,222 
Lease payments(402)(384)(388)(1,134)(1,239)
Unrealized foreign exchange loss6,636 3,465 4,341 6,138 16,945 
Derivative instruments loss 2,603 5,172 26,611 47,540 
Cash settlements on derivative instruments(219)(7,332)(17,796)(26,611)(45,041)
Gain on re-purchase of Senior Notes(2,598)— — (2,598)— 
Other financial instruments gain (13,634)—  (12,425)
Funds flow from operations (non-GAAP)$93,746 $69,103 $103,625 $284,681 $121,348 
Capital expenditures$57,035 $34,839 $65,199 $163,717 $109,650 
Free cash flow (non-GAAP)$36,711 $34,264 $38,426 $120,964 $11,698 


Additional Operational Results

Three Months Ended September 30,Three Months Ended June 30,Nine Months Ended September 30, Three Months Ended June 30,Three Months Ended March 31,Six Months Ended June 30,
(Thousands of U.S. Dollars)(Thousands of U.S. Dollars)20222021% Change202220222021% Change(Thousands of U.S. Dollars)20232022% Change202320232022% Change
Oil salesOil sales$168,397 $135,319 24 $205,785 $548,751 $327,435 68 Oil sales$157,902 $205,785 (23)$144,190 $302,092 $380,354 (21)
Operating expensesOperating expenses41,837 38,448 39,494 116,266 95,366 22 Operating expenses48,491 39,494 23 41,369 89,860 74,429 21 
Transportation expensesTransportation expenses2,417 3,130 (23)2,513 7,764 8,731 (11)Transportation expenses3,691 2,513 47 3,066 6,757 5,347 26 
Operating netback(1)
Operating netback(1)
124,143 93,741 32 163,778 424,721 223,338 90 
Operating netback(1)
105,720 163,778 (35)99,755 205,475 300,578 (32)
DD&A expensesDD&A expenses56,209 42,216 33 51,721 107,930 83,179 30 
DD&A expenses45,320 38,055 19 42,216 128,499 98,300 31 
G&A expenses before stock-based compensationG&A expenses before stock-based compensation8,284 5,444 52 7,847 23,910 19,394 23 G&A expenses before stock-based compensation9,549 7,847 22 11,196 20,745 15,626 33 
G&A stock-based compensation (recovery) expense(170)1,053 (116)1,989 6,376 6,597 (3)
Foreign exchange loss1,489 2,650 (44)2,722 486 15,824 (97)
G&A stock-based compensation expenseG&A stock-based compensation expense317 1,989 (84)1,500 1,817 6,546 (72)
Foreign exchange loss (gain)Foreign exchange loss (gain)4,707 2,722 73 1,702 6,409 (1,003)739 
Derivative instruments lossDerivative instruments loss 2,603 (100)5,172 26,611 47,540 (44)Derivative instruments loss 5,172 (100)—  26,611 (100)
Other financial instruments gain (13,634)(100)—  (12,425)(100)
Gain on re-purchase of Senior Notes(2,598)— 100 — (2,598)— 100 
Other gainOther gain — — (615)(615)— 100 
Interest expenseInterest expense11,421 13,608 (16)12,194 35,743 41,355 (14)Interest expense12,678 12,194 11,836 24,514 24,322 
63,746 49,779 28 72,140 219,027 216,585 83,460 72,140 16 77,340 160,800 155,281 
Interest incomeInterest income647 — 100 768 1,415 — 100 
Income before income taxesIncome before income taxes22,907 91,638 (75)23,183 46,090 145,297 (68)
Current income tax expenseCurrent income tax expense19,757 25,425 (22)17,606 37,363 46,252 (19)
Deferred income tax expenseDeferred income tax expense13,975 13,241 15,277 29,252 31,954 (8)
33,732 38,666 (13)32,883 66,615 78,206 (15)
Net (loss) incomeNet (loss) income$(10,825)$52,972 (120)$(9,700)$(20,525)$67,091 (131)
Sales Volumes (NAR)Sales Volumes (NAR)
Income before income taxes60,397 43,962 37 91,638 205,694 6,753 2946 
Total sales volumes, BOPDTotal sales volumes, BOPD27,271 22,847 19 25,171 26,227 22,790 15 
Brent Price per bblBrent Price per bbl$77.73 $111.98 (31)$82.10 $79.91 $104.94 (24)
Consolidated Results of Operations per bbl Sales Volumes NARConsolidated Results of Operations per bbl Sales Volumes NAR
Oil salesOil sales$63.63 $98.98 (36)$63.65 $63.64 $92.21 (31)
Operating expensesOperating expenses19.54 19.00 18.26 18.93 18.04 
Transportation expensesTransportation expenses1.49 1.21 23 1.35 1.42 1.30 
Operating netback(1)
Operating netback(1)
42.60 78.77 (46)44.04 43.29 72.87 (41)
DD&A expensesDD&A expenses22.65 20.31 12 22.83 22.74 20.17 13 
G&A expenses before stock-based compensationG&A expenses before stock-based compensation3.85 3.77 4.94 4.37 3.79 15 
G&A stock-based compensation expenseG&A stock-based compensation expense0.13 0.96 (86)0.66 0.38 1.59 (76)
Foreign exchange loss (gain)Foreign exchange loss (gain)1.90 1.31 45 0.75 1.35 (0.24)663 
Derivative instruments lossDerivative instruments loss 2.49 (100)—  6.45 (100)
1917


Current income tax expense (recovery)16,820 — 100 25,425 63,072 (14)450,614 
Deferred income tax expense4,914 8,955 (45)13,241 36,868 26,809 38 
21,734 8,955 143 38,666 99,940 26,795 273 
Net income (loss)$38,663 $35,007 10 $52,972 $105,754 $(20,042)628 
Sales Volumes (NAR)
Total sales volumes, BOPD23,516 23,833 (1)22,847 23,034 20,865 10 
Brent Price per bbl$97.70 $73.23 33 $111.98 $102.48 $67.97 51 
Consolidated Results of Operations per bbl Sales Volumes NAR
Oil sales$77.84 $61.72 26 $98.98 $87.27 $57.48 52 
Operating expenses19.34 17.53 10 19.00 18.49 16.74 10 
Transportation expenses1.12 1.43 (22)1.21 1.23 1.53 (20)
Operating netback(1)
57.38 42.76 34 78.77 67.55 39.21 72 
DD&A expenses20.95 17.36 21 20.31 20.43 17.26 18 
G&A expenses before stock-based compensation3.83 2.48 54 3.77 3.80 3.40 12 
G&A stock-based compensation (recovery) expense(0.08)0.48 (117)0.96 1.01 1.16 (13)
Foreign exchange loss0.69 1.21 (43)1.31 0.08 2.78 (97)
Derivative instruments loss 1.19 (100)2.49 4.23 8.35 (49)
Other financial instruments gain (6.22)(100)—  (2.18)(100)
Gain on re-purchase of Senior Notes(1.20)— 100 — (0.41)— 100 
Interest expense5.28 6.21 (15)5.87 5.68 7.26 (22)
29.47 22.71 30 34.71 34.82 38.03 (8)
Income before income taxes27.91 20.05 39 44.06 32.73 1.18 2,674 
Current income tax expense (recovery)7.77 — 100 12.23 10.03 — 100 
Deferred income tax expense2.27 4.08 (44)6.37 5.86 4.71 24 
10.04 4.08 146 18.60 15.89 4.71 237 
Net income (loss)$17.87 $15.97 12 $25.46 $16.84 $(3.53)(577)
Other gain — — (0.27)(0.13)— 100 
Interest expense5.11 5.87 (13)5.22 5.16 5.90 (13)
33.64 34.71 (3)34.13 33.87 37.66 (10)
Interest income0.26 — 100 0.34 0.30 — 100 
Income before income taxes9.22 44.06 (79)10.25 9.72 35.21 (72)
Current income tax expense7.96 12.23 (35)7.77 7.87 11.21 (30)
Deferred income tax expense5.63 6.37 (12)6.74 6.16 7.75 (21)
13.59 18.60 (27)14.51 14.03 18.96 (26)
Net (loss) income$(4.37)$25.46 (117)$(4.26)$(4.31)$16.25 (127)
 
(1) Operating netback is a non-GAAP measure that does not have any standardized meaning prescribed under GAAP. Refer to “Financial and Operational Highlights—non-GAAP measures” for a definition of this measure.







20


Oil Production and Sales Volumes, BOPD
Three Months Ended September 30,Three Months Ended June 30,Nine Months Ended September 30,Three Months Ended June 30,Three Months Ended March 31,Six Months Ended June 30,
2022202120222022202120232022202320232022
Average Daily Volumes (BOPD)Average Daily Volumes (BOPD)Average Daily Volumes (BOPD)
WI Production Before RoyaltiesWI Production Before Royalties30,391 28,957 30,607 30,123 25,501 WI Production Before Royalties33,719 30,607 31,611 32,671 29,988 
RoyaltiesRoyalties(6,919)(5,585)(7,392)(6,948)(4,531)Royalties(6,515)(7,392)(6,085)(6,301)(6,962)
Production NARProduction NAR23,472 23,372 23,215 23,175 20,970 Production NAR27,204 23,215 25,526 26,370 23,026 
Decrease (Increase) in InventoryDecrease (Increase) in Inventory44 461 (368)(141)(105)Decrease (Increase) in Inventory67 (368)(355)(143)(236)
SalesSales23,516 23,833 22,847 23,034 20,865 Sales27,271 22,847 25,171 26,227 22,790 
Royalties, % of WI Production Before RoyaltiesRoyalties, % of WI Production Before Royalties23 %19 %24 %23 %18 %Royalties, % of WI Production Before Royalties19 %24 %19 %19 %23 %

Oil production NAR for the three and six months ended SeptemberJune 30, 2022 was consistent with the corresponding period of 2021. Oil production NAR for the nine months ended September 30, 2022,2023, increased by 11%17% and 15%, respectively, compared to the corresponding periodperiods of 20212022 due to the successful drilling and workover campaigncampaigns in the Acordionero, Costayaco and Costayaco fields. Moqueta fields in Colombia.

Oil production NAR was comparableincreased by 7% compared to the prior quarter.quarter for the same reasons mentioned above.

Royalties as a percentage of WI production for the three and ninesix months ended SeptemberJune 30, 2022, increased to 23%2023, decreased by 19% compared to the corresponding periods of 20212022 commensurate with the increasedecrease in benchmark oil prices and the price sensitive royalty regime in Colombia. Compared to the prior quarter, royaltiesRoyalties as a percentage of WI production remained comparable.were comparable to the prior quarter.


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498
The Midas block includes the Acordionero, Chuira, and Ayombero oil fields, and the Chaza block includes the Costayaco and Moqueta oil fields.

Realized price per bbl for the three andsix months ended June 30, 2023, decreased by 36% and 31%, respectively, compared to the corresponding periods of 2022, primarily as a result of a 31% and 24% decrease in Brent price and higher differentials. For the three andsix months ended June 30, 2023, Castilla differentials increased to $9.41 and $12.29 per bbl from $7.82 and $7.10 per bbl, respectively, in the corresponding periods of 2022 and Vasconia differentials increased to $5.53 and $6.70 per bbl from $5.09 and $4.35 per bbl, respectively, in the corresponding periods of 2022. Compared to the prior quarter, the average realized price per bbl was comparable.
19


432

Oil sales for the three and six months ended June 30, 2023, decreased by 23% and 21% to $157.9 million and $302.1 million, respectively, compared to the corresponding periods of 2022 due to a 31% and 24% decrease in Brent price and higher Castilla and Vasconia differentials. During the first quarter of 2023, we commenced oil sales in Ecuador, which contributed $1.8 million and $4.8 million to oil sales and were subject to a $11.43 and $12.43 per bbl Oriente differential for the three and six months ended June 30, 2023, respectively.

Compared to the prior quarter, oil sales increased by 10%, primarily as a result of an 8% increase in sales volumes and the narrowing of quality and transportation differentials, partially offset by a 5% decrease in Brent price.

The following table shows the effect of changes in realized price and sale volumes on our oil sales for the three and six months ended June 30, 2023, compared to the prior quarter and the corresponding periods of 2022:
(Thousands of U.S. Dollars)Second Quarter 2023 Compared with First Quarter 2023Second Quarter 2023 Compared with Second Quarter 2022Six Months Ended June 30, 2023 Compared with Six Months Ended June 30, 2022
Oil sales for the comparative period$144,190 $205,785 $380,354 
Realized sales price decrease effect(56)(87,731)(135,636)
Sales volumes increase effect13,768 39,848 57,374 
Oil sales for the three and six months ended June 30, 2023$157,902 $157,902 $302,092 

20


Operating Netback
Three Months Ended September 30,Three Months Ended June 30,Nine Months Ended September 30,Three Months Ended June 30,Three Months Ended March 31,Six Months Ended June 30,
(Thousands of U.S. Dollars)(Thousands of U.S. Dollars)20222021202220222021(Thousands of U.S. Dollars)20232022202320232022
Oil SalesOil Sales$168,397 $135,319 $205,785 $548,751 $327,435 Oil Sales$157,902 $205,785 $144,190 $302,092 $380,354 
Transportation ExpensesTransportation Expenses(2,417)(3,130)(2,513)(7,764)(8,731)Transportation Expenses(3,691)(2,513)(3,066)(6,757)(5,347)
165,980 132,189 203,272 540,987 318,704 154,211 203,272 141,124 295,335 375,007 
Operating ExpensesOperating Expenses(41,837)(38,448)(39,494)(116,266)(95,366)Operating Expenses(48,491)(39,494)(41,369)(89,860)(74,429)
Operating Netback(1)
Operating Netback(1)
$124,143 $93,741 $163,778 $424,721 $223,338 
Operating Netback(1)
$105,720 $163,778 $99,755 $205,475 $300,578 
(U.S. Dollars Per bbl Sales Volumes NAR)(U.S. Dollars Per bbl Sales Volumes NAR)(U.S. Dollars Per bbl Sales Volumes NAR)
BrentBrent$97.70 $73.23 $111.98 $102.48 $67.97 Brent$77.73 $111.98 $82.10 $79.91 $104.94 
One Month Forward Brent (“M+1”) Adjustment(6.49)— — (2.23)— 
Quality and Transportation DiscountsQuality and Transportation Discounts(13.37)(11.51)(13.00)(12.98)(10.49)Quality and Transportation Discounts(14.10)(13.00)(18.45)(16.27)(12.73)
Average Realized PriceAverage Realized Price77.84 61.72 98.98 87.27 57.48 Average Realized Price63.63 98.98 63.65 63.64 92.21 
Transportation ExpensesTransportation Expenses(1.12)(1.43)(1.21)(1.23)(1.53)Transportation Expenses(1.49)(1.21)(1.35)(1.42)(1.30)
Average Realized Price Net of Transportation ExpensesAverage Realized Price Net of Transportation Expenses76.72 60.29 97.77 86.04 55.95 Average Realized Price Net of Transportation Expenses62.14 97.77 62.30 62.22 90.91 
Operating ExpensesOperating Expenses(19.34)(17.53)(19.00)(18.49)(16.74)Operating Expenses(19.54)(19.00)(18.26)(18.93)(18.04)
Operating Netback(1)
Operating Netback(1)
$57.38 $42.76 $78.77 $67.55 $39.21 
Operating Netback(1)
$42.60 $78.77 $44.04 $43.29 $72.87 
(1) Operating netback is a non-GAAP measure that does not have any standardized meaning prescribed under GAAP. Refer to “Financial and Operational Highlights—non-GAAP measures” for a definition of this measure.

236

22
21


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gte-20220930_g4.jpg
23


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Oil sales for the three months ended September 30, 2022, increased by 24% to $168.4 million compared to the corresponding period of 2021 due to a 33% increase in Brent price, partially offset by a 16% increase in the quality and transportation discounts and M+1 Brent adjustment, (as defined below). Castilla differentials increased to $9.15 from $6.51 per bbl in the corresponding period of 2021, and Vasconia differentials decreased to $3.77 from $4.02 in the corresponding period of 2021. During the three months ended September 30, 2022, we entered into new marketing arrangements moving from the Brent monthly average of the month of delivery (“M pricing”) to the Brent monthly average following the month of deliveries (“M+1 Brent”). The Company’s revenue was negatively impacted as the Brent monthly average decreased throughout the quarter.

For the nine months ended September 30, 2022, oil sales increased by 68% to $548.8 million compared to the corresponding period of 2021 due to a 51% increase in Brent price and 10% higher sales volumes, partially offset by 24% increase in the quality and transportation discounts and M+1 Brent adjustment. Castilla and Vasconia differentials increased to $7.89 and $4.17 from $4.50 and $2.65 per bbl in the corresponding period of 2021, respectively.

Compared to the prior quarter, oil sales decreased by 18%, primarily as a result of a 13% decrease in Brent price, 3% higher quality and transportation discounts and M+1 Brent adjustment.

The following table shows the effect of changes in realized price and sales volumes on our oil sales for the three and nine months ended September 30, 2022, compared to the prior quarter and the corresponding periods of 2021:

(Thousands of U.S. Dollars)Third Quarter 2022 Compared with Second Quarter 2022Third Quarter 2022 Compared with Third Quarter 2021Nine Months Ended September 30, 2022 Compared with Nine Months Ended September 30, 2021
Oil sales for the comparative period$205,785 $135,319 $327,435 
Realized sales price increase effect(45,744)34,873 187,280 
Sales volumes increase effect8,356 (1,795)34,036 
Oil sales for the three and nine months ended September 30, 2022$168,397 $168,397 $548,751 

24


The average realized price for the three and nine months ended September 30, 2022, increased by 26% and 52%, compared to the corresponding periods of 2021, commensurate with the increase in benchmark oil prices, offset by higher differentials and utilization of M+1 Brent pricing for our sales.

Compared to the prior quarter, the average realized price decreased by 21% due to lower benchmark oil prices, higher Castilla differentials and utilization of M+1 Brent pricing, which were partially offset by lower Vasconia differentials.

241
Operating expenses for the three months ended SeptemberJune 30, 2022,2023, increased by 9%23% to $41.8$48.5 million or by $1.81$0.54 per bbl to $19.34$19.54 per bbl, compared to the corresponding period of 2021,2022, primarily as a result of $0.68$1.94 per bbl increased workovers and $1.12 higher lifting costs mainly attributed to higherassociated with environmental community aids,activities and equipment rental in Ecuador, partially offset by $1.40 per bbl of lower recoveries from partners as a result of social blockades in the Suroriente block.workovers.

Operating expenses for the ninesix months ended SeptemberJune 30, 2022,2023, increased by 22%21% to $116.3$89.9 million or by $1.75$0.89 per bbl to $18.49$18.93 per bbl, compared to the corresponding period of 2021,2022, primarily as a result of $0.58 per bbl increased workovers and $1.16 per bbl$1.62 higher lifting costs attributed to higher power generationassociated with environmental activities, equipment rental in Ecuador and chemical costs due to increased production and waterflood in all major fields.water injection equipment mobilization, offset by $0.73 per bbl lower workovers.

22


Compared to the prior quarter, operating expenses increased by 6%17% or $0.34$1.28 per bbl from $39.5$41.4 million or $19.00$18.26 per bbl, primarily due to $1.35 per bbl higher workoverlifting costs attributed to road maintenance and environmental activities, in the current quarter.partially offset by $0.07 per bbl lower workovers.

Transportation expenses

We have options to sell our oil through multiple pipelines and trucking routes. Each option has varying effects on realized sales price and transportation expenses. The following table shows the percentage of oil volumes we sold in Colombia and Ecuador using each option for the three and ninesix months ended SeptemberJune 30, 2022,2023, and 2021,2022, and the prior quarter:

Three Months Ended September 30,Three Months Ended June 30,Nine Months Ended September 30,Three Months Ended June 30,Three Months Ended March 31,Six Months Ended June 30,
2022202120222022202120232022202320232022
Volume transported through pipelineVolume transported through pipeline %%— % %%Volume transported through pipeline1 %— %%2 %— %
Volume sold at wellheadVolume sold at wellhead47 %42 %48 %47 %55 %Volume sold at wellhead46 %48 %45 %46 %48 %
Volume transported via truck to sales pointVolume transported via truck to sales point53 %49 %52 %53 %39 %Volume transported via truck to sales point53 %52 %53 %52 %52 %
100 %100 %100 %100 %100 %100 %100 %100 %100 %100 %

Volumes transported through pipeline or via truck receive a higher realized price but incur higher transportation expenses. Conversely, volumes sold at the wellhead have the opposite effect of a lower realized price, offset by lower transportation expenses.

Transportation expenses for the three and ninesix months ended SeptemberJune 30, 2022, decreased2023, increased by 23%47% and 11%26% to $2.4$3.7 million and $7.8$6.8 million, respectively, compared to the corresponding periods of 2021. 2022 due to higher transportation tariffs affecting Acordionero sales, and the utilization of new transportation routes for new exploration wells in Colombia and Ecuador sales.

On a per bbl basis, transportation expenses decreasedincreased by 22%23% and 20%9% to $1.12$1.49 and $1.23$1.42 for the three and ninesix months ended SeptemberJune 30, 2022,2023, respectively, compared to the corresponding periods of 2021. The decrease in transportation expenses per bbl compared to2022 for the corresponding periods of 2021 was a result of a change in transportation routes that had lower transportation costs per bbl. During the third quarter of 2021, alternative transportation routes were utilized due to maintenance of the Impala terminal, which had higher transportation costs per bbl.same reason mentioned above.

For the three months ended September 30, 2022, transportationTransportation expenses decreasedincreased by 4% compared to $2.520% from $3.1 million in the prior quarter.quarter due to increased trucking costs from using longer distance delivery points and depreciation of U.S. dollar against the Colombian peso. On a per bbl basis transportation expenses decreasedcosts increased by 7%$0.14 from $1.21 in the prior quarter due use of alternative transportation routes, which resulted in lower transportation costs per bbl infor the current quarter.same reasons mentioned above.
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DD&A Expenses
Three Months Ended September 30,Three Months Ended June 30,Nine Months Ended September 30,Three Months Ended June 30,Three Months Ended March 31,Six Months Ended June 30,
2022202120222022202120232022202320232022
DD&A Expenses, thousands of U.S. DollarsDD&A Expenses, thousands of U.S. Dollars$45,320 $38,055 $42,216 $128,499 $98,300 DD&A Expenses, thousands of U.S. Dollars$56,209 $42,216 $51,721 $107,930 $83,179 
DD&A Expenses, U.S. Dollars per bblDD&A Expenses, U.S. Dollars per bbl20.95 17.36 20.31 20.43 17.26 DD&A Expenses, U.S. Dollars per bbl22.65 20.31 22.83 22.74 20.17 

DD&A expenses for the three and ninesix months ended SeptemberJune 30, 2022,2023, increased by 19%33% and 31%30% or by $3.59$2.34 and $3.17$2.57 per bbl, respectively, due to increased production and higher costs in the depletable base compared to the corresponding periods of 2021.2022.

For the three months ended September 30, 2022, DD&A expenses increased 7% or $0.649% compared to the prior quarter and decreased by $0.18 per bbl when compared to the prior quarter, due to higher costs in the depletable base in the current quarter.production.

24
G&A Expenses
26


Three Months Ended September 30,Three Months Ended June 30,Nine Months Ended September 30,
(Thousands of U.S. Dollars)20222021% Change202220222021% Change
G&A Expenses Before Stock-Based Compensation$8,284 $5,444 52 $7,847 $23,910 $19,394 23 
G&A Stock-Based Compensation (Recovery) Expense(170)1,053 (116)1,989 6,376 6,597 (3)
G&A Expenses, Including Stock-Based Compensation$8,114 $6,497 25 $9,836 $30,286 $25,991 17 
(U.S. Dollars Per bbl Sales Volumes NAR)
G&A Expenses Before Stock-Based Compensation$3.83 $2.48 54 $3.77 $3.80 $3.40 12 
G&A Stock-Based Compensation (Recovery) Expense(0.08)0.48 (117)0.96 1.01 1.16 (13)
G&A Expenses, Including Stock-Based Compensation$3.75 $2.96 27 $4.73 $4.81 $4.56 
G&A Expenses
Three Months Ended June 30,Three Months Ended March 31,Six Months Ended June 30,
(Thousands of U.S. Dollars)20232022% Change202320232022% Change
G&A Expenses Before Stock-Based Compensation$9,549 $7,847 22 $11,196 $20,745 $15,626 33 
G&A Stock-Based Compensation Expense317 1,989 (84)1,500 1,817 6,546 (72)
G&A Expenses, Including Stock-Based Compensation$9,866 $9,836 — $12,696 $22,562 $22,172 
(U.S. Dollars Per bbl Sales Volumes NAR)
G&A Expenses Before Stock-Based Compensation$3.85 $3.77 $4.94 $4.37 $3.79 15 
G&A Stock-Based Compensation Expense0.13 0.96 (86)0.66 0.38 1.59 (76)
G&A Expenses, Including Stock-Based Compensation$3.98 $4.73 (16)$5.60 $4.75 $5.38 (12)

For the three and ninesix months ended SeptemberJune 30, 2022,2023, G&A expenses before stock-based compensation increased by 52%22% and 33% to $8.3$9.5 million and 23% to $23.9$20.7 million, respectively, primarily due to higher consulting costs forand legal fees attributed to optimization projects and lease obligationswhen compared to the corresponding periods of 2021.2022. On a per bbl basis, G&A expenses before stock-based compensation increased by $1.35$0.08 and $0.40$0.58 per bbl to $3.83$3.85 and $3.80$4.37 per bbl, respectively, for the same reason mentioned above.

When comparedG&A expenses after stock-based compensation for the three months ended June 30, 2023 were comparable to the prior quarter, G&A expenses before stock-based compensation increasedcorresponding period of 2022 and decreased by 7% or $0.06 on a$0.75 per bbl basis, primarily due to a lower share price and higher costs for optimization projects.sales volumes in the current quarter.

G&A expenses after stock-based compensation for the three and ninesix months ended SeptemberJune 30, 2022,2023, increased by 25% and 17% or $0.79 and $0.252% per bbl respectively, due to higher G&A expenses before stock-based compensation offset by a higherlower share price and decreased by $0.63 per bbl due to higher sales volumes when compared to the corresponding periodsperiod of 2021.2022.

Compared to the prior quarter, G&A expenses before stock-based compensation decreased by 15% or $1.09 on a per bbl basis due to lower legal and information technology costs, partially offset by higher consulting fees attributed to optimization projects.

Compared to the prior quarter, G&A expenses after stock-based compensation decreased by 18%22% or $0.98$1.62 on a per bbl basis due to lower G&A expenses before stock-based compensation resulting fromand a lower share price in the thirdsecond quarter of 2022.

2023.
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Foreign Exchange Gains and Losses

For the three and ninesix months ended SeptemberJune 30, 2022,2023, we had a $4.7 million and $6.4 million loss on foreign exchange, of $1.5 million and $0.5 million, respectively, compared to a $2.7 million loss and $15.8a $1.0 million lossgain in the corresponding periods of 2021.2022, respectively, and a $1.7 million loss in the prior quarter. Accounts receivable, taxes receivable, deferred income taxes, accounts payable, and prepaid equity forward (“PEF”) are considered monetary items and require translation from local currencies to U.S. dollar functional currency at each balance sheet date. This translation was the primary source of the foreign exchange gains and losses in the periods.

The following table presents the change in the U.S. dollar against the Colombian peso and Canadian dollar for the three and ninesix months ended SeptemberJune 30, 2022,2023, and 2021:2022:

Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
20222021202220212023202220232022
Change in the U.S. dollar against the Colombian pesoChange in the U.S. dollar against the Colombian pesostrengthened bystrengthened bystrengthened bystrengthened byChange in the U.S. dollar against the Colombian pesoweakened bystrengthened byweakened bystrengthened by
10%2%14%12%9%10%13%4%
Change in the U.S. dollar against the Canadian dollarChange in the U.S. dollar against the Canadian dollarstrengthened bystrengthened bystrengthened bystrengthened byChange in the U.S. dollar against the Canadian dollarweakened bystrengthened byweakened bystrengthened by
6%3%8%—%2%3%2%2%


Income Tax Expense
Three Months Ended June 30,Six Months Ended June 30,
(Thousands of U.S. Dollars)2023202220232022
Income before income tax$22,907 $91,638 $46,090 $145,297 
Current income tax expense$19,757 $25,425 $37,363 $46,252 
Deferred income tax expense13,975 13,241 29,252 31,954 
Income tax expense$33,732 $38,666 $66,615 $78,206 
Effective tax rate147 %42 %145 %54 %

2826


Income Tax Expense
Three Months Ended September 30,Nine Months Ended September 30,
(Thousands of U.S. Dollars)2022202120222021
Income before income tax$60,397 $43,962 $205,694 $6,753 
Current income tax expense (recovery)$16,820 $— $63,072 $(14)
Deferred income tax expense4,914 8,955 36,868 26,809 
Total income tax expense$21,734 $8,955 $99,940 $26,795 
Effective tax rate36 %20 %49 %397 %

Current income tax expense was $63.1$37.4 million for the ninesix months ended SeptemberJune 30, 2022,2023, compared to a small recovery$46.3 million in the corresponding period in 2021,2022, primarily due to an increasea decrease in taxable income.

The deferred income tax expense for the ninesix months ended SeptemberJune 30, 2022,2023, was also the$29.3 million primarily as a result of tax depreciation being higher than accounting depreciation and the use of tax losses to offset taxable income in Colombia. The deferred income tax expense in the comparative period of 2021 resulted from excess tax depreciation compared with accounting depreciation and the use of tax losses to offset taxable income in Colombia.

For the ninesix months ended SeptemberJune 30, 2023, the difference between the effective tax rate of 145% and the 50% Colombian tax rate was primarily due to an increase in non-deductible foreign exchange adjustments, the impact of foreign taxes, non-deductible royalties in Colombia and non-deductible stock-based compensation. These were partially offset by a decrease in valuation allowance.

For the six months ended June 30, 2022, the difference between the effective tax rate of 49%54% and the 35% Colombian tax rate was primarily due to $26.6 million of hedging loss, and $35.7$24.3 million of financing cost related to Senior Notes, and $11.1$21.5 million of corporate costs, which were incurred in a jurisdictions where no tax benefit is recognized which was partially offset by $12.5 million of non-taxable foreign exchange gain.

For the nine months ended September 30, 2021, the difference between the effective tax rate of 397% and the 31% Colombian tax rate was primarily due to the non-deductibility of derivative instrument losses and financing costs; foreign currency translation adjustments, and stock based compensation. These were partially offset by a decrease in valuation allowance and the non-taxable portion (50%) of the unrealized gain on PetroTal Corp. shares.recognized.




























29


Net (Loss) Income and Funds Flow from Operations (a Non-GAAP Measure)

(Thousands of U.S. Dollars)Third Quarter 2022 Compared with Second Quarter 2022% changeThird Quarter 2022 Compared with Third Quarter 2021% changeNine Months Ended September 30, 2022 Compared with Nine Months Ended September 30, 2021% change
Net income (loss) for the comparative period$52,972 $35,007 $(20,042)
Increase (decrease) due to:
Sales price(45,744)34,873 187,280 
Sales volumes8,356 (1,795)34,036 
Expenses:
Operating(2,343)(3,389)(20,900)
Transportation96 713 967 
Cash G&A(437)(2,840)(4,516)
Net lease payments90 425 892 
Interest, net of amortization of debt issuance costs393 2,031 5,699 
Realized foreign exchange3,528 4,332 4,531 
Cash settlements on derivative instruments17,577 7,113 18,430 
Current taxes8,605 (16,820)(63,086)
Net change in funds flow from operations(1) from comparative period
(9,879)24,643 163,333 
Expenses:
Depletion, depreciation and accretion(3,104)(7,265)(30,199)
Deferred tax8,327 4,041 (10,059)
Amortization of debt issuance costs380 156 (87)
Stock-based compensation2,159 1,223 221 
Derivative instruments gain or loss, net of settlements on derivative instruments(12,405)(4,510)2,499 
Gain on re-purchase of Senior Notes2,598 2,598 2,598 
Other financial instruments gain— (13,634)(12,425)
Unrealized foreign exchange(2,295)(3,171)10,807 
Net lease payments(90)(425)(892)
Net change in net income (loss)(14,309)3,656 125,796 
Net income for the current period$38,663 (27)%$38,663 (10)%$105,754 628%

(Thousands of U.S. Dollars)Second Quarter 2023 Compared with First Quarter 2023% changeSecond Quarter 2023 Compared with Second Quarter 2022% changeSix Months Ended June 30, 2023 Compared with Six Months Ended June 30, 2022% change
Net (loss) income for the comparative period$(9,700)$52,972 $67,091 
Increase (decrease) due to:
Sales price(56)(87,731)(135,636)
Sales volumes13,768 39,848 57,374 
Expenses:
Operating(7,122)(8,997)(15,431)
Transportation(625)(1,178)(1,410)
Cash G&A1,647 (1,702)(5,119)
Net lease payments(65)114 585 
Interest, net of amortization of debt issuance costs(604)(596)(410)
Realized foreign exchange(11,581)(14,388)(14,462)
Cash settlements on derivative instruments— 17,796 26,392 
Current taxes(2,151)5,668 8,889 
Interest income(121)647 1,415 
Net change in funds flow from operations(1) from comparative period
(6,910)(50,519)(77,813)
Expenses:
Depletion, depreciation and accretion(4,488)(13,993)(24,751)
Deferred tax1,302 (734)2,702 
Amortization of debt issuance costs(238)112 218 
Stock-based compensation1,183 1,672 4,729 
Derivative instruments gain or loss, net of settlements on derivative instruments— (12,624)219 
Unrealized foreign exchange8,576 12,403 7,050 
Other gain(615)— 615 
Net lease payments65 (114)(585)
Net change in net (loss) income(1,125)(63,797)(87,616)
Net loss for the current period$(10,825)12%$(10,825)120%$(20,525)131%
(1)Funds flow from operations is a non-GAAP measure that does not have any standardized meaning prescribed under GAAP. Refer to "Financial and Operational Highlights—non-GAAP measures" for a definition and reconciliation of this measure.
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Capital expenditures during the three months ended SeptemberJune 30, 20222023, were $57.0$65.6 million:

(Millions of U.S. Dollars)
Colombia:
Exploration$16.9 
Development:
Drilling and Completions12.7 
Facilities6.2 
Other8.3 
44.1
Corporate & Ecuador12.9 
$57.0
(Millions of U.S. Dollars)ColombiaEcuadorTotal
Exploration$3.6 $7.5 $11.1 
Development:
Drilling and Completions38.9 — 38.9 
Facilities9.5 0.8 10.3 
Workovers2.8 — 2.8 
Other2.5 — 2.5 
$57.3 $8.3 $65.6 

During the three months ended SeptemberJune 30, 2022,2023, we commenced drilling the following wells in Colombia and Ecuador:

Colombia:
Number of wells (Gross and Net)
Colombia
Exploration2.0 
Development3.04.0 
Service2.03.0 
7.0 
Ecuador
Exploration1.0 
8.0 

We spud three exploration, threefour development and twothree water injection wells, of which fivetwo were in Midas Block oneand five in Chaza Block, one in Alea-1848A Block, and one inBlock. Of the Chanangue Block in Ecuador. Of thedevelopment wells spud during the quarter, fivethree were completed, and three wereone was in-progress as of SeptemberJune 30, 2022.2023. During the three months ended June 30, 2023, we have not spud any wells in Ecuador.

Liquidity and Capital Resources 
As at As at
(Thousands of U.S. Dollars)(Thousands of U.S. Dollars)September 30, 2022% ChangeDecember 31, 2021(Thousands of U.S. Dollars)June 30, 2023% ChangeDecember 31, 2022
Cash and Cash EquivalentsCash and Cash Equivalents$118,173 353 $26,109 Cash and Cash Equivalents$68,529 (46)$126,873 
Credit Facility$ (100)$67,500 
6.25% Senior Notes6.25% Senior Notes$279,909 (7)$300,000 6.25% Senior Notes$271,909 (3)$279,909 
7.75% Senior Notes7.75% Senior Notes$300,000 — $300,000 7.75% Senior Notes$300,000 — $300,000 

We believe that our capital resources, including cash on hand, cash generated from operations and available borrowings under the credit facility, will provide us with sufficient liquidity to meet our strategic objectives and planned capital program for the next 12 months, given the current oil price trends and production levels. We may also access capital markets to pursue financing or refinance our Senior Notes. In accordance with our investment policy, available cash balances are held in our primary cash management banks or may be invested in U.S. or Canadian government-backed federal, provincial or state securities or other money market instruments with high credit ratings and short-term liquidity. We believe that our current financial position provides us with the flexibility to respond to both internal growth opportunities and those available through acquisitions. We intend to pursue growth opportunities and acquisitions from time to time, which may require significant
31


capital, be located in basins or countries beyond our current operations, involve joint ventures, or be sizable compared to our current assets and operations.

During the three months ended SeptemberAt June 30, 2022,2023, we terminated our prior revolvinghad a credit facility agreement and entered into a new credit facility agreement with a market lender in the global commodities industry. The credit facility has a borrowing base of up to $150 million, with $100 million readily available at SeptemberJune 30, 2022,2023, and a potential option for an additional $50 million of borrowings upon mutual agreement by the lender and us. The credit facility bears interest based on a risk-free rate posted by the Federal Reserve Bank of New York plus a margin of 6.0%6.00% and a credit-adjusted spread of 0.26%. Undrawn amounts under the credit facility bear interest at 2.1%2.10% per annum, based on the amount available. The credit facility is secured by our Colombian assets and economic rights. It has a final maturity date of August 15, 2024, which may be extended to February 18, 2025, upon the satisfaction of certain conditions. The availability period for the draws is six months commencing the date ofunder the credit facility.facility expires on August 20, 2023. As of SeptemberJune 30, 2022,2023, the credit facility remained undrawn.

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Under the terms of the credit facility, we are required to maintain compliance with the following financial covenants:

i.Coverage ratio of at least 150% is, calculated using the net present value of the consolidated future cash flows of the Company up to the final maturity date discounted at 10% over the outstanding amount on the credit facility at each reporting period. The net present value of the consolidated future cash flows of the Company is required to be based on 80% of the prevailing ICE Brent forward strip.

ii.Prepayment Life Coverage Ratio of at least 150%, calculated using the estimated aggregate value of commodities to be delivered under the commercial contract from the commencement date to the final maturity date based on 80% of the prevailing ICE Brent forward strip, adjusted for quality and transportation discounts over the outstanding amount on the credit facility including interest and all other costs payable to the lender.

iii.Liquidity ratio where the Company’s projected sources of cash exceed projected uses of cash by at least 1.15 times in each quarter period included in one year consolidated future cash flows. The future cash flows represent forecasted expected cash flows from operations, less anticipated capital expenditures and certain other adjustments. The commodity pricing assumption used in this covenant is required to be 90% of the prevailing Brent strip forward for the projected future cash flows.

At SeptemberJune 30, 2022, we were in compliance with all above covenants.

At September 30, 2022,2023, we had a $279.9$271.9 million aggregate principal amount of 6.25% Senior Notes due 2025 and a $300.0 million aggregate principal amount of 7.75% Senior Notes due 2027 outstanding.

During the three and six months ended SeptemberJune 30, 2022,2023, we repurchasedre-purchased in the open market $20.1nil and $8.0 million, respectively, of 6.25% Senior Notes for cash consideration of $17.3 million, including interest payable of $0.1 million, which$6.8 million. The re-purchase resulted in a $2.6$1.1 million gain, on re-purchase which included the write-off of deferred financing fees of $0.3$0.1 million. The re-purchased 6.25% Senior Notes were not cancelledcanceled and are held by usthe Company as treasury bonds as of SeptemberJune 30, 2022.2023.

During the three monthsyear ended September 30,December 31, 2022, we implemented a share re-purchase program (the “2022 Program”) through the facilities of the Toronto Stock Exchange (“TSX”) and eligible alternative trading platforms in Canada. Under the 2022 Program, we arewere able to purchase at prevailing market prices up to 36,033,9693,603,396 shares of Common Stock, representing approximately 10% of the issued and outstanding shares of Common Stock as of August 22, 2022. The 2022 Program expires on August 31, 2023, or earlier if the 10% share maximum is reached. Re-purchases are subject to prevailing market conditions, the trading price of our Common Stock, our financial performance and other conditions. The 2022 Program has expired when 10% share maximum was reached in May 2023.

During the three and ninesix months ended SeptemberJune 30, 2022,2023, we re-purchased 10,733,70220,439 and 1,328,650 shares at a weighted average price of $1.34$5.27 and $8.15 per share. The re-purchasedshare (three and six months ended June 30, 2022 - nil). As of June 30, 2023, all 3,603,396 shares were held by us and were recorded as treasury stock, as of September 30, 2022.



were cancelled.
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Cash Flows

The following table presents our primary sources and uses of cash and cash equivalents for the periods presented:
Nine Months Ended September 30,Six Months Ended June 30,
(Thousands of U.S. Dollars)(Thousands of U.S. Dollars)20222021(Thousands of U.S. Dollars)20232022
Sources of cash and cash equivalents:Sources of cash and cash equivalents:Sources of cash and cash equivalents:
Net income (loss)$105,754 $(20,042)
Net (loss) incomeNet (loss) income$(20,525)$67,091 
Adjustments to reconcile net loss to Adjusted EBITDA(1)
and funds flow from operations(1)
Adjustments to reconcile net loss to Adjusted EBITDA(1)
and funds flow from operations(1)
Adjustments to reconcile net loss to Adjusted EBITDA(1)
and funds flow from operations(1)
DD&A expensesDD&A expenses128,499 98,300 DD&A expenses107,930 83,179 
Interest expenseInterest expense35,743 41,355 Interest expense24,514 24,322 
Income tax expenseIncome tax expense99,940 26,795 Income tax expense66,615 78,206 
Other lossOther loss — 
Non-cash lease expensesNon-cash lease expenses2,009 1,222 Non-cash lease expenses2,253 1,158 
Lease paymentsLease payments(1,134)(1,239)Lease payments(1,242)(732)
Unrealized foreign exchange loss6,138 16,945 
Unrealized foreign exchange gainUnrealized foreign exchange gain(7,548)(498)
Stock-based compensation expenseStock-based compensation expense6,376 6,597 Stock-based compensation expense1,817 6,546 
Unrealized derivative instruments lossUnrealized derivative instruments loss 2,499 Unrealized derivative instruments loss 219 
Gain on re-purchase of Senior Notes(2,598)— 
Other financial instruments gain (12,425)
Other gainOther gain(615)— 
Adjusted EBITDA(1)
Adjusted EBITDA(1)
380,727 160,007 
Adjusted EBITDA(1)
173,199 259,491 
Current income tax (expense) recovery(63,072)14 
Current income tax expenseCurrent income tax expense(37,363)(46,252)
Contractual interest and other financing expensesContractual interest and other financing expenses(32,974)(38,673)Contractual interest and other financing expenses(22,714)(22,304)
Funds flow from operations(1)
Funds flow from operations(1)
284,681 121,348 
Funds flow from operations(1)
113,122 190,935 
Proceeds from exercise of stock optionsProceeds from exercise of stock options1,292 19 Proceeds from exercise of stock options5 1,285 
Proceeds from issuance of Common Stock, net of issuance costs2 — 
Proceeds from disposition of investment, net of transaction costs 14,632 
Net changes in assets and liabilities from operating activitiesNet changes in assets and liabilities from operating activities72,838 17,956 Net changes in assets and liabilities from operating activities 56,329 
Foreign exchange gain on cash, cash equivalents and restricted cash and cash equivalentsForeign exchange gain on cash, cash equivalents and restricted cash and cash equivalents5,759 — 
Changes in non-cash investing working capitalChanges in non-cash investing working capital3,255 709 Changes in non-cash investing working capital9,088 10,964 
362,068 154,664 127,974 259,513 
Uses of cash and cash equivalents:Uses of cash and cash equivalents:Uses of cash and cash equivalents:
Additions to property, plant and equipmentAdditions to property, plant and equipment(163,717)(109,650)Additions to property, plant and equipment(136,627)(106,682)
Net changes in assets and liabilities from operating activitiesNet changes in assets and liabilities from operating activities(25,836)— 
Repayment of debtRepayment of debt(67,623)(40,125)Repayment of debt (67,525)
Re-purchase of Common StockRe-purchase of Common Stock(14,365)— Re-purchase of Common Stock(10,825)— 
Re-purchase of Senior NotesRe-purchase of Senior Notes(17,274)— Re-purchase of Senior Notes(6,805)— 
Debt issuance costsDebt issuance costs(1,873)— 
Settlement of asset retirement obligationsSettlement of asset retirement obligations(1,673)(483)Settlement of asset retirement obligations(156)(242)
Lease paymentsLease payments(1,991)(1,269)Lease payments(3,035)(1,261)
Foreign exchange loss on cash, cash equivalents and restricted cash and cash equivalentsForeign exchange loss on cash, cash equivalents and restricted cash and cash equivalents(1,996)(528)Foreign exchange loss on cash, cash equivalents and restricted cash and cash equivalents (680)
(268,639)(152,055)(185,157)(176,390)
Net increase in cash and cash equivalents and restricted cash and cash equivalents$93,429 $2,609 
Net (decrease) increase in cash and cash equivalents and restricted cash and cash equivalentsNet (decrease) increase in cash and cash equivalents and restricted cash and cash equivalents$(57,183)$83,123 
 
(1) Adjusted EBITDA and funds flow from operations are a non-GAAP measures which do not have any standardized meaning prescribed under GAAP. Refer to “Financial and Operational Highlights - non-GAAP measures” for a definition and reconciliation of this measure.

30


One of the primary sources of variability in our cash flows from operating activities is the fluctuation in oil prices. Sales volume changes, and costs related to operations and debt service also impact cash flows. Our cash flows from operating activities are also impacted by foreign currency exchange rate changes. During the ninethree and six months ended SeptemberJune 30, 2022,2023, funds flow from
33


operations increaseddecreased by 135%49% and 41%, respectively, compared to the corresponding periodperiods of 20212022, primarily due to a significant increasedecrease in Brent price, higher quality and increase in production, which were partially offset bytransportation discounts, higher Castillaoperating costs and Vasconia differentials, M+1 Brent adjustment, an increase in operating expenses and cash settlements on derivative instruments.realized foreign exchange loss.

Critical Accounting Policies and Estimates

Our critical accounting policies and estimates are disclosed in Item 7 of our 20212022 Annual Report on Form 10-K and have not changed materially since the filing of that document.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Commodity price risk

Our principal market risk relates to oil prices. Oil prices are volatile and unpredictable and influenced by concerns over world supply and demand imbalance and many other market factors outside of our control. Our revenues are from oil sales at ICE Brent adjusted for quality differentials.

Foreign currency risk

Foreign currency risk is a factor for our Company but is ameliorated to a certain degree by the nature of expenditures and revenues in the countries where we operate. Our reporting currency is U.S. dollars and 100% of our revenues are related to the U.S. dollar price of Brent adjusted for quality differentials. We receive 100% of our revenues in U.S. dollars and the majority of our capital expenditures is in U.S. dollars or is based on U.S. dollar prices. The majority of income and value added taxes, operating and G&A expenses in Colombia are in the local currency. Certain G&A expenses incurred at our head office in Canada are denominated in Canadian dollars. While we operate in South America exclusively, the majority of our acquisition expenditures have been valued and paid in U.S. dollars.

Additionally, foreign exchange gains and losses result primarily from the fluctuation of the U.S. dollar to the Colombian peso due to our current and deferred tax liabilities which are monetary liabilities denominated in the local currency of the Colombian foreign operations. As a result, a foreign exchange gain or loss must be calculated on conversion to the U.S. dollar functional currency.

Interest Rate Risk

Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. We are exposed to interest rate fluctuations on our revolving credit facility, which bears floating rates of interest. At SeptemberJune 30, 2022,2023, our outstanding balance under the credit facility was nil (December 31, 20212022 - $67.5 million)nil).

Item 4. Controls and Procedures
 
Disclosure Controls and Procedures
 
We have established disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, or Exchange Act). Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by Gran Tierra in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report, as required by Rule l3a-15(b) of the Exchange Act. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that Gran Tierra’s disclosure controls and procedures were effective as of SeptemberJune 30, 2022.2023.

Changes in Internal Control over Financial Reporting
 
There were no changes in our internal control over financial reporting during the quarter ended SeptemberJune 30, 2022,2023, that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.
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34


PART II - Other Information

Item 1. Legal Proceedings
 
See Note 98 in the Notes to the Condensed Consolidated Financial Statements (Unaudited) in Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference, for any material developments with respect to matters previously reported in our Annual Report on Form 10-K for the year ended December 31, 2021,2022, and any material matters that have arisen since the filing of such report.

Item 1A. Risk Factors

There are numerous factors that affect our business and results of operations, many of which are beyond our control. In addition to information set forth in this quarterly report on Form 10-Q, including in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, you should carefully read and consider the factors set out in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021.2022. These risk factors could materially affect our business, financial condition and results of operations. The unprecedented nature of the current pandemic and the volatility in the worldwide economy and oil and gas industry may make it more difficult to identify all the risks to our business, results of operations and financial condition and the ultimate impact of identified risks.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

(a)
Total Number of Shares Purchased
(b)
Average Price Paid per Share
(1)
(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(d)
Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs
(a)
Total Number of Shares Purchased
(b)
Average Price Paid per Share
(1)
(c)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(d)
Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs (2)
September 1-30, 202210,733,702 $1.34 10,733,702 25,300,267 (2)
April 1-30, 2023April 1-30, 2023— $— — 20,439 
May 1-31, 2023May 1-31, 202320,439 5.27 20,439 — 
June 1-30, 2023June 1-30, 2023— — — — 
TotalTotal10,733,702 $1.34 10,733,702 25,300,267 Total20,439 $5.27 20,439  

(1) Including commission fees paid to the broker to re-purchase the Common Stock.

(2) On August 29, 2022, we announced that we intended to implement a share re-purchase program (the “2022 Program”) through the facilities of the TSX and eligible alternative trading platforms in Canada commencing September 1, 2022, and ending on August 31, 2023.2023 or earlier if the 10% share maximum is reached. We will bewere able to purchase for cancellation at prevailing market prices up to 36,033,9693,603,396 shares of Common Stock, representing approximately 10% of our issued and outstanding shares of Common Stock as of August 22, 2022. The 2022 program expired when the 10% share maximum was reached in May 2023.

Item 5. Other Information

During the three months ended June 30, 2023, no director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements (in each case, as defined in Item 408(a) of Regulation S-K).

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Item 6. Exhibits
Exhibit No.DescriptionReference
3.1Incorporated by reference to Exhibit 3.3 to the Current Report on Form 8-K, filed with the SEC on November 4, 2016 (SEC File No. 001-34018).
3.2Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, filed with the SEC on May 5, 2023 (SEC File No. 001-34018).
3.3Incorporated by reference to Exhibit 3.4 to the Current Report on Form 8-K, filed with the SEC on November 4, 2016 (SEC File No. 001-34018).
3.33.4Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on July 9, 2018 (SEC File No. 001-34018).
3.43.5Incorporated by reference to Exhibit 3.1 to the Current
Report on Form 8-K filed with the SEC on August 4,
2021 (SEC File No. 001-34018).
10.1Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with SEC on August 23, 2022 (SEC File No. 001-34018).
31.1Filed herewith.
31.2Filed herewith.
32.1Furnished herewith.

101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104.The cover page from Gran Tierra Energy Inc.’s Quarterly Report on Form 10-Q for the quarter ended SeptemberJune 30, 2022,2023, formatted in Inline XBRL (included within the Exhibit 101 attachments).


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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
GRAN TIERRA ENERGY INC.
Date: NovemberAugust 1, 20222023/s/ Gary S. Guidry
 By: Gary S. Guidry
 President and Chief Executive Officer
 (Principal Executive Officer)

Date: NovemberAugust 1, 20222023/s/ Ryan Ellson
 By: Ryan Ellson
Executive Vice President and Chief Financial Officer
 (Principal Financial and Accounting Officer)

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