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 JuneSeptember 30, 2023

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 $0.01$0.001 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 July 26,October 27, 2023, 33,287,05533,288,305 shares of the registrant’s Common Stock, $0.01$0.001 par value, were issued.




Gran Tierra Energy Inc.

Quarterly Report on Form 10-Q

Quarterly Period Ended JuneSeptember 30, 2023

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);events; 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, geopolitical events, including the Russian invasion ofongoing conflicts in Ukraine and the Gaza region, 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 (occurred June 2023) 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 itsour 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 stockCommon Stock or bonds; the risk that we do not receive the anticipated benefits of government programs, including government tax refunds; our ability to comply with financial covenants in our 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 2022 Annual Report on Form 10-K (the “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 current volatility in the worldwide economy and oil and gas industry makes 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 interest production before 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 June 30,Six Months Ended June 30,Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022 2023202220232022
OIL SALES (Note 6)
OIL SALES (Note 6)
$157,902 $205,785 $302,092 $380,354 
OIL SALES (Note 6)
$179,921 $168,397 $482,013 $548,751 
EXPENSESEXPENSESEXPENSES
OperatingOperating48,491 39,494 89,860 74,429 Operating49,367 41,837 139,227 116,266 
TransportationTransportation3,691 2,513 6,757 5,347 Transportation3,842 2,417 10,599 7,764 
Depletion, depreciation and accretion (Note 3)Depletion, depreciation and accretion (Note 3)56,209 42,216 107,930 83,179 
Depletion, depreciation and accretion
(Note 3)
55,019 45,320 162,949 128,499 
General and administrative (Note 9)General and administrative (Note 9)9,866 9,836 22,562 22,172 General and administrative (Note 9)10,238 8,114 32,800 30,286 
Foreign exchange loss (gain)4,707 2,722 6,409 (1,003)
Foreign exchange lossForeign exchange loss1,717 1,489 8,126 486 
Derivative instruments loss (Note 9)Derivative instruments loss (Note 9) 5,172  26,611 Derivative instruments loss (Note 9) —  26,611 
Other gain (Note 4)Other gain (Note 4) — (615)— Other gain (Note 4)(354)(2,598)(969)(2,598)
Interest expense (Note 4)Interest expense (Note 4)12,678 12,194 24,514 24,322 Interest expense (Note 4)13,503 11,421 38,017 35,743 
135,642 114,147 257,417 235,057  133,332 108,000 390,749 343,057 
INTEREST INCOMEINTEREST INCOME647 — 1,415 — INTEREST INCOME271 — 1,686 — 
INCOME BEFORE INCOME TAXESINCOME BEFORE INCOME TAXES22,907 91,638 46,090 145,297 INCOME BEFORE INCOME TAXES46,860 60,397 92,950 205,694 
INCOME TAX EXPENSEINCOME TAX EXPENSEINCOME TAX EXPENSE
Current (Note 7)Current (Note 7)19,757 25,425 37,363 46,252 Current (Note 7)26,343 16,820 63,706 63,072 
Deferred (Note 7)Deferred (Note 7)13,975 13,241 29,252 31,954 Deferred (Note 7)13,990 4,914 43,242 36,868 
33,732 38,666 66,615 78,206 40,333 21,734 106,948 99,940 
NET AND COMPREHENSIVE (LOSS) INCOME$(10,825)$52,972 $(20,525)$67,091 
NET AND COMPREHENSIVE INCOME (LOSS)NET AND COMPREHENSIVE INCOME (LOSS)$6,527 $38,663 $(13,998)$105,754 
NET (LOSS) INCOME PER SHARE (1)
NET INCOME (LOSS) PER SHARE (1)
NET INCOME (LOSS) PER SHARE (1)
- BASIC - BASIC$(0.33)$1.44 $(0.61)$1.82  - BASIC$0.20 $1.05 $(0.42)$2.88 
- DILUTED - DILUTED$(0.33)$1.42 $(0.61)$1.80  - DILUTED$0.20 $1.04 $(0.42)$2.84 
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC (Note 5)WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC (Note 5)33,299,505 36,857,138 33,872,270 36,798,229 WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC (Note 5)33,287,368 36,730,543 33,675,160 36,775,419 
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED (Note 5)WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED (Note 5)33,299,505 37,423,360 33,872,270 37,297,769 WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED (Note 5)33,350,050 37,131,074 33,675,160 37,238,790 
(1) Reflects our 1-for-10 reverse stock split that became effective May 5, 2023. See Note 5 in the notes to the condensed consolidated 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 June 30, 2023As at December 31, 2022 As at September 30, 2023As at December 31, 2022
ASSETSASSETS  ASSETS  
Current AssetsCurrent Assets  Current Assets  
Cash and cash equivalents (Note 10)Cash and cash equivalents (Note 10)$68,529 $126,873 Cash and cash equivalents (Note 10)$123,216 $126,873 
Restricted cash and cash equivalents (Note 10)Restricted cash and cash equivalents (Note 10)1,142 1,142 Restricted cash and cash equivalents (Note 10)1,142 1,142 
Accounts receivableAccounts receivable6,753 10,706 Accounts receivable19,157 10,706 
InventoryInventory22,532 20,192 Inventory25,724 20,192 
Taxes receivable82 54 
Other current assets (Note 9)Other current assets (Note 9)9,108 9,620 Other current assets (Note 9)12,082 9,674 
Total Current AssetsTotal Current Assets108,146 168,587 Total Current Assets181,321 168,587 
Oil and Gas PropertiesOil and Gas Properties  Oil and Gas Properties  
ProvedProved1,045,686 1,000,424 Proved1,040,254 1,000,424 
UnprovedUnproved66,091 74,471 Unproved70,253 74,471 
Total Oil and Gas PropertiesTotal Oil and Gas Properties1,111,777 1,074,895 Total Oil and Gas Properties1,110,507 1,074,895 
Other capital assetsOther capital assets29,787 26,007 Other capital assets30,448 26,007 
Total Property, Plant and Equipment (Note 3)Total Property, Plant and Equipment (Note 3)1,141,564 1,100,902 Total Property, Plant and Equipment (Note 3)1,140,955 1,100,902 
Other Long-Term AssetsOther Long-Term Assets  Other Long-Term Assets  
Deferred tax assetsDeferred tax assets12,924 22,990 Deferred tax assets9,758 22,990 
Taxes receivableTaxes receivable40,014 27,796 Taxes receivable46,736 27,796 
Other long-term assets (Note 9)6,717 15,335 
Other long-term assets (Note 9 and 10)Other long-term assets (Note 9 and 10)7,265 15,335 
Total Other Long-Term AssetsTotal Other Long-Term Assets59,655 66,121 Total Other Long-Term Assets63,759 66,121 
Total AssetsTotal Assets$1,309,365 $1,335,610 Total Assets$1,386,035 $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$197,797 $167,579 Accounts payable and accrued liabilities$176,489 $167,579 
Credit facility (Note 4)Credit facility (Note 4)49,067 — 
Taxes payableTaxes payable30,442 58,978 Taxes payable46,398 58,978 
Equity compensation award liability (Note 5)Equity compensation award liability (Note 5)4,976 15,082 Equity compensation award liability (Note 5)7,794 15,082 
Total Current LiabilitiesTotal Current Liabilities233,215 241,639 Total Current Liabilities279,748 241,639 
Long-Term LiabilitiesLong-Term Liabilities  Long-Term Liabilities  
Long-term debt (Notes 4 and 9)Long-term debt (Notes 4 and 9)585,807 589,593 Long-term debt (Notes 4 and 9)587,444 589,593 
Deferred tax liabilitiesDeferred tax liabilities22,241 28 Deferred tax liabilities35,011 28 
Asset retirement obligationAsset retirement obligation66,845 63,358 Asset retirement obligation70,712 63,358 
Equity compensation award liability (Note 5)Equity compensation award liability (Note 5)5,708 16,437 Equity compensation award liability (Note 5)9,525 16,437 
Other long-term liabilitiesOther long-term liabilities8,131 6,989 Other long-term liabilities9,055 6,989 
Total Long-Term LiabilitiesTotal Long-Term Liabilities688,732 676,405 Total Long-Term Liabilities711,747 676,405 
Contingencies (Note 8)Contingencies (Note 8)Contingencies (Note 8)
Shareholders' Equity (1)
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)10,237 10,272 
Common Stock (Note 5) (33,288,305 and 36,889,862 issued, 33,288,305 and 34,615,116 outstanding shares of Common Stock, par value $0.001 per share, as at September 30, 2023, and December 31, 2022, respectively)Common Stock (Note 5) (33,288,305 and 36,889,862 issued, 33,288,305 and 34,615,116 outstanding shares of Common Stock, par value $0.001 per share, as at September 30, 2023, and December 31, 2022, respectively)10,237 10,272 
Additional paid-in capitalAdditional paid-in capital1,254,449 1,291,354 Additional paid-in capital1,255,044 1,291,354 
Treasury Stock (Note 5)Treasury Stock (Note 5) (27,317)Treasury Stock (Note 5) (27,317)
DeficitDeficit(877,268)(856,743)Deficit(870,741)(856,743)
Total Shareholders’ EquityTotal Shareholders’ Equity387,418 417,566 Total Shareholders’ Equity394,540 417,566 
Total Liabilities and Shareholders’ EquityTotal Liabilities and Shareholders’ Equity$1,309,365 $1,335,610 Total Liabilities and Shareholders’ Equity$1,386,035 $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 consolidated 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)
Six Months Ended June 30, Nine Months Ended September 30,
20232022 20232022
Operating ActivitiesOperating Activities  Operating Activities  
Net (loss) incomeNet (loss) income$(20,525)$67,091 Net (loss) income$(13,998)$105,754 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:Adjustments to reconcile net (loss) income to net cash provided by operating activities: Adjustments to reconcile net (loss) income to net cash provided by operating activities: 
Depletion, depreciation and accretion (Note 3)Depletion, depreciation and accretion (Note 3)107,930 83,179 Depletion, depreciation and accretion (Note 3)162,949 128,499 
Deferred tax expense (Note 7)Deferred tax expense (Note 7)29,252 31,954 Deferred tax expense (Note 7)43,242 36,868 
Stock-based compensation expense (Note 5)Stock-based compensation expense (Note 5)1,817 6,546 Stock-based compensation expense (Note 5)3,748 6,376 
Amortization of debt issuance costs (Note 4)Amortization of debt issuance costs (Note 4)1,800 2,018 Amortization of debt issuance costs (Note 4)3,394 2,769 
Unrealized foreign exchange gain(7,548)(498)
Unrealized foreign exchange (gain) lossUnrealized foreign exchange (gain) loss(7,814)6,138 
Other gain (Note 4)Other gain (Note 4)(615)— Other gain (Note 4)(969)(2,598)
Derivative instruments loss (Note 9) 26,611 
Cash settlements on derivatives instruments (26,392)
Derivative instrument loss (Note 9)Derivative instrument loss (Note 9) 26,611 
Cash settlement on derivative instrumentsCash settlement on derivative instruments (26,611)
Cash settlement of asset retirement obligationCash settlement of asset retirement obligation(156)(242)Cash settlement of asset retirement obligation(376)(1,673)
Non-cash lease expensesNon-cash lease expenses2,253 1,158 Non-cash lease expenses3,488 2,009 
Lease paymentsLease payments(1,242)(732)Lease payments(1,918)(1,134)
Net change in assets and liabilities from operating activities (Note 10)Net change in assets and liabilities from operating activities (Note 10)(25,836)56,329 Net change in assets and liabilities from operating activities (Note 10)(34,235)72,838 
Net cash provided by operating activitiesNet cash provided by operating activities87,130 247,022 Net cash provided by operating activities157,511 355,846 
Investing ActivitiesInvesting Activities  Investing Activities  
Additions to property, plant and equipmentAdditions to property, plant and equipment(136,627)(106,682)Additions to property, plant and equipment(179,707)(163,717)
Changes in non-cash investing working capital (Note 10)Changes in non-cash investing working capital (Note 10)9,088 10,964 Changes in non-cash investing working capital (Note 10)(11,051)3,255 
Net cash used in investing activitiesNet cash used in investing activities(127,539)(95,718)Net cash used in investing activities(190,758)(160,462)
Financing ActivitiesFinancing Activities  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)— 
Proceeds from debt, net of issuance costs (Note 4)Proceeds from debt, net of issuance costs (Note 4)48,125 — 
Repayment of debtRepayment of debt (67,623)
Purchase of Senior Notes (Note 4)Purchase of Senior Notes (Note 4)(6,805)(17,274)
Re-purchase of shares of Common Stock (Note 5)Re-purchase of shares of Common Stock (Note 5)(10,825)— Re-purchase of shares of Common Stock (Note 5)(10,825)(14,365)
Proceeds from exercise of stock optionsProceeds from exercise of stock options5 1,285 Proceeds from exercise of stock options8 1,294 
Lease paymentsLease payments(3,035)(1,261)Lease payments(5,101)(1,991)
Net cash used in financing activities(22,533)(67,501)
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities25,402 (99,959)
Foreign exchange gain (loss) on cash, cash equivalents and restricted cash and cash equivalentsForeign exchange gain (loss) on cash, cash equivalents and restricted cash and cash equivalents5,759 (680)Foreign exchange gain (loss) on cash, cash equivalents and restricted cash and cash equivalents5,897 (1,996)
Net (decrease) increase in cash, cash equivalents and restricted cash and cash equivalentsNet (decrease) increase in cash, cash equivalents and restricted cash and cash equivalents(57,183)83,123 Net (decrease) increase in cash, cash equivalents and restricted cash and cash equivalents(1,948)93,429 
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 
Cash and cash equivalents and restricted cash and cash equivalents,
beginning of period (Note 10)
Cash and cash equivalents and restricted cash and cash equivalents,
beginning of period (Note 10)
133,358 31,404 
Cash and cash equivalents and restricted cash and cash equivalents,
end of period (Note 10)
Cash and cash equivalents and restricted cash and cash equivalents,
end of period (Note 10)
$131,410 $124,833 
Supplemental cash flow disclosures (Note 10)Supplemental cash flow disclosures (Note 10)  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 June 30,Six Months Ended June 30, Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022 2023202220232022
Share Capital (1)
Share Capital (1)
  
Share Capital (1)
  
Balance, beginning of periodBalance, beginning of period$10,272 $10,272 $10,272 $10,270 Balance, beginning of period$10,237 $10,272 $10,272 $10,270 
Issuance of common stock (Note 5) —  
Re-purchase of shares of common stock(35)— (35)— 
Issuance of shares of Common Stock
(Note 5)
Issuance of shares of Common Stock
(Note 5)
 —  
Re-purchase of shares of Common Stock (Note 5)Re-purchase of shares of Common Stock (Note 5) — (35)— 
Balance, end of periodBalance, end of period$10,237 $10,272 $10,237 $10,272 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 period$1,291,973 $1,289,162 $1,291,354 $1,287,582 Balance, beginning of period$1,254,449 $1,290,075 $1,291,354 $1,287,582 
Exercise of stock optionsExercise of stock options5 303 5 1,283 Exercise of stock options3 8 1,292 
Re-purchase of shares of common stock(38,107)— (38,107)— 
Re-purchase of shares of Common Stock (Note 5)Re-purchase of shares of Common Stock (Note 5) — (38,107)— 
Stock-based compensation (Note 5)Stock-based compensation (Note 5)578 610 1,197 1,210 Stock-based compensation (Note 5)592 627 1,789 1,837 
Balance, end of periodBalance, end of period$1,254,449 $1,290,075 $1,254,449 $1,290,075 Balance, end of period$1,255,044 $1,290,711 $1,255,044 $1,290,711 
Treasury StockTreasury StockTreasury Stock
Balance, beginning of periodBalance, beginning of period$(38,035)$— $(27,317)$— Balance, beginning of period$ $— $(27,317)$— 
Purchase of treasury shares (Note 5)Purchase of treasury shares (Note 5)(107)— (10,825) Purchase of treasury shares (Note 5) (14,365)(10,825)(14,365)
Cancellation of treasury shares38,142 — 38,142 — 
Cancellation of treasury shares (Note 5)Cancellation of treasury shares (Note 5) — 38,142 — 
Balance, end of periodBalance, end of period$ $— $ $— Balance, end of period$ $(14,365)$ $(14,365)
DeficitDeficit  Deficit  
Balance, beginning of periodBalance, beginning of period$(866,443)$(981,653)$(856,743)$(995,772)Balance, beginning of period$(877,268)$(928,681)$(856,743)$(995,772)
Net (loss) income(10,825)52,972 (20,525)67,091 
Net income (loss)Net income (loss)6,527 38,663 (13,998)105,754 
Balance, end of periodBalance, end of period$(877,268)$(928,681)$(877,268)$(928,681)Balance, end of period$(870,741)$(890,018)$(870,741)$(890,018)
Total Shareholders’ EquityTotal Shareholders’ Equity$387,418 $371,666 $387,418 $371,666 Total Shareholders’ Equity$394,540 $396,600 $394,540 $396,600 
(1) Reflects our 1-for-10 reverse stock split that became effective May 5, 2023. See Note 5 in the notes to the condensed consolidated 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, 2022, included in the Company’s 2022 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 2022 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. Property, Plant and Equipment

(Thousands of U.S. Dollars)(Thousands of U.S. Dollars)As at June 30, 2023As at December 31, 2022(Thousands of U.S. Dollars)As at September 30, 2023As at December 31, 2022
Oil and natural gas propertiesOil and natural gas properties  Oil and natural gas properties  
ProvedProved$4,765,640 $4,617,804 Proved$4,812,245 $4,617,804 
UnprovedUnproved66,091 74,471 Unproved70,253 74,471 
4,831,731 4,692,275  4,882,498 4,692,275 
Other(1)
Other(1)
65,816 61,386 
Other(1)
68,954 61,386 
4,897,547 4,753,661 4,951,452 4,753,661 
Accumulated depletion, depreciation and impairmentAccumulated depletion, depreciation and impairment(3,755,983)(3,652,759)Accumulated depletion, depreciation and impairment(3,810,497)(3,652,759)
$1,141,564 $1,100,902 $1,140,955 $1,100,902 
(1) The “other” category includes right-of-use assets for operating and finance leases of $44.9$47.9 million, which had a net book value of $28.6$29.3 million as at JuneSeptember 30, 2023 (December 31, 2022 - $38.9 million, which had a net book value of $24.6 million).

On April 11, 2023, the Company and Ecopetrol S.A. renegotiated the terms of the contract for Company’s operatorship of the Suroriente Block ("Suroriente") which was previously scheduled to end in mid-2024. The duration of the contract was extended for 20 years from September 1, 2023 (the “Effective Date”), the date on which the Company satisfied the relevant conditions precedent and regulatory approval was received. The Company continues to be the operator of Suroriente. In connection with the contract extension, the Company paid cash consideration of $6.2 million and provided letters of credit of $123.0 million (Note 8) related to committed capital investments to be made over a three-year period from the Effective Date.

For the three and sixnine months ended JuneSeptember 30, 2023 and 2022, respectively, the Company had no ceiling test impairment losses. The Company used a 12-month unweighted average of the first-day-of the month Brent price prior to the ending date of the periods JuneSeptember 30, 2023, and 2022 of $88.52$83.86 and $87.88$94.85 per bbl, respectively, for the purpose of the ceiling test calculations.


7


4. Debt and Debt Issuance Costs

The Company’s debt as at JuneSeptember 30, 2023, and December 31, 2022, was as follows:
(Thousands of U.S. Dollars)As at June 30, 2023As at December 31, 2022
Long-Term
6.25% Senior Notes, due February 2025$271,909 $279,909 
7.75% Senior Notes, due May 2027300,000 300,000 
Unamortized debt issuance costs(10,830)(10,992)
561,079 568,917 
Long-term lease obligation(1)
24,728 20,676 
Total debt$585,807 $589,593 
(Thousands of U.S. Dollars)As at September 30, 2023As at December 31, 2022
Current
Credit facility$50,000 $— 
Unamortized debt issuance costs(933)— 
$49,067 $— 
Long-Term
6.25% Senior Notes, due February 2025 (“6.25% Senior Notes”)$271,909 $279,909 
7.75% Senior Notes, due May 2027 (“7.75% Senior Notes”)300,000 300,000 
Unamortized debt issuance costs (1)
(8,334)(10,992)
563,575 568,917 
Long-term lease obligation(2)
23,869 20,676 
$587,444 $589,593 
Total Debt$636,511 $589,593 
(1) As atDecember 31, 2022, the amount of deferred financing fees included $0.3 million related to the credit facility.
(2)The current portion of the lease obligation has been included in accounts payable and accrued liabilities on the Company’s balance sheet and totaled $7.8$10.0 million as at JuneSeptember 30, 2023 (December 31, 2022 - $4.8 million).

As of JuneDuring the three months ended September 30, 2023, the Company, had aas guarantor, and Gran Tierra Energy Colombia GmbH and and Gran Tierra Operations Colombia GmbH, as borrowers, amended and restated their credit facility with a market lenderleader in the global commodities industry. As part of the restatement, the initial commitment was adjusted from $100 million to $50 million (maintaining the potential option of up to additional $50 million, subject to approval by the lender). Additionally, the availability period for the draws under the amendment to the credit facility was extended until December 31, 2023. The credit facility has a borrowing base of upcontinues to $150 million, with $100 million as an initial commitment available at June 30, 2023, and an option for an additional $50 million upon mutual agreement by the Company and the lender. The credit facility bearsbear interest based on the secured overnight financing rate posted by the Federal Reserve Bank of New York plus a credit margin of 6.00% and a credit-adjusted spread of 0.26%. Undrawn amounts under the credit facility bear interest at 2.10% per annum, based on the amount available. The credit facility is secured by the Company’s Colombian assets and economic rights. Itrights and has a final maturity date of August 15, 2024, which may be extended to February 18, 2025, upon2024. During the satisfaction of certain conditions. The availability period for the draws underthree months ended September 30, 2023, the credit facility expires on August 20, 2023. As of June 30, 2023, and December 31, 2022, the credit facility remained undrawn.was drawn by $50 million.

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%, 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.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 ICE Brent forward strip for the projected future cash flows.

As of September 30, 2023, the Company was in compliance with all the above covenants.

Senior Notes

During the three and sixnine months ended JuneSeptember 30, 2023, the Company re-purchasedpurchased in the open market nil and $8.0 million respectively, of 6.25% Senior Notes for cash consideration of $6.8 million. The re-purchasepurchase resulted in a $1.1 million gain, which included the write-off of
8


deferred financing fees of $0.1 million. The re-purchasepurchase gain was recorded in “other gain” in the Company’s condensed consolidated statements of operations. The re-purchasedSubsequent to the quarter, the Company cancelled all previously purchased 6.25% Senior NotesNotes. No notes were not canceled and are held bypurchased during the Company as treasury bonds as of Junethree months ended September 30, 2023.

8Subsequent to the quarter, the Company completed exchange offers of $247.1 million of 6.25% Senior Notes and $275.8 million of 7.75% Senior Notes (together with 6.25% Senior Notes, the “Senior Notes”) for $487.6 million newly issued 9.50% Senior Secured Notes due 2029. The exchange consideration for $242.5 million of 6.25% Senior Notes included early participation premium of $80 for each $1,000 aggregate principal amount with the remainder of $4.6 million exchanged at $1,000 and for $274.2 million of 7.75% Senior Notes early participation premium of $20 for each $1,000 aggregate principal amount with remainder of $1.6 million of 7.75% Senior Notes exchanged at $950 for each $1,000 aggregate principal amount. In addition, the Company paid cash consideration of $60.0 million for 6.25% Senior Notes exchanged as part of total consideration to eligible holders on a pro rata basis, for each $1,000 aggregate principal amount tendered and accepted for the early exchange deadline. The settlement date of the exchange offer was on October 20, 2023. The Senior Notes tendered and accepted for exchange, as well as the notes held as treasury bonds, were cancelled.


Interest Expense

The following table presents the total interest expense recognized in the accompanying interim unaudited condensed consolidated statements of operations:
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended September 30,Nine Months Ended September 30,
(Thousands of U.S. Dollars)(Thousands of U.S. Dollars)2023202220232022(Thousands of U.S. Dollars)2023202220232022
Contractual interest and other financing expensesContractual interest and other financing expenses$11,659 $11,063 $22,714 $22,304 Contractual interest and other financing expenses$11,909 $10,670 $34,623 $32,974 
Amortization of debt issuance costsAmortization of debt issuance costs1,019 1,131 1,800 2,018 Amortization of debt issuance costs1,594 751 3,394 2,769 
$12,678 $12,194 $24,514 $24,322 $13,503 $11,421 $38,017 $35,743 

5. Share Capital
Shares of Common Stock
Shares issued at December 31, 202236,889,862 
Shares re-purchased(2,274,746)
Shares outstanding at December 31, 202234,615,116
Shares issued on option exercise5891,839 
Shares re-purchased(1,328,650)
Shares issued and outstanding at JuneSeptember 30, 202333,287,05533,288,305 
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 stockCommon Stock were automatically combined into one issued share of common stock,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 year ended 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 was able to purchase at prevailing market prices up to 3,603,396 shares of Common Stock, representing approximately 10% of the issued and outstanding shares of Common Stock as of August 22, 2022.

During the three and nine months ended September 30, 2023, the Company re-purchased nil and 1,328,650 shares at a weighted average price of nil and $8.15 per share, respectively (three and nine months ended September 30, 2022 - 1,073,370 shares). As of September 30, 2023, all 3,603,396 shares held as treasury stock were canceled. The 2022 Program expired in May 2023 when 10% share maximum was reached.

During the three and six months ended June 30, 2023, the Company re-purchased 20,439 and 1,328,650 shares at a weighted average price of $5.27 and $8.15 per share, respectively (three and six months ended June 30, 2022 - nil). As of June 30, 2023, all 3,603,396 shares held as treasury stock 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 sixnine months ended JuneSeptember 30, 2023:
PSUsDSUsStock Options
Number of Outstanding Share UnitsNumber of Outstanding Share UnitsNumber of Outstanding Stock OptionsWeighted Average Exercise Price/Stock Option ($)
Balance, December 31, 20223,152,823 656,186 1,730,286 11.52 
Granted1,504,546 46,290 407,627 8.59 
Exercised(1,523,408)— (589)7.93 
Forfeited(21,574)— (22,336)5.79 
Expired— — (129,943)24.87 
Balance, June 30, 20233,112,387 702,476 1,985,045 10.11 

9


PSUsDSUsStock Options
Number of Outstanding Share UnitsNumber of Outstanding Share UnitsNumber of Outstanding Stock OptionsWeighted Average Exercise Price/Stock Option ($)
Balance, December 31, 20223,152,823 656,186 1,730,286 11.52 
Granted1,504,546 89,643 409,435 8.58 
Exercised(1,523,408)— (1,839)4.17 
Forfeited(21,574)— (22,336)5.79 
Expired— — (133,880)25.15 
Balance, September 30, 20233,112,387 745,829 1,981,666 10.06 

For the three and sixnine months ended JuneSeptember 30, 2023, there was $0.3$1.9 million and $1.8$3.7 million of stock-based compensation expense, respectively. For the three and sixnine months ended JuneSeptember 30, 2022, there was $0.2 million of stock-based compensation recovery and $6.4 million of stock-based compensation expense, was $2.0 million and $6.5 million, respectively.

As at JuneSeptember 30, 2023, there was $10.5$11.4 million (December 31, 2022 - $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 1.91.8 years. During the sixnine months ended JuneSeptember 30, 2023, the Company paid out $15.1 million for PSUs vested on December 31, 2022 (six(nine months ended JuneSeptember 30, 2022 - $2.4 million for PSUs vested on December 31, 2021).

Net Income (Loss) Income per Share

Basic net lossincome or incomeloss per share is calculated by dividing net lossincome or incomeloss attributable to common shareholders by the weighted average number of shares of common stockCommon Stock issued and outstanding during each period.

Diluted net lossincome or incomeloss 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 of Common Stock 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 lossincome or incomeloss per share as their impact would be anti-dilutive.

Weighted Average Shares Outstanding

Three Months Ended June 30,Six Months Ended June 30, Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022 2023202220232022
Weighted average number of common shares outstanding33,299,505 36,857,138 33,872,270 36,798,229
Weighted average number of shares of Common Stock outstandingWeighted average number of shares of Common Stock outstanding33,287,368 36,730,543 33,675,160 36,775,419
Shares issuable pursuant to stock optionsShares issuable pursuant to stock options 1,180,686  1,235,124Shares issuable pursuant to stock options129,299 1,133,014  1,202,431
Shares assumed to be purchased from proceeds of stock optionsShares assumed to be purchased from proceeds of stock options (614,464) (735,584)Shares assumed to be purchased from proceeds of stock options(66,617)(732,483) (739,060)
Weighted average number of diluted common shares outstanding33,299,505 37,423,360 33,872,270 37,297,769
Weighted average number of diluted shares of Common Stock outstandingWeighted average number of diluted shares of Common Stock outstanding33,350,050 37,131,074 33,675,160 37,238,790

For the three and sixnine months ended JuneSeptember 30, 2023, 1,854,307 of options and all options, respectively, on a weighted average basis (three and sixnine months ended JuneSeptember 30, 2022, 609,291616,167 and 573,843586,388 options, respectively), were excluded from the diluted income (loss) income per share calculation as the options were anti-dilutive.

6. 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 sixnine months ended JuneSeptember 30, 2023, 100% of the Company’s revenue resulted from oil sales (three and sixnine months ended JuneSeptember 30, 2022 - 100%). During the three and sixnine months ended JuneSeptember 30, 2023, quality and
10


transportation discounts were 18%14% and 20%18% of the average ICE Brent price (three and sixnine months ended JuneSeptember 30, 2022 - 12%14% and 13%), respectively. The increase in quality and transportation discounts were primarily a result of higher Vasconia and Castilla discounts.

During the three months ended JuneSeptember 30, 2023, the Company’s production was sold primarily to one major customer in Colombia, representing 98%96% of the total sales volumes (three months ended JuneSeptember 30, 2022 - two customers,one major customer, representing 55% and 44%99% of the total sales volumes).

During the sixnine months ended JuneSeptember 30, 2023, the Company’s production was sold primarily to one major customer in Colombia, representing 98%97% of the total sales volumes (six(nine months ended JuneSeptember 30, 2022 - two major customers, representing 56%71% and 43%29% of the total sales volumes).

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

10


7. Taxes

The Company’s effective tax rate was 145%115% for the sixnine months ended JuneSeptember 30, 2023, compared to 54%49% in the comparative period of 2022. The increase was primarily due to an increase in non-deductible foreign exchange adjustments and non-deductible third-party royalty in Colombia. These were partially offset by a decrease in valuation allowance.

Current income tax expense was $37.4$63.7 million for the sixnine months ended JuneSeptember 30, 2023, compared to $46.3$63.1 million in the corresponding period of 2022, primarily due to a decrease in taxable income.income in Colombia, which is subject to a higher Colombian tax rate.

The deferred income tax expense for the sixnine months ended JuneSeptember 30, 2023, was $29.3$43.2 million compared to $36.9 million in the corresponding period of 2022. In both cases, this can be primarily as aattributed to higher tax depreciation compared to accounting depreciation and the utilization of tax losses to offset taxable income in Colombia.

For the nine months ended September 30, 2022, the deferred income tax expense was mainly the 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 20222021 was $32.0 million asalso 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 sixnine months ended JuneSeptember 30, 2023, the difference between the effective tax rate of 145%115% 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 sixnine months ended JuneSeptember 30, 2022, the difference between the effective tax rate of 54%49% 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.compensation which were partially offset by a decrease in foreign currency translation.

8. Contingencies

Legal Proceedings

Gran Tierra has several lawsuits and claims pending. The outcome of the lawsuits and disputes cannot be predicted with 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 JuneSeptember 30, 2023, the Company had provided letters of credit and other credit support totaling $109.4$220.1 million (December 31, 2022 - $111.1 million) as security relating to work commitment guarantees in Colombia and Ecuador contained in exploration contracts, the Suroriente Block (Note 3), and other capital or operating requirements.

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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 JuneSeptember 30, 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 current assets, other long-term assets, accounts payable and accrued liabilities, credit facility, long-term debt 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.

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Fair Value Measurement

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

(Thousands of U.S. Dollars)(Thousands of U.S. Dollars)As at June 30, 2023As at December 31, 2022(Thousands of U.S. Dollars)As at September 30, 2023As at December 31, 2022
Level 1Level 1Level 1
AssetsAssetsAssets
Prepaid equity forward (“PEF”) - current (1)
Prepaid equity forward (“PEF”) - current (1)
$4,898 $5,981 
Prepaid equity forward (“PEF”) - current (1)
$6,973 $5,981 
PEF - long-term(2)
PEF - long-term(2)
 9,975 
PEF - long-term(2)
 9,975 
$4,898 $15,956 $6,973 $15,956 
LiabilitiesLiabilitiesLiabilities
6.25% Senior Notes6.25% Senior Notes$233,502 $243,801 6.25% Senior Notes$255,594 $243,801 
7.75% Senior Notes7.75% Senior Notes227,321 241,455 7.75% Senior Notes257,145 241,455 
$460,823 $485,256 $512,739 $485,256 
Level 2Level 2Level 2
AssetsAssetsAssets
Restricted cash and cash equivalents - long-term(2)
Restricted cash and cash equivalents - long-term(2)
$6,504 $5,343 
Restricted cash and cash equivalents - long-term(2)
$7,052 $5,343 
(1) The current portion of PEF is included in the other current assets on the Company’s condensed consolidated balance sheet
(2) The long-term portion of restricted cash and PEF is included in the other long-term assets on the Company’s condensed consolidated balance sheet

The fair values of cash and cash equivalents, current restricted cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities and credit facility 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 approximated their carrying value because interest rates are variable and reflective of market rates.

PEF
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Prepaid Equity Forward

To reduce the Company’s exposure to changes in the trading price of the Company’s common shares of Common Stock 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 of Common Stock 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 JuneSeptember 30, 2023, the Company’s PEF had a notional amount of 1.0 million shares with a fair value of $4.9$7.0 million (As at December 31, 2022 - 1.6 million shares with a fair value of $16.0 million). During the three and sixnine months ended JuneSeptember 30, 2023, the Company recorded a $4.1$2.2 million gain and $5.8$3.6 million loss, respectively, on the PEF in general and administrative expenses (three and sixnine months ended JuneSeptember 30, 2022 - $5.2$2.6 million loss and $2.7$5.3 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.

Senior Notes

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

At JuneSeptember 30, 2023, the carrying amounts of the 6.25% Senior Notes and the 7.75% Senior Notes were $268.9$269.4 million and $293.9$294.2 million, respectively, which represented the aggregate principal amount less unamortized debt issuance costs, and the fair values were $233.5$255.6 million and $227.3$257.1 million, respectively.

During the three and sixnine months ended JuneSeptember 30, 2023, the Company did not have any derivative instruments and consequently did not incur any gains orand losses related to derivativesderivative instruments (three and sixnine months ended JuneSeptember 30, 2022 - $5.2nil and $26.6 million and $26.6 million, respective loss related to commodity price derivatives).derivatives, respectively.

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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,As at September 30,As at December 31,
(Thousands of U.S. Dollars)(Thousands of U.S. Dollars)2023202220222021(Thousands of U.S. Dollars)2023202220222021
Cash and cash equivalentsCash and cash equivalents$68,529 $108,558 $126,873 $26,109 Cash and cash equivalents$123,216 $118,173 $126,873 $26,109 
Restricted cash and cash equivalents - currentRestricted cash and cash equivalents - current1,142 1,142 1,142 392 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)
6,504 4,827 5,343 4,903 
Restricted cash and cash equivalents -
long-term (1)
7,052 5,518 5,343 4,903 
$76,175 $114,527 $133,358 $31,404 $131,410 $124,833 $133,358 $31,404 
(1) Included in other long-term assets on the Company’s condensed consolidated balance sheet

Net changes in assets and liabilities from operating activities were as follows:
Six Months Ended June 30,Nine Months Ended September 30,
(Thousands of U.S. Dollars)(Thousands of U.S. Dollars)20232022(Thousands of U.S. Dollars)20232022
Accounts receivable and other long-term assetsAccounts receivable and other long-term assets$3,898 $2,356 Accounts receivable and other long-term assets$(8,484)$2,811 
DerivativesDerivatives 4,254 Derivatives (2,757)
PEFPEF11,887 (11,215)PEF9,664 (13,837)
Prepaids & InventoryPrepaids & Inventory(3,035)(3,811)Prepaids & Inventory(6,809)(6,025)
Accounts payable and accrued and other long-term liabilitiesAccounts payable and accrued and other long-term liabilities(3,383)8,264 Accounts payable and accrued and other long-term liabilities(3,040)37,862 
Taxes receivable and payableTaxes receivable and payable(35,203)56,481 Taxes receivable and payable(25,566)54,784 
Net changes in assets and liabilities from operating activitiesNet changes in assets and liabilities from operating activities$(25,836)$56,329 Net changes in assets and liabilities from operating activities$(34,235)$72,838 

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Changes in non-cash investing working capital for the sixnine months ended JuneSeptember 30, 2023, were comprised of an increasea decrease in accounts payable and accrued liabilities of $9.1$11.0 million (sixand an increase in accounts receivable of $0.1 million (nine months ended JuneSeptember 30, 2022, an increase in accounts payable and accrued liabilities of $11.2$3.7 million and an increase in accounts receivable of $0.2$0.4 million).

The following table provides additional supplemental cash flow disclosures:
Six Months Ended June 30,Nine Months Ended September 30,
(Thousands of U.S. Dollars)(Thousands of U.S. Dollars)20232022(Thousands of U.S. Dollars)20232022
Cash paid for income taxes$71,457 $20,468 
Cash paid for income taxes including withholding taxCash paid for income taxes including withholding tax$85,203 $29,881 
Cash paid for interestCash paid for interest$20,406 $21,975 Cash paid for interest$29,446 $31,455 
Non-cash investing activities:Non-cash investing activities:Non-cash investing activities:
Net liabilities related to property, plant and equipment, end of periodNet liabilities related to property, plant and equipment, end of period$64,206 $41,106 Net liabilities related to property, plant and equipment, end of period$44,067 $33,397 
1314


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 2022 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 2022 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.Common Stock. As a result of the reverse stock split, every ten of the Company’s issued shares of common stockCommon Stock were automatically combined into one issued share of common stock, without any change to the par value per share.Common Stock. 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 secondthird quarter of 2023
Net lossincome in the secondthird quarter of 2023 was $10.8$6.5 million or $(0.33)$0.20 per share basic and diluted, compared to a net income of $53.0$38.7 million or $1.44$1.05 per share basic and $1.42$1.04 per share diluted in the secondthird quarter of 2022
Income before income taxes in the secondthird quarter of 2023 was $22.9$46.9 million, compared to an income before income taxes of $91.6$60.4 million in the secondthird quarter of 2022
DuringAdjusted EBITDA(2) increased to $119.2 million, compared to $116.1 million in the secondthird quarter of 2023, we re-purchased 20,439 of our common shares at a weighted average price of $5.27 per share2022 and increased from $97.3 million in the prior quarter
Funds flow from operations(2) decreased by 49%16% to $53.1$79.0 million, compared to the secondthird quarter of 2022 and decreasedincreased by 12%49% from $60.0$53.1 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
NAR production for the secondthird quarter of 2023 increased by 17%14% to 27,20426,776 BOPD, compared to 23,21523,472 BOPD in the secondthird quarter of 2022 and increaseddecreased by 7%2% from the firstprior quarter of 2023
Sales volumes for the secondthird quarter of 2023 increased by 19%12% to 27,27126,396 BOPD, compared to 22,84723,516 BOPD in the secondthird quarter of 2022 and increaseddecreased by 8%3% from the firstprior quarter of 2023
Oil sales for the third quarter of 2023 were $157.9$179.9 million, 23% lower7% higher compared to the secondthird quarter of 2022, primarily due to a 31% decrease in Brent price, an increase of 8% in thelower quality and transportation discounts and offset by 19% higher sales volumes.utilization of marketing arrangements which used Brent monthly average of the month of delivery (“M pricing”) during the current quarter compared to utilization of Brent monthly average following the month of deliveries (“M+1” pricing) which negatively impacted revenues in the third quarter of 2022. Oil sales increased by 10%14% from $144.2$157.9 million in the firstsecond quarter of 2023 primarily due to a 8% higher sales volumesan 11% increase in Brent prices and lower quality and transportation discounts, offset by 3% lower sales volumes
Operating expenses increased by 23%18% to $48.5$49.4 million or by $0.54$0.99 per bbl to $19.54$20.33 per bbl when compared to the secondthird quarter of 2022, primarily as a result of higher lifting costs offset by lower workover activities. Operating expenses increased from $41.4$48.5 million or $18.26$19.54 per bbl in the prior quarter, primarily due to higher lifting costsfor the same reason mentioned above
Transportation expenses per bbl increased by $0.28 in$0.46 when compared to the secondthird quarter of 20232022, due to higher transportation tariffs affecting Acordionero sales, utilization of new transportation routes for new exploration wells in Colombia and Ecuador sales when compared toand increased by $0.09 from the second quarter of 2022 and increased $0.14 from the first quarter of 2023 due to higher trucking costs resulting from utilization longer distance delivery points and depreciation of U.S. dollar against the Colombian peso
Operating netback(2) decreasedincreased to $105.7$126.7 million compared to $163.8$124.1 million in the secondthird quarter of 2022 and increased from $99.8$105.7 million in the prior quarter
Adjusted EBITDA(2) decreased to $84.5 million compared to $140.1 million in the second quarter of 2022 and decreased from $88.7 million in the prior quarter. During the quarter, Adjusted EBITDA was reduced by $12.8 million due to realized foreign exchange loss primarily associated with the payment of income taxes in the second quarter
Quality and transportation discounts for the secondthird quarter of 2023 increaseddecreased to $14.10$11.83 per bbl compared to $13.00$13.37 per bbl in the secondthird quarter of 2022, primarily as a result of the wideningtightening of the Castilla and Vasconia differentials and decreased from $18.45$14.10 per bbl in the prior quarter for the same reason mentioned above
General and administrative (“G&A”) expenses before stock-based compensation increasedwere comparable to the third quarter of 2022 and decreased by 22% compared to13% from the second quarter of 20222023 due to higherlower legal fees and consulting costs attributed to optimization projects and decreased by 15% from the first quarter of 2023
Capital additions for the secondthird quarter of 2023 were $65.6$43.1 million, an increasea decrease of 1%24% compared to the secondthird quarter of 2022, and decreased 8%a decrease of 34% from the firstsecond quarter of 2023 due to the accelerationcompletion of the 2023 drilling program in the first quarterhalf of 2023
1415


(Thousands of U.S. Dollars, unless otherwise indicated)(Thousands of U.S. Dollars, unless otherwise indicated)Three Months Ended June 30,Three Months Ended March 31,Six Months Ended June 30,(Thousands of U.S. Dollars, unless otherwise indicated)Three Months Ended September 30,Three Months Ended June 30,Nine Months Ended September 30,
20232022% Change202320232022% 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 Royalties33,719 30,607 10 31,611 32,671 29,988 Working Interest (“WI”) Production Before Royalties33,940 30,391 12 33,719 33,098 30,123 10 
RoyaltiesRoyalties(6,515)(7,392)(12)(6,085)(6,301)(6,962)(9)Royalties(7,164)(6,919)(6,515)(6,592)(6,948)(5)
Production NARProduction NAR27,204 23,215 17 25,526 26,370 23,026 15 Production NAR26,776 23,472 14 27,204 26,506 23,175 14 
Decrease (Increase) in Inventory67 (368)(118)(355)(143)(236)39 
(Increase) Decrease in Inventory(Increase) Decrease in Inventory(380)44 (964)67 (222)(141)(57)
Sales(1)
Sales(1)
27,271 22,847 19 25,171 26,227 22,790 15 
Sales(1)
26,396 23,516 12 27,271 26,284 23,034 14 
Net (Loss) Income$(10,825)$52,972 (120)$(9,700)$(20,525)$67,091 (131)
Net Income (Loss)Net Income (Loss)$6,527 $38,663 (83)$(10,825)$(13,998)$105,754 (113)
Operating NetbackOperating NetbackOperating Netback
Oil SalesOil Sales$157,902 $205,785 (23)$144,190 $302,092 $380,354 (21)Oil Sales$179,921 $168,397 $157,902 $482,013 $548,751 (12)
Operating ExpensesOperating Expenses(48,491)(39,494)23 (41,369)(89,860)(74,429)21 Operating Expenses(49,367)(41,837)18 (48,491)(139,227)(116,266)20 
Transportation ExpensesTransportation Expenses(3,691)(2,513)47 (3,066)(6,757)(5,347)26 Transportation Expenses(3,842)(2,417)59 (3,691)(10,599)(7,764)37 
Operating Netback(2)
Operating Netback(2)
$105,720 $163,778 (35)$99,755 $205,475 $300,578 (32)
Operating Netback(2)
$126,712 $124,143 $105,720 $332,187 $424,721 (22)
G&A Expenses Before Stock-Based CompensationG&A Expenses Before Stock-Based Compensation$9,549 $7,847 22 $11,196 $20,745 $15,626 33 G&A Expenses Before Stock-Based Compensation$8,307 $8,284 — $9,549 $29,052 $23,910 22 
G&A Stock-Based Compensation Expense317 1,989 (84)1,500 1,817 6,546 (72)
G&A Stock-Based Compensation Expense (Recovery)G&A Stock-Based Compensation Expense (Recovery)1,931 (170)1,236 317 3,748 6,376 (41)
G&A Expenses, Including Stock-Based CompensationG&A Expenses, Including Stock-Based Compensation$9,866 $9,836 — $12,696 $22,562 $22,172 G&A Expenses, Including Stock-Based Compensation$10,238 $8,114 26 $9,866 $32,800 $30,286 
Adjusted EBITDA(2)
Adjusted EBITDA(2)
$84,522 $140,113 (40)$88,677 $173,199 $259,491 (33)
Adjusted EBITDA(2)
$119,235 $116,089 $97,291 $306,391 $375,075 (18)
Funds Flow From Operations(2)
Funds Flow From Operations(2)
$53,106 $103,625 (49)$60,016 $113,122 $190,935 (41)
Funds Flow From Operations(2)
$79,000 $93,746 (16)$53,106 $192,122 $284,681 (33)
Capital ExpendituresCapital Expenditures$65,565 $65,199 $71,062 $136,627 $106,682 28 Capital Expenditures$43,080 $57,035 (24)$65,565 $179,707 $163,717 10 
(1) Sales volumes represent production NAR adjusted for inventory changes.

(2) Non-GAAP measures

Operating netback, EBITDA, adjusted EBITDA, and funds flow from operations 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 income (loss) income 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.

EBITDA, as presented, is defined as net income (loss) income 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 and other 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
16


financial measure is useful supplemental information for investors to analyze our performance and our financial results. A reconciliation from net income (loss) income to EBITDA and adjusted EBITDA is as follows:

15


Three Months Ended June 30,Three Months Ended March 31,Six Months Ended June 30, Three Months Ended September 30,Three Months Ended June 30,Nine Months Ended September 30,
(Thousands of U.S. Dollars)(Thousands of U.S. Dollars)20232022202320232022(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
Net income (loss)Net income (loss)$6,527 $38,663 $(10,825)$(13,998)$105,754 
Adjustments to reconcile net income (loss) to EBITDA and Adjusted EBITDAAdjustments to reconcile net income (loss) to EBITDA and Adjusted EBITDA
DD&A expensesDD&A expenses56,209 42,216 51,721 107,930 83,179 DD&A expenses55,019 45,320 56,209 162,949 128,499 
Interest expenseInterest expense12,678 12,194 11,836 24,514 24,322 Interest expense13,503 11,421 12,678 38,017 35,743 
Income tax expenseIncome tax expense33,732 38,666 32,883 66,615 78,206 Income tax expense40,333 21,734 33,732 106,948 99,940 
EBITDA (non-GAAP)EBITDA (non-GAAP)$91,794 $146,048 $86,740 $178,534 $252,798 EBITDA (non-GAAP)$115,382 $117,138 $91,794 $293,916 $369,936 
Non-cash lease expenseNon-cash lease expense1,109 747 1,144 2,253 1,158 Non-cash lease expense1,235 851 1,109 3,488 2,009 
Lease paymentsLease payments(636)(388)(606)(1,242)(732)Lease payments(676)(402)(636)(1,918)(1,134)
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 
Foreign exchange lossForeign exchange loss1,717 1,489 4,707 8,126 486 
Stock-based compensation expense (recovery)Stock-based compensation expense (recovery)1,931 (170)317 3,748 6,376 
Unrealized derivative instruments gainUnrealized derivative instruments gain (219)—  — 
Other gainOther gain — (615)(615)— Other gain(354)(2,598)— (969)(2,598)
Adjusted EBITDA (non-GAAP)Adjusted EBITDA (non-GAAP)$84,522 $140,113 $88,677 $173,199 $259,491 Adjusted EBITDA (non-GAAP)$119,235 $116,089 $97,291 $306,391 $375,075 

Funds flow from operations, as presented, is defined as net income (loss) income 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, unrealized derivative instruments gain or loss, cash settlement on derivative instruments and other 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. A reconciliation from net income (loss) income to funds flow from operations is as follows:
Three Months Ended June 30,Three Months Ended March 31,Six Months Ended June 30, Three Months Ended September 30,Three Months Ended June 30,Nine Months Ended September 30,
(Thousands of U.S. Dollars)(Thousands of U.S. Dollars)20232022202320232022(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
Net income (loss)Net income (loss)$6,527$38,663$(10,825)$(13,998)$105,754 
Adjustments to reconcile net income (loss) to funds flow from operationsAdjustments to reconcile net income (loss) to funds flow from operations
DD&A expensesDD&A expenses56,20942,21651,721107,930 83,179 DD&A expenses55,01945,32056,209162,949 128,499 
Deferred income tax expenseDeferred income tax expense13,97513,24115,27729,252 31,954 Deferred income tax expense13,9904,91413,97543,242 36,868 
Stock-based compensation expense3171,9891,5001,817 6,546 
Stock-based compensation expense (recovery)Stock-based compensation expense (recovery)1,931(170)3173,748 6,376 
Amortization of debt issuance costsAmortization of debt issuance costs1,0191,1317811,800 2,018 Amortization of debt issuance costs1,5947511,0193,394 2,769 
Non-cash lease expenseNon-cash lease expense1,1097471,1442,253 1,158 Non-cash lease expense1,2358511,1093,488 2,009 
Lease paymentsLease payments(636)(388)(606)(1,242)(732)Lease payments(676)(402)(636)(1,918)(1,134)
Unrealized foreign exchange (gain) lossUnrealized foreign exchange (gain) loss(8,062)4,341514(7,548)(498)Unrealized foreign exchange (gain) loss(266)6,636(8,062)(7,814)6,138 
Derivative instruments loss5,172 26,611 
Cash settlements on derivative instruments(17,796) (26,392)
Unrealized derivative instruments gainUnrealized derivative instruments gain (219)—  — 
Other gainOther gain(615)(615)— Other gain(354)(2,598)(969)(2,598)
Funds flow from operations (non-GAAP)Funds flow from operations (non-GAAP)$53,106$103,625$60,016$113,122 $190,935 Funds flow from operations (non-GAAP)$79,000$93,746$53,106$192,122 $284,681 










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Additional Operational Results

Three Months Ended June 30,Three Months Ended March 31,Six Months Ended June 30, Three Months Ended September 30,Three Months Ended June 30,Nine Months Ended September 30,
(Thousands of U.S. Dollars)(Thousands of U.S. Dollars)20232022% Change202320232022% Change(Thousands of U.S. Dollars)20232022% Change202320232022% Change
Oil salesOil sales$157,902 $205,785 (23)$144,190 $302,092 $380,354 (21)Oil sales$179,921 $168,397 $157,902 $482,013 $548,751 (12)
Operating expensesOperating expenses48,491 39,494 23 41,369 89,860 74,429 21 Operating expenses49,367 41,837 18 48,491 139,227 116,266 20 
Transportation expensesTransportation expenses3,691 2,513 47 3,066 6,757 5,347 26 Transportation expenses3,842 2,417 59 3,691 10,599 7,764 37 
Operating netback(1)
Operating netback(1)
105,720 163,778 (35)99,755 205,475 300,578 (32)
Operating netback(1)
126,712 124,143 105,720 332,187 424,721 (22)
DD&A expensesDD&A expenses56,209 42,216 33 51,721 107,930 83,179 30 DD&A expenses55,019 45,320 21 56,209 162,949 128,499 27 
G&A expenses before stock-based compensationG&A expenses before stock-based compensation9,549 7,847 22 11,196 20,745 15,626 33 G&A expenses before stock-based compensation8,307 8,284 — 9,549 29,052 23,910 22 
G&A stock-based compensation expense317 1,989 (84)1,500 1,817 6,546 (72)
Foreign exchange loss (gain)4,707 2,722 73 1,702 6,409 (1,003)739 
G&A stock-based compensation expense (recovery)G&A stock-based compensation expense (recovery)1,931 (170)1,236 317 3,748 6,376 (41)
Foreign exchange lossForeign exchange loss1,717 1,489 15 4,707 8,126 486 1,572 
Derivative instruments lossDerivative instruments loss 5,172 (100)—  26,611 (100)Derivative instruments loss — — —  26,611 (100)
Other gainOther gain — — (615)(615)— 100 Other gain(354)(2,598)(86)— (969)(2,598)(63)
Interest expenseInterest expense12,678 12,194 11,836 24,514 24,322 Interest expense13,503 11,421 18 12,678 38,017 35,743 
83,460 72,140 16 77,340 160,800 155,281 80,123 63,746 26 83,460 240,923 219,027 10 
Interest incomeInterest income647 — 100 768 1,415 — 100 Interest income271 — 100 647 1,686 — 100 
Income before income taxesIncome before income taxes22,907 91,638 (75)23,183 46,090 145,297 (68)Income before income taxes46,860 60,397 (22)22,907 92,950 205,694 (55)
Current income tax expenseCurrent income tax expense19,757 25,425 (22)17,606 37,363 46,252 (19)Current income tax expense26,343 16,820 57 19,757 63,706 63,072 
Deferred income tax expenseDeferred income tax expense13,975 13,241 15,277 29,252 31,954 (8)Deferred income tax expense13,990 4,914 185 13,975 43,242 36,868 17 
33,732 38,666 (13)32,883 66,615 78,206 (15)40,333 21,734 86 33,732 106,948 99,940 
Net (loss) income$(10,825)$52,972 (120)$(9,700)$(20,525)$67,091 (131)
Net income (loss)Net income (loss)$6,527 $38,663 (83)$(10,825)$(13,998)$105,754 (113)
Sales Volumes (NAR)Sales Volumes (NAR)Sales Volumes (NAR)
Total sales volumes, BOPDTotal sales volumes, BOPD27,271 22,847 19 25,171 26,227 22,790 15 Total sales volumes, BOPD26,396 23,516 12 27,271 26,284 23,034 14 
Brent Price per bblBrent Price per bbl$77.73 $111.98 (31)$82.10 $79.91 $104.94 (24)Brent Price per bbl$85.92 $97.70 (12)$77.73 $81.94 $102.48 (20)
Consolidated Results of Operations per bbl Sales Volumes NARConsolidated 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)Oil sales$74.09 $77.84 (5)$63.63 $67.18 $87.27 (23)
Operating expensesOperating expenses19.54 19.00 18.26 18.93 18.04 Operating expenses20.33 19.34 19.54 19.40 18.49 
Transportation expensesTransportation expenses1.49 1.21 23 1.35 1.42 1.30 Transportation expenses1.58 1.12 41 1.49 1.48 1.23 20 
Operating netback(1)
Operating netback(1)
42.60 78.77 (46)44.04 43.29 72.87 (41)
Operating netback(1)
52.18 57.38 (9)42.60 46.30 67.55 (31)
DD&A expensesDD&A expenses22.65 20.31 12 22.83 22.74 20.17 13 DD&A expenses22.66 20.95 22.65 22.71 20.43 11 
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 expenses before stock-based compensation3.42 3.83 (11)3.85 4.05 3.80 
G&A stock-based compensation expense0.13 0.96 (86)0.66 0.38 1.59 (76)
Foreign exchange loss (gain)1.90 1.31 45 0.75 1.35 (0.24)663 
Derivative instruments loss 2.49 (100)—  6.45 (100)
1718


G&A stock-based compensation expense (recovery)G&A stock-based compensation expense (recovery)0.80 (0.08)1,100 0.13 0.52 1.01 (49)
Foreign exchange lossForeign exchange loss0.71 0.69 1.90 1.13 0.08 1,313 
Derivative instruments lossDerivative instruments loss — — —  4.23 (100)
Other gainOther gain — — (0.27)(0.13)— 100 Other gain(0.15)(1.20)(88)— (0.14)(0.41)(66)
Interest expenseInterest expense5.11 5.87 (13)5.22 5.16 5.90 (13)Interest expense5.56 5.28 5.11 5.30 5.68 (7)
33.64 34.71 (3)34.13 33.87 37.66 (10)33.00 29.47 12 33.64 33.57 34.82 (4)
Interest incomeInterest income0.26 — 100 0.34 0.30 — 100 Interest income0.11 — 100 0.26 0.23 — 100 
Income before income taxesIncome before income taxes9.22 44.06 (79)10.25 9.72 35.21 (72)Income before income taxes19.29 27.91 (31)9.22 12.96 32.73 (60)
Current income tax expenseCurrent income tax expense7.96 12.23 (35)7.77 7.87 11.21 (30)Current income tax expense10.85 7.77 40 7.96 8.88 10.03 (11)
Deferred income tax expenseDeferred income tax expense5.63 6.37 (12)6.74 6.16 7.75 (21)Deferred income tax expense5.76 2.27 154 5.63 6.03 5.86 
13.59 18.60 (27)14.51 14.03 18.96 (26)16.61 10.04 65 13.59 14.91 15.89 (6)
Net (loss) income$(4.37)$25.46 (117)$(4.26)$(4.31)$16.25 (127)
Net income (loss)Net income (loss)$2.68 $17.87 (85)$(4.37)$(1.95)$16.84 (112)
 
(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.

Oil Production and Sales Volumes, BOPD
Three Months Ended June 30,Three Months Ended March 31,Six Months Ended June 30,Three Months Ended September 30,Three Months Ended June 30,Nine Months Ended September 30,
2023202220232023202220232022202320232022
Average Daily Volumes (BOPD)Average Daily Volumes (BOPD)Average Daily Volumes (BOPD)
WI Production Before RoyaltiesWI Production Before Royalties33,719 30,607 31,611 32,671 29,988 WI Production Before Royalties33,940 30,391 33,719 33,098 30,123 
RoyaltiesRoyalties(6,515)(7,392)(6,085)(6,301)(6,962)Royalties(7,164)(6,919)(6,515)(6,592)(6,948)
Production NARProduction NAR27,204 23,215 25,526 26,370 23,026 Production NAR26,776 23,472 27,204 26,506 23,175 
Decrease (Increase) in Inventory67 (368)(355)(143)(236)
(Increase) Decrease in Inventory(Increase) Decrease in Inventory(380)44 67 (222)(141)
SalesSales27,271 22,847 25,171 26,227 22,790 Sales26,396 23,516 27,271 26,284 23,034 
Royalties, % of WI Production Before RoyaltiesRoyalties, % of WI Production Before Royalties19 %24 %19 %19 %23 %Royalties, % of WI Production Before Royalties21 %23 %19 %20 %23 %

Oil production NAR for the three and sixnine months ended JuneSeptember 30, 2023, increased by 17% and 15%, respectively,14% in each of the periods compared to the corresponding periods of 2022 due to successful drilling and workover campaigns in Acordionero, Costayaco and Moqueta fields in Colombia.Colombia and exploration success in Ecuador.

Oil production NAR increaseddecreased by 7%2% compared to the prior quarter fordue to higher royalties driven by an increase in benchmark oil prices in the same reasons mentioned above.current quarter.

Royalties as a percentage of WI production for the three and sixnine months ended JuneSeptember 30, 2023, decreased by 19%to 21% and 20%, respectively, compared to the corresponding periods of 2022 commensurate with the decrease in benchmark oil prices and the price sensitive royalty regime in Colombia. Royalties as a percentage of WI production were comparableincreased compared to 19% in the prior quarter due to the prior quarter.increase in benchmark oil prices.
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498631
The Midas block includes the Acordionero, Chuira, Ayombero and AyomberoGaitas oil fields, and the Chaza block includes the Costayaco and Moqueta oil fields.

Realized price per bbl for the three andsix months ended JuneSeptember 30, 2023 decreased by 36% and 31%5%, respectively, compared to the corresponding periodsperiod of 2022, primarily as a result of a 31% and 24%12% decrease in Brent price, offset by lower differentials in the current quarter.

Realized price per bbl for thenine months ended September 30, 2023, decreased by 23%, compared to the corresponding period of 2022, primarily as a result of 20% decrease in Brent price and higher differentials. differentials in the current period.

20


For the three and sixnine months ended JuneSeptember 30, 2023, Castilla differentials decreased to $6.64 and increased to $9.41 and $12.29$10.41 per bbl from $7.82$9.15 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$7.89 per bbl, respectively, in the corresponding periods of 2022. Vasconia differentials decreased to $3.59 and increased to $5.66 per bbl from $3.77 and $4.17 per bbl, respectively, in the corresponding periods of 2022.

Compared to the prior quarter, the average realized price per bbl was comparable.increased due to an 11% increase in Brent price and lower differentials.
19


432556

Oil sales for the three and six months ended JuneSeptember 30, 2023, increased by 7% to $179.9 million, compared to the corresponding period of 2022 due to lower Castilla and Vasconia differentials and utilization of marketing arrangements which used Brent monthly average of the month of delivery (“M pricing”) during the current quarter compared to marketing arrangements which used Brent monthly average following the month of deliveries (“M+1” pricing) which negatively impacted revenues in the corresponding period of 2022.

Oil sales for the nine months ended September 30, 2023, decreased by 23% and 21%12% to $157.9$482.0 million, and $302.1 million, respectively, compared to the corresponding periodsperiod of 2022 due to a 31% and 24%20% decrease in Brent price, and higher Castilla and Vasconia differentials. During the first quarter of 2023, we commenced oildifferentials offset by 14% higher 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.volumes.

Compared to the prior quarter, oil sales increased by 10%14%, primarily as a result of an 8%11% increase in sales volumesBrent price and the narrowing of qualitylower Castilla, Vasconia and transportationOriente differentials partially offset by a 5%3% decrease in Brent price.sales volumes.

The following table shows the effect of changes in realized price and sale volumes on our oil sales for the three and sixnine months ended JuneSeptember 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 

(Thousands of U.S. Dollars)Third Quarter 2023 Compared with Second Quarter 2023Third Quarter 2023 Compared with Third Quarter 2022Nine Months Ended September 30, 2023 Compared with Nine Months Ended September 30, 2022
Oil sales for the comparative period$157,902 $168,397 $548,751 
Realized sales price increase (decrease) effect25,408 (9,095)(144,152)
Sales volumes (decrease) increase effect(3,389)20,619 77,414 
Oil sales for the three and nine months ended
September 30, 2023
$179,921 $179,921 $482,013 
2021



Operating Netback
Three Months Ended June 30,Three Months Ended March 31,Six Months Ended June 30,Three Months Ended September 30,Three Months Ended June 30,Nine Months Ended September 30,
(Thousands of U.S. Dollars)(Thousands of U.S. Dollars)20232022202320232022(Thousands of U.S. Dollars)20232022202320232022
Oil SalesOil Sales$157,902 $205,785 $144,190 $302,092 $380,354 Oil Sales$179,921 $168,397 $157,902 $482,013 $548,751 
Transportation ExpensesTransportation Expenses(3,691)(2,513)(3,066)(6,757)(5,347)Transportation Expenses(3,842)(2,417)(3,691)(10,599)(7,764)
154,211 203,272 141,124 295,335 375,007 176,079 165,980 154,211 471,414 540,987 
Operating ExpensesOperating Expenses(48,491)(39,494)(41,369)(89,860)(74,429)Operating Expenses(49,367)(41,837)(48,491)(139,227)(116,266)
Operating Netback(1)
Operating Netback(1)
$105,720 $163,778 $99,755 $205,475 $300,578 
Operating Netback(1)
$126,712 $124,143 $105,720 $332,187 $424,721 
(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$77.73 $111.98 $82.10 $79.91 $104.94 Brent$85.92 $97.70 $77.73 $81.94 $102.48 
One Month Forward Brent (“M+1”) AdjustmentOne Month Forward Brent (“M+1”) Adjustment (6.49)—  (2.23)
Quality and Transportation DiscountsQuality and Transportation Discounts(14.10)(13.00)(18.45)(16.27)(12.73)Quality and Transportation Discounts(11.83)(13.37)(14.10)(14.76)(12.98)
Average Realized PriceAverage Realized Price63.63 98.98 63.65 63.64 92.21 Average Realized Price74.09 77.84 63.63 67.18 87.27 
Transportation ExpensesTransportation Expenses(1.49)(1.21)(1.35)(1.42)(1.30)Transportation Expenses(1.58)(1.12)(1.49)(1.48)(1.23)
Average Realized Price Net of Transportation ExpensesAverage Realized Price Net of Transportation Expenses62.14 97.77 62.30 62.22 90.91 Average Realized Price Net of Transportation Expenses72.51 76.72 62.14 65.70 86.04 
Operating ExpensesOperating Expenses(19.54)(19.00)(18.26)(18.93)(18.04)Operating Expenses(20.33)(19.34)(19.54)(19.40)(18.49)
Operating Netback(1)
Operating Netback(1)
$42.60 $78.77 $44.04 $43.29 $72.87 
Operating Netback(1)
$52.18 $57.38 $42.60 $46.30 $67.55 
(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 and reconciliation of this measure.

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241241
Operating expenses for the three months ended JuneSeptember 30, 2023, increased by 23%18% to $48.5$49.4 million or by $0.54$0.99 per bbl to $19.54$20.33 per bbl, compared to the corresponding period of 2022, primarily as a result of $1.94$3.28 per bbl higher lifting costs associated with environmental activitiesroad and pipeline maintenance, power generation due to to increased compressed natural gas purchases and higher diesel tariffs and equipment rental in Ecuador, partiallyassociated with testing exploratory wells, offset by $1.40$2.29 per bbl of lower workovers. As a result of an El-Niño-induced drought, power costs have increased across Colombia, which relies on hydroelectricity for more than two-thirds of its installed power capacity. In addition, operating costs increased as a result of the depreciation of U.S. dollar against the Colombian peso.

Operating expenses for the sixnine months ended JuneSeptember 30, 2023, increased by 21%20% to $89.9$139.2 million or by $0.89$0.91 per bbl to $18.93$19.40 per bbl, compared to the corresponding period of 2022, primarily as a result of $1.62$2.17 higher lifting costs associated with environmental activities, equipment rental, in Ecuadorpower generation and water injection equipment mobilization,road maintenance, offset by $0.73$1.26 per bbl lower workovers.

2223



Compared to the prior quarter, operating expenses increased by 17%2% or $1.28$0.79 per bbl from $41.4$48.5 million or $18.26$19.54 per bbl, primarily due to $1.35$1.48 per bbl higher lifting costs attributed to road maintenance and environmental activities,power generation, partially offset by $0.07$0.69 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 sixnine months ended JuneSeptember 30, 2023, and 2022, and the prior quarter:

Three Months Ended June 30,Three Months Ended March 31,Six Months Ended June 30,Three Months Ended September 30,Three Months Ended June 30,Nine Months Ended September 30,
2023202220232023202220232022202320232022
Volume transported through pipelineVolume transported through pipeline1 %— %%2 %— %Volume transported through pipeline3 %— %%2 %— %
Volume sold at wellheadVolume sold at wellhead46 %48 %45 %46 %48 %Volume sold at wellhead47 %47 %46 %46 %47 %
Volume transported via truck to sales pointVolume transported via truck to sales point53 %52 %53 %52 %52 %Volume transported via truck to sales point50 %53 %53 %52 %53 %
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 sixnine months ended JuneSeptember 30, 2023, increased by 47%59% and 26%37% to $3.7$3.8 million and $6.8$10.6 million, respectively, compared to the corresponding periods of 2022 due to higher transportation tariffs affecting Acordionero sales, and the utilization of new transportation routes related to sales from for new exploration wells in Colombia and Ecuador sales.Ecuador.

On a per bbl basis, transportation expenses increased by 23%41% and 9%20% to $1.49$1.58 and $1.42$1.48 for the three and sixnine months ended JuneSeptember 30, 2023, respectively, compared to the corresponding periods of 2022 for the same reason mentioned above.

Transportation expenses increased by 20%4% from $3.1$3.7 million in the prior quarter due to higher increased trucking costs resulting from using longer distance delivery points and depreciation of the U.S. dollar against the Colombian peso. On a per bbl basis, transportation costsexpenses increased by $0.14$0.09 from $1.49 in the prior quarter for the same reasons mentioned above.
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DD&A Expenses
Three Months Ended June 30,Three Months Ended March 31,Six Months Ended June 30,Three Months Ended September 30,Three Months Ended June 30,Nine Months Ended September 30,
2023202220232023202220232022202320232022
DD&A Expenses, thousands of U.S. DollarsDD&A Expenses, thousands of U.S. Dollars$56,209 $42,216 $51,721 $107,930 $83,179 DD&A Expenses, thousands of U.S. Dollars$55,019 $45,320 $56,209 $162,949 $128,499 
DD&A Expenses, U.S. Dollars per bblDD&A Expenses, U.S. Dollars per bbl22.65 20.31 22.83 22.74 20.17 DD&A Expenses, U.S. Dollars per bbl22.66 20.95 22.65 22.71 20.43 

DD&A expenses for the three and sixnine months ended JuneSeptember 30, 2023, increased by 33%21% and 30%27% or by $2.34$1.71 and $2.57$2.28 per bbl, respectively, due to increased production and higher costs in the depletable base compared to the corresponding periods of 2022.

DD&A expenses increased 9%decreased by 2% compared to the prior quarter and decreasedincreased by $0.18$0.01 per bbl when compared to the prior quarter, due to higheradditions to the depletable reserves along with lower production.

2425


G&A Expenses
Three Months Ended June 30,Three Months Ended March 31,Six Months Ended June 30,Three Months Ended September 30,Three Months Ended June 30,Nine Months Ended September 30,
(Thousands of U.S. Dollars)(Thousands of U.S. Dollars)20232022% Change202320232022% Change(Thousands of U.S. Dollars)20232022% Change202320232022% Change
G&A Expenses Before Stock-Based CompensationG&A Expenses Before Stock-Based Compensation$9,549 $7,847 22 $11,196 $20,745 $15,626 33 G&A Expenses Before Stock-Based Compensation$8,307 $8,284 — $9,549 $29,052 $23,910 22 
G&A Stock-Based Compensation Expense317 1,989 (84)1,500 1,817 6,546 (72)
G&A Stock-Based Compensation Expense (Recovery)G&A Stock-Based Compensation Expense (Recovery)1,931 (170)1,236 317 3,748 6,376 (41)
G&A Expenses, Including Stock-Based CompensationG&A Expenses, Including Stock-Based Compensation$9,866 $9,836 — $12,696 $22,562 $22,172 G&A Expenses, Including Stock-Based Compensation$10,238 $8,114 26 $9,866 $32,800 $30,286 
(U.S. Dollars Per bbl Sales Volumes NAR)(U.S. Dollars Per bbl Sales Volumes NAR)(U.S. Dollars Per bbl Sales Volumes NAR)
G&A Expenses Before Stock-Based CompensationG&A Expenses Before Stock-Based Compensation$3.85 $3.77 $4.94 $4.37 $3.79 15 G&A Expenses Before Stock-Based Compensation$3.42 $3.83 (11)$3.85 $4.05 $3.80 
G&A Stock-Based Compensation Expense0.13 0.96 (86)0.66 0.38 1.59 (76)
G&A Stock-Based Compensation Expense (Recovery)G&A Stock-Based Compensation Expense (Recovery)0.80 (0.08)1,100 0.13 0.52 1.01 (49)
G&A Expenses, Including Stock-Based CompensationG&A Expenses, Including Stock-Based Compensation$3.98 $4.73 (16)$5.60 $4.75 $5.38 (12)G&A Expenses, Including Stock-Based Compensation$4.22 $3.75 13 $3.98 $4.57 $4.81 (5)

ForG&A expenses before stock-based compensation for the three and six months ended JuneSeptember 30, 2023, were comparable to the corresponding period of 2022. On a per bbl basis, G&A expenses before stock-based compensation decreased by $0.41 per bbl to $3.42 due to higher sales volumes in the current quarter.

G&A expenses before stock-based compensation for the nine months ended September 30, 2023, increased by 22% and 33% to $9.5$29.1 million, and $20.7 million, respectively, due to higher consulting costs and legal fees attributed to optimization projects when compared to the corresponding periodsperiod of 2022. On a per bbl basis, G&A expenses before stock-based compensation increased by $0.08 and $0.58$0.25 per bbl to $3.85 and $4.37$4.05 per bbl, respectively, for the same reason mentioned above.above and higher sales volumes during current period.

G&A expenses after stock-based compensation for the three months ended September 30, 2023, increased 26% compared to the corresponding period of 2022 and increased by $0.47 per bbl due to share price appreciation in the current quarter.

G&A expenses after stock-based compensation for the threenine months ended June 30, 2023 were comparable to the corresponding period of 2022 and decreased by $0.75 per bbl due to a lower share price and higher sales volumes in the current quarter.

G&A expenses after stock-based compensation for the six months ended JuneSeptember 30, 2023, increased by 2% per bbl8% due to higher G&A expenses before stock-based compensation offset by a lower share price devaluation and decreased by $0.63$0.24 per bbl due to higher sales volumes when compared to the corresponding period of 2022.

Compared to the prior quarter, G&A expenses before stock-based compensation decreased by 15%13% or $1.09$0.43 on a per bbl basis due to lower legal fees and information technologyconsulting costs partially offset by higher consulting fees attributed to optimization projects.

Compared to the prior quarter, G&A expenses after stock-based compensation decreasedincreased by 22%4% or $1.62$0.24 on a per bbl basis due to lower G&A expenses before stock-based compensation and a lower share price appreciation in the secondthird quarter of 2023.
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8351341
Foreign Exchange Gains and Losses

For the three and sixnine months ended JuneSeptember 30, 2023, we had a $4.7$1.7 million and $6.4$8.1 million loss on foreign exchange, compared to a $2.7$1.5 million loss and a $1.0$0.5 million gainloss in the corresponding periods of 2022, respectively, and a $1.7$4.7 million loss in the prior quarter. Accounts receivable, taxes receivable and payable, 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 sixnine months ended JuneSeptember 30, 2023, and 2022:

Three Months Ended June 30,Six Months Ended June 30,Three Months Ended September 30,Nine Months Ended September 30,
20232022202320222023202220232022
Change in the U.S. dollar against the Colombian pesoChange in the U.S. dollar against the Colombian pesoweakened bystrengthened byweakened bystrengthened byChange in the U.S. dollar against the Colombian pesoweakened bystrengthened byweakened bystrengthened by
9%10%13%4%3%10%16%14%
Change in the U.S. dollar against the Canadian dollarChange in the U.S. dollar against the Canadian dollarweakened bystrengthened byweakened bystrengthened byChange in the U.S. dollar against the Canadian dollarstrengthened bystrengthened byweakened bystrengthened by
2%3%2%2%2%6%—%8%

Income Tax Expense
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended September 30,Nine Months Ended September 30,
(Thousands of U.S. Dollars)(Thousands of U.S. Dollars)2023202220232022(Thousands of U.S. Dollars)2023202220232022
Income before income taxIncome before income tax$22,907 $91,638 $46,090 $145,297 Income before income tax$46,860 $60,397 $92,950 $205,694 
Current income tax expenseCurrent income tax expense$19,757 $25,425 $37,363 $46,252 Current income tax expense$26,343 $16,820 $63,706 $63,072 
Deferred income tax expenseDeferred income tax expense13,975 13,241 29,252 31,954 Deferred income tax expense13,990 4,914 43,242 36,868 
Income tax expenseIncome tax expense$33,732 $38,666 $66,615 $78,206 Income tax expense$40,333 $21,734 $106,948 $99,940 
Effective tax rateEffective tax rate147 %42 %145 %54 %Effective tax rate86 %36 %115 %49 %

2627


Current income tax expense was $37.4$63.7 million for the sixnine months ended JuneSeptember 30, 2023, compared to $46.3$63.1 million in the corresponding period inof 2022, primarily due to a decrease in taxable income.income in Colombia, which is subject to a higher Colombian tax rate.

The deferred income tax expense for the sixnine months ended JuneSeptember 30, 2023, was $29.3$43.2 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.

For the sixnine months ended JuneSeptember 30, 2023, the difference between the effective tax rate of 145%115% 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 sixnine months ended JuneSeptember 30, 2022, the difference between the effective tax rate of 54%49% and the 35% Colombian tax rate was primarily due to $26.6 million of hedging loss, $24.3$35.7 million of financing cost related to Senior Notes, and $21.5 million of corporate costs, which were incurred in a jurisdictions where no tax benefit is recognized.recognized which was partially offset by $12.5 million of non-taxable foreign exchange gain.












































28


Net Income (Loss) Income and Funds Flow from Operations (a Non-GAAP Measure)
(Thousands of U.S. Dollars)(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(Thousands of U.S. Dollars)Third Quarter 2023 Compared with Second Quarter 2023% changeThird Quarter 2023 Compared with Third Quarter 2022% changeNine Months Ended September 30, 2023 Compared with Nine Months Ended September 30, 2022% change
Net (loss) income for the comparative periodNet (loss) income for the comparative period$(9,700)$52,972 $67,091 Net (loss) income for the comparative period$(10,825)$38,663 $105,754 
Increase (decrease) due to:Increase (decrease) due to:Increase (decrease) due to:
Sales priceSales price(56)(87,731)(135,636)Sales price25,408 (9,095)(144,152)
Sales volumesSales volumes13,768 39,848 57,374 Sales volumes(3,389)20,619 77,414 
Expenses:Expenses:Expenses:
OperatingOperating(7,122)(8,997)(15,431)Operating(876)(7,530)(22,961)
TransportationTransportation(625)(1,178)(1,410)Transportation(151)(1,425)(2,835)
Cash G&ACash G&A1,647 (1,702)(5,119)Cash G&A1,242 (23)(5,142)
Net lease paymentsNet lease payments(65)114 585 Net lease payments86 110 695 
Interest, net of amortization of debt issuance costsInterest, net of amortization of debt issuance costs(604)(596)(410)Interest, net of amortization of debt issuance costs(250)(1,239)(1,649)
Realized foreign exchangeRealized foreign exchange(11,581)(14,388)(14,462)Realized foreign exchange10,786 (7,130)(21,592)
Cash settlements on derivative instrumentsCash settlements on derivative instruments— 17,796 26,392 Cash settlements on derivative instruments— 219 26,611 
Current taxesCurrent taxes(2,151)5,668 8,889 Current taxes(6,586)(9,523)(634)
Interest incomeInterest income(121)647 1,415 Interest income(376)271 1,686 
Net change in funds flow from operations(1) from comparative period
Net change in funds flow from operations(1) from comparative period
(6,910)(50,519)(77,813)
Net change in funds flow from operations(1) from comparative period
25,894 (14,746)(92,559)
Expenses:Expenses:Expenses:
Depletion, depreciation and accretionDepletion, depreciation and accretion(4,488)(13,993)(24,751)Depletion, depreciation and accretion1,190 (9,699)(34,450)
Deferred taxDeferred tax1,302 (734)2,702 Deferred tax(15)(9,076)(6,374)
Amortization of debt issuance costs(238)112 218 
Proceeds from debt, net of issuance costs Proceeds from debt, net of issuance costs(575)(843)(625)
Stock-based compensationStock-based compensation1,183 1,672 4,729 Stock-based compensation(1,614)(2,101)2,628 
Derivative instruments gain or loss, net of settlements on derivative instrumentsDerivative instruments gain or loss, net of settlements on derivative instruments— (12,624)219 Derivative instruments gain or loss, net of settlements on derivative instruments— (219)— 
Unrealized foreign exchangeUnrealized foreign exchange8,576 12,403 7,050 Unrealized foreign exchange(7,796)6,902 13,952 
Other gainOther gain(615)— 615 Other gain354 (2,244)(1,629)
Net lease paymentsNet lease payments65 (114)(585)Net lease payments(86)(110)(695)
Net change in net (loss) incomeNet change in net (loss) income(1,125)(63,797)(87,616)Net change in net (loss) income17,352 (32,136)(119,752)
Net loss for the current period$(10,825)12%$(10,825)120%$(20,525)131%
Net income (loss) for the current periodNet income (loss) for the current period$6,527 160%$6,527 (83)%$(13,998)(113)%
(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.
2729


Capital expenditures during the three months ended JuneSeptember 30, 2023, were $65.6$43.1 million:

(Millions of U.S. Dollars)(Millions of U.S. Dollars)ColombiaEcuadorTotal(Millions of U.S. Dollars)ColombiaEcuadorTotal
ExplorationExploration$3.6 $7.5 $11.1 Exploration$4.0 $2.9 $6.9 
Development:Development:Development:
Drilling and CompletionsDrilling and Completions38.9 — 38.9 Drilling and Completions9.3 — 9.3 
FacilitiesFacilities9.5 0.8 10.3 Facilities5.2 0.6 5.8 
WorkoversWorkovers2.8 — 2.8 Workovers4.8 — 4.8 
OtherOther2.5 — 2.5 Other14.0 2.3 16.3 
$57.3 $8.3 $65.6 $37.3 $5.8 $43.1 

During the three months ended JuneSeptember 30, 2023, we commenced drilling the following wells in Colombia:
Number of wells (Gross and Net)
Colombia
Development4.0 
Service3.0 
7.0 

We spud four development and three water injection wells, of which two were in Midas Block and five in Chaza Block. Of the development wells spud during the quarter, three were completed, and one was in-progress as of June 30, 2023. During the three months ended June 30, 2023, we havedid not spud any wells neither in Colombia nor in Ecuador.

On April 11, 2023, we and Ecopetrol S.A. renegotiated the terms of the contract for our operatorship of the Suroriente which was previously scheduled to end in mid-2024. The duration of the contract was extended for 20 years from September 1, 2023 (the “Effective Date”), the date on which we satisfied the relevant conditions precedent and regulatory approval was received. We continue to be the operator of Suroriente. In connection with the contract extension, we paid cash consideration of $6.2 million and provided letters of credit of $123.0 million (see Note 8 in the Notes to Condensed Consolidated Financial Statements (Unaudited) in Part I, Item 1 of this Quarterly Report on Form 10-Q which incorporated herein by reference) related to committed capital investments to be made over a three-year period from the Effective Date.

Liquidity and Capital Resources 
As at As at
(Thousands of U.S. Dollars)(Thousands of U.S. Dollars)June 30, 2023% ChangeDecember 31, 2022(Thousands of U.S. Dollars)September 30, 2023% ChangeDecember 31, 2022
Cash and Cash EquivalentsCash and Cash Equivalents$68,529 (46)$126,873 Cash and Cash Equivalents$123,216 (3)$126,873 
Credit FacilityCredit Facility$50,000 100 $— 
6.25% Senior Notes6.25% Senior Notes$271,909 (3)$279,909 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.financing. 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 capital, be located in basins or countries beyond our current operations, involve joint ventures, or be sizable compared to our current assets and operations.

At JuneDuring the three months ended September 30, 2023, we, had aas guarantor, and Gran Tierra Energy Colombia GmbH and and Gran Tierra Operations Colombia GmbH, as borrowers, amended and restated their credit facility with a market lenderleader in the global commodities industry. As part of the restatement, the initial commitment was adjusted from $100 million to $50 million (maintaining the potential option of up to additional $50 million, subject to approval by the lender). Additionally, the availability period for the draws under the amendment to the credit facility was extended until December 31, 2023. The credit facility has a borrowing base of upcontinues to $150 million, with $100 million readily available at June 30, 2023, and a potential option for an additional $50 million of borrowings upon mutual agreement by the lender and us. The credit facility bearsbear interest based on a risk-freethe secured overnight financing rate posted by the Federal Reserve Bank of New York plus a credit margin of 6.00% and a credit-adjusted spread of 0.26%. Undrawn amounts under the credit facility bear interest at 2.10% per annum, based on the amount available. The credit facility is secured by our Colombian assets and economic rights. Itrights and has a final maturity date of August 15, 2024, which may be extended to February 18, 2025, upon2024. During the satisfaction of certain conditions. The availability period for the draws under the credit facility expires on August 20, 2023. As of Junethree months ended September 30, 2023, the credit facility remained undrawn.was drawn by $50 million.

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

i.Global Coverage ratioRatio of at least 150%, 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.

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 ICE Brent forward strip forward for the projected future cash flows.

As of September 30, 2023, the Company was in compliance with all the above covenants.

At JuneSeptember 30, 2023, we had a $271.9 million aggregate principal amount of 6.25% Senior Notes due 2025 (“6.25% Senior Notes”) and a $300.0 million aggregate principal amount of 7.75% Senior Notes due 2027 (“7.75% Senior Notes” and together with 6.25% Senior Notes, the “Senior Notes”) outstanding.

During the three and sixnine months ended JuneSeptember 30, 2023, we re-purchasedpurchased in the open market nil and $8.0 million, respectively, of 6.25% Senior Notes for cash consideration of $6.8 million. The re-purchasepurchase resulted in a $1.1 million gain, which included the write-off of deferred financing fees of $0.1 million. The re-purchasedSubsequent to the quarter, the Company cancelled all previously purchased 6.25% Senior Notes. No notes were purchased during the three months ended September 30, 2023.

Subsequent to the quarter, we completed exchange offers of $247.1 million of 6.25% Senior Notes were not canceled and held by$275.8 million of 7.75% Senior Notes for $487.6 million newly issued 9.50% Senior Secured Notes due 2029. The exchange consideration for $242.5 million of 6.25% Senior Notes included early participation premium of $80 for each $1,000 aggregate principal amount with the Companyremainder of $4.6 million exchanged at $1,000 and for $274.2 million of 7.75% Senior Notes early participation premium of $20 for each $1,000 aggregate principal amount with remainder of $1.6 million of 7.75% Senior Notes exchanged at $950 for each $1,000 aggregate principal amount. In addition, we paid cash consideration of $60.0 million for 6.25% Senior Notes exchanged as part of total consideration to eligible holders on a pro rata basis, for each $1,000 aggregate principal amount tendered and accepted up to the early exchange deadline. The settlement date of the exchange offer was on October 20, 2023. The Senior Notes tendered and accepted for exchange, as well as the notes held as treasury bonds, as of June 30, 2023.were cancelled.

During the year ended 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 were able to purchase at prevailing market prices up to 3,603,396 shares of Common Stock, representing approximately 10% of the issued and outstanding shares of Common Stock as of August 22, 2022. 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 sixnine months ended JuneSeptember 30, 2023, we re-purchased 20,439nil and 1,328,650 shares at a weighted average price of $5.27nil and $8.15 per share, respectively (three and sixnine months ended JuneSeptember 30, 2022 - nil)1,073,370 shares). As of JuneSeptember 30, 2023, all 3,603,396 shares held as treasury stock were cancelled.canceled. The 2022 Program expired in May 2023 when 10% share maximum was reached.
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Cash Flows

The following table presents our primary sources and uses of cash and cash equivalents and restricted cash and cash equivalents for the periods presented:
Six Months Ended June 30,Nine Months Ended September 30,
(Thousands of U.S. Dollars)(Thousands of U.S. Dollars)20232022(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 (loss) incomeNet (loss) income$(20,525)$67,091 Net (loss) income$(13,998)$105,754 
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 expenses107,930 83,179 DD&A expenses162,949 128,499 
Interest expenseInterest expense24,514 24,322 Interest expense38,017 35,743 
Income tax expenseIncome tax expense66,615 78,206 Income tax expense106,948 99,940 
Other loss — 
Non-cash lease expensesNon-cash lease expenses2,253 1,158 Non-cash lease expenses3,488 2,009 
Lease paymentsLease payments(1,242)(732)Lease payments(1,918)(1,134)
Unrealized foreign exchange gain(7,548)(498)
Foreign exchange lossForeign exchange loss8,126 486 
Stock-based compensation expenseStock-based compensation expense1,817 6,546 Stock-based compensation expense3,748 6,376 
Unrealized derivative instruments loss 219 
Other gainOther gain(615)— Other gain(969)(2,598)
Adjusted EBITDA(1)
Adjusted EBITDA(1)
173,199 259,491 
Adjusted EBITDA(1)
306,391 375,075 
Current income tax expenseCurrent income tax expense(37,363)(46,252)Current income tax expense(63,706)(63,072)
Contractual interest and other financing expensesContractual interest and other financing expenses(22,714)(22,304)Contractual interest and other financing expenses(34,623)(32,974)
Realized foreign exchange (loss) gainRealized foreign exchange (loss) gain(15,940)5,652 
Funds flow from operations(1)
Funds flow from operations(1)
113,122 190,935 
Funds flow from operations(1)
192,122 284,681 
Proceeds from exercise of stock optionsProceeds from exercise of stock options5 1,285 Proceeds from exercise of stock options8 1,294 
Net changes in assets and liabilities from operating activitiesNet changes in assets and liabilities from operating activities 56,329 Net changes in assets and liabilities from operating activities 72,838 
Foreign exchange gain on cash, cash equivalents and restricted cash and cash equivalents5,759 — 
Foreign exchange gain on cash and cash equivalents and restricted cash and cash equivalentsForeign exchange gain on cash and cash equivalents and restricted cash and cash equivalents5,897 — 
Proceeds from debt, net of issuance costsProceeds from debt, net of issuance costs48,125 — 
Changes in non-cash investing working capitalChanges in non-cash investing working capital9,088 10,964 Changes in non-cash investing working capital 3,255 
127,974 259,513 246,152 362,068 
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(136,627)(106,682)Additions to property, plant and equipment(179,707)(163,717)
Net changes in assets and liabilities from operating activitiesNet changes in assets and liabilities from operating activities(25,836)— Net changes in assets and liabilities from operating activities(34,235)— 
Changes in non-cash investing working capitalChanges in non-cash investing working capital(11,051)— 
Repayment of debtRepayment of debt (67,525)Repayment of debt (67,623)
Re-purchase of shares of Common StockRe-purchase of shares of Common Stock(10,825)(14,365)
Purchase of Senior NotesPurchase of Senior Notes(6,805)(17,274)
Re-purchase of Common Stock(10,825)— 
Re-purchase of Senior Notes(6,805)— 
Debt issuance costs(1,873)— 
Settlement of asset retirement obligationsSettlement of asset retirement obligations(156)(242)Settlement of asset retirement obligations(376)(1,673)
Lease paymentsLease payments(3,035)(1,261)Lease payments(5,101)(1,991)
Foreign exchange loss on cash, cash equivalents and restricted cash and cash equivalents (680)
Foreign exchange loss on cash, and cash equivalents and restricted cash and cash equivalentsForeign exchange loss on cash, and cash equivalents and restricted cash and cash equivalents (1,996)
(185,157)(176,390)(248,100)(268,639)
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)$83,123 Net (decrease) increase in cash and cash equivalents and restricted cash and cash equivalents$(1,948)$93,429 
 
(1) Adjusted EBITDA and funds flow from operations are 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.

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One of the primary sources of variability in our cash flows from operating activities is the fluctuation in oil prices. Sales volume changes, costs related to operations and debt servicetransactions also impact cash flows. Our cash flows from operating activities are also impacted by foreign currency exchange rate changes. During the three and sixnine months ended JuneSeptember 30, 2023, funds flow from operations decreased by 49%16% and 41%33%, respectively, compared to the corresponding periods of 2022, primarily due to a decrease in Brent price, lower and higher quality and transportation discounts, respectively, higher operating costs and realized foreign exchange loss.

Critical Accounting Policies and Estimates

Our critical accounting policies and estimates are disclosed in Item 7 of our 2022 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 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 assets and liabilities which are monetary assets and 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 credit facility, which bears floating rates of interest. At JuneSeptember 30, 2023, our outstanding balance under the credit facility was nil$50 million (December 31, 2022 - 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 JuneSeptember 30, 2023.

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Changes in Internal Control over Financial Reporting
 
There were no changes in our internal control over financial reporting during the quarter ended JuneSeptember 30, 2023, that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.
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PART II - Other Information

Item 1. Legal Proceedings
 
See Note 8 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, 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, 2022. These risk factors could materially affect our business, financial condition and results of operations. The unprecedented nature of ongoing conflicts in several parts of the current pandemic andworld, 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 (2)
April 1-30, 2023— $— — 20,439 
May 1-31, 202320,439 5.27 20,439 — 
June 1-30, 2023— — — — 
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 or earlier if the 10% share maximum is reached. We were able to purchase for cancellation at prevailing market prices up to 3,603,396 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.None.

Item 5. Other Information

During the three months ended JuneSeptember 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).
3.4Incorporated 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).
3.5Incorporated 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).
3.510.1Incorporated 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).Filed herewith.
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 JuneSeptember 30, 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: August 1,October 31, 2023/s/ Gary S. Guidry
 By: Gary S. Guidry
 President and Chief Executive Officer
 (Principal Executive Officer)

Date: August 1,October 31, 2023/s/ Ryan Ellson
 By: Ryan Ellson
Executive Vice President and Chief Financial Officer
 (Principal Financial and Accounting Officer)

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