UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM ~~10-Q/A~~10-Q

~~AMENDMENT NO. 1~~

(Mark One)


☒						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2021~~2022


☐						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)

Delaware

98-0479924

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

~~900, 520 - 3 Avenue SW~~500 Centre Street S.E.

Calgary,

Alberta

Canada

~~T2P 0R3~~T2G 1A6

(Address of principal executive offices, including zip code)

(403) 265-3221

(~~Registrant's~~Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	GTE	NYSE 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 filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

On October ~~29, 2021, 367,144,500~~ 31, 2022, 368,898,619shares of the ~~registrant's~~registrant’s Common Stock, $0.001 par value, were issued.

~~EXPLANATORY NOTE~~

Gran Tierra Energy Inc. (the “Company”) is filing this Amendment No. 1 (“Amendment”) to its Form 10-Q for the quarter ended September 30, 2021, originally filed with the Securities and Exchange Commission (“SEC”) on November 2, 2021 (the “Original 10-Q”). This Amendment is being filed solely for the purpose of correcting an incorrect date in the certification by the Company's Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 filed as Exhibit 32.1 to the Original 10-Q. In accordance with Compliance and Disclosure Interpretations published by the SEC Staff, the entire periodic report for the quarter ended September 30, 2021 is included in this Amendment. Other than the correction described above, no other statement or amount has been changed from those presented in the Original 10-Q.

Gran Tierra Energy Inc.

Quarterly Report on Form 10-Q

Quarterly Period Ended September 30, ~~2021~~2022

Table of contents


		Page
PART I	Financial Information
Item 1.	Financial Statements	43
Item 2.	~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations	1716
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3734
Item 4.	Controls and Procedures	3734

PART II	Other Information
Item 1.	Legal Proceedings	3735
Item 1A.	Risk Factors	3735

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3835
Item 6.	Exhibits	3936
SIGNATURES		4037

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"~~“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the ~~"Exchange Act"~~“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”,~~“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 ability to comply with covenants in our credit agreement and indentures and make borrowings under our credit agreement; our ability to obtain amendments to the covenants in our credit agreement so as to avoid an event of default under our credit agreement and senior notes; a reduction in our borrowing base and our ability to repay any excess borrowings; sustained or future declines in commodity prices and the demand for oil; sustained or future excess supply of oil and natural gas; potential future impairments and reductions in proved reserve quantities and value; continuation of the COVID-19 pandemic and responses thereto, including possible future restrictions against oil and gas activity in Colombia and Ecuador; our current operations are located in South America and unexpected problems can arise due to guerilla activity, ~~and other~~strikes, local ~~conditions;~~blockades or protests; technical difficulties and operational difficulties may arise which impact the production, transport or sale of our products; other disruptions to local operations; global health events (including the ongoing COVID-19 pandemic); global and regional changes in the demand, supply, prices, differentials or other market conditions affecting oil and gas, including inflation and changes resulting from a global health crisis, the Russian invasion of Ukraine, or from the imposition or lifting of crude oil production quotas or other actions that might be imposed by OPEC, such as its recent decision to cut production and other producing countries and the resulting company or third-party actions in response to such changes; changes in commodity prices, including volatility or a 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 ~~raise capital; our ability to identify~~execute its business plan and ~~complete successful acquisitions, including in new countries and basins~~realize expected benefits from ~~our~~ current ~~operations; our ability to execute business plans;~~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; current global economic and credit market conditions and the regulatory environment may impact oil prices and oil consumption differently than we currently predict, which could cause us to further modify our strategy and capital spending program; volatility or declines in the trading price of our common stock or bonds; the risk that we do not receive the anticipated benefits of government programs, including government tax refunds; our ability to obtain a new credit agreement and ~~the continued listing of our shares on a national stock exchange;~~comply with financial covenants in its credit agreement and indentures and make borrowings under any credit agreement; and those factors set out in Part II, Item 1A ~~"Risk Factors"~~“Risk Factors” in this Quarterly Report on Form 10-Q and Part I, Item 1A “Risk Factors” in our ~~2020~~2021 Annual Report on Form 10-K (the ~~"2020~~“2021 Annual Report on Form ~~10-K"~~10-K”), and in our other filings with the Securities and Exchange Commission (“SEC”). The unprecedented nature of the COVID-19 pandemic and volatility in the worldwide economy and oil and gas industry makes, including the unpredictable nature of the resurgence of cases, possible variants and governmental responses, it more difficult to predict the accuracy of forward-looking statements. The information included herein 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:


bbl			barrel
BOPD			barrels of oil per day
NAR			net 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."

PART I - Financial Information

Item 1. Financial Statements

Gran Tierra Energy Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(Thousands of U.S. Dollars, Except Share and Per Share Amounts)
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
OIL SALES (Note 8) $ 135,319 $ 53,142 $ 327,435 $ 173,045

EXPENSES
Operating 37,567 20,721 92,623 84,673
Transportation 3,021 1,286 8,448 8,549
COVID-19 related costs (Note 9) 990 1,108 3,026 1,529
Depletion, depreciation and accretion 38,055 31,340 98,300 131,118
Goodwill impairment (Note 5) — — — 102,581
Asset impairment (Note 5) — 104,731 — 507,093
General and administrative 6,497 4,562 25,072 16,476
Severance — 122 919 1,469
Foreign exchange loss 2,650 4,275 15,824 20,094
Derivative instruments loss (gain) (Note 12) 2,603 (2,173) 47,540 (9,417)
Other financial instruments (gain) loss (Note 12) (13,634) 1,460 (12,425) 61,286
Other loss — 67 — 67
Interest expense (Note 6) 13,608 14,029 41,355 40,204
91,357 181,528 320,682 965,722
INTEREST INCOME — — — 345
INCOME (LOSS) BEFORE INCOME TAXES 43,962 (128,386) 6,753 (792,332)
INCOME TAX EXPENSE (RECOVERY)
Current (Note 10) — 637 (14) 560
Deferred (Note 10) 8,955 (21,202) 26,809 (62,796)
8,955 (20,565) 26,795 (62,236)
NET AND COMPREHENSIVE INCOME (LOSS) $ 35,007 $ (107,821) $ (20,042) $ (730,096)
NET INCOME (LOSS) PER SHARE
BASIC AND DILUTED $ 0.10 $ (0.29) $ (0.05) $ (1.99)
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC (Note 7) 366,992,802 366,981,556 366,985,646 366,981,556
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED (Note 7) 367,740,722 366,981,556 366,985,646 366,981,556


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
OIL SALES (Note 7)	$	168,397	$	135,319	$	548,751	$	327,435

EXPENSES
Operating	41,837		38,448		116,266		95,366
Transportation	2,417		3,130		7,764		8,731
Depletion, depreciation and accretion	45,320		38,055		128,499		98,300
General and administrative (Note 10)	8,114		6,497		30,286		25,991
Foreign exchange loss	1,489		2,650		486		15,824
Derivative instruments loss (Note 10)	—		2,603		26,611		47,540
Other financial instruments gain	—		(13,634)		—		(12,425)
Gain on repurchase of Senior Notes (Note 5)	(2,598)		—		(2,598)		—
Interest expense (Note 5)	11,421		13,608		35,743		41,355
	108,000		91,357		343,057		320,682


INCOME BEFORE INCOME TAXES	60,397		43,962		205,694		6,753

INCOME TAX EXPENSE (RECOVERY)
Current (Note 8)	16,820		—		63,072		(14)
Deferred (Note 8)	4,914		8,955		36,868		26,809
	21,734		8,955		99,940		26,795
NET AND COMPREHENSIVE INCOME (LOSS)	$	38,663	$	35,007	$	105,754	$	(20,042)

NET INCOME (LOSS) PER SHARE

- BASIC	$	0.11	$	0.10	$	0.29	$	(0.05)
- DILUTED	$	0.10	$	0.10	$	0.28	$	(0.05)
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC (Note 6)	367,305,426		366,992,802		367,754,192		366,985,646
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED (Note 6)	371,310,738		367,740,722		372,387,904		366,985,646

(See notes to the condensed consolidated financial statements)

Gran Tierra Energy Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(Thousands of U.S. Dollars, Except Share and Per Share Amounts)


		As at September 30, 2021		As at December 31, 2020			As at September 30, 2022		As at December 31, 2021

ASSETS	ASSETS					ASSETS
Current Assets	Current Assets					Current Assets
Cash and cash equivalents (Note 13)		$	16,600	$	14,114

Cash and cash equivalents (Note 11)						Cash and cash equivalents (Note 11)	$	118,173	$	26,109
Restricted cash and cash equivalents (Note 11)						Restricted cash and cash equivalents (Note 11)	1,142		392
Accounts receivable	Accounts receivable	26,431		8,044		Accounts receivable	10,694		13,185
Investment (Note 12)		44,116		48,323

Inventory						Inventory	18,704		14,526
Taxes receivable (Note 3)	Taxes receivable (Note 3)	47,772		49,925		Taxes receivable (Note 3)	52		45,506
Other current assets		17,141		13,459
Other current assets (Note 10)						Other current assets (Note 10)	12,035		2,083
Total Current Assets	Total Current Assets	152,060		133,865		Total Current Assets	160,800		101,801

Oil and Gas Properties	Oil and Gas Properties					Oil and Gas Properties
Proved	Proved	833,069		797,355		Proved	933,343		859,580
Unproved	Unproved	158,483		161,763		Unproved	111,531		131,865
Total Oil and Gas Properties	Total Oil and Gas Properties	991,552		959,118		Total Oil and Gas Properties	1,044,874		991,445
Other capital assets	Other capital assets	3,085		5,364		Other capital assets	11,143		4,352
Total Property, Plant and Equipment (Note 4)	Total Property, Plant and Equipment (Note 4)	994,637		964,482		Total Property, Plant and Equipment (Note 4)	1,056,017		995,797

Other Long-Term Assets	Other Long-Term Assets					Other Long-Term Assets
Deferred tax assets	Deferred tax assets	13,349		57,318		Deferred tax assets	17,713		61,494
Taxes receivable (Note 3)	Taxes receivable (Note 3)	14,447		42,635		Taxes receivable (Note 3)	25,952		17,522
Restricted cash and cash equivalents (Note 13)		3,532		3,409
Other		3,233		16
Other long-term assets (Note 10)						Other long-term assets (Note 10)	17,873		12,497
Total Other Long-Term Assets	Total Other Long-Term Assets	34,561		103,378		Total Other Long-Term Assets	61,538		91,513
Total Assets	Total Assets	$	1,181,258	$	1,201,725	Total Assets	$	1,278,355	$	1,189,111

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES AND SHAREHOLDERS’ EQUITY						LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities	Current Liabilities					Current Liabilities
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	$	114,785	$	100,784	Accounts payable and accrued liabilities	$	181,017	$	148,694
Derivatives (Note 12)		14,737		12,050
Current portion of long-term debt (Note 5)						Current portion of long-term debt (Note 5)	—		66,987
Derivatives						Derivatives	—		2,976
Taxes payable (Note 3)	Taxes payable (Note 3)	5,938		—		Taxes payable (Note 3)	25,888		6,620
Equity compensation award liability (Note 7 and 12)		2,132		805
Other (Note 6 and 10)						Other (Note 6 and 10)	15,381		2,710
Total Current Liabilities	Total Current Liabilities	137,592		113,639		Total Current Liabilities	222,286		227,987

Long-Term Liabilities	Long-Term Liabilities					Long-Term Liabilities
Long-term debt (Notes 6 and 12)		735,411		774,770
Long-term debt (Notes 5 and 10)						Long-term debt (Notes 5 and 10)	575,684		587,404

Asset retirement obligation	Asset retirement obligation	54,356		48,214		Asset retirement obligation	58,657		54,525
Equity compensation award liability (Note 7 and 12)		11,469		3,955
Equity compensation award liability (Note 6 and 10)						Equity compensation award liability (Note 6 and 10)	17,826		13,718

Other long-term liabilities	Other long-term liabilities	3,563		4,113		Other long-term liabilities	7,302		3,397
Total Long-Term Liabilities	Total Long-Term Liabilities	804,799		831,052		Total Long-Term Liabilities	659,469		659,044

Contingencies (Note 11)		0		0
Contingencies (Note 9)						Contingencies (Note 9)

Shareholders' Equity	Shareholders' Equity					Shareholders' Equity
Common Stock (Note 7) (367,038,454 and 366,981,556 shares issued and outstanding of Common Stock, par value $0.001 per share, as at September 30, 2021, and December 31, 2020, respectively)		10,270		10,270
Common Stock (Note 6) (368,882,887 and 367,144,500 shares issued, 358,149,185 and 367,144,500 outstanding of Common Stock, par value $0.001 per share, as at September 30, 2022, and December 31, 2021, respectively)						Common Stock (Note 6) (368,882,887 and 367,144,500 shares issued, 358,149,185 and 367,144,500 outstanding of Common Stock, par value $0.001 per share, as at September 30, 2022, and December 31, 2021, respectively)	10,272		10,270
Additional paid-in capital	Additional paid-in capital	1,286,893		1,285,018		Additional paid-in capital	1,290,711		1,287,582
Treasury Stock (Note 6)						Treasury Stock (Note 6)	(14,365)		—
Deficit	Deficit	(1,058,296)		(1,038,254)		Deficit	(890,018)		(995,772)
Total Shareholders' Equity		238,867		257,034
Total Shareholders’ Equity						Total Shareholders’ Equity	396,600		302,080
Total Liabilities and Shareholders’ Equity	Total Liabilities and Shareholders’ Equity	$	1,181,258	$	1,201,725	Total Liabilities and Shareholders’ Equity	$	1,278,355	$	1,189,111

(See notes to the condensed consolidated financial statements)

Gran Tierra Energy Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Thousands of U.S. Dollars)

Nine Months Ended September 30,
2021 2020
Operating Activities
Net loss $ (20,042) $ (730,096)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depletion, depreciation and accretion 98,300 131,118
Goodwill impairment (Note 5) — 102,581
Asset impairment (Note 5) — 507,093
Deferred tax expense (recovery) 26,809 (62,796)
Stock-based compensation expense (recovery) (Note 7) 6,597 (707)
Amortization of debt issuance costs (Note 6) 2,682 2,774
Unrealized foreign exchange loss 16,945 22,335
Derivative instruments loss (gain) (Note 12) 47,540 (9,417)
Cash settlements on derivatives instruments (45,041) 9,970
Other financial instruments (gain) loss (Note 12) (12,425) 61,286
Other non-cash loss — 2,026
Cash settlement of asset retirement obligation (483) (199)
Non-cash lease expenses 1,222 1,494
Lease payments (1,239) (1,404)
Net change in assets and liabilities from operating activities (Note 13) 17,956 23,288
Net cash provided by operating activities 138,821 59,346
Investing Activities
Additions to property, plant and equipment (109,650) (56,378)
Proceeds on disposition of investment, net of transaction costs (Note 12) 14,632 —
Changes in non-cash investing working capital (Note 13) 709 (69,549)
Net cash used in investing activities (94,309) (125,927)
Financing Activities
Proceeds from debt, net of issuance costs (Note 6) (125) 88,382
Repayment of debt (Note 6) (40,000) (7,000)
Proceeds from exercise of stock options 19 —
Lease payments (1,269) (307)
Net cash (used in) provided by financing activities (41,375) 81,075
Foreign exchange loss on cash, cash equivalents and restricted cash and cash equivalents (528) (754)
Net increase in cash, cash equivalents and restricted cash and cash equivalents 2,609 13,740
Cash, cash equivalents and restricted cash and cash equivalents,
beginning of period (Note 13)
17,523 11,075
Cash, cash equivalents and restricted cash and cash equivalents,
end of period (Note 13)
$ 20,132 $ 24,815
Supplemental cash flow disclosures (Note 13)


	Nine Months Ended September 30,
	2022		2021
Operating Activities
Net income (loss)	$	105,754	$	(20,042)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depletion, depreciation and accretion	128,499		98,300
Deferred tax expense	36,868		26,809
Stock-based compensation expense (Note 6)	6,376		6,597
Amortization of debt issuance costs (Note 5)	2,769		2,682
Unrealized foreign exchange loss	6,138		16,945
Gain on repurchase of Senior Notes (Note 5)	(2,598)		—
Derivative instruments loss	26,611		47,540
Cash settlements on derivatives instruments	(26,611)		(45,041)
Other financial instruments gain	—		(12,425)

Cash settlement of asset retirement obligation	(1,673)		(483)
Non-cash lease expenses	2,009		1,222
Lease payments	(1,134)		(1,239)
Net change in assets and liabilities from operating activities (Note 11)	72,838		17,956
Net cash provided by operating activities	355,846		138,821

Investing Activities
Additions to property, plant and equipment	(163,717)		(109,650)
Proceeds on disposition of investment, net of transaction costs	—		14,632
Changes in non-cash investing working capital (Note 11)	3,255		709
Net cash used in investing activities	(160,462)		(94,309)

Financing Activities

Repayment of debt (Note 5)	(67,623)		(40,125)
Re-purchase of Senior Notes (Note 5)	(17,274)		—
Re-purchase of Common Stock (Note 6)	(14,365)		—
Proceeds from issuance of Common Stock, net of issuance costs	2		—
Proceeds from exercise of stock options	1,292		19
Lease payments	(1,991)		(1,269)
Net cash used in financing activities	(99,959)		(41,375)

Foreign exchange loss on cash, cash equivalents and restricted cash and cash equivalents	(1,996)		(528)

Net increase in cash, cash equivalents and restricted cash and cash equivalents	93,429		2,609
Cash, cash equivalents and restricted cash and cash equivalents, beginning of period (Note 11)	31,404		17,523
Cash, cash equivalents and restricted cash and cash equivalents, end of period (Note 11)	$	124,833	$	20,132

Supplemental cash flow disclosures (Note 11)

(See notes to the condensed consolidated financial statements)

Gran Tierra Energy Inc.

Condensed Consolidated Statements of ~~Shareholders'~~Shareholders’ Equity (Unaudited)

(Thousands of U.S. Dollars)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Share Capital	Share Capital									Share Capital
Balance, beginning of period	Balance, beginning of period	$	10,270	$	10,270	$	10,270	$	10,270	Balance, beginning of period	$	10,272	$	10,270	$	10,270	$	10,270

Issuance of common stock (Note 6)										Issuance of common stock (Note 6)	—		—		2		—
Balance, end of period	Balance, end of period	10,270		10,270		10,270		10,270		Balance, end of period	10,272		10,270		10,272		10,270

Additional Paid-in Capital	Additional Paid-in Capital									Additional Paid-in Capital
Balance, beginning of period	Balance, beginning of period	1,286,235		1,283,798		1,285,018		1,282,627		Balance, beginning of period	1,290,075		1,286,235		1,287,582		1,285,018

Exercise of stock options	Exercise of stock options	10		—		18		—		Exercise of stock options	9		10		1,292		18

Stock-based compensation (Note 7)		648		607		1,857		1,778
Stock-based compensation (Note 6)										Stock-based compensation (Note 6)	627		648		1,837		1,857
Balance, end of period										Balance, end of period	1,290,711		1,286,893		1,290,711		1,286,893

Treasury Stock										Treasury Stock
Balance, beginning of period										Balance, beginning of period	—		—		—		—
Purchase of treasury shares (Note 6)										Purchase of treasury shares (Note 6)	(14,365)		—		(14,365)		—
Balance, end of period	Balance, end of period	1,286,893		1,284,405		1,286,893		1,284,405		Balance, end of period	(14,365)		—		(14,365)		—

Deficit	Deficit									Deficit
Balance, beginning of period	Balance, beginning of period	(1,093,303)		(882,562)		(1,038,254)		(260,287)		Balance, beginning of period	$	(928,681)	$	(1,093,303)	$	(995,772)	$	(1,038,254)
Net income (loss)	Net income (loss)	35,007		(107,821)		(20,042)		(730,096)		Net income (loss)	38,663		35,007		105,754		(20,042)
Balance, end of period	Balance, end of period	(1,058,296)		(990,383)		(1,058,296)		(990,383)		Balance, end of period	(890,018)		(1,058,296)		(890,018)		(1,058,296)

Total Shareholders' Equity		$	238,867	$	304,292	$	238,867	$	304,292
Total Shareholders’ Equity										Total Shareholders’ Equity	396,600		238,867		396,600		238,867

(See notes to the condensed consolidated financial statements)

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"~~“Company” or ~~"Gran Tierra"~~“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"~~(“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 consolidated financial statements provide additional disclosures ~~to that~~ 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~~Company’s consolidated financial statements as at and for the year ended December 31, ~~2020,~~2021, included in the ~~Company's 2020~~Company’s 2021 Annual Report on Form 10-K.

The ~~Company's~~Company’s significant accounting policies are described in Note 2 of the consolidated financial statements, which are included in the ~~Company's 2020~~Company’s 2021 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 ~~through~~ to the date these interim unaudited condensed consolidated financial statements were issued.

3. Taxes Receivable and Payable

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


(Thousands of U.S. Dollars)	(Thousands of U.S. Dollars)	As at September 30, 2021		As at December 31, 2020		(Thousands of U.S. Dollars)	As at September 30, 2022		As at December 31, 2021
Taxes Receivable	Taxes Receivable					Taxes Receivable
Current	Current					Current
VAT Receivable	VAT Receivable	$	31,890	$	35,977	VAT Receivable	$	52	$	21,918
Income Tax Receivable	Income Tax Receivable	15,882		13,948		Income Tax Receivable	—		23,588
		$	47,772	$	49,925		$	52	$	45,506
Long-Term	Long-Term					Long-Term
VAT Receivable		$	—	$	28,485
Income Tax Receivable	Income Tax Receivable	14,447		14,150		Income Tax Receivable	$	25,952	$	17,522
		$	14,447	$	42,635

Taxes Payable	Taxes Payable					Taxes Payable
Current	Current					Current
VAT Payable	VAT Payable	$	5,938	$	—	VAT Payable	$	6,425	$	6,620
Income Tax Payable						Income Tax Payable	19,463		—
							$	25,888	$	6,620

Total Taxes Receivable net of Taxes Payable	Total Taxes Receivable net of Taxes Payable	$	56,281	$	92,560	Total Taxes Receivable net of Taxes Payable	$	116	$	56,408

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

(Thousands of U.S. Dollars) Net VAT Receivable Income Tax Receivable Total Net Taxes Receivable
Balance, as at December 31, 2020 $ 64,462 $ 28,098 $ 92,560
  Collected through direct government refunds (518) (14,228) (14,746)
  Collected through sales contracts (70,881) — (70,881)
  Taxes paid (1)
38,278 19,923 58,201
  Foreign exchange loss (5,389) (3,464) (8,853)
Balance, as at September 30, 2021 $ 25,952 $ 30,329 $ 56,281


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

(1)VAT is paid on certain goods and services and collected on sales in Colombia at a rate of 19%

4. Property, Plant and Equipment

(Thousands of U.S. Dollars) As at September 30, 2021 As at December 31, 2020
Oil and natural gas properties
Proved $ 4,236,548 $ 4,106,768
Unproved 158,483 161,763
4,395,031 4,268,531
Other(1)
32,779 32,135
4,427,810 4,300,666
Accumulated depletion and depreciation and impairment (3,433,173) (3,336,184)
$ 994,637 $ 964,482


(Thousands of U.S. Dollars)	As at September 30, 2022		As at December 31, 2021
Oil and natural gas properties
Proved	$	4,500,932	$	4,302,473
Unproved	111,531		131,865
	4,612,463		4,434,338
Other(1)	44,550		34,943
	4,657,013		4,469,281
Accumulated depletion and depreciation and impairment	(3,600,996)		(3,473,484)
	$	1,056,017	$	995,797

(1) The ~~"other"~~“other” category includes right-of-use assets for operating and finance leases of ~~$11.7~~$22.4 million, which had a net book value of ~~$2.5~~$9.9 million as at September 30, ~~2021~~2022 (December 31, ~~2020~~2021 - ~~$11.4~~$13.9 million, which had a net book value of ~~$4.4~~$3.9 million).

~~5. Impairment~~

~~Asset impairment~~

~~(i) Oil and gas property impairment~~

For the three and nine months ended September 30, 2022, and 2021, the Company had no ~~ceiling test impairment losses. For each of the three and nine months ended September 30, 2020, Gran Tierra had $104.7 million and $502.9 million of~~ ceiling test impairment losses. The Company used an average Brent ~~price~~price of $94.85 and $60.12 ~~and $47.95~~ per bbl, for the purposes of the September 30, ~~2021~~2022 and ~~2020,~~2021 ceiling test calculations, respectively.

~~(ii) Inventory impairment~~

For the three and nine months ended September 30, 2021, the Company had no inventory impairment. For the three and nine months ended September 30, 2020, the Company recorded $0.1 million and $4.2 million, respectively, of inventory impairment.

~~Goodwill impairment~~

The entire goodwill balance of $102.6 million was impaired during the nine months ended September 30, 2020, due to the reporting unit's carrying value exceeding its fair value due to the impact of lower forecasted commodity prices.

5. Debt and Debt Issuance Costs

The ~~Company's~~Company’s debt at September 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, was as follows:


(Thousands of U.S. Dollars)	(Thousands of U.S. Dollars)	As at September 30, 2021		As at December 31, 2020		(Thousands of U.S. Dollars)	As at September 30, 2022		As at December 31, 2021
Current						Current
Revolving credit facility						Revolving credit facility	$	—	$	67,500
Unamortized debt issuance costs						Unamortized debt issuance costs	—		(513)
							$	—	$	66,987

Long-Term						Long-Term
6.25% Senior Notes, due February 2025	6.25% Senior Notes, due February 2025	$	300,000	$	300,000	6.25% Senior Notes, due February 2025	$	279,909	$	300,000
7.75% Senior Notes, due May 2027	7.75% Senior Notes, due May 2027	300,000		300,000		7.75% Senior Notes, due May 2027	300,000		300,000
Revolving credit facility		150,000		190,000

Unamortized debt issuance costs	Unamortized debt issuance costs	(15,566)		(18,124)		Unamortized debt issuance costs	(11,572)		(14,030)
Long-term debt		734,434		771,876
							568,337		585,970
Long-term lease obligation(1)	Long-term lease obligation(1)	977		2,894		Long-term lease obligation(1)	7,347		1,434
		$	735,411	$	774,770		$	575,684	$	587,404
							$	575,684	$	654,391

(1) The current portion of the lease obligation has been included in accounts payable and accrued liabilities on the ~~Company's~~Company’s balance sheet and totaled ~~$2.9~~$2.6 million as at September 30, ~~2021~~2022 (December 31, ~~2020~~2021 - $3.3 million).

AsDuring the three months ended September 30, 2022, the Company terminated its prior revolving credit facility agreement and entered into a new credit facility agreement with a market lender in the global commodities industry. The credit facility has a borrowing base of up to $150 million, with $100 million as an initial commitment available at September 30, ~~2021,~~2022, and an option for an additional $50 million upon mutual agreement by the ~~borrowing base~~Company and the lender. The credit facility bears interest based on the secured overnight financing rate posted by the Federal Reserve Bank of New York plus a credit margin of 6.0% and a credit-adjusted spread of 0.26%. Undrawn amounts under the ~~Company's Senior Secured Credit Facility (the "revolving~~ credit ~~facility") was $215 million.~~facility bear interest at 2.1% per annum, based on the amount available. The credit facility is secured by the Company’s Colombian assets and economic rights. It has a final maturity date of August 15, 2024, which may be extended to February 18, 2025, upon the ~~revolving~~satisfaction of certain conditions. The availability period for the draws is six months commencing the date of the credit facility. As of September 30, 2022, the credit facility ~~is October 2022 and the next re-determination to occur no later than November 2021.~~remained undrawn.

~~The~~Under the terms of the credit facility, the Company is required to ~~comply~~maintain compliance with ~~various covenants, which were modified in response to market conditions including~~ the ~~COVID-19 pandemic until October 1, 2021 ("~~following financial covenants:

i.Global Coverage Ratio of at least 150% is calculated using the covenant relief period"). During the covenant relief period, the Company's ratio of total debt to Covenant EBITDAX ("EBITDAX") was permitted to be greater than 4.0 to 1.0, Senior Secured Debt to EBITDAX ratio could not exceed 2.5 to 1.0, and EBITDAX to interest expense ratio for the trailing four-quarter periods measured asnet present value of the ~~last day~~consolidated future cash flows of the ~~fiscal quarter ended September 30, 2021, was~~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 ~~2.0~~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 ~~1.0.~~ be delivered under the commercial contract from the commencement date to the final maturity date based on 80% of the prevailing ICE Brent forward strip and adjusted for quality and transportation discounts over the outstanding amount on the credit facility including interest and all other costs payable to the lender.

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

As of September 30, ~~2021,~~2022, the Company was in compliance with all ~~applicable covenants in~~ the ~~revolving credit facility.~~above covenants.

~~Commencing on October 1, 2021,~~During the three months ended September 30, 2022, the Company ~~must maintain compliance with~~re-purchased in the ~~following financial covenants: limitations on Company's ratio~~open market $20.1 million of ~~debt to EBITDAX to~~6.25% Senior Notes for cash consideration of $17.3 million, including interest payable of $0.1 million. The re-purchase resulted in a ~~maximum~~$2.6 million gain, which included the write-off of ~~4.0 to 1.0; limitations on Company's ratio~~deferred financing fees of $0.3 million. The re-purchased 6.25% Senior ~~Secured Debt to EBITDAX to a maximum of 3.0 to 1.0;~~Notes were not cancelled and ~~the maintenance of a ratio of EBITDAX to interest expense of at least 2.5 to 1.0. If~~were held by the Company ~~fails to comply with these financial covenants, it would result in a default under the terms~~as treasury bonds as of ~~the credit agreement, which could result in an acceleration of repayment of all indebtedness under the Company's revolving credit facility.~~September 30, 2022.

~~Amounts drawn down under the revolving credit facility bear interest, at the Company's option, at the USD LIBOR rate plus a~~

margin ranging from 2.90% to 4.90%, or an alternate base rate plus a margin ranging from 1.90% to 3.90%, in each case based on the borrowing base utilization percentage. The alternate base rate is currently the U.S. prime rate. We pay a commitment fee on undrawn amounts under the revolving credit facility, which ranges from 0.73% to 1.23% per annum, based on the average daily amount of unused commitments.

The Company's revolving credit facility is guaranteed by and secured against the assets of certain of the Company's subsidiaries (the "Credit Facility Group"). Under the terms of the revolving credit facility, the Company is subject to certain restrictions on its ability to distribute funds to entities outside of the Credit Facility Group, including restrictions on the ability to pay dividends to shareholders of the Company.

Interest Expense

The following table presents the total interest expense recognized in the accompanying interim unaudited condensed consolidated statements of operations:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
(Thousands of U.S. Dollars)	(Thousands of U.S. Dollars)	2021		2020		2021		2020		(Thousands of U.S. Dollars)	2022		2021		2022		2021
Contractual interest and other financing expenses	Contractual interest and other financing expenses	$	12,701	$	13,191	$	38,673	$	37,430	Contractual interest and other financing expenses	$	10,670	$	12,701	$	32,974	$	38,673
Amortization of debt issuance costs	Amortization of debt issuance costs	907		838		2,682		2,774		Amortization of debt issuance costs	751		907		2,769		2,682
		$	13,608	$	14,029	$	41,355	$	40,204		$	11,421	$	13,608	$	35,743	$	41,355

7.6. Share Capital


			Shares of Common Stock
~~Balance,~~Shares issued and outstanding at December 31, ~~2020~~2021			~~366,981,556~~367,144,500
Shares issued on option exercise			~~56,898~~1,738,387
~~Balance,~~Shares issued at September 30, ~~2021~~2022			~~367,038,454~~368,882,887
Treasury stock			(10,733,702)
Shares issued and outstanding at September 30, 2022			358,149,185

During the three months ended September 30, 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 is able to purchase at prevailing market prices up to 36,033,969 shares of Common Stock, representing approximately 10% of the issued and outstanding shares of Common Stock as of August 22, 2022. The 2022 Program will expire on August 31, 2023, or earlier if the 10% share maximum was reached. Re-purchases are subject to the availability of stock, prevailing market conditions, the trading price of the Company’s stock, the Company’s financial performance and other conditions.

During the three and nine months ended September 30, 2022, the Company re-purchased 10,733,702 shares at a weighted average price of $1.34 per share. The re-purchased shares were held by the Company and were recorded as treasury stock as of September 30, 2022.

Equity Compensation Awards

The following table provides information about performance stock units (“PSUs”), deferred share units (“DSUs”), and stock option activity for the nine months ended September 30, ~~2021:~~2022:


		PSUs	DSUs	Stock Options			PSUs	DSUs	Stock Options
		Number of Outstanding Share Units		Number of Outstanding Stock Options	Weighted Average Exercise Price/Stock Option ($)		Number of Outstanding Share Units		Number of Outstanding Stock Options	Weighted Average Exercise Price/Stock Option ($)
Balance, December 31, 2020		23,273,404	4,067,897	15,444,949	1.50
Balance, December 31, 2021						Balance, December 31, 2021	30,365,196	5,710,764	17,848,722	1.20
Granted	Granted	13,428,840	1,310,122	5,834,014	0.80	Granted	6,841,907	683,233	2,814,947	1.40
Exercised	Exercised	(2,733,209)	—	(56,898)	0.33	Exercised	(4,396,646)	—	(1,738,387)	0.74
Forfeited	Forfeited	(3,492,165)	—	(1,628,591)	0.90	Forfeited	(1,282,224)	—	(264,858)	1.24
Expired	Expired	—	—	(1,279,641)	3.17	Expired	—	—	(1,322,620)	2.78
Balance, September 30, 2021		30,476,870	5,378,019	18,313,833	1.22
Balance, September 30, 2022						Balance, September 30, 2022	31,528,233	6,393,997	17,337,804	1.16

For the three and nine months ended September 30, ~~2021,~~2022, there was $0.2 million of stock-based compensation recovery and $6.4 million of stock-based compensation expense, respectively. For the three and nine months ended September 30, 2021, there was $1.1 million and $6.6 million ~~respectively (three and nine months ended September 30, 2020,~~of stock-based compensation expense, ~~of $0.1 million and recovery of $0.7 million, respectively).~~respectively.

At September 30, ~~2021,~~2022, there was ~~$14.2~~$16.4 million (December 31, ~~2020~~2021 - ~~$5.9~~$11.8 million) of unrecognized compensation costs related to unvested PSUs and stock options, which isare expected to be recognized over a weighted-average period of ~~1.8~~1.6 years. During the nine months ended September 30, ~~2021,~~2022, the Company paid out $2.4 million for PSUs vested on December 31, 2021 (nine months ended September 30, 2021 - $0.6 million for PSUs vested on December 31, ~~2020 (nine months ended September 30, 2020 - $3.2 million for PSUs vested on December 31, 2019)~~2020).

Net Income (Loss) per Share

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

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

Weighted Average Shares Outstanding

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Weighted average number of common shares outstanding 366,992,802 366,981,556 366,985,646 366,981,556
Shares issuable pursuant to stock options 1,574,305 — — —
Shares assumed to be purchased from proceeds of stock options (826,385) — — —
Weighted average number of diluted common shares outstanding 367,740,722 366,981,556 366,985,646 366,981,556


	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
Weighted average number of common shares outstanding	367,305,426	366,992,802	367,754,192	366,985,646
Shares issuable pursuant to stock options	11,330,144	1,574,305	12,024,315	—
Shares assumed to be purchased from proceeds of stock options	(7,324,832)	(826,385)	(7,390,603)	—
Weighted average number of diluted common shares outstanding	371,310,738	367,740,722	372,387,904	366,985,646

For the three and nine months ended September 30, ~~2021,~~2022, 6,161,672 and 5,863,881 options, respectively (three and nine months ended September 30, 2021- 16,362,882 and all options, respectively), on a weighted average basis ~~(three months ended September 30, 2020 - all options),~~ were excluded from the diluted income (loss) per share calculation as the options were anti-dilutive. ~~For the nine months ended September 30, 2021 and 2020, all options on a weighted average basis were excluded from the diluted loss per share calculation as the options were anti-dilutive.~~

~~8. Revenue~~

7. Oil Sales

The ~~Company's~~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 crude differentials, quality, and transportation discounts each month. For the three and nine months ended September 30, ~~2021,~~2022, 100% (three and nine months ended September 30, ~~2020~~2021 - 100%) of the ~~Company's~~Company’s revenue resulted from oil sales. During the three and nine months ended September 30, ~~2021,~~2022, quality and transportation discounts were ~~16%~~14% and ~~15%, respectively,~~13% of the average ICE Brent price (three and nine months ended September 30, ~~2020~~2021 - ~~22%~~16% and ~~27%~~15%, respectively).

During the three months ended September 30, 2022, the Company’s production was sold primarily to one major customer in Colombia (three months ended September 30, 2021 - two, representing 63% and 25% of the total sales volumes). During the nine months ended September 30, ~~2021,~~2022, the ~~Company's~~Company’s production was sold primarily to two major customers in Colombia, ~~(three~~representing 71% and ~~nine~~29% of the total sales volumes (nine months ended September 30, ~~2020~~2021 - ~~two)~~two, representing 68% and 24% of the total sales volumes).

As at September 30, ~~2021,~~2022, accounts receivable included ~~NaN~~nil of accrued sales revenue related to September ~~2021~~2022 production (December 31, ~~2020~~2021 - ~~$0.1 million~~nil related to December ~~2020~~2021 production).

~~9. COVID-19 Costs~~

The COVID-19 pandemic has resulted in additional ongoing operating and transportation costs related to COVID-19 health and safety preventative measures, including incremental sanitation requirements and enhanced procedures for trucking barrels and crew changes in the field. Below is a break-down of the costs:

Three Months Ended September 30, Nine Months Ended September 30,
(Thousands of U.S. Dollars) 2021 2020 2021 2020
Operating expenses $ 881 $ 1,012 $ 2,743 $ 1,433
Transportation costs 109 96 283 96
Total COVID-19 costs $ 990 $ 1,108 $ 3,026 $ 1,529

~~10.~~8. Taxes

The Company's effective tax rate was ~~397%~~ 49% for the nine months ended September 30, ~~2021,~~ 2022, compared to 8%397% in the comparative period of ~~2020.~~2021. Current income tax expense was ~~in a recovery position~~$63.1 million for the nine months ended September 30, ~~2021, versus an expense position for the comparative period in 2020, primarily as~~2022, compared to a ~~result of changes~~small recovery in the ~~previous estimation~~corresponding period of ~~presumptive minimum tax.~~ 2021, primarily due to an increase in taxable income.

The deferred income tax expense for the nine months ended September 30, ~~2021, resulted from excess~~2022, was mainly the result of tax depreciation ~~compared to~~being higher than accounting depreciation and the use of tax losses to offset taxable income in Colombia. The deferred income tax ~~recovery~~expense in the comparative period of ~~2020~~2021 was ~~mainly~~also the result of ~~a ceiling test impairment loss~~tax depreciation being higher compared to accounting depreciation and the use of tax losses to offset taxable income in Colombia.

For the nine months ended September 30, 2022, the difference between the effective tax rate of 49% and the 35% Colombian tax rate was primarily due to an increase in the impact of foreign taxes, increase in valuation allowance, non-deductible third-party royalties in Colombia, other permanent differences, and non-deductible stock-based compensation which were partially offset by ~~losses incurred~~a decrease in ~~Colombia that are now fully offset by a valuation allowance.~~foreign currency translations.

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

In the third quarter of 2021, Congressional authorities in Colombia enacted a new tax legislation, which includes an increase to the corporate income tax rate to 35% from 31%, effective January 1, 2022. Accordingly, the tax rates applied to the calculation of deferred income taxes, before valuation allowance, have been adjusted to reflect this change.

For the nine months ended September 30, 2020, the difference between the effective tax rate of 8% and the 32% Colombian tax rate was primarily due to an increase in the valuation allowance, the non-deductibility of goodwill impairment for tax purposes, foreign translation adjustments and the non-deductible portion (50%) of the unrealized loss on PetroTal Corp. ("PetroTal") shares.

~~11.~~9. Contingencies

Legal Proceedings

Gran Tierra has a number of lawsuits and claims pending, including a dispute with the Agencia Nacional de Hidrocarburos (National Hydrocarbons Agency) ~~("ANH"~~(“ANH”) relating to the calculation of high price share royalties. Although the outcome of these 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 September 30, ~~2021,~~2022, the Company had provided letters of credit and other credit support totaling ~~$102.4~~$109.8 million (December 31, ~~2020~~2021 - ~~$100.6~~$103.0 million) as security relating to work commitment guarantees in Colombia and Ecuador contained in exploration contracts and other capital or operating requirements.

~~12.~~10. 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 September 30, ~~2021,~~2022, the Company’s financial instruments recognized on the balance sheet ~~consisted~~consist of cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, ~~investment,~~ other long-term assets, accounts payable and accrued liabilities, ~~derivatives,~~other short-term payables, long-term debt, asset retirement obligation, long-term equity compensation ~~award~~reward liability ~~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.

Fair Value Measurement

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


	As at September 30, 2022		As at December 31, 2021
(Thousands of U.S. Dollars)
Level 1
Assets
Prepaid equity forward - current (2)	$	7,398	$	—
Prepaid equity forward - long-term(1)	12,339		7,578
	$	19,737	$	7,578

Liabilities
DSUs liability - long-term(3)	$	7,736	$	4,346
6.25% Senior Notes	230,925		273,672
7.75% Senior Notes	234,000		271,500
	$	472,661	$	549,518
Level 2
Assets
Derivative asset(2)	$	—	219
Restricted cash and cash equivalents - long-term(1)	5,518		4,903
	$	5,518	$	5,122
Liabilities
Derivative liability	$	—	$	2,976
Revolving credit facility	—		66,987
PSUs liability - current (4)	13,657		2,710
PSUs liability - long-term(3)	10,089		9,372
	$	23,746	$	82,045

Level 3
Liabilities
Asset retirement obligation - current(4)	$	1,724	$	—
Asset retirement obligation - long-term	58,657		54,525
	$	60,381	$	54,525

(1)The long-term portion of restricted cash and Prepaid equity forward are included in the other long-term assets on the Company’s balance sheet

(2)Included in the other current assets on the Company’s balance sheet

(3)Long-term DSUs and PSUs liabilities are included in the long-term equity compensation award liability ~~is remeasured~~on the Company’s balance sheet

(4)Current portion of PSU liability and asset retirement obligation are included in the other short-term liabilities on the Company’s balance sheet

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

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

Prepaid Equity Forward (“PEF”)

To reduce the Company’s exposure to changes in the trading price of the Company’s common shares on outstanding PSUs and DSUs, the Company entered into a PEF. At the end of the term, the counterparty will pay the Company an amount equivalent to the notional amount of the shares using the price of the Company’s common shares at the valuation date. The Company has the discretion to increase or decrease the notional amount of the PEF or terminate the agreement early. As at September 30, 2022, the Company’s PEF had a notional amount of 16 million shares with a fair value of $19.7 million (As at December 31, 2021 - 10 million shares with a fair value of $7.6 million). During the three and nine months ended September 30, 2022, the Company recorded a $2.6 million and $5.3 million gain, respectively, on the PEF in general and administrative expenses (three and nine

months ended September 30, 2021- $0.6 million and $0.7 million gain respectively). The fair value of the PEF asset was estimated using the Company’s share price quoted in active markets at the end of each reporting period.

~~Investment in PetroTal~~

The estimated fair value of the Company's investment in PetroTal was $44.1 million at September 30, 2021 ($48.3 million at December 31, 2020), based on the closing stock price of PetroTal of $0.41 CAD ($0.25 CAD at December 31, 2020) and the foreign exchange rate at that date. During the nine months ended September 30, 2021, the Company sold 44% (109 million common shares) of its interest in PetroTal for cash proceeds net of transaction costs of $14.6 million, resulting in a loss on sale of $5.1 million. PetroTal is a publicly-traded energy company incorporated and domiciled in Canada engaged in exploration, appraisal, and development of crude oil and natural gas in Peru. PetroTal's shares are listed on the Toronto Stock Exchange Venture under the trading symbol 'TAL' and on the London Stock Exchange Alternative Investment Market under the trading symbol 'PTAL'. As at September 30, 2021, Gran Tierra holds approximately 137 million common shares representing approximately 17% of PetroTal's issued and outstanding common shares.

~~Commodity and Foreign Currency Derivatives~~DSUs liability

The fair value of ~~commodity~~DSUs liability was estimated using the Company’s share price ~~and foreign currency derivatives is estimated based on various factors, including~~ quoted ~~market prices~~ in active markets ~~and quotes from third parties. The Company also performs an internal valuation to ensure~~at the

~~reasonableness~~ end of third party quotes. In consideration of counterparty credit risk, the Company assessed the possibility of whether the counterparty to the derivative would default by failing to make any contractually required payments. Additionally, the Company considers that it is of substantial credit quality and has the financial resources and willingness to meet its potential repayment obligations associated with the derivative transactions.each reporting period.

PSUs ~~and DSUs~~liability

The ~~estimated~~ fair value of the PSUs liability iswas estimated based on a pricing model using inputs such as ~~quoted market prices in an active market~~Company’s share price and PSUs performance factor. ~~The fair value of DSUs liability is measured using quoted market prices in an active market.~~

~~The fair value of investment, derivatives, and PSUs and DSUs liability at September 30, 2021, and December 31, 2020, was as follows:~~

(Thousands of U.S. Dollars) As at September 30, 2021 As at December 31, 2020
Investment $ 44,116 $ 48,323
Derivative liability $ 14,737 $ 12,050
PSUs and DSUs liability
13,601 4,760
$ 28,338 $ 16,810

~~The following table presents gains or losses on derivatives and other financial instruments recognized in the accompanying interim unaudited condensed consolidated statements of operations:~~

Three Months Ended September 30, Nine Months Ended September 30,
(Thousands of U.S. Dollars) 2021 2020 2021 2020
Commodity price derivatives loss (gain) $ 2,586 $ (2,206) $ 47,435 $ (12,983)
Foreign currency derivatives loss 17 33 105 3,566
Derivative instruments loss (gain) $ 2,603 $ (2,173) $ 47,540 $ (9,417)
Unrealized PetroTal investment (gain) loss $ (13,616) $ 1,055 $ (17,477) $ 60,124
Loss on sale of PetroTal shares — — 5,070 —
Financial instruments (gain) loss (18) 405 (18) 1,162
Other financial instruments (gain) loss $ (13,634) $ 1,460 $ (12,425) $ 61,286

Senior Notes

Financial instruments not recorded at fair value ~~include~~at September 30, 2022, were the ~~Company's 6.25%~~ Senior Notes ~~due 2025 (the "6.25% Senior Notes") and 7.75% Senior Notes due 2027 (the "7.75% Senior Notes")~~(Note 5).

At September 30, ~~2021,~~2022, the carrying amounts of the 6.25% Senior Notes and the 7.75% Senior Notes were ~~$293.5~~$275.5 million and ~~$291.7~~$292.9 million, respectively, which represented the aggregate principal amount less unamortized debt issuance costs, and the fair values were ~~$262.6~~$230.9 million and ~~$260.1~~$234.0 million, respectively.

Restricted cash - long-term

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

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 consist of quoted prices (unadjusted) in active markets for identical assets and liabilities and have the highest priority. Level 2 and 3 inputs are based on significant other observable inputs and significant unobservable inputs, respectively, and have lower priorities. The Company uses appropriate valuation techniques based on the available inputs to measure the fair values of assets and liabilities.

At September 30, 2021, the fair value of the investment and DSUs liability was determined using Level 1 inputs. The fair value of the derivative and PSUs liability was determined using Level 2 inputs.

The Company uses available market data and valuation methodologies to estimate the fair value of debt. The fair value of debt is the estimated amount the Company would have to pay a third party to assume the debt, including a credit spread for the difference between the issue rate and the period-end market rate. The credit spread is the Company’s default or repayment risk. The credit spread (premium or discount) is determined by comparing the Company’s Senior Notes and revolving credit facility to new issuances (secured and unsecured) and secondary trades of similar size and credit statistics for public and private debt. The disclosure in the paragraph above regarding the fair value of cash and restricted cash and cash equivalents and Senior Notes was based on Level 1 inputs, and the fair value of credit facility was based on Level 2 inputs.Asset retirement obligation

The Company’s non-recurring fair value measurements include asset retirement ~~obligations.~~obligation. The fair value of an asset retirement obligation is measured by reference to the expected future cash outflows required to satisfy the retirement obligation discounted at the Company’s credit-adjusted risk-free interest rate.

~~Commodity Price Derivatives~~

The ~~Company utilizes commodity price derivatives~~significant level 3 inputs used to ~~manage~~calculate such liabilities include estimates of costs to be incurred, the ~~variability in cash flows associated with~~Company’s credit-adjusted risk-free interest rate, inflation rates, and estimated dates of abandonment. Accretion expense is recognized over time as the ~~forecasted sale~~discounted liabilities are accreted to their expected settlement value, while the asset retirement cost is amortized over the estimated productive life of ~~its oil production, reduce commodity price risk and provide a base level of cash flows to assure it can execute at least a portion of its planned capital spending.~~

~~At September 30, 2021,~~ the ~~Company had outstanding commodity price derivative positions as follows:~~

Period and type of instrument Volume,
bopd Reference Sold Put ($/bbl, Weighted Average) Purchased Put ($/bbl, Weighted Average) Sold Call ($/bbl, Weighted Average) Swap Price ($/bbl, Weighted Average)
Three-way Collars:
October 1, to December 31, 2021 7,000 ICE Brent 47.14 57.14 68.95 n/a
Swaps: October 1, to December 31, 2021 3,000 ICE Brent n/a n/a n/a 56.75

~~Foreign Currency Derivatives~~

The Company utilizes foreign currency derivatives to manage the variability in cash flows associated with the Company's forecasted Colombian peso ("COP") denominated expenses. At September 30, 2021, the Company had outstanding foreign currency derivative positions as follows:

Period and type of instrument Amount Hedged
(Millions of COP)
U.S. Dollar Equivalent of Amount Hedged (Thousands of U.S. Dollars)(1)
Reference Floor Price
(COP, Weighted Average) Cap Price (COP, Weighted Average)
Collars: October 1, to December 31, 2021 3,000 782 COP 3,500 3,630

~~(1)At September 30, 2021 foreign exchange rate.~~related assets.

~~13.~~11. 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:


(Thousands of U.S. Dollars)	(Thousands of U.S. Dollars)	As at September 30,				As at December 31,				(Thousands of U.S. Dollars)	As at September 30,				As at December 31,
		2021		2020		2020		2019			2022		2021		2021		2020
Cash and cash equivalents	Cash and cash equivalents	$	16,600	$	21,808	$	14,114	$	8,817	Cash and cash equivalents	$	118,173	$	16,208	$	26,109	$	13,687

Restricted cash and cash equivalents - current										Restricted cash and cash equivalents - current	1,142		392		392		427
Restricted cash and cash equivalents - long-term(1)	Restricted cash and cash equivalents - long-term(1)	3,532		3,007		3,409		2,258		Restricted cash and cash equivalents - long-term(1)	5,518		3,532		4,903		3,409
		$	20,132	$	24,815	$	17,523	$	11,075		$	124,833	$	20,132	$	31,404	$	17,523

(1)Included in other long-term assets on the Company’s balance sheet

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


		Nine Months Ended September 30,					Nine Months Ended September 30,
(Thousands of U.S. Dollars)	(Thousands of U.S. Dollars)	2021		2020		(Thousands of U.S. Dollars)	2022		2021
Accounts receivable and other long-term assets	Accounts receivable and other long-term assets	$	(18,582)	$	31,108	Accounts receivable and other long-term assets	$	2,811	$	(18,582)
Derivatives	Derivatives	(2,427)		694		Derivatives	(16,594)		(2,427)
Inventory	Inventory	(2,920)		(2,377)		Inventory	(3,252)		(2,920)
Prepaids	Prepaids	42		(183)		Prepaids	(2,773)		42
Accounts payable and accrued and other long-term liabilities	Accounts payable and accrued and other long-term liabilities	14,417		(57,621)		Accounts payable and accrued and other long-term liabilities	37,862		14,417
Taxes receivable and payable	Taxes receivable and payable	27,426		51,667		Taxes receivable and payable	54,784		27,426
Net changes in assets and liabilities from operating activities	Net changes in assets and liabilities from operating activities	$	17,956	$	23,288	Net changes in assets and liabilities from operating activities	$	72,838	$	17,956

Changes in non-cash investing working capital for the nine months ended September 30, ~~2021, are~~2022, were comprised of an increase in accounts payable and accrued liabilities of $3.7 million and an increase in accounts receivable of $0.4 million (nine months ended September 30, 2021, an increase in accounts payable and accrued liabilities of $0.6 million and a decrease in accounts receivable of $0.1 ~~million (nine months ended September 30, 2020, a decrease in accounts payable and accrued liabilities of $69.9 million and a decrease in accounts receivable of $0.3~~ million).

The following table provides additional supplemental cash flow disclosures:


		Nine Months Ended September 30,					Nine Months Ended September 30,
(Thousands of U.S. Dollars)	(Thousands of U.S. Dollars)	2021		2020		(Thousands of U.S. Dollars)	2022		2021
Cash paid for income taxes	Cash paid for income taxes	$	20,433	$	11,603	Cash paid for income taxes	$	29,881	$	20,433
Cash paid for interest	Cash paid for interest	$	37,259	$	35,408	Cash paid for interest	$	31,455	$	37,259

Non-cash investing activities:	Non-cash investing activities:					Non-cash investing activities:
Net liabilities related to property, plant and equipment, end of period	Net liabilities related to property, plant and equipment, end of period	$	29,420	$	7,805	Net liabilities related to property, plant and equipment, end of period	$	33,397	$	29,420

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"~~“Financial Statements” as set out in Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as the ~~"Financial~~“Financial Statements and Supplementary ~~Data"~~Data” and ~~"Management’s~~“Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations"~~Operations” included in Part II, Items 7 and 8, respectively, of our ~~2020~~2021 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"~~“Risk Factors” of this Quarterly Report on Form 10-Q, as well as Part I, Item 1A “Risk Factors” in our ~~2020~~2021 Annual Report on Form 10-K.

Financial and Operational Highlights

Key Highlights for the third quarter of ~~2021~~2022

•Net income in the third quarter of ~~2021~~2022 was $38.7 million or $0.11 per share basic and $0.10 per share diluted, compared to a net income of $35.0 million or $0.10 ~~per share basic and diluted, compared with a net loss of $107.8 million or $(0.29)~~ per share basic and diluted in the third quarter of ~~2020~~2021

•Income before income taxes in the third quarter of ~~2021~~2022 was ~~$44.0~~$60.4 million compared to ~~loss~~an income before income taxes of ~~$128.4~~$44.0 million in the third quarter of ~~2020~~2021

•During the third quarter of ~~2021,~~2022, we ~~repaid $25.0~~re-purchased $20.1 million of ~~the amount drawn under the revolving credit facility~~6.25% Senior Notes for a cash consideration of $17.3 million and re-purchased 10,733,702 of our common shares at a weighted average price of $1.34 per share

•Funds flow from operations(2) increased by ~~758%~~36% to ~~$69.1~~$93.7 million compared to the third quarter of ~~2020~~2021 and ~~increased 197%~~decreased by 10% from the second quarter of ~~2021~~2022

•During the third quarter, the Company generated ~~$34.3~~$36.7 million of free cash flow(2) ~~which~~. For the nine months ended September 30, 2022, the Company generated $121.0 million of free cash flow(2). Free cash flow was partially used for ~~debt reduction~~the re-purchase of Senior Notes and shares of Common Stock

•~~Our~~NAR production for the third quarter of ~~2021 average production NAR~~2022 was 23,472 BOPD, which was comparable to 23,372 BOPD ~~(sales volumes - 23,833 BOPD), a 37% increase (sales volumes - 40% increase) from 17,051 BOPD (sales volumes - 17,066 BOPD)~~ in the third quarter of ~~2020,~~2021 and ~~23% increase (sales volumes - 29% increase) from~~23,215 in the second quarter of 2022

•Sales volumes for the third quarter of 2022 were 23,516 BOPD which were comparable to 23,833 BOPD in the third quarter of 2021 ~~which was impacted by national blockades~~and 3% higher than 22,847 in ~~Colombia affecting production from major fields~~the second quarter of 2022

•Oil sales were ~~$135.3~~$168.4 million, ~~155%~~24% higher compared to ~~$53.1~~$135.3 million in the third ~~quarter of 2020 as a result of an increase in Brent price, offset by higher quality and transportation discounts. Oil sales increased by 40% compared with $96.6 million in the second~~ quarter of 2021, as a result of a 6%33% increase in Brent price, ~~and~~offset by a ~~29%~~16% increase in quality and transportation discounts. Oil sales ~~volumes~~decreased by 18% compared to $205.8 million in the second quarter of 2022 as a result of a 13% decrease in Brent price and 3% higher quality and transportation discounts.

•Operating expenses were $41.8 million, 9% higher than $38.4 million in the third quarter of 2021, due to increased ~~30% on~~workovers and higher lifting costs as a ~~per bbl basis ($3.93 per bbl)~~result of higher environmental, community aids, and lower recoveries from partners in the Suroriente Block as a result of social blockades. Operating expenses increased by 6% from $39.5 million in the second quarter of 2022, primarily due to higher workover activities during the current quarter

•Transportation expenses decreased by 23% compared to the third quarter of ~~2020~~2021. During the third quarter of 2021, alternative transportation routes were utilized due to the maintenance of the Impala terminal, which had higher ~~power generation~~transportation costs ~~in Acordionero and increased by 13% on a~~ per ~~bbl basis ($1.99 per bbl) compared~~bbl. Compared to the second quarter of ~~2021~~2022, transportation expenses decreased by 4% due to ~~power generation and chemical costs~~

•~~Transportation expenses increased by 135% compared to~~ the ~~third quarter~~use of ~~2020 as a result of the national blockades resulting in utilization of more expensive~~alternative transportation routes, ~~and increased 3% compared to~~which resulted in lower transportation costs in the ~~second~~current quarter ~~of 2021~~

•Operating netback(2) increased by ~~204% and 39%, respectively,~~32% to ~~$94.7~~$124.1 million compared to ~~$31.1~~$93.7 million in the third quarter of ~~2020~~2021 and ~~$68.3~~decreased 24% from $163.8 million in the second quarter of ~~2021~~2022

•Adjusted EBITDA(2) increased by ~~274% and 125%, respectively,~~48% to ~~$81.8~~$121.2 million compared to ~~$21.9~~$81.8 million in the third quarter of ~~2020~~2021 and ~~$36.3~~decreased by 13% from $140.1 million in the second quarter of ~~2021~~2022. The trailing twelve-month Adjusted EBITDA was $462.3 million resulting in Net Debt(2) to Adjusted EBITDA(2) of 1.0 times.

•Quality and transportation discounts for the third quarter of ~~2021~~2022 increased to ~~$11.51~~$13.37 per bbl compared to ~~$9.49~~$11.51 per bbl in the third quarter of ~~2020 as a result of higher differentials~~2021 and ~~remained consistent when compared to $11.54~~$13.00 per bbl in the second quarter of ~~2021~~2022

•General and administrative expenses ("(“G~~&A"~~&A”) before stock-based compensation increased by ~~21%~~52% compared to the third quarter of ~~2020, consistent with the increase of operating activities~~2021 due to higher costs for special projects and lease obligations in the current ~~period. When compared to~~quarter. G&A expenses before stock-based compensation increased by 6% or $0.06 per bbl from the second quarter of ~~2021, G&A before stock-based compensation decreased by 24%~~2022, primarily due to ~~the timing of certain~~ costs ~~incurred and expensed in the prior quarter~~for optimization projects

•Capital additions for the third quarter of ~~2021~~2022 were ~~$34.8~~$57.0 million, an increase of ~~$27.5 million~~64% compared to the third quarter of ~~2020~~2021, as a result of the drilling program in the Acordionero field and exploration wells in Colombia and Ecuador and decreased ~~slightly~~13% from ~~the $37.4 million incurred in~~ the second quarter of ~~2021~~2022


(Thousands of U.S. Dollars, unless otherwise indicated)	(Thousands of U.S. Dollars, unless otherwise indicated)	Three Months Ended September 30,					Three Months Ended June 30,		Nine Months Ended September 30,					(Thousands of U.S. Dollars, unless otherwise indicated)	Three Months Ended September 30,					Three Months Ended June 30,		Nine Months Ended September 30,
		2021		2020		% Change	2021		2021		2020		% Change		2022		2021		% Change	2022		2022		2021		% Change

Average Daily Volumes (BOPD)	Average Daily Volumes (BOPD)													Average Daily Volumes (BOPD)
Consolidated	Consolidated													Consolidated
Working Interest ("WI") Production Before Royalties		28,957		18,944		53	23,035		25,501		22,864		12
Working Interest (“WI”) Production Before Royalties														Working Interest (“WI”) Production Before Royalties	30,391		28,957		5	30,607		30,123		25,501		18
Royalties	Royalties	(5,585)		(1,893)		195	(4,059)		(4,531)		(2,600)		74	Royalties	(6,919)		(5,585)		24	(7,392)		(6,948)		(4,531)		53
Production NAR	Production NAR	23,372		17,051		37	18,976		20,970		20,264		3	Production NAR	23,472		23,372		—	23,215		23,175		20,970		11
Decrease (Increase) in Inventory	Decrease (Increase) in Inventory	461		15		2,973	(522)		(105)		117		(190)	Decrease (Increase) in Inventory	44		461		(90)	(368)		(141)		(105)		(34)
Sales(1)	Sales(1)	23,833		17,066		40	18,454		20,865		20,381		2	Sales(1)	23,516		23,833		(1)	22,847		23,034		20,865		10

Net Income (Loss)	Net Income (Loss)	$	35,007	$	(107,821)	132	$	(17,627)	$	(20,042)	$	(730,096)	97	Net Income (Loss)	$	38,663	$	35,007	10	$	52,972	$	105,754	$	(20,042)	628

Operating Netback	Operating Netback													Operating Netback
Oil Sales	Oil Sales	$	135,319	$	53,142	155	$	96,623	$	327,435	$	173,045	89	Oil Sales	$	168,397	$	135,319	24	$	205,785	$	548,751	$	327,435	68
Operating Expenses	Operating Expenses	(37,567)		(20,721)		81	(25,431)		(92,623)		(84,673)		9	Operating Expenses	(41,837)		(38,448)		9	(39,494)		(116,266)		(95,366)		22

Transportation Expenses	Transportation Expenses	(3,021)		(1,286)		135	(2,921)		(8,448)		(8,549)		(1)	Transportation Expenses	(2,417)		(3,130)		(23)	(2,513)		(7,764)		(8,731)		(11)
Operating Netback(2)	Operating Netback(2)	$	94,731	$	31,135	204	$	68,271	$	226,364	$	79,823	184	Operating Netback(2)	$	124,143	$	93,741	32	$	163,778	$	424,721	$	223,338	90

G&A Expenses Before Stock-Based Compensation	G&A Expenses Before Stock-Based Compensation	$	5,444	$	4,506	21	$	7,133	$	18,475	$	17,183	8	G&A Expenses Before Stock-Based Compensation	$	8,284	$	5,444	52	$	7,847	$	23,910	$	19,394	23
G&A Stock-Based Compensation Expense (Recovery)		1,053		56		1,780	1,873		6,597		(707)		1,033
G&A Stock-Based Compensation (Recovery) Expense														G&A Stock-Based Compensation (Recovery) Expense	(170)		1,053		(116)	1,989		6,376		6,597		(3)
G&A Expenses, Including Stock-Based Compensation	G&A Expenses, Including Stock-Based Compensation	$	6,497	$	4,562	42	$	9,006	$	25,072	$	16,476	52	G&A Expenses, Including Stock-Based Compensation	$	8,114	$	6,497	25	$	9,836	$	30,286	$	25,991	17

Adjusted EBITDA(2)	Adjusted EBITDA(2)	$	81,804	$	21,884	274	$	36,299	$	160,007	$	74,247	116	Adjusted EBITDA(2)	$	121,236	$	81,804	48	$	140,113	$	380,727	$	160,007	138

Funds Flow From Operations(2)	Funds Flow From Operations(2)	$	69,103	$	8,056	758	$	23,272	$	121,348	$	36,257	235	Funds Flow From Operations(2)	$	93,746	$	69,103	36	$	103,625	$	284,681	$	121,348	135

Capital Expenditures	Capital Expenditures	$	34,839	$	7,354	374	$	37,384	$	109,650	$	56,378	94	Capital Expenditures	$	57,035	$	34,839	64	$	65,199	$	163,717	$	109,650	49

(1) Sales volumes represent production NAR adjusted for inventory changes.

(2) Non-GAAP measures

Operating netback, net debt, EBITDA, adjusted EBITDA, funds flow from operations, and free cash flow, are non-GAAP measures ~~which~~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) or other measures of financial performance as determined in accordance with GAAP. Our method of calculating these measures may differ from other companies and, accordingly, may not be comparable to similar measures used by other companies. Disclosure of each non-GAAP financial measure is preceded by the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure.

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

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

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

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


		Three Months Ended September 30,				Three Months Ended June 30,		Nine Months Ended September 30,					Three Months Ended September 30,				Three Months Ended June 30,		Nine Months Ended September 30,				Twelve Months Rolling Ending September 30,
(Thousands of U.S. Dollars)	(Thousands of U.S. Dollars)	2021		2020		2021		2021		2020		(Thousands of U.S. Dollars)	2022		2021		2022		2022		2021		2022
Net income (loss)	Net income (loss)	$	35,007	$	(107,821)	$	(17,627)	$	(20,042)	$	(730,096)	Net income (loss)	$	38,663	$	35,007	$	52,972	$	105,754	$	(20,042)	$	168,278
Adjustments to reconcile net income (loss) to EBITDA and Adjusted EBITDA	Adjustments to reconcile net income (loss) to EBITDA and Adjusted EBITDA											Adjustments to reconcile net income (loss) to EBITDA and Adjusted EBITDA
DD&A expenses	DD&A expenses	38,055		31,340		28,927		98,300		131,118		DD&A expenses	45,320		38,055		42,216		128,499		98,300		170,073
Interest expense	Interest expense	13,608		14,029		13,935		41,355		40,204		Interest expense	11,421		13,608		12,194		35,743		41,355		48,769
Income tax expense (recovery)		8,955		(20,565)		9,189		26,795		(62,236)
Income tax expense												Income tax expense	21,734		8,955		38,666		99,940		26,795		53,799
EBITDA (non-GAAP)	EBITDA (non-GAAP)	$	95,625	$	(83,017)	$	34,424	$	146,408	$	(621,010)	EBITDA (non-GAAP)	$	117,138	$	95,625	$	146,048	$	369,936	$	146,408	$	440,919
Goodwill impairment		—		—		—		—		102,581
Asset impairment		—		104,731		—		—		507,093
Non-cash lease expense	Non-cash lease expense	408		523		370		1,222		1,494		Non-cash lease expense	851		408		747		2,009		1,222		2,454
Lease payments	Lease payments	(384)		(429)		(393)		(1,239)		(1,404)		Lease payments	(402)		(384)		(388)		(1,134)		(1,239)		(1,516)
Unrealized foreign exchange loss	Unrealized foreign exchange loss	3,465		3,080		477		16,945		22,335		Unrealized foreign exchange loss	6,636		3,465		4,341		6,138		16,945		11,072
Stock-based compensation expense (recovery)		1,053		56		1,873		6,597		(707)
Other non-cash loss		—		2,026		—		—		2,026
Stock-based compensation (recovery) expense												Stock-based compensation (recovery) expense	(170)		1,053		1,989		6,376		6,597		8,175
Unrealized derivative instruments (gain) loss	Unrealized derivative instruments (gain) loss	(4,729)		(6,546)		(3,066)		2,499		553		Unrealized derivative instruments (gain) loss	(219)		(4,729)		(12,624)		—		2,499		(12,088)
Gain on re-purchase of Senior Notes												Gain on re-purchase of Senior Notes	(2,598)		—		—		(2,598)		—		(2,598)
Other financial instruments (gain) loss	Other financial instruments (gain) loss	(13,634)		1,460		2,614		(12,425)		61,286		Other financial instruments (gain) loss	—		(13,634)		—		—		(12,425)		15,794
Other loss												Other loss	—		—		—		—		—		44
Adjusted EBITDA (non-GAAP)	Adjusted EBITDA (non-GAAP)	$	81,804	$	21,884	$	36,299	$	160,007	$	74,247	Adjusted EBITDA (non-GAAP)	$	121,236	$	81,804	$	140,113	$	380,727	$	160,007	$	462,256

Funds flow from operations, as presented, is defined as net income or loss adjusted for DD&A expenses, ~~goodwill and asset impairment,~~ deferred tax expense or recovery, stock-based compensation expense or recovery, amortization of debt issuance costs, non-cash lease expense, lease payments, unrealized foreign exchange gain or loss, derivative instruments gain or loss, cash settlement on derivative instruments, ~~other non-cash~~ gain ~~or loss~~on re-purchase of Senior Notes, and other financial instruments gain or loss. Management uses this financial measure to analyze performance and income generated by our principal business activities prior to the consideration of how non-cash items affect that income and believes that this financial measure is also useful supplemental information for investors to analyze performance and our financial results. Free cash flow, as presented, is defined as funds flow less capital expenditures. Management uses this financial measure to analyze cash flow generated by our principal business activities after capital requirements and believes that this financial measure is also useful supplemental information for investors to analyze performance and our financial results. A reconciliation from net ~~loss~~income (loss) to funds flow from operations, and free cash flow is as follows:

Three Months Ended September 30, Three Months Ended June 30, Nine Months Ended September 30,
(Thousands of U.S. Dollars) 2021 2020 2021 2021 2020
Net income (loss) $ 35,007 $ (107,821) $ (17,627) $ (20,042) $ (730,096)
Adjustments to reconcile net income (loss) to funds flow from operations
DD&A expenses 38,055 31,340 28,927 98,300 131,118
Goodwill impairment — — — — 102,581
Asset impairment — 104,731 — — 507,093
Deferred tax expense (recovery) 8,955 (21,202) 9,203 26,809 (62,796)
Stock-based compensation expense (recovery) 1,053 56 1,873 6,597 (707)
Amortization of debt issuance costs 907 838 894 2,682 2,774
Non-cash lease expense 408 523 370 1,222 1,494
Lease payments (384) (429) (393) (1,239) (1,404)
Unrealized foreign exchange loss 3,465 3,080 477 16,945 22,335
   Derivative instruments loss (gain) 2,603 (2,173) 21,239 47,540 (9,417)
Cash settlements on derivative instruments (7,332) (4,373) (24,305) (45,041) 9,970
   Other non-cash loss — 2,026 — — 2,026
   Other financial instruments (gain) loss (13,634) 1,460 2,614 (12,425) 61,286
Funds flow from operations (non-GAAP) $ 69,103 $ 8,056 $ 23,272 $ 121,348 $ 36,257
   Capital expenditures $ 34,839 $ 7,354 $ 37,384 $ 109,650 $ 56,378
Free cash flow (non-GAAP) $ 34,264 $ 702 $ (14,112) $ 11,698 $ (20,121)


	Three Months Ended September 30,				Three Months Ended June 30,		Nine Months Ended September 30,
(Thousands of U.S. Dollars)	2022		2021		2022		2022		2021
Net income (loss)	$	38,663	$	35,007	$	52,972	$	105,754	$	(20,042)
Adjustments to reconcile net income (loss) to funds flow from operations
DD&A expenses	45,320		38,055		42,216		128,499		98,300
Deferred tax expense	4,914		8,955		13,241		36,868		26,809
Stock-based compensation (recovery) expense	(170)		1,053		1,989		6,376		6,597
Amortization of debt issuance costs	751		907		1,131		2,769		2,682
Non-cash lease expense	851		408		747		2,009		1,222
Lease payments	(402)		(384)		(388)		(1,134)		(1,239)
Unrealized foreign exchange loss	6,636		3,465		4,341		6,138		16,945
Derivative instruments loss	—		2,603		5,172		26,611		47,540
Cash settlements on derivative instruments	(219)		(7,332)		(17,796)		(26,611)		(45,041)
Gain on re-purchase of Senior Notes	(2,598)		—		—		(2,598)		—
Other financial instruments gain	—		(13,634)		—		—		(12,425)
Funds flow from operations (non-GAAP)	$	93,746	$	69,103	$	103,625	$	284,681	$	121,348
Capital expenditures	$	57,035	$	34,839	$	65,199	$	163,717	$	109,650
Free cash flow (non-GAAP)	$	36,711	$	34,264	$	38,426	$	120,964	$	11,698

Additional Operational Results

Three Months Ended September 30, Three Months Ended June 30, Nine Months Ended September 30,
(Thousands of U.S. Dollars) 2021 2020 % Change 2021 2021 2020 % Change
Oil sales $ 135,319 $ 53,142 155 $ 96,623 $ 327,435 $ 173,045 89
Operating expenses 37,567 20,721 81 25,431 92,623 84,673 9
Transportation expenses 3,021 1,286 135 2,921 8,448 8,549 (1)
Operating netback(1)
94,731 31,135 204 68,271 226,364 79,823 184
COVID-19 related costs 990 1,108 (11) 897 3,026 1,529 98
DD&A expenses 38,055 31,340 21 28,927 98,300 131,118 (25)
Goodwill impairment — — — — — 102,581 (100)
Asset impairment — 104,731 (100) — — 507,093 (100)
G&A expenses before stock-based compensation 5,444 4,506 21 7,133 18,475 17,183 8
G&A stock-based compensation expense (recovery) 1,053 56 1,780 1,873 6,597 (707) 1,033
Severance expenses — 122 (100) — 919 1,469 (37)
Foreign exchange loss 2,650 4,275 (38) 91 15,824 20,094 (21)
Derivative instruments loss (gain) 2,603 (2,173) 220 21,239 47,540 (9,417) 605
Other financial instruments (gain) loss (13,634) 1,460 (1,034) 2,614 (12,425) 61,286 (120)
Other loss — 67 (100) — — 67 (100)
Interest expense 13,608 14,029 (3) 13,935 41,355 40,204 3
50,769 159,521 (68) 76,709 219,611 872,500 (75)
Interest income — — — — — 345 (100)
Income (loss) before income taxes 43,962 (128,386) 134 (8,438) 6,753 (792,332) 101
Current income tax expense (recovery) — 637 (100) (14) (14) 560 (103)
Deferred income tax expense (recovery) 8,955 (21,202) 142 9,203 26,809 (62,796) 143
8,955 (20,565) 144 9,189 26,795 (62,236) 143
Net income (loss) $ 35,007 $ (107,821) 132 $ (17,627) $ (20,042) $ (730,096) 97
Sales Volumes (NAR)
Total sales volumes, BOPD 23,833 17,066 40 18,454 20,865 20,381 2
Brent Price per bbl $ 73.23 $ 43.34 69 $ 69.08 $ 67.97 $ 42.53 60


	Three Months Ended September 30,					Three Months Ended June 30,		Nine Months Ended September 30,
(Thousands of U.S. Dollars)	2022		2021		% Change	2022		2022		2021		% Change
Oil sales	$	168,397	$	135,319	24	$	205,785	$	548,751	$	327,435	68
Operating expenses	41,837		38,448		9	39,494		116,266		95,366		22

Transportation expenses	2,417		3,130		(23)	2,513		7,764		8,731		(11)
Operating netback(1)	124,143		93,741		32	163,778		424,721		223,338		90


DD&A expenses	45,320		38,055		19	42,216		128,499		98,300		31
G&A expenses before stock-based compensation	8,284		5,444		52	7,847		23,910		19,394		23
G&A stock-based compensation (recovery) expense	(170)		1,053		(116)	1,989		6,376		6,597		(3)
Foreign exchange loss	1,489		2,650		(44)	2,722		486		15,824		(97)
Derivative instruments loss	—		2,603		(100)	5,172		26,611		47,540		(44)
Other financial instruments gain	—		(13,634)		(100)	—		—		(12,425)		(100)
Gain on re-purchase of Senior Notes	(2,598)		—		100	—		(2,598)		—		100
Interest expense	11,421		13,608		(16)	12,194		35,743		41,355		(14)
	63,746		49,779		28	72,140		219,027		216,585		1



Income before income taxes	60,397		43,962		37	91,638		205,694		6,753		2946


Current income tax expense (recovery)														Current income tax expense (recovery)	16,820		—		100	25,425		63,072		(14)		450,614
Deferred income tax expense														Deferred income tax expense	4,914		8,955		(45)	13,241		36,868		26,809		38
															21,734		8,955		143	38,666		99,940		26,795		273
Net income (loss)														Net income (loss)	$	38,663	$	35,007	10	$	52,972	$	105,754	$	(20,042)	628

Sales Volumes (NAR)														Sales Volumes (NAR)

Total sales volumes, BOPD														Total sales volumes, BOPD	23,516		23,833		(1)	22,847		23,034		20,865		10

Brent Price per bbl														Brent Price per bbl	$	97.70	$	73.23	33	$	111.98	$	102.48	$	67.97	51

Consolidated Results of Operations per bbl Sales Volumes NAR	Consolidated Results of Operations per bbl Sales Volumes NAR													Consolidated Results of Operations per bbl Sales Volumes NAR
Oil sales	Oil sales	$	61.72	$	33.85	82	$	57.54	$	57.48	$	30.99	85	Oil sales	$	77.84	$	61.72	26	$	98.98	$	87.27	$	57.48	52
Operating expenses	Operating expenses	17.13		13.20		30	15.14		16.26		15.16		7	Operating expenses	19.34		17.53		10	19.00		18.49		16.74		10
Transportation expenses	Transportation expenses	1.38		0.82		68	1.74		1.48		1.53		(3)	Transportation expenses	1.12		1.43		(22)	1.21		1.23		1.53		(20)
Operating netback(1)	Operating netback(1)	43.21		19.83		118	40.66		39.74		14.30		178	Operating netback(1)	57.38		42.76		34	78.77		67.55		39.21		72

COVID-19 related costs		0.45		0.70		(36)	0.53		0.53		0.27		96

DD&A expenses	DD&A expenses	17.36		19.96		(13)	17.23		17.26		23.48		(26)	DD&A expenses	20.95		17.36		21	20.31		20.43		17.26		18
Goodwill impairment		—		—		—	—		—		18.37		(100)
Asset impairment		—		66.71		(100)	—		—		90.80		(100)
G&A expenses before stock-based compensation	G&A expenses before stock-based compensation	2.48		2.87		(14)	4.25		3.24		3.08		5	G&A expenses before stock-based compensation	3.83		2.48		54	3.77		3.80		3.40		12
G&A stock-based compensation expense (recovery)		0.48		0.04		1,100	1.12		1.16		(0.13)		992
Severance expenses		—		0.08		(100)	—		0.16		0.26		(38)
G&A stock-based compensation (recovery) expense														G&A stock-based compensation (recovery) expense	(0.08)		0.48		(117)	0.96		1.01		1.16		(13)
Foreign exchange loss	Foreign exchange loss	1.21		2.72		(56)	0.05		2.78		3.60		(23)	Foreign exchange loss	0.69		1.21		(43)	1.31		0.08		2.78		(97)
Derivative instruments loss (gain)		1.19		(1.38)		186	12.65		8.35		(1.69)		594
Other financial instruments (gain) loss		(6.22)		0.93		(769)	1.56		(2.18)		10.97		(120)
Other loss		—		0.04		(100)	—		—		0.01		(100)
Derivative instruments loss														Derivative instruments loss	—		1.19		(100)	2.49		4.23		8.35		(49)
Other financial instruments gain														Other financial instruments gain	—		(6.22)		(100)	—		—		(2.18)		(100)
Gain on re-purchase of Senior Notes														Gain on re-purchase of Senior Notes	(1.20)		—		100	—		(0.41)		—		100
Interest expense	Interest expense	6.21		8.94		(31)	8.30		7.26		7.20		1	Interest expense	5.28		6.21		(15)	5.87		5.68		7.26		(22)
		23.16		101.61		(77)	45.69		38.56		156.22		(75)		29.47		22.71		30	34.71		34.82		38.03		(8)

Interest income		—		—		—	—		—		0.06		(100)

Income (loss) before income taxes		20.05		(81.78)		125	(5.03)		1.18		(141.86)		101

Income before income taxes														Income before income taxes	27.91		20.05		39	44.06		32.73		1.18		2,674

Current income tax expense (recovery)	Current income tax expense (recovery)	—		0.41		(100)	(0.01)		—		0.10		(100)	Current income tax expense (recovery)	7.77		—		100	12.23		10.03		—		100
Deferred income tax expense (recovery)		4.08		(13.50)		130	5.48		4.71		(11.24)		142
Deferred income tax expense														Deferred income tax expense	2.27		4.08		(44)	6.37		5.86		4.71		24
		4.08		(13.09)		131	5.47		4.71		(11.14)		142		10.04		4.08		146	18.60		15.89		4.71		237
Net income (loss)	Net income (loss)	$	15.97	$	(68.69)	123	$	(10.50)	$	(3.53)	$	(130.72)	97	Net income (loss)	$	17.87	$	15.97	12	$	25.46	$	16.84	$	(3.53)	(577)

(1) Operating netback is a non-GAAP measure ~~which~~that does not have any standardized meaning prescribed under GAAP. Refer to ~~"Financial~~“Financial and Operational Highlights—non-GAAP ~~measures"~~measures” for a definition of this measure.

Oil Production and Sales Volumes, BOPD


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Three Months Ended June 30,		Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2022		2021
Average Daily Volumes (BOPD)	Average Daily Volumes (BOPD)									Average Daily Volumes (BOPD)
WI Production Before Royalties	WI Production Before Royalties	28,957		18,944		25,501		22,864		WI Production Before Royalties	30,391		28,957		30,607		30,123		25,501
Royalties	Royalties	(5,585)		(1,893)		(4,531)		(2,600)		Royalties	(6,919)		(5,585)		(7,392)		(6,948)		(4,531)
Production NAR	Production NAR	23,372		17,051		20,970		20,264		Production NAR	23,472		23,372		23,215		23,175		20,970
Decrease (Increase) in Inventory	Decrease (Increase) in Inventory	461		15		(105)		117		Decrease (Increase) in Inventory	44		461		(368)		(141)		(105)
Sales	Sales	23,833		17,066		20,865		20,381		Sales	23,516		23,833		22,847		23,034		20,865

Royalties, % of WI Production Before Royalties	Royalties, % of WI Production Before Royalties	19	%	10	%	18	%	11	%	Royalties, % of WI Production Before Royalties	23	%	19	%	24	%	23	%	18	%

Oil production NAR for the three ~~and~~months ended September 30, 2022 was consistent with the corresponding period of 2021. Oil production NAR for the nine months ended September 30, ~~2021,~~2022, increased by ~~37% and 3%, respectively,~~11% compared to the corresponding ~~periods~~period of ~~2020~~2021 due to the successful drilling and workover campaign in ~~all major fields, despite~~the Acordionero and Costayaco fields. Oil production ~~disruptions during the second quarter of 2021 caused by national blockades in Colombia. Compared~~NAR was comparable to the prior ~~quarter, oil production NAR increased 23% as the national blockades were resolved by the end of the second quarter of 2021.~~quarter.

Royalties as a percentage of production for the three and nine months ended September 30, ~~2021,~~2022, increased to 23% compared ~~with~~to the corresponding periods of ~~2020 and the prior quarter~~2021 commensurate with the increase in benchmark oil prices and the price sensitive royalty regime in Colombia. Compared to the prior quarter, royalties as a percentage of production remained comparable.

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

Operating Netback


		Three Months Ended September 30,				Three Months Ended June 30,		Nine Months Ended September 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)	2021		2020		2021		2021		2020		(Thousands of U.S. Dollars)	2022		2021		2022		2022		2021

Oil Sales	Oil Sales	$	135,319	$	53,142	$	96,623	$	327,435	$	173,045	Oil Sales	$	168,397	$	135,319	$	205,785	$	548,751	$	327,435
Transportation Expenses	Transportation Expenses	(3,021)		(1,286)		(2,921)		(8,448)		(8,549)		Transportation Expenses	(2,417)		(3,130)		(2,513)		(7,764)		(8,731)
		132,298		51,856		93,702		318,987		164,496			165,980		132,189		203,272		540,987		318,704
Operating Expenses	Operating Expenses	(37,567)		(20,721)		(25,431)		(92,623)		(84,673)		Operating Expenses	(41,837)		(38,448)		(39,494)		(116,266)		(95,366)
Operating Netback(1)	Operating Netback(1)	$	94,731	$	31,135	$	68,271	$	226,364	$	79,823	Operating Netback(1)	$	124,143	$	93,741	$	163,778	$	424,721	$	223,338

(U.S. Dollars Per bbl Sales Volumes NAR)	(U.S. Dollars Per bbl Sales Volumes NAR)											(U.S. Dollars Per bbl Sales Volumes NAR)
Brent	Brent	$	73.23	$	43.34	$	69.08	$	67.97	$	42.53	Brent	$	97.70	$	73.23	$	111.98	$	102.48	$	67.97
One Month Forward Brent (“M+1”) Adjustment												One Month Forward Brent (“M+1”) Adjustment	(6.49)		—		—		(2.23)		—
Quality and Transportation Discounts	Quality and Transportation Discounts	(11.51)		(9.49)		(11.54)		(10.49)		(11.54)		Quality and Transportation Discounts	(13.37)		(11.51)		(13.00)		(12.98)		(10.49)
Average Realized Price	Average Realized Price	61.72		33.85		57.54		57.48		30.99		Average Realized Price	77.84		61.72		98.98		87.27		57.48
Transportation Expenses	Transportation Expenses	(1.38)		(0.82)		(1.74)		(1.48)		(1.53)		Transportation Expenses	(1.12)		(1.43)		(1.21)		(1.23)		(1.53)
Average Realized Price Net of Transportation Expenses	Average Realized Price Net of Transportation Expenses	60.34		33.03		55.80		56.00		29.46		Average Realized Price Net of Transportation Expenses	76.72		60.29		97.77		86.04		55.95
Operating Expenses	Operating Expenses	(17.13)		(13.20)		(15.14)		(16.26)		(15.16)		Operating Expenses	(19.34)		(17.53)		(19.00)		(18.49)		(16.74)
Operating Netback(1)	Operating Netback(1)	$	43.21	$	19.83	$	40.66	$	39.74	$	14.30	Operating Netback(1)	$	57.38	$	42.76	$	78.77	$	67.55	$	39.21

Oil sales for the three months ended September 30, ~~2021,~~2022, increased by ~~155%~~24% to ~~$135.3~~$168.4 million compared to the corresponding period of 2021 due to a ~~69%~~33% increase in Brent price, ~~and 40% higher sales volumes~~ partially offset by a ~~21%~~16% increase in the quality and transportation discounts ~~as a result of the widening of the~~and M+1 Brent adjustment, (as defined below). Castilla ~~and Vasconia~~ differentials ~~compared~~increased to $9.15 from $6.51 per bbl in the corresponding period of ~~2020. Both the Castilla~~2021, and Vasconia differentials ~~have widened~~decreased to $3.77 from ~~$4.65 and $3.01 in the third quarter of 2020 to $6.51 and~~ $4.02 in the ~~third quarter~~corresponding period of ~~2021, respectively.~~ 2021. During the three months ended September 30, 2022, we entered into new marketing arrangements moving from the Brent monthly average of the month of delivery (“M pricing”) to the Brent monthly average following the month of deliveries (“M+1 Brent”). The Company’s revenue was negatively impacted as the Brent monthly average decreased throughout the quarter.

For the nine months ended September 30, ~~2021,~~2022, oil sales increased by ~~89%~~68% to ~~$327.4~~$548.8 million compared to the corresponding period of ~~2020~~2021 due to a ~~60%~~51% increase in Brent price and 10% higher sales volumes, ~~and lower~~partially offset by 24% increase in the quality and transportation ~~discounts.~~ discounts and M+1 Brent adjustment. Castilla and Vasconia differentials increased to $7.89 and $4.17 from $4.50 and $2.65 per bbl in the corresponding period of 2021, respectively.

Compared ~~with~~to the prior quarter, oil sales ~~increased 40%~~decreased by 18%, primarily as a result of a ~~6% increase~~13% decrease in Brent price, 3% higher quality and ~~a 29% increase in sales volumes.~~

transportation discounts and M+1 Brent adjustment.

The following table shows the effect of changes in realized price and sales volumes on our oil sales for the three and nine months ended September 30, ~~2021,~~2022, compared to the prior quarter and the corresponding periods of ~~2020:~~2021:


(Thousands of U.S. Dollars)	(Thousands of U.S. Dollars)	Third Quarter 2021 Compared with Second Quarter 2021		Third Quarter 2021 Compared with Third Quarter 2020		Nine Months Ended September 30, 2021 Compared with Nine Months Ended September 30, 2020		(Thousands of U.S. Dollars)	Third Quarter 2022 Compared with Second Quarter 2022		Third Quarter 2022 Compared with Third Quarter 2021		Nine Months Ended September 30, 2022 Compared with Nine Months Ended September 30, 2021
Oil sales for the comparative period	Oil sales for the comparative period	$	96,623	$	53,142	$	173,045	Oil sales for the comparative period	$	205,785	$	135,319	$	327,435
Realized sales price increase effect	Realized sales price increase effect	9,162		61,106		150,930		Realized sales price increase effect	(45,744)		34,873		187,280
Sales volumes increase effect	Sales volumes increase effect	29,534		21,071		3,460		Sales volumes increase effect	8,356		(1,795)		34,036
Oil sales for the three and nine months ended September 30, 2021		$	135,319	$	135,319	$	327,435
Oil sales for the three and nine months ended September 30, 2022								Oil sales for the three and nine months ended September 30, 2022	$	168,397	$	168,397	$	548,751

The average realized price for the three and nine months ended September 30, ~~2021,~~2022, increased ~~82%~~by 26% and ~~85%~~52%, ~~respectively,~~ compared to the corresponding periods of ~~2020. The increases were~~2021, commensurate with the ~~rise~~increase in benchmark oil prices, ~~and for the nine month period lower Vasconia and Castilla differentials, but for the three month period were partially~~ offset by higher ~~Vasconia~~differentials and ~~Castilla differentials.~~ utilization of M+1 Brent pricing for our sales.

Compared to the prior quarter, the average realized price ~~increased 7%~~decreased by 21% due to ~~higher~~lower benchmark oil prices, higher Castilla differentials and utilization of M+1 Brent pricing, which were partially offset by ~~higher~~lower Vasconia differentials.

Operating expenses for the three months ended September 30, 2022, increased by 9% to $41.8 million or by $1.81 per bbl to $19.34 per bbl, compared to the corresponding period of 2021, primarily as a result of $0.68 per bbl increased workovers and $1.12 higher lifting costs mainly attributed to higher environmental, community aids, and lower recoveries from partners as a result of social blockades in the Suroriente block.

Operating expenses for the nine months ended September 30, ~~2021,~~2022, increased ~~$3.93 and $1.10~~by 22% to $116.3 million or by $1.75 per bbl to ~~$37.6 million and $92.6 million or $17.13 and $16.26~~$18.49 per bbl, ~~primarily due to increased operating activities and higher power generation costs in Acordionero when~~ compared to the corresponding ~~periods~~period of ~~2020. Lower operating activities during most~~2021, primarily as a result of ~~2020 were~~$0.58 per bbl increased workovers and $1.16 per bbl higher lifting costs attributed to ~~the shut-in of higher-cost wells~~higher power generation and chemical costs due to increased production and waterflood in ~~response to the COVID-19 pandemic.~~ all major fields.

Compared to the prior quarter, operating expenses increased ~~$1.99~~by 6% or $0.34 per bbl from ~~$25.4~~$39.5 million or ~~$15.14~~$19.00 per bbl, primarily due to higher ~~costs associated with power generation and chemical costs~~workover activities in ~~Acordionero and increased workover activity.~~the current quarter.

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 using each option for the three and nine months ended September 30, 2022, and 2021, ~~2020,~~ and the prior quarter:


		Three Months Ended September 30,				Three Months Ended June 30,		Nine Months Ended September 30,					Three Months Ended September 30,				Three Months Ended June 30,		Nine Months Ended September 30,
		2021		2020		2021		2021		2020			2022		2021		2022		2022		2021
Volume transported through pipeline	Volume transported through pipeline	9	%	—	%	9	%	6	%	5	%	Volume transported through pipeline	—	%	9	%	—	%	—	%	6	%
Volume sold at wellhead	Volume sold at wellhead	42	%	48	%	24	%	55	%	45	%	Volume sold at wellhead	47	%	42	%	48	%	47	%	55	%
Volume transported via truck to sales point	Volume transported via truck to sales point	49	%	52	%	67	%	39	%	50	%	Volume transported via truck to sales point	53	%	49	%	52	%	53	%	39	%
		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 ~~months ended September 30, 2021, increased by 135% to $3.0 million~~ and on a per bbl basis increased by 68% to $1.38 compared to the corresponding period of 2020 due to maintenance on the Impala terminal resulting in utilization of alternative transportation routes which had higher costs per bbl. For the nine months ended September 30, ~~2021, transportation expenses~~2022, decreased by 1%23% and 11% to ~~$8.4~~$2.4 million and ~~on a per bbl basis decreased by 3% to $1.48 when~~$7.8 million, respectively, compared to the corresponding ~~period~~periods of ~~2020, as a result of higher volumes sold at the wellhead during the current period which resulted in lower transportation costs.~~

~~For the three months ended September 30, 2021, transportation expenses increased by 3% compared to $2.9 million in the prior quarter due to increased sales volumes.~~2021. On a per bbl basis, transportation expenses decreased by ~~21% from $1.74 in the previous quarter due~~22% and 20% to ~~the Company utilizing more favorable transportation routes as all blockades were lifted.~~

~~COVID-19 Costs~~

~~The COVID-19 pandemic has resulted in extra ongoing operating~~$1.12 and transportation costs related to COVID-19 health and safety preventative measures, including incremental sanitation requirements and enhanced procedures for trucking barrels and crew changes in the field. For the three and nine months ended September 30, 2021, COVID-19 costs were $1.0 million and $3.0 million, respectively, comprised of $0.9 million and $2.7 million related to operating activities and $0.1 million and $0.3 million related to transportation activities. There were $1.1 million and $1.5 million COVID-19 costs$1.23 for the three and nine months ended September 30, ~~2020, respectively, comprised~~2022, compared to the corresponding periods of ~~$1.0~~2021. The decrease in transportation expenses per bbl compared to the corresponding periods of 2021 was a result of a change in transportation routes that had lower transportation costs per bbl. During the third quarter of 2021, alternative transportation routes were utilized due to maintenance of the Impala terminal, which had higher transportation costs per bbl.

For the three months ended September 30, 2022, transportation expenses decreased by 4% compared to $2.5 million ~~and $1.4 million related to operating activities and $0.1 million and $0.1 million related to~~in the prior quarter. On a per bbl basis, transportation ~~activities. For~~expenses decreased by 7% from $1.21 in the prior quarter ~~COVID-19~~due use of alternative transportation routes, which resulted in lower transportation costs ~~were $0.9 million, comprised of $0.8 million related to operating and $0.1 million to transportation activities.~~per bbl in the current quarter.

DD&A Expenses


		Three Months Ended September 30,				Three Months Ended June 30,		Nine Months Ended September 30,					Three Months Ended September 30,				Three Months Ended June 30,		Nine Months Ended September 30,
		2021		2020		2021		2021		2020			2022		2021		2022		2022		2021
DD&A Expenses, thousands of U.S. Dollars	DD&A Expenses, thousands of U.S. Dollars	$	38,055	$	31,340	$	28,927	$	98,300	$	131,118	DD&A Expenses, thousands of U.S. Dollars	$	45,320	$	38,055	$	42,216	$	128,499	$	98,300
DD&A Expenses, U.S. Dollars per bbl	DD&A Expenses, U.S. Dollars per bbl	17.36		19.96		17.23		17.26		23.48		DD&A Expenses, U.S. Dollars per bbl	20.95		17.36		20.31		20.43		17.26

DD&A expenses for the three and nine months ended September 30, ~~2021,~~2022, increased ~~21%~~by 19% and ~~25%, respectively,~~31% or by $3.59 and $3.17 per bbl due to increased production and higher costs in the depletable base compared to the corresponding periods of 2020. On a per bbl basis, DD&A expenses decreased by $2.60 and $6.22 per bbl, respectively, due to lower costs in the depletable base as a result of ceiling test impairment losses recorded over the last three quarters of 2020.2021.

For the three months ended September 30, ~~2021,~~2022, DD&A expenses increased ~~32%~~7% or $0.64 per bbl compared to the prior quarter due to ~~increased production during~~higher costs in the ~~current quarter. On a per bbl basis DD&A expenses were comparable to~~depletable base in the ~~previous~~current quarter.

G&A Expenses

~~Impairment~~

~~Asset impairment~~

~~(i) Oil and gas property impairment~~

For the three and nine months ended September 30, 2021, we had no ceiling test impairment losses. For the three and nine months ended September 30, 2020, we had $104.7 million and $502.9 million of ceiling test impairment losses. We used an average Brent price of $60.12 and $47.95 per bbl for September 30, 2021 and 2020, respectively, ceiling test calculations.

~~(ii) Inventory impairment~~

For the three and nine months ended September 30, 2021, we had no inventory impairment. For the three and nine months ended September 30, 2020, we recorded $0.1 million and $4.2 million, respectively, of inventory impairment.

~~Goodwill impairment~~

The entire goodwill balance of $102.6 million was impaired during the nine months ended September 30, 2020, due to the unit's carrying value exceeding its fair value as a result of the impact of lower forecasted commodity prices.

~~G&A Expenses~~


		Three Months Ended September 30,				Three Months Ended June 30,			Nine Months Ended September 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)	2021		2020			2021			2021		2020			(Thousands of U.S. Dollars)	2022		2021		% Change	2022		2022		2021		% Change
G&A Expenses Before Stock-Based Compensation	G&A Expenses Before Stock-Based Compensation	$	5,444	$	4,506		$	7,133		$	18,475	$	17,183		G&A Expenses Before Stock-Based Compensation	$	8,284	$	5,444	52	$	7,847	$	23,910	$	19,394	23
G&A Stock-Based Compensation Expense (Recovery)		1,053		56			1,873			6,597		(707)
G&A Stock-Based Compensation (Recovery) Expense															G&A Stock-Based Compensation (Recovery) Expense	(170)		1,053		(116)	1,989		6,376		6,597		(3)
G&A Expenses, Including Stock-Based Compensation	G&A Expenses, Including Stock-Based Compensation	$	6,497	$	4,562		$	9,006		$	25,072	$	16,476		G&A Expenses, Including Stock-Based Compensation	$	8,114	$	6,497	25	$	9,836	$	30,286	$	25,991	17
(U.S. Dollars Per bbl Sales Volumes NAR)	(U.S. Dollars Per bbl Sales Volumes NAR)														(U.S. Dollars Per bbl Sales Volumes NAR)
G&A Expenses Before Stock-Based Compensation	G&A Expenses Before Stock-Based Compensation	$	2.48	$	2.87		$	4.25		$	3.24	$	3.08		G&A Expenses Before Stock-Based Compensation	$	3.83	$	2.48	54	$	3.77	$	3.80	$	3.40	12
G&A Stock-Based Compensation Expense (Recovery)		0.48		0.04			1.12			1.16		(0.13)
G&A Stock-Based Compensation (Recovery) Expense															G&A Stock-Based Compensation (Recovery) Expense	(0.08)		0.48		(117)	0.96		1.01		1.16		(13)
G&A Expenses, Including Stock-Based Compensation	G&A Expenses, Including Stock-Based Compensation	$	2.96	$	2.91		$	5.37		$	4.40	$	2.95		G&A Expenses, Including Stock-Based Compensation	$	3.75	$	2.96	27	$	4.73	$	4.81	$	4.56	5

For the three and nine months ended September 30, ~~2021,~~2022, G&A expenses before stock-based compensation increased by ~~21%~~52% to $8.3 million and ~~8%,~~23% to $23.9 million, respectively, ~~consistent with an increase of operating activities in 2021~~primarily due to higher costs for optimization projects and lease obligations compared to ~~the~~ corresponding periods of ~~2020.~~2021. On a per bbl basis, ~~for the three months ended September 30, 2021,~~ G&A expenses before stock-based compensation ~~decreased by 14% to $2.48 as a result of higher sales volumes and~~ increased by 5%$1.35 and $0.40 per bbl to ~~$3.24~~$3.83 and $3.80 per bbl, respectively, for the ~~nine months ended September 30, 2021, as a result of increased operating activities when~~same reason mentioned above.

When compared to the ~~corresponding periods of 2020. For the three months ended September 30, 2021,~~prior quarter, G&A expenses before stock-based compensation ~~decreased~~increased by ~~24% to $5.4 million~~7% or ~~42% to $2.48~~$0.06 on a per bbl basis, ~~compared to the prior quarter~~primarily due to ~~the timing of certain~~higher costs ~~incurred and expensed in the prior quarter.~~for optimization projects.

G&A expenses after stock-based compensation for the three and nine months ended September 30, ~~2021,~~2022, increased by ~~42%~~25% and ~~52% (2%~~17% or $0.79 and ~~49%~~$0.25 per ~~bbl),~~bbl, respectively, due to a higher share price compared to the corresponding periods of ~~2020, mainly~~2021.

Compared to the prior quarter, G&A expenses after stock-based compensation decreased by 18% or $0.98 on a per bbl basis due to ~~higher~~lower stock-based compensation resulting from a ~~higher~~lower share price. G&A expenses after stock-based compensation for the three months ended September 30, 2021, decreased by 28% or 45% on a per bbl basis, compared with the prior quarter, due to the timing of certain costs incurred and expensedprice in the ~~prior quarter.~~third quarter of 2022.

2827

Foreign Exchange Gains and Losses

For the three and nine months ended September 30, ~~2021,~~2022, we had a loss on foreign exchange of $1.5 million and $0.5 million, respectively, compared to a $2.7 million and $15.8 million ~~respectively,~~ loss ~~on foreign exchange compared to a $4.3 million and a $20.1 million loss for~~in the corresponding periods of ~~2020.~~2021. Accounts receivable, taxes receivable, deferred income taxes, accounts payable, and ~~investment~~prepaid equity forward (“PEF”) are considered monetary items and require translation from local ~~currency~~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 nine months ended September 30, ~~2021,~~2022, and ~~2020:~~2021:


		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended September 30,		Nine Months Ended September 30,
		2021	2020	2021	2020		2022	2021	2022	2021
Change in the U.S. dollar against the Colombian peso	Change in the U.S. dollar against the Colombian peso	strengthened by	strengthened by	strengthened by	strengthened by	Change in the U.S. dollar against the Colombian peso	strengthened by	strengthened by	strengthened by	strengthened by
		2%	3%	12%	18%		10%	2%	14%	12%
Change in the U.S. dollar against the Canadian dollar	Change in the U.S. dollar against the Canadian dollar	strengthened by	weakened by	strengthened by	strengthened by	Change in the U.S. dollar against the Canadian dollar	strengthened by	strengthened by	strengthened by	strengthened by
		3%	2%	—%	3%		6%	3%	8%	—%

~~Financial Instrument Gains and Losses~~

~~The following table presents the nature of our derivative and other financial instruments gains and losses for the three and nine months ended September 30, 2021, and 2020:~~


	Three Months Ended September 30,						Nine Months Ended September 30,
(Thousands of U.S. Dollars)	2022			2021			2022			2021
Income before income tax	$	60,397		$	43,962		$	205,694		$	6,753

Current income tax expense (recovery)	$	16,820		$	—		$	63,072		$	(14)
Deferred income tax expense	4,914			8,955			36,868			26,809
Total income tax expense	$	21,734		$	8,955		$	99,940		$	26,795

Effective tax rate	36		%	20		%	49		%	397		%

~~Income Tax Expense~~

Three Months Ended September 30, Nine Months Ended September 30,
(Thousands of U.S. Dollars) 2021 2020 2021 2020
Income (loss) before income tax $ 43,962 $ (128,386) $ 6,753 $ (792,332)
Current income tax expense (recovery) $ — $ 637 $ (14) $ 560
Deferred income tax expense (recovery) 8,955 (21,202) 26,809 (62,796)
Total income tax expense (recovery) $ 8,955 $ (20,565) $ 26,795 $ (62,236)
Effective tax rate 20 % 16 % 397 % 8 %

Current income tax expense was ~~in a recovery position~~$63.1 million for the nine months ended September 30, ~~2021, versus an expense position for~~2022, compared to a small recovery in the ~~comparative~~corresponding period in ~~2020,~~2021, primarily due to ~~changes~~an increase in ~~the previous estimation of presumptive minimum tax.~~taxable income. The deferred income tax expense for the nine months ended September 30, 2022, was also 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 2021 resulted from excess tax depreciation compared with accounting depreciation and the use of tax losses to offset taxable income in Colombia. ~~The deferred income~~

For the nine months ended September 30, 2022, the difference between the effective tax ~~recovery~~rate of 49% and the 35% Colombian tax rate was primarily due to $26.6 million of hedging loss and $35.7 million of financing cost related to Senior Notes, and $11.1 million of corporate costs, which were incurred in ~~the comparative period of 2020~~jurisdictions where no tax benefit is recognized which was ~~mainly the result of a ceiling test impairment loss in Colombia,~~ partially offset by ~~losses incurred in Colombia that are now fully offset by a valuation allowance.~~ $12.5 million of non-taxable foreign exchange gain.

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

3029

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

(Thousands of U.S. Dollars) Third Quarter 2021 Compared with Second Quarter 2021 % change Third Quarter 2021 Compared with Third Quarter 2020 % change Nine Months Ended September 30, 2021 Compared with Nine Months Ended September 30, 2020 % change
Net loss for the comparative period $ (17,627) $ (107,821) $ (730,096)
Increase (decrease) due to:
Sales price 9,162 61,106 150,930
Sales volumes 29,534 21,071 3,460
Expenses:
   Operating (12,136) (16,846) (7,950)
   Transportation (100) (1,735) 101
   Cash G&A 1,689 (938) (1,292)
   Net lease payments 47 (70) (107)
   Severance — 122 550
   Interest, net of amortization of debt
   issuance costs 340 490 (1,243)
   Realized foreign exchange 429 2,010 (1,120)
   Cash settlements on derivative instruments 16,973 (2,959) (55,011)
   Current taxes (14) 637 574
   Other loss — (1,959) (1,959)
   COVID-19 related costs (93) 118 (1,497)
   Interest income — — (345)
Net change in funds flow from operations(1) from comparative period
45,831 61,047 85,091
Expenses:
   Depletion, depreciation and accretion (9,128) (6,715) 32,818
   Goodwill impairment — — 102,581
   Asset impairment — 104,731 507,093
   Deferred tax 248 (30,157) (89,605)
   Amortization of debt issuance costs (13) (69) 92
   Stock-based compensation 820 (997) (7,304)
   Derivative instruments gain or loss, net of
   settlements on derivative instruments 1,663 (1,817) (1,946)
   Other financial instruments gain or loss 16,248 15,094 73,711
   Unrealized foreign exchange (2,988) (385) 5,390
   Other Loss — 2,026 2,026
   Net lease payments (47) 70 107
Net change in net loss 52,634 142,828 710,054
Net income (loss) for the current period $ 35,007 299% $ 35,007 132% $ (20,042) 97%


(Thousands of U.S. Dollars)	Third Quarter 2022 Compared with Second Quarter 2022		% change	Third Quarter 2022 Compared with Third Quarter 2021		% change	Nine Months Ended September 30, 2022 Compared with Nine Months Ended September 30, 2021		% change
Net income (loss) for the comparative period	$	52,972		$	35,007		$	(20,042)
Increase (decrease) due to:
Sales price	(45,744)			34,873			187,280
Sales volumes	8,356			(1,795)			34,036
Expenses:
Operating	(2,343)			(3,389)			(20,900)
Transportation	96			713			967
Cash G&A	(437)			(2,840)			(4,516)
Net lease payments	90			425			892

Interest, net of amortization of debt issuance costs	393			2,031			5,699
Realized foreign exchange	3,528			4,332			4,531
Cash settlements on derivative instruments	17,577			7,113			18,430
Current taxes	8,605			(16,820)			(63,086)


Net change in funds flow from operations(1) from comparative period	(9,879)			24,643			163,333
Expenses:
Depletion, depreciation and accretion	(3,104)			(7,265)			(30,199)


Deferred tax	8,327			4,041			(10,059)
Amortization of debt issuance costs	380			156			(87)
Stock-based compensation	2,159			1,223			221
Derivative instruments gain or loss, net of settlements on derivative instruments	(12,405)			(4,510)			2,499
Gain on re-purchase of Senior Notes	2,598			2,598			2,598
Other financial instruments gain	—			(13,634)			(12,425)
Unrealized foreign exchange	(2,295)			(3,171)			10,807

Net lease payments	(90)			(425)			(892)
Net change in net income (loss)	(14,309)			3,656			125,796
Net income for the current period	$	38,663	(27)%	$	38,663	(10)%	$	105,754	628%

(1)Funds flow from operations is a non-GAAP measure ~~which~~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.

3130

Capital expenditures during the three months ended September 30, ~~2021~~2022 were ~~$34.8~~$57.0 million:


(Millions of U.S. Dollars)
Colombia:
Exploration	$	~~6.6~~16.9
Development:
Drilling and Completions	~~9.6~~12.7
Facilities	~~6.3~~6.2
Other	~~11.8~~8.3
	~~34.3~~44.1
Corporate & Ecuador	~~0.5~~12.9
	$	~~34.8~~57.0

During the three months ended September 30, ~~2021,~~2022, we commenced drilling the following wells in ~~Colombia:~~Colombia and Ecuador:


			Number of wells (Gross and Net)
Colombia
Exploration			2.0
Development			3.0
Service			2.0
			7.0
Ecuador
Exploration			1.0
			8.0

We spud three exploration, three development, and two ~~development~~water injection wells, of which five were in Midas Block, one in Chaza Block, one in Alea-1848A Block, and one in the ~~Midas~~Chanangue Block ~~both of which~~in Ecuador. Of the wells spud during the quarter five were ~~producing~~completed, and three were in-progress as of September 30, ~~2021.~~2022.

Liquidity and Capital Resources


		As at						As at
(Thousands of U.S. Dollars)	(Thousands of U.S. Dollars)	September 30, 2021		% Change	December 31, 2020		(Thousands of U.S. Dollars)	September 30, 2022		% Change	December 31, 2021
Cash and Cash Equivalents	Cash and Cash Equivalents	$	16,600	18	$	14,114	Cash and Cash Equivalents	$	118,173	353	$	26,109

Revolving Credit Facility		$	150,000	(21)	$	190,000
Credit Facility							Credit Facility	$	—	(100)	$	67,500

6.25% Senior Notes	6.25% Senior Notes	$	300,000	—	$	300,000	6.25% Senior Notes	$	279,909	(7)	$	300,000

7.75% Senior Notes	7.75% Senior Notes	$	300,000	—	$	300,000	7.75% Senior Notes	$	300,000	—	$	300,000

~~The outbreak of~~We believe that our capital resources, including cash on hand, cash generated from operations and available borrowings under the ~~COVID-19 virus, which was declared a pandemic by~~credit facility, will provide us with sufficient liquidity to meet our strategic objectives and planned capital program for the ~~World Health Organization~~next 12 months, given the current oil price trends and production levels. We may also access capital markets to pursue financing or refinance our Senior Notes. In accordance with our investment policy, available cash balances are held in ~~March 2020, spread across the globe~~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 ~~impacted worldwide economic activity. In 2020, global commodity prices declined significantly during the first half of 2020 due to disputes between major oil producing countries combined~~short-term liquidity. We believe that our current financial position provides us with the ~~impact of the COVID-19 pandemic~~flexibility to respond to both internal growth opportunities and ~~associated reductions in global demand for oil. Governments worldwide, including~~ those ~~in Colombia~~available through acquisitions. We intend to pursue growth opportunities and ~~Ecuador, the countries where we operate, enacted emergency measures~~acquisitions from time to ~~combat the spread of the virus. These measures,~~time, which ~~include the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused, and~~ may continue to cause, material disruption to businesses globally resulting in an economic slowdown. While global commodity prices have improved since historic lows during the first half of 2020, the current challenging economic climate had and may continue to haverequire significant ~~adverse impacts on our Company including, but not exclusively:~~

•~~material declines in revenue and cash flows as a result of the decline in commodity prices;~~

•~~declines in revenue and operating activities due to reduced capital programs and the shut-in of production;~~

•~~impairment charges;~~

•~~inability to comply with covenants and restrictions in debt agreements;~~

•~~inability to access financing sources;~~

•~~increased risk of non-performance by our customers and suppliers;~~

•~~interruptions in operations as we adjust personnel to the dynamic environment; and~~

3231

•~~inability~~capital, be located in basins or countries beyond our current operations, involve joint ventures, or be sizable compared to ~~operate or delay in operations as a result COVID-19 restrictions in the countries in which we operate~~our current assets and operations.

~~Based on current forecasted Brent pricing and production levels, which can change materially in very short time frames,~~During the three months ended September 30, 2022, we ~~forecasted to comply with the financial covenants contained in the~~terminated our prior revolving credit facility ~~for at least the next year from the date of these financial statements. The amount available under our senior secured~~agreement and entered into a new credit facility isagreement with a market lender in the global commodities industry. The credit facility has a borrowing base of up to $150 million, with $100 million readily available at September 30, 2022, and a potential option for an additional $50 million of borrowings upon mutual agreement by the lender and us. The credit facility bears interest based on ~~the lender's borrowing base determination. The borrowing base is determined,~~a risk-free rate posted by the ~~lenders, based on our reserves~~Federal Reserve Bank of New York plus a margin of 6.0% and ~~commodity prices. The next renewal~~a credit-adjusted spread of ~~the borrowing base is in November 2021, and there is a risk that the lenders may reduce the borrowing base. In addition, our ability to borrow~~0.26%. Undrawn amounts under the credit facility bear interest at 2.1% per annum, based on the amount available. The credit facility is secured by our Colombian assets and economic rights. It has a final maturity date of August 15, 2024, which may be ~~limited by~~extended to February 18, 2025, upon the ~~terms~~satisfaction of certain conditions. The availability period for the draws is six months commencing the date of the ~~indentures for~~credit facility. As of September 30, 2022, the ~~6.25% Senior Notes and 7.75% Senior Notes.~~credit facility remained undrawn.

The risk of non-compliance with the covenants in the lending agreements and the risk associated with maintaining the borrowing base is heightened in the current period of volatility coupled with the unprecedented disruption caused by the COVID-19 pandemic. We currently expect to continue to meetUnder the terms of the credit facility, or obtain further amendments or waivers if and when required. We also expect to maintain the borrowing base at a level in excess of the amount borrowed. However, there can be no assurances that our liquidity can be maintained at or above current levels during this period of volatility and global economic uncertainty.

~~The situation is dynamic, and the ultimate duration and magnitude of the impact on the economy and the financial effect on our Company is not known at this time.~~

As at September 30, 2021, the borrowing base of our Senior Secured Credit Facility (the "revolving credit facility") was $215 million, with the next re-determination to occur no later than November 2021. Wewe are required to comply with various covenants, which have been modified in response to the recent market conditions and the COVID-19 pandemic. We have obtained relief from compliance with certain financial covenants, which expired on October 1, 2021 ("the covenant relief period"). During the covenant relief period, our ratio of total debt to EBITDAX was permitted to be greater than 4.0 to 1.0, our Senior Secured Debt to EBITDAX ratio could not exceed 2.5 to 1.0, and our EBITDAX to interest expense ratio for the trailing four-quarter periods measured as of the last day of the fiscal quarters ending as of the last day of the fiscal quarters ended September 30, 2021, was required to be at least 2.0 to 1.0. We are required to comply with various covenants, which as disclosed above, have been modified in response to the current market conditions and the COVID-19 pandemic. As of September 30, 2021, we were in compliance with all applicable covenants in the revolving credit facility.

~~After the expiration of the covenant relief period on October 1, 2021, we must~~ maintain compliance with the following financial covenants: limitations on our ratio of debt to EBITDAX to a maximum of 4.0 to 1.0; limitations on our ratio of Senior Secured Debt to EBITDAX to a maximum of 3.0 to 1.0; and the maintenance of a ratio of EBITDAX to interest expense of at least 2.5 to 1.0. If we fail to comply with these financial covenants, it would result in a default under the terms of the credit agreement, which could result in an acceleration of repayment of all indebtedness under the Company's revolving credit facility.

Amounts drawn under the revolving credit facility bear interest, at the borrower's option, USD LIBOR plus a margin ranging from 2.90% to 4.90%, or base rate plus a margin ranging from 1.90% to 3.90%, in each case based on the borrowing base utilization percentage. The alternate base rate is currently the U.S. prime rate. We pay a commitment fee on undrawn amounts under the revolving credit facility, which ranges from 0.73% to 1.23% per annum, based on the average daily amount of unused commitments.

~~At September 30, 2021, we had~~ i.~~$150.0 million~~Coverage ratio of at least 150% is calculated using the net present value of the consolidated future cash flows of the Company up to the final maturity date discounted at 10% over the outstanding amount on the credit facility at each reporting period. The net present value of the consolidated future cash flows of the Company is required to be based on 80% of the prevailing ICE Brent forward strip.

ii. ~~drawn~~Prepayment Life Coverage Ratio of at least 150% calculated using the estimated aggregate value of commodities to be delivered under the ~~revolving credit facility. During~~commercial contract from the ~~third quarter of 2021, we repaid~~ ~~$25.0 million~~ commencement date to the final maturity date based on 80% of the prevailing ICE Brent forward strip, adjusted for quality and transportation discounts over the outstanding amount ~~drawn under~~on the ~~revolving credit facility. Accordingly, we had~~ ~~$65.0 million~~ ~~of availability under the revolving~~ credit facility asincluding interest and all other costs payable to the lender.

iii.Liquidity ratio where the Company’s projected sources of ~~September 30, 2021. As~~cash exceed projected uses of ~~October 29, 2021, outstanding borrowings under our revolving credit facility were further reduced~~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 ~~$130.0 million~~.be 90% of the prevailing Brent strip forward for the projected future cash flows.

At September 30, ~~2021,~~2022, we were in compliance with all above covenants.

At September 30, 2022, we had a ~~$300.0~~$279.9 million aggregate principal amount of 6.25% Senior Notes due 2025 and a $300.0 million aggregate principal amount of 7.75% Senior Notes due 2027 outstanding. An event of default under the revolving credit facility would result in a default under the indentures governing the senior notes, which could allow the noteholders to require us to repurchase all of the outstanding Senior Notes.

~~In accordance with our investment policy, available~~During the three months ended September 30, 2022, we repurchased in the open market $20.1 million of 6.25% Senior Notes for cash ~~balances~~consideration of $17.3 million, including interest payable of $0.1 million, which resulted in a $2.6 million gain on re-purchase which included the write-off of deferred financing fees of $0.3 million. The re-purchased 6.25% Senior Notes were not cancelled and are held in our primary cash management banks or 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.by us as treasury bonds as of September 30, 2022.

~~Derivative Positions~~During the three months ended September 30, 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 are able to purchase at prevailing market prices up to 36,033,969 shares of Common Stock, representing approximately 10% of the issued and outstanding shares of Common Stock as of August 22, 2022. The 2022 Program expires on August 31, 2023, or earlier if the 10% share maximum is reached. Re-purchases are subject to prevailing market conditions, the trading price of our Common Stock, our financial performance and other conditions.

AtDuring the three and nine months ended September 30, ~~2021,~~2022, we ~~had outstanding commodity~~re-purchased 10,733,702 shares at a weighted average price ~~derivative positions~~of $1.34 per share. The re-purchased shares were held by us and were recorded as ~~follows:~~

~~Foreign Currency Derivatives~~

~~At September 30, 2021, we had outstanding foreign currency derivative positions as follows:~~

Period and type of instrument Amount Hedged
(Millions COP)
U.S. Dollar Equivalent of Amount Hedged (Thousands of U.S. Dollars)(1)
Reference Floor Price
(COP, Weighted Average) Cap Price (COP, Weighted Average)
Collars: October 1, to December 31, 2021 3,000 782 COP 3,500 3,630

~~(1)~~ ~~At September 30, 2021 foreign exchange rate.~~

~~At September 30, 2021, our balance sheet included $14.7 million of current liabilities related to the above outstanding commodity price and foreign currency derivative positions.~~

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Cash Flows

The following table presents our primary sources and uses of cash and cash equivalents for the periods presented:


		Nine Months Ended September 30,					Nine Months Ended September 30,
(Thousands of U.S. Dollars)	(Thousands of U.S. Dollars)	2021		2020		(Thousands of U.S. Dollars)	2022		2021
Sources of cash and cash equivalents:	Sources of cash and cash equivalents:					Sources of cash and cash equivalents:
Net loss		$	(20,042)	$	(730,096)
Net income (loss)						Net income (loss)	$	105,754	$	(20,042)
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 expenses	DD&A expenses	98,300		131,118		DD&A expenses	128,499		98,300
Interest expense	Interest expense	41,355		40,204		Interest expense	35,743		41,355
Income tax expense (recovery)		26,795		(62,236)
Goodwill impairment		—		102,581
Asset impairment		—		507,093
Other loss		—		2,026
Income tax expense						Income tax expense	99,940		26,795

Non-cash lease expenses	Non-cash lease expenses	1,222		1,494		Non-cash lease expenses	2,009		1,222
Lease payments	Lease payments	(1,239)		(1,404)		Lease payments	(1,134)		(1,239)
Unrealized foreign exchange loss	Unrealized foreign exchange loss	16,945		22,335		Unrealized foreign exchange loss	6,138		16,945
Stock-based compensation expense (recovery)		6,597		(707)
Stock-based compensation expense						Stock-based compensation expense	6,376		6,597
Unrealized derivative instruments loss	Unrealized derivative instruments loss	2,499		553		Unrealized derivative instruments loss	—		2,499
Other financial instruments (gain) loss		(12,425)		61,286
Gain on re-purchase of Senior Notes						Gain on re-purchase of Senior Notes	(2,598)		—
Other financial instruments gain						Other financial instruments gain	—		(12,425)
Adjusted EBITDA(1)	Adjusted EBITDA(1)	160,007		74,247		Adjusted EBITDA(1)	380,727		160,007
Current income tax recovery (expense)		14		(560)
Current income tax (expense) recovery						Current income tax (expense) recovery	(63,072)		14
Contractual interest and other financing expenses	Contractual interest and other financing expenses	(38,673)		(37,430)		Contractual interest and other financing expenses	(32,974)		(38,673)
Funds flow from operations(1)	Funds flow from operations(1)	121,348		36,257		Funds flow from operations(1)	284,681		121,348
Proceeds from debt, net of issuance costs		—		88,382
Proceeds from issuance of Senior Notes, net of issuance costs		—		—
Proceeds from issuance of exercise of stock options		19		—
Proceeds from exercise of stock options						Proceeds from exercise of stock options	1,292		19
Proceeds from issuance of Common Stock, net of issuance costs						Proceeds from issuance of Common Stock, net of issuance costs	2		—
Proceeds from disposition of investment, net of transaction costs	Proceeds from disposition of investment, net of transaction costs	14,632		—		Proceeds from disposition of investment, net of transaction costs	—		14,632
Net changes in assets and liabilities from operating activities	Net changes in assets and liabilities from operating activities	17,956		23,288		Net changes in assets and liabilities from operating activities	72,838		17,956
Changes in non-cash investing working capital	Changes in non-cash investing working capital	709		—		Changes in non-cash investing working capital	3,255		709
		154,664		147,927			362,068		154,664

Uses of cash and cash equivalents:	Uses of cash and cash equivalents:					Uses of cash and cash equivalents:
Additions to property, plant and equipment	Additions to property, plant and equipment	(109,650)		(56,378)		Additions to property, plant and equipment	(163,717)		(109,650)

Repayment of debt	Repayment of debt	(40,000)		(7,000)		Repayment of debt	(67,623)		(40,125)
Re-purchase of Common Stock						Re-purchase of Common Stock	(14,365)		—
Re-purchase of Senior Notes						Re-purchase of Senior Notes	(17,274)		—

Debt issuance costs		(125)		—

Changes in non-cash investing working capital		—		(69,549)
Settlement of asset retirement obligations	Settlement of asset retirement obligations	(483)		(199)		Settlement of asset retirement obligations	(1,673)		(483)
Lease payments	Lease payments	(1,269)		(307)		Lease payments	(1,991)		(1,269)
Foreign exchange loss on cash, cash equivalents and restricted cash and cash equivalents	Foreign exchange loss on cash, cash equivalents and restricted cash and cash equivalents	(528)		(754)		Foreign exchange loss on cash, cash equivalents and restricted cash and cash equivalents	(1,996)		(528)
		(152,055)		(134,187)			(268,639)		(152,055)
Net increase in cash and cash equivalents and restricted cash and cash equivalents	Net increase in cash and cash equivalents and restricted cash and cash equivalents	$	2,609	$	13,740	Net increase in cash and cash equivalents and restricted cash and cash equivalents	$	93,429	$	2,609

(1) Adjusted EBITDA and funds flow from operations are a non-GAAP measures which do not have any standardized meaning prescribed under GAAP. Refer to “Financial and Operational Highlights - non-GAAP measures” for a definition and reconciliation of this measure.

One of the primary sources of variability in our cash flows from operating activities is the fluctuation in oil ~~prices, the impact of which we partially mitigate by entering into commodity price derivatives.~~prices. Sales volume changes and costs related to operations and debt service also impact cash flows. Our cash flows from operating activities are also impacted by foreign currency exchange rate ~~changes, the impact of which we partially mitigate by entering into foreign currency derivatives.~~changes. During the nine months ended September 30, ~~2021,~~2022, funds flow from

operations increased by ~~235%~~135% compared to the corresponding period of ~~2020~~2021 primarily due to a significant increase in Brent price and increase in production, which were partially offset by higher Castilla and Vasconia differentials, M+1 Brent adjustment, an increase in operating expenses and cash settlements on derivative instruments.

~~Off-Balance Sheet Arrangements~~

~~As at September 30, 2021, we had no off-balance sheet arrangements.~~

~~Contractual Obligations~~

~~At September 30, 2021, we had $150.0 million drawn under our revolving credit facility.~~

~~Except for noted above, as at September 30, 2021, there were no other material changes to our contractual obligations outside of the ordinary course of business from those as at December 31, 2020.~~

Critical Accounting Policies and Estimates

Our critical accounting policies and estimates are disclosed in Item 7 of our ~~2020~~2021 Annual Report on Form 10-K and have not changed materially since the filing of that document.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Commodity price risk

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

Foreign currency risk

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

Additionally, foreign exchange gains and losses result primarily from the fluctuation of the U.S. dollar to the Colombian peso due to our current and deferred tax liabilities, which are monetary liabilities, denominated in the local currency of the Colombian foreign operations. As a ~~Smaller Reporting Company, we~~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 ~~not required~~exposed to ~~provide information~~interest rate fluctuations on our revolving credit facility, which bears floating rates of interest. At September 30, 2022, our outstanding balance under ~~this Item 3.~~the credit facility was nil (December 31, 2021 - $67.5 million).

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~~Tierra’s disclosure controls and procedures were effective as of September 30, ~~2021.~~2022.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended September 30, ~~2021,~~2022, that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

PART II - Other Information

Item 1. Legal Proceedings

See Note 119 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, ~~2020,~~2021, 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~~“Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations"~~Operations”, you should carefully read and consider the factors set out in Part I, Item 1A ~~"Risk Factors"~~“Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. These risk factors could materially affect our business, financial condition and results of operations. The unprecedented nature of the current pandemic and ~~downturn~~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

~~None.~~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
September 1-30, 2022	10,733,702	$	1.34	10,733,702	25,300,267	(2)
Total	10,733,702	$	1.34	10,733,702	25,300,267

(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. We will be able to purchase for cancellation at prevailing market prices up to 36,033,969 shares of Common Stock, representing approximately 10% of our issued and outstanding shares of Common Stock as of August 22, 2022.

3735

Item 6. Exhibits

Exhibit No.

Description

Reference

3.1

Certificate of Incorporation.

Incorporated 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).

3.2

Bylaws of Gran Tierra Energy Inc.

Incorporated 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).

3.3

Certificate of Retirement dated July 9, 2018

Incorporated 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).

3.4

Amendment No.1 to Bylaws of Gran Tierra Energy Inc.

Incorporated by reference to Exhibit 3.1 to the Current
Report on Form 8-K filed with the SEC on August 4,
2021 (SEC File No. 001-34018).

10.1

Credit Agreement, dated as of August 18, 2022, by and among Gran Tierra Energy Inc., Gran Tierra Energy Colombia LLC, Gran Tierra Colombia Inc. and Trafigura PTE Ltd. as a lender

Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with SEC on August 23, 2022 (SEC File No. 001-34018).

31.1

Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith.

31.2

Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith.

32.1

Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Furnished 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’s Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2021,~~2022, formatted in Inline XBRL (included within the Exhibit 101 attachments).

*Management contract or compensatory plan or arrangement

3836

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: November ~~3, 2021~~1, 2022						/s/ Gary S. Guidry
						By: Gary S. Guidry
						President and Chief Executive Officer
						(Principal Executive Officer)


Date: November ~~3, 2021~~1, 2022						/s/ Ryan Ellson
						By: Ryan Ellson
						Executive Vice President and Chief Financial Officer
						(Principal Financial and Accounting Officer)

3937


(Thousands of U.S. Dollars)	Net VAT Receivable		Income Tax Receivable		Total Net Taxes Receivable
Balance, as at December 31, 2020	$	64,462	$	28,098	$	92,560
Collected through direct government refunds	(518)		(14,228)		(14,746)
Collected through sales contracts	(70,881)		—		(70,881)
Taxes paid (1)	38,278		19,923		58,201

Foreign exchange loss	(5,389)		(3,464)		(8,853)
Balance, as at September 30, 2021	$	25,952	$	30,329	$	56,281