GTE - Earnings call transcript Q2 2019 | Gran Tierra Energy Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to Gran Tierra Energy's Results Conference Call for the Second Quarter 2019. My name is Mao, and I will be your coordinator for today. [Operator Instructions].

I would like to remind everyone that this conference call is being webcast and recorded today, Thursday, August 8, 2019, at 11 o'clock in the morning Eastern Time. Today's discussion may include certain forward-looking information as well as certain non-GAAP financial measures. measures earnings important update this disclaimers reconciliation any the issued release information to call. of for today's yesterday with non-GAAP refer and press operational we and Please on discussed regard to

Per barrel amounts on working a or sales royalties. are before based interest all of equivalent BOE

property call consent expressly Energy forbidden the Gran written Inc. this Any this earnings of of is Finally, copying Gran call Energy. Tierra of is the Tierra or rebroadcasting without

Gary Guidry, the of turn conference to Executive Guidry, call now and will Officer President over Gran please, I Chief go Mr. Tierra. ahead.

Gary Guidry

yesterday and Thank Executive you, Guidry, Operator. to Vice President with me Second Good Call. and is Officer morning, Quarter Conference comments, XXXX We and detailed Gary My questions. today Executive name line then welcome Results which is is our Tierra's for Ellson, Chief issued Chief included our and quarter President After release Gran website. we brief Ryan our press a a XXXX that second Officer. few will available results, about information the Financial open on

I'll over financial Ellson, President, Vice highlights. Executive operational to to go of Financial now Officer, Ryan, ahead. call our Chief discuss and Ryan some the turn our

Ryan Ellson

everyone. morning, Good

some QX. mention subsequent I'll end achievements of First, the to significant

also time impact water Acordionero's Our barrels current to recovery rates May frame. oil water ramped central efficiency. as in XX,XXX oil this injection We've day support will to the facilities day to to reservoir month. this ultimate up XXXX producers And pressure, injection and successfully about the gas approximately production the plan, on as further Acordionero's per to of installation expanded positive which we team and XX,XXX during significantly injection has forecast both processing Acordionero's during will commission a turbines. increase from future per July of expect With increase increased power well completed injection Acordionero's and water injected of the the barrels

Acordionero-XX just well, new which oil results the we from E very light using about excited the development expanded. Lisama a opens that are We recent up infrastructure same

E Lisama the this main the zone is with and reservoir horizon. wells Acordionero-XX the to the test well opportunity context, located us although field, penetrated has for And other C Acordionero been first is in below overpressured just the this A For new Lisama reservoirs.

In production temporary our the as terms by blockade results, averaged QX oil we day, issues, successfully during production Putumayo, been achieved Despite reduction barrels field's which Southern financial injection. at production Tierra which of the of in temporary Gran Acordionero, water impacted strong and ramped our these the has the in resolved per is quarter. XX,XXX that performance

basis, income XX% QX share net from to million. increase also per QX quarterly or grew funds significantly $X.XX XX% million from QX. million compared on in EBITDA million a Our $XXX with $XX flow increased operations $XX our QX, $XX to of in was an

During we stockholders XXXX. the million of our first through outstanding of at of returned $XX million to shares or half of X% XXXX, buyback start shares almost the XX.X our

a trailing Our debt-to-EBITDA our basis. at of on XX-month end standing net sheet the balance QX with X.Xx strong at remains

gas On this annualized $XXX is sales the of Oil during the X.Xx. to basis and million ratio quarter. QX EBITDA, increased

per operating top to QX netbacks QX We our operating barrel. XX% compared to netback increasing with quartile continue with $XX have

XXXX and oil XX,XXX to of barrels I'd full up during We're like our remainder year to to the touch our XXXX day. production ramp we guidance. revised to production forecast forecasting XXXX, on now updated per of XX,XXX

both of We Basin blocks assets These in our X in Putumayo million LLA-XX bid are like million we the position efficiently in We our to million contracts XXXX to in X flow our to rounds. side a ANH blocks exploration guidance to on VMM-XX to the signed complement a Colombian and in $XXX range which that current I'd and $XXX updated $XXX these XXXX new guidance to won contiguous blocks total $XXX have range the Mag. Ecuador, highlight basins. Middle the our cash capital Basin acreage of recent of Llanos border. million. for our the

In Putumayo. terms half and drilling drilling potential catalysts, Este we of in well E PUT-X second with XX in the upcoming XX of during and the of XXXX, of the including exploration Lisama in wells, Vonu the of catalysts, Sand the the block many have the to appraisal development Acordionero planned

the free and our the significant cash and We're Gran Tierra flexibility we the A-Limestone Overall, QX XXXX. seismic generate complete QX, flow we during believe, completion will at Putumayo expansion just this and now year and financial U Sand. XD momentum. of large in our facilities targeting the have in we planned operational Acordionero fractured With program in forecast

Looking at our and debt net reduction to to refocus XXXX, plan free wasn't sustainable flow profile, on we for use cash planned buybacks. share

exploration program of year. per expect flow XX while to beyond, and We and strong production X active into cash maintaining wells XXXX

a reduction with temporary in not the across Gran and excellent our underlying proven flow infrastructure. production Columbia a exploration XX world-class value strong was in was position comprised While cash and free visible sheet X and an balance profile, of QX in portfolio strong with and prolific growth, during asset blocks basins excess Ecuador changed is Tierra unfortunate, production

operator please the ahead. and to questions. take we'll now go I'll Operator, the call be back turn to happy

Operator

[Operator Instructions].

from Macqueen First line question Eight. Ian of of the comes

Ian Macqueen

tell you Just start wells to continue development what a evolving Acordionero. the you drill a is production question quick see as on see currently? waterflood the and to how production And Can response? us you

Gary Guidry

Yes. the was Ian, what that second of part question?

Ian Macqueen

you as see the a and drill? with the you waterflood How see do development evolving response continue start to production

Gary Guidry

day we that. production per our barrels tested XX,XXX to right water about day. XX,XXX a And go capacity Okay. We've Acordionero. at barrels of Yes. beyond at from the We're facility XX,XXX. Current is injecting have

process water We're it's injection four-handle our starting -- response. But in did response up barrel real see the ramping be XX,XXX our will and production. our at be on we'll very response. with already It's in see August, We a the we're the confident matter and there with of the be pilot will we timing program. day. the back get So of we're you a to that on it,

So say, months, main now in XX%, that would over is replacement of the our our ramping reserves, objective we've and injections. with will I already coming voidage in our we earnest. approaching achieved right XX% see -- We're where response that we're of the

your So the answer over months. few to short question the next is,

Ian Macqueen

a the would peak that should production again? a then that peak Is it go was XX,XXX Or day. Okay. reasonable at about expectation where a barrels to And it think I to? think back higher

Gary Guidry

We're there. We now were we the will handling back XX,XXX very control It's XX,XXX cuts reasonable. facilities to be that at the per We confident within as both our increase. have and all water they injection barrels day. for

reasonable. it's We of fluid per day to think our handle day can I barrels bit oil so XX,XXX per facilities. up of and about through And XX,XXX barrels very over a

we'll be to So volumes. confident quite we're able those handle

Operator

next from David Your Round Markets. of comes the question Capital line of BMO

David Round

so sold I did. elaborate How might can at about have differentials, much bit was Vasconia? apologies it, seeing can the the in crude just particular? what the much is you in your you of change And can a seen quarter? positively much more how a if there? on just I second the where you're your If the talk But in And you've crude? you missed question And for the field expectations sold there you water said quarter responding elaborate the to are you is, year? exactly next your what injection, of differentials is between increased

Ryan Ellson

minus this of our quite Yes, Brent with are all tight With the -- either worldwide. Vasconia those to of just been Both year of respect it's priced shortage barrels differentials Ryan. heavies differentials, off the of or Gaztea. both have

So benefited dollars. couple by we've that of obviously a by

for barrels, netback particular, into have and new market entered which also increased differential $X.XX we We really to a in arrangements, we -- May, our the narrowed $X. in by Acordionero --

Gary Guidry

very this And is rapidly, day. water seeing Cohembi, wells, what are what us in The pressure on a is of what fluid terms parallel, our barrels same order At is is of -- of the water end year barrels seeing capability XXX, sourcing. have objective is a increased water really In is produced exciting get expanding the sourced of objective year from our we're facilities. doing in injection day XXX we're increases by the that's But followed And our injection responses we're for the this to of water, up XX,XXX, to our water. to produced production visible, towards as expanding levels. XX,XXX the very time, we're capacity. we all non-potable the

have production the with that that we place. handle infrastructure We capacity in the have to

And answer to and we so is that confident reason we're surrounding seeing injectors we're quite is, the have question response your pressure in place. wells the the

Ryan Ellson

XXX, increased as we net. Gary mentioned, production Yes, and, David, XXX. That's --

without well. day actual X,XXX fuel increased drilling over production per the barrels by So a

Operator

Next of question line from comes the [indiscernible].

Unidentified Analyst

from $XX a change, the comment strategy for to and on your how oil if you a perspective capital would Can operationally of drop were allocation period to both time? extended an barrel

Gary Guidry

We about a to if $XX, barrel. extreme hedged of of was say, to $XX have hit $XX, the a exploration. operate about program, protect we down all And moment. our our assets, let's bit effectively barrels program, a objective at all our long-term XX,XXX our capital it capital Below it's day and, our does

permitting or is And one capital our process us is up important within so that our speed exploration. to to our is slow the thing regulatory, The control. down ability program for the

it but takes have time to We get portfolio, permitting. a that fantastic

control is probably the we important us have within thing and And and our most so flexibility that means. our to all

Ryan Ellson

fields, far In in of place. major in facilities capital core as all all allocation, our are the addition, as of

on large capital we So any projects don't horizon. have major the

So again, allocation. our with that helps capital

Unidentified Analyst

policy? your buyback about and And price dividend under what And scenarios? would change oil share that different

Ryan Ellson

CapEx for free flow Yes. didn't doing next debt operating a pay basis. To our a reduction would allocate free share not buybacks for share on flow, less is really so the objective that buyback. we cash extent dividend. have that and be And Currently, a don't flow, we we net XX-XX our cash years cash to to

Gary Guidry

now. have we place program But in a

Ryan Ellson

do we we and a place pay in have But don't dividend. right program now,

Unidentified Analyst

this. average last of currently? of just fields on production What your question basis on weighted based kind breakeven to And one Okay. your the cost is related a

Ryan Ellson

$XX. About

Operator

of question line of Nikolay Menteshashvili from Investment. Insight Next comes the

Nikolay Menteshashvili

Most been questions of the have answered.

Just a left. couple

broadly forward, the that Do be do grow as assumptions what you that the remain using? -- flow expect you to to free oil cash basically just are capital -- using because you then as production free XXXX. basic And this year flow about CapEx cash dynamics the generation expect as well? flow what's that mentioned that and stable positive, you grows? right? expect Going Or free you cash Are $XX you're in you'll

Ryan Ellson

main respect that for key the We million us With free Brent, cash cash the our make And quarter-by-quarter. X-year that to is sure free we blocks, that period. year. operate that -- objective just is really earlier at And the allocation. all plans. Gary long capital $XX of over flexibility flexibility it about alluded have strategic plan all And next is gives $XXX flow do X-year flow blocks, to to Yes. us we profile, that for control to don't with

Nikolay Menteshashvili

well down further fall Okay. capital And the case from the you're let's flexibility prices in say, exploiting levels? oil as current

Gary Guidry

year, Very barrels with floor Yes. have the hedged XX,XXX this correct. And $XX. we of

Nikolay Menteshashvili

tender issuing the for reasons And early announced Okay. year the year. this the the was secondly, convertible, for up the so then that going? take is far? And in the the you what's tender bond How one of

Ryan Ellson

We've of million, all, the repurchased with exception repurchased tender. the all that closed We've we've -- of $X,XXX. $XXX but the Yes.

Operator

Miguel from of line Next Ospina of the comes Compass question Group.

Miguel Ospina

two have I questions.

where XXXX regulation CapEx, the would next going? again, your sense to IMO assume with in is you coming make it The year, where above you see see do one the $XXX differential And year? your program next capital Does first second Vasconia million? one

Ryan Ellson

Yes.

to monetize it's respect a We've that. quantify to groups With the our of with oil us. IMO, first with lot who been for hard marketing working question the

that And will revenue but the the free $X year, respect are downside of to of this -- the -- on XXXX for of targeting year, next budget and year to we in barrel. to We expect, $XXX to flow that's December release million on impact our $X cash $XX capital downside, scenario. next respect With we a sales million. with XXXX

Operator

Al Next question Stanton the of RBC. line comes of from

Al Stanton

of A couple me please. as questions from well,

in production might half, Just averages but you with and average with I mentioned don't mean then in at -- you I handle, the your you're the Acordionero, envisage X-year to this also looking year respect $XX-something. do for you exit a going plan, growing? second full not to suppose. how

the exploration. at look production? I a a And of A it we XXXX was the with of if whether wells that Should on how was seen rather financial management So couple just than and all and just longer subsequent as associated little have a perhaps I or some some would delays may, of wells to -- the question -- production plateau spending shifted then the there be sudden, was wondering that? quick couple of peak? if right.

Gary Guidry

Al. because the questions announced we we our Thanks, the your to that's release grow The extended as Acordionero, that in and shot to confident A BSPs, on reserves South, good expect we last field reach answer operations as South. proves correlated the to pretty were could step to changed. we it structure we seismic, step we to that the correct has as are far And we that out. enough was the

that is -- focused discovery think our defined We've and tank. aerially we've E how defined both we defined the we probable is E reserves we our not exciting. is we hard find now on so quite Sand's that what And the quite much -- below and might possible we've

that start Sand exploiting. D have also we'll We

have ramping our to the injection that in we Now place, program. start we ability water facilities have

of we've a of We so handle believe reserves, to very XX,XXX to efficient for And start our how And can as flooding a couple we now our have day we our a and believe production it facilities over possible built have asset infrastructure that a probable matter be we barrels reserves, that strong applying reason. management, they the at the team it's field. next years.

hopefully that that And answers so question.

because And terms we excited having not high-pressured. of one that work exception the for with we about a our of well country, couple North. we day to And drilled, no the Ayombero in the the discovery equipment big the it's we decline. hundred a still the in are defer concluded -- -- It's we're exploration, us, producing there's we over first to activity have completion a with finally of barrels

really logistics under in rest have unit can work the until of place it's that of conditions. and logistics. to in And permitting more We in program financial, snuffing get to really our is, it's a country we defer place. pressure our Getting

the we still program active have so exploration can well believe couple years. an of next that for to year we And XX X per

Ryan Ellson

Yes. that able Vonu first time and And discovery. to appraise the the that's we're quite about we're well Vonu Este the excited

XXX,XXX was over barrels the If fractured discovery recall you the Vonu accumed from A-Limestone.

an appraise So that. this be will in

Al Stanton

question, may. one final And if I

Some been of about round. talking upcoming your peers have licensing

accumulate acreage? is mean, continue plate you full? I So your Or do to

Gary Guidry

they're completely undeveloped been Ecopetrol of talked an in think by the in in as portfolio think producer table. and acreage and an the really you ANH with And forward. upgrading on we footing really that, equal be of holder, will But under we're and for and know, process having country, a big the a I the country. big have, your that. about about some portfolio constant the the else -- competitive process what's talked nothing It's be I competing happy hits fields that -- or have opportunity maybe the said going divesting all that we'll

few to drilling look we and portfolio, it great years. forward over a have We the next

Ryan Ellson

XX on offered And to only selective. and be two. there around, over was bid we [Indiscernible] blocks continuing we'll ANH be

it's the look take it's existing close So see to potential at acreage we acreage our that and we upside and will it. infrastructure, a the

Operator

there further Gentlemen, time. this are at Please questions no continue.

Gary Guidry

our you you ongoing joining you, Thank look again, of forward to us Operator. I for to Okay. us. update progress. all thank, quarter with on like would next speaking and today, the we and over Thanks for everyone, joining

Operator

conference. wonderful Ladies Thank this for and you and have today's participation, gentlemen, day. concludes a your

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Gran Tierra Energy (GTE) 8 Aug 192019 Q2 Earnings call transcript