GTE - Earnings call transcript Q2 2021 | 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 2021. My name is Angie, and I will be your coordinator for today. At this time, all participants are in listen-only mode.

Following the initial remarks, we will conduct a question-and-answer for security and analysts and institution. Instructions will be provided at that time for the queue. a.m. now being remind today, recorded X, at would conference that Wednesday, I XXXX, is call and XX:XX Instructions] like everyone to this August [Operator webcast for Eastern Time. as Today's include measures. discussion certain certain information may non-GAAP well forward-looking financial as earnings any to update operational on call. non-GAAP for measures the issued this information press regard disclaimers discussed with Please to we and yesterday and refer release important reconciliations of today's royalties. oil of working or BOE, based are the before equivalent, amounts interest on sales Per barrel

Finally, property of Executive Inc. call Mr. Tierra. the this is like Any the over copying Tierra go is please without to Guidry, Energy, earnings Gran Tierra now conference Gran to call of forbidden I of of or this written ahead. Chief Gary Officer Gran would turn and Energy. Guidry, rebroadcasting consent expressly President

Gary Guidry

on some available to press brief and will Ryan second quarter turn detailed quarter highlights included line questions. information Good which the then Gran to for we for are results. President and are My and Financial Angie. President and the the me and joining you, over conference Tierra's discuss second I comments issued Officer; and is with second morning of Chief now release Gary Vice and will Will, from results, make on for call. Executive that a XXXX XXXX Ryan Rob Yesterday, Vice Guidry, Ellson, website. President we few call our our our Management. results Rob Officer; of name thanks us a Asset our our Chief Thank Executive Ryan quarter will today open

Ryan Ellson

last a key of second quarter, Good blockades Colombia some protests number discussed releases, shut-in several resulting wells the Gary. we of press oilfields. of morning, the few Thank impacted temporary and during the in everyone. our throughout and across In routes country transportation our you, how

second during quarter. of deferred. simply point to being I production have of out blockades, were under barrels would that they're the barrels just oil As lost, a XXX,XXX these like these result deferred been not

expect a blockades. also impact negative the on the of reserves as We don't any company's result

Colombian operations. As the been were Tierra’s we've entire the government start able successfully announced our that blockades July, production affecting to mid the in of And Gran areas portfolio. throughout in end the negotiated restoring

in per Our This oil quarter quarter. from track down second drop first to Gran production on is XX,XXX strong is the quarter. due solely second of the impact was barrels for the temporary during a XXXX. in day, the Tierra half blockades X%

average second facility $XX had day. Gran quarter, total per to end XXXX forecasting XX,XXX to were to XX,XXX day, of the cash also million credit paid the we and $XXX to balance By BOE XXXX, guidance million down half XX,XXX production Tierra its cash, full BOE per of we XX,XXX our As production of further second had reaffirming equivalents.

achieved alternatives. some Gran costs $XX.XX in significant field. this blockades of Despite the to achieved expenses expenses reduction other temporary few the to also generation deferred transportation Gran power expenses during cost a like quarter, the the impact Due in to I'd Tierra discuss Acordionero to its quarter. increases during reloaded production higher in expenses, of mainly were first XXXX. in During operating the operating QX, a relative X% by decrease in per Tierra barrel the of lower reduction production, down company's operating quarter GTE’s of

compared to quarter. to the quarter. expenses higher marketing the was costs, prior a prior discount and a of barrel, the also quarter up relative $XX.XX the quarter temporary transportation barrel $X.XX per these arrangements $X.XX As Transportation to per with quality result to were alternative during up during the $X.XX

and transportation discount to have we of full $X.XX prior quality and lower year $XX forecast transportation our XXXX reaffirm G&A of of the barrel our transportation for and due stock-based cost resolution corporate of to normal blockades, the the and With restored during to costs increased $X routes compared time production. before $X.XX. certain the $X.XX by the compensation lower expenses quarter, per expenses to

full $X.XX XXXX our to for forecast reaffirming barrel. still expenses per of year $X.XX G&A are We

CapEx we million $XX was Second and flat at of workovers completion drilling pressed quarter operations development with the ahead as quarter-on-quarter, Acordionero oil fields. Costayaco and our

expect $XXX during spent of our $XXX XXXX XX% approximately of half We has to to program XX% XXXX. first been capital of the million billion

substantially million and significantly the prior by from loss to million temporary XX% the $XX $XX driven in narrowed increase up million $XX and QX improved net million to EBITDA down quarter. funds drop QX $XX million quarter-over-quarter $XX QX’s operations from Our due blockade expenses. was our in production to from in

In terms of $XX.XX. hedges in half of place we ceiling weighted per of second average of of barrel have average $XX hedges day barrels XX,XXX with and per price the year, floor for a weighted for oil the

as we our summary, to filed filed July of new loss on was X, quarter, much $XXX of million, with Tierra replaced have our XXXX hedging forecast achieve set guidance now and Gran the and we're XXXX shelf Form prices. on S-X, track to September have realized shell also just dividend ceiling flow first higher and existing During X a cash and as free our a and In expire. of turn In course, half Rob $XX operational but floor our our and year. half has XXXX and off to XXXX normal been I'll ruled $XXX program oil With about VP-Asset half over prioritize Will, highlights. the discuss excited hedges, expiry million successful the now price half half operations and portfolio. backup environment drilling XXXX. of to our debt of the repayment, Management We for first have we're safely then second constructive call ramped we oil very can first throughout second million to XXXX diligently of the price had and the

Rob Will

everyone. Thank Ryan we during gone At restore morning, had total a XX workovers to you, the completed Acordionero, that of good and quarter wells offline.

the since pump submersible quarter average producers development end of replacement rig electric the year, May the and XX% XXXX, November drilling this of cost per from $X.X wells were campaign, was cost on has at average XXXX. active Pad-X, Acordionero workover the has decreased Also current in XX.X five from XX% that to drilling mid pleased million. resulted fourth a a at production well to cost total spud decreased the the We're of of injectors. from drilled from days, During And both well pacesetter XXXX. water

last to that which months the allowed We our of believe continue strongly XX a restore ago, to demonstrates achieved has the the reservoir Acordionero's production waterflood of prudent management field's level to effectiveness us waterflood.

One is and Costayaco-XX the Costayaco joint our production to both wells Moving commenced expected XXXX. quick Moqueta, Costayaco-XX to be completed stimulation by August, program during we on completed. development infield conversions and campaign On six one to were remaining at XX oil during conversion injector three September. currently and are Putumayo, two are injector the early production well and quarter. Two workover well the on producers update producer of expected Costayaco. a a start The workovers

expansion upsizing Lastly as also in at allow program online Suroriente, to running be done is program facility if the expected program. to in The which operator, please pumps four pump additional answer blockades larger and we've oil expansion is half Colombian facility A brought currently to we is back is been summary, after and progressing wells. workover in production planned, have of the second rig operations our Operator, being XXXX. save any pleased resume call now In able our to the portfolio. questions. with we ahead. the go across to turn conjunction the are that I'll

Operator

Schachter Schachter [Operator of line Energy. first question Josef Your Instructions] with comes from the

Josef Schachter

for is for is domestics Ryan those what But part me. asset of is any that you'll before couple questions morning, what took some that of sure the a probably year Number A that, the that ago Rob. Good impairments companies is sheet. or because $XXX million, in Gary. been The if production. this the if I'm – not terms Canadian conditions, have for of what are impairment of – balance potentially reverse and of you one, gone lot a probably conditions to reversing stance reversing your there

Ryan Ellson

the recalling writing happens, back we for under gone, Good back we write Yes, under we be U.S. GAAP sure. to IFRS, you GAAP, it's that whereas IFRS, once that up up, if write-off morning, because were have would Josef. U.S. follow

Josef Schachter

Okay.

the occur So okay. future, that's going not in to

production? increase in XX,XXX and Second, is occurring. the that, production August, in production to second Where XX,XXX and of half feel number is the of looking big to your of for terms just now, a now are where – the get terms overall you're XX,XXX for the in up you ramp of

Gary Guidry

we've resumed the XX,XXX Rob us at now. XX,XXX a blockades wells were pump barrels we're comes on workovers mentioned. We've to that And drilled from get the after production and remainder lifted. day bringing Yes, about and upsizing that the

Josef Schachter

Okay.

the strikes on company, teachers' Is can. there affecting powerful that In Colombian do that account the recovery see Lastly, many the your you this they’re if sizing for economy? they're impact of any about talking of more on And months? drags pretty union. and if I

Gary Guidry

It's the Yes. and we normal actively we government back But the both operations in programs protest and protest to and the government from Middle with are can. moved the to protestors discussions involved Putumayo. assisting everywhere blockading now committee. community We're the also with Magdalena our

especially bottom the serious the try think economy COVID and with over resolve issues last for And no about the of are downturn of quite And protest. question XX is, of have lot up the hurt taking Columbia, to these caused I line so, – months it did it the a to Josef, some the government economic that come they that.

government but an that is to to serious And a so it – back mode. seriously, we're it we and taking see normal back operations assist is the

Josef Schachter

I'm Thanks forward pickup big Super. better to to much, forward. Gary. so Well, production, quarters glad we'll much and see the look in going

Gary Guidry

bet. You

Operator

Al Your line the comes next from with Stanton RBC. of question

Al Stanton

have the do was the XXXX? I the bigger On early of them maybe not? take what a guys. sequentially. end I evening the first just start but taxman questions, balance going starting the is in for or I to sheet, the revenues Should Good is couple can I'll there you I and see outlook, is to of give receivable us spending Yes. on the – and may, taxation, guidance a for are up wondering That's question. wake year next year go of as a slice up if

Ryan Ellson

had the Yes, receivable that our approximately we this we the touch we and on – of year. ending taxes, I'll million still $XX last the expect have be $XX one. with balance position, million, at around that Yes, year, and so end to given

where $XX really million. cash over net Just inflow a it's with of so prices at,

our a OpEx million also XX-Q, and withholding at of after $XX in VAT CapEx. out from tax – that tax which both notice balances looking because pay do beginning depending some to our losses, on point inflow and on then tax with balance, cash that we we factor notes on you we in income that in, is we our the revenue, put increases some minimal But taxes goods – there, pools there XXXX on that increase You'll expect as you'll our spending see from gradually existing to And XXXX. in ending receivable. during reconciliation of and XXXX, all XXXX, out still

Al Stanton

to call we of imminent? Okay. gave the it’s on impression your you And that, the anything something the – should done more and Is something expiry the on expecting that mentioned have to filing, be previous was just looks spooked it you just you was shelf now it earlier mentioned you shelf. with have market. paperwork, would also I that the which there – the spending wondering, than

Ryan Ellson

the – shelf was it – had September always used place, just do do the you most and like we've just get it's to have in set to companies quarter Historically, in out. expire always Yes. ours when

month it we earlier did a we normally would than So have.

in normal it category. I So put the just course would

Al Stanton

guys. Thanks Okay.

Ryan Ellson

Al. Thanks,

Operator

comes line next Capital. Your with question from Skolnick Phil Eight of the

Phil Skolnick

Yes, you're next that thanks. program you then debt exploration be going are year you And free Good flow have cash commencing. morning. to thinking with reduction? and an about How also

of that capable kind path getting you're how it of to I how get your kind report here, kind So of – XX,XXX-plus that to? you guess outlined that reserve and barrels of then day a

Gary Guidry

Yes.

and timeline on We exciting permitting, across know with the the that exploration border the our and some portfolio, some both quite the to the appraise, across the Llanos, the are exploration – side Putumayo. with across ready just have look time in a for Magdalena as getting rest and that we discovery Middle you of the Ecuador, border continuing we exploration compress to just

stripped from at prices. think cash And to it's flow off, is, year year at can – your as our Phil bit it quite see world debt question, different a ago, was current prices answer so, the a with than free I of next outlook, financial our you a paid totally

be But directing we're of ready get are exploration things quite will to go. doing this next for We year. exciting. some ready there that and portfolio, year that it's We're our to to

Phil Skolnick

Thanks. Okay.

Operator

next comes Your question Herzberg Stifel. of David the with line from

David Herzberg

I could the was place as to first if Thank you hedging you that and in to, some looking half of call. for hedges production in you're if timing and you some wondering perhaps in color might about XXXX any be thinking perhaps of for the achieve? tell pricing have of if us what terms terms not,

Gary Guidry

Yes.

to be our we'll I of long have think discussing the a on, over any which it of that plan this plans first for months did. We the any and look as at we the in five-year half couple that towards at the we the next that or production XXXX, hedged this answer we successfully modest address hedge bring to half. plan, XXXX. then. have year is look range of And don't back We’ll for moment the year. end don't hedges We at second

David Herzberg

Thank you.

Operator

question line next Patrick O'Connell with the Your from of comes AllianceBernstein.

Patrick O'Connell

Hi Thanks much call. for guys. so the

side bit out? you on elevated talk a that of lower Just about the everything some just production bit was this up cost of In the those of about item. confidence getting tad, laid little equation a one-time came ranges a of quarter definitely line. the Can was little into but the and the think updated I else you budget, that OpEx in the kind

for those are of the that able So year? be costs the how Thanks. you to confident half second you'll down bring

Ryan Ellson

confident. very of fixed. XX% We're operating to Thanks our XX% Patrick. are About costs Yes.

the burn got the team cost to contracts have did so quarter, the we production job to good you to move that lower to do hit only And with our in blockades. just routes this The during minimize due so our very did a some of But barrels to the quality higher they're with a to different at, where costs, discount suspending just quarter. higher try quick have we both were transportation Obviously, high barrels moving. transportation move And situation keep was a in as that. We're sell then through can margin used to painful it that And prices that using as have the quite it some barrels costs. was those we they of all well routes oil still to course the operations in using back normal But level. like that routes. past. normally

Patrick O'Connell

helpful, Very Ryan. Thanks,

Ryan Ellson

Patrick. Thanks

Operator

of Chang Your next Al question comes from the line with Citi.

Al Chang

the for Hey guys, thanks call.

Just been point stake, still you my wondering, end. some has being alternatives discussed for questions movement remaining evaluating at a I from few your were know there on that just PetroTal any front? something is that or

Gary Guidry

a at continue are next the with five they're but basis very And answer we is good keep at it's doing. pleased Long-term, we happy we evaluate. we also portfolio long-term, of The doing a no management for at have continuous the will that all plans. team years and we'll great to but to are and we But PetroTal something our look it, look position. not on immediate assets that that always job,

Al Chang

on helpful. period, of relief of That's that after the the date quarter? the it. end as is first Is got covenant that very what fourth testing expires? X October And Okay, or

Gary Guidry

good – the Yes, in at the of so question as X, task will first February. end October really of be

So relief based October will things around, covenant effective X. very where comfortable with we're off look the

Al Chang

is the currently year given $XXX million the still XX Understood. XX clarify, to then the Okay. you close out expecting just range? And Are facility balance on the million, credit to wanted million. in

Ryan Ellson

Correct, yes.

Al Chang

Understood. Thank guys. helpful. That's Got it. you super

Ryan Ellson

Thanks. Great.

Operator

Your with from line Rossi comes Balanz next Lores Román the Capital. question of

Unidentified Analyst

[indiscernible] is question. This taking Balanz for you morning. Thank Capital. Good from Hello. my

guidance. seems achieve on midpoint the clarify production guidance, to to just it that the So

the confirm this for barrels You XX,XXX need mean? per sustain half, I day. Can to second you like

Ryan Ellson

We confirm that. correct. That's

the half for year XX,XXX for is XXXXX second the guidance half. to second Our

Unidentified Analyst

follow-up Awesome. maybe And we higher due a to quarter on this was it royalties, understand that HPR.

expect we per $XX if what stays can is barrel? above So Brent

Ryan Ellson

Yes, reasonable around level. to XX% XX% effective rate that royalty is of

Unidentified Analyst

Even $XX if per above Brent barrel? stays

Ryan Ellson

Correct? Yes.

Unidentified Analyst

Okay. Awesome. you, guys. Thank

Ryan Ellson

you, Great. Thank

Operator

questions. for for the to allotted back closing reached the management we've Ladies or and to remarks. any additional would gentlemen, now like time floor I turn

Gary Guidry

you thank Thank progress. speaking you, the much. and us everyone and we very like Angie. update as look next Thank to with I would we to you today over forward have joining for quarter

Operator

today's for in you Thank conference participating call.

your at time. You this lines may now disconnect

Gran Tierra Energy (GTE) 4 Aug 212021 Q2 Earnings call transcript