GTE - Earnings call transcript Q2 2022 | Gran Tierra Energy Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to Gran Tierra Energy Results Conference Call for the Second Quarter 2022. My name is Justin, 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, Tuesday, August 9, 2022 at 11 a.m. Eastern Time. Today's discussion may include certain forward-looking information as well as certain non-GAAP financial measures. on operational with release and regard any measures and for issued reconciliations earnings non-GAAP disclaimers important to discussed refer update we press yesterday of Please call. today's this information working oil of amounts on royalties. or Per interest barrel before equivalent sales are BOE based a

over copy for Tierra Finally, this conference bidding Officer and turn written of Gran any within I President property of will this the Tierra Energy, of Mr. the Gary earnings rebroadcasting Gran call Energy. Chief now Gran call of ahead. Inc. Guidry, is Guidry, or to is especially consent go please Executive Tierra.

Gary Guidry

Executive - Good Justin. and are today Ellson, conference you, of Gran My Paul with Tierra's our for quarter the Ryan Paul go President Northern and questions. then release Director our on Executive morning, and open a region Yesterday, will information in website. included is Colombia. for Thank brief Asset Chief comments, joining please Officer; call. us press few Management for Guidry, Putumayo make for we the Chief Officer; our and thanks Baker, ahead. and quarter Ryan Ryan, which XXXX Gary Financial our our name me results line detailed available results, press XXXX will is Vice second and about second President and released we

Ryan Ellson

of Tierra oil quarter since which increase Tierra growth again, in of year-on-year. funds Tierra income and company's another oil averaging of net while $XX from operations XX% our our million and production quarter Grand was quarter During progress was strong XXX% increase and quarter. quarterly the quarter XXXX. Brent that in fields, XX% of day, strong achieved pricing. operating third the per Tierra's both quarter achieved wells Gran up had was XXXX production second XXXX from work has the quarter $X.XX up the world and make $X.XX QX prior year-on-year. the This growth for $XX.XX and million, annual highest quarterly up where able due XX,XXX the from has and in everyone. net Gran X% earnings prior share, production XXXX. fourth in campaigns Colombia driven ago Gran higher This before in versus net development up and on to the The per the on $XX prior prior was production resulted morning, quarter, XX% This is the both to price. to barrel Ecuador up from drilling flow QX, the and quarter highest from which since strong in were Good deliver Gary. the per XXXX exploration prior generated loss year to Thanks, second the of XX% in continuing a strong of oil up back Brent to required by a quarter of We production million XX% barrels from XXX% compared volumes Costayaco $XXX oil we year-on-year up Acordionero material by increased is

from the second diluted flow funds in quarter per QX highest and since first $X.XX XXXX. share, XXXX operations funds a share was $X.XX per of in $X.XX flow the of quarter which the prior was per up achieved from Our share the On from quarter. per up share basis, is

credit facility. from two commitment cash $XXX which of of its the during of demonstrated rapidly in development was was second paid years, its completed facility and Tierra to fully which Gran than incurred Acordionero during XX% the zero, $XX Costayaco programs being In debt Gran a free capital This clearly $XX prior to down Gran of reduce was balance majority during terms flow. QX, capital company’s fully was expenditures, only repaid incurred million result the the million quarter. the our - has higher level QX, credit both which In approximately was Tierra with quarter's Tierra's million.

As company a million debt of cash $XXX $XXX and balance June of XX, net the XXXX, of million. added

maintain With Our assume long ratio facility debt-to-EBITDA cash times second our annualized times. are strengthen to plan fully $XX to to paid off, now quarter one Brent net buy of debt-to-EBITDA above to we to our the per million of one million from to continue accretive liquidity. to back strengthen our results. we the opportunities sheet, a operational maintain excess highlights to targeted in $XXX now QX I'll to We over barrel ratio and over over under our call Paul our $XX balance balance and turn portfolio. cash and deploy net the some was And below of discuss of plan order term, targeting case. cash a shares balance credit

Paul Baker

Good was the pacesetter its days in took morning, to a Gran continues which Tierra In well delivered to new quarter, Ryan. drive at Thanks, Acordionero, drill. fields. efficiencies everyone. X.X major only

days to development well in the to X.X drill a Acordionero with XX% time has drilling reduced average a time further the days. from decreased For by X

well the budgeted. million, than costs As which average decreased a reduction, $X.X originally drilling have result lower is of X% this to per

the the were the year. cost Costayaco of of techniques completed successful X continue with been our reductions optimization application development has during the utilized programs We and development Putumayo, Costayaco development Acordionero of delivery because the in program. Acordionero budget our XXXX XXth on In half in our completed of under deliver in All outline program first of through well to the wells the the programs.

in for Chanangue exploration Oriente final exploration to Basin. In we Block of site the the progress. Ecuador's Bocachico-X programs continue our Ecuador, are in Finally, planned construction well in stages well the

The in happy expect questions. any well , planned third Block Instructions] in well of question the funded activities. Operator, third the exploration to site and of quarter which the our well for ahead. turn the Covault. Putumayo exploration please now from In in quarter progressing go the [Operator has answer drilling XXXX. back I'll start call this continue we to And the we'll started Thank construction to ALEA-XXXXA first We comes our you. XXXX. Basin, the in operator, Rose-X has Oriana Colombia, be

Your line is now open.

Unidentified Analyst

was Hi, reform a government good tax morning. for but Thanks by taking question. yesterday. was couple main think questions, I the - related the of to would my Petro's that had go proposed I that submitted that one

reform trying price how levels? - rate see this your you tax do effective see how from potential So at And exemption what and understand changes would price royalty the proposal tax you scheme, current just out? specifically, proposed do EBITDA impact to fiscal new the and playing the in estimated

Gary Guidry

through reform reform a needs Yes. it know, and into the It's the upper is chamber the to, as before but debates signed sure in actually proposal, aware, you're know, lower you chamber We're good And still working two to implications. it's just two a you question. tax is I'm know, the you tax law. still the go that, in

So we're currently assessing the impact.

Unidentified Analyst

E&Ps with But your that that given royalties – Senate? impact trying precisely and perhaps it it go some that to that, that Got through could understand Are way perhaps that it your it. Congress any has more been work? first through legal be could it's to prevent thoughts following current how just chances line, soon. net exemption I the your recourses understand in be flow Does thoughts, on on there there from are go any that through up to it bottom or if that. And would tax do And proposed? revenues? that might how too the

Gary Guidry

if think - the I you touch And Yeah. question first. on second I'll

proposed. you you just in the know, I think similar final time look US, or a of than was tax what looks at put bills very that quite it if gets forward, what to bill the lot past different you times saw were to originally

mode that's impacts you why with what and the we're know, see obviously, kind, to barrel. wait But in they So of the that. to there's our on we see guarantee know, we respect royalties, the And expect the to But a in up some royalties, you is a lot no pay take the changes. pick government are. to

those wellhead. even we they're actually taking from So right don't deduct the barrels, barrels, those

that see we're still at that moment, assessing impact. again, Tierra to Gran but major don't this a we So impact as

Unidentified Analyst

given that maybe was was frame it should still XX be one there That's noticed last helpful. just lifting targeted year a full couple the XX from understanding you just expect one And Perfect. your year. results. what quarters that owed for of to jump seem above for that the We to very to barrel it in costs overseas. quarter, your quarterly full per in To your and the work wells next we guidance,

Gary Guidry

Yes.

the of that as go in them the we volumes down, to a increase year, barrel expect plan our half we metric per and range. the We we second still in be expect

Unidentified Analyst

Perfect. Thanks question. for taking our

Gary Guidry

No problem.

Operator

for question. next moment And one comes next And our you. our Paradigm Adam from from Gill Capital. Thank question

line open. is Your now

Adam Gill

Good morning.

XXXX? have in be to on of capital this country in allocation should terms Just you success the How exploration could program year. some aggressive Ecuador, later that you in

Gary Guidry

very and Colombia. what closely Yeah. Ecuador Petro President We're closely in watching very will watching doing be

are Colombia As but have we big on for Ecuador. portfolio you exploration, very in a also know, we keen

X is, able would And terms certainly slow of of program we in answer to terms things Ecuador. being reallocate question term, so Petro's if execute to in do through of two in regulatory, the to your down President years

blocks prospective the have we currently and in country. commitments. very We're those We have progressing

Ecuador, by And play so that the it portfolio, and we'll the a for Putumayo us, a year. into Oriente and really is one

Ryan Ellson

regulatory entire EIAs as requirements, far we the on the As have block.

we So be quite Gary aggressive. could, mentioned,

Adam Gill

you. Thank

Operator

question. one Energy next And for And Schachter Research moment comes you. Thank from Survey. our question Joseph our Schachter next from

now open. Your is line

Joseph Schachter

Thank Ryan, taking first. for morning, Ryan. you question. my you and very for Gary Thanks Good much.

XXX versus mentioned levers $XX Are On debt you that between whole million, quarters? generating the loan you'll guys net NCIB load, level. the metric a given do more the terms get then looking of coming $XXX in down debt then how where you and spending growth flow that debt another the are How at at once return other want at money on $XXX million? strong debt, And to to to ways we shareholders. looking that you or work you to level, be over cash

Ryan Ellson

Yeah.

that year we on at by we of to around be And QX. year I end allocation. We at of think is, really those levels. of And the you think by the very the your yes, the capital of comes first by part second the debt would question the the of by question it to so the there comfortable our really million. net $XXX think then will end targeted question, down second is end year, the I if part get look the is

balance right a out have balance And look and existing you exploration that at also in assets. pricing, As you then even the NPV capital, the trading look substantial and like of we when obviously now. we both sheet, know, the share great to, Colombia, know, And we at is, know, know, at growth if strengthening if how NAV look PDP. the just especially per you really, you our looking correctly always discount of where buybacks, growth at you so cap, exploration, and most if share, portfolio development know, point industry at also right you you at optimize we're of Ecuador, trading, getting a P look you strip you we're we're one

also, So at again, $X.XX at our the And then proceeds. of right use pretty bonds, trading look you are now. that's bonds a when

So that potential could another be use.

allocation. the right that just of mix So capital getting the it's really

Joseph Schachter

is to Good have economists about that. you been the Gary. government. Does work? with to living And Ecuador some -- Are people the any Or Ecuador? ability with articles area area? issues how the where form in the then the and our some you that With local one people in is and with in and different on program disrupt to relationship there's it indigenous indigenous Okay. same disruptions area - some your a for how then people hear want

Ryan Ellson

Yes.

after COVID in area I answer spent both is of folks during entire the a think relations, COVID, we've oil to time, where to the prone we with - lot the with COVID, our disruption, operations. that, working community but region before has the Joseph, have and is

with so we that And have progress the we're indigenous what can we doing. believe relationships the with community do we that

comfortable we're in with our operability So Ecuador.

Joseph Schachter

so next my Thanks the on quarter. super. congratulations for Okay, very much questions and taking

Ryan Ellson

you. Thank

Gary Guidry

Joseph. Thanks,

Operator

Rossi next moment Roman from One our you. question. Thank our question Genuity. comes And next from Canaccord for

is open. now line Your

Roman Rossi

Thank you. morning, Good everyone.

my taking on congratulations So you And results. excellent the for thank questions.

So I have a couple.

sequentially. ask Let's

you So first, at looking down, break so of XX million booked CapEx. the exploration CapEx

So well I the was was to you wondering, where wells dry this drilled. related exploration was drilled? And that

Gary Guidry

- did drill did - of release, we [ph] as well, was press we dry. last unfortunately So in CapEx, the our and mentioned, tenure we Truco the it

it's That's the total million the region exploration, some development – just allocate, the reallocating of that. capital I just why a it what So to the in give we of producing of think range the we from hat's of to location program. in on on the exploration back to CapEx try Costayaco a lot And is our is CapEx, released fields. And development. of Truco Moqueta we focus was $XX

Roman Rossi

Okay. Perfect.

you regarding with drilling you so mentioned, are Ecuador, as progressing And there. the

assume So you testing that I quite period have long there.

when could you we expect will So production? selling to that start

Gary Guidry

volume do Yeah. We take when tell from we you infrastructure testing to exploration, to and Putumayo, similar it don't we is production can we for - the the sales. forecast but I any very there that that what collect tests,

generate to immediately. testing revenue also information that So we but get to the allows long-term need effectively that have us

- And test will our so have we sales success, long-term be if the we volumes.

Roman Rossi

just question. last Thank Okay, And perfect. you. one

hedging, [indiscernible] second any have during hedges thinking forward, pressures, in have know you downs – down to shut we you are quarter? down get but I anything anything as going seeing you by regarding some – particularly expecting currently do any place. don't So are

Gary Guidry

challenged offtake with $XX arrangements hedging what was backwardation. currently of providers sort before of we can place. in was working some We're curve put in when our the about It

with currently partners. optimal our with So structure assessing some our working we’re of and that -

Roman Rossi

Okay. very Thank again. And you much. congratulations

Gary Guidry

Thank you.

Operator

moment our comes for Jose-Maria question. one question next Silva And next you. Thank our BTG And Pactual. from from

open. Your line is now

Jose-Maria Silva

during just quarter? the couple picking questions was my on impact Could any That's for the guys. you quantify one from a question. Hi, of hedges Congrats first in results. that you last the and or place still Good hedges. have this up what was regarding if I morning. there second impact good had

Ryan Ellson

Yeah.

Our million, year of half hedging losses $XX million. $XX were in around the the first

impact in was second And so some quarter. there the

Jose-Maria Silva

me can you that guide one production hoping some the the total exit in to say, of guide are you with give production? let's of on if what is guidance, Okay. And second production you can for you year. But the XXXX finish exit terms

Ryan Ellson

be focusing have. that water will floods in the It Yeah. XX,XXXs. the currently developing we We're on the low

day, to plateau XX,XXX over fully that deploy expect coming in we So XX,XXX, barrels to raise the capital per years.

Acordionero. our But to X high-quality, probable is, the of reserves. will Those floods very are to testing change possible in to We the over XX,XXX day all have about answer We and XX,XXX that polymer question disclosure, talked what our the in were targets pilot years. barrels the next your a in rate. X exit

Jose-Maria Silva

and leverage My guys very the your of excess helpful your last are Very or cash your free very 'XXs, liquidity very guys regarding clear. that generating is discounted, the you given you seems flow good in trading excess which lowering following, at especially the bonds cash considerably. when Perfect. question having look results

So to secondary about on of are cash discounted? thinking you profitability the of your bonds guys the market, using they look so purchase given some

Ryan Ellson

of is It Yeah. one considerations. definitely the

the sheet, strengthen potential bond acquisitions opportunities. And accretive within any sheet, to balance or been M&A would we strengthen the share release calculated in statement. have that mentioned, the think balance and repurchase I buybacks

definitely looking at. is that it So something we're

So that we we agree undervalued. think they're

Jose-Maria Silva

Ryan. very from you Thank side. on speak Thank next my perfect. you. results it Congratulations you much, the good and That's time. to That's

Ryan Ellson

Thank you.

Operator

One question. you. for Herzberg next from And question Thank comes moment from next Stifel. our David our

open. now Your line is

David Herzberg

morning. Hi. I two Thanks guess have I my this for taking questions.

your in operations July and The in first is update. financial

facility a might if the million million a XXXX mentioned of you're were terms $XXX to to size? that had if with your question full that what $XXX respect had with you any year second the developments be I CapEx? looking guiding still then on was expect would in and towards color replace to CapEx And credit one. you wondering or You smaller we

Ryan Ellson

No, Yes. great. that's

one, will On yes, continue number the a initiatives. first to we advance of

So that that as then do at we we something extent finalize finalize something to announce the time. we'll

so $XXX CapEx, million I to comfortable range. at looking yes, the $XXX think we're million the facility. question million we're the is million that replacement $XXX on on the second to And with range $XX in

David Herzberg

you Thank Okay.

Operator

Barclays. And moment comes question you. from next questions. Thank One [indiscernible] for our from

Your line is now open.

Unidentified Analyst

And great I taking My much basically, to solicitation? be two for or one on the in these Especially what's now about for your you trying congratulations XXXX. free earnings. - down Tierra that so related thinking the are you And to the trying obviously, you appreciate consent consent Or of refi XXXX you debt guys quick failed, bonds first these XXXX. have key we're cash I XXXX? the of is follow-up Thank buyback understand guys the what's question. is, going to flow? on logic question about to think behind the focus approach Gran And equity. the maturing, mentioned XQ my pillars for the are that questions. some to is using already going line has

see curious to how XXXX? you're Thank just so this you I'm thinking So about much.

Gary Guidry

Yeah.

it I question. think a of - the lot thanks for

We of conditions. years. did lot a did depending we're just bit period. where during we as were million to we on net increase to losses, credit think we look X have, and I know, last well that substantially ramping the suffer and balance cash. significantly our But able facility, if production, you think few or our debt repay you the repay as obviously you at I reduced it - a up reduce market our is hedging off quite $XXX know,

the we'd to in so the cash be To And free flow that available, bonds the we're a market in XXXX repay assets. extent good think the the position nature I in comfortable of wasn't with full

Unidentified Analyst

get you the potential some to we And then if the way your or of solicitation give where think Should LME [ph] of details now? expect in same really? some just consent not sort to Thank do did with strategy why regards you do what's us another you. can - And you it?

Gary Guidry

Yeah.

on lot again, market. the depends a I think

the solicitation for intent we get On wanted the liquid exchange, more didn't really to that of a the to provide offer, was fair offer was holders. that consent We and expired. to and the it we point bond thought and a then the

forward. then flow a conditions. And up of we'll where we're our I market in market going we But see assets position great regardless comfortable we're guess conditions cash end so that and on very with free

Unidentified Analyst

Perfect. guys. Thank much, you so

Gary Guidry

welcome. You’re

Operator

question. you. One for next moment Thank our

from Our next Davis Luke from comes question RBC.

line Your now is open.

Luke Davis

guys. Hey. morning, Good

wrapping exploration You guys back in some up the are drilling half.

for or them? expectations from results X you detail wondering provide those timing wells of could we if on potential and Just when see on individual some each the X

Gary Guidry

expectations, we we targets range those On published, Yeah. available. XX high think from make potential I of but The to can average, have targets. exploration million our as certainly X that as anywhere barrels on

on now. on In testing terms But testing excited that I as you prospects. exploration any year not drilling of what in drilling some quite period that results those certainly after drilling the [ph] position have We're shareholders we we're through update we our a can well. of we're quality the best guide have and we're don't as will the of any activity, timing, cased having results tell long we and we're COVID, we're prospects. We the on being expiration with do yet.

Luke Davis

Got you.

is balance the QX then, to XXXX through on it kind of the fair program? results So of some see we'll say early

Gary Guidry

Yeah.

QX. see QX some I results we think and should in

Luke Davis

Thanks. helpful. Okay,

Operator

now our Thank line you. from question. open. And And for next Garrett Fellow next from question is [ph] JH comes Your Partners Lane one moment our

Unidentified Analyst

Thanks Hey, guys. very answered. much. actually is My question

Gary Guidry

Okay.

Operator

the further I to go there questions. And Gary Guidry like closing you. Thank call turn now for ahead remarks. and over would no are to

Gary Guidry

forward have once Thank certainly as next you you and We Justin. Thank do throughout look joining will I'd today. speaking us quarter. update quarter, with the we progress of very thank much. you, for to you. everyone Thank like we all you to again

Operator

participating. today's conference for you This call. concludes Thank

disconnect. You may now

Gran Tierra Energy (GTE) 10 Aug 222022 Q2 Earnings call transcript