Earnings call transcript Q3 2022

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Operator

Good morning, ladies and gentlemen, and welcome to Gran Tierra Energy's Results Conference Call for the Third Quarter 2022. My name is Kathy, and I'll be your coordinator for today. At this time, all participants are in a listen only mode.

Following the initial remarks we will conduct a question and answer session for security analysts and institutions. Instruction will be provided at that time for you to queue up for questions. remind recorded this XXXX, today, a.m. to being call at like and webcast Thursday, would everyone conference that is XX I November X, Time. Eastern

Today's disclaimers and any on operational well press release reconciliations information measures. discussion of yesterday non-GAAP refer to update certain today's for this issued non-GAAP and important Please earnings discussed certain regard call. financial as the to we may include with measures as forward-looking information

royalties. on working interest Any production volumes before are based sales

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

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

Gary Guidry

for results I'm quarter and our Tierra's Ryan our Management. thanks Officer; Thank Officer; Executive joining Chief Gran conference of and are Asset President Paul My Guidry, Gary you, with XXXX Kathy. President is and and Ellson, Vice name Executive third morning, today call. Director Financial Good me Chief Baker, and

few we'll November issued for Paul on which comments a information that detailed XXXX included quarter make third then line our available we Tuesday, will a Ryan on and our is X, and open press website. the release On brief questions. results,

now highlights will to from the Ryan turn financial I call our key results. discuss to over third quarter

Ryan Ellson

free $XX the and of wells a by wells Colombia. delivering quarter in million Ecuador Tierra flow, $XX three strong Gary. funds and you, the achieved Thank of flow morning, Rose well everyone. and Gran Good while in Bocachico million Gaitas exploration funds drilling

our flow flow cash execute facility. sheet complete $XXX allowed via of EBITDA buybacks million, the pay income net and million. This strengthen down buyback free generated bond to former balance of cash we $XXX of months, XX our million last $XXX us share and funds credit million, $XXX the plan and adjusted of our flow free Over of

XXX to outstanding balance the The $XXX a net of while debt remaining quarter. and balance credit total with $XXX million about reducing company new reduction the million our quarter quarter, the completely our X.X% during shares we sheet, the our strengthened count the on in sheet with shares, cash exited During facility overall representing undrawn. share of of million outstanding

prior $XX.XX the Brent ago, XX% the barrel barrel, oil up QX, Colombian the The quality Brent this quarter from During quarter. year price and but $XX oil per averaged transportation to per the one ago. in widened The and barrel per the XX% differentials year discount widening from increases in of company's relative price per by prior from $XX.XX driven were up barrel one price. to in QX, $XX.XX discount down oil

XX% share achieved the from we second income in QX XXXX. production $XX flat the down approximately of was in XX,XXX earnings third and quarter. prior of quarter QX were million, from XXXX. net share up quarter of $X.XX the quarter QX, with third of XXXX per X% Tierra's of from per $X.XX Gran During up average BOPD, total

average localized company's blockades. QX Colombia's the impact these experienced XXX occasional the The Block lowered quarter, Putumayo due to the During production Basin approximately of in BOPD. total Suroriente blockades disruptions by in

cash one barrel $XX.XX. the to pricing. barrel, Compared $XX.XX which ago. netback in per from in netback prior and prior XX% QX from from oil the operating was quarter. from up XX% year was prior an increased million, flow down from despite per decrease $XX.XX Cash Brent XX% barrel year ago, $XX.XX year $XXX The XX% Gran up $XX from of quarter. one ago was decrease up and XX% was generated one compared year company's only XX% operations to down sales Tierra XX% million, quarter, a from the per one QX ago XX% netback Funds the

Tierra's second we In quarter level capital the the which programs were completed of of of CapEx, XXXX. $XX million, $XX and were prior during Gran Costayaco both the terms development as of quarter's majority during incurred lower of QX capital than expenditures, in million Acordionero

three Rose-X wells, Gran commence QX, we and and the Ecuador drilled drilled well the will in Colombia. well Bocachico end, Tierra in to Gaitas-X the wells in quarter Norte in Charapa exploration During testing the shortly. case Subsequent and Ecuador

senior bonds. to net of Tierra's bought reduce QX million Gran part As approximately Tierra's our February ongoing value for back of $XX.X $XX.X an XXXX, we approximate during X.XX% Gran debt, notes million of due discount face cost savings commitment maturity representing of bonds. will interest the Purchases' the to about a of million, term XX% generate about XXXX remaining the XXXX $X of over of bonds our value face the to

shares, the quarter, per for million, we cost shares X.X% total $XX.X price about at XX.X an representing was a million outstanding average $X.XX which share. our repurchased of During of of

for programs. we our exploration With finishing and about XXXX forward development and BOPD, a current production capital note look to XX,XXX of excited are approximately XXXX strong plans our on

will expect in aware, changes have are other numerous you in history proposals stable changes future. have of what changes uncertainty environment many the given for investment, don't we the than Columbia's long comments there long-term any that Colombia, a proposed in be, the regime ultimate tax to As on been for and the continue of the we providing on

to third the results. discuss operational from highlights some now quarter I'll our Paul call of over turn to the

Paul Baker

Thank continues everyone. you, morning, drive Tierra to fields. efficiencies at its Gran Good Ryan. major

oil day. our Ryan quarter XX,XXX of per for production As mentioned, the barrels was

per fourth production oil averaging So is far, of to our quarter barrels during XX,XXX day. date,

Our our waterflood core declines. stable continue to projects and with results fields in expected natural yield low

polymer the test polymer a of laboratory several injection the After years our commenced for enhanced milestone. is work indicated this Acordionero modeling Acordionero injection. reservoir and field, suitability During injection pilot QX, recovery, in project we oil

formation. Bocachico-X We are also to to the stimulate it Basal that T and in uphole to we U place disclosed of the now previously to and in the deepest Sand zone, Tena tested the testing which go initial We initial excited Sand company first about moved water-bearing. on both before a Ecuador. company the the uphole moving T exploration was results was that drilled achieved test it Ecuador. long-term test the Sand, Colombia and back the the the production has well After plan

test Gran Charapa is total with November oil drilling has well. being Norte-X of to the Norte-X in core, and plan of potential identified. the shows core XX production We the finished XXXX. Ecuador the cut Sand was of had A Tierra's depth throughout during pay feet to well, cased of oil second XX Charapa feet Hollin which

ratio well well a pump the hour period, XX we Rose-X naturally at Colombia, tested in In of the gravity Sand drilled period flowed an over without XX feet Basin. N a per during rates and barrels company oil barrels this per with XX XXX of of the average of barrel. per day production a cubic stabilized the gas-oil degree day The two Putumayo standard and of API water

the based exploration Middle spud on XX drilling results of Gaitas-X well. the and encouraging to on rig the exploration the moved the October Magdalena we In Basin, a Gaitas-X we well, Gaitas pad

Umir from Lisama expect reservoir in zones possible a the to location oil-water Gaitas-X target further the a away well, than to We that in test multiple higher effort Sand and is the planned deeper Formation contacts. structurally Gaitas-X

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

Operator

of Instructions] and analyst. from now question session the Our you. line from Thank gentlemen, comes [indiscernible] will we conduct question-and-answer first the for Ladies Balanz. [Operator our securities

Oriana Covault

hear me? Can afternoon. good Hi, you

Gary Guidry

clear. Yes, crystal

Oriana Covault

my for Oriana we question. one Thanks I may would Perfect. Covault is three go had by taking be questions Balanz. This great. with one if that

the cost above continue of high-end starting on year that to full be noticed well lifting First, the year-to-date We guidance. lifting costs. your

And you're So by fourth understand plan range what just increase and sticking such to if in to quarter? reach this quarter? wanted to drove how third you this reduction

Ryan Ellson

Yes.

are globally. amount also mentioned a in barrels is that QX, I substantial Paul over amount obviously, a inflation of day. lifting think lifting part But our of fixed. the of we're cost A XX,XXX there's set costs had

the So cost quarter, as production during per ramp unit we that decrease. will up

Oriana Covault

Understood. And quarter into in to saw and the better impact perhaps that in the fourth this guidance operational that third you just during to contingencies the due for quarter. understand quarter, the production take disruptions

what going this should detail perhaps more Colombia, impact could and production this provide issues, think the of forward? in So how if nature in levels on you we of the drove

Ryan Ellson

that in blockades were the around XXX, the were barrels quarter impact. was Block, central a And disruptions majority day the the had The which during XXX those against -- not of Suroriente Yes. the Tierra. predominantly against the were in blockades -- government, we is Gran

get forward. And in unfortunately, with those the we unfortunately, caught very middle to So difficult it's the going predict. working blockades just one to a that. government closely again, We're mitigate of

quarter. challenging it's anticipating again, predict. we to But during So aren't one blockades the a

Oriana Covault

with for $XXX about guiding year-end in capital one. Understood. just corporate and million saw in the million roughly cash And midpoint cash my items. your from last for coming maybe about other of position working presentation $XX that you're We

share could do more you you on this plan if details to target? how just So achieve

Ryan Ellson

Yes.

at obviously, quarter, look it's you oil pretty when the think a environment now. price right I constructive

Our of is the the quarter, is a development clearly during CapEx lot past the to quarters, us. compared behind dropping program

just our during And $XX tax operations. But we free also, come as to build the to cash so, million well. XXXX $XX range quarter flow the on our a we in in have expect then refund of million

Operator

you. Thank

Our comes Riding next Hunt. question Werner from Peel of

open. line now Your is

Werner Riding

I being weeks There 'XX final month but in is from FY only no the guys. we're year. away this yet, Hi, guidance guess of

largely is XXXX for outcome the so And known.

year? us for And current could future see So following production on a I expectations assets? just from to you the then peak was which from give wondering possible, production next achieved that, perhaps being extent you year on your feel

Gary Guidry

of which in for answer Board we're long that of meet the The mid that then guidance a life plan, our we budget annually Yes. we expect. our Directors early our We'll XXXX. -- is with releasing to discuss year five you give that be to meeting outlook. out mid-December, and assets short And of our of press -- will range of all all rolls

things. In year focused terms know, One sheet. on of was peak as we balance several production, you this

second Paul sheet polymer. then in mentioned is And is we shape. the balance And the on focused that our fields. final our big on waterfloods pilot Our expanding thing our is in great test

room do of expanding clear So if expanding And exciting have recovery. those, you wells have exploration that some Ryan going appraise. combine production, as all waterfloods, to we increase we're to mentioned, success we

the you peak lots of in we've terms And of couple guidance some of but so XXXX, give on for production, we'll dry years. powder next got

Operator

you. Thank

the from Josef line [SERSE] comes question next (ph) Schachter of with Our

Josef Schachter

and Ryan Gary, morning questions. Paul. for taking Thanks Good my

to balance go to Ryan. sheet the for and probably First

end cash than or big a at disruptions discount to take QX market the asked $XXX during and you now get core Are the the year more forward? there, you kind used? U.S. NCIB? is probably there of comments million through at some to you to sheet you don't much -- of you $XXX more $XXX assets million. QX the additional you $XXX you buy you can you keep being how walk And on areas? maybe As you like And see really advantage million being cash during on in potential of looking bonds can earlier your me how within any about or get because quarter? Or acquisition before that where at want where aggressive on of the balance need your the Are million looking the made that can you do did fit going

Ryan Ellson

thanks Yes, your for Josef questions.

bond capital We as think and share in bond as on if some insured assets, optimize booking repurchases assets, would you look somewhat best not that the share to possible. have repurchase the then our it's QX, and And balanced. at QX, exploration capital, the well the really portfolio at portfolio allocation, the are well. some to expect we the we conditions. we development repurchase had looking We be it going how always always and buying continue look capital when I and always could dependent was value selling be we being repurchase long-term at obviously market as

buybacks. as -- just focus -- repurchase static would it a but as and case, on on would appraising So the be bond continuing the well be exploration share the

Josef Schachter

to at $X.XX clarify, Canadian you Is Okay. mentioned was share. that NCIB U.S.? And or per the just

Ryan Ellson

U.S.

Josef Schachter

U.S. That was

much. Okay. Good. very it from That’s me. Thanks

Ryan Ellson

you. Thank

Operator

Matias come will Securities. Castagnino line question from next the Our of of BCP

Your is open. now line

Matias Castagnino

hear you Can me? Hello.

Operator

Yes.

Matias Castagnino

contracts. question. about view for to that want new my that. want defined. allow Okay. taking know to Thanks existing yet of I and allowing the Don't I ask exploration not ask on about Petro's just your is on remarks contracts not

questions. two Just

contracts granted you in have first still one, your happens from the if is that to new reserves, full of And explore understand the are The and will sense XP those private second that, contracts not to access lot I question I develop them. recent in were right, you a have freely players that the Colombia existing are and past.

of granted years? you say, tell to the me three existing let's were past, can your how five So many contracts in

Gary Guidry

Yes.

I think good for lands said and Tierra in the We've contracts. couple all the us, efforts. the one also Middle Putumayo no but we here three in the is years basin. has is a clearly of We're in where also through short Llanos come exploration of President, Petro regulatory new The answer Colombia. our focused exploration big and the very Gran position. we is have in refocused the through went Magdalena We process. a exploration basins

So have next couple an to lands we lands of on inventory that of currently have years. drill the -- over we

as some -- we're to not success have It's has we the Putumayo, and about as doing. in governments Ecuador. anything Petro said success well. things basin cooperating having that, in regulators the -- Ecuador as found in lands, But said President same and do had the we've what are existing exciting we that some early also the business usual

And so to years. in our your Moqueta, in is, the drilling on over couple question Acordionero. continue next lots enhanced answer focus Costayaco, big the have our short to fields continuing of And inventory of we're we recovery

Gran for Tierra. speaking Just

Matias Castagnino

you. Thank Okay.

Operator

you. Thank

next Rossi of line question of Genuity. Our Canaccord from the Roman comes

now is line open. Your

Roman Rossi

very much. everyone. morning Good you Thank

So them may. couple will I of ask have a if questions. I sequentially, I

The first related marketing the agreement place. you to have one new in is

positive you course, month's have can or a the impact depending of on price So, change. negative next

wanted of about of know in changes? are So type any order to prices you I just if mitigate thinking the to impact these hedging

Ryan Ellson

Yes.

not. I the -- no, think we're on

same M not over we how up a put at you we we're are because protection, variance, in much for place we're ending hedging the structure. price looking -- whether longer current just additional at hedges price -- the But the period or mentioned, think you're on so the really month getting general long-term, M+X I we price. as

And assuming price Brent had flat. we Brent price you we're -- price the the average December. going in we're look in volumes October, production of at October, If to are In get November. average the at in as November,

really just variation. it's So that month one

hedging price be program. expect we have we we capital to make putting prices to stop looking that in but not sure and with program working have we are protection, and just our at we're together production we're capital the that, to to at make to start don't our So but sure -- volatile, looking downward conjunction on so continue

Roman Rossi

campaign. related question Perfect. is And then the second to the exploration

[indiscernible] is far, will the so just -- are the there? results. on next to So, And Ecuador, wanted expecting down adding positive what pending Ecuador. for check The you what quite year? and maybe focus commitment what's be put to And

Gary Guidry

Yes.

Our wells. And of will -- total seismic work, process one in of a is XX it’s of to part XX And commitment those program. process. some the just in those are wells include we're the appraising Ecuador converting

wells And we're our we're plan increase in what additional we're we for we're That four our terms several that doing today. Putumayo Valley, so, firm the an year, comfortable wells Ecuador, in as and through the having. going our process we're December, mentioned, Ecuador of planning And year. wells quite several planning And we'll gone planned could the in with what after are Magdalena where and -- success planning for we've have next in Middle we for prospectivity-wise as with that's disclose as Board. in our with well certainly I plans

Operator

you. Thank

BTG. of Silva Maria Jose from comes question next Our

Your is line now open.

Jose Maria Silva

hear Hello. Can me? you

Operator

Yes.

Gary Guidry

Yes. Crystal clear.

Jose Maria Silva

much. and I very like I would of you go one like by [indiscernible]. that to Thank would couple ask A one. questions to

have let's this the oil start of starts of place and yielding That's were country out to say, already can do number So export there? you that infrastructure start Ecuador, to And you first oil, one. in that seems all we'll the we out When to it once on proper there. start should significant start we expect, coming deliver oil?

Ryan Ellson

Yes.

had the the On have already pipeline. from we production, test already we barrels the those Bocachico, in that

quick So to barrels to very market. get it's very, for us our

of barrels we're right actually Putumayo now. our those As -- Ecuador of you our lot into -- remember, all in the barrels a selling we're Basin,

trucking, very regulatory just familiar the the we're offloading Ecuador. So the with in and processes

far ramp-up, will the up equivalent -- N all. Putumayo. before moving So production in Tena, to at which to sands just we bottleneck is as as -- Basal the Upper mentioned, we're we're isolate be Basal T Sand the Tena And as looking that the the a

Norte be that the be we'll Charapa in of So we'll testing testing November. here and then month

have So And that year. assuming to plan we we And up Gary wells in for well. as four success, with our already increase could positive test ramp things have results, fairly next going quickly. mentioned,

So it year. upcoming next capital for test with really results be is coupled allocation going to the

Jose Maria Silva

-- next of Okay. we level I for should from production you this any Ecuador? preliminary, quite that but know coming is year expect

Ryan Ellson

going results. we're to have think test to the wait I for

Jose Maria Silva

Perfect. Okay.

expect Regarding And limit any limit going in repurchases, call you at the want assets bond holders? any to much those or next would let's you into which is to you mind Do this to said the and of say, quarter tender have, how else continue the year. have you they them -- all bonds repurchase? and there to

Ryan Ellson

Yes, the is very the the over rules. limit not the is that It tripping we creeping work really tender something closely people just bonds. repurchasing with

we not what the not and assist banks well test So entails. -- very counsel work that But bright a to with is on closely that on trip as there's really legal as line that up.

the money the assets towards we've buybacks, well, on as had that as putting share as thus existing repurchases well bond especially balance far. factor. limiting exploration flow trying that we're So the -- of get was the as allocating no limitations to quantum Quantum that. really right there the far And the is free to as results based on NPV cash optimizing extent the and to of our

Jose Maria Silva

Okay. That's perfect.

much you the I'm has been have on production we average. that of XXXX for and budget said Regarding should for you guide exit the have Do on -- already us the year? production, end sure expect production your you and how you quarter-to-date -- for the can

Gary Guidry

be XX,XXX range. barrels The of bringing a We're day in Yes. exit XX,XXX just to to on is production going the wells. process the in

And in take mid-December. you of to so that's plan give And where our a sense XXXX we plan. that in we'll

Jose Maria Silva

And at bit. the little Perfect. the Okay. cannibalizing here I risk call, a of continue will

You a things want moving an do this it the million of then could be impact said surcharge taxes -- you that yet or give, have call, impacts to have that's reluctant know because free to taxes a structure beginning you quantify you next some range of we tax pay? be that? the magnitude XX% million, this I not say, and on have, the to of cash the of kind that still or terms in idea like were of like something $XX like $XX say, an can just subject, on idea could that. it's will to new the how be you the let's to originally that tax one. have for let's and to changed extra much flow But are tax dynamic -- Can you generation an share year of like the

Ryan Ellson

Yes.

giving be And I comfortable range much in think -- passed. that we clarity. either we'll been the And much point. then we numbers Gary out finalized put more have or December, has that at legislation of will a provide mentioned, more would our once it should feel we more once as then

Operator

Thank you.

of Lane from J.H. Garrett line Our of question Fellows next Partners. the comes

open. Your now line is

Garrett Fellows

some how by cash wondering use much said that bonds and had and of you how end provide expiration, if $XXX development year. per I'm around to I repurchases? you million how just the much exploration could development excess of would the purchases, to but excess go clarity if of share to and know of there. cash, much you the equity guys more for bond Hi the

Ryan Ellson

only we it's Yes, year. look at have two we -- months I the think -- left in when

of putting when plan really budget. conjunction really So It together look it's -- at XXXX really end cash, in really will and excess we with our wasn't the targeting by be excess year. the cash the

So I capital think the that it just point. outgain at

XXXX target our like. will and looks than year, more at what our the end then into have probably the we dovetail of So it

Garrett Fellows

you But will than so a others guys will do XX-XX guess come equity? I see bonds more in like how out? playing just terms Or after that Okay. what in of be you

Ryan Ellson

Yes.

QX similar quarter, well. to equity, fairly had and the be we what the QX and bonds between we equity, the would On as balanced bonds that during same and the expect the to is in

Garrett Fellows

Okay. Thank much. very you

Ryan Ellson

Thank you.

Operator

Thank you.

line next Barclays. of the of comes question from [indiscernible] Our

Unidentified Participant

you Hello. me? Can hear

Operator

Yes.

Unidentified Participant

you're Thank taking Good management. my any the Okay. I a planning doing question for if you morning. wanted ask similar question. Thank about to 'XX, you. on and liability

Ryan Ellson

liability I as XXXX's out now, base guess a just market. plan function management But Right the as the conditions. always carefully the monitoring at Yes, continue market currently we're to is well equity. of look repurchasing to is

Unidentified Participant

Okay. Thank you.

Ryan Ellson

welcome. You’re

Operator

from We SERSE. additional Josef have question an of Schachter

Your now line is open.

Josef Schachter

you course, is of on me assuming into the Thanks removes in allowing The for to and any work that like for Do more people there door there. States or of and working see the again to United of up Americans, refinery working Gary, seeing, and Gran side. the government against Venezuela? product for into And another their opening as seems Europe something allowing move sanction signed because and or Tierra Canadians in you again Repsol area be question. agreements, in, Venezuela leadership Colombia moving working Venezuela, do the one U.S. an if this the We're is Colombia shortages. would to you see friendly, the issues Chevron whatever? more now, be political becoming government you're issues -- legal some to opens the basins

Gary Guidry

Yes.

is relationship was we in answer what a The humanitarian think Venezuela that the different. straining refugees Venezuela no quite on help and Colombia we I Colombia and are in system. certainly is the standpoint. the is, operate. that from There few will regions going between short a always monitor

normalize between overall, they if two. think, relations the helpful I So be that can will

we view Ecuador long-term But in that at Colombia continue we a is, and would in fit and the right Tierra, all. would short Venezuela. answer is, business for that happens to in transition, to very Gran be business development we'll that monitor if it my team on. what's of have The terms Colombia, have In skillset the going

Josef Schachter

the for very that. Thank color Thanks you on Okay. extra much.

Operator

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

Gary Guidry

you, quarter progress. I with Thank speaking much. again very and you to would joining on look for us Thank update Kathy. you And the you in We everyone forward today. ongoing to like thank once our next

Operator

today's you for you participation your Thank program, in conference. does may the This Yes. conclude and disconnect. now

Gran Tierra Energy (GTE) 3 Nov 222022 Q3 Earnings call transcript