Earnings call transcript Q4 2022

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Operator

Good morning, ladies and gentlemen, and welcome to Gran Tierra Energy's Conference Call for Fourth Quarter and Year End 2022 results. My name is Andrea and I will 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 securities analysts and institution. 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 Wednesday, would everyone conference that is XX I February XXnd, Time. Eastern

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

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

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

Gary Guidry

and and and Vice welcome fourth me And call. Will, our morning Tierra's today Tierra's Vice Guidry, conference results Officer. Ryan Good year Executive Officer; XXXX name and Ellson, Gran quarter of President is Management. My Gary Asset with Chief President Rob are President Financial Gran to Andrea. and you, Executive end Chief Thank our

press that issued a our end XXXX release and we included results. on detailed fourth Yesterday, quarter information year

XX-K Gran is annual XXXX addition, on been report and In on filed EDGAR available Form website. Tierra's our on has

a we brief for then ahead. and line Rob Ryan will make open will go few the comments, and questions. please Ryan,

Ryan Ellson

Thanks morning Gary. everyone. Good

announce Tierra several achieved Gran company to in that very XXXX. records pleased We are financial

combined successful strong by was and XXXX our Our exploration management, driven in field and oil flooding with excellent performance, drilling, performance development disciplined cost prices. water programs,

the operations, cash income, ratio history of resulted well production funds in the net replacement company's XX%, flow. reserves during flow highest achievements Our figure the growth year year-over-year free from annual many above and XXX%, and for strong in

the several discoveries geological of key After XXXX, reduced XXXX, company confidence provide our activity and during understanding exploration in basins. which during made the XXXX exploration

XP, reserves able performance, results waterflooding Through XP, which Rob programs, drilling, fuel increase our from successful categories, to and and will in development we're XP describe. exploration and

as at was During the $X.XX in XXXX, income in our earnings our net basic record share both basis $XXX the per and coming diluted per share. highest a result on million, on

was EBITDA per million $X.XX basis. basic on share a adjusted Our was $XXX and

were Funds $XXX cash of for $XXX the free basis. $X on flow per were operations Funds operations year share resulting of also from which million, for was million, in company. both flow basic from a flow the records

and which Gran year-on-year. development budget reserves year growth spend was totaled production and for profitable on Tierra's between resulted $XXX activities, capital exploration million the in balanced and

million reduce reduction Tierra resulting Gran return the a to its $XXX company $XXX during capital finished with adjusted The X.X XX% a achieved XXXX, continued The XXXX. of of EBITDA in company and to debt million also commitment times. and cash average net employed net year debt in In $XX of in on in million debt debt.

Tierra's Gran was the for barrel strong per year, XXXX. operating $XX.XX from up $XX.XX in netback of XX%

mention Gran hand I Beyond and environment it want I where our Rob, significant Compliance initiatives, benefits over communities. in opportunities some to Tierra Before of identifies to

required legally stewardship. track environmental, what and aspects all in protect to do. record to proud social right We voluntarily our because very the and environment company's to the is benefits strive We're go social, of of beyond governance provide it's the thing

in land In Putumayo Colombia. of the indigenous XXXX, across investigation Gran the X,XXX communities anti-personnel Tierra out approximately four in several demining situated Corporation, an in within partnership municipalities World of Women's with carried hectares Basin

and human and held Colombia company's the Guiding sessions employees, of suppliers. and rights XXX Rights, include almost in for in were part training Principles XX Nations Ecuador Human United As XXXX, the contractors, commitment, Business which

roughly in meet employment Tierra requirements opportunities opportunities XXXX, also Colombia. has Since created in XX,XXX development opportunities, Gran in local Gran created or Tierra approximately government XXXX. which strives labor Ecuador labor employment. exceed for XXX The and maximize company to local

Tierra further projects meet national locally In Ecuadorian communities the communities peace-building and also their themselves governments local Ecuador and XXXX, the needs. efforts. to and committed in to Colombia by local Colombian, million with over their in $X.X Gran identified has the work to company invested

agriculture The entrepreneurship to programs, projects include support, homes, the improvements community improvement production strengthening schools, infrastructure of and capabilities, community and centers.

quarter These available just XXXX take will highly and we year. website on some are at that of which our the initiatives our XXXX, of completed the be Report, you look in recommend Sustainability I in second this a

the of I'll the to some highlights over Rob of now Will to current call turn our discuss operations.

Rob Will

press reserves. a regarding yesterday's release, Thanks cover few as operational morning our Ryan. highlights briefly press as everyone. well from recent release Good I'll year-end XXXX

building Basin the of are in Down drilling with Putumayo commenced successful Block, Chaza in to the first XXXX our we off XXXX. Colombia well was first year Moqueta in campaign a XXXX. drilled have off which since late Operationally, the the the drilled we field being in XXXX, and start well

the in on pump, January reached day campaign its plan We to has this on Producing per on Moqueta well planned XXXX. jet well XXXX-XXXX depth total Moqueta-XX, was This completed been QX well unstimulated. XXX of has and averaged on oil XXth, the of development Xst. February year. drilling stimulate well the put the during second production barrels

is was its Moqueta-XX, end the February The reach total on spud Moqueta before to Xth, planned and third expected development depth February. of well, XXXX

to the over XX, to and company more two four Moqueta-XX five in next drill and the one months. complete to wells addition development to In Moqueta plans

expected on was Chaza planned well, XXXX and its the XXXX development Reservoir on was the injection in drilling down-dip Costayaco February well. the spud reached six-well planned this in total depth program Block, first water January quality XXth, as Also, Xnd.

to planned the XXXX. completed the XXXX drilled Costayaco depth. or was on its program of production be drilling are XXXX late and February Xth, third All reached second second expected total wells -- well on quarter injection by put end spud in before quarter and The and

in since quarter second of day XXXX, of the In despite south the XXXX. monthly average drilled achieved per production Suroriente fact that first well the Block's was a second Putumayo the marking XXXX. of in Suroriente This growth the January of barrels quarter X,XXX we've not the highest approximately since oil the Basin, averaged production

Magdalena Up the January well, spud well Valley planned to Basin depth was XXXX January reached Acordionero-XXX on in Middle Colombia, development total the XX XXth, of its first Acordionero's on XXXX drilling XX program, XXth. the and

logs production indicate XXXX. that this the of in Well complete February plans reservoir came the expected. The pay company on zone end and to put as well before

reached a was its planned on and The injector depth. second total February well, Xth has spud

The on third XXth. well spud February was

planned on by quarter injection production this All program and are in placed drilled, Acordionero the development completed, the to or of second wells XXXX. been year's have expected end

to on the of to XXXX, during flow through strengthen new continue share while cash to buybacks. and plan new exploration capital shareholders discoveries appraisal to all and balance also return focus we sheet Finally, free drilling potential generating our

to As increased year-end before XXXX compared by NPVXX XX% the tax, XP year-end. for oil company reserves, achieved our year-end which growth XXXX significant its XXXX in

our compared in As NPVXX to the These achieved growth and significant before year-on-year. company's XP well, oil driven we successful increased a increases XXXX development by by prices. in year-end were exploration XX% strong recovery and tax, which programs

XP The during XX additions million of of XX reserve company the and achieve during key excellent with replacement ratios follows. XXX% After XXX% XX XP XP ratios. additions million company million XP are discoveries additions BOE; with exploration reduced several exploration XP reserve which the as XXX% XXXX, XP of made reserve BOE; XXXX, helped BOE. XXXX reserve activity with

exploration were driven and reserve large material drilling with program, of The XXXX measure flooding a XP which Material XP results several discoveries. in additions company's additions Acordionero by water several to at success reserve were addition XP and largely Costayaco made to development success independent discoveries. due the and exploration the

By on up able share for per for of operating XP, in Gran XXXX. costs, a well and completing achieve depth $X.XX reductions from XX% from up buybacks, before net and to values Tierra combination continuing costs, asset per XXXX share maintaining tax XX% capital reductions to of in was of XP, focus $X.XX combination low and

XXXX production With for Tierra's significant stakeholder we per be values Gran We gas Gran our our oil asset well-positioned full-cycle to in value creation and company, multiple exploration, focused to fronts during Tierra believe success is demonstrates the exceptional all growth our offer in on ability share believe and development, long-term on value. stakeholders. net a XXXX,

back will and be to I questions. go the please happy Operator, ahead. the call operator, will Gary, to now Ryan, and take turn I

Operator

for Thank you. Ladies analysts. [Operator now session conduct securities Instructions] and gentlemen, question-and-answer a we will

first Our Capital. Adam Gill from with Please Paradigm question comes go ahead.

Adam Gill

Good morning. me. for Two questions

believe We've hit forward? you've operating costs First workover you plateau off, costs. That lower drivers power And on increased going given could and activity. seen what escalation OpEx? do said, on OpEx a over XXXX rising

Ryan Ellson

Adam. thanks Yes,

basis I a a think will we have on costs think compared We be our to operating plateau. gross similar in XXXX hit XXXX.

so basis, higher, be we'll those unit see costs down. a production Our per come will on

Adam Gill

And on that asset look Suroriente on just there was question upfront expiring could what second XXXX, commitments the precedence this in the the And renewal? is ensure to any mid-year great. portfolio? Okay, and the contract contract stays like

Gary Guidry

Yes, country for are to trying in have that multiple are the our renewal. and there We expiry. precedents contract do Ecopetrol renewal on contract in discussions of in achieve clauses with the we before

Adam Gill

when timing on Any could that thoughts of be completed?

Gary Guidry

benefits Ecopetrol -- we both expiry. see just real of working the before continuing programs no last it's started of over as mutual companies couple and the we've No, because that can with years. We're diligently as

Adam Gill

Okay, gentlemen. great. you, Thank

Gary Guidry

Thank you.

Operator

you. Thank

Oriana ahead. with Our next comes Balanz. Please from go Covault question

Oriana Covault

to if I that Hi, Covault go with good be had would it's morning. Balanz. okay This is Oriana questions, great. one-by-one, three

the to remained Castilla and fourth I Vasconia they at pricing regards discounts, quarter. that levels First, big with the through noticed

And what So, in And during how the so wider including -- you are year? are guidance? what far you XXXX observing the this discounts? driving your XXXX just wondering is

Gary Guidry

that. Thanks. take And Yes. I'll

And bit Vasconia it's driver a end as January. lack and last out the just Castilla, at of February. heavy to demand, little widen oil especially starting a and really into main of tighten It's in to year with pointed On they China. is started continued the the

And now. right see have we differentials with we reopening, right and those narrow started what to budgeted around I think China it's

QX to We QX, QX, into what wide be and expect in then and we narrow And QX. that's really forecasted. them

Oriana Covault

following of in in Got may risk you. certain -- business. in a introduction new the your adverse the factor have it. XX-K impact the that noticed I And acquisitions Thank regarding

make could just into you're more and jurisdictions if transactions Tierra? new this? Gran Ecuador would So, if on further type you for sense aside what looking elaborate wondering And of precisely, from

Ryan Ellson

just that's factor. think I Yes, risk a

part optimize of us, And always -- job companies think I their portfolio. our is think most to do have for the that E&P disclosure. we're within I

either So, optimize. sell We're new to we are happy always assets in our are to assets portfolio. or portfolio acquire looking very that

of could it outside or again, sellers. within be either that So, will give Colombia Colombia, or buyers

Oriana Covault

cash And the one quarter $XXX just came bit million position that report. the ending you with a had that final We Perfect. third guided noted shy one. of

on So, if you could share any this? additional color

Ryan Ellson

Brent that. we quite but bit came price drivers the One, on forecasted, in a than originally two also Yes, differentials. lower

we had -- to if average It the than -- wider those way historical widened it one So, much forecasted. was average were at point. Vasconia, and at -- is much five-year all you up look both $X about $XX the

to And $X widened way $XX, Castilla, is up $X five-year to and the all $XX. average the closer to it

quarter. working capital from So, that really is really movements. us hurt rest explained the And in just the

Oriana Covault

would be Perfect. That end. Thank from my you.

Ryan Ellson

you. Thank

Operator

question Energy Please Our from next Schachter with Schacter ahead. Research. Josef comes go

Josef Schachter

Ryan year. Rob. this made Thank questions. morning you Gary, you all very Congratulations and much. on A Good few the progress

$XXX on million the XXXX? flow, target If it The XX see that million where first have? $XXX Is Brent to to plus level XX million on you'll X:X cash or you December sheet, you $XXX the do $XX in XXXX, have you to Is you number going be debt of debt a free the will want want for one the like? forward? average per Ryan. you sheet how million with You're terms we have a you'd you to so, in down EBITDA. from XXX XX, that go Where of the balance on below balance target generate see debt there see there do to

via point, in have down And not at of amount you should do forward? want debt after that all? and to get trying money that's buybacks, be Or to increase much growth that left this will exploration keep debt more et on zero head you knocking be by to stock at and going over my development, say or debt the in how cetera? that to Just

Ryan Ellson

Yes, it's a good question.

debt-to-EBITDA of X.X net we're one-times to think really with comfortable our comfort the times is In range. one-times. I

capital between debt, XXX be be we're And we at I the -- we right company target think currently. structure our is size look our now XXX. that would gross right when our about XXX for and will a think of

Josef Schachter

Okay.

Or think, social star nine, star, that it's Next is two, have, question, these double releases reasons. one-star, issues, you And things your -- government so due in government the restrictions, to you there. see suspended the there? on a single in exploration and eight, about in you can document from once any eight get changes that put use you you page this says four, And I security for with licensing blocks. talked do the exploration which settle XXXX? down Do you extensions future to or keep properties is six,

Gary Guidry

Yes, the and the continuous answer ones suspended we're short we're government it's and communities, ongoing with I is with basis, are think -- that the issues communities. are with a process. on that to working The an

top you We've not forward. can projects. any going But the our some of priorities we are given assure end on exploration it's But I that in up our priority really there relinquish. of may top none that

years. want we over three so, to we're -- answer think the and short do, that next achieve doing that everything I to And it's one we'll the is

Josef Schachter

Okay.

Lastly, the see and the a Colombia and and have been in Gary shareholder as a stocks fan valuations. lot in of company to as Colombia you Ecuador, somebody who's again, opportunity of discount the a a

And Street highlighted your possible. money? doing currently as barrel about the to Bay Street Is on waking ignored? Wall colleagues And Ryan you and interest and there is buying up value discount NAV, as in is in being selling and the the mentioned, substantial that bid the then is or some selling issuer with and potentially cheaper spending than assets everybody underlying a presentation

Gary Guidry

If in how we we're think, Ryan that sheet. again, we our a develop, we accordingly Yes, adjust levels. the will of I we'll balance looking on discoveries mentioned short debt terms answer, long-term continuous the have value. create is at see basis,

a at seen non-core looking our world. our the many on and are divest valuations stock also create We've we of the portfolio, the assets, we believe, We regardless value other a around to basins of company all in can companies large which size price. cases starting lot the of

years, look five We being into other and long-term other the we're as assets next five new current at the direct that long-term, this will on both we next And diversify in efforts weeks. in assets assets. it business our we for the basins, not our

And hit a I good you think point.

are looking partners portfolio we'll we expand to interest. really we to like at create bring our believe and opportunities other doing in things we're and just we portfolio. -- in We today, our dilute at that value, But can look also that really have we're to everything that we and looking

Josef Schachter

questions Okay. I'll and rooting in much be Thanks very more much. very taking breakthroughs my Thanks for for XXXX.

Gary Guidry

Thank you.

Operator

Thank you.

go Our next question comes from Alexandra Symeonidi from William Blair. ahead. Please

Alexandra Symeonidi

questions just you thank Most for have of one. Hi, my been answered. I have taking my question.

tax you estimated production estimate the and your If discounts. for prices have for oil and total your in given guidance XXXX,

non-deductibility calculation, that that that surcharge tax the and estimate? royalties. the include So, of would you made Have

Ryan Ellson

$XXX tax what estimate paid tax to million. we'd Yes, of off million again Brent based and But and differentials our on pricing expect current $XX be used. $XXX to

Alexandra Symeonidi

includes the non-deductibility--? royalties? what the mean this to And for royalties, several pay you or I need

Ryan Ellson

two which XXXX, to for bill tax will installments current be XXXX. our that in Yes, paid in

Operator

you. Thank

ahead. Our Capital. from with go comes Philip Please next question Eight Skolnick

Philip Skolnick

Thanks. Good morning.

to back going Suroriente. Just

the you adds be contract think production CapEx If to about with potential to reserve we target? changes how would get to do And budget, renewal, year's that? any this were there respect maybe also, the

Gary Guidry

of Yes, expand the the lot years. answer, I plans would waterflood. a is last think done Suroriente the We've over few Phil, to be work for our

be a we But would to there expand three-year the the in program, the of some of waterflood block. terms to look increase would the the drilling more In development some at capital minor plan adjustments. type

effort reserves. over capital program change major see wouldn't on year. three would a we lot But the increasing focus next in of this years, you So, a the

forward. that contract reserve in for base with to mutually going premature what are a put at waiting be want together. signed. would We we we're to trying Ecopetrol don't and be the change actually in look But our taking And program working to

Philip Skolnick

Got Understood. it.

still usual. just the said Is finally, the as the I Just recent been that it's know past, process, you've business past, basically permitting case? in that environmental

Gary Guidry

terms been about It say And progress, discoveries blockades and think, in other permitting environmental on And interruptions. of -- our and in Colombia and Ecuador. we've is quite we've some We're But with to diligently the it's in as studies, working communities usual has. Ecuador. in business excited that. seen way very we I

As doing what mentioned, in expand Rob see to the opportunity well. there Ecuador we're real border some we across as

Philip Skolnick

Great. Thank you.

Operator

you. Thank

from Our RBC. Luke with comes Davis next question go Please ahead.

Luke Davis

Thanks. Good morning.

You guys of year. pile on have [ph] this wells coming

year and the of Just wondering expected And little have volumes any that maybe expect expected in contribution if quarterly the can cadence to where are any you just exit bit speak if program? the from included a wondering production to of also, exploration the at? wells you you

Ryan Ellson

Thanks -- of doing first mentioned, a Luke. half Yes, the drilling we're Rob lot year. in the development the cadence I think as of

in brought into will those So, QX be on and QX.

the up and around extend we or a XX,XXX so. So, barrels steady for the year expect ramp year

Luke Davis

anything it. upside? is from And that Got or those wells exploration just potential

Ryan Ellson

upside. Potential

Luke Davis

Yes.

only thing sort into Okay. how cash that was an of sweeping free other target you're to Is be flow of thinking you're buybacks, portion to looking buybacks? hit about about that thinking have that a going just that? that how The currently? about wondering you or I is aggregate you are Do you're

Ryan Ellson

approval X.X% Yes, we X.X%, our around we year, to last bought and XX%. back currently have up stock of

then at to So, our discount renew. a like look such out to to we max definitely especially we NCIB NAV, when substantial traded and the

Luke Davis

Got it. it Thanks. for That’s me.

Ryan Ellson

Awesome. Luke. Thanks

Operator

Thank you.

Juan Our with ahead. next question Cruz go Morgan Stanley. comes Please from

Juan Cruz

the clarify quarter Hi, forward. XXXX debt and you bonds. the bought about to the indicated I back you had for were going morning worth about levels third call, quickly, you thanks $XX market have talking everybody call. just of the that wanted to good million just guys on And

outstanding. It's are my still understanding that those

yet, be on that you great. them reason to your considering wanted can see any that, targets? there's not would for If canceled if being Just comment

Ryan Ellson

as only cancel inclusion. ourselves. the hold those Yes, was want there impacts to adverse we And why we bonds reason them we far no sure is make didn't as that index

and for treatment bonds accounting million have those is $XXX $XXX reality million, really and the used we holding assigned is economic the we're to from So, inclusion. that debt index our bonds,

Juan Cruz

I understand.

there's from no perspective, back your market? intention Okay. But those reselling of bonds into the

Ryan Ellson

There is No. not. No.

Juan Cruz

and remain purposes? in that in treasury index They're for treasury would inclusion

Ryan Ellson

Correct.

Juan Cruz

you. Okay. Thank

Ryan Ellson

don't enough, anymore anything want They're liquid we already do so to at to average.

Operator

you. Thank

comes Rossi Genuity. with Our next ahead. Canaccord from question Please Roman go

Roman Rossi

question. much Thank very taking for my you

a Just couple.

limit a if happened check The just first one you buyback able one? new wanted regarding initiate Are the the I to program. is the what reached you program? to of

year, cash one I the around to last if of wanted just you mentioned is, Thank And that's second you $XXX change? the check have million. guidance you. a wanted balance to

Ryan Ellson

hasn't Yes, we year. can always the which cash afterwards, million a maximum, the which at the on to cash we we to And a up once we look we $XX million And target balance, fulfill be that renew -- good would changed. then program once for buy balance. renewing in would $XXX

Roman Rossi

Okay, very perfect. Thank you much.

Ryan Ellson

Thank you.

Operator

Thank you.

comes Please question from Asset next Management. go Marathon Our Dechiario ahead. Chris with

Chris Dechiario

hi. Yes, for the Thanks call.

current on know sort It's I people going outlook up. a wondering, is in of exploration potential view hard Just I mean, is various tell there's from of forward? Colombia. restrictions what end your going or it's where talk lot been to on to

your thoughts how looking outside does on you acquiring assets that plans? But affecting that maybe Give affect your mean, Colombia? that? thoughts your of are Is that. I And on at

Gary Guidry

next have to of us great five of we exploration front the we in plenty portfolio Yes, years. five lands, a have for work of and

some very have also well. lands in as exciting We Ecuador

plan been But there Colombia what we in some doing announcements realize in in on as forward we that. exploration, We Colombia. our have about get no in lands. impact new we're terms go exploration five-year it's no So, of

the at question I looking are basins. your we some answer other mentioned Ecuador, to is,

at the what but portfolio, in a opportunities only believe we have And and not risk. our are we East, criteria globally. looking that in in some Africa, We can Middle we we invest where mitigate expand very strict diversify value

very we're basins. other in And our opportunities is at so, other exploration the looking but answer we're in to your Colombia, also question happy with

Chris Dechiario

Great. Thanks.

Operator

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

Gary Guidry

with you I -- you, Andrea. forward on look everyone would like the Thank progress. us We again Thank you. to joining process you. next thank speaking our quarter you update today. over ongoing and for to Thank

Gran Tierra Energy (GTE) 22 Feb 232022 Q4 Earnings call transcript