Earnings call transcript Q1 2023

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Operator

Good morning, ladies and gentlemen, and welcome to Gran Tierra Energy's Results Conference Call for the First Quarter 2023. My name is Shannon 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 institutions. [Operator Instructions] I would like to remind everyone that this conference call is being webcast and recorded today, Wednesday, May 3, 2023, at 11:00 a.m. Time. Eastern

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

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

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

Gary Guidry

Gran is Results Call. Vice Financial with our President Tierra's Rob First Thank President Guidry, Good Gary me Asset Ellson, Will, Chief Management. our you, Executive Shannon. Quarter My today Conference joining morning, Officer. name Executive and and for and Chief President Ryan And of and are XXXX Officer; Vice thanks

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

Meeting following Immediately of General XX be Stockholders. this noon Time, our a.m. Mountain holding at XX Eastern Annual earnings and calls will Time, we

is the be call, I website. During We this found company where meeting, will you the heading. our and to of give on overview can us Tierra invite an instructions dial-in after join Gran

to the turn over call now I'll Ryan.

Ryan Ellson

for flow loaded drilling out to program, XX XX delivering wells. quarter Tierra Gran our we saw plan total front Good development wells XX $XX end Thank achieved development morning everyone. on you, million development the budget funds of delivering strong XXXX by while of of the the Gary.

Gran Given flow fund on $XX $XX slightly expenditures, million. by the the activity million spent during which increased Tierra quarter, capital exceeded

three and the first production flow rates we to in of of of development our goal expect in oil majority the our the months completing benefit year of from with program cash the XXXX. remainder By production the and maximizing higher XXXX, for

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

a average approximately the million During Gran XX.X total Tierra $XX.X of quarter, million for price price purchased share. per an of approximately shares purchase $X.XX

year ratio the net of EBITDA times. with healthy We a debt-to-adjusted also one exited

to value the as company during reduce Gran approximately far million, Gran of Tierra's the million As ongoing commitments its of of in X to of discount face a representing the back XX% buyback notes, senior XXXX face value the $X.X cost X.XX% debt the XXXX the bond Tierra's net was bought quarter, bonds.

The credit quarter company cash of on the $XXX remaining with with facility million debt $XXX completely undrawn. and sheet a million exited net of the balance

one-year XX% averaged And prior XX% now the the Brent $XX per QX, price from from quarter. down During barrel ago.

barrel in discounts the production. the from transportation is differential increased oil to barrel, up in Castilla and per benchmark per prior $XX.XX policy $XX.XX $XX.XX the Acordionero per The year-ago, narrowed Castilla corresponding And for one per from from government $X.XX to barrel $XX.XX XXXX. period barrel in down quarter. the our

approximately down March The differential $X.XX the and and to this production. the is XXXX. corresponding Putumayo barrel, period Vasconia down $X.XX our to year in differential April. is benchmark per that differentials Vasconia $XX.XX. in narrowed of increased the The in continue to is Castilla good for news from is narrow differential current The $X.XX approximately Vasconia to

Oil $XX. respectively. in of continuing and $XX.XX it the averaging encouraging volatile couple in and differentials and days Brent is weeks, $X.XX last $XX $X have to of Vasconia last well a off narrowed to sold of QX, brent has is high a the more price hit for remain couple and of Even Castilla low

volatility new. recent nothing is the So

quarter, and discounts Tierra's from down flow one-year driven X% targets by $XX.XX the year. to on operating The funds and X% XX% date netback on same and total and per transportation was were operating decrease from per for the policy company's are XX,XXX compared XX,XXX X% approximately quarter from day, the second of prior this barrel prior the production quarter the BOE Gran widening company's decreased in brent one over and oil The was is netback year-ago ago XXXX period. up price production changes we down and the track largely to in oil the quarter. our time BOPD

We're Suroriente as It expected mid-XXXX. cash in very of Gran a Block the investment agreement to the will committing announced funded agreements National of be Colombia in Tierra Gran Company to recent Putumayo renegotiated is pleased by in over for period date. this Block Tierra, to with with Suroriente program effective Gran agreement scheduled be flows. Oil Basin, year capital which where million was end our the continue Ecopetrol Ecopetrol, operator from to $XXX three a internal the Tierra's

life appraisal allows recovery add the work continuous programs and and investment to additional The extend agreement life as The fields by enhance for of in value long-term significant drillings provides fields. efficiency years. Suroriente to infrastructure the in well duration economic the existing agreement to an XX to of term opportunity as oil

which to and first from on Rob, the Tierra the got who's now to environmental, happy over call some company's governance value at issued the turn sustainability long-term of that discuss commitments, quarter we're on to our Lastly, website www.grantierra.com/ESG. report I'll highlights found results. company's has delivering be creating report, that Gran can operational XXXX social and our

Rob Will

everyone. Ryan. Good morning, Thanks,

performance producing in development our drilling which campaign In in at quarter, the drilling a with of major is as Acordionero program Tierra been oil of and of Acordionero development with Gran that barrels the XX,XXX the completed development three averaged the XXXX continued January day end Field, have wells highest XX-well level fields, has if of approximately waterflood, the result oil portion are resumed significant to in the XXXX program, quarter its oil XXXX, date our has drilled May during good of which expectations. via a wells were During enhanced of XX per of the rates recovery by a with fields, second a line quarter since XXXX.

water the from injected The XXXX. in XX,XXX polymer a we quarter, Tierra per of a with quarter well injected and during new injection second XX,XXX first approximately polymer of was day, to the barrels startup quarter water injection of barrels achieved day planned injection up with well, quarter, per flood water During pilot record continues of Gran a XXXX. polymer to progress plan follow-up second third expanded for a [ph]

to We flood ultimate are excited about the oil Acordionero's expect early recovery. pilot increase the fields polymer results and

XXXX. saw the to four Two drilled and injector development Costayaco are for quarter. Two campaign expected to producers completed, Costayaco additional one completed part early being of additional injection Our and drilled May second wells two development remain the expected wells XXXX are be as producers currently time water begin plan during XXXX. quarter and during in with injection

were stimulation expected and Costayaco along continue two of additional year. during and injection production both that additional development of to into wells in the grow and expected Two stimulation. wells to are two with are waterflood drilled awaiting optimization in are production the the and the planned production conversions on to and existing In in Moqueta. are grow XXXX, optimize injectors Completion waterflood quarter producing wells throughout through wells Moqueta,

ability The execute all recommence exploration and to efficiently. commitment drilling of these We're our team's excellence is program half capital testament a drilling second with also plans excited their to wells our during their to operational XXXX. to

in Charapa of wells the Block. Block to of Ecuador, Formation in drilling the Hollin one discovery appraise in the the three With four and Chanangue the

which selection Gran in a and Colombia and company to Ecuador. Tierra process between XXXX combined. six to from in to expects mobilize rig, exploration Tierra Ecuador drill completed wells to has Colombia, Gran plans the secured the four drilling

are primarily we'll happy results call to results flood our and to Finally, across I Operator, ongoing beginning to positive any operator answer operations and positive see to we our please continue in ahead. our questions. Suroriente the turn in now see Acordionero the in from will go be and back Acordionero. waterfloods polymer

Operator

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

Our first question of SERSI. Josef comes from with Schachter the line

open. now is line Your

Josef Schachter

and the into go of Would little Gary, the size come And later, what or wells? potential price if first volumes, with XXXX? in of bit the production they Ryan Bocachico the Charapa. terms your in successful questions. of or detail Good I exploration those wells more in 'XX have be three timeline a That's question. Rob. you On the on? you're is of Could XX of morning, X, guys Slide into you what highlight two and Rose presentation,

Gary Guidry

through the answer five XX everything Okay, update pre-drill to But issue yes were mid-year to question million Rose is and that going the range. the on first Bocachico type your the barrel reserve a question to Josef. reserved we're estimates we're doing on

barrel us excited of internally We it's that to estimate. On the we're original Norte, million of and be work estimate in in And that XX by our target that it deters the exploration about prolific a appraisal that was could million from year. pre-drill anything haven't some It unaudited seen quite Charapa McDaniel XX discovery. very this But producer. our range.

Josef Schachter

they impact your with in If of those you successful could volumes are 'XX? wells, QX

Gary Guidry

could. Yes, they

Josef Schachter

the is XX for mind? see reverse do a that you getting in split. date me for you have TSX X one last happening Do approval? Okay, When after

Gary Guidry

in it morning, Yes, early it will, assuming shareholders approve occur this will AGM and week. later our to mid-next whether it

Josef Schachter

me. Thanks Okay, answering very our questions. super. for much for it That's

Operator

Thank you.

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

line is now open. Your

Phil Skolnick

Good thanks. morning. Yes,

should impact the that can next over Suroriente, years how on three million and growth your about Just we the $XXX think -- on profile? you

Ryan Ellson

Yes, a question. good that's I think

excited we're block. that think I about

water drilled just a you we the that XXXX. highest since since drilling well on of blocks rate block. And well without know, wrap up And we had a successful As haven't even injection, the XXXX. enough with

that it's So a as on drilling development very that so And focused year. think a great start be I a we're us, it'll know, at comfortable will first. for really program next field, and drilling for discipline you

lot of done. a facility have We expansions

So get XX,XXX we'll next X,XXX field up the barrel start range. to in the we that drilling day to expect and net year, Gran Tierra to

Phil Skolnick

you. Thank Perfect.

Ryan Ellson

coming Over years. the

Phil Skolnick

Thanks. Great. Okay.

Operator

Thank you.

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

open. now line Your is

Roman Rossi

question. Good my morning, everyone. for Thanks taking

increase the question in I a regarding So G&A. have

you're mentioned to finding [indiscernible]. the was due You costs used to higher increase be that

be can rest more for what and should that year? of clear the So you expect the you on

Ryan Ellson

this breaking little it certainly, side. up was it DDNA? And on with It was bit question a was a to respect

Roman Rossi

Increasing G&A?

Ryan Ellson

G&A. through first cost in quarter. was one-time coming the Yes. some That

trend So we would down expect that year. throughout the to

Roman Rossi

year? should we to something So what we saw expect last similar

Ryan Ellson

just In lower, to the barrel increased Correct. be with volumes. Correct. upper expect basis, it we

Roman Rossi

you Okay, very awesome. Thank much, Ryan.

Ryan Ellson

Thank you.

Operator

you. Thank

Our comes of from Adam the line next Paradigm with Capital. Gill question

Your line is now open.

Adam Gill

gentlemen. morning, Thank Good you.

just you rundown of you and us Can expect exploration. Ecuador year? when the this exploration give a on to of back spud Just results the the timing quick program

Ryan Ellson

in the as soon results it have should we in results be the of the as end year. spud, summer Ecuador, will Yes, continuing and through later

Adam Gill

And going if this exploration to program four just to two be one rig. well

Ryan Ellson

Yes. rig. One

Adam Gill

then that, how last And on many? just one

Ryan Ellson

There go ahead.

Adam Gill

how you blocks going potential exploration many wells zones completion? first ask the was I to did two the on in two just see for

Ryan Ellson

Yes, drilling still in We to Norte. the two for in Chica each the appraisal blocks. and in three We've of more at carbonates. three two we well, But Boca some to wells. those and saw to and take to exploration it's of the have test three going those hopes both yet and drop

Adam Gill

That's my Thank Okay, question. great. you.

Ryan Ellson

you. Thank

Operator

Thank you.

Oriana line Covault Our comes Balanz. with next of question the from

Your line open. now is

Oriana Covault

This question. my taking had of Covault couple Balanz. a for thanks Oriana I is questions. with Hi,

First, into vis-à-vis and the along costs. How operations your the insights kickoff could of and sales operation share is and wise production from coming the coming more general Ecuador pricing expectations? you if in

Gary Guidry

expectations, right costs. target Ecuador development think Yes, on production on I expectations we're our and the for on in

costs just you high, have little well As producing. know, look your bit a always one we

to large wells going fairly two and drill shared more pad have of to off a only We that use facility. we're

a costs prospectivity really strong wells, So performer the infrastructure. and date the overall, we're -- results light expect to come excited continues to oil, as Gary to we [indiscernible] close our drill well additional down the as mentioned, we be to about But our dramatically.

Ecuador. very why to excited the the that's about wells four year of And coming So drill this in second we're half very, we're year.

Oriana Covault

mostly [indiscernible]. for month seeing any you volatility of on type Awesome. wider or and maybe area? the doing hedging entering last although following-up just contract changes slightly in compressing the any price international discounts, recent Are thinking and in like of And that

Gary Guidry

out. low today differentials as know, Brent of bit a XX. now. of of quite very you taken has pricing thinking And mentioned, Yes, has as and high is I of QX which we're volatile in as Like XX, right testing been a

in half volatile remain some the to hedges year. Brent remain second looking at quarter to the of that and expect we So for are placing in we the

Oriana Covault

last one Perfect. And just one.

in being continue we've in that country. about either elsewhere. of could account, for Colombia across some be relinquished you'd terms some taking is be And for you Tierra? in how Just or Or opportunities moving exploration on into along this the in? see for of opportunities type perhaps heard Gran focus looking the licenses Do agenda assets that interested

Gary Guidry

lands, next just continuous and a we some that it's Exxon the process started a for basis, current Magdalena prospective, I that very in year, continuous I of good process those want say able their we're success. in Colombia, years. think the for or have And last the Valley. you other saw It's us, lands blocks. under the those we transfer of process exiting the would the regulations, that's to having relinquish land exploring few non We're probably in commitments to you're acreage

we're happy exploration where position, with today. very we so our sit And

unusual so as on. us been years. underway the programs going in for last Colombia, terms nothing several usual And business that had It's of executing the program, in we've

Oriana Covault

very Perfect. Thank much. you

Gary Guidry

Thank you.

Operator

you. Thank

with Our of JPMorgan. next Alejandra from question the comes line Andrade

is now open. line Your

Alejandra Andrade

in you Thank addition so allocation buybacks. capital the first my buybacks to taking question question. share in My a in morning. good some in quarter, saw some forward. going for related was amount We small Hi, to much bond

Just are and you. priorities wondering how forward how programs? those you kind do envision what two of in going year Thank the the

Gary Guidry

good Yes, question.

issuer under essentially the I out issuer bid, under until maxed bid, normal buyback you shares that think at amount have, the August. allocation, we the of we've be the if that course I we can a can't on normal think look course restrictions renewed which

through strength of on So continued bonds. really, balance the the the sheet focus be will repurchase

Alejandra Andrade

Great, thanks. Thank you.

Operator

you. Thank

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

open. is line Your now

Unidentified Analyst

guys. very thank Good morning, much. Yes, you

barrels update, Xth that yesterday, with Just day. update that In for previous that's indicating April, you're indicating operational your you second running XX,XXX production a the of one today quarter But clarification was now the on please. update, were question, at XX,XXX. around the

understand going from production, out trying So end quarter, well. you going you of because, of those have were presentation, wells more everything what put kind the into in at is the as to and the volumes said,

So understand trying to that difference?

Rob Will

Yes, it's here. Rob

extremely of well averaged production, curve. tend north our the program. this in drilling the flatten on there bit with pleased on and strong of wells at we drilled Acordionero up part the wrapped drilling those of a on and look out. do the really our wells -- you Acordionero largely If we've four the great wells producers was year results of Acordionero and and six program The parts our injectors type off and pool come they spent do they We some were fall reservoir, but the to then new above do

production from we So flush some was those there wells. new

a there we're the so those getting saw time fallings. And some volumes right of you were at flush probably

So it's a bit. off come little

program Costayaco. drilling stimulating Of the Costayaco seeing we're our pleased from rates And we're of in now process the course, wells. extremely and with completing right we're

wells we ESP Thompson, tested, Jeff over to get pumps. stimulated, initially there those So we on as switched

So months another come see those our production we to as over the as well. few boost wells in on production expect next

So pleased this rates our year look of at Acordionero overall, great extremely with programs we're and at both them. seeing Costayaco and drilling all and

a off new we're kind and our overall, over All the tight So see will our production will on. fall But little pleased. joint bounce very off of come wells programs these as curves. year, rates and you bit beating

Gary Guidry

we're in with guidance have comfortable the very out we the market. So that

we results drawing production, their put times been of lot out said, A great. Rob early. have just As that average

informed, daily on barrels. to a a by it lot, X,XXX and fluctuates market the fluctuate couple lot a keep that's basis a to just going So

comfortable But our reality just of very that's average So annual it. guidance. we're with

Unidentified Analyst

been to have kind just So any coming on those heavy put after you production, be production clear, five out? have on that wells now of that Acordionero, flash stabilize

Gary Guidry

was at Acordionero that Yes, they're six definitely say, this four were definitely yes, stabilizing, stabilizing. And I wells, they injectors. were drilled there we would they're producing

well stabilize overall to there's starting were we like, very it's curves, results. yes, about they're now. type pleased an And Now, as and well -- very, as

Rob Will

wells as on still We the in well have Costayaco, as Moqueta well. as to bring

Unidentified Analyst

you. Okay, that's Thank great.

Operator

Thank you.

AG. the comes next with Our of Management [indiscernible] question from line Aquila Asset

Your now is open. line

Unidentified Analyst

for discount cash guideline that down. zero be prices terms are of as the bit, going And the ask, recent committed with you warranty, free given the my gave at the we Brent, you And really just flow, thank Yes, taking to for is went the see, revised XXXX situation as you're and may up like in downward I least prices would there maybe that a question. to chance if a apply because the

that So on just possible. point, color a bit if it's of

Gary Guidry

think to But Brent differentials which Brent average tighter think a to were that the QX, Yes, was XX, little than a went of XX. had again, budget XX. -- first was low we we premature back we go of to our it's XX again, no, bit high we budgeted. had during a quarter

So we're today. XX at

bullish business. know, still and strong. think and it's very years very, on supply the be a half demand we you very volatile second very So We're fundamentals, the

Unidentified Analyst

Okay. much. Thank so you

Gary Guidry

you. Thank

Operator

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

Gary Guidry

for you to I'd today. you, meeting next again everyone Thank all speaking of for on of to with us Karen. and thank to look everyone our stockholders We annual quarter, progress. like forward hope our see ongoing and general update Thank shortly you joining you.

Operator

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

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Gran Tierra Energy (GTE) 3 May 232023 Q1 Earnings call transcript