GTE - Earnings call 2 2023 | Gran Tierra Energy Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to Gran Tierra Energy's Results Conference Call for the Second Quarter 2023. My name is Shannon, 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, Wednesday, August 2, 2023, at 11:00 a.m. Eastern Time. Today's discussion may include certain forward-looking statement information as well as certain non-GAAP financial measures. Please refer to the earnings and operational update press release we issued yesterday for important disclaimers with regard to this information and reconciliations of any non-GAAP measures discussed on today's call. Any production volumes are based on working interest sales before royalties.

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

Gary Guidry

our Officer; press today operator. detailed make both you, quarter that thank Guidry, results now included President update, Ryan call. conference then and turn the X on August second of and line XXXX information which Tuesday, and issued over open Executive are is quarter President joining Ryan. brief questions. I'll website. Vice few releases Gary we will XXXX Xst, me our Asset and of for and Rob Chief midyear Thank you will Ryan morning, and and Chief the our to Ellson, available Financial XXXX, reserves Management. On Executive our we Vice and about My comments, are our Rob Good a second Gran with on XXXX name President call Tierra's results, Will, Officer; for

Ryan Ellson

Good Gary. everyone. morning, Thanks,

$XX EBITDA negatively quarter, in of expectations. Gran loss foreign dollar. the the drilling flow Tierra first which strength achieved compared versus another in in our XXXX, of completes the U.S. million same in $XX of impacted quarter to with million a producing caused flow, broadly Tierra by million prior which this exchange oil delivering in were as adjusted $XX the capital by the year. Adjusted million funds $XX been quarter funds peso the first which have Both Colombian and quarter. during the was was both million $XX the half were realized During of our campaign line EBITDA expenditures, in of exceeding or development wells development while fields, XX Gran X major at incurring by rates strong

the development benefiting for the the we producing production complete, expenditures increased be year, while campaign capital to new lower expect of from wells. our now With half second the from

of the on ahead, entering to in of Looking are where XXXX, fourth Ecuador drill exciting we're successful up quarter wells exploration growth XXXX exploration in building an gearing our campaign. we phase

June exit of the cash of in XX, balance forecasted free $XX million, cash. XXXX, a a debt XXXX, and XXXX of of $XXX As over net the had company with million of expect second with to flow we cash half million $XXX

Looking to pricing.

barrel, prior quarter. The prior the per X-year which quarter, X% ago, company's from XXXX. from throughout to narrowed differentials from the Castilla transportation quality per have Vasconia down discount and During barrel, continued Brent down to was price $XX.XX per barrel in oil narrow $XX.XX $XX.XX down averaged and XX% the oil quarter. The and the

$X.XX period. last operating by decrease barrel narrowed down and During quarter. from differentials largely the and company's to quarter. ago, average per quarter, in July year over for over higher average the XX% Castilla down differentials price down barrel. Gran $XX.XX drop from approximately up ago, quarter, the the day, Tierra's the Vasconia differential was driven production to X-year was per the The to with the down we down period. In time down the same the per quarter The differential per XX,XXX. The the has of Castilla company's per been prior oil X% operating netback to XXXX increase the prior from was barrels barrel, second continued see quarter per differential the prior netback $X.XX $X.XX XX% compared differential from second $X.XX XX,XXX and XXXX, to X-year per barrel from narrowed while have time second X% in narrowing production an Vasconia $X.XX barrel today, over per barrel, to barrel $XX.XX the oil in

and narrow pleased of strong barrel, the production of Brent $XX year. We're the of the above behind very half current conservation Basin extending the project. the price per to invest oil the base, With we capital plan Putumayo again majority to about second we're protection support Colombia announce to in also expenditures our excited in differentials Andean-Amazon and the the rainforest us, NaturAmazonas of by

to including look the During initial the has Tierra's forward $XX results planting and first X produced NGO and Conservation with to local Gran partnership made already and project, second from project. I'll Rob benefited call of excited to NaturAmazonas discuss our and over already of the impactful land the our over restoration to of positive million X.X XX,XXX reserve million of communities, years XXXX International are trees. We the upon highlights now investment the operational our and the environment reforestation and build update mid-year hectares continued results. of quarter with impacts we've turn over

Robert Will

Good morning, everyone.

barrels oil day. of XXXX, second production XX,XXX approximately During per Acordionero's quarter averaged

drilling the performance and management XXXX scheme. of strong recovery enhanced program, prudent due successful ongoing quarter Another the to waterflood oil the

As Ryan had development its completed indicated, the company XXXX has campaign.

company continuation. website. water success company reserves and the of update on Field, release of are testament and campaign northern secure to are were a invite particular opportunities drilled development to regions in half the injectors. and Costayaco XX was relationships you production the pleased production, to the completed now are X company wells, its at of Tierra's are X the the the producers on Suroriente that XXXX, multiple drilled the read we At Chaza Acordionero, reserves in-country license update operational note, which is excess positive and total The wells. A well of entirety to of announced unswept Gran to X results first the the drilled and Costayaco, Moqueta, complete, campaign our drilled, water We have allowed the provide its well reserves on the update. Costayaco-XX press well our Block, drilled in a midyear the X the X of of has XXXX drilling has resulted a target are Tierra is oil. With wells wells. Gran which of During consists X our which injection. In XX drilling most in identification additional

our basis XXXX basis. Despite XP used in first Report decrease a the Brent McDaniel XP evaluation, year-end As BOE Gran XXXX, XP Report the BOE allowed XP the low for basis. In combination ratios has million of XXX of achieve reserves, million XXX% X in on replacement XP XXX% XXXX, of and us and BOE operating to on company's costs of our the XP tax. focus XX maintaining months XX, XXXX, or a XP now XP, the in equivalent, basis, in reserves successful BOE, midyear which a values contract our to of campaign, first before XX buyback achieve the allowed Tierra on XXX million BOE the of on X.X XP development to XX to on Gran years relative company continuation, of XX the million a Reserves year-end BOE Suroriente net of Reserves Tierra on and reserve XXX% barrels on program of history. the McDaniel asset million the million June basis, share and a highest oil basis, drilling a XXXX a added forecast relative price increases

production $X.XX up NAV BOE Our with developing our $XX.XX excluding on reserve results is midyear be the is share, achieved per development to are XP, back exploration to before to asset ahead. and for for XP operator, XP. These came to we in and our as $X.XX a to and operate Tierra's value share, now Costs future Gran call the before ability which changes the $X.XX value and these bit. I'll refining now XX%. the at stakeholders, we via a tax XP now per company, go tax please $XX.XX to offers in questions. a costs, answer up drill Operator, net success per associated XP and reserves, X%, for any will happy full-cycle testament and basis turn have

Operator

from Blair United Our Alexandra William & of with the Symeonidi question comes Instructions] [Operator Company line Kingdom. first

Alexandra Symeonidi

quarter, if half taxes higher second and guess the of This taxes 'XX. this some is my X, guidance the fiscal I'm this first. the the go provide have for may, I seeing cash by please I tax is one of year? payment Can ask ahead last I'll for because I for one. you

Ryan Ellson

question really higher to decrease... debt. net it's debt Yes, The

Alexandra Symeonidi

For the taxes, sorry.

my So question was about Yes. taxes.

So half? guidance second taxes for for the cash

Ryan Ellson

the we that revenue. tax the following Colombian about just prepayment only half really are taxes. up that tax, year which withholding of in works a The the that's withholding X% the And for reason the paid increased tax, and Yes. to second government of -- has

Alexandra Symeonidi

half, second Very about have clear. Do you to converge XX.XX%, Perfect. higher guidance. bit running expenses above you we're at operating half the saying been second in expect production a the because the Okay. Then right?

Ryan Ellson

Yes.

with operating the look in to per XX,XXX year, in trend the barrel QX. you right throughout XXX with quarter, expected around the at average the our now. for We -- We're it down cost was just

will the increases, strengthen cost but expect than that unit are peso then the we -- and with bit the forecasted did And per we So higher a we we little was -- that help. to just as production originally, our decrease.

Alexandra Symeonidi

And about last Great. my CapEx. question Okay. is

has expect campaign do this year, year? guidance CapEx of end that given So you for come the the the lower finished drilling to the for at

Ryan Ellson

Yes.

Our was XXX the for year. XXX to original guidance

our that to we release, XXX. think in lowered I last XXX to

range. the narrowed we So

range. end expect do lower we So that at the the of

Alexandra Symeonidi

America. of line comes from question Milne Bank with of next Our the Anne

Anne Milne

results. in on have. the that have questions currently place. you hedges X I noticed Congratulations not I is One any do

you at to the under some in the just I think -- and hedges? And was to you has little mitigate what can that I consider answer, And hinted the degree answer about -- affected cost or what wonder what do I that is you it? How a anything question second, conditions which reinstating there your basis? bit would last guess, your So stronger that peso. prices

Gary Guidry

Yes.

looking our over at On We're that of the process. unhedged go correct, you're moment. period. process are just we at the through hedging, of X-year all And a starting annual we an assets

we XXXX let depending peso. capital and our make Ryan outlooks those but So we'll what evaluate the the capital on answer the allocate question depending third for on here, that the And and for the also program, what fourth on I'll are. decisions quarter in

Ryan Ellson

obviously around X,XXX. The up the to the started think, peso Yes. year, way X,XXX all I ran

we're around back down X,XXX. to Now

little has a cost pressure it put of So on. bit

done our X,XXX. haven't budget We around X,XXX. done We've at

it But XX% Colombia. what especially So budgeted. still than our pesos. Inflation in is had little we bit it's significantly are came of a impact negative not operating has a costs in higher

offsetting So pressures. the of some that's inflationary

have material it results. our a impact So won't on

-- in you'll large, that our realized in really quarter, June, results. gain did and our taxes. taxes was peso. we because and of April And in quarter, that's change why our the and both a just the This see that booked XXXX in payment predominantly the of We payment second was

make did payment we it because this quarter. that So to true was realize gain

Operator

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

Roman Rossi

on Excellent the reserve side. additions

So couple, I go have will a I by one. one

if are The that it, decrease was renew to you expecting if the first to order just the mentioned was hold expecting NCIB I cash to ratio? you one, are in leverage or wondering, you completed.

Ryan Ellson

sometime the it. but on it question, would then we did we NCIB, that we we it. this did of flexibility renew, On to whether we repurchase Last renew have month. shares not. can renew of look Even And our and renew lots do purchase we it to back or would at shares, year, look on XX% do we we

Roman Rossi

that guidance. Awesome. And before, second midpoint in the to year the $XX But half quarter. exploration we of you spend to need CapEx only around reach the million had to during fourth mentioned question campaign like will begin Okay. adding the then you

should light in a third the higher quarter and CapEx CapEx in expect So we fourth?

Ryan Ellson

XXXX as development and campaign pads exploration Yes, well as by be development will ready exploration driven the the Correct. again for campaign. -- building wells nominally QX

Roman Rossi

that Castilla Perfect. differentials. significantly. is regarding We've And narrowed last the question they seen have the and Vasconia

you are half of year? what the for expecting So second the

Ryan Ellson

Yes.

higher we is that I currently have. what they than we number the think budgeted were forecasting

-- think to $X but think I close I Castilla today.

We're But for So it's half. the than and Vasconia below is that's around the now. a $X forecasting and that market bit right now $X.XX going around for quite higher second Castilla $X. for

Roman Rossi

Great. Okay.

Operator

of line Research. Josef Our with Schachter next Energy question Schachter the from comes

Josef Schachter

questions. X

The first one for Ryan.

million. that debt mentioned was You $XXX net

to by up so expected $XXX year-end be you cash are at million June You $XX from million, XX. where

sheet X.XX% do bonds? back also, need see really the senior You've to use the you $XXX Or in half, buying for purposes Or other want that might cash strong that at XX, money on notes see XX. Do buying first million balance you did Feb have for? you are in more year-end? of a to using there find to that the some

Ryan Ellson

a it's Yes, question. good

vary million $XX balance it's that maintain think quarter we by million, I will to and of -- a to depending target $XXX activity. cash on

So with $XXX to we're the balance. million comfortable cash $XX million

excess half, cash So up deploy cash and we called could in -- a active share second bond be XXXX repurchase more what's the a of would that to program. repurchases, where combination the or gear [indiscernible] the to look just at for

Josef Schachter

see net you you do you Where want debt, and can number debt then XXXX? there. let's zone at your going Where have to the $XX given you're in want an Okay. targeted production say, do in and, number, it you you XXX, that number comfort do see and to leave on happy see the levels forward Brent

Ryan Ellson

number. we debt we production a Yes. $XXX like around think a that's that's of base, the our down we'd And gross $XXX think to and $XXX manageable million. get net especially I capital low our very reasonable million assets, our with debt requirements to think to our million number,

Josef Schachter

In with world. looking there into been you you on adding do other places presentations, diversifying stool maybe leg to or Super, yes. agree business? MENA I for A mentioned you the the that? around question of at see much another that Okay. the And Gary. past maybe that. XXXX were progress Has

Gary Guidry

Yes. is The answer yes.

into acquisitions. value-add will diversifying it's continuous and continue at a And XXXX. looking continue We process

process many in your of a looking are we general. continue and our I So that to transactions add. We're There transactions of you answer not value. are value are is for North there the lots think at could we outside half add will that see things -- the out and our But trading question see can that of at sitting globally. happening America PDP, Canada we of --

Josef Schachter

area as well? or And are MENA main -- other the is there areas

Gary Guidry

but diversifying beyond always targets countries that look Yes. We we're that the the in in the definitely Ecuador, in, countries MENA. basins those and for Colombia, is we're

Josef Schachter

Okay.

So for Gary, said just you QX. luck and to clarify good before. what

the seeing Looking forward stronger results given the prices. commodity to

Gary Guidry

Josef. Thanks,

Operator

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

Oriana Covault

questions. we great. be I go go -- we If had one by if X would that may one,

a X% in operating Acordionero the volumes. on noticed side, First, we sequential decrease

just basis, provide wondering that Acordionero in Putumayo? lower on sorry? could you And if production and terms more production drove of you growing insight a you what seeing So Ecuador could you color any quarter-over-quarter how into across if are share the have

Ryan Ellson

Yes.

on I of timing on when think part that brought we was just wells.

second So first had did in some flush we and production -- the decrease quarter. probably in the quarter we then

our brought why that's the we also now. subsequently quarter, XX,XXX some production barrels wells had that during around We down right which have and on, we see

Oriana Covault

concentrated going just I the And question. to the only back of exploration Perfect. remainder wanted just the to year whether CapEx Ecuador. confirm be program through the in will

and the from looking expect continuation this, Ecuador. Colombia we XXXX to of of plan and just wells I anything part between X to coming going Just Suroriente Colombia should to if program? confirm at guidance the the into wanted as X see

Gary Guidry

have We will we're very capital We've some yes. our development We're had on looking occur And Colombia, wells, We've answer that on good drilled really is for likely The to drill do program. the but in mass X side. in discoveries. Ecuador XXXX things in Yes. focused Ecuador. success. some critical X exciting

Operator

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

Garrett Fellows

you Can and about XXXX just use debt? we cash quantum the of perhaps plans the talk reduce maturity, guys that address to excess overall some to would of

Ryan Ellson

have it's at some we then Yes, point will out, new. deploying we we that and to Yes, as targeting we as excess plan come And our the is XXXX will question. that a repay base is you cash look rightly maturities. and good them capital

Operator

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

Gary Guidry

you on Thank update very look for joining progress. ongoing much. again once Thank quarter like you today. to speaking you, We forward to thank us with operator. and you next I'd everyone

Operator

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

disconnect. now may You

Gran Tierra Energy (GTE) 2 Aug 232023 Q2 Earnings call transcript