GTE - Earnings call 4 2023 | Gran Tierra Energy Inc.

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Operator

Good morning, ladies and gentlemen. Welcome to Gran Tierra Energy's Conference Call for Fourth Quarter and Year-End 2023 Results. My name is Olivia, and I'll be your coordinator for today. [Operator Instructions] I would like to remind everyone that this conference call is being webcast and recorded today, Tuesday, February 20, 2024, at 11:00 a.m. Eastern Time.

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

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

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

Gary Guidry

Executive and Thank are you is operator. to Ryan Chief Executive Fourth Good Results and My President morning, Quarter XXXX and name Conference Officer. Tierra's Call. welcome Year-End And today Tierra's me Gran Guidry, Gary Gran quarter with and and included results. Operating year-end our a Vice Chief our we fourth Officer; that press This release Morin, our and Financial Officer. about Chief Sebastien morning, detailed XXXX information issued President Ellson,

Tierra's few on on our annual Gran we available and will Sebastien for In report Ryan line comments, is has a and the make Form been on will then and website. addition, questions. XXXX brief filed EDGAR open XX-K

please Ryan turn over now call results. discuss ahead. to the financial our Ryan, I'll go to

Ryan Ellson

morning, Good everyone.

our These announce flow. are commitment milestones of for to XXXX underscore production, successfully quality We in unwavering to that cash achieved the delighted our terms and operational operations funds Tierra Gran its and assets free targets excellence. flow of from

Our focused across strong performance various key efforts asset metrics. yielded on development have

course a our asset outstanding We're showcased value long-term net dedication by program, purchasing XX%. by currently shares we to NCIB producing PDP value. create our in proved prospects normal trading demonstrating out bid or Additionally, or Tierra's of our Gran to share at confidence issuer per our in about discount developed our future shareholder through X.X% XXXX,

$X purchase per cost average share each per was share. Our

XXX%, well reserves XP, and reserves X%, the Our during year-over-year production of XP growth year-end ratios in achievements replacement XP many and result above strong in the history. the year company's highest

in financial X.X% $XXX Gran issued existing milestone reduce exchange amortizing major align expected our million maturity extending leverage future proceeds new subsequently XX% which for XX%, XXXX. the used facility, cash capital credit Approximately was Tierra net million flexibility another year-end, notes additional notes with highlighting of senior capital from to $XX million due of company of secured achieved utilization. Gran by outstanding bonds to of were The improve to terminated. repay $XXX to solid better secured return sheet, bondholders. under borrowings In additional flows. Tierra average a these performance of of in portion balance issued notes loss amortizing of schedule Gran Tierra our provide and million an the X.X% XXXX, showcasing a overall in on support due XXXX its a Despite in Subsequent senior exchanged, holders' $X XXXX, employed

$X.XX guidance generation. million and of per Tierra's in the funded per cash of fully Gran or $XXX expenditures flow financial share, positive at effective or cash by from our $XXX of share, end flow were capital low at management funds $X.XX demonstrating $XX million operations million, resulting free

of with volatile close XXXX challenges prices. adjusted amid decreased substantial the EBITDA realized million, Although XX%, adjusted company indicating resilience by EBITDA $XXX operational oil to

cost lower activities. in inflationary and transportation volumes higher maintenance control XXXX. were showcasing XX% year was sales Gran $XXX driven expenses in by XXXX, compared price higher discounts X% XXXX. by at decrease in operating to pressures, in and million decrease Vasconia Despite managed $XXX in Gran Tierra offset This million higher differentials, Tierra's Castilla primarily net partially effectively sales for resilience the a Brent and

continuation, of continue the operational of the the Suroriente for of in of to item block. with projects One By would committed believe We joint Tierra's oil programs Gran Gran optimizing long-term the technical Tierra recovery to highlight Suroriente plans is was robust the will our completion I successful continuation knowledge Suroriente like expertise and securing our final capital agreement. and success Basin block. in the development value combination and the Ecopetrol's Putumayo development

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

Sebastien Morin

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

off the year Tierra we successful Costayaco in Gran on which December we building oil are note. initial wells are drilled in Operationally, seeing start excellent results. production field in strong a XXXX XXXX off XXXX, a to has Since X

was water X on The cut. of average first stable rate well, on of producing XX% and a and January Costayaco-XX, oil Costayaco-XX X% spud barrels in stable a has well, production January. oil of around X,XXX It producing brought day A and been day of per has and has barrels January cut. rate early a at a been on per late production been water second X,XXX since average around

third well. The

[Technical Difficulty]

Operator

the Ladies hold speaker. while pardon reconnect and gentlemen, the we Please has been disconnected. interruption, speaker

Sebastien Morin

the the block's new make construct and in and half latter the production in We well development located by Gran goal increase Back Basin, Being all with development of to completed commence development year. and drilled, expected All the the Southern power final Suroriente drilled first expand facilities, of be block the in production intends end production on followed field Acordionero-XXX. of of generation the the Tierra down investments are in be social during the well, XXXX program pads to Putumayo the XXXX. substantial to plan gas and will in quarter before area, year. oil the drilling growth Cohembi this wells the from

target drilling focus to on unlocking proven of established promising short to exploration infrastructure. potential plan program dedication near XXXX results activities, cycle and sustainable in XX% fostering with Gran Tierra's production transportation from signifying capital in Building including From time an program, high-impact around our and wells exploration and exploration exploration will of prospects growth. field XXXX X reserves we low-risk to to perspective, XX% X the Ecuador, Colombia new basins on the

in program, And to will advancing part Ecuador, In early as the our Tropo in in of acquire over in addition, XD Colombia the the phases pads and stage for currently of XXX of XXXX company. execution square are block drilling seismic [ set which ] kilometers program we the to growth building for exploration licenses, pre-invest for XXXX Ecuador. the future capital opportunities

of to million and of we by barrels reserves our reserve fifth XP, contains XP. replacement XXX% oil excellent barrel company's driven This XXX also These we and XXXX, that XP, Costayaco January equivalent XXXX block, history. oil a the with by XP the agreement XXX% evaluated year-end Moqueta represented as success we reserve the million as Chaza Suroriente achieved by XX development year-end On XP were equivalent in and of which report results pleased in fields XX, continuation XP, achieved and release barrels the growth. year oil and water McDaniel. saw the highest drilling results and of million were XXX% Ryan. XXXX flooding consecutive XXX reserve outlined equivalent XP our

over tax our drilling our from the to future $XX.XX well is we plus asset net also offer of allowed and proved net 'XX, values Tierra reductions strong success reflects from Gran approved the locations, share long-term achieve up booked, With Tierra well of XXX% stakeholder share and last reserves growth, years, to before values $XX.XX Tierra achieved XP, believe buybacks our per XXXX to growth Gran combination ongoing company's XXX we reserves from X During conversion exceptional grow undeveloped asset XP, XXX% to up probable the in in XXXX. and is in in The probable positioned and share per beyond. debt this With a of positioned significant value. continue XXXX ongoing XXXX reserves production category. Gran

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

Operator

[Operator Instructions]

Gary Guidry

Operator?

Operator

first moment question. for our One

Gary Guidry

Okay. ladies Thank session and gentlemen, we'll you, and a now with analysts. conduct question-and-answer Well, securities proceed. the we'll

If on phone. star key XX -- your by press star followed the questions, you have touchtone any please

is an advising You will hand then hear your automated raised. message

they One Please please Your that the received. phone are the you're any speaker pulled you moment a first ensure lift question. question be using before pressing handset your keys. will order when for in

Operator

from Genuity. coming Canaccord Rossi question with First Roman

Roman Rossi

I have one. by go I if one can a couple,

one and first discount. regarding is transportation the The quality

know XXXX. saw quarter-over-quarter. just the we XX% a for decrease I to was main what reason wanted So [indiscernible] behind and this

Ryan Ellson

Yes.

can Roman, -- the hear think me you I okay?

Roman Rossi

Yes.

Ryan Ellson

you me hear Can now?

Roman Rossi

can but you, there of I hear is echo. a bit

Ryan Ellson

differentials Yes, that Castilla fourth quality is Okay. Vasconia the with did quality. quarter. the during from widen and mostly the just

this seen have $X, Castilla is fairly QX. we've $X, budgeted hasn't substantial change which we that There year. is And Currently, the QX to been around what and Vasconia for QX. around into from consistent effective differential is so a

Roman Rossi

has that that Okay. widening And you [Technical changed the think do think Difficulty]. the -- even [indiscernible] you do

Ryan Ellson

starts to the the which X issues, Canadian hear as of come Canada, of result there's the Roman, TMX question to Venezuela, I Sorry, more that's think -- well the think OPEC crude the market. as as actually heavy as their sours in you of of releasing is We'd well heavy cuts. Yes, tidewater. Venezuela. expect of part as again. from me? the some Can crude will X, is start was I more Venezuela potential well line as get additional is

no budget combination us, a to it's our and in those really it's it's But factors. surprise So around X of right numbers.

Roman Rossi

question. Okay. And last one

production lower increase order definite in OpEx, was in inflationary that. there? there Is Regarding that ratios or a of the there [indiscernible] because was

Ryan Ellson

Yes, the it driven production. was all by lower just

to we expect with increased in will operating XXXX, our production. flat cost come gross be coupled And slightly so down

to drop. the So per unit we expect cost

Operator

And our next Covault question from [indiscernible]. Oriana comes

Oriana Covault

that -- with right to believe Covault Oriana have there's but now. questions X try is a Balanz. This I'm put to a of there, I going bit I part

for [indiscernible]. first year? it What regarding Suroriente would is the one take So [indiscernible] your

Ryan Ellson

to have do XX,XXX barrels actually floor respect we still the With end hedged of with Yes. a -- we QX. hedging, until did

with with a XX,XXX $XX which of contract with floor put of physical have part our hedged $X, is offtake. barrels We around the really premiums the

puts additional now. process adding at the remainder in that looking year. are doing We're We the in right the of of just for

Oriana Covault

Perfect.

us you increase how that So out take are [indiscernible] thinking would production?

Ryan Ellson

Yes.

a on this question. side. Sorry, It broke I missed up the bit little

Oriana Covault

in are Like around some like your the year? thoughts Yes. [indiscernible] your what production what hedged [indiscernible] are production --

Ryan Ellson

rolling to like X after have And to We of production. things hedged. the too, X to really you'll XX% a using our Yes. just have have operational strong downside puts we X on hedged further like XX% out operate then to X is production. XX% And looking very months, given we that to -- months, basis, looking of one is hedge recall, a and all we'd

So a extent to prices could capital flexibility of very lot substantially, the cut program. we our quickly we were that expenditures capital on have our decreased

we another way that's the way So one protect -- business.

Oriana Covault

one side. Got one my last from it. Well, just

[indiscernible] your or XXXX. on and we you that have value can comment cash is can this minimum You market a saw [indiscernible]

Ryan Ellson

Yes.

of debt-to-EBITDA net to year-end targeting we're X.Xx. there, out X.Xx guidance our think I

take So the consistent a is we if in we've fairly the past as had target. what onetime, which

continue We expect and have like that governments, throughout sheet average fluctuate to between cetera. the target the the capital And range. that payments $XX And anywhere cash we $XXX over year, million. million of on to million we'd will to to But et year, that. with $XXX the program, just of course in $XX balance to million

Operator

[Operator Instructions] line coming question the [indiscernible]. Joe next from is our of And Schachter with

Josef Schachter

be challenging to breaks up, going If a is later. you Brian, call it could call. if me This

Ryan Ellson

Absolutely.

Josef Schachter

question you had in good your and guidance have quarter. a [indiscernible] you First very

QX You affecting depletion year [indiscernible]? lower volume more no barrels. [indiscernible] expecting the of add you the in success [indiscernible] the Are

Ryan Ellson

one exceeded -- give on our the -- it's range. think the the -- reason of is Yes, production why that's we a done I wells Cauca expectations. And that, have

the And so wells. days on early still it's

see range we'll the with progress of next over But right now. additional before the how still quarters we're wells So guidance. couple comfortable these providing

Josef Schachter

Okay. How many do [indiscernible]? have locations you

Ryan Ellson

area? that which to in just clarify sorry, -- In question,

Josef Schachter

We're the the talking CYC [indiscernible] -- about see discovery. Putumayo you

Ryan Ellson

Yes.

have, an still got of Suroriente Moqueta out So at additional that identified we XP the for for there example. locations XX. XX locations And XXX then Costayaco, is we've

Josef Schachter

That's info. -- good that's good Okay.

Gary Guidry

unswept of One our on the looking and of at Josef, Sebastien good what's are with things, the reservoir things and targeting Costayaco That's areas. in Costayaco. very the at north. modeling results one the outperforming We've team that some got

[ the this target to southern that in to of try the area part We we're going of have another strike reservoir ] year.

that's -- we're So we're excited about why Costayaco.

Josef Schachter

last Okay. for Good. me. one One

[indiscernible] -- app maybe [ With about the terms of [ in right briefing company? in moderate new and maybe in flow that had the talked about you few ] everything in area in the the talked [indiscernible] Minot ] the past, analyze you in you've

Gary Guidry

looking all always at Yes. that anything don't we The but We the to answer is see moment, are that our long development business for initiatives opportunity. term. specific are

anything the And so for don't we're increase but the to have horizon. we always value looking specific ways of on company,

Operator

Please disconnected. while been we speakers hold Speakers Instructions] now back Yes, reconnect you're [Operator have the speakers. connected.

your [ open. is ], have Xandra We [indiscernible] Denny line Simon

Unknown Analyst

for will the of credit balance that you [indiscernible] $XXX used? Where million $XX facility. million the mentioned was So used be

Ryan Ellson

Yes.

around repay $XXX On pointed sheet the as million, And the would these $XX out be the million -- of were you the facility, balance the $XX right on proceeds million, it net out. remainder went to cash now.

Operator

from our line And with Alejandra coming the JPM. next question Andrade of

Alejandra Andrade Carrillo

Just a at moment, line, one don't for you lines the me, after you quick repaid that available correct? any committed the confirming have

Ryan Ellson

Correct. Correct. and We repaid terminated. it then

looking with We and on the cash comfortable a which with and flows free inflows. now, nothing at sheet. we some business balance flow outflows just are capital the of and right we're ebbs coincided But the in working and of have facility better cash place our and our cash

Operator

Please time. And gentlemen, no are there this at questions further continue.

Gary Guidry

you We update thank the would team our work next XXXX, for continued for to us joining entire Tierra the hard support. for their ongoing over with Gran on fantastic everyone, to you, you the progress. our speaking Thank look I forward shareholders and to and you. quarter results like Thank in today. their

Operator

Thank that participation. conclude our gentlemen, for today. Thank you. you and conference your does for Ladies

disconnect. now may You

Gran Tierra Energy (GTE) 20 Feb 242023 Q4 Earnings call transcript