Gran Tierra Energy Establishes Initial Exploration & Production Position in Brazil
Acquires operated light oil reserves, production and exploration upside
CALGARY, Alberta, August 29, 2010, Gran Tierra Energy Inc. ("Gran Tierra Energy") (NYSE Amex: GTE, TSX: GTE), a company focused on oil and gas exploration and production in South America, today announced that it has finalized an agreement with Alvorada Petr leo S.A. ("Alvorada") whereby Gran Tierra Energy will pay US$22.6 million and fulfill certain commitments, including in part, the drilling of 2 wells in 2011, to receive a 70% working interest in Blocks REC-T-129, -142, -155 and -224 in the on-shore Rec ncavo Basin, Brazil. The transaction is subject to Gran Tierra Energy obtaining the customary regulatory approval from Brazil's Ag ncia Nacional de Petr leo G s Natural e Biocombust veis ("ANP").
"This farm-in opportunity presents Gran Tierra Energy with a solid entry-point into Brazil, with new light oil reserves, production and exploration upside, including near-term drilling opportunities," said Dana Coffield, President and Chief Executive Officer of Gran Tierra Energy. "Gran Tierra Energy continues to evaluate additional exploration and production opportunities in Brazil, with the intention of expanding our presence in Brazil's growing oil and gas sector."
Under the terms of the agreement, Gran Tierra Energy will become the operator of Blocks REC-T-129, -142, -155 and -224 and has committed to pay 100% of the costs to drill an exploration well on each of Blocks REC-T-129 and -142 and its working interest share of the 130 km2 3D seismic program currently being conducted on the four blocks. These blocks were awarded to Alvorada through Brazil's 9th ANP bid round.
Blocks REC-T-129, -142, -155 and -224 are located approximately 70 km Northeast of Salvador, Brazil in the prolific Rec ncavo Basin. This basin covers an area of approximately 10,000 km2, contains 129 oil and gas fields, and has produced over 1.5 billion barrels of oil to date. Production from this basin is characterized by light oil ranging between 35 and 40 API.
Earlier this year, a 38 API oil discovery was made on Block REC-155. The current gross production from the discovery is approximately 500 barrels of oil per day from the Sergi formation. Gran Tierra Energy anticipates drilling additional wells to further delineate this discovery and potentially increase production and reserves from the field. This discovery currently has unaudited estimated gross recoverable resources of 6 million barrels of oil.
In addition to the current oil discovery on Block REC-155, Gran Tierra Energy has identified a new oil resource play that would potentially employ multi-staged frac horizontal well technology and intends to investigate this opportunity with Alvorada Petr leo.
About Gran Tierra Energy Inc.
Gran Tierra Energy Inc. is an international oil and gas exploration and production company, headquartered in Calgary, Canada, incorporated in the United States, trading on the NYSE Amex Exchange (GTE) and the Toronto Stock Exchange (GTE), and operating in South America. Gran Tierra Energy holds interests in producing and prospective properties in Argentina, Colombia, Peru, and Brazil. Gran Tierra Energy has a strategy that focuses on establishing a portfolio of producing properties, plus production enhancement and exploration opportunities to provide a base for future growth.
Gran Tierra Energy's Securities and Exchange Commission filings are available on a web site maintained by the Securities and Exchange Commission at http://www.sec.gov and on SEDAR at http://www.sedar.com.
Forward Looking Statements:
This news release contains certain forward-looking information and forward-looking statements (collectively, "forward-looking statements") under the meaning of applicable securities laws, including Canadian Securities Administrators' National Instrument 51-102 - Continuous Disclosure Obligations and the United States Private Securities Litigation Reform Act of 1995. The use of the words "anticipates", "potentially", "potential" and "will" identify forward-looking statements. In particular, but without limiting the foregoing, this news release contains forward-looking statements regarding Gran Tierra Energy's presence in Brazil, planned and expected results regarding commitments and exploration, production and development plans for the Alvorada farm-in.
The forward-looking statements contained in this news release are subject to risks, uncertainties and other factors that could cause actual results or outcomes to differ materially from those contemplated by the forward-looking statements, including, among others: the transaction is subject to regulatory approval, which if not obtained or delayed could cause the transaction not to occur; Gran Tierra Energy may incur unexpected technical difficulties and operational difficulties in its operations in Brazil, which could impact or delay its drilling and other obligations in the Alvorada farm-in; geographic, political and weather conditions can impede testing and drilling operations or Gran Tierra Energy's ability to expand its presence in Brazil; and the risk that current global economic and credit market conditions may impact oil prices and oil consumption more than Gran Tierra Energy currently predicts, which could cause Gran Tierra Energy to modify its intention to expand its presence in Brazil. Further information on potential factors that could affect Gran Tierra Energy are included in risks detailed from time to time in Gran Tierra Energy's Securities and Exchange Commission filings, including, without limitation, under the caption "Risk Factors" in Gran Tierra Energy's Quarterly Report on Form 10-Q filed August 6, 2010. These filings are available on a Web site maintained by the Securities and Exchange Commission at http://www.sec.gov and on SEDAR at www.sedar.com. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this press release are made as of the date of this press release and Gran Tierra Energy disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities legislation.
Additional information is available on Gran Tierra Energy's website at www.grantierra.com. For media and investor inquiries please contact Jason Crumley, Director, Investor Relations at 403-265-3221 or [email protected]