CALGARY, Alberta, December 6, 2006 - Gran Tierra Energy Inc. (OTC Bulletin Board: GTRE.OB) - On December 1, 2006, Gran Tierra acquired the interests of Compa~n'ia General de Combustibles S.A. ("CGC") in two properties in the Noroeste Basin of Argentina, acquiring CGC's 75% interest in the El Chivil block and 75% participation in the Surubi block. Concurrently, Gran Tierra acquired the remaining 25% interests of the minority partner in both blocks. The total purchase price for the transactions was $2.78 million. The acquisitions are expected to add net production of 123 barrels per day (October, 2006) and expand the Company's inventory of exploration land and drilling prospects.
Gran Tierra made its offer to purchase the interests of CGC in eight properties in the Noroeste Basin of Argentina in February 2006. The disposition of CGC's assets was subject to approval of local courts within Argentina, which was received in late-October 2006. According to its offer of February 2006, Gran Tierra was obligated to purchase CGC's interests in four properties and retained an option to proceed with the acquisition of the remaining four interests, which were subject to rights of first refusal among joint venture partners and other third party consents. Following court approval, the initial four properties were acquired in early November 2006 for a total purchase price of $2.1 million.
Gran Tierra has declined to exercise its option to acquire of CGC's 17.85% interest at Palmar Largo and 5% participation at Aguarague, considering the likelihood that joint venture partners would exercise their rights of first refusal, the need for other third party consents, and in light of more attractive investment opportunities. The Company has determined its drilling program for the coming year has a higher priority and offers greater upside for the Company, and intends to fund a ten-well program to the end of 2007 from available cash and cash flow.
The total purchase price for the acquisition of CGC's interests in all six properties acquired is $4.6 million. Post-closing adjustments which reflect original values assigned to the properties, amended terms, revenues and costs from the effective date of January 1, 2006 are expected to amount to a net cash outlay of approximately $3.5 million.
Dana Coffield, President and Chief Executive Officer of Gran Tierra, stated, "The CGC acquisitions complete our initial growth strategy in Argentina, providing us with a production base and a significant land position for future remedial work, production enhancement and exploration. Our initial offer to acquire CGC's assets was made at a time before our entry into Colombia and before subsequent moves in Peru and Argentina. Today we are a more diverse company, with a mandate and opportunity to move into a more aggressive phase of growth - advancing from a period of acquisition to a period of drilling activity. Our expanded portfolio and cash position allow us to high grade our investment decisions, and this is what we are doing. We have a solid foundation for growth, as we move into an active drilling stage of our business plan."
About Gran Tierra Energy Inc.
Gran Tierra Energy, Inc. is an international oil and gas exploration and production company, headquartered in Calgary, Canada, incorporated and traded in the United States and operating in South America. The Company now holds interests in producing and prospective properties in Argentina, Colombia and Peru. To date, the Company has pursued a strategy that focuses on establishing a portfolio of producing properties, development and exploration opportunities, through selective acquisitions, to provide a base for future growth. Additional information concerning Gran Tierra is available at www.grantierra.com. Investor inquiries may be directed to [email protected] or 1-800-916-GTRE (4873).
Forward Looking Statements
This press release contains 'forward-looking statements' within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, including without limitation those statements regarding the Company's ability to exploit oil and gas exploration opportunities. These statements are expressed in good faith and based upon a reasonable basis when made, but there can be no assurance that these expectations will be achieved or accomplished. Although the forward-looking statements in this release reflect the good faith judgment of management, forward-looking statements are inherently subject to known and unknown risks and uncertainties that may cause actual results to be materially different from those discussed in these forward-looking statements including, but not limited to, our ability to complete the Company's drilling program for 2007, our ability to discover reserves that may be extracted on a commercially viable basis, difficulties inherent in estimating oil and gas reserves, intense competition in the oil and gas industry, environmental risks, regulatory changes and general economic conditions including the price of oil and gas. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this release, other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various disclosures made by us in the our reports filed with the Securities and Exchange Commission, including those risks set forth in the Company's Annual Report on Form 10-KSB filed on March 10, 2006, as amended, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operation and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected. We undertake no obligation to update these forward looking statements.