CALGARY, Alberta, June 19, 2019 (GLOBE NEWSWIRE) -- Gran Tierra Energy Inc. ("Gran Tierra" or the "Company") (NYSE American:GTE)(TSX:GTE)(LSE:GTE) today announced an operations update regarding activities and results during second quarter 2019 to date. All dollar amounts are in United States ("U.S.") dollars unless otherwise indicated. Production amounts are unaudited and on an average working interest before royalties ("WI") basis unless otherwise indicated.
- The expansions of Acordionero's central processing and water injection facilities, as well as the installation of gas-to-power turbines ("Acordionero Projects"), are mechanically complete with commissioning expected during July 2019, which represents a significant milestone for the Company and its largest oil producing asset
- Record drilling results achieved in Acordionero: the AC-40 and AC-41 wells were drilled in 9.5 and 7.4 days respectively, each a consecutive record short drilling time for the field
- Received the Global Environmental License for Acordionero on June 12, 2019 from the Autoridad Nacional de Licencias Ambientales, the Colombian environmental regulator; this license is expected to allow accelerated and optimized full field development of Acordionero
- The Company believes the successful drilling and operations activities at both Acordionero and Suroriente to date will support increases in Proved ("1P") and Probable ("2P") reserves
- Surpassed over six million person-hours without a lost time incident
- Gran Tierra has preliminarily won two blocks in the recent Agencia Nacional de Hidrocarburos ("ANH") bid round in Colombia; the Company believes these blocks may be highly prospective; as part of the bidding process, other companies can offer more than Gran Tierra's proposed work commitment until June 26, 2019 in an attempt to win the blocks, but Gran Tierra has a right of first refusal in respect of such offers since the Company's initial bid was the highest
- Gran Tierra has officially signed contracts for our three exploration blocks in Ecuador; the Company is making progress and plans to drill its first exploration well in Ecuador in late 2019 or early 2020
- New personnel hired to improve operations: a new Vice President of Asset Management and a new Director of Completions both recently joined the Company
- Gran Tierra is currently addressing some temporary operational issues which have impacted our production; the Company is taking the necessary steps to get production back on track and believes our oil reserves and values remain intact as these challenges represent deferral of production; the Company does not believe these issues are related to the underlying quality of the assets; further information is provided below:
From April 1, 2019 to May 23, 2019, Company production averaged 37,700 barrels of oil per day equivalent ("BOEPD"), and was expected to meet our previously published full year 2019 guidance
Starting in late May 2019, production decreased as a result of the following:
Acordionero: the Company proactively shut-in two oil producers with high gas-oil ratios ("GOR"); two other oil producers went off-line due to electric submersible pump ("ESP") failures; total current, temporary impact to production is approximately 4,500 BOEPD
Suroriente and PUT-7: local farmers have set up blockades in the southern Putumayo region to protest against the Colombian national government; these protests are not directed at the oil industry or Gran Tierra; as a result of these blockades, Gran Tierra has had to shut in all production at both of these blocks; total current, temporary impact to production is approximately 4,500 BOEPD
For second quarter to June 17, 2019 Company production has averaged approximately 36,200 BOEPD; for the five days up to and including June 17, 2019, the Company's production was approximately 29,000 BOEPD
As a result of these events, Gran Tierra will be revisiting its guidance over the coming months and expects to revise its guidance once the impact of the blockades and the startup of the Acordionero Projects can be fully assessed
- Gran Tierra is taking the following mitigation actions to address these temporary operational issues with production:
Acordionero: the planned full commissioning of the Acordionero Projects during July 2019 is expected to allow a rapid increase in water injection from approximately 16,000 barrels of water injected per day ("bwipd") to 40,000 bwipd and the release three rental facilities which will reduce operating costs; this full implementation of the Acordionero waterflood is forecasted to repressure the reservoir over the next few months, which should reduce the field's GOR, which in turn would allow the Company to increase oil production rates from several wells and to bring back online those wells which were temporarily shut-in; start-up of the 20 megawatt gas-to-power project at the same time is expected to significantly improve power reliability, improve ESP reliability and significantly lower operating costs; all of these activities are expected to restore Acordionero's production back to levels achieved in first quarter 2019 over the next few months and grow in 2020, despite the recent production decrease
Suroriente and PUT-7: Colombian government authorities are currently addressing farmers' concerns and expect to restore normal conditions within the next several days; Gran Tierra is working closely with government officials to safely resume operations and production on these two blocks as soon as possible; the Company may continue to have short-term interruptions in the area which are difficult to predict; the Company expects to restore Suroriente's and PUT-7's oil production back to normal levels once the blockades are resolved
Costayaco: the Company is currently drilling the CYC-39 infill oil well which is expected to be on production in July 2019; in mid-July 2019, the Company expects to spud the first of two horizontal water injectors (one each for the T Sand and the Caballos Formation) to improve ultimate oil recovery; these actions are expected to improve Costayaco's oil production performance
Ayombero: the Company expects to contract a snubbing unit (equipment capable of working with high pressures) to retrieve parted coiled tubing in both the AY-2 and 3 wells in order to continue with completion operations; the AY-1 well was recently successfully cleaned out and re-perforated across the entire Galembo formation and is expected to be placed on long-term production test; we are very encouraged by the three Ayombero wells drilled to date which have confirmed similar lithologies, oil saturations and over-pressure in the Galembo Member of the La Luna Carbonate reservoir, suggesting reservoir and structural continuity; the Company's estimates of oil in place and prospective resources are unchanged by these short-term issues
Gary Guidry, President and Chief Executive Officer of Gran Tierra, commented, "With the receipt of the Acordionero Global Environmental License and the planned commissioning of the Acordionero Projects, as well as the lifting of the blockades in the southern Putumayo, we believe we are capable of restoring our production back up to over 40,000 BOEPD. The timing of this forecasted production increase depends on the water injection response at Acordionero and the impacts of community blockades in the southern Putumayo. We believe the current production decrease is a deferral, not a loss of reserves, and that we are taking the necessary steps to get production back on track. Overall, while the delay in the Acordionero Projects has deferred production in the short term, we are very encouraged by the continuity and quality of the sands in Acordionero and the expected commissioning of these projects in July 2019 is a major milestone. Based on the drilling to date in Acordionero and the commissioning of the Acordionero Projects, we expect to increase the original oil in place and recovery factor which will increase both the 1P and 2P reserves in Acordionero."
Exploration Update (All Projects 100% WI)
Llanos Basin: Prosperidad-1 Well, El Porton Block
- While sufficient oil shows and gas log response warranted testing the lower Gacheta Formation, only formation water was recovered; as a result Gran Tierra plans to abandon this well
- This exploration commitment well was part of the Petroamerica acquisition in early 2016 and Gran Tierra was required to drill it in under the terms of the ANH contract
- The one positive result is that Prosperidad-1 was successfully drilled to a depth of approximately 17,000 feet, which was the deepest well ever drilled by the Company and demonstrated the technical skills of Gran Tierra's drilling team
Putumayo Basin: Pomorroso, Almendrillo and Pecari Wells, PUT-7 Block
- All three exploration wells have found producible oil in multiple zones (U Sand, A-Limestone and N Sand), at rates ranging from 100 to 300 BOEPD in each zone
- We are encouraged about encountering oil in multiple wells and are currently determining the optimal completion and stimulation design; a go-forward plan is expected to be determined during July 2019
- The Company is currently working to seek approval to commingle several productive zones within a single wellbore (a production method used at the Costayaco and Moqueta fields) to further improve the ultimate recovery and enhance the economics of the wells
- Currently, activity is ceased as a result of the blockades referenced above
For investor and media inquiries please contact:
Gary Guidry, Chief Executive Officer
Ryan Ellson, Chief Financial Officer
Rodger Trimble, Vice President, Investor Relations
About Gran Tierra Energy Inc.
Gran Tierra Energy Inc. together with its subsidiaries is an independent international energy company focused on oil and natural gas exploration and production in Colombia and Ecuador. The Company is focused on its existing portfolio of assets in Colombia and Ecuador and will pursue new growth opportunities throughout Colombia and South America, leveraging our financial strength. The Company's common shares trade on the NYSE American, Toronto Stock Exchange and London Stock Exchange under the ticker symbol GTE. Additional information concerning Gran Tierra is available at www.grantierra.com. Information on the Company's website does not constitute a part of this press release. Investor inquiries may be directed to [email protected] or (403) 265-3221.
Gran Tierra's Securities and Exchange Commission filings are available on the Securities and Exchange Commission website at http://www.sec.gov and on SEDAR at http://www.sedar.com and UK regulatory filings are available on the National Storage Mechanism website at www.morningstar.co.uk/uk/nsm.
Forward Looking Statements and Legal Advisories:
This press release contains opinions, forecasts, projections, and other statements about future events or results that constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and financial outlook and forward looking information within the meaning of applicable Canadian securities laws (collectively, "forward-looking statements"). The use of the words "expect", "plan", "intend", "will" "guidance," and "believes", derivations thereof and similar terms identify forward-looking statements. In particular, but without limiting the foregoing, this press release contains forward-looking statements regarding: the Company's strategies, operations, including planned drilling and operation activities, and developments, the commissioning and expected benefits of the Acordionero Projects, the expected benefits of the Global Environmental License, the anticipated benefits of the two blocks in the ANH bid round and the Company's success in the bidding process, the Company's drilling plans and expected results, the expected production for second quarter 2019 and the Company's expectations as to future production amounts, the future impact of adverse events on production, and the resolution and effect to the Company of the strikes in Colombia and the timing of such resolution. The forward-looking statements contained in this press release reflect several material factors and expectations and assumptions of Gran Tierra including, without limitation, that Gran Tierra will continue to conduct its operations in a manner consistent with its current expectations, the accuracy of testing and production results and seismic data, pricing and cost estimates (including with respect to commodity pricing and exchange rates), rig availability, the effects of waterflood and the general continuance of assumed operational, regulatory and industry conditions in Colombia and Ecuador, and the ability of Gran Tierra to execute its business and operational plans in the manner currently planned.
Among the important factors that could cause actual results to differ materially from those indicated by the forward-looking statements in this press release are: sustained or future declines in commodity prices and potential resulting future impairments and reductions in proved reserve quantities and value; Gran Tierra's operations are located in South America, and unexpected problems can arise due to guerrilla activity; technical difficulties and operational difficulties may arise which impact the production, transport or sale of our products; geographic, political and weather conditions can impact the production, transport or sale of our products; the risk that current global economic and credit conditions may impact oil prices and oil consumption more than Gran Tierra currently predicts; the ability of Gran Tierra to execute its business plan, including the successful award of blocks in the ANH bid round in Colombia; the risk that unexpected delays and difficulties in developing properties may occur; the timely receipt of regulatory or other required approvals for our activities; the failure of exploratory drilling to result in commercial wells; unexpected delays due to the limited availability of drilling equipment and personnel; the risk that oil prices could continue to fall, or current global economic and credit market conditions may impact oil prices and oil consumption more than Gran Tierra currently predicts, which could cause Gran Tierra to further modify its strategy and capital spending program; and the risk factors detailed from time to time in Gran Tierra's periodic reports filed with the Securities and Exchange Commission, including, without limitation, under the caption "Risk Factors" in Gran Tierra's Annual Report on Form 10-K for the year ended December 31, 2018, as amended, and its other filings with the Securities and Exchange Commission. These filings are available on the Securities and Exchange Commission website at http://www.sec.gov and on SEDAR at www.sedar.com.
The forward-looking statements contained in this press release are based on certain assumptions made by Gran Tierra based on management's experience and other factors believed to be appropriate. Gran Tierra believes these assumptions to be reasonable at this time, but the forward-looking statements are subject to risk and uncertainties, many of which are beyond Gran Tierra's control, which may cause actual results to differ materially from those implied or expressed by the forward looking statements. All forward-looking statements are made as of the date of this press release and the fact that this press release remains available does not constitute a representation by Gran Tierra that Gran Tierra believes these forward-looking statements continue to be true as of any subsequent date. Actual results may vary materially from the expected results expressed in forward-looking statements. Gran Tierra 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 law.