CALGARY, Canada, August 13, 2007 - Gran Tierra Energy Inc. (OTC Bulletin Board: GTRE), a company focused on oil exploration and production in South America, today announced that results from the independent reserve auditors report of Gaffney, Cline & Associates (GCA) and internal assessments relating to Gran Tierra Energy's exploration drilling program in the first half of 2007, have increased the company's reported proved, probable, and possible reserves 361%, and have increased the company's reported proved reserves 197%.
Dana Coffield, President and CEO, stated "Gran Tierra Energy has attained extraordinary oil reserve growth in the first half of 2007 as a result of our operated drilling activity. We believe these results affirm our strategy of acquiring underdeveloped lands and adding value by drilling. In the last two years, since inception of Gran Tierra Energy, our focus has been on identifying and acquiring underdeveloped lands; our focus in 2007 has been on developing these lands by drilling. As a result, we have now more than tripled our acquired proved, probable and possible oil reserve base and almost doubled our acquired proved oil reserve base by executing our drilling program in the first half of 2007."
The discovery of the Costayaco field in the Chaza Block, located in the Putumayo Basin of Colombia and operated by Gran Tierra Energy, was the result of drilling the Costayaco-1 exploration well in the second quarter of 2007. GCA has evaluated the well data and associated geoscience data, and has allocated to Gran Tierra Energy proved reserves of 3.0 million barrels of oil, with additional probable reserves of 6.0 million barrels of oil, and additional possible reserves of 8.2 million barrels of oil (all net after royalty).
The discovery of the Juanambu field in the Guayuyaco Block, also located in the Putumayo Basin of Colombia and operated by Gran Tierra Energy, was the result of drilling the Juanambu-1 exploration well earlier in 2007. GCA has evaluated the well data and associated geoscience data, and has allocated to Gran Tierra Energy proved reserves of 0.1 million barrels of oil, with additional probable reserves of 0.3 million barrels of oil, and additional possible reserves of 1.1 million barrels of oil (all net after royalty).
The Puesto Climaco-2D sidetrack well in the Vinalar Block, located in the Noroeste Basin of Argentina, tested a deeper undeveloped reservoir beneath the existing Puesto Climaco field at the beginning of 2007. Gran Tierra Energy internally evaluated the well data and associated geoscience data, and has reallocated reserves associated with this well from existing proved undeveloped reserves to new proved producing reserves. This reallocation does not impact total proved reserves.
In the first half of 2007, Gran Tierra Energy has produced approximately 206 thousand barrels of oil, net after royalty, reducing its proved producing reserves reported at December 31, 2006 by that amount. Incorporating oil produced and adding the new reserves reported above, Gran Tierra Energy's estimate of proved reserves, net after royalty, as of June 30, 2007, stands at 5.9 million barrels of oil, with additional probable reserves at 7.5 million barrels of oil, and additional possible reserves of 12.2 million barrels of oil, for a total of 25.6 million barrels of proved, probable and possible oil reserves. This contrasts to Gran Tierra Energy's December 31, 2006, proved reserves of 3.0 million barrels of oil, probable reserves of 1.2 million barrels of oil, and possible reserves of 2.9 million barrels of oil, or a total of 7.1 million barrels of proved, probable and possible oil reserves.
Production for the first half of 2007 has been stable, averaging 1,140 barrels of oil per day, net after royalty, as a result of successful well workovers and production from Puesto Climaco-2D. Gran Tierra Energy has begun initial production from testing and production optimization programs at Juanambu-1 and Costayaco-1. Gran Tierra Energy expects production to grow through the balance of 2007 and into 2008. The new oil production is currently being trucked to existing production facilities.
New field development planning is in progress for the Costayaco and Juanambu fields, and is expected to continue into early 2008. This planning will include the design of oil processing facilities, oil transportation requirements, and field development drilling requirements. Gran Tierra Energy has currently scheduled two additional wells for the Costayaco field, with the objective to increase early production capacity and to further delineate the size of the oil accumulation in the field. Drilling is to begin in the fourth quarter of 2007.
Dana Coffield continued "Our immediate attention going forward will be to develop these new reserves by converting them into production and cash flow in the coming years through additional drilling and infrastructure development. Simultaneously, we are continuing to add additional underdeveloped lands to our base and developing additional exploration drilling opportunities. The balance of 2007 and 2008 will see a mix of both development drilling and exploration drilling in our portfolio, in contrast to the activity of the first half of this year, which was focused on exploration."
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. Gran Tierra Energy holds interests in producing and prospective properties in Argentina, Colombia and Peru. To date, Gran Tierra Energy has pursued a strategy that focuses on establishing a portfolio of producing properties, and development and exploration opportunities, through selective acquisitions, to provide a base for future growth. Additional information concerning Gran Tierra Energy is available at http://www.grantierra.com. Investor inquiries may be directed to [email protected] or 1-800-916-GTRE (4873).
GCA's statement of Proved reserves have been prepared in accordance with the definitions set out in Rule 4-10 of Regulation S-X of the United States Securities and Exchange Commission. GCA's statement of Probable and Possible reserves have been prepared in accordance with generally accepted petroleum engineering principles provided for in the document entitled Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information, promulgated by the Society of Petroleum Engineers (SPE). Reserve definitions utilized are those approved by the Society of Petroleum Engineers, World Petroleum Council, American Association of Petroleum Geologists and the Society of Petroleum Evaluation Engineers in March 2007 and issued under the name of Petroleum Resources Management System in March of 2007.
Forward Looking Statements
The statements in this press release regarding Gran Tierra Energy's expectations for the balance of 2007 and 2008 with respect to growth of production, new field development and increase in development drilling, are 'forward-looking statements' within the meaning of Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934. Although these forward-looking statements 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, in the case of these forward-looking statements, unexpected delays in drilling due to equipment failure or other unforeseen reasons; unforeseen events, such as unexpected difficulties in drilling or unexpected discoveries, may cause Gran Tierra Energy to reallocate resources, which may delay drilling and production and/or alter the mix of development drilling and exploration drilling in Gran Tierra Energy's portfolio; and unexpected costs may decrease funds available to carry out drilling plans, which could delay or prevent production and/or development. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. Gran Tierra Energy assumes no obligation to update these forward-looking statements 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, including the risk factors, made by Gran Tierra Energy in its reports filed with the Securities and Exchange Commission, in particular its quarterly report on Form 10-Q filed on May 15, 2007, which attempt to advise interested parties of the risks and factors that may affect Gran Tierra Energy's business. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, Gran Tierra Energy's actual results may vary materially from those expected or projected.