Gran Tierra Energy (GTE) 4 Nov 24 2024 Q3 Earnings call transcript

In Gran Tierra Energy's Q3 2024 earnings call, the company showcased its strategic moves and financial performance, with a significant emphasis on the recent acquisition of i3 Energy and its impact on the company's future growth prospects. Gary Guidry, President and CEO, alongside Ryan Ellson, Chief Financial Officer, and Sebastian Morin, Chief Operating Officer, discussed key financial and operational highlights, offering valuable insights into the company's strategic direction and market positioning.

Financial Performance and Acquisition

Gran Tierra reported a solid financial performance in Q3 2024, generating $60 million in funds flow from operations and $93 million in adjusted EBITDA. The acquisition of i3 Energy, which closed on October 31, 2024, was a major highlight, diversifying Gran Tierra's portfolio into Canada and adding significant assets in the Montney and Clearwater plays. This acquisition has significantly increased Gran Tierra's reserves, with an estimated 42 million barrels of oil equivalent added to its 1P reserves, 88 million barrels to its 1P, and 174 million barrels to its 2P.

The integration of i3 Energy's assets has positioned Gran Tierra as a premier diversified oil and gas company, with a strong presence in Canada, Colombia, and Ecuador. The company's focus on developing significant oil-weighted opportunities in its Canadian portfolio, while still developing high-impact oil opportunities in South America, underscores its commitment to growth and diversification.

Operational Highlights and Exploration Success

From an operational perspective, Gran Tierra reported lower volumes in the Acordionero field due to increased downtime related to workovers. This decrease was partially offset by higher production in the Costayaco field in Colombia and increased production from the Chanangue and Charapa blocks in Ecuador. The company's exploration successes in Ecuador, particularly the Charapa-B7 well, have been impressive, with a 30-day initial production rate of 2,043 barrels of oil per day, marking a significant milestone of over 1 million barrels of cumulative oil production.

Gran Tierra's capital expenditures for the quarter were lower than the previous one due to timing of its rig program, with only one drilling rig operated during the quarter compared to two in the prior quarter. The company's operational expenses also decreased by 2%, primarily due to lower overall workover costs, while transportation expenses decreased by 31% due to the utilization of shorter distance delivery points.

Outlook and Capital Allocation

Looking ahead, Gran Tierra is focused on developing its significant oil-weighted opportunities in its Canadian portfolio while continuing to develop and appraise high-impact oil opportunities in South America. The company's long-term net debt-to-EBITDA target of 1x or less remains a priority.

In terms of capital allocation, Gran Tierra expects to allocate capital to new oil discoveries in Ecuador, continued development of mature waterfloods in Colombia, and oil opportunities in Western Canada. The company's unique position with recent discoveries and underdeveloped assets in Canada provides a significant opportunity for growth in 2025 and beyond.

Conclusion

Gran Tierra Energy's Q3 2024 earnings call highlighted the company's strategic moves, including the acquisition of i3 Energy, and its operational and financial performance. The company's focus on diversification, growth, and optimization of its assets positions it well for future success, particularly in the context of a challenging market environment. With a strong operational and financial foundation, Gran Tierra is poised for growth and value creation, making it an interesting player to watch in the oil and gas sector.