Third Quarter 2023 Results Including the Highest Production Since the Second Quarter of 2019, Net Income of $7 Million and $36 Million of Free Cash Flow

Third Quarter 2023 Total Average WI Production of 33,940 BOPD, Up 12% from One Year Ago and Up 1% from Prior Quarter, Highest Quarterly Average Since Second Quarter 2019

Third Quarter 2023 Net Income of $7 Million, Funds Flow from Operations of $79 Million and Free Cash Flow of $36 Million

Third Quarter 2023 Adjusted EBITDA of $119 Million and 12-Month Trailing Adjusted EBITDA of $413 Million

Subsequent to Third Quarter 2023, Issuance of New 9.500% Senior Secured Amortizing Notes Due 2029 in Exchange for Existing Notes Improves Balance Sheet, Reduces Overall Leverage and Provides Additional Financial Flexibility

CALGARY, Alberta, Oct. 31, 2023 (GLOBE NEWSWIRE) -- Gran Tierra Energy Inc. (“Gran Tierra” or the “Company”) (NYSE American:GTE)(TSX:GTE)(LSE:GTE) today announced the Company’s financial and operating results for the quarter ended September 30, 2023 (“the Quarter”). All dollar amounts are in United States dollars, and production amounts are on an average working interest (“WI”) before royalties basis unless otherwise indicated. Per barrel (“bbl”) and bbl per day (“BOPD”) amounts are based on WI sales before royalties. For per bbl amounts based on net after royalty (“NAR”) production, see Gran Tierra’s Quarterly Report on Form 10-Q filed October 31, 2023.

Message to Shareholders

Gary Guidry, President and Chief Executive Officer of Gran Tierra, commented: “Gran Tierra had a solid Quarter, our financial position remains robust, and we continue to focus on maximizing operational efficiency and managing costs effectively to ensure sustainable growth and profitability.

We are very pleased with the successful completion of our bond exchanges subsequent to the Quarter which we believe are highly beneficial for both Gran Tierra and our stakeholders. The Company’s balance sheet is now stronger due to an improved amortization schedule, less restrictive conditions, and overall reduced leverage. The bond exchanges, in tandem with our solid operating cash flow, provide additional financial flexibility and a stronger platform, as we execute our strategy of delivering profitable production growth, free cash flow generation and value creation for stakeholders. We intend to continue to high-grade our portfolio through our integrated strategy of acquiring, exploring, developing, producing, and enhancing high-quality oil and gas assets.

In terms of upcoming activity, following our successful 2023 development campaigns at Acordionero and the northern extension of the Costayaco field, we are accelerating our development program and plan to commence drilling at both of these fields in December 2023. The waterfloods across our four core assets continue to be effective at increasing ultimate oil recoveries and we are excited to resume drilling by the end of this year. We are delighted that we closed the extension of the Suroriente block agreement during the Quarter as we believe this block will be a key growth area for the Company over the coming years. As seen in our mid-year reserve update, the success in our waterflood and the extension of the Suroriente block agreement resulted in record highs in the Company’s Proved and Proven plus Probable oil reserves. We added Proved reserves of 16 million bbl and Proven plus Probable of 26 million bbl since the end of the 2022.”

Key Highlights of the Quarter:

Production: Gran Tierra’s total average WI production was 33,940 BOPD, an increase of 1% compared to second quarter 2023 (“the Prior Quarter”) and up 12% from third quarter 2022 (“one year ago”). Gran Tierra’s production in the Quarter was the Company’s highest quarterly average total production since second quarter 2019.

Net Income: Gran Tierra achieved net income of $7 million, compared to a net loss of $11 million in the Prior Quarter and net income of $39 million one year ago. The Company’s net income over the last 12 months was $19 million.

Basic (Diluted) Earnings Per Share: Gran Tierra generated net earnings of $0.20 per share basic and diluted, compared to a net loss of $0.33 per share basic and diluted in the Prior Quarter and net earnings of $1.05 per share basic and $1.04 per share diluted one year ago.

Adjusted EBITDA(2): Adjusted EBITDA(2) was $119 million compared to $97 million in the Prior Quarter and $116 million one year ago. Twelve month trailing Net Debt(2) to Adjusted EBITDA(2) was 1.2 times.

Funds Flow from Operations(2): Funds flow from operations(2) was $79 million ($2.37 basic per share), up 49% from the Prior Quarter and down 16% from one year ago.

Free Cash Flow(2): During the Quarter, the Company generated free cash flow of approximately $36 million. Given the Company’s front-end loaded 2023 development program, the majority of the Company’s capital expenditures were incurred in the first half of 2023.

Return on Average Capital Employed(2): Achieved return on average capital employed(2) of 25% during the Quarter and 18% over the last trailing twelve months.

Cash and Debt: As of September 30, 2023, the Company had a cash balance of $123 million and net debt(2) of $499 million.

Credit Facility: Gran Tierra amended and restated the Company’s credit facility with a market leader in the global commodities industry. As part of the restatement, the initial commitment was adjusted from $100 million to $50 million (maintaining the potential option of up to an additional $50 million, subject to approval by the lender). During the Quarter, the Company drew $50 million on the credit facility for settlement of the bond exchanges. The Company expects to pay back this amount fully by August 2024.

Oil Price Hedges: Subsequent to the end of the Quarter, the Company entered into 15,000 BOPD put options from October 1, 2023 to March 31, 2024 with a floor price of $80.00 per bbl Brent and no ceiling for a premium of $3.10 per BOPD.

Additional Key Financial Metrics:

Capital Expenditures: Capital expenditures of $43 million were lower than the Prior Quarter’s level of $66 million and down from $57 million compared to one year ago as a result of no wells being drilled during the Quarter.

Oil Sales: Gran Tierra generated oil sales of $180 million, up 14% from the Prior Quarter and up 7% from one year ago. Compared to one year ago, oil sales increased as a result of lower Castilla and Vasconia differentials to the Brent oil price. Oil sales increased compared to the Prior Quarter primarily due to an 11% increase in the Brent oil price, partially offset by a 3% decrease in sales volumes.

Operating Netback(2)(3): The Company’s operating netback(2)(3) was $40.87 per bbl, an increase of 18% from the Prior Quarter and down 8% from one year ago. Similar to oil sales, changes in operating netback relative to the Prior Quarter were driven by an increase in the Brent oil price and were partially offset by higher operating costs. Compared to one year ago the change in operating netback was largely driven by a 12% decrease in Brent and higher operating expenses.

Operating Expenses: Gran Tierra’s operating expenses remained consistent at $15.92 per bbl, compared to $15.86 per bbl in the Prior Quarter. Compared to one year ago, operating expenses increased by 7% on a per bbl basis, due to higher lifting costs associated with road and pipeline maintenance, power generation due to increased compressed natural gas purchases and higher diesel tariffs, and equipment rental associated with testing exploratory wells. As a result of an El-Niño-induced drought, power costs have increased across Colombia, which relies on hydroelectricity for more than two-thirds of its installed power capacity. In addition, operating costs increased due to the appreciation of the Colombian peso versus the U.S. dollar.

Quality and Transportation Discounts: The Company’s quality and transportation discount narrowed to $11.83 per bbl, down from $14.10 per bbl in the Prior Quarter and down from $13.37 per bbl one year ago. The Castilla oil differential narrowed to $6.64 per bbl, down from $9.41 per bbl in the Prior Quarter and down from $9.15 per bbl one year ago (Castilla is the benchmark for the Company’s Middle Magdalena Valley Basin oil production). The Vasconia differential narrowed to $3.59 per bbl, down from $5.53 per bbl in the Prior Quarter and down from $3.77 per bbl one year ago (Vasconia is the benchmark for the Company’s Putumayo Basin oil production). The current(1) Castilla differential is approximately $7.11 per bbl and the Vasconia differential is approximately $3.45 per bbl.

General and Administrative (“G&A”) Expenses: G&A expenses before stock-based compensation were $2.68 per bbl, down from $3.12 per bbl in the Prior Quarter and down from $2.95 when compared to one year ago due to higher sales volumes in the Quarter.

Cash Netback(2): Cash netback per bbl was $25.48, compared to $17.37 in the Prior Quarter as a result of an increase in Brent price of $8.19 per bbl and a lower quality and transportation discount. Compared to one year ago, cash netback per bbl decreased by $7.94 from $33.42, despite a $11.78 per bbl decrease in the Brent oil price over the same period.

Development Campaign:

Following Gran Tierra’s successful 2023 development drilling campaigns at Acordionero and the northern extension of the Costayaco field, the Company plans to accelerate its development program and expects to commence drilling at both fields in December 2023. Upon completion of the development drilling program in Costayaco (expected in March 2024), the Company plans to move the drilling rig to Ecuador to begin the exploration drilling program.

Financial and Operational Highlights (all amounts in $000s, except per share and bbl amounts)

• Gran Tierra’s fourth quarter-to-date 2023 total average differentials are for the time period from October 1 to October 30, 2023.
• Funds flow from operations, operating netback, net debt, cash netback, return on average capital employed, earnings before interest, taxes and depletion, depreciation and accretion (“DD&A”) (“EBITDA”) and EBITDA adjusted for non-cash lease expense, lease payments, foreign exchange gains or losses, stock-based compensation expense, unrealized derivative instruments gains or losses, and other financial instruments gains or losses (“Adjusted EBITDA”), cash flow, free cash flow and net debt are non-GAAP measures and do not have standardized meanings under generally accepted accounting principles in the United States of America (“GAAP”). Cash flow refers to funds flow from operations. Free cash flow refers to funds flow from operations less capital expenditures. Refer to “Non-GAAP Measures” in this press release for descriptions of these non-GAAP measures and, where applicable, reconciliations to the most directly comparable measures calculated and presented in accordance with GAAP.
• Reflects our 1-for-10 reverse stock split that became effective May 5, 2023.

Conference Call Information:

Gran Tierra will host its third quarter 2023 results conference call on Wednesday, November 1, 2023, at 9:00 a.m. Mountain Time, 11:00 a.m. Eastern Time. Interested parties may access the conference call by registering at the following link: https://register.vevent.com/register/BI3d4b404745c040cca3def3c065f9605a. The call will also be available via webcast at www.grantierra.com.

Corporate Presentation:

About Gran Tierra Energy Inc.

Gran Tierra's Securities and Exchange Commission (the “SEC”) filings are available on the SEC website at http://www.sec.gov. The Company’s Canadian securities regulatory filings are available on SEDAR at http://www.sedar.com and UK regulatory filings are available on the National Storage Mechanism website at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

Non-GAAP Measures

*Annualized EBIT was calculated for the three months ended September 30, 2023, by multiplying the quarter-to-date EBIT by 4.

Cash netback as presented is defined as net income or loss adjusted for depletion, depreciation and accretion (“DD&A”) expenses, deferred tax expense or recovery, stock-based compensation expense or recovery, amortization of debt issuance costs, non-cash lease expense, lease payments, unrealized foreign exchange gain or loss, unrealized derivative instruments gain or loss and other gain or loss. Management believes that operating netback and cash netback are useful supplemental measures for investors to analyze financial performance and provide an indication of the results generated by Gran Tierra’s principal business activities prior to the consideration of other income and expenses. A reconciliation from net income or loss to cash netback is as follows:

EBITDA, as presented, is defined as net income or loss adjusted for DD&A expenses, interest expense and income tax expense or recovery. Adjusted EBITDA, as presented, is defined as EBITDA adjusted for non-cash lease expense, lease payments, foreign exchange gain or loss, stock-based compensation expense or recovery, unrealized derivative instruments gain or loss, other gain or loss, and other financial instruments gain or loss. Management uses this supplemental measure to analyze performance and income generated by our principal business activities prior to the consideration of how non-cash items affect that income, and believes that this financial measure is useful supplemental information for investors to analyze our performance and our financial results. A reconciliation from net income or loss to EBITDA and adjusted EBITDA is as follows:

Adjustments to reconcile net income (loss) to EBITDA and Adjusted EBITDA

Funds flow from operations, as presented, is defined as net income or loss adjusted for DD&A expenses, deferred tax expense or recovery, stock-based compensation expense or recovery, amortization of debt issuance costs, non-cash lease expense, lease payments, unrealized foreign exchange gain or loss, unrealized derivative instruments gain or loss, other gain or loss and other financial instruments gain or loss. Management uses this financial measure to analyze performance and income or loss generated by our principal business activities prior to the consideration of how non-cash items affect that income or loss, and believes that this financial measure is also useful supplemental information for investors to analyze performance and our financial results. Free cash flow, as presented, is defined as funds flow from operations adjusted for capital expenditures. Management uses this financial measure to analyze cash flow generated by our principal business activities after capital requirements and believes that this financial measure is also useful supplemental information for investors to analyze performance and our financial results. A reconciliation from net income or loss to both funds flow from operations and free cash flow is as follows:

Adjustments to reconcile net income (loss) to funds flow from operations

Net debt as of September 30, 2023, was $499 million, calculated using the sum of 6.25% Senior Notes, 7.75% Senior Notes, and the Credit Facility excluding deferred financing fees totaling $622 million, less cash and cash equivalents of $123 million.

Presentation of Oil and Gas Information

All reserves values and ancillary information contained in this press release have been prepared by the Company’s independent qualified reserves evaluator McDaniel & Associates Consultants Ltd. (“McDaniel”) in a report with an effective date of June 30, 2023 (the “GTE McDaniel Reserves Report”) and calculated in compliance with Canadian National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) and the Canadian Oil and Gas Evaluation Handbook (“COGEH”), unless otherwise expressly stated.

Estimates of net present value and future net revenue contained herein do not necessarily represent fair market value. Estimates of reserves and future net revenue for individual properties may not reflect the same level of confidence as estimates of reserves and future net revenue for all properties, due to the effect of aggregation. There is no assurance that the forecast price and cost assumptions applied by McDaniel in evaluating Gran Tierra’s reserves will be attained and variances could be material. All reserves assigned in the GTE McDaniel Reserves Report are located in Colombia and Ecuador and presented on a consolidated basis by foreign geographic area. There are numerous uncertainties inherent in estimating quantities of crude oil reserves. The reserve information set forth in the GTE McDaniel Reserves Report are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual reserves may be greater than or less than the estimates provided therein.

Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves. Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves. Possible reserves are those additional reserves that are less certain to be recovered than Probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of Proved plus Probable plus Possible reserves.