- Published: 26 February 2009
- Written by Editor
Gran Tierra Energy Announces Fourth Quarter and 2008 Year-End Financial Results
--Company Reports Record Increase in Year over Year Reserves, Production Volumes, and Revenues - Cash Balance Grows to $177 Million
Gran Tierra Energy Inc. (NYSE Alternext: GTE, TSX: GTE), a company focused on oil exploration and production in South America, today announced financial and operating results for the quarter and year ended December 31, 2008. Highlights for the year include:
* 145% increase in average daily oil production over the prior year with a current production rate of approximately 12,000 barrels of oil per day (BOPD), net after royalty.
* Record revenue and other income for the year of $114.0 million, an
increase of 253% from $32.3 million for 2007.
* Net income of $23.5 million or $0.19 per share basic and $0.16 per share
diluted, compared to a net loss of $8.5 million or ($0.09) per share
basic and diluted in 2007.
* Cash and cash equivalents of $176.8 million compared to $57.8 million at
September 30, 2008 and $18.2 million at December 31, 2007. Gran Tierra
Energy continues to be debt free.
Full Year 2008 Financial Highlights:
The company recognized revenue and other income of $114.0 million, an increase of 253% from $32.3 million for 2007. Net income for 2008 was $23.5 million or $0.19 per share basic and $0.16 per share diluted, compared to a net loss of $8.5 million or ($0.09) per share in 2007 basic and diluted. The 2008 results reflect increased production from the successful exploration and development programs in both Colombia and Argentina, higher oil prices based on a higher average West Texas Intermediate (WTI) oil price and the results of Solana Resources Limited from the November 14, 2008 acquisition date.
The average price received per barrel of oil in 2008 increased 44% to $84.89 per barrel from $58.79 per barrel in 2007.
Cash provided by operations for 2008 was $109.7 million compared to $8.8 million in 2007.
Fourth Quarter 2008 Financial Highlights:
Revenue and other income for the fourth quarter ended December 31, 2008 was $19.7 million, a 24% increase from $16.0 million for the same period of 2007. The company reported a net loss for the quarter of $12.7 million or $(0.07) per share diluted as compared to net income of $2.2 million, or $0.02 per share for the same period in 2007.
Included in the 2008 fourth quarter results are non-cash expenses resulting from the inclusion of Solana, comprised of a $7.3 million unrealized foreign exchange loss related to translation of a deferred tax liability, and additional depletion expense of $6.9 million.
A general strike in Colombia, which caused the suspension of production operations in southern Colombia from November 20, 2008 through to year end, also impacted the results of the quarter. Operating expenses during this period remained relatively unchanged from the third quarter as the company retained its employees and continued to maintain its facilities.
Realized prices in the fourth quarter of 2008 averaged $50.38 per barrel compared to $72.95 per barrel for the fourth quarter of 2007, reflecting the recent decline in WTI price.
Balance Sheet Highlights:
The company reported cash and equivalents of $176.8 million at 2008 year end as compared to $57.8 million at September 30, 2008 and $18.2 million at December 31, 2007. Working capital was $132.8 million at 2008 year end, as compared to $43.5 million at September 30, 2008 and $8.1 million at the end of 2007. Shareholders' equity increased to $791.9 million at December 31, 2008 from $76.8 million at December 31, 2007, and the company had no outstanding long-term debt as of year end. The increase in equity is primarily a result of the issuance of shares to acquire Solana. Cash included in the assets acquired from Solana was $81.9 million, net of acquisition costs.
Production Highlights:
Average oil production for the year ended December 31, 2008, net of royalties, increased 145% to 3,629 BOPD from 1,482 BOPD in 2007. The increase in production is due primarily to increased production from the continued development of the Costayaco field in the Chaza Block in Colombia and the successful drilling of the Proa -1 well in the Surubi Block in Argentina.
Average oil production for the fourth quarter of 2008, net after royalties, was 4,074 BOPD. Production was impacted by the strike at the Ecopetrol operated Orito facilities which resulted in a suspension of crude oil transportation in southern Colombia from November 20, 2008 through year end 2008. Crude oil transportation resumed on January 12, 2009.
Current production is approximately 12,000 BOPD, net after royalty, and the company anticipates that production will be 15,000 BOPD, net after royalty, at the end of the first quarter of 2009.
2008 Reserve Review:
Externally audited proved oil reserves (as per SEC Reserves Definitions) net after royalty to Gran Tierra Energy as of December 31, 2008 tripled to 19.2 million barrels of oil (BO) proved compared to 6.4 million BO proved as of December 31, 2007.
As per Canadian NI 51-101 and the Reserves definitions in the COGE Handbook, reserves net after royalty to Gran Tierra Energy as of December 31, 2008 increased significantly from 2007 to 18.8 million BO proved, 8.7 million BO probable, and 18.6 million BO possible. This compares to reserves as of December 31, 2007 of 6.4 million BO proved, 5.0 million BO probable and 4.9 million BO possible.
Commenting on the results, Dana Coffield, President and Chief Executive Officer of Gran Tierra Energy Inc., stated, "2008 was a milestone year for Gran Tierra Energy. Associated with the acquisition of Solana Resources, the high-point was the consolidation of a 100% working interest in the Costayaco field, one of the largest oil discoveries in Colombia in recent years. With this and with additional drilling success, Gran Tierra Energy was able to triple proved reserves during the year. In parallel, our net after royalty production volumes have increased dramatically and we are on track to reach 20,000 barrels of oil per day, net to the company, in the second half of this year."
Coffield continued, "The fourth quarter of the year proved to be challenging as a result of falling oil prices and a significant deferral of production in Colombia in December. In spite of this, our balance sheet is stronger than it has ever been. Our capital program for 2009 will be fully funded from cash flow and cash on hand. This includes a development drilling program to grow production, an exploration drilling program to continue exploring for new reserves, and diverse seismic programs in Colombia, Peru, and Argentina to prepare for continued exploration drilling in 2010."
"The successful execution of our strategy to date has positioned Gran Tierra Energy to not only survive in the current business environment, but to thrive. Our 2008 results and strong balance sheet should allow Gran Tierra Energy to continue pursuing its long term goal of becoming a significant player in the international oil and gas exploration and production arena by prudently executing our growth strategy," Coffield concluded.
Related News - Costayaco 6 and 7 Update:
The company reported the recent completion of production testing at Costayaco-6 in Colombia. Only water was recovered in this testing. Additional testing will be undertaken to optimize the use of this wellbore for water disposal or for reservoir pressure support. In addition, the drilling of Costayaco-7 has been initiated. This development well is being drilled in the north central portion of the Costayaco field and will take approximately 45 days to drill and complete.
Conference Call Information:
Gran Tierra Energy Inc. will hold a conference call to review its fourth quarter and full year 2008 results on Thursday, February 26, 2009 at 11:00 a.m. Eastern Time. The call will be hosted by Dana Coffield, President and Chief Executive Officer. Interested parties may access the conference call by dialing (888) 713-4218 (domestic) or (617) 213-4870 (international), pass code # 43836235. The call will also be available via web cast at http://www.grantierra.com, or http://www.streetevents.com, http://www.fulldisclosure.com. The web cast will be available on Gran Tierra Energy's website until the next earnings call.
If you are unable to participate, an audio replay of the call will be available beginning two hours after the call and will be available until 11:59 p.m. on February 26, 2009, by dialing (888) 286-8010 (domestic) or (617) 801-6888 (international) using confirmation pass code 72426646.
About Gran Tierra Energy Inc.:
Gran Tierra Energy Inc. is an international oil and gas exploration and production company, headquartered in Calgary, Canada, incorporated in the United States, trading on the NYSE Alternext exchange (GTE) and the Toronto Stock Exchange (GTE), and operating in South America. The company holds interests in producing and prospective properties in Argentina, Colombia and Peru. The company has a strategy that focuses on establishing a portfolio of producing properties, plus production enhancement and exploration opportunities 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 This email address is being protected from spambots. You need JavaScript enabled to view it. or (866) 973-4873
Cautionary Statement:
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. The estimate of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties, due to the effects of aggregation.
Estimates of total net proved oil reserves at December 31, 2008 have been prepared in accordance with the definitions for proved reserves set out in Rule 4-10 of Regulation S-X of the U.S. Securities and Exchange Commission. Reserves were estimated for proved, proved plus probable and proved plus probable plus possible cases under the reserve definitions of National Instrument 51-101 (NI 51-101) of Canada and for the proved case under the definitions of the Securities Exchange Commission (SEC) of the United States. The evaluation was conducted in accordance with standard industry practice and reserves definitions, procedures and guidance contained in the Canadian Oil and Gas Evaluation Handbook (COGE Handbook).
Forward Looking Statements:
The statements in this news release regarding Gran Tierra Energy's belief that the company's production will be 15,000 BOPD, net after royalty at the end of the first quarter of 2009, that it is on track for achieving 20,000 BOPD this year, that its 2009 capital program will be fully funded from cash flow and cash on hand, that it is positioned to thrive in the current business environment, and its 2009 testing and drilling plans for Costayaco 6 and 7, are forward looking statements or financial outlook (collectively, "forward- looking statements") under the meaning of applicable securities laws, including Canadian Securities Administrators' National Instrument 51-102 Continuous Disclosure Obligations and the United States Private Securities Litigation Reform Act of 1995. These statements are subject to risks, uncertainties and other factors that could cause actual results or outcomes to differ materially from those contemplated by the forward-looking statements. There are a number of important factors that could cause the results or outcomes discussed herein to differ materially from that indicated by the forward-looking statements, including, among others: Gran Tierra Energy's operations are located in South America, and unexpected problems can arise due to guerilla activity, technical difficulties and operational difficulties which impact the production, transport or sale of its products; geographic, political and weather conditions can impact the production, transport or sale of its products; and the risk that the current global economic and credit crisis may impact oil prices and oil consumption more than Gran Tierra Energy currently predicts. Further information on potential factors that could affect Gran Tierra Energy are included in risks detailed from time to time in Gran Tierra Energy's Securities and Exchange Commission filings, including, without limitation, under the caption "Risk Factors" in Gran Tierra Energy's Quarterly Report on Form 10-Q filed November 6, 2008. These filings are available on a Web site maintained by the Securities and Exchange Commission at http://www.sec.gov and on SEDAR at http://www.sedar.com Gran Tierra Energy does not undertake an obligation to update forward-looking or other statements in this release.
Basis of Presentation of Financial Results:
Gran Tierra Energy's financial results are reported in United States dollars and prepared in accordance with generally accepted accounting principles in the United States.
Contacts:
Dana Coffield Al Palombo
Gran Tierra Energy, Inc. Cameron Associates
President & Chief Executive Officer Investor Relations
(866) 973-4873 (212) 554-5488
This email address is being protected from spambots. You need JavaScript enabled to view it. This email address is being protected from spambots. You need JavaScript enabled to view it.
Financial Tables to Follow
Gran Tierra Energy Inc.
Consolidated Statements of Operations and Retained Earnings (Accumulated Deficit)
For the Years and Quarters ended December 31, 2008, 2007
Prepared in accordance with generally accepted accounting principles in the United States
(Thousands of U.S. Dollars, Except Share and Per Share Amounts)
Year Ended December 31, Quarter Ended December 31,
REVENUE AND OTHER 2008 2007 2008 2007
INCOME (Unaudited) (Unaudited)
Oil and natural gas
sales $112,805 $31,853 $18,932 $15,925
Interest 1,224 425 795 48
114,029 32,278 19,727 15,973
EXPENSES
Operating 19,218 10,474 8,452 3,755
Depletion,
depreciation and
accretion 25,737 9,415 10,516 2,865
General and
administrative 18,593 10,232 5,783 2,648
Liquidated damages - 7,367 - -
Derivative financial
instruments (gain)
loss (193) 3,040 (3,180) 2,247
Foreign exchange
(gain) loss 6,235 (78) 7,969 15
69,590 40,450 29,540 11,530
INCOME (LOSS) BEFORE
INCOME TAXES 44,439 (8,172) (9,813) 4,443
Income tax expense
(recovery) (20,944) (295) 2,881 2,280
NET INCOME (LOSS) AND
COMPREHENSIVE INCOME
(LOSS) $23,495 $(8,467) $(12,694) $2,163
ACCUMULATED DEFICIT,
BEGINNING OF PERIOD (16,511) (8,044) 19,678 (18,674)
RETAINED EARNINGS
(ACCUMULATED DEFICIT),
END OF PERIOD $6,984 $(16,511) $6,984 $(16,511)
NET INCOME (LOSS) PER
SHARE - BASIC 0.19 (0.09) (0.07) 0.02
NET INCOME (LOSS) PER
SHARE -DILUTED 0.16 (0.09) (0.07) 0.02
WEIGHTED AVERAGE SHARES
OUTSTANDING -
BASIC 123,421,898 95,096,311 176,768,596 95,049,083
WEIGHTED AVERAGE
SHARES
OUTSTANDING -
DILUTED 143,194,590 95,096,311 185,847,980 110,577,835
Gran Tierra Energy Inc.
Consolidated Balance Sheets
As at December 31, 2008, 2007
Prepared in accordance with generally accepted accounting principles in the United States
(Thousands of U.S. Dollars, Except Share and Per Share Amounts)
As at December 31,
2008 2007
ASSETS
Current Assets
Cash and cash equivalents $176,754 $18,189
Accounts receivable 7,905 10,695
Inventory 999 787
Taxes receivable 5,789 1,177
Prepaids 1,103 442
Derivative financial instruments 233 -
Deferred tax asset 2,262 220
Total Current Assets 195,045 31,510
Oil and Gas Properties (using the full cost
method of accounting)
Proved 380,855 44,292
Unproved 384,195 18,910
Total Oil and Gas Properties 765,050 63,202
Other Assets 2,502 716
Total Property, Plant and Equipment 767,552 63,918
Long Term Assets
Deferred tax asset 10,131 1,839
Taxes receivable - 525
Other long-term assets 1,315 -
Goodwill 98,582 15,005
Total Long Term Assets 110,028 17,369
Total Assets $1,072,625 $112,797
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $21,134 $11,327
Accrued liabilities 12,841 6,139
Derivative financial instruments - 1,594
Current taxes payable 28,163 3,284
Deferred tax liability 100 1,108
Total Current Liabilities 62,238 23,452
Long term liabilities 40 132
Deferred tax liability 213,093 9,235
Deferred remittance tax 1,077 1,332
Derivative financial instruments - 1,055
Asset retirement obligation 4,251 799
Total Long Term Liabilities 218,461 12,553
Shareholders' Equity
Common shares 226 95
(190,248,384 and 80,389,676 common shares
and 48,238,269 and 14,787,303 exchangeable
shares, par value $0.001 per share, issued
and outstanding as at December 31, 2008 and
2007, respectively)
Additional paid in capital 753,236 72,458
Warrants 31,480 20,750
Retained earnings (accumulated deficit) 6,984 (16,511)
Total Shareholders' Equity 791,926 76,792
Total Liabilities and Shareholders' Equity $1,072,625 $112,797
Gran Tierra Energy Inc.
Consolidated Statements of Cash Flow
For the Years ended December 31, 2008, 2007
Prepared in accordance with generally accepted accounting principles in the United States
(Thousands of U.S. Dollars, Except Share and Per Share Amounts)
Year Ended December 31,
2008 2007
Operating Activities
Net income (loss) $23,495 $(8,467)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depletion, depreciation and accretion 25,737 9,415
Deferred taxes (6,418) 185
Stock based compensation 2,520 810
Liquidated damages - 5,839
Unrealized foreign exchange loss 6,985 -
Unrealized (gain) loss on financial
instruments (2,882) 2,648
Net changes in non-cash working capital
Accounts receivable 34,943 (5,604)
Inventory (107) 25
Prepaids 261 234
Accounts payable and accrued liabilities 10,697 2,808
Taxes receivable and payable 14,840 869
Settlement of asset retirement obligations (334) -
Net cash provided by operating activities 109,737 8,762
Investing Activities
Restricted cash - 1,010
Oil and gas property expenditures (55,217) (15,976)
Cash acquired on acquisition net of
acquisition costs 81,912 -
Long term assets and liabilities 446 (427)
Net cash provided by (used in) investing
activities 27,141 (15,393)
Financing Activities
Restricted cash - -
Proceeds from issuance of common stock 21,687 719
Net cash provided by financing activities 21,687 719
Net (decrease) increase in cash and cash
equivalents 158,565 (5,912)
Cash and cash equivalents, beginning of year 18,189 24,101
Cash and cash equivalents, end of year $176,754 $18,189
Cash 110,688 18,189
Term deposits 66,066 -
Cash and cash equivalents, end of year $176,754 $18,189
Supplemental cash flow disclosures:
Cash paid for interest $- $80
Cash paid for taxes $11,587 $116
Non-cash investing activities:
Non-cash working capital related to capital
additions $11,096 $8,259
http://www.grantierra.com
