Gran Tierra Energy Announces 2016 Capital Budget And Guidance

CALGARY, ALBERTA--(Jan 18, 2016) -  All dollar amounts are in United States ("U.S.") dollars unless otherwise indicated.

Gran Tierra Energy Inc. ("Gran Tierra" or the "Company") (GTE.TO)(GTE.TO) is pleased to announce its 2016 capital and operating budget. Given the current volatility in commodity prices, the board of directors of Gran Tierra has approved a flexible budget focusing capital allocation on projects to grow and expand the assets in Colombia, while maximizing the value of assets in Brazil and Peru.

"An important part of our base and development budget is underway now and will be completed over the first six months of 2016. If the price of oil remains below $50.00 per barrel through the second quarter of 2016, the Company may choose to defer some discretionary components of our exploration and development budget to preserve cash. We plan to continue to allocate capital to acquisitions and joint ventures, consistent with our strategy of expanding and diversifying the Company's growth portfolio in Colombia," commented Gary Guidry, President and Chief Executive Officer of Gran Tierra.

The Company's strategy is to efficiently grow and diversify its current portfolio of exploration, development and production opportunities in Colombia. In addition to implementing a flexible approach to optimize capital allocation, the Company continues to implement both temporary and permanent cost structure reductions in operating, capital and general and administrative costs.

Highlights:

The Company operates over 80 percent of its production and therefore has significant flexibility on capital allocation. At a $40.00 Brent price, the Company will generate funds flow of $95 to $105 million which will fund the majority of the 2016 base capital expenditures, including required 2016 exploration commitments. At a $52.50 Brent price, the Company will generate funds flow of $155 to $165 million which would fund both the base capital and discretionary growth program.

The Company has a robust portfolio with $61 million of identified growth projects scheduled in the second half of 2016. In the event of an increase in commodity prices, the Company will deploy free cash flow to these projects.

Based on a $40.00 Brent price;

• The Company is forecasting 20% growth in 2016 working interest ("WI") production over 2015 average WI production.
• The Company expects to maintain a strong balance sheet in 2016 and does not anticipate utilizing its $200 million undrawn credit facility.

The Company anticipates exiting 2015 with working capital of approximately $161 million. The net cash portion of the Petroamerica Oil Corp. ("Petroamerica") acquisition was $45 million, and the proposed PetroGranada Colombia Limited ("PetroGranada") acquisition is $19 million. The Petroamerica acquisition closed January 13, 2016 and was funded from cash on hand, and the Petrogranada acquisition is anticipated to close in January and will be funded with cash on hand. Estimated working capital at the beginning of 2016 is approximately $97 million, after giving consideration to these acquisitions.

2016 PRODUCTION GUIDANCE

The 2016 average WI production from the Company's assets in Colombia and Brazil is expected to average approximately 27,500 to 29,000 barrels of oil equivalent per day ("boepd"), representing an increase of 20% over our 2015 average production of 23,400 boepd. The 2016 production guidance includes 900 to 1,000 boepd of production from the Company's assets in Brazil.

The Company is expecting 2016 WI exit production of 29,000 to 30,000 boepd.

BASE CAPITAL PROGRAM OF $107 MILLION

The base capital budget for 2016 is estimated at $107 million, with the majority of the budget allocated to Colombia. The budget includes low-risk committed exploration capital required for the Putumayo-7 block ("PUT-7 Block") in the Putumayo Basin of Colombia. The major components of the base capital work program include the following activities:

Base Capital Program ($million)
Maintenance and Development Capital:
Chaza Block		50
	- Drill 2 water injection wells at Costayaco
	- Drill 3 development wells at Moqueta
	- Facilities work - increased water injection, and new well tie-ins
Brazil		8
Non-Operated Blocks in Colombia		6
Total Maintenance and Development Capital		64
PUT-7 Block		20
	- Drill 2 exploration wells
	- Drill 1 development well
Peru		6
Other - Capital Allocations		17
Total Base Capital Program		107

Well Summary for Base Capital Program:	Gross Wells	Net Wells
Development Wells	6.0	6.0
Exploration Wells	3.0	2.5
Total Wells	9.0	8.5

Also included in our 2016 Base Capital Program is an exploration well on the Llanos-10 block, of which Gran Tierra is carried and has a 50% WI.

DISCRETIONARY GROWTH CAPITAL OF $61 MILLION

For 2016, the budgeted discretionary growth capital will target exploration and development drilling and seismic activities in Colombia. Gran Tierra's discretionary exploration and development work program is as follows:

Discretionary Growth Capital	Gross Wells	Net Wells	($millions)
Putumayo Basin	7.0	3.2	37
Llanos Basin	4.0	1.9	18
Sinu Basin - 281 km of 2D seismic	-	-	6
Total Discretionary Growth Capital	11	5.1	61

Gran Tierra has additional exploration drilling opportunities that could be accelerated given higher oil prices and higher than anticipated funds flow from operations. Alternatively, the discretionary growth capital outlined above can be deferred to 2017 if low commodity prices prevail.

ACQUISITIONS AND NEW PROJECTS

Gran Tierra continues to identify and analyze acquisition and joint-venture opportunities in Colombia (and potentially Mexico) to expand and diversify its growth portfolio. Gran Tierra's strong cash and working capital position and undrawn credit facility provide the Company with the flexibility to continue its active exploration and development program, accelerate the appraisal of any new discoveries and/or expand the growth portfolio through acquisition and new joint-venture projects.

PERU AND BRAZIL BUSINESS UNITS

The capital program in Peru is $6 million, and includes only those activities required for retention of lands and security of assets. In Brazil, the capital program approved for 2016 is $8 million, and includes minimal activity to implement water injection for reservoir pressure maintenance, and to preserve current production levels.

In both Peru and Brazil, operations have been scaled back significantly, with the aim of allowing time for the Company to explore and execute on options to maximize shareholder value. The operations are now structured in such a way that the free cash flow from production in Brazil offsets the spend in Peru, ensuring that these assets remain in-tact without being a burden on the free cash flow generating core assets of the Company.

FUNDS FLOW FROM OPERATIONS

With expected 2016 average production of 27,500 to 29,000 boepd, the Company expects 2016 funds flow from operations and 2016 cash netbacks to be as follows.

Brent ($US/barrel)	40.00	52.50	57.50
Funds Flow from Operations ($million)	95 - 105	155 - 165	175-185
Cash Netbacks ($US/barrel)	9.00 - 10.00	15.00 - 16.00	17.00 - 18.00
Operating Netbacks ($US/barrel)	11.50 - 13.50	19.00 - 21.00	22.00 - 24.00

Cash netback is defined as operating netback less general and administrative, finance and tax expense

2016 BUDGET SUMMARY

($million, unless otherwise indicated)			2016 Budget	2016 Budget
Brent ($US/barrel)			40.00	52.50
Average Production (boepd)			27,500-29,000	27,500-29,000
Oil Percentage of Production			99%	99%
Funds Flow from Operations			95 - 105	155 - 165
Cash Netbacks ($US/barrel)			9.00 - 10.00	15.00 - 16.00
Capital Budget
	Base Capital Program:
		Colombia	76	76
		Brazil	8	8
		Peru	6	6
		Other	17	17
	Total Base Capital Program		107	107
	Discretionary Growth Capital:
		Putumayo Basin	-	37
		Llanos Basin	-	18
		Sinu Basin	-	6
	Total Discretionary Growth Capital		-	61
Total Capital Budget			107	168

The Company will continue to monitor and review realized oil prices and the resulting funds flow, in conjunction with the Company's capital program. With changes in funds flow expectations, the Company will defer or accelerate discretionary capital projects and ensure capital expenditures can be funded by funds flow from operations.

FOR MORE INFORMATION ON GRAN TIERRA ENERGY INC., PLEASE GO TO: www.grantierra.com

DISCLAIMER

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"). Such forward-looking statements include, but are not limited to, statements about: future projected or target production and the growth of production including the product mix of such production and expectations respecting production growth, expected future funds flow from operations; our strategy regarding changing oil prices; our intentions regarding the use of our credit facility; expected cost savings; anticipated capital expenditures, including the location and impact of capital expenditures, our business strategies; our ability to grow in both the near and long term and the funding of our growth opportunities; our possible creation of new core areas; the plans, objectives, expectations and intentions of the company regarding production, exploration and exploration upside, development; Gran Tierra's 2016 capital program including the changes thereto along with the expected costs and the allocation of the capital program; Gran Tierra's financial position including liquidity and financial capacity, and the future development of the company's business.

The forward-looking statements contained in this press release reflect several material factors and expectations and assumptions of Gran Tierra including, without limitation, assumptions relating to the performance of the Petroamerica and PetroGranada assets and Gran Tierra's existing assets, log evaluations, the accuracy of reserves estimates, 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 drilling down-dip, the effects of waterflood and multi-stage fracture stimulation operations, the extent and effect of delivery disruptions, and the general continuance of current or, where applicable, assumed operational, regulatory and industry conditions including in areas of potential expansion, and the ability of Gran Tierra to execute its current business and operational plans in the manner currently planned. Gran Tierra believes the material factors, expectations and assumptions reflected in the forward-looking statements are reasonable at this time but no assurance can be given that these factors, expectations and assumptions will prove to be correct.

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: risks relating to Gran Tierra's ability to realize the anticipated benefits from the Petroamerica and PetroGranada acquisitions; Gran Tierra's operations are located in South America, and unexpected problems can arise due to guerilla 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; the risk that unexpected delays and difficulties in developing currently owned properties may occur; the timely receipt of regulatory or other required approvals for our operating 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 filed March 2, 2015, and its Quarterly Report on Form 10-Q filed November 3, 2015. These filings are available on the Web site maintained by the Securities and Exchange Commission at http://www.sec.gov and on SEDAR at www.sedar.com. Although the current capital spending program and long term strategy of Gran Tierra is based upon the current expectations of the management of Gran Tierra, should any one of a number of issues arise, Gran Tierra may find it necessary to alter its business strategy and/or capital spending program and there can be no assurance as at the date of this press release as to how those funds may be reallocated or strategy changed.

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 securities laws. Gran Tierra's forward-looking statements are expressly qualified in their entirety by this cautionary statement.

The estimates of future production and funds flow from operations set forth in this press release may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws. Financial outlook and future-oriented financial information contained in this press release about prospective financial performance, financial position or cash flows are based on assumptions about future events, including economic conditions and proposed courses of action, based on management's assessment of the relevant information currently available, and to become available in the future. In particular, this press release contains projected operational information for 2016. These projections contain forward-looking statements and are based on a number of material assumptions and factors set out above. Actual results may differ significantly from the projections presented herein. These projections may also be considered to contain future-oriented financial information or a financial outlook. The actual results of Gran Tierra's operations for any period will likely vary from the amounts set forth in these projections, and such variations may be material. See above for a discussion of the risks that could cause actual results to vary. The future-oriented financial information and financial outlooks contained in this press release have been approved by management as of the date of this press release. Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein. The Company and its management believe that the prospective financial information has been prepared on a reasonable basis, reflecting management's best estimates and judgments, and represent, to the best of management's knowledge and opinion, the Company's expected course of action. However, because this information is highly subjective, it should not be relied on as necessarily indicative of future results.

NON-GAAP FINANCIAL MEASURES

This press release includes non-GAAP measures as further described herein. These non-GAAP measures do not have a standardized meaning under GAAP. Investors are cautioned that these measures should not be construed as alternatives to net income or loss or other measures of financial performance as determined in accordance with GAAP. Gran Tierra's method of calculating these measures may differ from other companies and, accordingly, they may not be comparable to similar measures used by other companies.

Funds flow from operations, as presented, is net income or loss, net of income taxes, depletion, depreciation, accretion and impairment expenses, deferred tax recovery or expense, non-cash stock-based compensation, unrealized foreign exchange gains and losses, financial instruments gains and losses, equity tax and cash settlement of foreign currency derivatives. Management uses this financial measure to analyze performance and income or loss generated by Gran Tierra's 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 Gran Tierra's financial results.

Operating netback as presented is calculated as oil and gas sales net of royalties and operating expenses. Management believes that netback is a useful supplemental measure for management and investors to analyze operating performance and provide an indication of the results generated by our principal business activities prior to the consideration of other income and expenses.

For more information on "funds flow from operations", and "operating netback" see "Non-GAAP Measures" in our Management's Discussion and Analysis for the three and nine months ended September 30, 2015.

DISCLOSURE OF OIL AND GAS INFORMATION

BOE's may be misleading particularly if used in isolation. A BOE conversion ratio of 6 thousand cubic feet of gas to 1 barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, given that the value ratio based on the current price of oil as compared with natural gas is significantly different from the energy equivalent of six to one, utilizing a BOE conversion ratio of 6Mcf:1bbl would be misleading as an indication of value. The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties due to the effects of aggregation.

Contact:

Gran Tierra Energy Inc.
Gary Guidry
Chief Executive Officer
+1.403.767.6500
Gran Tierra Energy Inc.
Ryan Ellson
Chief Financial Officer
+1.403.767.6501
Gran Tierra Energy Inc.
Chris Metcalfe
Director Investor Relations
+1.403.698.7946
www.grantierra.com