(Source: Canada Newswire)
Record Quarterly Production of 12,611 Barrels of Oil Per Day Attained
CALGARY, Aug. 10 /CNW/ - Gran Tierra Energy Inc. (NYSE Amex: GTE, TSX: GTE), a company focused on oil exploration and production in South America, today announced financial and operating results for the quarter ended June 30, 2009. All dollar amounts are in United States dollars unless otherwise indicated.
Key facts about the quarter:
- 271% increase in production to 12,611 barrels of oil per day (BOPD)
net after royalty (NAR) for the quarter ended June 30, 2009, compared
with 3,399 BOPD NAR for the same period in 2008;
- Net loss for the quarter ended June 30, 2009 was $28.2 million and
includes a foreign exchange loss of $33.7 million, of which
$31.0 million was an unrealized foreign exchange loss;
- Funds flow from operations for the quarter ended June 30, 2009 was
$36.0 million as compared to $17.9 million for the same period in
2008 (see table below);
- Cash and cash equivalents of $146.5 million at June 30, 2009;
- Gran Tierra Energy continues to be debt free;
- Ecopetrol's oil pipeline in Southern Colombia was disrupted between
June 7 and June 20: consolidated production averaged 2,963 BOPD NAR
during this period;
- Three new highly prospective exploration contracts signed for a total
of 235,264 acres in Putumayo Basin of Southern Colombia with 100%
working interest; and
- Costayaco-8 logging demonstrates that reservoirs lie completely
within the field's oil column; subsequent testing produced 2,640 BOPD
from the lower reservoir and 2,211 BOPD from the upper reservoir.
"During the second quarter we executed our exploration and development program, grew production to record levels, and generated strong cash flow from operations," said Dana Coffield, President and Chief Executive Officer of Gran Tierra Energy. "Non-cash depletion, depreciation and accretion expenses of $32.7 million and unrealized foreign exchange losses of $31.0 million, contributed to our net loss for the quarter of $28.2 million. However, our funds flow from operations was $36.0 million in the second quarter and our underlying asset base remains strong. We believe we have successfully positioned ourselves to generate the cash necessary to fund future growth and allow us to fund our ongoing development and exploration program, including fourteen exploration wells in Colombia and Peru beginning in late 2009 and continuing through 2010. Our balance sheet remains very strong, and we expect that our capital expenditure program for the next twelve months will be more than fully funded from cash flow and cash on hand."
Production Review
Three Months Ended Three Months Ended
June 30, 2009 June 30, 2008
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(Barrels
of Oil) Colombia Argentina Total Colombia Argentina Total
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Gross
Production 1,213,251 91,444 1,304,695 326,845 55,247 382,092
Royalties (155,966) (11,089) (167,055) (55,052) (6,630) (61,682)
Inventory
Adjustment 1,257 8,698 9,955 (13,130) 2,089 (11,041)
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Production
(NAR) 1,058,542 89,053 1,147,595 258,663 50,706 309,369
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Barrels of
Oil Per Day
(BOPD)(NAR) 11,632 979 12,611 2,842 557 3,399
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Six Months Ended Six Months Ended
June 30, 2009 June 30, 2008
------------------------------- -----------------------------
(Barrels
of Oil) Colombia Argentina Total Colombia Argentina Total
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Gross
Production 2,191,556 198,609 2,390,165 583,764 112,359 696,123
Royalties (281,022) (24,451) (305,473) (95,460) (13,483) (108,943)
Inventory
Adjustment 1,730 (1,328) 402 (14,304) (4,785) (19,089)
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Production
(NAR) 1,912,264 172,830 2,085,094 474,000 94,091 568,091
------------------------------- -----------------------------
------------------------------- -----------------------------
BOPD (NAR) 10,565 955 11,520 2,604 517 3,121
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------------------------------- -----------------------------
Financial Review
Three Months Ended June 30, Six Months Ended June 30,
------------------------------- -----------------------------
2009 2008 % Change 2009 2008 % Change
------------------------------- -----------------------------
(Thousands
of U.S.
Dollars)
Revenue and
Interest $ 58,511 $ 33,144 77 $ 92,076 $ 53,963 71
------------------------------- -----------------------------
------------------------------- -----------------------------
Net income
(loss) $(28,200) $ 8,526 (431) $(14,068) $ 13,202 (207)
------------------------------- -----------------------------
------------------------------- -----------------------------
(US Dollars
per Share)
Net Income
(Loss) Per
Share -
Basic $ (0.12) $ 0.08 (250) $ (0.06) $ 0.13 (146)
------------------------------- -----------------------------
------------------------------- -----------------------------
Net Income
(Loss) Per
Share -
Diluted $ (0.12) $ 0.07 (271) $ (0.06) $ 0.11 (155)
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------------------------------- -----------------------------
Funds flow from operations reconciled to net income (loss) is as follows:
Funds flow From Operations - Three Months Ended Six Months Ended
Non-GAAP Measure (1) June 30, June 30,
------------------- --------------------
2009 2008 2009 2008
------------------- --------------------
(Thousands of U.S. Dollars)
Net income (loss) $(28,200) $ 8,526 $(14,068) $ 13,202
Adjustments to reconcile net
income to net cash (used in)
provided by operating activities
Depletion, depreciation and
accretion 32,691 5,400 60,220 8,464
Deferred taxes (971) (1,487) (4,953) (866)
Stock-based compensation 1,160 399 2,285 847
Unrealized loss on financial
instruments 284 5,077 371 5,770
Unrealized foreign
exchange loss 31,007 - 12,709 -
------------------- --------------------
Funds flows from operations $ 35,971 $ 17,915 $ 56,564 $ 27,417
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(1) Gran Tierra Energy has disclosed the non-GAAP measure "funds flow
from operations" in this press release which does not have any
standardized meaning prescribed under GAAP. Management uses this
financial measure to analyze operating performance and the income
(loss) generated by Gran Tierra Energy's principal business
activities prior to the consideration of how non-cash items affect
that income, and believes that this financial measure is also useful
supplemental information for investors to analyze operating
performance and Gran Tierra Energy's financial results. Investors
should be cautioned that this measure should not be construed as an
alternative to net income (loss) or other measures of financial
performance as determined in accordance with GAAP. Gran Tierra
Energy's method of calculating this measure may differ from other
companies and, accordingly, it may not be comparable to similar
measures used by other companies. Funds flow from operations, as
presented, is based on net income (loss) adjusted for depletion,
depreciation and accretion, deferred taxes, stock based compensation,
unrealized loss (gain) on financial instruments and unrealized
foreign exchange losses (gains).
Second Quarter 2009 Financial Highlights:
Revenue and interest increased by 77% to $58.5 million for the three months ended June 30, 2009 compared with $33.1 million for the same period in 2008. For the six months ended June 30, 2009 revenue and interest increased by 71% to $92.1 million compared with $54.0 million for the same period the previous year. While partially offset by the effect of lower oil prices, increased revenue this quarter was the result of a 271% increase in production, primarily due to increased production from the continued development of the Costayaco field in the Chaza Block in Colombia, and the addition of production from Solana Resources' interests in Colombia following the acquisition on November 14, 2008. The average price received per barrel of oil in the second quarter of 2009 decreased 52% to $50.79 per barrel from $106.80 per barrel in the second quarter of 2008.
Operating expenses increased by 138% to $8.9 million for the quarter ended June 30, 2009 compared with $3.7 million for the same quarter in 2008. On a per barrel basis, operating expenses for the second quarter of 2009 declined by 36% to $7.74 per barrel compared with $12.04 per barrel for the same period in 2008. For the six months ended June 30, 2009, operating expenses increased by 155% to $16.0 million compared with $6.3 million for the same period in 2008. On a per barrel basis, operating expenses for the first half of 2009 declined by 30% to $7.66 per barrel compared with $11.01 per barrel in the first half of 2008. Per barrel operating expenses in both periods of 2009 were lower due to high production wells and increases in operational efficiency.
Depletion, depreciation and accretion expenses (DD&A) for the first three months of 2009 increased to $32.7 million or $28.49 per barrel from $5.4 million or $17.45 per barrel for the same quarter in 2008 due to higher production levels and amortization of $24.6 million in the quarter related to the fair value of property, plant and equipment recorded on the acquisition of Solana Resources. DD&A for the six months ended June 30, 2009 was $60.2 million or $28.88 per barrel, including $45.5 million related to Solana Resources property, plant and equipment, compared with $8.5 million or $14.90 per barrel for the same period in 2008.
General and administrative expenses (G&A) increased by 51% to $7.0 million for the quarter ended June 30, 2009 compared with $4.6 million for the same period in 2008. However, on a per barrel basis, general and administrative costs in the second quarter of 2009 decreased by 59% to $6.12 per barrel compared with $15.00 per barrel in the second quarter of 2008. G&A expenses for the six months ended June 30, 2009 were $12.2 million or $5.83 per barrel compared with $8.8 million or $15.44 per barrel for the same period in 2008. The decrease in G&A expenses on a per barrel basis for the periods ending June 30, 2009 was the result of higher production offsetting the increase in employee related costs in connection with Gran Tierra Energy's expanded operations in Colombia.
Included in the second quarter 2009 results is a $33.7 million foreign exchange loss of which $31.0 million is due to a non-cash unrealized foreign exchange loss related to translation of the deferred tax liability recorded on the acquisition of Solana Resources. For the six months ended June 30, 2009, the company recorded a non-cash $12.7 million foreign exchange loss due to the translation of the same deferred tax liability. A strengthening in the Colombian peso against the U.S. dollar results in foreign exchange losses, estimated at $70,000 for each one peso decrease in the exchange rate of the Colombian peso to one U.S. dollar.
The net loss for the second quarter of 2009 was $28.2 million compared with a net income of $8.5 million for the same period in 2008. On a per share basis, the net loss was $0.12 per share basic and diluted, compared with a net income of $0.08 per share basic and $0.07 per share diluted in the second quarter of 2008. For the six months ended June 30, 2009 the net loss was $14.1 million compared with net income of $13.2 million for the same period in 2008.
