Gran Tierra Energy

Overview

“I believe we're in a multi-year bull market for oil,” said Eric Nuttall, partner and senior portfolio manager at Ninepoint Partners. He shared further, “What we saw throughout 2021, continuing into 2022, is the lack of significant production growth from all over the world.” In the interview, Nuttall also shared that the fear of peak demand is leading to a reality of peak supply, setting the table for an oil supply crisis.

According to the Short Term Energy Outlook released by the US Energy Information Administration (EIA), oil prices will average $107.37 per barrel in 2022.

Oil is produced around the globe, and Latin America is one of the largest producers of the resource. Colombia is the third largest oil producer in Latin America. The country began exporting oil in the 1980s and significantly boosted production over the past few decades, going from 550,000 barrels per day in 2007 to roughly 900,000 barrels per day. This improvement is primarily attributable to the country’s reforms of energy laws which encouraged a dramatic increase in international investments.

Gran Tierra Energy (TSX:GTE,NYSE:GTE,LSE:GTE) is an oil and gas exploration and development company with producing assets and exploration prospects in Colombia and Ecuador. The company operates the production from the vast majority of its assets, which gives it control over where and when to drill. Gran Tierra is focusing on enhancing recovery by utilizing the waterflooding process that results in higher oil recovery rates and modest future development costs. The company has plans to conduct additional exploration and development operations throughout 2022 and 2023.

The company is currently increasing its production at its flagship project, Acordionero, by drilling 14-16 new development wells throughout 2022. Since the project’s acquisition in 2016, it has produced roughly 29 million barrels of oil (MMbbl) and generated approximately US$1.3 billion in oil and gas sales. In addition, drilling and completion costs have steadily decreased by over 50 percent during the past four years. The drilling of new development wells is also slated for this year at two of Gran Tierra’s other major fields, Costayaco and Moqueta. All the company’s oil fields have access to robust transportation infrastructure and benefit from a stable economic environment.

Waterflooding is a secondary recovery method to enhance overall oil recovery. Water is injected into the oil reservoir, and the influx of water displaces oil from porous rocks where oil is accumulated and pushes the oil towards producing wells. Additionally, adding water maintains or improves the pressure of the reservoir, which increases the productivity of the producing wells. While not every oil reservoir in the world is suitable for waterflooding, all of Gran Tierra’s major oil fields are considered world-class candidate for this enhanced recovery technique.

In a recent interview, CEO Gary Guidry stated, “We’re spending most of our efforts continuing to enhance oil recovery with waterflooding. So, what we’re doing this year is implementing waterfloods and testing polymers to see if we can enhance recovery even further. Our forecast this year is 30,500-32,500 barrels of oil per day of average production, and we’re quite comfortable with that prediction.”

ESG ratings are essential to the company, and Gran Tierra has planted over 1.2 million trees since 2018. Guidry continued, “We’re quite proud of what we do. For the past five years, we’ve put a lot of effort and money into reforestation. Unfortunately, there’s been a lot of clear-cutting in Colombia, but we’ve gone in behind that cutting with our partner, Conversation International, to advance reforestation projects.”

A strong management team leads Gran Tierra with experience ranging from natural resources to corporate administration. Gary Guidry has over 40 years of experience maximizing the value of assets in the oil and gas industry, including at previous companies with assets in Latin America. Ryan Ellson, CFO, has over 22 years of experience in international finance and accounting. Phillip Abraham, VP of Legal and Business Development, brings 27 years of experience in positions at major law firms. Additional managers bring experience in corporate responsibility and investor relations.

Company Highlights

• Gran Tierra is an international oil and gas company focused on exploration and production in Colombia and Ecuador.
• The company leverages waterflooding to improve oil recovery at each of its assets, which are world-class candidates for this enhanced recovery technique.
• Gran Tierra plans to drill several new wells throughout 2022 in addition to conducting exploration programs at its other assets.
• Acordionero, the company’s flagship project, has already produced over US$1.3 billion in oil and gas sales since 2016. Additionally, 14-16 new wells are scheduled to be drilled in this oil field this year.
• The company focuses on enhancing oil recovery at each producing asset to maximize the value of all its reservoirs.
• ESG ratings are essential for Gran Tierra, and the company has already planted 1.2 million trees in Colombia, alongside other environmental initiatives.
• A strong management team with directly relevant experience leads the company towards its goals.