Strong Balance Sheet and Core Asset Value
GTE is forecasting 2022 YE net debt (1) under $500 million and net debt to EBITDA of 1.0x (2). Balance sheet has strengthened significantly over the past two years
Forecasting free cash flow of $170 – $190 million before exploration and $100 - $120 million (2) (3)
Currently trading at significant discount to 1P and 2P Before Tax Net Asset Value per share of $US 2.61 and $US 4.72 (4)
1) “Free cash flow“ and “net debt” are non-GAAP measure and do not have a standardized meaning under GAAP. Refer to "Non-GAAP Measures" in the disclaimers below.
2) Based on an assumption of an average price of $80 Brent for 2022.
3) Based on mid-point exploration budget for 2022.
4) Based on shares outstanding at December 31, 2021, debt of $668 million and GTE McDaniel December 31, 2021 Reserves Report.
Top Tier Conventional
Oil Assets Under Waterflood
- All core assets under waterflood leading to higher oil recovery rates & lower natural declines with modest future development costs = material free cash flow (5)
- Low cost operator with over 100% PDP and 1P reserve replacement over the past two years
- Large amount of future development opportunities exist within the portfolio including a polymer pilot in H2 2022 in Acordionero
5) “Free cash flow“ and “net debt” are non-GAAP measure and do not have a standardized meaning under GAAP. Refer to "Non-GAAP Measures" in the disclaimers below.
Environmental, Social and Governance (ESG)
From 2019 to 2020 GTE reduced our scope 1 and scope 2 carbon emissions by 55% (6)
In Colombia, GTE has planted approximately 1.2 million trees and conserved, preserved and reforested over 3,103 hectares of land since 2018
6) Scope 1: direct emissions from owned and controlled sources; Scope 2: indirect operations from external power sources.
High Impact Exploration Catalysts for 2022 and Beyond
GTE plans in 2022 to drill exploration wells, including 4 wells in 6-7 Colombia & 2-3 wells in Ecuador
Ecuador exploration wells to be drilled in a basin where over 6 billion bbl of oil have been produced & in the same geological basin as the Putumayo in Colombia
Track Record of Value Creation
Since 2015, at a corporate level, GTE has
added 108 MMbbl in 1P reserves and
136 MMbbl in 2P reserves (7)
7) Based on GTE McDaniel Historical Reserves Reports from 2015 - 2021.
Gran Tierra offers many exciting catalysts for 2022 while maintaining financial prudence of strengthening the balance sheet and does so with an environmental and social focus
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2022 Key Objectives
Disciplined 2022 Budget & Material Free Cash Flow
Profitable production growth and accelerated debt reduction underway
Clear Path to Debt Reduction
Credit facility expected to be repaid in H1/2022 with material 2022 free cash flow
Continue to Optimize Waterfloods
Increase reserves with modest capital expenditures
High Impact Exploration
Material 2022 cash flow fully funds exploration program of 6-7 exploration wells
Our Focused Strategy
Forward-Looking Non-GAAP Measures
Free cash flow as presented is defined as GAAP projected "net cash provided by operating activities" less projected 2022 capital spending. The most directly comparable GAAP measure is net cash provided by operating activities. Management believes that free cash flow is a useful supplemental measure for management and investors to in order to evaluate the financial sustainability of the Company's business. Gran Tierra is unable to provide a quantitative reconciliation of forward-looking free cash flow to its most directly comparable forward-looking GAAP measure because management cannot reliably predict certain of the necessary components of such forward-looking GAAP measure.
Net debt as presented is defined as $600 million in senior notes and borrowings under the credit facility less projected cash as at December 31, 2022. Management believes that net debt is a useful supplemental measure for management and investors to in order to evaluate the financial sustainability of the Company's business and leverage. The most directly comparable GAAP measure is total debt. Gran Tierra is unable to provide a quantitative reconciliation of forward-looking net debt to its most directly comparable forward-looking GAAP measure because management cannot reliably predict certain of the necessary components of such forward-looking GAAP measure.
Oil and Gas Metrics
This presentation contains a number of oil and gas metrics, including free cash flow, finding and development (“F&D”) costs, operating netback, reserve life index, net asset value per share and reserves replacement, which do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies and should not be used to make comparisons. Such metrics have been included herein to provide readers with additional measures to evaluate the Company's performance; however, such measures are not reliable indicators of the future performance of the Company and future performance may not compare to the performance in previous periods.
- NAV per share is calculated as the applicable NPV10 (before or after-tax, as applicable) minus estimated net debt, divided by the number of shares of Gran Tierra's common stock issued and outstanding. Management uses NAV per share as a measure of the relative change of Gran Tierra's net asset value over its outstanding common stock over a period of time.
For further information and disclaimers on the above measures and metrics refer to the Appendix to our Corporate Presentation.