31 May 2016

Gran Tierra Energy Inc. Announces Increase in 2016 Exploration Capital Budget, Hedging Program, Credit Facilities Update and an Operations Update

CALGARY, ALBERTA–(Marketwired – May 31, 2016) – Gran Tierra Energy Inc. (“Gran Tierra” or the “Company”(NYSE MKT:GTE)(TSX:GTE), today announced the following (all dollar amounts are in United States dollar unless otherwise stated):

Increase in Base 2016 Capital Budget

Gran Tierra is increasing its base 2016 capital budget by $33 million to $43 million to a revised total of $140 million to $150 million. The Company’s previously announced base capital budget was $107 million.

The increased capital investment will be entirely directed at exploration in Colombia and will allow the drilling of two additional, 100% working interest (“WI“) exploration wells, including one additional N-Sands exploration well in the Putumayo Basin. The increased budget will also allow for the acquisition of additional 2D seismic in the Sinu Basin, and accelerated lease construction and environmental impact assessment work in preparation for the Company’s 2017 Colombian exploration drilling program.

Gran Tierra’s 2016 production guidance remains unchanged. The 2016 average WI production before royalties 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.

Hedging Program

To provide downside oil price protection for the next 12 months, Gran Tierra has transacted Brent oil hedges as follows (US$/bbl):

June 1, 2016 – May 31, 201710,000$35.00$45.00$65.00$1.25

Credit Facilities Update

The committed borrowing base under Gran Tierra’s credit facility has been modestly reduced from the previous $200 million to $185 million, with $160 million readily available and $25 million subject to the consent of all lenders. Recognizing the challenging commodity price environment and the impacts on the estimated value of producing reserves, Gran Tierra management is pleased with the continued support of the lending banks to maintain liquidity which complements operating cash flow and supports future growth. The credit facility is currently undrawn and the maturity date remains the same at September 21, 2018.

Operations Update

Drilling lease construction is underway for the Cumplidor-1 exploration well in the PUT-7 block, which the Company continues to expect to spud in early third quarter 2016. This well is expected to be followed immediately by the Alpha-1 exploration well from the same drilling pad. These wells are the first to test the N-Sands exploration play in PUT-7 in the Putumayo Basin, which Gran Tierra believes is highly prospective and expects to lead to long term reserve and production growth.

The Moqueta-22 development well has been successfully drilled and completed and over a combined test period of 24 hours to 23:00 Bogota time on May 30, 2016, the well produced on pump an average of 438 barrels of oil per day, 205 barrels of water per day and 654 thousand standard cubic feet per day from the Caballos and T Sand formations. Clean up and running of the final completion equipment for this well continue. The Moqueta and Costayaco 2016 development drilling programs have now concluded. Both oil fields are expected to provide significant free cash flow starting in the second half of 2016, which would allow Gran Tierra to fully fund its multi-year exploration program in Colombia.

Gary Guidry, President and Chief Executive Officer of Gran Tierra, commented today:

“We are pleased to be in a position to accelerate our exciting Colombian exploration program. We are expecting regulatory approvals for several key exploration prospects over the next few months. The substantial recovery in the Brent oil price since its multi-year low in January 2016 also gives Gran Tierra an opportunity to accelerate some key exploration drilling and seismic activities in Colombia while continuing to pursue opportunities to expand the Company’s portfolio in an effort to increase net asset value per share for shareholders.

We are also pleased with the result of the May 2016 redetermination of the borrowing base for our credit facility. Our credit facility provides a solid foundation and readily accessible financial resources for growth in Colombia. The ongoing support we received from the lending banks demonstrates the underlying confidence in our producing assets, our team and the business environment in Colombia. Our new hedging position provides us with downside oil price protection as we increase our exploration spending in today’s volatile commodity price environment.

With $81 million of working capital at March 31, 2016, $109 million of net proceeds from our convertible senior notes offering in April 2016, strong cash flow, $160 million of available borrowings under our undrawn credit facility and, subject to lender consent, an additional $25 million available under our credit facility, we continue to be well positioned to allocate capital to explore, develop and grow reserves and add value through acquisitions. Our team is focused on emerging from this low oil price environment as one of the strongest intermediate international exploration and production companies.”

Forward-Looking Statements and Legal Advisories:

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, the Company’s strategies, the Company’s operations including planned operations, the development of the PUT-7 block and the Costayaco and Moqueta fields, the base capital program, allocation of capital, production estimates and drilling including trends, infrastructure schedules and the expected timing of certain projects.

The forward-looking statements contained in this press release reflect several material factors and expectations and assumptions of Gran Tierra including, without limitation, 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: sustained or future declines in commodity prices and potential resulting future impairments and reductions in proved reserve quantities and value; Gran Tierra’s operations are located in South America, and unexpected problems can arise due to guerrilla 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 February 29, 2016 and its Quarterly Report on Form 10-Q filed May 3, 2016. 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.

Estimates of future production 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.

Oil and Gas Disclaimer:

BOEs have been converted on the basis of 6 thousand cubic feet (“Mcf”) of natural gas to 1 barrel of oil. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 barrel 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 6 Mcf: 1 barrel would be misleading as an indication of value.

Well test results should be considered as preliminary and are not necessarily indicative of future production or ultimate recovery.

Contact Information:

Gran Tierra Energy Inc.
Gary Guidry
President and Chief Executive Officer

Gran Tierra Energy Inc.
Ryan Ellson
Chief Financial Officer

Gran Tierra Energy Inc.
Rodger Trimble
Director Investor Relations