2 November 2017
Gran Tierra Energy Inc. Provides Operations Update Highlighted by Acordionero Production Growth, Progress with the A-Limestone Play and Multi-Zone Oil Potential in the Siriri-1 Exploration Well
CALGARY, Alberta, Nov. 02, 2017 (GLOBE NEWSWIRE) — Gran Tierra Energy Inc. (“Gran Tierra” or the “Company”) (NYSE American:GTE) (NYSE MKT:GTE) (TSX:GTE), a company focused on oil and gas exploration and production in Colombia, is pleased to provide today an operations update. All dollar amounts are in United States (“U.S.“) dollars and all production volumes are on a working interest before royalties (“WI“) basis, unless otherwise stated.
Continued Strong Performance at Acordionero, 100% WI
- Since acquiring the Acordionero field in the Middle Magdalena Valley (“MMV”) Basin in August 2016, Gran Tierra has increased this field’s production by 172% to a record high third quarter 2017 exit rate of 12,870 barrels of oil per day (“bopd”)
- The MMV Basin assets’ total production has increased from 5,620 bopd to a third quarter 2017 exit rate of 13,639 bopd over the same time period
Strong A-Limestone Production from Vonu-1 Exploration Well, Putumayo 1 (“PUT-1”) Block, 55% WI
- This important discovery well in the A-Limestone is currently producing 1,925 bopd (100% gross) from the A-Limestone or 1,059 bopd WI with less than 1% water cut (average since October 1, 2017)
- Vonu-1 is Gran Tierra’s strongest A-Limestone well to date in terms of oil production performance and has already produced 195,000 barrels (“bbl“) of oil
- Oil productivity was proved in the U Sand and untested potential may exist in the M2-Limestone and the N Sand
Exciting Multi-Zone Potential in Siriri-1 Exploration Well, Putumayo 4 (“PUT-4”) Block, 100% WI
- The Siriri-1 exploration well, drilled and cased during September and October 2017, based on logs has encountered multi-zone potential with a cumulative 216 feet (“ft”) of true vertical depth (“TVD“) potential net oil pay across five prospective zones, including 70 ft in the A-Limestone and 64 ft in the potential new oil play of the B-Limestone
- Production testing of this well is planned to begin during November 2017
Progress with A-Limestone Results in Costayaco, Chaza Block, 100% WI
- Five wells from the Costayaco field have now produced a combined cumulative 839,000 bbl of oil with less than 1% water cut since September 19, 2016, when CYC-19, the first well tested in the A-Limestone, was brought on production
Progress with N Sand Wells in Putumayo 7 (“PUT-7”) Block, 100% WI
- Cumplidor-1: producing 1,009 bopd, 19o API, less than 1% water cut (average since July 10, 2017)
- Confianza-1: producing 349 bopd, 21o API, less than 1% water cut (average since July 1, 2017)
- Gran Tierra’s Colombia only production averaged a record high of 32,570 barrels of oil equivalent per day (“BOEPD“) during third quarter 2017, which was 14% higher compared with 28,481 BOEPD in the first quarter of 2017 and 8% higher compared with 30,098 BOEPD in the second quarter of 2017
- The Company’s Colombia only production in third quarter 2017 was also up 31% from one year ago and up 44% from second quarter 2015 when the current senior management team started at Gran Tierra
Gary Guidry, President and Chief Executive Officer of Gran Tierra, commented “With our excellent, diversified portfolio of Colombian exploration and development assets and access to mature transportation infrastructure, we continue to successfully execute our self-funded multi-year plan to deliver growth in net asset value per share for our shareholders. We are pleased to report several achievements since our last operations update.
The Acordionero field in the MMV Basin continues to provide strong production growth which exceeds our original expectations. The acquisition of the MMV Basin oil assets and, as expected, is proving to be a very high return project. Since acquiring the Acordionero field in August 2016, we have increased production by 172% to a third quarter 2017 exit rate of 12,870 bopd. We had high expectations for the field, and to date, it has exceeded our expectations. We have also started the planned water injection pilot to enhance Acordionero’s ultimate oil recovery, which we expect to begin converting this field’s material Possible reserves into Proved and Probable reserves.
Our A-Limestone play in the Putumayo Basin continues to deliver strong production results from the Costayaco field and the Vonu-1 well. In combination with the potential A-Limestone net oil pay identified in the Siriri-1 exploration well and the previously announced A-Limestone discovery at the Confianza-1 well in the southern Putumayo, our confidence continues to grow that the A-Limestone play may represent a significant basin-wide conventional carbonate oil resource play. We look forward to further proving up the A-Limestone’s potential as we continue to produce from this exciting new play in Costayaco and Vonu, test the play at Siriri-1, and in our new Nancy-Burdine-Maxine Block acquisition, and drill additional exploration wells throughout the Putumayo Basin through the end of 2017 and into 2018.
While we are very excited by the A-Limestone’s potential, the CYC-29 horizontal well in the A-Limestone has to date underperformed our expectations. Currently, our A-Limestone vertical wells in the Costayaco field and at Vonu-1 are outperforming CYC-29. We are currently working with an integrated Halliburton team to optimize further stimulation treatments of this well, including the 40% of the wellbore which has yet to be stimulated. As expected in any new play, there is a learning curve which we are quickly navigating.
We are pleased to report that the PUT-7 Block’s productive potential continues to be realized with the Cumplidor-1 and Confianza-1 wells producing at a combined rate from the N Sand of 1,358 bopd with less than 1% water cut. With our seismic surveys recently completed on PUT-7, we look forward to the planned drilling of two more exploration wells on this block over the next two quarters, which will further test the multi-zone potential in the southern Putumayo, including the U Sand, A-Limestone and N Sand.
With our Colombia-focused strategy continuing to deliver results on several fronts, and our self-funded exploration and development program, we believe Gran Tierra has a sustainable business model that is well positioned for potential growth through the end of 2017 and beyond.”
Gran Tierra Production Growth Since 2015
The graph below portrays Gran Tierra’s Colombia only production growth since the current management team joined the Company in 2015. From third quarter 2015 through third quarter 2017, the Company’s Colombia production has grown at a compound annual rate of 20%. Gran Tierra’s Colombia production averaged a record high of 32,570 BOEPD during third quarter 2017, which was 14% higher compared with 28,481 BOEPD in the first quarter of 2017 and 8% higher compared with 30,098 BOEPD in the second quarter of 2017.
Figure 1 accompanying this release is available at:
Acordionero Field Development (Gran Tierra 100% WI and Operator)
The Acordionero field continues to exceed expectations and deliver strong production growth. At the date of acquisition on August 23, 2016, production from the Acordionero field was 4,730 bopd. Gran Tierra spud its first Acordionero development well as operator in October 2016 and has since completed nine oil wells, two water injection wells and one water source well. As a result of these development activities, Acordionero’s third quarter 2017 production averaged 10,743 bopd, an increase of 127% since acquiring the field in August 2016. Total average WI production for all of the acquired PetroLatina Energy Ltd. properties in the MMV Basin, including Acordionero, during third quarter 2017 was 11,565 bopd. Acordionero and the total MMV Basin properties exited third quarter 2017 at respective average production rates of 12,870 bopd (up 172% since acquisition) and 13,639 bopd (up 143% since acquisition).
Acordionero development oil wells AC-12, 13, 15 and 17 were brought on production during third quarter 2017. The AC-14i water injection well and the AC-18 development oil well were spud during third quarter 2017 and are expected to be on stream in early fourth quarter 2017. The AC-16 and AC-21 development oil wells are planned to be the final wells to be drilled from the AC-4 pad before the end of 2017. Following these wells, drilling is planned to commence from the new AC-6 pad. Gran Tierra expects to spud the AC-6 and AC-20 development oil wells in fourth quarter 2017, to be followed by the drilling of the AC-22 development oil well and the AC-23i water injection well in first quarter 2018.
The table below summarizes the productivity and API oil gravity for the Acordionero development oil wells which Gran Tierra has drilled, completed and brought on production since acquiring the field:
|1 IP30 represents initial production averaged over first 30 days of production
During fourth quarter 2017, Gran Tierra plans to bring three more development oil wells on production: AC-16, AC-18 and AC21.
In addition, the Mochuelo-1ST well was spud in third quarter 2017, targeting potential oil in the Lisama D Sand and source water from the Lisama A and C sands for use in the Acordionero waterflood. From August 19, 2017 to September 30, 2017, a short-term production test of the Lisama D Sand in Mochuelo-1ST produced 28o API oil at an average rate of 196 bopd, with a water cut of 0.2% and gas-oil ratio (“GOR”) of 219 standard cubic feet per bbl (“scf/bbl”). Following this Lisama D Sand oil test, the Lisama A and C Sands were perforated and tested for water production capacity. Pending analysis of this water production test, Gran Tierra expects that more than 10,000 bbl of water per day could be produced from Mochuelo-1ST, which would be used as injection water for the waterflood pilot being implemented at Acordionero. Further evaluation is also now underway regarding potential plans for exploiting the Lisama D Sand in the Mochuelo area.
The waterflood pilot project at Acordionero is expected to commence pending completion of the AC-14i water injection well in the Lisama A and C Sands. Completion operations are preparing for water injectivity tests in both zones. Depending on the injectivity results of AC-14i, the AC-8i water injection well is planned to be stimulated to improve Lisama C Sand injectivity. Lisama A Sand injectivity was previously established in AC-8i.
Elsewhere in the MMV Basin, Gran Tierra is also finalizing the completion of the surface drilling locations for the Ayombero and Totumillo exploration prospects and both wells are anticipated to be drilled within the next three months.
PUT-1 Block (Gran Tierra 55% WI and Operator)
The Vonu-1 well has now produced a 100% gross cumulative 195,000 bbl of oil from the A-Limestone since being brought on production on July 4, 2017. The well is currently producing 1,925 bopd (100% gross) or 1,059 bopd WI of 30o API oil with less than 1% water cut, a GOR of 245 scf/bbl, and low natural decline to date. Vonu-1 is Gran Tierra’s strongest A-Limestone well to date in terms of oil production performance.
With the success of the A-Limestone in the PUT-1 Block, Gran Tierra is currently evaluating options to drill new wells in the block starting in 2018. As Vonu-1 also discovered oil in the U Sand and net oil pay in the N Sand, the Company’s evaluation is designed to identify the best drilling locations to test the stacked multi-zone potential of the PUT-1 Block.
PUT-4 Block (Gran Tierra 100% WI and Operator)
The Siriri-1 exploration well was spud on August 20, 2017, and reached total depth of 12,680 ft (measured depth) on September 14, 2017. This well is located approximately 40 kilometers (“km”) to the southwest of Vonu-1. Based on logs and sample analysis, Siriri-1 appears to have multi-zone potential with a cumulative 216 ft of TVD potential net oil pay. There are five separate prospective zones including the Upper Pepino, N Sand, M2-Limestone, A-Limestone and B-Limestone, with estimated net oil pay (in ft TVD) based on petrophysical logs as follows:
A testing program to determine Siriri-1’s productive potential scheduled to begin during November 2017. The first zone planned to be tested is the B-Limestone. The B-Limestone represents a potentially new conventional carbonate resource oil play in the Putumayo Basin. Depending on results, the next zones to test would be the A-Limestone, M2-Limestone and the N Sand.
Siriri-1 targeted one of the deepest portions of the Putumayo Basin and appears to have proved up the potential presence of oil in the primary targets, the N Sand and the A-Limestone. Also, the apparent presence of oil within the B-Limestone indicates the potential for yet another conventional resource play in the area. Gran Tierra’s exploration results to date continue to illustrate the potential regional extent of these plays throughout the Putumayo.
The map below portrays how Gran Tierra’s exploration results to date illustrate the potential regional extent of the A-Limestone play throughout the Putumayo Basin.
Figure 2accompanying this release is available at:
The table below portrays the net pays encountered in Gran Tierra’s Putumayo Basin Exploration wells so far in 2017 in the A-Limestone and B-Limestone:
|A-Limestone Net Pay (ft)
|B-Limestone Net Pay (ft)
Update on Mocoa Disaster in the Putumayo Basin and Its Impact on Costayaco
As previously disclosed, heavy rain during the night of April 1, 2017 caused catastrophic flooding and mudslides in Mocoa, the regional capital of the Putumayo Department, resulting in a tragic loss of life and major damage to the infrastructure of the city and region. Gran Tierra was an early responder to aid Mocoa residents and regional authorities with the diversion of some of the Company’s assets to provide emergency relief and continues to provide support to the community at this time.
Gran Tierra’s northern Putumayo Basin production has continued to be negatively impacted from continued outages on the regional electric power grid supplied by an interim substation that was installed by the local utility company after the Mocoa disaster. When these outages occur, the Company is forced to temporarily shut in both production and, more importantly, water injection in the Costayaco and Moqueta fields. By the end of 2017, Gran Tierra expects to be generating all of its own electric power at Costayaco facility with the gas-to-electrical power project which was started in 2016. The in-field electricity generated is expected to be sufficient to provide power for both Costayaco and Moqueta and is forecasted to help with power reliability as operations would be independent from the regional electrical grid.
Costayaco A-Limestone, Chaza Block, (Gran Tierra 100% WI and Operator)
The A-Limestone play in the Costayaco field continues to be an exciting new development for Gran Tierra. Five wells (three verticals and two horizontals) in the field have now produced total cumulative oil production of 839,000 bbl since the first A-Limestone recompletion in the CYC-19 vertical well was performed September 2016. With continued water-free production from the A-Limestone in Costayaco, the latest technical evaluation indicates that the lowest known oil (“LKO”) now extends down to -7,025 ft TVD subsea which indicates the potential estimated original oil in place volume in Costayaco’s A-Limestone could be growing daily as water-free production continues.
The CYC-19 vertical well has now produced a cumulative 474,000 bbl of oil since September 19, 2016. An electrical submersible pump (“ESP”) was recently installed at the beginning of October 2017. The ESP has increased CYC-19’s oil production rate by 289 bopd averaged over 30 days. Currently the well is producing 892 bopd with a water cut of 0.5% (October 2017 average).
The CYC-29 horizontal well in the A-Limestone has to date underperformed the Company’s original expectations. Gran Tierra is currently working with an integrated Halliburton team to optimize further stimulation treatments of this well, especially the 40% of the wellbore which has not yet been stimulated. As expected in any new play, there is a learning curve which Gran Tierra is quickly navigating.
The CYC-30, a new vertical well, was drilled and cased during third quarter 2017. While the conventional logging program showed good potential through the N, U and T Sands and the Caballos Formation, the current focus in CYC-30 is the A-Limestone where logs indicate 52 ft of potential net oil pay. The CYC-30 is scheduled to be stimulated in the A-Limestone during fourth quarter 2017 and would represent the sixth A-Limestone well in Costayaco.
Putumayo-7 (“PUT-7”) Block (Gran Tierra 100% WI and Operator)
The Cumplidor-1 exploration well was brought back on production from the N Sand on July 10, 2017, and production has since averaged 1,009 bopd of 19o API oil with less than 1% water cut. The Confianza-1 well has produced an average 349 bopd from the N Sand of 21o API oil with less than a 1% water cut since July 1, 2017. Two additional pay zones within the N Sand have yet to be perforated within Confianza-1.
Gran Tierra also completed two seismic programs in the PUT-7 Block during third quarter 2017. The first, the Cumplidor three dimensional (“3D”) seismic program, was completed on July 14, 2017, and was 43 square km in size and extended over the west of the Cumplidor N Sand field. Reservoir modeling is now underway to determine the optimal field development plan. Early indications from this 3D seismic are that the N Sands extend further west than seen on 2D seismic. Development of the Cumplidor field is scheduled to continue in 2018 using the 3D seismic to target future development locations. Future exploitation of the recent A-Limestone and U Sand oil discoveries in the Confianza-1 well can be optimized with the 3D seismic interpretation.
The second 3D seismic survey was completed August 31, 2017, covering 52 square km and multiple exploration prospects in the west-central area of the PUT-7 Block. The 3D seismic is now being used to target the bottom hole locations for the Pomorroso, Northwest and Pecari N Sand prospects, which were previously identified on 2D seismic data. These exploration wells are also designed to be deepened to test the A-Limestone and are scheduled to be drilled over the next several months.
Nancy-Burdine-Maxine (“NBM”) Block (Gran Tierra 100% WI and Operator)
Gran Tierra has started civil works on the access road as well as the Nancy-1 and Burdine-5 drilling pads. A workover rig is scheduled to be mobilized to the shut-in Nancy-1 well in fourth quarter 2017 with a plan to test the N Sand productivity. After testing of the Nancy-1 is complete, the Company plans to move the rig to the shut-in Burdine-5 well to test the A-Limestone, which Company analysis indicates may be prospective across the block.
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About Gran Tierra Energy Inc.
Gran Tierra Energy Inc. together with its subsidiaries is an independent international energy company focused on oil and natural gas exploration and production in Colombia. The Company also has business activities in Peru. The Company is focused on its existing portfolio of assets in Colombia and will pursue new growth opportunities throughout Colombia, leveraging our financial strength. The Company’s common shares trade on the NYSE American and the Toronto Stock Exchange under the ticker symbol GTE. Additional information concerning Gran Tierra is available at www.grantierra.com. Information on the Company’s website does not constitute a part of this press release. Investor inquiries may be directed to firstname.lastname@example.org or (403) 265-3221.
Gran Tierra’s Securities and Exchange Commission filings are available on a website maintained by the Securities and Exchange Commission at http://www.sec.gov and on SEDAR at http://www.sedar.com.
Forward Looking Statements and Legal Advisories:
This press release contains opinions, forecasts, projections, guidance, plans 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 future operations including planned operations, the exploration and development of the Company’s blocks, areas and fields, the Company’s expectations regarding certain plays, the Company’s business model and the Company’s plans, including completion and testing plans, objectives, expectations, evaluations and intentions regarding production, exploration and exploration upside and development, the Company’s projected and forecasted growth and results, expected allocation of capital 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 access capital and other resources and 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: 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 the Company’s products, including instability of electricity supply at our production facilities; geographic, political and weather conditions can impact the production, transport or sale of the Company’s 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 and its drilling and development 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 the Company’s 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 remain weak or further decline, or 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 1, 2017 and its subsequent quarterly reports on Form 10-Q. 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 guidance, 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 and how that would impact Gran Tierra’s results of operations and financing position.
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 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 and production fourth quarter 2017 and 2018. 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 could 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 bbl. 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.
References to thickness of “oil pay” or of a formation where evidence of hydrocarbons has been encountered is not necessarily an indicator that hydrocarbons will be recoverable in commercial quantities or in any estimated volume. Well test results should be considered as preliminary and not necessarily indicative of long-term performance or of ultimate recovery. Well log interpretations indicating oil and gas accumulations are not necessarily indicative of future production or ultimate recovery. If it is indicated that a pressure transient analysis or well-test interpretation has not been carried out, any data disclosed in that respect should be considered preliminary until such analysis has been completed.
Investors are urged to consider closely the disclosures and risk factors in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and in the other reports and filings with the SEC, available from the Company’s offices or website. These forms can also be obtained from the SEC via the internet at www.sec.gov.