5 June 2017

Gran Tierra Energy Inc. Provides Operations Update Highlighted by Continued Success with Costayaco A-Limestone, Acordionero Development and Putumayo Exploration

CALGARY, ALBERTA–(Marketwired – June 5, 2017) – Gran Tierra Energy Inc. (“Gran Tierra” or the “Company”) (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, unless otherwise indicated. Per barrel of oil (“bbl“) amounts are based on working interest (“WI“) sales before royalties.


  • Continued A-Limestone Success at Costayaco
    • CYC-28 horizontal well is producing 1,053 barrels of oil per day (“bopd“) gross WI at 5.7% water cut from a 1,718 feet (“ft“) horizontal section (average WI production since May 29, 2017) and is still cleaning up while its water cut continues to decrease; the well’s production is currently restricted due to pump limitations and is expected to continue to pump at the current pressure drawdown near-term.
    • CYC-29, the second horizontal well targeting the A Limestone, was spud on May 15, 2017, and is currently at the horizontal casing point; with learnings from CYC-28, the targeted horizontal length for this well is greater than 3,300 ft and the plan is to use underbalanced drilling technology for the horizontal leg.
  • Multi-Zone Potential at Vonu-1 Exploration Well, PUT-1 Block
    • The well has been cased for production testing, which is expected to begin during June 2017.
    • Total net oil pay of 157 feet (“ft“) true vertical depth (“TVD“) identified on well logs across six zones within the Villeta Formation.
    • Prospective zones include the N Sand, the A-Limestone and the U and T Sands.
  • Continued Strong Performance at Acordionero
    • Since acquiring the Middle Magdalena Valley (“MMV”) Basin assets nine months ago, Gran Tierra has increased WI production from 5,620 bopd to 10,248 bopd; the Acordionero field’s WI production has increased by 100% to a record high current WI rate of 9,460 bopd over the same time period.
  • Confianza-1 Well, PUT-7 Block
    • N Sand: on production since April 30, 2017 at 468 bopd average WI production, 20.7o API, with less than 1% water cut; continues to produce sand as expected.
  • Cumplidor-1 Well, PUT-7 Block
    • Fishing operations underway, production forecasted to resume by end of June 2017.
  • Current Production
    • Gran Tierra’s WI production is currently 33,684 barrels of oil equivalent per day (“BOEPD”), up 13% from first quarter 2017’s average WI production of 29,879 BOEPD.

Gary Guidry, President and Chief Executive Officer of Gran Tierra, commented, “After diversifying and transforming our Colombian exploration and development portfolio in 2016, we are now successfully executing our multi-year plan to deliver growth in net asset value per share for our shareholders. We are very excited with several achievements so far in 2017. Our A-Limestone play in the Putumayo Basin continues to deliver strong production results from the Costayaco field, where our first horizontal well, CYC-28, is now on production at a restricted rate of 1,053 bopd. With indications of an A-Limestone discovery at the Vonu-1 well, adjacent to the Costayaco field, and the confirmed A-Limestone discovery at the Confianza-1 well in the southern Putumayo, we believe the A-Limestone play may have significant basin-wide oil potential. We look forward to continuing to prove up the A-Limestone’s potential as we drill our next Costayaco horizontal well, CYC-29, and test our new exploration well at Vonu-1.

Drilling at the Vonu-1 multi-zone exploration well resulted in an estimated 91 ft TVD of net oil pay in the A-Limestone, and a combined 66 ft TVD of net oil pay in five other zones within the Villeta formation, including the N, U and T Sands. The well has been cased and we plan to begin production testing later this month.

The Acordionero field in the MMV Basin continues to provide ongoing strong production performance. In the nine months since acquiring this field, we have increased its production by 100% to a current rate of 9,460 bopd. We believe we are on track to achieve our Acordionero Proved plus Probable production forecast of 15,000 bopd by the end of 2018, and will start the planned water injection pilot to enhance oil recovery later this month.

We are in the process of bringing on the production deferred during first quarter 2017 to test new discoveries at Acordionero and in the Putumayo-7 (“PUT-7“) Block and are at current WI production of 33,684 BOEPD. As we guided for 2017, we are on track for continuous production growth through the end of the year and into 2018.

With our Colombia-focused strategy continuing to deliver results on several fronts, and exploration and development being funded by funds flow from operations, Gran Tierra is well positioned for potential growth in 2017 and beyond.”

Development Program Update

Costayaco Field Development (Gran Tierra 100% WI and Operator)

Encouraging production results continue with the new A-Limestone play in the Costayaco field.

CYC-28, the first horizontal well drilled in the field and the Putumayo Basin with a 1,718 ft horizontal section, was brought on production April 27, 2017 and since May 29, 2017 has produced an average of 1,053 bopd, 29°API oil and a gas-oil ratio (“GOR”) of 164 standard cubic feet per stock tank barrel (“scf/stb“) from the A-Limestone at 5.7% water cut. Large fracture networks were encountered while drilling, resulting in significant lost returns. Therefore, the Company elected not to continue drilling ahead to the planned horizontal section of 3,300 ft. The well is continuing to clean up with the oil rate steadily climbing and the water cut falling, after fluid was lost to the formation while drilling, completing, and stimulating the well.

Pressure build-up tests have confirmed an average permeability of 140 millidarcies, and a dual-porosity flow behavior suggesting matrix oil storage is feeding a fracture network. This dual-porosity flow behavior has been observed in four of the five A-Limestone wells tested to date. Pressures also confirm hydraulic connectivity to other producing wells, suggesting efficient drainage. The estimated productivity index of CYC-28 is 1.93 barrels of fluid per day per pounds per square inch indicating the current drawdown is 40% of available reservoir pressure. Future increases in pressure drawdown to enhance the CYC-28’s productivity are planned as the well continues to clean up.

CYC-29, the next horizontal well targeting the A-Limestone, was spud on May 15, 2017 and casing has been set at 9,130 ft measured depth (“MD”), prior to starting to drill the horizontal section. The Company had significant learnings drilling CYC-28, especially regarding wellbore stability of the build (from vertical to horizontal) and lost returns while drilling horizontal sections. From these learnings, the plan is to use underbalanced drilling technology in CYC-29 to target a longer horizontal section of greater than 3,300 ft and to minimize formation damage. The CYC-29 is on schedule to reach the planned total depth (“TD“) by the end of June 2017, after which the completion and stimulation program is planned to begin. The well is forecasted to start production during August 2017.

Based on the strong production performance from the A-Limestone at Costayaco and ongoing engineering, geological and geophysical evaluations of this exciting new play, Gran Tierra’s technical team has identified another 15 to 20 potential horizontal drilling locations in this zone within the Costayaco field infrastructure.

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 four producers and one water injector, with an additional producer, AC-11, brought on production on June 3, 2017. As a result of these development activities, Acordionero’s production has reached 9,460 bopd, an increase of 100% since acquiring the field nine months ago. Total average WI production for all of the acquired PetroLatina properties in the MMV Basin, including Acordionero, has reached 10,248 bopd as of June 3, 2017.

Gran Tierra has improved drilling cost and efficiency of Acordionero since taking over operatorship. The AC-11 well, which was drilled in only 7 days during May 2017, is expected to be the Company’s quickest and lowest cost development well to date. Total cost to drill, complete and tie-in this well is estimated to be $3.8 million ($1.9 million to drill and $1.9 million to complete and tie-in), 46% less the previous Acordionero average of $7.1 million to drill, complete and tie-in, prior to Gran Tierra’s acquisition of this field. With the Company’s demonstrated capital efficiency, Gran Tierra’s total MMV Basin current WI production rate of 10,248 bopd has been achieved at an approximate cost of $54,100 per flowing bopd as at June 3, 2017, including the initial acquisition cost and the subsequent costs of drilling and facilities.

Lifting costs in the Acordionero field have averaged approximately $3.90 per WI bbl since the acquisition, with a 2017 year-to-date operating netback1 of approximately $28.40 per bbl. Production since the acquisition has generated operating netback1 of $39.5 million, which has more than funded the capital spent to date of $29.8 million. In the current oil price environment and with an active drilling program, the Acordionero field is generating free cash flow.

On the AC-7 well, a workover to clean the wellbore and replace the electric submersible pump (“ESP“) commenced on April 4, 2017. The well was back on production on April 23, 2017, and has produced an average of 562 bopd of 14.7° API oil with a water cut of 0.8% from the Lisama A reservoir. The pre-pump failure production rate from January 24, 2017 was 369 bopd of 14.4° API oil with a water cut of 0.8%.

On the AC-9 well, the newly discovered Lisama D test was concluded and the well completed in the targeted Lisama C reservoir. Since April 1, 2017, the well has produced at an average rate of 1,053 bopd of 25.8° API oil with a water cut of 0.2% and a GOR of 294 scf/stb from a 188 ft gross perforated interval in the Lisama C reservoir.

The AC-10 well is the first of five planned wells in the next phase of the development targeting the northern area of the field, from a pad where the existing AC-2 well is located, and was spud on March 29, 2017. Completion operations commenced on April 24, 2017 and gross pay intervals of 1,057 ft in the Lisama A and 227 ft in the Lisama C were perforated. The quality and net pay within the Lisama A and Lisama C reservoirs exceeded the Company’s expectations. The well was equipped with an ESP and commenced production from the Lisama A and Lisama C on May 7, 2017. Since then, the well has produced at an average rate of 1,168 bopd of 15.2° API oil, with a water cut of 0.6% and GOR of 125 scf/stb. For the first 11 days, production from this well was constrained by electrical and pipeline limitations. Following electrical upgrades and commissioning of a new production line on May 18, 2017, AC-10 has been producing at an average rate of 1,504 bopd of 15.1° API oil with a water cut of 0.6% and GOR of 114 scf/stb.

The next development well, AC-11, was spud on May 11, 2017, from the same northern drilling pad where the AC-2 and AC-10 are located and reached 8,345 ft measured depth (“MD“) and 8,240 ft TVD on May 18, 2017. Completion operations commenced on May 23, 2017 and a total of 343 ft were perforated in the Lisama A and 118 ft were perforated in the Lisama C. The well was equipped with an ESP and brought on production June 3, 2017. AC-11’s initial production was 1,093 bopd with a 0.7% water cut during its first full day of production, and is expected to be increased to full production capacity once completion fluids have been recovered from the well.

During May 2017, the Company completed the AC-8i well as an injector in the Lisama A and C reservoirs, perforating 144 ft of the Lisama C and 271 ft of the Lisama A. The water injection plant is being commissioned and the enhanced oil recovery injection pilot tests on track to commence during June and July 2017.

The next development well, AC-12, is scheduled to spud before the end of June 2017 and is expected to be followed by the AC-13 development well and AC-14i water injection well.

1 See below: “Oil and Gas Disclaimer” and “Non-GAAP Measures”

Moqueta Field Development (Gran Tierra 100% WI and Operator)

The Moqueta field is currently producing at a WI rate that is 1,200 bopd below the field’s productive capacity, of which 1,000 bopd is attributable to the MQT-21 well going off-line due to a downhole mechanical issue. A workover of the MQT-21 is scheduled during June 2017 in order to restore this well’s production. The remaining shortfall of 200 bopd is attributable to electric power interruptions since the tragic Mocoa flood disaster which occurred on March 31, 2017. Gran Tierra is addressing these power interruptions with the ongoing gas to power project described below.

Costayaco and Moqueta Gas to Power Project Update (Gran Tierra 100% WI and Operator)

In 2015, the Company made a strategic decision to reduce flared natural gas volumes, improve reliability of electrical supply and reduce operating costs by implementing a phased natural gas-to-power project at Costayaco and Moqueta. The first phase was fully operational in March 2016, resulting in 550 thousand cubic feet per day (“mcfd“) reduction in flared natural gas volumes, $133,000 per month operating cost savings and replacement of 45% of the Company’s total electricity demand from the national electricity grid.

In fourth quarter 2016, the Company sanctioned Phase-2 of the natural gas-to-power project to supply the total field electricity at Costayaco and Moqueta demand, and to become 100% independent from the national electric grid. Phase 2 is on schedule to be fully operational by the end of fourth quarter 2017. The importance of this project and its implementation has been highlighted by the tragic Mocoa disaster which occurred on March 31, 2017, which destroyed the electrical substation which supplies electricity to the Putumayo region. Year to date in 2017, issues related to electrical supply from the national grid have resulted in 40 unplanned shut downs and 12,551 bbl of deferred production.

Due to the Mocoa disaster, during April 2017, the Company has added temporary natural gas-powered electricity generation at Costayaco and Moqueta increasing from 4.3 megawatt-hours (“Mwh“) to 5.7 Mwh to mitigate continuing electric power outages until Phase 2 is online.

Suroriente Block (Gran Tierra 15.8% WI, Non-operated)

In the Suroriente block, the 2017 development drilling program in the N Sand reservoir is currently underway. The first well, Cohembi-19, was drilled and completed during first quarter 2017 and is on production with an average rate of 478 bopd gross over the first 30 days, (75 bopd WI). The second well, Cohembi-20, reached TD in the second quarter of 2017 and is on production with an average rate of 1,832 bopd gross, 289 bopd WI (average since May 28, 2017). Both wells have water cuts less than 1%. The development drilling campaign continues with three planned wells, one workover and one contingent location remaining.

Llanos 22 Block (Gran Tierra 45% WI, Non-operated)

The Ramiriqui-1 well was producing 1,403 bopd (631 bopd WI) and 25.0% water cut before being shut in to conduct a stimulation on April 28, 2017. When brought back on production on May 4, 2017, rates have averaged 2,427 bopd gross (1,092 bopd WI) and 18.2% water cut since the stimulation May 1, 2017 to June 4, 2017.

Exploration Program Update

Putumayo 1 (“PUT-1”) Block (Gran Tierra 55% WI and Operator)

Gran Tierra spud the Vonu-1 exploration well on May 6, 2017. The well was drilled directionally from an existing production pad located in the adjacent Costayaco field into a separate structural prospect, similar to the Costayaco field, imaged on three dimensional (“3D“) seismic. Vonu-1 is a multi-zone prospect that targeted the Caballos Formation and the Villeta U and T Sands, A-Limestone and N Sand.

Log analysis indicates that Vonu-1 is an exciting multi-zone discovery well with a cumulative 157 ft TVD of net oil pay within six separate zones as follows (all net pay numbers are TVD):

  • N Sand: 8.2 ft
  • M1 Limestone: 3.4 ft
  • M2 Limestone: 8.7 ft
  • A-Limestone: 91.1 ft
  • U Sand: 15.3 ft
  • T Sand: 30.7 ft

Oil saturations were noted on well logs from the shallowest zone (N Sand) through the deepest T Sand. The deepest formation, the Caballos, has been interpreted as water bearing. The response from the A-Limestone is particularly encouraging with evidence of natural fracturing, virgin reservoir pressure, strong oil shows and interpreted net oil pay from petrophysics.

Casing has been set, and a production testing program to determine the productive potential of each of the prospective zones is planned to begin during June 2017. Testing will take several weeks, as zones are tested individually.

PUT-7 Block (Gran Tierra 100% WI and Operator)

Confianza-1 was the third exploration/appraisal well drilled within the Cumplidor-Alpha complex on the PUT-7 block. As previously disclosed, this well proved up the N Sand play. Confianza-1 also made important new discoveries in the U Sand and A-Limestone which were both successfully production-tested and are potential new plays in the southern Putumayo Basin which are now being evaluated by the Company’s technical teams.

After the production testing of the U Sand and A-Limestone were completed in Confianza-1, the Company moved uphole and perforated the N Sand in the lower 13 ft out of 24 ft TVD of net pay at the end of April 2017. The well has been on production from the N Sand with an ESP since April 30, 2017, at an average rate of 468 bopd, 20.7° API and water cut of less than 1%. As expected, the well continues to produce sand and production indices are expected to further increase as the well produces more sand. The remaining 11 ft TVD of net pay is expected to be perforated and brought on production in the future.

As previously disclosed, the Cumplidor-1 well produced 19° API oil with a GOR of less than 100 scf/stb and a water cut of less than 1% at a rate of 236 to 1,043 bopd over 18 days from January 17 to February 3, 2017. A maximum instantaneous rate of approximately 1,900 bopd was achieved in the three hours prior to jet pump failure on February 3, 2017. Progressively larger jet pump nozzles were run in the well, and the last attempt resulted in sticking a tool string and wireline in the well. The well is on the same pad as the Confianza-1 well, and a workover could not occur at Cumplidor-1 (thereby deferring production) until drilling, testing and completion operations on Confianza-1 were completed. Fishing operations on Cumplidor-1 to retrieve the stuck tool string and wireline are now underway with good progress so far. Cumplidor-1’s production is expected to be restored before the end June 2017 and is expected to add between 800 to 1,100 bopd WI.

Gran Tierra is currently executing two seismic programs in the PUT-7 Block. The first, the Cumplidor 3D seismic program, is 43 square kilometers in size and is designed to extend over the west of the Cumplidor field. This 3D seismic is expected to provide information that is critical to following up on the A-Limestone and U Sand discoveries in the Confianza-1 well. Additionally, this 3D seismic is expected to guide the picking of additional development locations to the west, which are currently only covered by 2D seismic information, and to plan for the future waterflooding of the field to enhance oil recovery. Surveying of shots and receivers is currently underway.

The second 3D seismic survey is planned to be 52 square kilometers and cover two exploration prospects in the central area of the PUT-7 Block. The timing of this seismic was planned to define the bottom hole locations for the Pomorroso and Northwest prospects, which target amplitudes of the N Sand, currently identified on 2D seismic data. These exploration wells are scheduled to be drilled in fourth quarter 2017. Both 3D seismic programs are expected to be finished by third quarter 2017.

Nancy-Burdine-Maxine (“NBM”) Block

Gran Tierra acquired the NBM Block from Ecopetrol effective April 27, 2017.

The planned near-term exploration program includes the acquisition of approximately 100 square kilometers of 3D seismic, three new drilling pad locations, and then the potential drilling of several multi-zone prospects. Similar to the other exploration blocks in the Putumayo Basin, Gran Tierra plans to explore for N Sand, A-Limestone and deeper U, T, and Caballos Sands potential in this new block. The Company believes the NBM block is particularly exciting since technical analysis indicates that it may lie within the interpreted A-Limestone trend fairway that extends from Costayaco in the north to the PUT-7 Block in the south of the Putumayo. Several wells previously drilled in the NBM block had oil shows in the A-Limestone.

Llanos – El Porton Block (Gran Tierra 100% WI and Operator)

As previously disclosed, all regulatory approvals from the federal government and local authorities were obtained and the civil works for road access and pad construction were completed for the Prosperidad-1 exploration well. The drilling rig had also been mobilized to the lease site.

On April 28, 2017, the Company was informed of two Class Actions filed against Gran Tierra, Agencia Nacional de Hidrocarburos (“ANH“, Colombian federal energy regulator) and Autoridad Nacional de Licencias Ambientales (“ANLA“, Colombian federal environmental regulator). One action was filed directly by Corporinoquia (the regional environmental regulator) where the El Porton Block is located, and the other one by an individual. Both actions argue that the drilling of the Prosperidad-1 well will affect the water resources of the region. Based on detailed technical evaluations, Gran Tierra believes these actions are without merit. The actions were received by the Tribunal in the city of Yopal, and the Tribunal issued an injunction suspending Gran Tierra’s preparatory work to spud this exploration well.

While Gran Tierra remains confident that this issue will be resolved favorably, the legal process may take several months. Therefore, the Company has released the drilling rig and ceased all other activities in the area. With a diverse exploration portfolio in Colombia, Gran Tierra will redeploy the exploration capital which was allocated to Prosperidad-1.

Credit Facility Update

As previously disclosed, the borrowing base on Gran Tierra’s reserve-based credit facility was increased from $250 million to $300 million, effective June 1, 2017.

About Gran Tierra Energy Inc.

Gran Tierra Energy Inc. is an international oil and gas exploration and production company, headquartered in Calgary, Canada, incorporated in the United States, trading on the NYSE MKT (GTE) and the Toronto Stock Exchange (GTE), and operating in South America. Gran Tierra holds interests in producing and prospective properties in Colombia, Peru, and Brazil. Gran Tierra has a strategy that focuses on establishing a portfolio of producing properties, plus production enhancement and exploration opportunities to provide a base for future growth. Additional information concerning Gran Tierra is available at www.grantierra.com. Investor inquiries may be directed to info@grantierra.com 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, 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 operations including planned operations, the exploration and development of the Company’s blocks, areas and fields, 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, 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 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; 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 February 28, 2017. 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 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 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 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.

Drilling Locations

This press release discloses potential future drilling locations which are unbooked. Unbooked locations are internal estimates based on prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review. Unbooked locations do not have attributed reserves or resources (including contingent and prospective). Unbooked locations have been identified by a member of management who is a qualified reserves evaluator in accordance with COGEH as an estimation of the Company’s multi-year drilling activities based on evaluation of applicable geologic, seismic, engineering, production and reserves information. There is no certainty that Gran Tierra will drill all unbooked drilling locations and if drilled, there is no certainty that such locations will result in additional oil and gas reserves, resources or production. The locations on which Gran Tierra actually drills wells will ultimately depend upon the availability of capital, regulatory approvals, seasonal restrictions, oil and natural gas prices, costs, actual drilling results, additional reservoir information that is obtained and other factors. While certain of the unbooked drilling locations have been de-risked by drilling existing wells in relative close proximity to such unbooked drilling locations, other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves, resources or production.

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 or by calling 1-800-SEC-0330.

Non-GAAP Measures

This press release includes non-GAAP financial measures as further described herein. These non-GAAP measures do not have a standardized meaning under GAAP. Investors are cautioned that these measures should not be construed as alternatives to net income or loss or other measures of financial performance as determined in accordance with GAAP. Gran Tierra’s method of calculating these measures may differ from other companies and, accordingly, they may not be comparable to similar measures used by other companies. Each non-GAAP financial measure is presented along with the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure.

Operating netback as presented is oil and gas sales net of royalties and operating and transportation expenses. Management believes that operating netback is a useful supplemental measure for investors to analyze financial performance and provide an indication of the results generated by Gran Tierra’s principal business activities prior to the consideration of other income and expenses.

Operating Netback 2017 Year-To-Date
Per bbl
Since Acquisition ($000s)
Oil and Natural Gas Sales $ 39.20 $ 52,863
Transportation Expenses (5.02 ) (7,757 )
Operating Expenses (5.79 ) (5,629 )
Operating Netback $ 28.39 $ 39,477

This press release contains a number of oil and gas metrics, including cost per flowing bbl, 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. 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.

Cost per flowing bbl is the total purchase price paid for PetroLatina of $525.0 million plus capital expenditures on the acquired PetroLatina properties in the MMV Basin, including Acordionero, since acquisition of $29.8 million, divided by current production from the MMV Basin properties of 10,248 bopd. Management believes that cost per flowing bbl is a useful supplemental measure for investors to analyze financial performance and provide insight to the capital efficiency of this development project.

Contact Information:

For investor and media inquiries please contact:
Gary Guidry
Chief Executive Officer

Ryan Ellson
Chief Financial Officer

Rodger Trimble
Vice President, Investor Relations