CALGARY, Alberta, June 21, 2006, Gran Tierra Energy, Inc. (OTC Bulletin Board: GTRE.OB) today announced that the Company has completed a $65,000,000 private placement financing of units of its common stock and warrants and has concurrently completed the acquisition of Argosy Energy International in Colombia. The Company has also initiated the closing of an acquisition/farm-in agreement in Argentina with Golden Oil Corporation. Deutsche Bank Securities Inc. and Sanders Morris Harris acted as Placement Agents for the financing.
Argosy is an active oil producer and explorer in Colombia. The acquisition of the company is expected to add production of approximately 856 barrels of oil per day and proven reserves of 2.3 million barrels of oil to Gran Tierra (both net after royalty). Argosy holds interests as an operator in two producing projects covering six fields as well as a total of five exploration blocks, and is currently drilling the Popa-1 prospect in the Rio Magdalena block. Total consideration for the Argosy acquisition consisted of $37.5 million cash plus 870,647 shares of Gran Tierra's common stock, in addition to certain overriding and net profit interests in the acquired assets valued at $1 million.
Gran Tierra's acquisition of a 50% interest in the El Vinalar Block in Argentina from Golden Oil is expected to add approximately 44 barrels per day of oil production (after royalty) and positions the company for a drilling program to commence later this year. Total consideration for the acquisition is $950,000 and includes a commitment to fund up to $2.7 million of the cost of a planned sidetrack well.
Documentation for a third acquisition of producing and prospective assets of Compa~n'ia General de Combustibles S.A. (CGC) in Argentina, for a total purchase price of $37.8 million, is nearing completion. Closing for this transaction is scheduled on or before July 31, 2006 and is subject to certain authorizations including the waiving of rights of first refusal of partners and regulatory, legal/judicial approvals within Argentina.
The private placement of securities of the Company provided total proceeds of $65,004,076 based on the issuance of 43,336,051 units consisting of one common share plus one warrant to purchase one-half share. The offering was conducted pursuant to the exemption from the registration requirements of the federal securities laws provided by the Securities Act of 1933 (as amended). Proceeds from the financing have been used to close the Argosy and Vinalar acquisitions, and are earmarked for the pending CGC acquisitions and for drilling and work programs across all acquired properties. Gran Tierra intends to supplement its equity financing with a committed debt facility of $25 million.
Dana Coffield, President and Chief Executive Officer of Gran Tierra, stated, "Gran Tierra is, today, entering a new chapter in its history. We have concluded two important transactions and are ready for a third. We have resources in place for an aggressive work program. We are positioned for growth in three countries. We have achieved our objectives for our first year as a company, and we are ready for the challenges and rewards that are ahead."
About Gran Tierra Energy, Inc.
Gran Tierra Energy, Inc. is an international oil and gas exploration and production company, headquartered in Calgary, Canada, incorporated and traded in the United States and operating in South America. The Company now holds interests in producing and prospective properties in Argentina, Colombia and Peru. To date, the Company has pursued a strategy that focuses on establishing a portfolio of producing properties, development and exploration opportunities, through selective acquisitions, to provide a base for future growth.
Gran Tierra is advancing a multi-well work program for 2006/early-2007 and expects to continue its strategy of moving aggressively and sensibly to build a diverse, self-sustaining and active international oil and gas company. Additional information concerning Gran Tierra is available at www.grantierra.com. Investor inquiries may be directed to firstname.lastname@example.org or 1-800-916-GTRE (4873).
Forward Looking Statements
This press release contains 'forward-looking statements' within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, including without limitation those statements regarding the Company's ability to exploit oil and gas exploration opportunities. These statements are expressed in good faith and based upon a reasonable basis when made, but there can be no assurance that these expectations will be achieved or accomplished. Although the forward-looking statements in this release reflect the good faith judgment of management, forward-looking statements are inherently subject to known and unknown risks and uncertainties that may cause actual results to be materially different from those discussed in these forward-looking statements including, but not limited to, our ability to complete each of the potential acquisitions discussed above on anticipated terms and in a timely manner, including the completion of financing relating thereto on satisfactory terms, our ability to discover reserves that may be extracted on a commercially viable basis, difficulties inherent in estimating oil and gas reserves, intense competition in the oil and gas industry, environmental risks, regulatory changes and general economic conditions including the price of oil and gas. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this release, other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various disclosures made by us in the our reports filed with the Securities and Exchange Commission, including those risks set forth in the Company's Current Report on Form 8-K filed on November 10, 2005, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operation and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected. We undertake no obligation to update these forward looking statements.
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Gran Tierra Energy Inc.