Currently Drilling High Impact Exploration Well in the Llanos Basin Foothills
CALGARY, Alberta, November 1, 2011, Gran Tierra Energy Inc. ("Gran Tierra Energy") (NYSE Amex: GTE, TSX: GTE), a company focused on oil exploration and production in South America, today announced that it has entered into a farm-in agreement with CEPSA Colombia S.A., a wholly-owned subsidiary of Compania Espanola de Petroleos, S.A.U. ("CEPSA"), whereby Gran Tierra Energy will earn a 45% working interest ("WI") in Concession Contract Llanos-22 (CEPSA will retain a 55% WI and Operatorship) and CEPSA will farm-in for a 30% WI on the Piedemonte Norte Block (Gran Tierra Energy will retain a 70% WI and Operatorship). The completion of the two transactions is subject to obtaining regulatory approval from Colombia's Agencia Nacional de Hidrocarburos ("ANH") and other customary conditions of closing.
This strategic partnership with CEPSA builds upon Gran Tierra Energy's existing relationship in the Garibay Block (GTE 50% WI, CEPSA 50% WI and Operator) in the Llanos Basin. This transaction expands Gran Tierra Energy's presence in this basin and positions the company in attractive foothills acreage located adjacent to the prolific Cusiana / Cupiagua fields, which have cumulatively produced over 1.2 billion barrels of light oil. The Llanos-22 block encompasses approximately 343 square kilometers (84,757 acres) and has several leads and prospects analogous to the foothills of the Putumayo Basin where Gran Tierra Energy has had significant exploration success in recent years. The block was acquired by CEPSA through the 2008 Colombian bid round process and is governed by the ANH Model Contract with its attractive fiscal terms.
"The partnership is currently drilling Rumiriqui-1, a high impact oil exploration well testing a prospect defined on new 3D seismic, which will likely reach the target horizons within the next 30 days. If drilling results are successful, this opportunity benefits from a short time to reserves and production because of the proximity to existing infrastructure" said Dana Coffield, President and Chief Executive Officer of Gran Tierra Energy.
Under the terms of the farm-in agreements, in addition to the swap of the 30% WI in Piedemonte Norte block, Gran Tierra Energy will pay $1.5 million towards historic costs and a partial carry on the current well being drilled. The Piedemonte Norte block, located in the Putumayo Basin, encompasses 319 square kilometers (78,742 acres) and also contains significant exploration upside. The effective increase in the Gran Tierra Energy 2011 budget will be approximately US$20 million.
About Gran Tierra Energy Inc.
Gran Tierra Energy is an international oil and gas exploration and production company, headquartered in Calgary, Canada, incorporated in the United States, trading on the NYSE Amex Exchange (GTE) and the Toronto Stock Exchange (GTE), and operating in South America. Gran Tierra Energy holds interests in producing and prospective properties in Colombia, Argentina, Peru, and Brazil. Gran Tierra Energy 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.
Gran Tierra Energy's Securities and Exchange Commission filings are available on a web site maintained by the Securities and Exchange Commission at http://www.sec.gov and on SEDAR at http://www.sedar.com.
Forward Looking Statements:
This news release contains certain forward-looking information and forward-looking statements (collectively, "forward-looking statements") under the meaning of applicable securities laws, including Canadian Securities Administrators' National Instrument 51-102 - Continuous Disclosure Obligations and the United States Private Securities Litigation Reform Act of 1995. The use of the words "target" and "will" identify forward-looking statements. In particular, but without limiting the foregoing, the statements made by Mr. Coffield in his quote in this news release and the statement regarding the expected impact the contracts will have on Gran Tierra Energy's 2011 budget are forward-looking statements.
The forward-looking statements contained in this news release reflect several material factors and expectations and assumptions of Gran Tierra Energy including, without limitation, assumptions relating to field size and recoverability in the Putumayo and Llanos Basins. Gran Tierra Energy 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.
The forward-looking statements contained in this news release are subject to risks, uncertainties and other factors that could cause actual results or outcomes to differ materially from those contemplated by the forward-looking statements, including, among others: the transaction is subject to regulatory approval by Agencia Nacional de Hidrocarburos (ANH), the timing and results of which are outside of Gran Tierra Energy's control, which approval if not obtained or delayed could cause the transaction not to occur or to be delayed; unexpected technical difficulties and operational difficulties may occur, or the obtaining of environmental permits may be delayed, which could impact or delay the drilling of exploration wells; geographic, political and weather conditions can impede the drilling of exploration wells; and guerilla activity in Colombia has in the past, and may in the future, impact the timing of Gran Tierra Energy's operations in Colombia. Further information on potential factors that could affect Gran Tierra Energy are included in risks detailed from time to time in Gran Tierra Energy's Securities and Exchange Commission filings, including, without limitation, under the caption "Risk Factors" in Gran Tierra Energy's Quarterly Report on Form 10-Q filed August 9, 2011. These filings are available on a Web site maintained by the Securities and Exchange Commission at http://www.sec.gov and on SEDAR at www.sedar.com. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this press release are made as of the date of this press release and Gran Tierra Energy 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 legislation.
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