Gran Tierra Energy (GTE)

Q1 2011 Earnings Call

May 10, 2011 10:00 am ET

Executives

Martin Eden - Chief Financial Officer, Principal Accounting Officer and Vice President of Finance

Shane O’leary - Chief Operating Officer

Dana Coffield - Chief Executive Officer, President, Executive Director and Member of Reserves Committee

Analysts

Martin Molyneaux - FirstEnergy Capital Corp.

Nathan Piper - RBC Capital Markets, LLC

David Dudlyke - Stifel, Nicolaus & Co., Inc.

George Toriola - UBS Investment Bank

Neal Dingmann - SunTrust Robinson Humphrey, Inc.

Jamie Somerville - TD Newcrest Capital Inc.

Hubert van der Heijden

Presentation

Operator

Good morning, ladies and gentlemen, and welcome to Gran Tierra Energy's results conference call for the 3 months ended March 31, 2011. My name is Sev, and I'll be your coordinator for today. [Operator Instructions] I would like to remind everyone that this conference call is being webcast and recorded today, Tuesday, May 10, 2011, at 10:00 A.M. Eastern Standard Time.

Please be advised that in addition to historical information, certain comments made during this conference call, particularly those anticipating future financial performance, business prospects and overall operating strategies, constitute forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Such statements may be identified by words such as anticipate, believe, estimate, expect, intend, predict and hope or similar expressions. Such statements, which include estimated or forward-looking production and financial information or results, are based on management’s current expectations and are subject to a number of factors and uncertainties which could cause actual results to differ materially from those described in the forward-looking statements.

Listeners are urged to carefully review and consider the various disclosures made by Gran Tierra Energy and its reports filed with the Securities and Exchange Commission, including those risks set forth in Gran Tierra Energy's quarterly report on Form 10-Q filed with the SEC on May 10, 2011, and in its annual report on Form 10-K for the year ended December 31, 2010, filed with the Securities and Exchange Commission, February 25, 2011.

If one or more of these risk or uncertainties materialize or if the underlying assumptions prove incorrect, Gran Tierra Energy’s actual results may vary materially from those expected or projected. Listeners are urged not to place undue reliance on forward-looking statements made in today’s conference call. Gran Tierra Energy assumes no obligation to update these forward-looking statements other than as may be required by applicable law or regulation.

Today's conference call also includes the non-GAAP measure funds flow from operations. The press release disseminated by Gran Tierra Energy last night includes a reconciliation of this non-GAAP item with the company’s GAAP net income or loss, as well as information about why management believes the measure is useful in evaluating the company’s performance, and is available on Gran Tierra Energy’s website, www.grantierra.com.

All dollar amounts mentioned in today’s conference call are in U.S. dollars unless otherwise stated.

Finally, this earnings call is the property of Gran Tierra Energy, Inc. Any copying or rebroadcasting of this call is expressly forbidden without the written consent of Gran Tierra Energy.

I will now turn the conference over to Dana Coffield, President and Chief Executive Officer of Gran Tierra Energy. Mr. Coffield, please go ahead.

Dana Coffield

Thank you. Good morning, and thank you for joining us for Gran Tierra Energy's First Quarter 2011 Results Conference Call. With me today is Martin Eden, our Chief Financial Officer; and Shane O’leary, our Chief Operating Officer.

Last night, we disseminated a press release that included detailed financial information about the quarter. In addition, Gran Tierra Energy's 2011 report on Form 10-Q for the 3 months ending March 31, 2011, has been filed on EDGAR and SEDAR and will be available on our website at www.grantierra.com

I'm going to begin today by talking about some of the key developments for the quarter. Martin will then take a few minutes to discuss key aspects of this quarter's financial results. Shane will provide an operational overview and outlook, and I will return to provide closing remarks.

The highlight of the quarter was the announcement and subsequent closing of the acquisition of all of the issues and outstanding shares and warrants of Petrolifera Petroleum, which closed on March 18, 2011. This acquisition is significant for Gran Tierra Energy as it adds undeveloped gas reserve potential in Colombia, oil exploration opportunities in Colombia and Peru and additional oil production and reserve development opportunity in a rising oil price environment in Argentina.

The second significant highlight in the quarter was the continued reserve growth of the Moqueta oil field. Since the beginning of the year, we had drilled and evaluated 2 additional delineation wells, both encountering more oil than has been previously encountered. We still have not found the limits of this growing asset. No oil-water contract has been found in any of the reservoirs and any of the wells drilled today. We are now planning 2 additional delineation wells to further evaluate the extent of the oil column in the field. The next well is expected to be drilled in the third quarter.

Importantly, we are also nearing completion of the flow-line between Moqueta and the Costayaco Field and are anticipating first production from this discovery in late May.

In Brazil, to further complement our growth strategy, we have been qualified as a Class B operator from Brazil's National Petroleum Agency, the ANP, allowing Gran Tierra Energy to act as an operator in both the onshore and shallow water offshore in Brazil. This qualification allows us to broaden our strategy to include the offshore where we see significant opportunities in Brazil.

Read the rest of this transcript for free on seekingalpha.com