Gran Tierra Energy (GTE)

Q2 2011 Earnings Call

August 09, 2011 10:00 am ET


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

Shane O’leary - Chief Operating Officer


Martin Molyneaux - FirstEnergy Capital Corp.

Nathan Piper - RBC Capital Markets, LLC

Matthew Portillo - Tudor, Pickering, Holt & Co. Securities, Inc.

Brad Virbitsky

Rafi Khouri - Raymond James Ltd.

J. Frederick Kozak - Canaccord Genuity

Alexander Klein - Dundee Securities Corporation

Howard Farkas

Unknown Analyst -

Ian Macqueen - CIBC World Markets Inc.

Quinn Sievewright - Stifel, Nicolaus & Co., Inc.



Good morning, ladies and gentlemen, and welcome to the Gran Tierra Energy's results conference call for the 3 months ended June 30, 2011. My name is Nicole, and I will be your coordinator for today. [Operator Instructions] I would like to remind everyone that this conference call is being webcast and recorded today, Tuesday, August 9, 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 August 9, 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 24, 2011. If one or more of these risks 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 form 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, as well as the information about why management believes this measure is useful in evaluating the company’s performance, and is available on Gran Tierra Energy’s website, 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 Shane O'leary, Chief Operating Officer of Gran Tierra Energy. Mr. Leary, please proceed.

Shane O’leary

Good morning, and thank you for joining us for Gran Tierra Energy's Second Quarter 2011 Results Conference Call. With me today is Martin Eden, our Chief Financial Officer; Dana Coffield, our President and Chief Executive Officer, is unable to join us today as she is meeting Canada's Prime Minister Harper in Brazil this morning, following the Prime Minister's meeting with President Dilma Rousseff. Dana will be meeting the Prime Minister again tomorrow in Colombia prior to the Prime Minister's meeting with President Santos.

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 ended June 30, 2011, has been filed on EDGAR and is available on our website at

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. I will provide an operational overview and closing remarks.

The second quarter of 2011 was highlighted by record production and the first full quarter of production from the Petrolifera assets acquired earlier this year. The quarter was also highlighted by initial long-term test production from the Moqueta discovery, which is now flowing through a newly constructed flow line back to our Costayaco facilities. Gran Tierra Energy obtained average quarterly production sales in the second quarter of 18,141 barrels of oil equivalent per day, net after royalty, comprised of 15,277 barrels of oil equivalent per day in Colombia; 2,820 barrels of oil equivalent per day in Argentina; and 44 barrels of oil per day in Brazil. Contributing to the second quarter increase was existing fuel developments, new production from recent field discoveries and production growth from recently acquired Petrolifera assets. This also represents an increase from our first quarter 2011 production of 13,476 barrels of oil equivalent per day, which was impacted by downtime at the Tumaco Port. Approximately 97% of our production is light and medium oil.

Funds flow from operations for the quarter doubled to $88.6 million compared to the same quarter last year. Funds flow for the first 6 months worth $155.1 million, which contributed to a cash and cash equivalents balance of $211.4 million.

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