Gran Tierra Energy (GTE)

Q3 2011 Earnings Call

November 08, 2011 10:00 am ET

Executives

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

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

Analysts

Caio M. Carvalhal - JP Morgan Chase & Co, Research Division

Jamie Somerville - TD Newcrest Capital Inc., Research Division

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

Martin P. Molyneaux - FirstEnergy Capital Corp., Research Division

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

George Toriola - UBS Investment Bank, Research Division

Nathan Piper - RBC Capital Markets, LLC, Research Division

Unknown Analyst -

Presentation

Operator

Good morning, ladies and gentlemen, and welcome to the Gran Tierra Energy's Result Conference Call for the 3 months ended September 30, 2011. My name is Francine, and I am your coordinator for today. [Operator Instructions] I would like to remind everyone that this conference call is being webcast and recorded today, November 8, 2011, at 10 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 statement. Listeners are urged to carefully review and consider the various disclosures made by Gran Tierra Energy in its reports filed on the Securities and Exchange Commission, including risks set forth in Gran Tierra's Energy quarterly report on Form 10-Q filed with the SEC on November 7, 2011, and 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 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 they may be required by applicable law or regulation.

Today's conference call also includes a 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 and loss, as well as information about why the management believes this measure is useful in evaluating the company’s performance and is available on Gran Tierra's Energy 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, Francine. Good morning, and thank you for joining us for Gran Tierra Energy's Third Quarter 2011 Results Conference Call.

With me today is Martin Eden, our Chief Financial Officer; Shane O’leary, our Chief Operating Officer is unable to join us today due to schedule conflicts. On November 7, 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 September 30, 2011, has been filed on EDGAR and is 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. I will then provide an operational overview and outlook followed by closing remarks.

Financially, the third quarter was highlighted by revenue and other income of $151 million, net income of $49.1 million, and funds flow from operations of $72.8 million. Cash and cash equivalents were $226.4 million and working capital was $230.5 million at the end of the quarter. As before, the company remains debt free. Operationally, the third quarter was highlighted by record quarterly production of 18,369 barrels of oil equivalent per day, a 36% increase from the year before. Approximately, 95% of this, or 17,437 barrels was light, high-quality high [ph] crude oil. Gran Tierra Energy also confirmed 2 new oil discoveries, one in Columbia and one in Argentina, plus a very important appraisal well with Moqueta-6 in Colombia, which has confirmed additional oil volume in this growing oil discovery.

Perhaps most importantly, we've expanded our strategic partnerships in South America where we have entered into agreements with Statoil and Petrobras in a joint venture to explore in the offshore of Brazil and expanded our existing partnership with CEPSA to explore additional prospective acreage in Colombia. Both of these initiatives add new, large exploration prospects to our exploration inventory with both near-term and long-term drilling opportunities. Before going into more detail, let me now turn the call over to Martin Eden to discuss the financial results. Martin?

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