Gran Tierra Energy, Inc. (GTE)

Q2 2012 Earnings Call

August 07, 2012 01:00 pm ET


Dana Coffield - President & CEO

Shane O'Leary - COO

James Rozon - CFO


Nathan Piper - RBC

Jamie Somerville - TD Securities

John Malone - Global Hunter Securities

Matt Portillo - Tudor Pickering

Rafi Khouri - Raymond James

George Toriola - UBS

Ian Macqueen - CIBC

Caio Carvalhal - JPMorgan

Justin Anderson - Salman Partners

Neal Jacobs - Cambrian Funds

Frederick Kozak - Canaccord Adams



Good morning, ladies and gentlemen, and welcome to Gran Tierra Energy's results conference call for the three months ended June 30, 2012. My name is Christine and I'll be your coordinator for today. At this time all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session for securities, analysts and institutions.

Instructions will be provided at that time for you to queue up for questions. (Operator Instructions) I would like to remind everyone that this conference call is being webcast and recorded today, Tuesday, August 7, 2012 at 01:00 PM 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 in 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 7, 2012 and in its annual report on Form 10-K for the year ended December 31, 2011 filed with the Securities and Exchange Commission February 27, 2012.

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

All dollar amounts mentioned in today’s conference call are in US dollars unless otherwise stated. Finally this earnings call is the property of Gran Tierra Energy Incorporated, any copying or rebroadcasting of this call is expressly forbidden without the written consent of Grand Tierra Energy. I will now turn the conference over to Mr. Dana Coffield, President and Chief Executive officer of Grand Tierra Energy. Please go ahead.

Dana Coffield

Thank you good morning and thank you for joining us for Gran Tierra Energy's second quarter 2012 results conference calls. With me today is Shane O'Leary, our Chief Operating Officer, and James Rozon our Chief Financial Officer.

This morning we disseminated a press release that included detailed financial information about the quarter. In addition Gran Tierra Energy's report on Form 10-Q for the six months ending June 30, 2012 has been filed on EDGAR and SEDAR and will be available on our website at

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

The key highlight for the quarter was a positive mid-year reserve evaluation of the Costayaco field, Gran Tierra Energy's largest asset in Colombia. After producing 1.7 million barrels of oil since yearend 2011, we’re able to still add an additional 4.9 million barrels of crude reserves and 5.8 million barrels of 2P reserves, representing 33% and 35% growth respectively according to SEC figures.

This is remarkable for a field that has been on plateau production for three years and is a testament to our team’s ability to manage this field effectively and extend the expected plateau production and associated cash flow. In addition, we confirmed an exploration success with the Ramiriqui oil discovery in the Llanos basin in Colombia where we're currently evaluating options for implementation of an early production program for the well and the drilling of an appraisal well in the discovery.

Finally, in Brazil we drilled two development wells and expect to soon be drilling production from the [Tia] field. These successes in exploration and reserve additions during the quarter were offset in part by continued challenges to production due to pipeline disruptions on Ecopetrol operated OTA pipeline in Colombia.

Grand Tierra Energy's production in the second quarter averaged 14,127 barrels of oil equivalent per day net after royalty and inventory adjustment, comprised of 10,308 barrels of oil equivalent per day in Colombia, 3,693 barrels of oil equivalent per day in Argentina and 126 barrels of oil equivalent per day in Brazil.

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