Mr. Gary Guidry reports

GRAN TIERRA ENERGY INC. ANNOUNCES SECOND QUARTER 2023 RESULTS

Gran Tierra Energy Inc. has released the company's financial and operating results for the quarter ended June 30, 2023. All dollar amounts are in U.S. dollars, and production amounts are on an average working interest (WI) before royalties basis unless otherwise indicated. Per barrel and barrel per day amounts are based on WI sales before royalties. For per bbl amounts based on net after royalty (NAR) production, see Gran Tierra's quarterly report on Form 10-Q filed Aug. 1, 2023.

Message to shareholders

Gary Guidry, president and chief executive officer of Gran Tierra, commented: "During the first half of 2023, Gran Tierra completed its development campaign with the drilling of 21 development wells in three of our major fields, which have been producing oil at rates in line with and at times exceeding our expectations. Currently, our third-quarter-to-date 2023 total average production levels stands at an impressive approximately 35,300 bopd. Now that our development campaign has been completed, capital expenditures are expected to decrease significantly in the second half of 2023, which should allow the company to focus on the generation of free cash flow.

"Gran Tierra is pleased to provide a midyear reserves update that we announced today in a separate press release. The positive results announced in the reserves update are a testament to the company's operational success and our in-country relationships that have allowed the company to secure the Suroriente block continuation agreement. We invite you to read the reserves update press release in its entirety.

"Looking ahead, we are entering an exciting phase of growth. With the 2023 development campaign now completed, we are gearing up to drill exploration wells in Ecuador. This represents a promising opportunity for Gran Tierra to follow up on existing exploration success achieved in Ecuador during 2022. Our company's financial position remains robust, which gives us the flexibility to make strategic investments and seize opportunities that drive long-term value creation for our shareholders as they arise. We continue to focus on maximizing operational efficiency and managing costs effectively to ensure sustainable growth and profitability.

"We are also pleased to announce that we plan to continue our investment in the protection and conservation of the Andean-Amazon rainforest in the Putumayo basin of Colombia by extending our support to the NaturAmazonas project. The project, founded by Gran Tierra and world-renowned non-governmental organization Conservation International, has grown into an alliance of public and private institutions working together to address the root causes of deforestation. We began our reforestation work nearly a decade ago because one of our long-standing goals is to leave the environment in a better condition than when we arrived. During the first six years of the project, Gran Tierra's initial investment of $13-million has already produced impactful results that have benefited the environment and local communities, including the reforestation and restoration of over 1,400 hectares of land and the planting of over 1.2 million trees."

Key highlights of the quarter:

• Production:
  • Gran Tierra's total average production was 33,719 bopd, an increase of 7 per cent compared with first quarter 2023 and up 10 per cent from second quarter 2022. Gran Tierra's production in the quarter was the company's highest quarterly average total production since the second quarter of 2019.
  • The company's third-quarter-to-date 2023 total average production has been approximately 35,300 bopd.
• Quality and transportation discounts: The company's quality and transportation discount narrowed to $14.10 per bbl, down from $18.45 per bbl in the prior quarter and up from $13 per bbl one year ago. The Castilla oil differential narrowed to $9.41 per bbl, down from $15.17 per bbl in the prior quarter and up from $7.82 per bbl one year ago (Castilla is the benchmark for the company's Middle Magdalena Valley basin oil production). The Vasconia differential narrowed to $5.53 per bbl, down from $7.87 per bbl in the prior quarter and up from $5.09 per bbl one year ago (Vasconia is the benchmark for the company's Putumayo basin oil production). Differentials to Brent pricing have continued to narrow as 2023 has progressed. The current Castilla differential is approximately $6.64 per bbl, and the Vasconia differential is approximately $3.96 per bbl.
• Net income: Gran Tierra incurred a net loss of $11-million, compared with a net loss of $10-million in the prior quarter and net income of $53-million one year ago, which was primarily due to the $13-million of realized foreign exchange loss mainly associated with the strengthening of the Colombian peso by 9 per cent in the quarter and the payment of the company's 2022 income taxes in the quarter, which are paid in Colombian pesos. The company's net income over the last 12 months was $51-million.
• Oil price: The Brent oil price averaged $77.73 per bbl, down 5 per cent from the prior quarter and down 31 per cent from one year ago.
• Realized foreign exchange loss: During the quarter, a $13-million realized foreign exchange loss was recognized primarily as a result of the strengthening of the Colombian peso by 9 per cent in the quarter and the payment of the 2022 income taxes in the quarter, which are paid in Colombian pesos.
• Basic earnings per share: Gran Tierra incurred a net loss of 33 cents per share, compared with a net loss of 28 cents per share in the prior quarter and net earnings of $1.44 per share one year ago.
• Diluted earnings per share: Gran Tierra incurred a net loss of 33 cents per share, compared with a net loss of 28 cents per share in the prior quarter and net earnings of $1.42 per share one year ago.
• Adjusted earnings before interest, taxes, depreciation and amortization: Adjusted EBITDA was $85-million compared with $89-million in the prior quarter and $140-million one year ago. Adjusted EBITDA was negatively impacted by the $13-million realized foreign exchange loss. Twelve-month trailing adjusted EBITDA to net debt was 1.2 times.
• Funds flow from operations: Funds flow from operations was $53-million, down 12 per cent from the prior quarter and down 49 per cent from one year ago. Funds flow from operations was negatively impacted by the $13-million realized foreign exchange loss. Over the last 12 months, Gran Tierra's funds flow from operations was $288-million.
• Free cash flow: During the quarter, the company's capital expenditures exceeded funds flow from operations by approximately $12-million as a result of the company's front-end-loaded 2023 development program, which saw the drilling of seven development wells in the quarter, which completed the development program for 2023, which consisted of a total of 21 wells. The majority of the company's capital expenditures was incurred in the first half of 2023, and with the current Brent oil price, narrowing of differentials and current production levels, the company expects to meet its free cash flow targets for 2023.
• Share buybacks:
  • During the quarter, pursuant to Gran Tierra's current normal course issuer bid, Gran Tierra purchased 20,439 shares for a total purchase price of $107,810, at a weighted-average price of approximately $5.27 per share. Since the commencement of the NCIB on Sept. 1, 2022, Gran Tierra has purchased 3.6 million shares, representing approximately 9.8 per cent of Gran Tierra's outstanding shares as of June 30, 2022. The NCIB was completed and expired when the 10-per-cent share maximum of Gran Tierra's public float as of Aug. 22, 2022, was reached in May, 2023.
• Cash: As of June 30, 2023, the company had a cash balance of $69-million and net debt of $503-million. With the forecasted free cash flow in the second half of 2023, it expects to exit 2023 with over $150-million of cash.
• Undrawn credit facility: Gran Tierra's credit facility, with a capacity of up to $150-million, remains undrawn.
• Oil price hedges: Gran Tierra does not currently have any oil price hedges in place and expects to fully benefit from any increases in oil prices.
• Additional key financial metrics:
  • Capital expenditures: Capital expenditures of $66-million were lower than the prior quarter's level of $71-million and slightly up from $65-million compared with one year ago. During the quarter, Gran Tierra drilled seven development wells in Colombia.
  • Oil sales: Gran Tierra generated oil sales of $158-million, up 10 per cent from the prior quarter and down 23 per cent from one year ago. Oil sales increased compared with the prior quarter primarily as a result of an 8-per-cent increase in sales volumes, partially offset by a 5-per-cent decrease in Brent price. Lower oil sales relative to one year ago were driven primarily by the decrease in Brent oil price and the widening of quality and transportation discounts compared with the same period, which were partially offset by the increase in the company's oil production over the same time frame.
  • Operating netback: The company's operating netback was $34.58 per bbl, down 2 per cent from the prior quarter and down 42 per cent from one year ago. As with oil sales, changes in operating netback relative to the prior quarter were driven by a decrease in Brent oil price. Compared with one year ago, the change in operating netback was largely driven by the decrease in Brent oil price and higher quality and transportation discounts over the same time period.
  • Operating expenses: Gran Tierra's operating expenses increased 9 per cent to $15.86 per bbl, up from $14.59 per bbl in the prior quarter, primarily due to higher road maintenance and environmental activities, partially offset by a lower number of workovers. Compared with one year ago, operating expenses increased by 10 per cent on a per bbl basis, due primarily to increased Ecuador operations and higher environmental costs and partially offset by a lower number of workovers.
  • General and administrative (G&A) expenses: G&A expenses before stock-based compensation were $3.12 per bbl, down from $3.95 per bbl in the prior quarter due to lower legal and information technology costs, partially offset by higher consulting fees attributed to optimization projects and up from $2.86 when compared with one year ago.
  • Cash netback: Cash netback per bbl was $17.37, compared with $21.16 in the prior quarter, as a result of a decrease in Brent price of $4.37 per bbl and a $4.18-per-barrel realized foreign exchange loss in the quarter due to the strengthening Colombian peso and payment of the 2022 income taxes paid in the quarter. In the prior quarter, the realized foreign exchange loss was of 42 cents per bbl. Compared with one year ago, cash netback per bbl decreased by $20.34 from $37.71, despite a $34.25-per-barrel decrease in the Brent oil price over the same period.

Conference call information

Gran Tierra will host its second quarter 2023 results conference call on Wednesday, Aug. 2, 2023, at 9 a.m. Mountain Time or 11 a.m. Eastern Time. Interested parties may listen to the conference call by registering. The call will also be available through a webcast at the Gran Tierra website.

Corporate presentation

Gran Tierra's corporate presentation has been updated and is available on the company website.

About Gran Tierra Energy Inc.

Gran Tierra, together with its subsidiaries, is an independent international energy company currently focused on oil and natural gas exploration and production in Colombia and Ecuador. The company is currently developing its existing portfolio of assets in Colombia and Ecuador, and will continue to pursue additional new growth opportunities that would further strengthen the company's portfolio. The company's common stock trades on the NYSE American, the Toronto Stock Exchange and the London Stock Exchange under the ticker symbol GTE.

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