Gran Tierra Energy Inc ((GTE)) has held its Q4 earnings call. Read on for the main highlights of the call.
Gran Tierra Energy Inc’s latest earnings call painted a picture of strong operational achievements tempered by financial hurdles. The company celebrated record high reserves and production levels, alongside successful strategic initiatives such as a significant share repurchase program and promising exploration plans. However, these positive developments were offset by financial challenges, including decreased adjusted EBITDA, increased operating costs, and production issues in Colombia.
Record High Reserves and Production
Gran Tierra Energy Inc closed 2024 on a high note, achieving record levels across all reserve categories and delivering its highest-ever quarterly production in the fourth quarter. The company’s 2P reserves reached an impressive 293 million barrels of oil equivalent (BOE), and the average production for 2024 was 34,710 BOE per day, marking a 6% increase from the previous year.
Successful Share Repurchase Program
In a move to enhance shareholder value, Gran Tierra successfully repurchased 6.7% of its outstanding shares through its normal course issuer bid program. This strategic initiative underscores the company’s commitment to long-term value creation for its investors.
Positive Exploration and Development Plans
Looking ahead, Gran Tierra plans to allocate 25% of its 2025 capital program to exploration, with new wells planned in Ecuador and Canada. The company anticipates a significant increase in production, projecting a rise to between 47,000 and 53,000 BOE per day in 2025.
Strong Financial Management
Despite facing a decrease in net oil sales and adjusted EBITDA, Gran Tierra demonstrated strong financial management by increasing its cash balance from $62 million in 2023 to $103 million by the end of 2024.
Strategic Canadian Acquisition
The integration of the I3 Canadian asset package proved successful, contributing 20% of the company’s production and enhancing its long-term potential with valuable natural gas reserves.
Decreased Financial Metrics Due to Lower Brent Prices
Gran Tierra experienced a decrease in adjusted EBITDA, which fell by 8% from $399 million in 2023 to $367 million in 2024. Additionally, funds from operations dropped to $223 million compared to $277 million in the previous year, primarily due to lower Brent crude prices.
Increased Operating Costs
Operating costs rose by 8% to $202 million in 2024, with operating expenses per BOE increasing by 2% compared to 2023. This increase was largely attributed to the removal of diesel subsidies in Colombia and higher costs for natural gas and electricity.
Production Challenges in Colombia
Gran Tierra faced production challenges in Colombia, particularly in the Acordionero field, due to downtime related to workovers and deferred production caused by blockades in the Suroriente region.
Forward-Looking Guidance
Gran Tierra Energy provided optimistic guidance for 2025, projecting production to rise significantly to between 47,000 and 53,000 BOE per day. The company plans to focus on development drilling programs in Suroriente, Ecuador, and Canada, and aims to fulfill its 14-well exploration commitment in Ecuador. Financially, Gran Tierra targets reducing its gross debt to $600 million by 2026 and $500 million by 2027, with an emphasis on maintaining a net debt to EBITDA ratio of less than one.
In summary, Gran Tierra Energy’s earnings call highlighted a robust operational performance with record production and strategic initiatives aimed at enhancing shareholder value. However, financial challenges, including decreased adjusted EBITDA and increased operating costs, present hurdles that the company aims to overcome with its forward-looking strategies and exploration plans.