All dollar amounts are in United States (“U.S.”) dollars unless otherwise indicated.
Gran Tierra Energy Inc. (“Gran Tierra” or the “Company”) (GTE) (GTE) is pleased to announce that today the Company entered into an agreement with PetroGranada Limited to acquire all of the issued and outstanding shares of PetroGranada Colombia Limited (“PGC”) (the “Acquisition”). Subject to approval by the Agencía Nacíonal de Hidrocarburos of Colombia (“ANH”), PGC holds a full 50% undivided working interest in the exploration and production contract for the Putumayo-7 block (“PUT-7 Block”), in the Putumayo Basin of Colombia. Consideration for the Acquisition is $19 million, subject to customary adjustments, to be paid on the closing of the Acquisition. In addition, the Company has agreed to pay an additional $4 million to PGC if the cumulative production from the PUT-7 Block plus gross Proved plus Probable reserves under the PUT-7 Block meet or exceed 8 million barrels (“MMbbls”). As a result of its previous acquisition of Petroamerica Oil Corp., the Company already holds the rights to the other 50% undivided working interest of the PUT-7 Block, which is subject to ANH approval. Upon receiving ANH approval with respect to both interests, the Company will hold a 100% undivided working interest and be the operator of the PUT-7 Block.
The Acquisition will be funded with cash-on-hand, and the Company will remain debt free with an undrawn $200 million credit facility.
STRATEGIC RATIONALE
The PUT-7 Block is highly prospective in the Company’s view. Based on an NI 51-101 independent report prepared by GLJ Petroleum Consultants Ltd., as of December 31, 2014, there were 1.9 MMbbls of Proved plus Probable reserves with respect to the 50% undivided working interest of Petroamerica Oil Corp. In addition, the Company believes there are multiple seismically identified drill ready exploration prospects on the PUT-7 Block, including the emerging N Sands play.
“This acquisition is strategic to the Company in consolidating reserves and high potential exploration opportunities in the Putumayo Basin, and throughout the hydrocarbon producing basins in Colombia. This operated block will provide a focal point for potential new infrastructure in the southern Putumayo as we begin the exciting exploration and development programs in this region,” commented Gary Guidry, President and Chief Executive Officer of Gran Tierra.
SUMMARY OF THE ACQUISITION
The Acquisition has the following characteristics and metrics:
| Total consideration | $19 million1 | |
| Total net acres of undeveloped land (50% of block) | 65,093 acres | |
| Working Interest Proved plus Probable reserves | 1.9 MMbbls2 | |
| Consideration paid for barrel of 2P reserves | $10.00/bbl |
- Gran Tierra has agreed to pay an additional $4 million to PGC if cumulative production from the PUT-7 Block plus gross Proved plus Probable reserves under the PUT-7 Block meet or exceed 8 MMbbls.
- Based on NI 51-101 independent report prepared by GLJ Petroleum Consultants Ltd. as of December 31, 2014, with respect to the 50% undivided working interest of Petroamerica Oil Corp.
There are commitments to drill two exploration wells on the PUT-7 Block during 2016, after which there will remain a commitment to perform approximately 167 square kilometers of 3D seismic. The Company considers the drill ready prospects on the PUT-7 Block to be in the top quartile of its exploration portfolio.
Gran Tierra continues to execute its business plan of creating sustainable value-added growth in reserves, production and cash flow through management’s integrated strategy of acquiring, exploring, developing and enhancing high-quality assets in Colombia.
FOR MORE INFORMATION ON GRAN TIERRA ENERGY INC., PLEASE GO TO:www.grantierra.com
