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Gran Tierra Energy Inc. (“Gran Tierra” or the “Company“) (NYSE MKT:GTE)(TSX:GTE), a company focused on oil exploration and production in Colombia, today announced the Company’s 2015 year-end estimated reserves as evaluated by the Company’s independent qualified reserve evaluator McDaniel & Associates Consultants Ltd. (“McDaniel“) in a report with an effective date of December 31, 2015 (the “GTE McDaniel Reserves Report“). Subsequent to year-end 2015, on January 13, 2016, the Company completed its acquisition of all the issued and outstanding common shares of Petroamerica Oil Corp. (“Petroamerica“) and expects to complete its acquisition of all the issued and outstanding common shares of PetroGranada Colombia Limited (“PGC“) on or about January 25, 2016. Gran Tierra is also announcing pro forma combined reserves and resources that have resulted from the Petroamerica acquisition and are expected to result from the PGC acquisition.

All dollar amounts are in United States (“U.S.“) dollars, unless otherwise indicated. Unless otherwise expressly stated, all reserves values contained in this press release have been calculated in compliance with Canadian National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101“) and the Canadian Oil and Gas Evaluation Handbook (“COGEH“). For reserves values calculated in compliance with SEC rules, see “Reserves Reported in Accordance with United States Reporting Requirements” below in this press release.

Message to Shareholders

Gary Guidry, President and Chief Executive Officer of Gran Tierra, commented “Gran Tierra’s mature legacy assets have performed as expected providing stable cash flow and production. Including the completed acquisition of Petroamerica which occurred subsequent to year-end, and the acquisition of PGC, which is expected to be completed on or about January 25, 2016, the Company’s Proved plus Probable (“2P“) working interest (“WI“) reserves increased by 14% compared with year-end 2014. In addition, as a result of the Petroamerica and PGC acquisitions, Gran Tierra’s unrisked net Prospective Resources are expected to increase to 681.7 million barrels of oil equivalent (“MMBOE “) (36% increase) and risked Prospective Resources to 178.2 MMBOE (50% increase) in Colombia compared with the Company’s Prospective Resources as at September 30, 2015.”

Highlights

  • Annual production for 2015 averaged 23,401 company interest barrels of oil equivalent per day (“BOEPD“) before royalties, or 19,489 BOEPD net after royalty.
  • Year-end 2015 WI oil and gas reserves based on NI 51-101 and COGEH:
    • Proved reserves (“1P“) increased 7,251 thousand barrels of oil equivalent (“MBOE“) from year-end 2014, before production, due to technical and economic revisions. In Brazil, 1P reserves increased by 83% based on reservoir performance. After production of 8,542 MBOE, year-end 2015 1P reserves were 48,350 MBOE compared to 49,100 MBOE at year-end 2014;
    • 2P reserves increased 7,0251 MBOE from year-end 2014 due to technical and economic revisions. In Brazil, 2P reserves increased based on reservoir performance and budgeted plans to implement water injection. After production of 8,542 MBOE, year-end 2015 2P reserves were 65,962 MBOE compared to 66,9391 MBOE year-end 2014;
    • Proved plus Probable plus Possible (“3P“) reserves were 81,009 MBOE after 2015 production a decrease of 8% from year-end 2014, excluding Peru reserves1.
  • Year-end 2015 before tax net present values discounted at 10% for Gran Tierra’s reserves based on NI 51-101 and COGEH:
    • 1P of $814.0 million compared to $1,111.3 million at year-end 2014
    • 2P of $1,100.5 million compared to $1,499.6 million at year-end 2014
    • 3P of $1,374.1 million compared to $2,038.9 million at year-end 2014.
  • Combined year-end 2015 WI oil and gas reserves of Petroamerica and (subject to closing) PGC2:
Reserves Category Volume
(MBOE)
Net Present Value Before Tax,
Discounted at 10% ($ million)
Proved 4,681 47.6
Proved plus Probable 10,267 130.7
Proved plus Probable plus Possible 15,002 233.3
  • Pro forma combined net asset value of $4.49 per share, based on before tax net present values discounted at 10% of 2P proforma combined reserves of the Company, Petroamerica and PGC, and estimated year-end 2015 working capital, net of cash paid for the Petroamerica and PGC acquisitions, of $97.0 million. This estimated net asset value does not represent fair market value.
  • Pro forma Colombia WI Prospective Resources for Petroamerica and (subject to closing) PGC, and Gran Tierra Prospective Resources announced December 20153:
Mean Unrisked
Prospective Resources
(MMBOE)
Mean Risked
Prospective Resources
(MMBOE)
Gran Tierra, year-end 2015 Colombia Only 501.1 119.0
Combined Petroamerica and PGC, year-end 2015 180.6 59.2
TOTAL 681.7 178.2
Change as a result of the Petroamerica and PGC acquisitions 36% increase 50% increase

__________________
1 Excludes any reserves for Peru. On February 19, 2015, Gran Tierra made the decision to suspend all further development expenditures on the Bretaña Field on Block 95 in Peru other than what was necessary to maintain tangible asset integrity and security. As a result of the decision to defer development, all probable and possible reserves associated with the field were reclassified as contingent resources.

2 Based on the independent report prepared by McDaniel as of December 31, 2015 (the “PTA McDaniel Reserves Report“) for Petroamerica and the independent report prepared by McDaniel as of December 31, 2015 (the “PGC McDaniel Reserves Report“) for PGC. As the Petroamerica acquisition closed and the PGC acquisition is expected to close subsequent to year-end 2015, these reserves are expected to be consolidated during 2016. These reports and the GTE McDaniel Reserves Report have not yet been submitted to the Agencia Nacional de Hidrocarburos (National Hydrocarbons Agency) (“ANH“).

3 Based on the independent evaluation of Prospective Resources prepared by McDaniel as at September 30, 2015, with respect to Gran Tierra’s Colombian properties (the “GTE McDaniel Prospective Resources Report“), the independent evaluation of Petroamerica’s Prospective Resources prepared by McDaniel as at December 31, 2015 (the “PTA McDaniel Prospective Resources Report“) and derived from the PTA McDaniel Prospective Resources Report as PGC owns the remaining 50% WI in the Putumayo-7 Block, the other 50% WI being owned by Petroamerica. These reports have not yet been submitted to the ANH.

Reserves Reported in Accordance with Canadian Reporting Requirements

The following tables summarize Gran Tierra’s NI 51-101 and COGEH compliant reserves in Colombia and Brazil derived from the GTE McDaniel Reserves Report and a report prepared by GLJ Petroleum Consultants Ltd. (“GLJ“) for Gran Tierra effective December 31, 2014 (the “GTE GLJ 2014 Reserves Report“), in each case calculated using forecasted oil and gas prices and costs. As noted above, probable and possible reserves associated with the Bretaña field on Block 95 in Peru are excluded from the table below.

Total Company 2015 Year-End 2014 Year-End
Oil and Liquids
(COGEH compliant)
WI Reserves WI Reserves(***)
Reserves Category Mbbl(*) Mbbl(*)
Total Proved 47,475 48,920
Total Probable 17,124 17,222
Total Proved plus Probable 64,599 66,142
Total Possible 14,614 20,638
Total Proved plus Probable plus Possible 79,213 86,780

(*)Mbbl (thousand barrels of oil).

Total Company 2015 Year-End 2014 Year-End
Gas
(COGEH compliant)
WI Reserves WI Reserves(***)
Reserves Category MMcf(**) MMcf(**)
Total Proved 5,248 1,081
Total Probable 2,929 3,699
Total Proved plus Probable 8,177 4,780
Total Possible 2,597 3,144
Total Proved plus Probable plus Possible 10,774 7,924
(**)MMcf (million cubic feet)
Total Company 2015 Year-End 2014 Year-End
BOE(COGEH compliant) WI Reserves WI Reserves(***)
Reserves Category MBOE MBOE
Total Proved 48,350 49,100
Total Probable 17,612 17,839
Total Proved plus Probable 65,962 66,939
Total Possible 15,047 21,162
Total Proved plus Probable plus Possible 81,009 88,101

(***) On February 19, 2015, Gran Tierra made the decision to cease all further development expenditures on the Bretaña field on Block 95 in Peru other than what is necessary to maintain tangible asset integrity and security. As a result of this decision, all probable and possible reserves associated with the field were reclassified as contingent resources. These probable and possible reserves are therefore excluded from the tables above.

Future Development Costs

The following table sets forth future development costs, excluding abandonment costs, deducted in the estimation of the future net revenue attributable to the reserve categories noted below (using forecast prices and costs):

Year Proved Reserves
($000s)
Proved Plus Probable
Reserves ($000s)
2016 34,917 58,440
2017 17,848 33,160
2018 2,862 24,005
2019 1,220 10,011
2020 8,432 1,882
Remaining 3,824 4,705
Total (undiscounted) 69,103 132,203

Before Tax Net Present Values

The following table summarizes before tax net present values for Gran Tierra’s NI 51-101 and COGEH compliant reserves at year-end 2015.

Total Company Before Tax Net Present Value ($ million)
Discount Rate
0% 5% 10% 15% 20%
Reserves Category
Total Proved 1,222 981 814 693 603
Total Probable 537 385 286 220 173
Total Proved plus Probable 1,759 1,366 1,100 913 776
Total Possible 609 397 274 198 148
Total Proved plus Probable plus Possible 2,368 1,763 1,374 1,111 924

Pro Forma Combined Reserves and Net Present Value

On January 13, 2016, Gran Tierra completed its acquisition of all the issued and outstanding common shares of Petroamerica, and expects to complete its acquisition of all the issued and outstanding common shares of PGC on or about January 25, 2016. The following table summarizes pro forma combined NI 51-101 and COGEH compliant WI reserves at year-end 2015 after giving effect to the Petroamerica and PGC acquisitions and derived from the GTE McDaniel Reserves Report, the PTA McDaniel Reserves Report and the PGC McDaniel Reserves Report.

BOE
(COGEH compliant)
Gran Tierra
WI Reserves
Combined Petroamerica
and PGC WI Reserves
Pro Forma
Combined
Reserves Category MBOE MBOE MBOE
Total Proved 48,350 4,681 53,031
Total Probable 17,612 5,586 23,198
Total Proved plus Probable 65,962 10,267 76,229
Total Possible 15,047 4,735 19,782
Total Proved plus Probable plus Possible 81,009 15,002 96,011

Readers are cautioned that the aggregate estimates set forth above may reflect different price estimates and other assumptions.

The following table summarizes pro forma combined before tax net present values discounted at 10% at year-end 2015.

Gran Tierra Combined Petroamerica
and PGC
Pro Forma
Combined
Reserves Category $ million $ million $ million
Total Proved 814 48 862
Total Probable 286 83 369
Total Proved plus Probable 1,100 131 1,231
Total Possible 274 103 377
Total Proved plus Probable plus Possible 1,374 234 1,608

Reserves Reported in Accordance with United States Reporting Requirements

The following tables summarize Gran Tierra’s SEC compliant reserves in Colombia and Brazil as derived from the GTE McDaniel Reserves Report and the GTE GLJ 2014 Reserves Report calculated using average start-of-month 2015 and 2014 oil and gas prices.

Total Company 2015 Year-End 2015 Year-End 2014 Year-End
Oil and Liquids
(SEC Compliant)
Company
Interest
Reserves
Net After
Royalty
(“NAR”)
Reserves
Company
Interest
Reserves
(***)
Reserves Category Mbbl(*) Mbbl(*) Mbbl(*)
Total Proved 45,941 38,109 49,698
Total Probable 18,506 15,276 17,263
Total Proved plus Probable 64,447 53,385 66,961
Total Possible 14,767 12,155 20,103
Total Proved plus Probable plus Possible 79,214 65,540 87,064
Total Company 2015 Year-End 2015 Year-End 2014 Year-End
Gas
(SEC Compliant)
Company
Interest
Reserves
NAR
Reserves
Company
Interest
Reserves
(***)
Reserves Category MMcf(**) MMcf(**) MMcf(**)
Total Proved 5,190 4,628 1,081
Total Probable 2,931 2,616 3,822
Total Proved plus Probable 8,121 7,244 4,903
Total Possible 2,653 2,374 3,152
Total Proved plus Probable plus Possible 10,774 9,618 8,055
Total Company 2015 Year-End 2015 Year-End 2014 Year-End
BOE
(SEC Compliant)
Company
Interest
Reserves
NAR
Reserves
Company
Interest
Reserves
(***)
Reserves Category MBOE MBOE MBOE
Total Proved 46,806 38,880 49,878
Total Probable 18,994 15,712 17,900
Total Proved plus Probable 65,800 54,592 67,778
Total Possible 15,209 12,551 20,628
Total Proved plus Probable plus Possible 81,009 67,143 88,406

Before Tax Net Present Values

The following table summarizes before tax net present values for Gran Tierra’s SEC compliant reserves at year-end 2015 calculated using average start-of-month oil and gas prices.

Total Company Before Tax Net Present Value ($ million)
Discount Rate
0% 5% 10% 15% 20%
Reserves Category
Total Proved 844 719 626 556 501
Total Probable 301 226 174 138 111
Total Proved plus Probable 1,145 945 800 694 612
Total Possible 343 234 169 127 99
Total Proved plus Probable plus Possible 1,488 1,179 969 821 711

The SEC standardized measure of after tax future net cash flows discounted at 10% from Gran Tierra’s estimated SEC compliant proved oil and gas reserves at December 31, 2015, is $464.8 million.

Pro Forma Combined Reserves and Net Present Value

On January 13, 2016, Gran Tierra completed its acquisition of all the issued and outstanding common shares of Petroamerica, and expects to complete its acquisition of all the issued and outstanding common shares of PGC on or about January 25, 2016. The following table summarizes pro forma combined SEC compliant company interest reserves at year-end 2015 as derived from the GTE McDaniel Reserves Report, the PTA McDaniel Reserves Report and the PGC McDaniel Reserves Report.

BOE
(SEC Compliant)
Gran Tierra
Company Interest
Reserves
Combined Petroamerica
and PGC Company
Interest Reserves
Pro Forma
Combined
Reserves Category MBOE MBOE MBOE
Total Proved 46,806 4,464 51,270
Total Probable 18,994 5,513 24,507
Total Proved plus Probable 65,800 9,977 75,777
Total Possible 15,209 4,471 19,680
Total Proved plus Probable plus Possible 81,009 14,448 95,457

The following table summarizes pro forma combined before tax net present values discounted at 10% at year-end 2015.

Gran Tierra Combined Petroamerica
and PGC
Pro Forma
Combined
Reserves Category $ million $ million $ million
Total Proved 626 43 669
Total Probable 174 46 220
Total Proved plus Probable 800 89 889
Total Possible 169 58 227
Total Proved plus Probable plus Possible 969 147 1,116

Prospective and Contingent Resources

In addition to the GTE McDaniel Prospective Resources Report, an updated independent assessment of Gran Tierra’s contingent and prospective resources on its Peruvian exploration and development properties was completed by GLJ as of September 30, 2015, (the “GTE GLJ Contingent and Prospective Resources Report“) in accordance COGEH and the standards established by NI 51-101.

Additionally, an independent assessment of prospective resources has been completed by McDaniel on Petroamerica, the acquisition of which has closed, as reflected in the PTA McDaniel Prospective Resources Report.

The following table summarizes the prospective resources for Colombia, proforma with the acquisitions, and for Peru derived from the GTE McDaniel Prospective Resources Report, the PTA McDaniel Prospective Resources Report and the GTE GLJ Contingent and Prospective Resources Report:

WI Prospective Resources – Unrisked (1)(2) Risked Resources
Colombia Prospects/ Low P50 Mean High Mean(2)
Basin (Leads)
Gran Tierra
Light and Medium Crude Oil (MMbbl)(****)
Putumayo(3)(5) 30 102.0 262.2 371.3 764.6 99.4
Llanos(3)(5) 3 4.5 16.1 25.7 58.5 5.0
Sinu(3)(5) 4 (leads) 8.4 43.4 83.1 210.7 11.7
Total (3)(4)(5) 114.9 321.7 480.1 1,033.8 116.1
Conventional Natural Gas (MMcf) (**)
Putumayo(3)(5) 30
Llanos(3)(5) 3
Sinu(3)(5) 4 (leads) 13.4 67.1 126.3 318.1 18.1
Total (3)(4)(5) 13.4 67.1 126.3 318.1 18.1
BOE (MMBOE)
Putumayo(3)(5) 30 102.0 262.2 371.3 764.6 99.4
Llanos(3)(5) 3 4.5 16.1 25.7 58.5 5.0
Sinu(3)(5) 4 (leads) 10.6 54.5 104.1 263.7 14.6
Total (3)(4)(5) 117.1 332.8 501.1 1,086.8 119.0
Petroamerica and PGC
Light and Medium Crude Oil (MMbbl)(****)
Putumayo(3)(5) 15 12.9 44.4 70.1 156.8 35.4
Llanos(3)(5) 9 and 2 leads 38.9 88.8 110.5 209.8 23.8
Total (3)(4)(5) 24 and 2 leads 51.8 133.2 180.6 366.6 59.2
Pro Forma Combined
BOE (MMBOE)
Putumayo(3)(5) 45 114.9 306.6 441.4 921.4 134.8
Llanos(3)(5) 9 and 2 leads 43.4 104.9 136.2 268.3 28.8
Sinu(3)(5) 4 (leads) 10.6 54.5 104.1 263.7 14.6
Total (3)(4)(5) 54 and 6 leads 168.9 466.0 681.7 1,453.4 178.2

(****) million barrels of oil

(1) There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. See “Disclosure of Oil and Gas Information” below for important cautionary notes regarding prospective resources.

(2) The risked resources are partially risked prospective resources that have been risked for chance of discovery, but have not been risked for the chance of development. The chance of development is defined as the probability of a project being commercially viable. Quantifying the chance of development requires consideration of both economic contingencies and other contingencies, such as legal, regulatory, market access, political, social license, internal and external approvals and commitment to project finance and development timing. As many of these factors are extremely difficult to quantify, the chance of development is uncertain and must be used with caution. The chance of development was estimated to be 75 percent in the Putumayo and Llanos Basins and 60 percent in the Sinu Basin.

(3) Total based on the probabilistic aggregation of zones within a prospect and arithmetic aggregation of the individual prospects to the Total level. The estimates of prospective resources for individual properties may not reflect the same confidence level as estimates of prospective resources for all properties, due to the effects of aggregation. Aggregation of multiple zones and multiple prospects may lead to slight numeric variation due to rounding errors.

(4) The unrisked total assumes every prospect is successful and as such is not representative of the exploration portfolio unrisked total as defined in COGE Handbook Volume 2 Section 2.8.2.

(5) Company gross resources are based on WI share of the property gross resources.

(6) Based on a Mcf to BOE conversion of 6 to 1.

WI Prospective Resources – Unrisked (1)(2) Risked Resources
Peru Prospects/ Low P50 Mean High Mean(2)
Basin (Leads)
Light and Medium Crude Oil (MMbbl)(****)
Maranon(3)(5) 5 159.9 774.8 1,604.8 3,274.7 317.1
Ucayali(3)(5) 1 61.1 218.3 312.9 682.8 60.1
Total (3)(4)(5) 221.0 993.1 1,917.7 3,957.5 377.2
Conventional Natural Gas (MMcf)(**)
Maranon(3)(5) 5
Ucayali(3)(5) 1
Total (3)(4)(5)
BOE (MMBOE)
Maranon(3)(5) 5 159.9 774.8 1,604.8 3,274.7 317.1
Ucayali(3)(5) 1 61.1 218.3 312.9 682.8 60.1
Total (3)(4)(5) 221.0 993.1 1,917.7 3,957.5 377.2

(1) There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. See “Disclosure of Oil and Gas Information” below for important cautionary notes regarding prospective resources.

(2) The risked resources are partially risked prospective resources that have been risked for chance of discovery, but have not been risked for the chance of development. The chance of development is defined as the probability of a project being commercially viable. Quantifying the chance of development requires consideration of both economic contingencies and other contingencies, such as legal, regulatory, market access, political, social license, internal and external approvals and commitment to project finance and development timing. As many of these factors are extremely difficult to quantify, the chance of development is uncertain and must be used with caution. The chance of development was estimated to be 69 percent in the Maranon and Ucayali Basins.

(3) Total based on the probabilistic aggregation of zones within a prospect and arithmetic aggregation of the individual prospects to the Total level. The estimates of prospective resources for individual properties may not reflect the same confidence level as estimates of prospective resources for all properties, due to the effects of aggregation. Aggregation of multiple zones and multiple prospects may lead to slight numeric variation due to rounding errors.

(4) The unrisked total assumes every prospect is successful and as such is not representative of the exploration portfolio unrisked total as defined in COGE Handbook Volume 2 Section 2.8.2.

(5) Company gross resources are based on WI share of the property gross resources.

(6) Based on a Mcf to BOE conversion of 6 to 1.

The following tables summarize Gran Tierra’s contingent resources as of September 30, 2015, as derived from the GTE Contingent and Prospective Resources Report:

Summary of Contingent Resources (1)(2)(3)
Peru 1C 2C 3C
Heavy Oil (MMbbl) (****)
Bretaña 34.2 53.0 80.9
34.2 53.0 80.9

(1) All of the Company’s contingent resources have been classified as heavy oil. There is uncertainty that it will be commercially viable to produce any portion of the resources.

(2) “Contingent Resources” are 100% of the volumes estimated to be recoverable from the field in the event that it is developed.

(3) The volumes reported here are “unrisked” in the sense that no adjustment has been made for the risk that the field may not be developed in the form envisaged or may not be developed at all (i.e. no “Chance of Development” factor has been applied).

Forecast prices

The pricing assumptions used in estimating NI 51-101 and COGEH compliant reserves data disclosed above with respect to net present values of future net revenue are set forth below. The forecast inflation rate for price is 2% from 2030 onwards. The price forecast is based off McDaniel’s standard price forecast effective January 1, 2016. McDaniel is an independent qualified reserves auditor pursuant to NI 51-101.

Brent
Crude Oil
Year $US/bbl
2016 $47.50
2017 $56.20
2018 $65.00
2019 $71.70
2020 $75.80

About Gran Tierra Energy Inc.

Gran Tierra Energy Inc. is an international oil and gas exploration and production company, headquartered in Calgary, Canada, incorporated in the United States, trading on the NYSE MKT (GTE) and the Toronto Stock Exchange (GTE), and operating in South America. Gran Tierra holds interests in producing and prospective properties in Colombia, Peru and Brazil. Gran Tierra has a strategy that focuses on establishing a portfolio of producing properties, plus production enhancement and exploration opportunities to provide a base for future growth.

Gran Tierra’s Securities and Exchange Commission filings are available on a website maintained by the Securities and Exchange Commission at www.sec.gov and on SEDAR at www.sedar.com.

For more information on Gran Tierra please go to: www.grantierra.com.