Gran Tierra Energy Inc. is pleased to announce the completion of the semi-annual redetermination of the Company’s bank-syndicated credit facility. All dollar amounts are in United States (“U.S.”) dollars, unless otherwise indicated. The Company and the syndicate of lenders party to the credit facility have agreed to amend the credit facility (the “Amendment”) effective as of June 1, 2020, as follows:
(i) | Redetermination of borrowing base limit to $225 million from the prior limit of $300 million; |
(ii) | Grant of relief under financial covenants until October 1, 2021 (the “Covenant Relief Period”), including relief from compliance with the ratio of Total Debt1 to EBITDAX1 during the Covenant Relief Period; and |
(iii) | Amendment of the interest rate to either, at the borrower’s option, the London Inter-Bank Offered Rate (LIBOR) plus a spread ranging from 2.9% to 4.9%, or base rate plus a spread ranging from 1.9% to 3.9%, with such spread, in each case, dependent upon the Company’s Senior Secured Leverage Ratio1. Based on the Company’s current Senior Secured Leverage Ratio, the interest rate would equal 3.2% under the first option and 2.2% under the second option. |
The credit facility matures in November 2022. The Amendment does not impact the Company’s current bonds outstanding.
Additional Hedges Secured, Strong Hedge Position In-Place: The Company has entered into additional oil price hedges and now has 11,000 barrels (“bbl”) of oil per day (“bopd”) hedged for the second quarter of 2020 and 9,000 bopd hedged for the second half of 2020. Gran Tierra’s current hedges are summarized in the following table:
Type of Instrument & Period |
Volume (bopd) |
Sold Put ($/bbl)* |
Purchased Put ($/bbl)* |
Sold Call ($/bbl)* |
|||
Collar: April 1 to June 30, 2020 | 6,000 | n/a | $55.00 | $69.05 | |||
3-Way: April 1 to June 30, 2020 | 5,000 | $25.00 | $35.00 | $38.93 | |||
3-Way: July 1 to December 31, 2020 | 9,000 | $25.28 | $34.72 | $41.46 |
*Weighted Average
Operations Update
Current Production
Gran Tierra remains focused on the ongoing production and waterflooding of the Company’s core assets at Acordionero, Costayaco and Moqueta. Consistent with management’s expectation, during the second quarter of 2020 to-date, Gran Tierra’s total working interest production has averaged approximately 21,000 bopd.
Acordionero (100% Working Interest, Operator)
Ayombero (100% Working Interest, Operator)
Message to Stakeholders
Gary Guidry, President and Chief Executive Officer of Gran Tierra, commented: “We are very pleased that our bank syndicate continues to be supportive of Gran Tierra during these volatile times. We expect the Company to have sufficient liquidity for the remainder of 2020, since we plan to spend less than anticipated funds flow from operations and have a strong hedge position. The credit facility was drawn to $204 million as at March 31, 2020 and, due to the low forecasted expenditures, the expected positive funds flow from operations at current pricing and the recovery of tax receivables in the range of $50 million to $80 million over the next six months, the Company expects the amount drawn on the credit facility to decrease by the end of 2020.
Furthermore, the waiver of the Total Debt1 to EBITDAX1 covenant until the fourth quarter of 2021 allows the Company greater flexibility to focus on value creation for all stakeholders. Ongoing tax refunds from the Colombian government are expected to further strengthen our balance sheet through the course of 2020.
We forecast that the Company currently has the productive capacity to produce over 30,000 bopd with the future completion of workovers in Acordionero, resumption of production in the Suroriente Block and restart of production from our minor fields for an expected cost of less than $10 million. We expect all shut-in fields and facilities to return to prior production levels once Brent oil prices stabilize and return to a range of $35 to $40/bbl. We continue to prioritize financial strength, liquidity and long-term value creation and believe we will exit strongly from this current period of economic turmoil.”
1 These non-GAAP measures are defined in the Credit Agreement, dated as of September 18, 2015, by and among Gran Tierra Energy Inc., Gran Tierra Energy International Holdings Ltd., the Bank of Nova Scotia, Societe Generale and the lenders party thereto, as amended (the “Credit Agreement”). The Credit Agreement and all amendments thereto are available as exhibits to Gran Tierra’s SEC filings. Total Debt means all debt of Gran Tierra and its subsidiaries party to the credit facility on a consolidated basis. EBITDAX means the sum of consolidated net income plus the following expenses or charges to the extent deducted from consolidated net income: interest, income taxes, depreciation, depletion, amortization, exploration expenses and other similar noncash charges, minus all noncash income added to consolidated net income. Senior Secured Leverage Ratio means the ratio of secured total date to EBITDAX.
2 All Ayombero-Chuira resources values and ancillary information 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”) and in respect of prospective resources are based on the estimated prospective resources as evaluated by the Company’s independent qualified reserve evaluator McDaniel in a report with an effective date of July 31, 2018 (the “GTE McDaniel Prospective Resources Report”). Refer to “Prospective Resources” in this press release for more information.
Contact Information
For investor and media inquiries please contact:
Gary Guidry
President & Chief Executive Officer
Ryan Ellson
Executive Vice President & Chief Financial Officer
Rodger Trimble
Vice President, Investor Relations
+1-403-265-3221
info@grantierra.com
About Gran Tierra Energy Inc.
Gran Tierra Energy Inc. together with its subsidiaries is an independent international energy company focused on oil and natural gas exploration and production in Colombia and Ecuador. The Company is focused on its existing portfolio of assets in Colombia and Ecuador and will pursue new growth opportunities throughout Colombia and Latin America, leveraging our financial strength. The Company’s common stock trades on the NYSE American, the Toronto Stock Exchange and the London Stock Exchange under the ticker symbol GTE. Additional information concerning Gran Tierra is available at www.grantierra.com. Information on the Company’s website (including the Sustainability Report) does not constitute a part of this press release. Investor inquiries may be directed to info@grantierra.com or (403) 265-3221.
Gran Tierra’s Securities and Exchange Commission filings are available on the SEC website at http://www.sec.gov and on SEDAR at http://www.sedar.com and UK regulatory filings are available on the National Storage Mechanism website at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.