RE:RE:Gran Tierra Energy Inc. Reports Third Quarter 2024 Results a Well Frank, I listened to the call yesterday where Guidry welcomed the new investors from former i3 Energy however, he had nothing to say of the Gran Tierra investors, yes, the ones he’s put at a loss for many years.
The analysts questions were very weak (i.e., cash tax, surtax, average Brent for their oil, etc.), it’s almost like they didn’t want to be there. In fact, the call was over in less than a half hour, pathetic to the core! It’s like Gran Tierra Management has been given a pass from the analysts that cover them.
Even when asked about why the acquisition Gary Guidry, CEO, just noted that the acquisition provides a platform for growth in Western Canada, diversifying both oil and gas assets. The focus will be on developing new discoveries in Ecuador, mature water floods in Colombia, and oil opportunities in Canada though, no synergies nothing other? Remember, they purchased the growth in Western Canada as they will be focused developing new discoveries in Ecuador.
They keep regurgitating the same average production of 32,764 barrels of oil per day for the last couple years for their South American assets. What have all the expenditures done the past years is my question?
As far as the high yield on its 2029 bonds ($700 Million or so) is concerned, Ryan Ellson, CFO mentioned they are comfortable with their bond amortization plans, focusing on asset longevity and investing in the ground. They plan to fund upcoming maturities with cash on hand and free cash flow. Easy as that!
Anyway, here are the takeaways:
Positive Points
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Gran Tierra Energy Inc (GTE) completed its acquisition of I Three Energy, diversifying its assets into Canada and increasing its reserves significantly.
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The acquisition added 253 net booked drilling locations and increased production by 18,000 barrels of oil equivalent per day.
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Gran Tierra's operating expenses decreased by 2% compared to the prior quarter, primarily due to lower workover costs.
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The company achieved a major milestone of over 1 million barrels of cumulative oil production in Ecuador, marking significant exploration success.
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Gran Tierra announced the renewal of its normal course issuer bid, reinforcing its commitment to share buybacks as a key component of shareholder returns.
Negative Points
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Gran Tierra's oil sales decreased by 9% from the prior quarter due to lower prices and wider oil differentials.
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The company's transportation expenses decreased by 31% due to shorter distance delivery points, but this was offset by higher lifting costs in Ecuador.
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Gran Tierra's net income for the quarter was only $1 million, indicating limited profitability.
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The company's cash balance is expected to decrease by approximately $170 million due to funding the I Three acquisition.
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Gran Tierra had to pause its share buyback program due to the acquisition, resulting in only 370,000 shares repurchased during the quarter.
Ryan Ellson confirmed they are comfortable with the 2024 guidance range and plan to release 2025 guidance in early January.