Release Date: February 24, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gran Tierra Energy Inc (GTE, Financial) achieved record highs across all reserve categories and delivered its highest ever quarterly production in Q4 2024.
- The company successfully met its average production guidance target for 2024, with a 6% increase in average working interest production compared to 2023.
- Gran Tierra Energy Inc (GTE) repurchased 6.7% of its outstanding shares, demonstrating confidence in the company's future prospects and commitment to long-term shareholder value creation.
- The company has a robust and diverse portfolio with significant reserves, including 293 million BOE of 2P reserves, positioning it well for future growth.
- Gran Tierra Energy Inc (GTE) plans to allocate 25% of its total capital program to exploration in 2025, with a focus on Ecuador, which is expected to fulfill exploration commitments and move to the development phase.
Negative Points
- Gran Tierra Energy Inc (GTE) experienced a decrease in net oil sales by 2% compared to 2023, with operating costs increasing by 8% due to higher workovers and increased natural gas and electricity costs.
- The company's adjusted EBITDA decreased by 8% from 2023, and funds from operations also saw a decline, attributed to lower Brent prices.
- Gran Tierra Energy Inc (GTE) faced downtime in the Acordionero field due to workovers and deferred production from blockades in Suroriente.
- The company anticipates higher costs in 2024 due to the removal of diesel subsidies in Colombia and increased natural gas and electricity expenses.
- Gran Tierra Energy Inc (GTE) is targeting a reduction in gross debt to $600 million by the end of 2026, indicating a focus on debt management amidst financial pressures.
Q & A Highlights
Q: Can you provide insights on the higher cost of sales in 2024 and expectations for 2025?
A: Ryan Ellson, CFO, explained that the higher costs in 2024 were due to the removal of diesel subsidies in Colombia and increased natural gas and electricity costs. However, these costs are expected to decrease in 2025 as production ramps up, especially in Ecuador, where unit costs are anticipated to decline.
Q: What are the production expectations for 2026 and 2027?
A: Ryan Ellson, CFO, stated that Gran Tierra is comfortable with a 5% to 10% production growth, depending on capital allocation. The company has 293 million BOE of 2P reserves, which is a good indicator of potential production growth.
Q: How does Gran Tierra plan to manage potential tariff impacts on production sales?
A: Ryan Ellson, CFO, mentioned that the company expects minimal impact from tariffs. The diversification of production, with most oil sold domestically in Canada, and the tightening of differentials in South America, should offset any potential tariff increases.
Q: Are there any expected changes in the capital structure for 2025?
A: Ryan Ellson, CFO, indicated that Gran Tierra plans to reduce debt using free cash flow. The company aims to balance debt reduction with share repurchases, targeting a net debt of $600 million by the end of 2025.
Q: How is the integration of the i3 asset package progressing?
A: Gary Guidry, CEO, reported that the integration has gone well, with the entire team from i3 joining Gran Tierra. The integration is expected to facilitate technology transfer and operational synergies across regions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
