Gran Tierra Energy Inc. · AMEX:GTE

Gran Tierra Energy — Investor Presentation (September 2018)

40 slides from Gran Tierra Energy's investor presentation, September 2018

  1. Slide 1: Creating Value in Colombia

    Creating Value in Colombia September 2018

  2. Slide 2: General Advisory

    General Advisory core areas; our prospects and leads; the plans, objectives, expectations and intentions of the Company regarding production, exploration and exploration upside, drilling, permitting, testing and development; The information contained in this presentation does not purport to be all-i

  3. Slide 3: Company Snapshot

    COMPANY SNAPSHOT Gran Tierra: publicly listed, independent international exploration & production company focused in onshore Colombia Operating Statistics 2016 2017 2018E W.I. Production (boepd)1 26,216 31,426 36,500-38,500 Cash Flow (US$MM)2 $93 $190 $330-$340 Middle Capital Expenditures (US$MM) $1

  4. Slide 4: Gran Tierra – Excellent Value Proposition

    GRAN TIERRA – EXCELLENT VALUE PROPOSITION • Focused on full-cycle returns • Low decline rates • Management track record of • Top quartile netbacks adding value • High impact exploration Value- High Quality Driven Assets CREATE Objective: Grow LONG-TERM NAV/share by 3-5 SHAREHOLDER VALUE times within

  5. Slide 5: Second Half 2018: Upcoming Catalysts

    SECOND HALF 2018: UPCOMING CATALYSTS All wells GTE-operated, 100% Working Interest Middle Magdalena  3 appraisal oil wells at Ayombero, Valley Basin Midas Block (La Luna carbonate)  Forecasted growth in Acordionero oil production (Lisama sandstone); 6 development oil wells & 1 water injector; expa

  6. Slide 6: Delivering on Our Focused Strategy

    DELIVERING ON OUR FOCUSED STRATEGY 1 Production Growth  2 Reserves Growth1 (mboe/d, gross W.I.) (mmboe, gross W.I.) 194% 57% 142% 75%   3 Expanded Exploration NAV Per Share Growth1,2 4 Potential1 (US$/share) (mmboe, mean prospective 87% resources, gross W.I.) 192% 48% 191% Growth in Colombian re

  7. Slide 7: Net Asset Value

    NET ASSET VALUE Dec.31/2017 NAV Before Tax (US$MM, US$/share)1 Sep.04/2018 Share Price US $3.42/share Gran Tierra shares currently trade at a significant discount; 0.6 x of 2P NAV per share 1. Based on 2017 McDaniel Reserve Report, Jun.30/2018 net debt (non-GAAP) of $289 MM, Jul.30/2018 share count

  8. Slide 8: Steadily Growing Production

    STEADILY GROWING PRODUCTION From under 25,000 boepd in mid-2015 to a forecasted 50,000 boepd in 20201 1. Based on GTE 2015-2017 actuals, 2018 production guidance & 2017 McDaniel Reserve Report 8

  9. Slide 9: Material Growth: Reserves and Value

    MATERIAL GROWTH: RESERVES AND VALUE1 2P Reserves by Property1 (MMboe)  85% of 2P reserves in 4 core fields  Reserves = 137 MMBOE (99% oil), up 18% y-o-y  Reserves/share2 up 20% y-o-y  2P NAV/share up 29%  Reserves replacement2 = 283% 85% Gran Tierra has created material shareholder value in Col

  10. Slide 10: Q2/2018 Results & Operational Highlights

    Q2/2018 RESULTS & OPERATIONAL HIGHLIGHTS o Record Quarterly Production, On Track To Achieve Guidance2 Quarterly Comparison Q2/2018 Q1/2018 % Change - Q2/2018 averaged 35,400 BOEPD WI Production (boepd) 35,400 35,075 1% - June 2018 average of 36,426 BOEPD Funds Flow ($MM)1 $95 MM $75 MM 27% - On trac

  11. Slide 11: 2018 Updated Guidance – Growth Within Cash Flow

    2018 UPDATED GUIDANCE1 – GROWTH WITHIN CASH FLOW Production Guidance Capital Guidance WI Production (boepd) 36,500 – 38,500 Total Capital ($MM) $305 - $325 y-o-y growth2 16 – 23% 2018 Capex Program Cash Flow Guidance PREVIOUS NEW3 Brent ($/bbl) $57 $72 Cash Flow4 ($MM) $265-285 $330-340 Expense Guid

  12. Slide 12: 2018 Capital Program Details

    2018 CAPITAL PROGRAM DETAILS Development Capital ($210 – $220 MM; ~68%) New storage tanks and new processing equipment under Acordionero (MMV) construction • Drill 12 wells: 10 development & 2 water injection • CPF expansion • Gas-to-power project Acordionero CPF Expansion Exploration Capital Ayombe

  13. Slide 13: Sustainable Business Model

    SUSTAINABLE BUSINESS MODEL During Q2/2018, Brent average oil price = ~$75/bbl Cash Flows, Capital & Leverage ORIG. BUDGET REVISED BUDGET @ $57/bbl Brent @ $72/bbl Brent Cash Flow1 $MM 265 - 285 330 - 340 Cash Flow per Share $/Share 0.68 - 0.73 0.84 - 0.87 Cash Flow Multiple Ratio 4.6 – 4.9 3.8 - 3.9

  14. Slide 14: Deploying Capital Profitably

    DEPLOYING CAPITAL PROFITABLY  GTE already generates high return on capital 2P Recycle Ratio1 employed (“ROCE”), over 15% YTD in 2018 4.0  Over time, GTE to ROCE to trend towards long- 3.5 term internal rate of return target of 20%+ 3.0 2.5 2.0 ROCE 1.5 18% 1.0 16% 14% 0.5 12% 0.0 2016 2017 10% 8%

  15. Slide 15: Acordionero (MMV) – Snapshot

    ACORDIONERO (MMV) – SNAPSHOT o Acordionero: major oil producing asset in MMV - GTE increased field’s production by 274% since acquisition, all while generating free cash flow o Near-term production growth engine - Current1 production of 17,710 BOEPD (W.I.) - 2019 2P production forecast = ~23,000 BOE

  16. Slide 16: Ayombero-1: Exciting MMV La Luna Results

    AYOMBERO-1: EXCITING MMV LA LUNA RESULTS  Spud Nov. 13, 2017 La Luna Depth Map  Galembo 200 ft. contour interval Galembo member: • 200-275 ft of net oil pay • Only 70 ft perforated to date • Natural flow of ~250 bopd of 19°API, no water Puj.  Pujamana member: • Upside yet to be tested CHR-1  Ayo

  17. Slide 17: Putumayo – Snapshot

    PUTUMAYO – SNAPSHOT GTE Blocks o Dominant land position & proprietary seismic database - GTE: largest landholder (1.1 million gross acres) & operates 14 out of 15 blocks - Substantial 2D/3D seismic database covering much of basin - Unrisked Mean Prospective Resources2:: 1,155 MMBOE (297 MMBOE risked

  18. Slide 18: Putumayo Basin Stacked Pays

    PUTUMAYO BASIN STACKED PAYS OIL RESERVOIR ANALOG FIELDS N Sands Stratigraphic Play Cumplidor  Discoveries/appraisal: Cumplidor-1 & 2, N Sand Alpha-1, Confianza-1, Nancy-1 Dec.31/2017 Putumayo Quinde Cohembi  Amplitudes identifiable on seismic Prospective Resources1 M2-  Statistically high COS (MM

  19. Slide 19: Transportation Optionality

    TRANSPORTATION OPTIONALITY Barranquilla  Ample takeaway capacity and no infrastructure Cartagena / Puerto Bahía bottlenecks to GTE’s operations Cov eñas Lower Mag Basin • Spare capacity exists in many pipelines (including Ayacucho Acordionero those used by GTE) due to Colombian production declining

  20. Slide 20: Oil Price Upside Exposure

    OIL PRICE UPSIDE EXPOSURE Vasconia – Brent differential  GTE produces nearly 100% oil; all crude sales 0 contracts use Brent as the reference price Key Differentials  Over 80% of forecasted 2018 production has -5 exposure to oil price upside • 50% of GTE hedges (5,000 of 10,000 bbl/d) have -10 ups

  21. Slide 21: Environmental, Social & Governance Excellence

    ENVIRONMENTAL, SOCIAL & GOVERNANCE EXCELLENCE Safety Greenhouse Gas NaturAmazonas Emissions Project GTE is committed to being an industry leader GTE voluntarily discloses GTE has positive impact on areas in Health and Safety. We strive to eliminate all greenhouse gas (GHG) emissions where it operate

  22. Slide 22: Summary of Key Investment Attributes

    SUMMARY OF KEY INVESTMENT ATTRIBUTES  High Quality Assets  Accretive Production/Reserves Growth Middle Magdalena Valley Basin  High Impact Exploration Llanos Basin  Funded Through Cash Flow Putumayo Basin  Significant Exposure to Higher Oil Prices GTE Blocks Sustainable business model, expected

  23. Slide 23: Appendix

    Appendix

  24. Slide 24: Highly Experienced Management Team

    HIGHLY EXPERIENCED MANAGEMENT TEAM Name Title Experience Gary President & Professional Engineer registered with APEGA with over 35 years of experience; prior to Gran Tierra, was Guidry CEO President & CEO of Caracal Energy, Orion Oil & Gas and Tanganyika Oil Ryan Chartered Accountant with over 17 ye

  25. Slide 25: 2015 to 2018: A Transformed Company

    2015 TO 2018: A TRANSFORMED COMPANY 2015 Key Goals Achieved? Where We Are Now in 2018 Visible Reserves & Production Growth P 2P Reserves up 142%, Production up 57%, RLI = ~11 yrs Focus on Colombia P Brazil assets sold, Peru assets spun out Consolidate Putumayo Basin P Petroamerica, PetroGranada, Eco

  26. Slide 26: Key Asset Overview

    KEY ASSET OVERVIEW Appraisal & Development of New Fields Acordionero, Ayombero, Other MMV  Near-term conventional production growth funded by its own cash flow Middle Magdalena  Ayombero: 3 appraisal wells planned for H2/2018 Costayaco Growth Through Development of Legacy Reservoirs & A-Limestone

  27. Slide 27: Acordionero (MMV) – Asset Overview

    ACORDIONERO (MMV) – ASSET OVERVIEW Lisama A Sand Structure Map o Low decline rate for existing production of ~14% 1,3 o 100% working interest (operator) o High netback ~19° API oil o Stacked pay: Overview - Thick, permeable oil pay in Lisama A & C - New discoveries in Lisama D (AC-8i & Mochuelo) o F

  28. Slide 28: Debt/Cash Flow Peer Comparison

    DEBT/CASH FLOW PEER COMPARISON 9 8 2018E Debt / Cash Flow (x's) 7 6 5 4 3 2 1 0 Cdn Peer… US Peer… Intl Peer… GTE Peer 1 Peer 2 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 18 Peer 33 Peer 10 Peer 11 Peer 12 Peer 13 Peer 14 Peer 15 Peer 16 Peer 17 Peer 19 Peer 20 Peer 21 Peer 22 Peer 23 Peer 24 Peer 26 P

  29. Slide 29: PetroLatina: Transformational Acquisition in MMV

    PETROLATINA: TRANSFORMATIONAL ACQUISITION IN MMV Reserves2 o In August 2016, GTE made transformational & strategic (MMBOE; W.I.) acquisition of PetroLatina for US$525 million 18% o Provided diversification into prolific Middle Magdalena Valley Basin (MMV) through cash flow generating 42% growth asse

  30. Slide 30: Putumayo: Costayaco & Moqueta – Asset Overview

    PUTUMAYO: COSTAYACO & MOQUETA – ASSET OVERVIEW Reserves2 o Low decline rates for existing production of ~17% 1,2 (Costayaco) & (MMBOE; W.I.) ~12%1,2 (Moqueta) o 100% working interest (operator) o High netback ~29° API oil Overview o Strong, reliable cash flow, minimal future capital required o Volum

  31. Slide 31: Three Strategic Acquisitions in Putumayo Basin

    THREE STRATEGIC ACQUISITIONS IN PUTUMAYO BASIN Reserves1 o In 2016, GTE completed 3 acquisitions in the Putumayo Basin for total consideration of US$126 million (MMBOE; W.I.) - Consolidated GTE’s position in Putumayo & provided strategic infrastructure instrumental for regional development o Acquire

  32. Slide 32: Large Putumayo Seismic Database

    LARGE PUTUMAYO SEISMIC DATABASE o Gran Tierra has a substantial Costayaco proprietary seismic database Moqueta covering much of the Putumayo Vonu Basin - 3D: 1,716 km2 - 2D: 16,807 km o N Sand and A-Limestone plays are clearly defined by seismic o New 3D seismic surveys in PUT-7 block designed to be

  33. Slide 33: Vonu-1 A-Limestone Discovery (PUT-1 Block)

    VONU-1 A-LIMESTONE DISCOVERY1 (PUT-1 BLOCK) Log Analysis: Net Oil Pay (ft, TVD) Increased Pump N Sand 8 Frequency M1 Limestone 3 M2 Limestone 9 Initial 7-day test A-Limestone 91 U Sand 15 Larger flowline TOTAL 126 Other Oil Production Test (bopd, gross) U Sand 217 (<3% water cut) Multi-zone discover

  34. Slide 34: Funds Flow & EBITDA Reconciliations

    FUNDS FLOW & EBITDA RECONCILIATIONS Non-GAAP Measures This presentation includes non-GAAP financial measures, as further described. Funds flow from operations, as presented, is net income or loss adjusted for DD&A expenses, asset impairment, deferred tax expense or recovery, stock-based compensation

  35. Slide 35: Operating & Cash Netback Reconciliations

    OPERATING & CASH NETBACK RECONCILIATIONS Non-GAAP Measures This presentation includes non-GAAP financial measures, as further described. Operating netback as presented is defined as oil and gas sales less operating and transportation expenses. Cash netback as presented is defined as net income or lo

  36. Slide 36: Presentation of Oil & Gas Information

    PRESENTATION OF OIL & GAS INFORMATION BOEs (Barrel of Oil Equivalent) may be misleading particularly if used in isolation. A BOE conversion ratio of 6 thousand cubic feet of gas to 1 barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not

  37. Slide 37: Presentation of Oil & Gas Information

    PRESENTATION OF OIL & GAS INFORMATION Reserves and Prospective Resources Information Unless otherwise noted, estimates of the Company’s reserves, net present value of future net revenue attributable to Company’s reserves and prospective resources relate solely to the Company’s Colombia reserves and

  38. Slide 38: Presentation of Oil & Gas Information

    PRESENTATION OF OIL & GAS INFORMATION For a discussion of Gran Tierra’s interest in the prospective resources, the location of the prospective resources, the product type reasonably expected, the risks and level of uncertainty associated with recovery of the resources, the significant positive and n

  39. Slide 39: Presentation of Oil & Gas Information

    PRESENTATION OF OIL & GAS INFORMATION Disclosure of Reserves and Resources Information and Cautionary Note to U.S. Investors Unless expressly stated otherwise, all estimates of proved, probable and possible reserves and related future net revenue and prospective resources disclosed in this presentat

  40. Slide 40: Investor Relations

    900, 520 – 3RD AVENUE SW CALGARY, ALBERTA, CANADA T2P 0R3 Investor Relations 403-265-3221 [email protected] 40

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