gte-20230930

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number 001-34018

GRAN TIERRA ENERGY INC.

(Exact name of registrant as specified in its charter)

Delaware

98-0479924

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

500 Centre Street S.E.

Calgary,

Alberta

Canada

T2G 1A6

(Address of principal executive offices, including zip code)

(403) 265-3221

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	GTE	NYSE American
		Toronto Stock Exchange
		London Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

On October 27, 2023, 33,288,305 shares of the registrant’s Common Stock, $0.001 par value, were issued.

Gran Tierra Energy Inc.

Quarterly Report on Form 10-Q

Quarterly Period Ended September 30, 2023

Table of contents


		Page
PART I	Financial Information
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33

PART II	Other Information
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 5.	Other information	34
Item 6.	Exhibits	35
SIGNATURES		36

CAUTIONARY LANGUAGE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts included in this Quarterly Report on Form 10-Q regarding our financial position, estimated quantities and net present values of reserves, business strategy, plans and objectives of our management for future operations, covenant compliance, capital spending plans and benefits of the changes in our capital program or expenditures, our liquidity and those statements preceded by, followed by or that otherwise include the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “target,” “goal,” “plan,” “budget,” “objective,” “could,” “should,” or similar expressions or variations on these expressions are forward-looking statements. We can give no assurances that the assumptions upon which the forward-looking statements are based will prove to be correct or that, even if correct, intervening circumstances will not occur to cause actual results to be different than expected. Because forward-looking statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. There are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from the forward-looking statements, including, but not limited to, our operations are located in South America and unexpected problems can arise due to guerilla activity, strikes, local blockades or protests; technical difficulties and operational difficulties may arise which impact the production, transport or sale of our products; other disruptions to local operations; global health events; global and regional changes in the demand, supply, prices, differentials or other market conditions affecting oil and gas, including inflation and changes resulting from a global health crisis, geopolitical events, including the ongoing conflicts in Ukraine and the Gaza region, or from the imposition or lifting of crude oil production quotas or other actions that might be imposed by OPEC, such as its recent decision (occurred June 2023) to cut production and other producing countries and the resulting company or third-party actions in response to such changes; changes in commodity prices, including volatility or a prolonged decline in these prices relative to historical or future expected levels; the risk that current global economic and credit conditions may impact oil prices and oil consumption more than we currently predicts, which could cause further modification of our strategy and capital spending program; prices and markets for oil and natural gas are unpredictable and volatile; the effect of hedges; the accuracy of productive capacity of any particular field; geographic, political and weather conditions can impact the production, transport or sale of our products; our ability to execute our business plan and realize expected benefits from current initiatives; the risk that unexpected delays and difficulties in developing currently owned properties may occur; the ability to replace reserves and production and develop and manage reserves on an economically viable basis; the accuracy of testing and production results and seismic data, pricing and cost estimates (including with respect to commodity pricing and exchange rates); the risk profile of planned exploration activities; the effects of drilling down-dip; the effects of waterflood and multi-stage fracture stimulation operations; the extent and effect of delivery disruptions, equipment performance and costs; actions by third parties; the timely receipt of regulatory or other required approvals for our operating activities; the failure of exploratory drilling to result in commercial wells; unexpected delays due to the limited availability of drilling equipment and personnel; volatility or declines in the trading price of our Common Stock or bonds; the risk that we do not receive the anticipated benefits of government programs, including government tax refunds; our ability to comply with financial covenants in our credit agreement and indentures and make borrowings under any credit agreement; and those factors set out in Part II, Item 1A “Risk Factors” in this Quarterly Report on Form 10-Q and Part I, Item 1A “Risk Factors” in our 2022 Annual Report on Form 10-K (the “2022 Annual Report on Form 10-K”), and in our other filings with the Securities and Exchange Commission (“SEC”) during the current fiscal year. The unprecedented nature of the current volatility in the worldwide economy and oil and gas industry makes it more difficult to predict the accuracy of forward-looking statements. The information included herein (other than in the context of the financial statements) is given as of the filing date of this Quarterly Report on Form 10-Q with the SEC and, except as otherwise required by the federal securities laws, we disclaim any obligation or undertaking to publicly release any updates or revisions to or to withdraw, any forward-looking statement contained in this Quarterly Report on Form 10-Q to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based.

GLOSSARY OF OIL AND GAS TERMS

In this document, the abbreviations set forth below have the following meanings:


bbl			barrel
BOPD			barrels of oil per day
NAR			net after royalty

Sales volumes represent production NAR adjusted for inventory changes. Our oil and gas reserves are reported as NAR. Our production is also reported NAR, except as otherwise specifically noted as “working interest production before royalties”.

PART I - Financial Information

Item 1. Financial Statements

Gran Tierra Energy Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(Thousands of U.S. Dollars, Except Share and Per Share Amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
OIL SALES (Note 6)	$	179,921	$	168,397	$	482,013	$	548,751

EXPENSES
Operating	49,367		41,837		139,227		116,266
Transportation	3,842		2,417		10,599		7,764
Depletion, depreciation and accretion (Note 3)	55,019		45,320		162,949		128,499
General and administrative (Note 9)	10,238		8,114		32,800		30,286
Foreign exchange loss	1,717		1,489		8,126		486
Derivative instruments loss (Note 9)	—		—		—		26,611
Other gain (Note 4)	(354)		(2,598)		(969)		(2,598)
Interest expense (Note 4)	13,503		11,421		38,017		35,743
	133,332		108,000		390,749		343,057

INTEREST INCOME	271		—		1,686		—
INCOME BEFORE INCOME TAXES	46,860		60,397		92,950		205,694

INCOME TAX EXPENSE
Current (Note 7)	26,343		16,820		63,706		63,072
Deferred (Note 7)	13,990		4,914		43,242		36,868
	40,333		21,734		106,948		99,940
NET AND COMPREHENSIVE INCOME (LOSS)	$	6,527	$	38,663	$	(13,998)	$	105,754

NET INCOME (LOSS) PER SHARE (1)

- BASIC	$	0.20	$	1.05	$	(0.42)	$	2.88
- DILUTED	$	0.20	$	1.04	$	(0.42)	$	2.84
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC (Note 5)	33,287,368		36,730,543		33,675,160		36,775,419
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED (Note 5)	33,350,050		37,131,074		33,675,160		37,238,790

(1) Reflects our 1-for-10 reverse stock split that became effective May 5, 2023. See Note 5 in the notes to the condensed consolidated financial statements for further discussion.

(See notes to the condensed consolidated financial statements)

Gran Tierra Energy Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(Thousands of U.S. Dollars, Except Share and Per Share Amounts)


	As at September 30, 2023		As at December 31, 2022

ASSETS
Current Assets
Cash and cash equivalents (Note 10)	$	123,216	$	126,873
Restricted cash and cash equivalents (Note 10)	1,142		1,142
Accounts receivable	19,157		10,706
Inventory	25,724		20,192
Other current assets (Note 9)	12,082		9,674
Total Current Assets	181,321		168,587

Oil and Gas Properties
Proved	1,040,254		1,000,424
Unproved	70,253		74,471
Total Oil and Gas Properties	1,110,507		1,074,895
Other capital assets	30,448		26,007
Total Property, Plant and Equipment (Note 3)	1,140,955		1,100,902

Other Long-Term Assets
Deferred tax assets	9,758		22,990
Taxes receivable	46,736		27,796
Other long-term assets (Note 9 and 10)	7,265		15,335
Total Other Long-Term Assets	63,759		66,121
Total Assets	$	1,386,035	$	1,335,610

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable and accrued liabilities	$	176,489	$	167,579
Credit facility (Note 4)	49,067		—
Taxes payable	46,398		58,978
Equity compensation award liability (Note 5)	7,794		15,082

Total Current Liabilities	279,748		241,639

Long-Term Liabilities
Long-term debt (Notes 4 and 9)	587,444		589,593
Deferred tax liabilities	35,011		28
Asset retirement obligation	70,712		63,358
Equity compensation award liability (Note 5)	9,525		16,437

Other long-term liabilities	9,055		6,989
Total Long-Term Liabilities	711,747		676,405

Contingencies (Note 8)

Shareholders' Equity (1)
Common Stock (Note 5) (33,288,305 and 36,889,862 issued, 33,288,305 and 34,615,116 outstanding shares of Common Stock, par value $0.001 per share, as at September 30, 2023, and December 31, 2022, respectively)	10,237		10,272
Additional paid-in capital	1,255,044		1,291,354
Treasury Stock (Note 5)	—		(27,317)
Deficit	(870,741)		(856,743)
Total Shareholders’ Equity	394,540		417,566
Total Liabilities and Shareholders’ Equity	$	1,386,035	$	1,335,610

(1) Reflects our 1-for-10 reverse stock split that became effective May 5, 2023. See Note 5 in the notes to the condensed consolidated financial statements for further discussion.

(See notes to the condensed consolidated financial statements)

Gran Tierra Energy Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Thousands of U.S. Dollars)


	Nine Months Ended September 30,
	2023		2022
Operating Activities
Net (loss) income	$	(13,998)	$	105,754
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depletion, depreciation and accretion (Note 3)	162,949		128,499
Deferred tax expense (Note 7)	43,242		36,868
Stock-based compensation expense (Note 5)	3,748		6,376
Amortization of debt issuance costs (Note 4)	3,394		2,769
Unrealized foreign exchange (gain) loss	(7,814)		6,138
Other gain (Note 4)	(969)		(2,598)
Derivative instrument loss (Note 9)	—		26,611
Cash settlement on derivative instruments	—		(26,611)
Cash settlement of asset retirement obligation	(376)		(1,673)
Non-cash lease expenses	3,488		2,009
Lease payments	(1,918)		(1,134

SEC Form 10-Q filed by Gran Tierra Energy Inc.