Gran Tierra Energy Inc. (GTE) Earnings Call Transcript & Summary

We will now proceed with the formal business of this meeting. There are 4 proposals to be considered by the stockholders at this meeting, which I will summarize and are more fully described in the proxy statement for this meeting, which has been filed with the Securities and Exchange Commission and mailed or made available to stockholders. The first item of business is the election of 9 directors to serve until the 2024 Annual Meeting of Shareholders -- Stockholders and until their successors are elected and qualified. This proposal is described in detail in the notice and proxy statement delivered to stockholders in connection with this meeting. The nominees for directors are Peter Dey, Gary Guidry, Evan Hazell, Robert Hodgins, Alison Redford, Ronald Royal, Sondra Scott, David Smith and Brooke Wade. The second item of business is the ratification of the selection by the Audit Committee of the Board of Directors of KPMG LLP as the independent registered public accounting firm of the company for the fiscal year 2023. The third item of business today is the advisory vote on the compensation of Gran Tierra's named executive officers as disclosed in the proxy statement. And the fourth item, the business today is the approval for an amendment to the company's certificate incorporation to effect a reverse stock split of the company's issued stock at a reverse split of 1 or 10. This proposal is described in detail in the notice and proxy statement delivered to the stockholders in connection with this meeting.

We will now pause to address any stockholder questions we have received relating to these proposals. Seeing that there are no questions on the proposals, the polls for voting at our 2023 Annual Meeting will now be closed. The preliminary report of the Inspector of Election covering the proposals presented at this meeting is as follows: one, each of the nominees for election to the Board, Peter Dey, Gary Guidry, Evan Hazell, Robert Hodgins, Alison Redford, Ronald Royal, Sondra Scott, David Smith and Brooke Wade have been duly elected. Two, the proposal to ratify the appointment of KPMG LLP as the independent registered public accounting firm of the company for 2023 has been approved. Three, the proposal to approve on an advisory basis, the compensation of Gran Tierra's named executive officers as disclosed in the proxy statement has been approved. And fourth, the proposal to approve the amendment to the company's Certificate of corporation to effect a reverse stock split of the company's issued common stock at a reverse stock split of 1 for 10 has been approved. The final voting results of today's meeting will be reported on a Form 8-K and filed within 4 business days of this meeting.

The 2023 Annual Meeting of Stockholders is now adjourned. I want to thank all of you for attending today's meeting and for the interest you've shown in the affairs of our company. Gary Guidry, President and CEO, will now make a presentation regarding the company's recent business.

Thank you, Bob. John, please flip to Slide 3. Why invest in Gran Tierra? 4 consecutive years of replacing our proven reserves even during COVID, when capital programs were vastly reduced. We've achieved more than 100% reserve replacement for proven and proven plus probable demonstrating the company's ability to grow net present value with its free cash flow. In 2022, we had four oil discoveries, resulting in additional significant proven, probable and possible reserves and continued focus on strengthening our balance sheet. Since second quarter of 2020, we've reduced our debt by $235 million. We exited the first quarter of this year with a net debt of $453 million and a net debt-to-EBITDA ratio of 1x. Since August of 2022, we bought back 36 million shares, approximately 10% of the outstanding. A snapshot of Gran Tierra. In 2023, our guidance is based on a brick oil price of $85 average for the year. We're projecting cash flow of $295 million at the midpoint of our forecasted production of 32,000 to 34,000 barrels per day and free cash flow of $65 million at the midpoint. Based on our current outstanding shares, our NAV or net asset value per share after tax is $2.53 a share on a proven basis and $3.99 on a proven plus probable basis and approximately $0.70. We're currently trading significantly below that net asset value. In the first quarter of 2023, production averaged 31,600 barrels of oil per day, with the second quarter being 32,000 barrels per day. 2023 key objectives. Free cash flow generation across all 3 guidance cases of $75, $85 and $95 Brent. We operate 99% of our production, allowing us to pace our capital programs, giving us a natural operational hedge in the event of prolonged lower oil prices. Reserves. Last year, we added 17 million barrels of proven plus probable reserves, of which 16 million came from our exploration success. Our net present value on a 2P basis is USD 3 billion. Over the next 5 years, future net revenue after tax and capital expenditures is estimated at $1.4 billion on a proven reserve basis. Reserves growth from 2015 to 2022, we produced 76 million barrels. We've replaced 150% on a proven basis of that production. And on a proven plus probable basis, we've replaced 113% over that same time period. Health, Safety and Environment, key priorities for Gran Tierra. We have a very strong track record of outperforming Latin American and international benchmarks on a lost time incident frequency and total recordable incidents, as you can see from the chart. Environmental and emissions reduction. Gas to power has been a main focus to reduce emissions associated and associated natural gas flaring. We decreased our Scope 1 and 2 emissions by 39% since 2019, while decreasing overall flaring emissions by 73%. In 2017, we entered an agreement project for NaturAmazonas with a nongovernment organization Conservation International, our long-term partner. This is a large-scale reforestation and conservation project in the Putumayo region of Colombia with approximately 1.5 million trees planted so far. We committed to investing $13 million over the next 8 years on the NaturAmazonas project. Social investment. The social license to operate is very important to our entire company. Excellent relations with the communities where we operate, and we've spent over the last year, $4.6 million in local projects, and awarded $109 million to local contractors during the year 2022. Human rights. Our work on the social side means nothing if people in the communities can't walk safely to school or to work. We helped clear 285 anti-personnel mines with the Colombian authorities left over from the country's civil war. Acordionero, in 2016, only 4 existing wells were in this field that we acquired. Since that acquisition, we drilled over 100 wells, installed power generation, installed production and injection facilities. We produced 33 million barrels of oil. And as of December 31, 2022, we have 57 million barrels of proven plus probable reserves remaining. This is our largest single asset in terms of production and reserves. Suroriente. We're very excited about continuing the Suroriente agreement with Ecopetrol for the next 20 years. The original agreement was set to expire in 2024, and now we can make long-term investments to enhance oil recovery adding material value for all stakeholders. Transportation. Access to excellent infrastructure across Colombia and Ecuador significantly reduces the risk to accessing sales markets. In Ecuador, development of our recent oil discoveries utilizing infrastructure we've been using for many years to sell our Southern Colombia production. Exploration. Our largest exploration land base is in the underexplored Putumayo basin. To the south is the Oriente basin, which is geologically contiguous with Putumayo. We have 3 blocks in Ecuador. During COVID, in 2020 and '21, we prioritized our prospects and permitting across both of these basins. We drilled 6 wells and had 4 discoveries during the year, 2 of those in Ecuador, 2 of those in Colombia. We have further plans this year to drill 4 wells in Ecuador starting later this summer. This concludes the presentation, and I thank you for participating today. I would encourage you to refer to our press release issued yesterday, May 2, 2023, our updated corporate presentation and our sustainability report, which can all be found on our website at www.grantierra.com. These documents provide an overview of the excellent results Gran Tierra has achieved in 2022 and 2023 so far. Thank you.