Oilman Jim's Letter - 2 May 2024

Gran Tierra Energy (GTE GTE.TO GTE.L) announced the company’s financial and operating results for the quarter ended March 31, 2024. During the quarter, Gran Tierra made significant progress in its development drilling programs, with the successful program in Costayaco confirming the company’s reservoir interpretation and extending the field both to the north and the south. Production at the field increased to the highest level since 2017. The company is further excited about the initial drilling and open-hole logging results of the Arawana exploration well in the Chanangue block in Ecuador. The mapped area of closure, and the rock properties observed in the Arawana-1 well compares to the Cohembi field, which as of the end of 2023, has produced 28 million barrels of oil equivalent and has remaining reserves of 25 million barrels of oil equivalent proved, 54 million barrels of oil equivalent proved plus probable and 95 million barrels of oil equivalent proved plus probable plus possible. The company’s adjusted EBITDA for the quarter was US$95 million compared to US$93 million in the prior quarter and US$90 million in the first quarter of 2023. Twelve month trailing net debt to adjusted EBITDA was 1.3 times and is expected to be less than 1.0x by year end 2024. Free cash flow for the quarter was approximately $19 million, during which time Gran Tierra purchased approximately 0.9 million shares. Since January 1, 2023 the company has repurchased approximately 3.3 million shares, or 10% of shares issued and outstanding at January 1, 2023, all from free cash flow.

ADX Energy (ADX.AX ADXRF GHU.F) announced a A$13.5 million institutional placement. Firm commitments have been received. The placement provides balance sheet strength to progress an extensive exploration and development program in Austria during the second half of 2024 including: evaluation, data analysis and production testing of the Welchau-1 gas condensate discovery; assessment of exploration prospectivity and potential deepening of the Welchau-1 well; drilling of a gas exploration well in the ADX-AT-I licence; drilling, completion and tie-in of the Anshof-2A sidetrack well; gas processing upgrades including a CO2 reduction plant at ADX’s Vienna Basin oil and gas fields; and general working capital. Strong news flow is upcoming.

These are opinions only of the individual author.  The contents of this piece do not contain investment advice and the information provided is for educational purposes only and no discussions constitute an offer to sell or the solicitation of an offer to buy any securities of any company.  All content is purely subjective and you should do your own due diligence.  No representation, warranty or undertaking, express or implied, as to the accuracy, reliability, completeness or reasonableness of the information contained in the piece is made.  Any assumptions, opinions and estimates expressed in the piece constitute judgments of the author as of the date thereof and are subject to change without notice.  Any projections contained in the information are based on a number of assumptions and there can be no guarantee that any projected outcomes will be achieved.  No liability is accepted for any direct, consequential or other loss arising from reliance on the contents of this piece.  The author is not acting as your financial, legal, accounting, tax or other adviser or in any fiduciary capacity.