Gran Tierra Energy Inc (TSX:GTE, LSE:GTE, NYSE-A:GTE, ETR:G1P) has reported financial and operating results for 2021 showing net income at the highest achieved since 2018.
The company generated net income of $42.5 million, or $0.12 per share (basic and diluted) in full-year 2021, compared to a net loss of $778.0 million, or $(2.12) per share basic and diluted in 2020. The company realized adjusted EBITDA of $241.5 million, the highest since 2019, and an increase of 150% from $96.5 million in 2020.
It also generated net cash provided by operating activities of $244.8 million, an increase of 202% from $81.1 million in 2020, while funds flow from operations were $186.5 million, the highest since 2019, and an increase of 312% from $45.2 million in 2020.
In a statement, Gary Guidry, president and chief executive officer of Gran Tierra, commented: "After the many challenges in 2020 that the world faced, 2021 was a year of strong recovery for the energy industry and Gran Tierra. Our top tier, low-decline, onshore, conventional asset base continued to prove its high quality as the company returned to strong growth in 2021 in production, reserves, funds flow from operations, free cash flow, and after-tax NAV per share. We achieved strong reserve replacement ratios on both a PDP and 1P basis, driven by our successful, on-budget development programs and waterflood initiatives."
WATCH: Gran Tierra Energy 'quite comfortable' in its forecasts to produce 28,000-30,000 bopd
Guidry added: "Looking to 2022, we are very excited for our planned development drilling programs in the Middle Magdalena Valley and Putumayo Basins in Colombia and the restart of our exploration drilling program, in which we expect to include our first exploration wells in Ecuador. In the company's high oil case for 2022 guidance, which assumes a Brent oil price of $80/bbl, we forecast that Gran Tierra could generate $100-120 million of 2022 free cash flow, which would allow us to completely pay down our bank credit facility before the end of the first half of 2022."
"In addition, our 'Beyond Compliance Policy' continues. Where Gran Tierra identifies significant opportunities and benefits to the environment and communities, we voluntarily strive to go beyond what is legally required to protect the environment and provide social benefits because it is the right thing to do," the chief executive officer of Gran Tierra concluded.
Gran Tierra's capital expenditures of $149.9 million were on-budget, within guidance and more than fully funded by the company's 2021 funds flow from operations of $186.5 million, which allowed it to generate free cash flow of $36.6 million, the highest level achieved since 2012.
Despite impacts on production due to national protests in the second quarter of 2021 and localized blockades in South Putumayo during the fourth quarter, which deferred oil production of 620,376 barrels (bbl) - annualized impact of 1,700 bbl of oil per day (bopd) - Gran Tierra achieved 2021 average working interest (WI) production of 26,507 bopd (100% oil), a 17% increase from 2020.
The increase in production was the direct result of successful drilling and workover campaigns in the Acordionero and Costayaco oil fields, combined with ongoing waterflood optimization throughout the company's portfolio.
The company's total current average production is approximately 30,000 bopd, a level that demonstrates the effectiveness of its waterflooding operations.
Strong 2022 production forecast
Building on the successful development drilling and workover campaigns in 2021, Gran Tierra forecasts 2022 production of 30,500-32,500 bopd, a 15%-23% increase from 2021.
This projected 2022 production increase would result from the company's forecast 2022 development drilling program of 14-16 wells in Acordionero, 4-5 wells in Costayaco, and three wells in Moqueta. While Gran Tierra also plans to drill 6-7 exploration wells in 2022, the company's production forecast does not include any assumed volumes from exploration discoveries.
Gran Tierra achieved material Proved reserves additions, particularly in the company's core assets, as a result of the continued positive reservoir responses from waterflooding, and successful 2021 development drilling and workover campaigns.
The PDP reserves replacement ratio was 148%, with PDP reserves additions of 14.3 million bbl of oil equivalent (mmboe), while the 1P reserves replacement ratio was 123%, with 1P reserves additions of 11.9 mmboe. The company's strong 1P reserves replacement resulted in 1P reserves of 81 mmboe (100% oil) as of year-end 2021.
Gran Tierra's oil sales increased by 99% to $473.7 million in 2021, compared to $237.8 million in 2020. The increase was primarily driven by the 64% increase in the Brent oil price and the company's 17% increase in production, both relative to 2020. Oil sales were $48.99 on a per bbl basis, a 71% increase from 2020
During the fourth quarter, Gran Tierra generated oil sales of $146.3 million, up 8% or $11.0 million from the prior quarter, primarily driven by a 2% increase in production and a 9% increase in the Brent oil price. Oil sales were $53.26 per bbl, a 7% increase from the prior quarter.
The company said it will host its fourth quarter and full-year 2021 results conference call on Wednesday, February 23, 2022, at 9.00am Mountain Time, 11.00am Eastern Time. Interested parties may access the conference call by dialing 1-844-348-3792 or 1-614-999-9309 (North America), 0800-028-8438 or 020-3107-0289 (United Kingdom) or 01-800-518-5094 (Colombia). The call will also be available via webcast at www.grantierra.com.
Gran Tierra Energy, together with its subsidiaries, is an independent international energy company currently focused on oil and natural gas exploration and production in Colombia and Ecuador.
The company is currently developing its existing portfolio of assets in Colombia and Ecuador and will continue to pursue additional new growth opportunities that would further strengthen its portfolio. Gran Tierra Energy common stock trades on the NYSE American, the Toronto Stock Exchange, and the London Stock Exchange under the ticker symbol GTE.
Contact the author at jon.hopkins@proactiveinvestors.com