Morningstar | Gran Tierra's 3Q Production in Line With Our Expectations
No-moat Gran Tierra Energy reported third-quarter production volumes of 36.2 thousand barrels of oil equivalent per day, an 11% increase from the year-ago period and a 2% increase sequentially. Even with the sale of Brazilian assets in early 2017, production increased on the back of heightened drilling activity in Colombia. Production was negatively affected by pump failures, which affected 1 mboe/d. Third-quarter production was more or less in line with our expectations, which we lowered after the company's dismal 2017 results. The company expects to meet its full-year production target between 36.5 and 38.5 mboe/d. We think this target remains a tad optimistic since production has only averaged 35.3 mboe/d through the first nine months of the year. Management also expects 2018 exit production to exceed 40 mboe/d, which also looks optimistic to us.We expect to incorporate the company’s third-quarter results in our model shortly. We are maintaining our $2.75 (CAD 3.50) fair value estimate and no-moat rating for Gran Tierra Energy.
Gran Tierra Energy, together with its subsidiaries, is a company focused on oil and gas exploration and production in Colombia. Co. is primarily engaged in the exploration and production of oil and natural gas. Co. has one reportable segment based on geographic organization, Colombia. As of Dec 31 2017, Co. had total estimated proved reserves of 59.3 million barrels of oil and natural gas equivalent, consisting of 58.9 million barrels of oil and 2.1 million cubic feet of natural gas.
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