Morningstar | Gran Tierra's 4Q Production Slightly Above Our Expectations
No-moat Gran Tierra Energy reported fourth-quarter production volumes of 38.1 thousand barrels of oil equivalent per day, a quarterly record high for the company. Quarterly production increased 11% from the year-ago period and 5% sequentially. Fourth-quarter production was also slightly above our expectations of 37.2 mboe/d, driven by increased drilling in the company’s Acordionero and Costayaco fields. The company also increased its 2019 production target to 41-43 mboe/d from its prior target of 40-42 mboe/d. The target remains above our 2019 production forecasts.Subsequent to the quarter-end, the company announced an agreement to increase its working interest in the Suroriente block from 16% to 52%, acquire a 50% working interest in the Putumayo-8 block, and acquire a 100% working interest in the Llanos-5 block. Under the agreement, Gran Tierra would also serve as the operator of the Suroriente and Putumayo-8 blocks. Gran Tierra agreed to pay $104 million for the assets.
We expect to incorporate the company’s fourth-quarter results into our model shortly, but for now, we are maintaining our $2.25 (CAD 3) fair value estimate and no-moat rating.
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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