Gran Tierra Energy (GTE) Provides FY20 Guidance and Operational Update

Gran Tierra Energy Inc. (NYSE: GTE) today announced its 2020 capital budget and production guidance and an operational update. All dollar amounts are in United States dollars and all production volumes are on a working interest before royalties ("WI") basis and are expressed in barrels ("bbl") of oil per day ("bopd") or bbl of oil equivalent ("boe") per day ("boepd"), unless otherwise indicated.

Commenting on Gran Tierra's 2020 guidance and operational update, Gary Guidry, President and Chief Executive Officer of Gran Tierra, said: "Since October 2019, we have increased the Company's total production by approximately 10% or 3,000 boepd, to a current average level of over 35,000 boepd. We are delivering this resumption of production growth through the successful implementation of the Acordionero field-wide waterflood and the ongoing positive results achieved with our infill development well program at Costayaco. We plan to ramp up production at Acordionero to over 20,000 bopd during 2020, resulting in strong and stable free cash flow2.

In addition, we are excited that the development drilling at Acordionero has extended the field limits to the south. Also, Costayaco drilling has confirmed our reservoir modeling predictions of unswept oil pools within the field, and added immediate production and confidence in future development to enhance oil recovery.

During 2019, our production was temporarily impacted in the southern Putumayo region and at the Acordionero oil field in the Middle Magdalena Valley Basin. We believe we have mitigated the risks of these types of disruptions in the future. The 2019 production issues at Acordionero have been addressed through the expansion of our production facilities, significant increase in water injection and installation of gas-to-power turbines which are delivering cheaper and more reliable power. We continue to see no issues with the long-term reservoir performance in our main fields at Acordionero, Costayaco, Moqueta and Cohembi.

Our 2020 capital budget is a balanced, returns-focused program which prioritizes free cash flow2 generation over the rate of development and production growth. We plan to direct free cash flow2 to debt reduction and share buybacks, with priority given to debt reduction. We still see material upside in our exploration portfolio located in highly prospective geological trends in Colombia and Ecuador. We have budgeted a measured, yet robust high-impact exploration campaign, mostly directed at our large landholdings in the Putumayo Basin of Colombia and Oriente Basin of Ecuador. Our 2020 plans are also aligned with Gran Tierra's 'Beyond Compliance Policy' which focuses on our commitments to environmental, social and governance excellence. Wherever there are significant opportunities and benefits to the environment or communities, Gran Tierra voluntarily goes beyond what is legally required to protect the environment and provide social benefits because it is the right thing to do."

Highlights

2020 Guidance

• Free Cash Flow: Gran Tierra's 2020 plan is focused on generating strong free cash flow2; the Company's midpoint 2020 EBITDA3 guidance of $340 million is $130 million above the midpoint of 2020 capital expenditures guidance
• Fully Funded Capital Program: the 2020 capital budget of $200-220 million is expected to be fully funded from the 2020 cash flow1 forecast of $270-290 million, at a $60/bbl Brent oil price
• Debt Reduction: with 2020 expected free cash flow2 and changes in non-cash working capital (primarily related to the collection of value-added tax receivables), Gran Tierra expects its credit facility to be fully repaid by year-end 2020; the Company forecasts an annualized fourth quarter 2020 net debt4 to EBITDA3 ratio of 1.4 times
• Free Cash Flow Uses: during 2020, Gran Tierra plans to direct free cash flow2 towards debt reduction and share buybacks, with priority given to debt reduction
• Managed Production Growth: in 2020, Gran Tierra has elected to reduce capital expenditures, relative to 2019 levels, in order to emphasize free cash flow2 generation rather than significant production growth; the Company expects 2020 average production of 35,500 to 37,500 boepd, which represents growth from the Company's forecasted 2019 average production of 34,800 to 35,000 boepd; Gran Tierra forecasts that based on its existing Proved plus Probable ("2P") reserves, the Company has the potential capacity to increase production to 46,000 to 51,000 boepd, over the next several years, depending on capital spending levels in 2021 and beyond
• 2020 production guidance is: º Only forecasted volumes from existing operations and expected development and appraisal projects, with no volumes assumed for any exploration success º 100% oil, ranging from medium to light gravity
• Gran Tierra is forecasting the following ranges for the Company’s 2020 budget:

• Based on the midpoint of guidance, the base case 2020 capital budget is forecasted to be directed approximately 75% to development and 25% to exploration
• Gran Tierra's 2020 exploration program is expected to be measured but high-impact; the 3 to 5 well program is targeting highly prospective geological trends in the Putumayo and Middle Magdalena Valley ("MMV") Basins in Colombia and the Oriente Basin in Ecuador
• MMV Basin: in 2020, Gran Tierra plans to drill 12-14 development and 0-1 exploration wells; if Gran Tierra drills a MMV exploration well, the plan is to target the Gaitas prospect on the Midas Block (same block as Acordionero), which is a prospective structure which may have Lisama reservoir sands analogous to Acordionero
• Putumayo Basin: in 2020, Gran Tierra plans to drill 4-5 development and 2 exploration wells
• Ecuador (Oriente Basin): in 2020, Gran Tierra plans to drill 1-2 exploration wells
• Gran Tierra has significant flexibility with capital allocation and timing; the Company operates over 95% of its production and all of its blocks in the Putumayo, MMV and Oriente Basins
• If oil prices drop significantly below the Company's forecast, Gran Tierra has the ability to moderate the rate of spending accordingly due to the Company's high operated interests across its asset portfolio
• Gran Tierra expects approximate 2020 expenses and operating netback per boe5 to be in the following ranges:

Credit Facility Update

• The borrowing base of Gran Tierra's credit facility has been confirmed at $300 million until the next redetermination, scheduled for May 2020
• Gran Tierra has agreed with its lenders to extend the maturity of its revolving credit facility by one year, to November 2022, on materially the same terms, subject to documentation

Operational Update (All Projects Operated)

Acordionero Production and Positive Results from Waterflood (100%WI)

• Acordionero production is back on track and is expected to increase throughout 2020; during the fourth quarter of 2019, Acordionero production averaged 14,136 bbls of oil per day ("bopd") in October and 15,513 bopd in November; since November 21, 2019, the field has averaged approximately 16,200 bopd; as expected, Acordionero is showing positive waterflood response across the field in both the Lisama A and C reservoirs; the replacement of several electric submersible pumps ("ESP") has also increased production

Acordionero: Expansion of Field (100% WI)

• AC-54: this development well is the southernmost well drilled in the Acordionero field to date and encountered 348 feet ("ft") measured depth ("MD") of net pay and was completed in the Lisama A and C reservoirs and placed on production November 20, 2019; during November 20 - December 8, 2019, the AC-54 produced at average stabilized rates of 488 bopd of 17 degree API oil, a gas-oil ratio ("GOR") of 290 standard cubic feet per stock tank bbl ("scf/stb") and a watercut of 0% on ESP; this well is located outside the previously established southern boundary of the original-oil-place mapping for the field
• Gran Tierra is encouraged that Acordionero's production has returned to a growth track and the Company expects incremental reserve additions associated with the waterflood response and the AC-54 well results

Successful Costayaco Infill Development Well Results (100% WI)

• Gran Tierra's most recently drilled Costayaco infill development wells targeted areas of the field predicted by modeling to be unswept by water injection, with the potential to optimize oil recovery efficiency; the modeling proved to be correct and the wells have been successful as demonstrated by the average production results summarized in the table below:

Modeling shows further potential to enhance oil recovery which the Company plans to pursue over the next few years

Ayombero-Chuira Appraisal (100% WI)

• The Ayombero-Chuira structure is estimated to contain estimated prospective resources6 in the ranges outlined in the table below, as evaluated by the Company's independent qualified reserves evaluator McDaniel & Associates Consultants Ltd. ("McDaniel") in a report with an effective date of July 31, 2018 (the "GTE McDaniel Prospective Resources Report"):

This structure's reservoir is highly over-pressured and therefore requires special equipment called a snubbing unit, which is now onsite in Colombia, to work on the three Ayombero wells; the Company believes what is most exciting about this discovery is that the production so far, from both the western Chuira and eastern Ayombero sides of the structure, indicates that these wells could potentially reach the McDaniel estimated average WI 2P ultimate oil recovery of approximately 420,000 bbls of oil per well for Ayombero-Chuira7

• Ayombero-1: Gran Tierra remains encouraged by production from this well; since November 7, 2019, the well has produced via natural flow at an average rate of 180 bopd of 18.5 degree API oil, a GOR of 356 scf/stb, a watercut of 0.1% and 1,469 pounds per square inch of tubing head pressure; the well has total cumulative oil production to date of 86,545 bbls with no signs of pressure depletion
• Ayombero-2 and 3: stuck coiled tubing has been removed from within the Ayombero-3 tubing string; both wells have been successfully prepared for snubbing operations, which are expected to begin in the next 10 days; the plan is to re-establish production testing operations in these wells

Suroriente (52% WI)

• Cohembi Oil Field: continues to respond positively to increased water injection and pump optimizations; the Company is planning to increase gross water injection to 40,000 bbls of water injected per day by the end of 2019
• Since assuming operatorship, the Company has been able to increase the Suroriente Block's WI production by approximately 450 bopd without drilling a well to a current average level of 3,734 bopd (average since December 2, 2019)

Cocona-1 Exploration Well in PUT-1 Block (100% WI)

• This exploration well was spud on November 27, 2019 and is currently at 2,015 ft MD; Cocona-1 is expected to reach its planned total depth of approximately 11,000 ft MD by the end of 2019
• Cocona-1 is a multi-zone prospect with potential in the N and U Sands and the A-Limestone
• This well is the first follow up drilled by Gran Tierra on PUT-1 since the Vonu-1 exploration well, which has been Gran Tierra's most successful A-Limestone well to date, and tests a potentially significant extension of the fracture limestone play fairway
• The Vonu-1 well has produced approximately 857,000 bbls of oil from the A-Limestone (from June 2017 to November 2019) and had initial 30-day average production of 1,758 bopd (30-day average) of 30 degree API oil, a GOR of 407 scf/stb and a watercut of less than 1%; the well is still producing over 400 bopd, with less than1% water cut and a GOR of 1,214 scf/stb; this well's solution gas production is contributing to the Costayaco gas to power generation project
• Prior to the Vonu-1 being placed on production from the A-Limestone, the well was also production-tested during June 2017 on a jet pump for 24 hours from the U Sand, at an average rate of 217 bopd of 29 degree API oil, a water cut of less than 3% (declining) and a GOR of 524 scf/stb (steady); the U Sand oil production rate was showing signs of stabilizing
• The Costayaco-19 well in the adjacent Chaza Block, has produced approximately 763,000 bbls of oil from the A-Limestone (from May 2016 to November 2019)
• Gran Tierra predicts that the Cocona-1 well may encounter the same faulted and fractured trend in the A-Limestone from which the Vonu-1 and Costayaco-19 wells have produced; natural fracturing of the A-Limestone appears to significantly enhance its oil productivity and expected ultimate recovery
• If Cocona-1 is successful in the A-Limestone, this well may have positive implications for the size of the A-Limestone's ultimate potential in this region of the northern Putumayo Basin and the possibility of additional follow-up drilling locations on the PUT-1 Block and adjacent Chaza exploitation area

3D Seismic Program Update (100% WI)

• The 341 square kilometer 3D seismic program was successfully completed across the Alea 1848A, Nancy-Burdine-Maxine, PUT-4 and PUT-25 Blocks
• This program is the largest seismic program ever conducted in the Putumayo Basin
• Interpretation is currently underway which is helping Gran Tierra better define further development of the Nancy field and multiple exploration prospects across all four blocks, with very encouraging initial results
• Gran Tierra's exploration team is also rapidly integrating 3D seismic data from Ecuador and applying learnings from both sides of the border to optimize the Company's 2020 exploration program in the Putumayo and Oriente Basins of 3 to 4 exploration wells

ANH Bid Round Awards

• Gran Tierra was awarded two blocks in the recent Agencia Nacional de Hidrocarburos ("ANH") bid round in Colombia, the PUT-21 and PUT-33 Blocks in the Putumayo Basin; the Company believes these blocks may be highly prospective
• PUT-21 Block: covers 76,778 acres contiguous to Gran Tierra's assets in the Putumayo Basin and is on-trend with the Costayaco and Moqueta oil fields; this block is close to the Company's facilities and other existing infrastructure; the Company is committed to undertaking a 55 square kilometer ("km") 3D seismic survey and one exploration well within a six year exploration period; one of several prospective horizons in PUT-21 is the M2 Sand, from which the nearby Miraflor-2 well is testing at average unstimulated production rates of 167 bopd of 26 degree API oil, a GOR of 10 scf/stb and a watercut of 3% on jet pump over a period of 26 days; Gran Tierra successfully drilled the Miraflor-2 well during fourth quarter 2019; other prospective horizons on PUT-21 include the N, T, U and Caballos Sands and the A and M2 Limestones
• PUT-33 Block: covers 13,653 acres; the Company is committed to undertaking a 49 square km 3D seismic survey and one exploration well within a six year exploration period; this block is adjacent to areas with production from the N, M2, U and T Sands and may contain potential structural and stratigraphic traps

2020 Capital Markets Day

Gran Tierra is planning a Capital Markets Day in Bogota, with a trip to the Acordionero field, on January 29, 2020.

Gary Guidry, President and Chief Executive Officer of Gran Tierra, further commented: "Our 100% working interest in and operatorship of our major assets gives us the flexibility to pace our 2020 development program. With no projected impact on ultimate oil recovery efficiency, we are choosing to slow the pace of our infill development drilling programs at Acordionero, Costayaco and Moqueta, while funding exploration and generating free cash flow2 to strengthen our balance sheet.

This flexibility also allows us to optimize our programs with changes in oil prices. With our 2020 operating expense budget, we are targeting decreases in both our unit operating and workover costs per boe compared to 2019, as we utilize past investments in Acordionero's expanded production facilities and the reliable and more cost-effective power we are now generating from our natural gas production at Acordionero and Costayaco.

We believe that Gran Tierra has a self-funding and sustainable business model with an excellent Colombian and Ecuadorian portfolio to generate ongoing growth on a per share basis in terms of net asset value, production, reserves and cash flow1. We are currently evaluating production hedging opportunities to protect our discretionary exploration plans for 2020.

We would like to thank all of our stakeholders for their continued support."

1“Cash flow” refers to the GAAP line item “net cash provided by operating activities”. "Cash flow per share” refers to the GAAP line item “net cash provided by operating activities” divided by the common stock outstanding as of September 30, 2019 of 366,982,000 shares.2 "Free cash flow" is a non-GAAP measure and does not have a standardized meaning under generally accepted accounting principles in the United States of America ("GAAP"). Free cash flow is defined as “net cash provided by operating activities” less projected 2020 capital spending. Refer to "Non-GAAP Measures" in this press release.3Operating netback and earnings before interest, taxes and depletion, depreciation and accretion ("EBITDA") are non-GAAP measures. Refer to "Non-GAAP Measures" in this press release.4"Net debt" (non-GAAP) is an estimate of 2020 year-end working capital, less $600 million in senior notes.5 Operating netback per boe is a non-GAAP measure and does not have a standardized meaning under GAAP. Refer to "Non-GAAP Measures" in this press release. The GAAP measure is oil and gas sales price. Estimated oil and gas sales price is calculated by subtracting 2020 forecasts of transportation and quality discount and royalties from the 2020 budget Brent oil price forecast as outlined in the table above. Estimated 2020 operating netback is calculated by subtracting 2020 forecasts of transportation and quality discount, royalties, operating costs and pipeline transportation from the 2020 budget Brent oil price forecast as outlined in the table above.6 All Ayombero-Chuira resources values and ancillary information contained in this press release have been calculated in compliance with Canadian National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) and the Canadian Oil and Gas Evaluation Handbook (“COGEH”) and in respect of Prospective Resources are based on the estimated prospective resources as evaluated by the Company's independent qualified reserve evaluator McDaniel in the GTE McDaniel Prospective Resources Report with an effective date of July 31, 2018. Refer to “Prospective Resources” in this press release for more information.7 Derived from the Company's 2018 year-end estimated reserves as evaluated by the Company's independent qualified reserves evaluator McDaniel in a report with an effective date of December 31, 2018 (the "GTE McDaniel Reserves Report"). Also, see Gran Tierra's Statement of Reserves Data and Other Oil and Gas Information on Form 51-101F1 dated effective as at December 31, 2018, which includes further disclosure of its oil and gas reserves and other oil and gas information in accordance with NI 51-101 forming the basis of this press release, available on SEDAR at www.sedar.com.

You May Also Be Interested In

• Walmart (WMT) PT Lowered to $130 at UBS on Investment Narrative's Competing Dynamics
• DA Davidson Reiterates Buy Rating on Box, Inc. (BOX) on Secular Tailwinds for Demand
• UBS Upgrades Apollo Tyres (APTY:IN) to Buy