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Gran Tierra Energy Announces $467 Million Capital Spending Program for 2014

5 exploration wells and 11 development & appraisal wells plus infrastructure in Colombia, Brazil, Peru and Argentina 

CALGARY, Dec. 10, 2013 /PRNewswire/ - Gran Tierra Energy Inc. ("Gran Tierra Energy") (NYSE MKT: GTE) (TSX: GTE), a company focused on oil exploration and production in South America, today announced a 2014 capital spending program of $467 million for its exploration and production development operations in Colombia, Brazil, Peru and Argentina.  The capital spending program allocates $227 million for drilling, $102 million for facilities, equipment and pipelines, $136 million for seismic activities and $2 million associated with corporate activities.  The budget currently contemplates the drilling of 12 gross wells in Colombia, 2 gross wells in Argentina, and 2 gross wells in Peru. Approximately 59% of the drilling budget is for development and appraisal drilling and approximately 41% is for exploration drilling. The approved 2014 capital spending program also includes funds for 2,213 km of 2D and 228 km2 of 3D seismic acquisition programs in Colombia, Peru, and Brazil, primarily in preparation for additional exploration and production drilling operations in 2014 and beyond.

Gran Tierra Energy is expecting 2014 production to average between 30,000 and 31,000 barrels of oil equivalent per day ("BOEPD") gross working interest or between 23,500 and 24,500 BOEPD net after royalty ("NAR") with Costayaco contributing approximately 12,000 BOEPD NAR and Moqueta contributing approximately 4,700 BOEPD NAR assuming a 4% contingency for potential delivery disruptions and $95 average price for Brent.  Approximately 96% of this production consists of oil, with the balance consisting of natural gas.  Production expectations are based on the development of existing discoveries and could prove to be conservative with exploration success in Colombia.

Gran Tierra Energy had $353 million in cash and equivalents and no debt at the end of the third quarter 2013. Based on current oil prices, Gran Tierra Energy expects the 2014 work program and budget to be funded primarily from cash flows from operations and cash on hand.

"Gran Tierra Energy is poised to execute the largest capital spending program in our history in 2014, as a direct result of our success in managing existing reserves, production and cash flow, finding new reserves to develop during this year and setting the stage to explore for new reserves during the coming year.  As 2013 is coming to an end, Gran Tierra Energy remains financially strong, and expects to remain debt free and fund the 2014 capital spending program from cash flow and cash on hand at current oil prices and expected higher production levels.  The development of our diverse assets has provided a range of risk and reward drilling opportunities that has positioned Gran Tierra Energy for significant reserves and production growth in the years to come.  Key milestones in 2014 include attaining the Global Development Permit for the Moqueta field and subsequent development activity in Colombia, booking reserves and initiating long-term test production from our new Bretaña oil development in Peru and ongoing operations in Brazil and Argentina," said Dana Coffield, President and Chief Executive Officer of Gran Tierra Energy. "We look forward to sharing news on our wells currently drilled and testing, and our progress on an exciting 2014 capital spending program as it unfolds."

Colombia

The Colombia capital spending program for 2014 is $243 million and Gran Tierra Energy expects it to include drilling 4 gross exploration wells and 8 gross appraisal and development wells.  Gran Tierra Energy's oil exploration drilling program will target oil prospects in the Putumayo and Llanos Basins, while development drilling will focus on the Moqueta and Costayaco oil fields, with total drilling expenditures expected to be $118 million. Facilities work primarily consists of water injection and infrastructure work at Moqueta and Costayaco, central processing facility expansion at Jilguero, and compression and storage systems at Ramiriqui and is expected to be $54 million. Geological and geophysical ("G&G") work consisting of 228 km2 of 3D seismic and 1,913 km of 2D seismic, along with other costs, is expected to be $71 million. Gran Tierra Energy plans G&G work for the Putumayo, Cauca and Sinu-San Jacinto Basins to mature leads and prospects for drilling in 2014 and beyond.

Putumayo Basin 

Chaza Block (100% Working Interest ("WI") and Operator)  

With the continued successful appraisal of the Moqueta oil discovery throughout 2013, plans are in place to continue drilling in the field with the Moqueta-13, -14, -15 and -16 wells. Gran Tierra Energy is continuing to pursue its application for a Global Development Permit, which it expects to be granted in the first quarter of 2014.

Gran Tierra Energy continues to see positive response from its water injection program at the Costayaco field and intends to drill 4 additional development wells at the Costayaco field in 2014.

Exploration on the Chaza Block includes the Eslabón Norte Shallow and Eslabón Norte Deep which Gran Tierra Energy expects will be drilled in the second and third quarters of 2014.  The wells will target the same Cretaceous sandstone reservoirs found in the Costayaco and Moqueta discoveries.

Putumayo-1 Block (55% WI and Operator, Lewis Energy 45%)

Gran Tierra Energy intends to drill the Cabañas Norte oil exploration well on the Putumayo-1 Block in the third quarter of 2014.

Llanos Basin

Garibay Block (GTE 50% WI, CEPSA 50% WI and Operator)

Gran Tierra Energy intends to drill the Garibay Norte oil exploration well on the Garibay Block in the first quarter of 2014.

Peru 

The Peru capital spending program of $148 million includes drilling one gross appraisal well and one gross development well.  Gran Tierra Energy anticipates drilling costs to be $83 million including costs associated with the southern drilling pad construction on Block 95, approximately $43 million is budgeted for G&G work and $22 million for facility and other costs.  Long-term test ("LTT") production from the Bretaña-1ST well is anticipated to start in the third quarter of 2014 at a rate of approximately 2,500 barrels of oil per day gross.  The LTT will provide valuable information on the reservoir and operating environment to optimize the main field development, in addition to providing early cash flow.

Marañon Basin

Block 95 (100% WI and Operator)

Gran Tierra Energy is scheduled to spud a water-injector well in the Bretaña Field in the first quarter of 2014 and begin drilling the Bretaña Sur appraisal well on the southern portion of the field in the fourth quarter, 2014. In addition, crude oil processing and loading facilities are expected to be completed in order to initiate LTT production in the third quarter of 2014.

Blocks 123 and 129 (100% WI and Operator)

Gran Tierra Energy is continuing the permitting process in anticipation of drilling its first well on each of these blocks in 2015 and 2016.

Ucayali Basin

Blocks 107 and 133 (100% WI and operator)

Gran Tierra Energy is planning a 300 km infill 2D seismic program on Block 107 in the Ucayali Basin for 2014 in preparation for oil exploration drilling in 2015.

Argentina

Gran Tierra Energy's drilling plan in 2014 consists of drilling two gross development wells. Out of the $44 million total capital spending program for Argentina, $18 million is expected to be spent on drilling, and $20 million spent on facilities costs. In addition, the company is planning to conduct six workovers.  The development wells and workovers will be concentrated in the Puesto Morales field of the Neuquen Basin in an effort to grow production from these assets.

Noroeste Basin

Santa Victoria (100% WI and Operator) 

Gran Tierra Energy is evaluating the potential to drill a gas exploration well in 2014. Gran Tierra Energy, as operator, is interested in testing the gas potential of the Devonian reservoirs, a proven play in nearby wells, as well as the unconventional gas resource potential of the Los Monos formation, the primary source rock for the basin.

Surubi (85% WI and Operator, Recursos y Energia de Formosa S.A. 15% WI)) 

Following the successful production test of the Proa-2 appraisal well in early 2012, Gran Tierra Energy plans to drill the Proa-3 development well in the Proa field in the first quarter of 2014.

Neuquen Basin

Puesto Morales (100% WI and operator)

Gran Tierra Energy expects development and appraisal drilling to begin in the second quarter of 2014 in the Puesto Morales field in the Neuquen Basin.

Brazil

Gran Tierra Energy holds interests in seven blocks in the onshore Recôncavo Basin. The Brazil capital spending program for 2014 is $30 million. The Brazil capital spending program will focus on facilities work at the Tiê field along with seismic acquisition on the newly acquired Blocks-86, -117, and -118 in the Recôncavo Basin. Approximately $22 million is dedicated to G&G and facilities work.

Gran Tierra Energy is continuing the study of two unconventional resource plays in 2014 through core analysis, geochemistry studies, 3D seismic re-processing and evaluating ongoing fracture stimulation test results, among other activities in an effort to establish the commercial viability of the resource opportunity in oil-saturated tight sandstones and shales in the Recôncavo Basin.

About Gran Tierra Energy Inc.

Gran Tierra Energy is an international oil and gas exploration and production company, headquartered in Calgary, Canada, incorporated in the United States, trading on the NYSE MKT Exchange (GTE) and the Toronto Stock Exchange (GTE), and operating in South America. Gran Tierra Energy holds interests in producing and prospective properties in Argentina, Colombia, Peru, and Brazil. Gran Tierra Energy has a strategy that focuses on establishing a portfolio of producing properties, plus production enhancement and exploration opportunities to provide a base for future growth.

Gran Tierra Energy's Securities and Exchange Commission filings are available on a web site maintained by the Securities and Exchange Commission at http://www.sec.gov and on SEDAR at http://www.sedar.com.

Additional information concerning Gran Tierra Energy is available at www.grantierra.com, on SEDAR (www.sedar.com) and with the Securities and Exchange Commission (www.sec.gov).

Forward-Looking Statements and Advisories 

This news release contains certain forward-looking information and forward-looking statements (collectively, "forward-looking statements") under the meaning of applicable securities laws, including Canadian Securities Administrators' National Instrument 51-102 - Continuous Disclosure Obligations and the United States Private Securities Litigation Reform Act of 1995. The use of the words "expects", "anticipates", "scheduled", "target", "potential", "plans", "continue", "intends", "could", "will", "contemplates" and variations of these and similar words identify forward-looking statements. In particular, but without limiting the foregoing, this news release contains forward-looking statements regarding, among other things: Gran Tierra Energy's planned and expected capital spending program for 2014; expectations with respect to drilling, drilling locations, testing, construction, exploration activities, acquisition of seismic, production and timing of these activities and results; resource potential in South America; expected costs and allocation of the capital spending program; anticipated funding of the capital spending program; continuation of the company's current strategy; and granting of the company's application for a global development licence.

The forward-looking statements contained in this news release reflect several material factors and expectations and assumptions of Gran Tierra Energy including, without limitation: assumptions relating to field size and recoverability; the accuracy of testing and production results and seismic data; the effects of certain drilling techniques; rig availability; cost and price estimates; and the general continuance of current or, where applicable, assumed operational, regulatory and industry conditions. Gran Tierra Energy believes the material factors, expectations and assumptions reflected in the forward-looking statements are reasonable at this time but no assurance can be given that these factors, expectations and assumptions will prove to be correct.

The forward-looking statements contained in this news release are subject to risks, uncertainties and other factors that could cause actual results or outcomes to differ materially from those contemplated by the forward-looking statements, including, among others: unexpected technical difficulties and operational difficulties may occur, or delays in obtaining necessary permits may occur or continue which could impact or delay the commencement of drilling exploration or development wells; Gran Tierra Energy's operations are located in South America, and unexpected problems can arise due to guerilla activity; disruptions on the Oleoducto Transandino pipeline may be more than Gran Tierra Energy expects and activities undertaken to mitigate the impact of such disruptions may not have the impact currently anticipated by Gran Tierra Energy; geographic, political and weather conditions can impede testing, which could impact or delay the commencement of drilling exploration wells; and the risk that current global economic and credit market conditions may impact oil prices and oil consumption more than Gran Tierra Energy currently predicts, which could cause Gran Tierra Energy to modify its exploration and drilling activities. Although the current capital spending program is based upon the current expectations of the management of Gran Tierra Energy, there may be circumstances in which, for unforeseen reasons, a reallocation of funds may be necessary as may be determined at the discretion of Gran Tierra Energy and there can be no assurance as at the date of this press release as to how those funds may be reallocated. Should any one of a number of issues arise, Gran Tierra Energy may find it necessary to alter its current business strategy and/or capital spending program. Accordingly, readers should not place undue reliance on the forward-looking statements contained herein. Further information on potential factors that could affect Gran Tierra Energy are included in risks detailed from time to time in Gran Tierra Energy's Securities and Exchange Commission filings, including, without limitation, under the caption "Risk Factors" in Gran Tierra Energy's Quarterly Report on Form 10-Q filed November 12, 2013. These filings are available on a Web site maintained by the Securities and Exchange Commission at http://www.sec.gov and on SEDAR at www.sedar.com.

The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this press release are made as of the date of this press release and Gran Tierra Energy disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities legislation.

Barrels of oil equivalent ("BOE") may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, given that the value ratio based on the current price of oil as compared with natural gas is significantly different from the energy equivalent of six to one, utilizing a BOE conversion ratio of 6 Mcf: 1 bbl would be misleading as an indication of value.

SOURCE Gran Tierra Energy Inc.

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