Ecopetrol S.A. (NYSE: EC, BVC: ECOPETROL) reported first-quarter 2026 consolidated revenues of 28.6 trillion COP, a decline of 8.7% from 31.4 trillion COP in the year-earlier period, as lower crude oil prices and reduced hydrocarbon production compressed the top line for Colombia’s state-controlled oil and gas company. Against that backdrop, a marked recovery in refining margins and disciplined cost management lifted EBITDA by 1.5% to 13.5 trillion COP, yielding a 47% EBITDA margin and partially offsetting the revenue headwind. At the Q1 2026 average exchange rate of approximately 3,700 COP per USD, the quarter’s revenues translate to roughly $7.73 billion USD and EBITDA to approximately $3.65 billion USD.

Embattled Ecopetrol CEO Ricardo Roa was appointed to the position by Colombian President Gustavo Petro after managing his political campaign. (photo: Ecopetrol)

Net income for the quarter reached 2.9 trillion COP (approximately $784 million USD), down 7.7% year-over-year, reflecting the combined drag of lower revenues, a sharply elevated effective tax rate of 37.1%, and a one-time charge of 1.2 trillion COP for the impuesto al patrimonio — Colombia’s government-mandated wealth levy on large corporations established to fund post-disaster reconstruction measures. The company is also subject to a 10% income tax surcharge applicable for fiscal year 2026, which is embedded in the reported effective rate. The aggregate tax burden absorbed a disproportionate share of operating improvement relative to prior periods, limiting the flow-through of refining gains to the net income line.

Total hydrocarbon production averaged 725.2 thousand barrels of oil equivalent per day (kboed) in Q1 2026, below the 745 kboed recorded in the 2025 annual average cited by management during the March 2026 general shareholders’ meeting. Domestic crude output represented the largest component at approximately 520 thousand barrels per day (kbd). Ecopetrol’s Permian Basin operations in the United States contributed 91.8 kbd, underscoring the continued strategic importance of the international segment. Gas production continued a multi-year declining trend that poses a medium-term domestic supply challenge; management has sought to address this partially through regasification capacity additions at Puerto Bahía and on the Pacific coast, expected to come online in the second half of 2026 with a combined contribution of up to 430 billion BTU per day.

The refining segment delivered the quarter’s most pronounced operational outperformance. Ecopetrol’s domestic refineries, led by Refinería de Cartagena, processed 417.5 kbd of crude throughput. The integrated refining margin rose to $17.3 USD per barrel, a 60% improvement over the same quarter of 2025, driven by favorable differential pricing between domestic crude benchmarks and refined product values alongside ongoing operational efficiency improvements. The Comisión de Regulación de Energía y Gas (CREG) and the Ministerio de Minas y Energía remain central to the regulatory framework governing downstream margins over the medium term.

The balance sheet carries significant structural and contingent risk items of direct relevance to institutional credit and equity holders. Gross debt stood at 108.1 trillion COP (approximately $29.2 billion USD), representing a leverage ratio of 2.3 times trailing EBITDA — a level that leaves limited room for further deterioration before debt covenants or rating agency thresholds become binding. Ecopetrol holds a receivable of 4.2 trillion COP (approximately $1.14 billion USD) from the Fondo de Estabilización de Precios de los Combustibles (FEPC), a government fuel price stabilization mechanism that represents a claim on the Colombian treasury with timing and recovery risk. A dispute with the Dirección de Impuestos y Aduanas Nacionales (DIAN) over value-added tax assessments totals 12.26 trillion COP (approximately $3.31 billion USD) in aggregate, of which 10.22 trillion COP relates to Ecopetrol’s consolidated operations and 2.04 trillion COP to Refinería de Cartagena. Both cases are under administrative and judicial review; no provisions have been recognized in the financial statements pending resolution, but the potential liability represents a material contingency relative to the company’s quarterly net income.

On the corporate development front, Ecopetrol disclosed three significant transactions during or following the quarter. The company agreed to acquire producing assets from Gran Tierra Energy (NYSE: GTE, TSX: GTE) for $92.4 million USD, adding Colombian upstream production inventory in basins where both companies have operated. In Brazil, Ecopetrol launched a tender offer for shares of Brava Energia (BVMF: BRAV3) at 23 BRL per share, seeking to expand its footprint in that country’s oil and gas sector. And in a transaction that would reshape the mid-size independent landscape in Colombia, the company reached an agreement to acquire Parex Resources (TSX: PXT) for $250 million USD; Parex is a Colombia-focused producer with a complementary asset base across the Llanos and other producing basins. Collectively, the three transactions signal that Ecopetrol’s capital allocation strategy under the current government continues to favor upstream consolidation despite the elevated leverage profile.

The exploration portfolio generated positive news announcements. The Copoazú-1 exploratory well, drilled in Colombia’s Llanos foothills region, was confirmed as a commercial discovery, adding to the domestic reserve base. The Sirius offshore project advanced through the Consulta Previa process — a legally mandated prior consultation with indigenous and Afro-Colombian communities required before development of projects in or near their territories — reaching a milestone in community engagement that brings the project closer to formal development sanction. The Agencia Nacional de Hidrocarburos (ANH) oversees the licensing framework within which both projects operate.

“Ecopetrol is listed on the New York Stock Exchange; we are governed by the strict regulations of US federal agencies. Agencies like OFAC and the SEC could intervene in the company and could even accelerate the payment of financial obligations, which would be extremely grave for Ecopetrol.” — Martín Ravelo, President, Unión Sindical Obrera (USO)

The ISA transmission segment, managed through Ecopetrol’s majority stake in ISA — Interconexión Eléctrica S.A., contributed stable regulated cash flows during the quarter. ISA completed 46 transmission reinforcement works across its Latin American concession portfolio. The segment also completed the acquisition of 100% of IE Madeira in Brazil, consolidating its position in that country’s power grid interconnection infrastructure. ISA further submitted a competitive bid for the Río Bueno–Puerto Montt high-voltage transmission line concession in Chile, demonstrating the group’s appetite for long-duration, inflation-linked infrastructure assets across the Andes region. For institutional investors evaluating Ecopetrol as a blended hydrocarbons-and-infrastructure holding, ISA’s consistent cash generation provides partial diversification from crude price volatility, though it does not insulate the consolidated entity from headline governance risk.

The most consequential variable for the investment thesis over the near term is Ecopetrol’s prolonged governance crisis. At the company’s general shareholders’ meeting on March 27, 2026, held at the Corferias convention center in Bogotá, minority shareholders loudly heckled president Ricardo Roa — with audible shouts of “¡Fuera, fuera!” reverberating through the hall — as debate over his leadership erupted into open confrontation. The meeting approved a dividend of 121 COP per share for minority holders and a 4 trillion COP distribution to the Colombian government as majority shareholder, payable in two installments by June 30, 2026. Despite the financial business conducted, governance overshadowed the proceedings.

Roa faces two separate judicial proceedings. The Fiscalía General de la Nación formally charged him in connection with alleged influence peddling related to the purchase of an apartment in northern Bogotá — charges he has denied. Separately, the Consejo Nacional Electoral (CNE) is examining whether campaign spending limits were violated during President Gustavo Petro’s 2022 presidential campaign, which Roa managed — an investigation that Finance Colombia has covered in detail. Angela Maria Robledo, Chair of the Board of Directors, defended the board’s decision to retain Roa at the March assembly, citing the constitutional presumption of innocence. However, four of the nine board members had already formally recorded their support for his removal at that point, exposing a divided governance structure at a time when strategic and operational decisions require unified leadership.

The Unión Sindical Obrera (USO), which represents approximately one-third of Ecopetrol’s workforce, issued a production strike ultimatum timed to a March 30 board meeting. Martín Ravelo, president of the USO, framed the leadership crisis explicitly in terms of US regulatory risk: “Ecopetrol is listed on the New York Stock Exchange; we are governed by the strict regulations of US federal agencies. Agencies like OFAC and the SEC could intervene in the company and could even accelerate the payment of financial obligations, which would be extremely grave for Ecopetrol.” Ravelo further warned that the company’s outstanding international debt — which he placed at approximately $30 billion USD and which is exacerbated by elevated interest rates — left Ecopetrol exposed to potential covenant triggers or early repayment demands in a scenario where the Securities and Exchange Commission (SEC) or the Office of Foreign Assets Control were to take enforcement action.

Following sustained pressure from the USO, minority shareholders, and opposition political figures, Ecopetrol’s board approved an extended leave of absence for Roa beginning April 7, 2026. Under the arrangement, Roa used accrued vacation through May 27, followed by 30 calendar days of unpaid leave beginning May 28, extending his absence through the end of June — a period encompassing Colombia’s presidential first round on May 31 and a potential runoff on June 21. Juan Carlos Hurtado Parra, the company’s executive vice president of hydrocarbons and designated first alternate to the presidency since November 2025, was appointed acting president. Hurtado Parra holds an MBA in International Oil and Gas and brings more than 28 years of energy sector experience to the acting role, having previously served as vice president of exploration, development, and production.

The political calendar creates a structural transition risk that sits above the operational and financial results as the primary concern for long-duration investors. Colombia’s incoming government, to be inaugurated August 7, 2026, is widely expected to appoint a new Ecopetrol board and select a new company president. That transition may bring material shifts in strategic priorities — including the pace of upstream investment, the approach to the FEPC receivable recovery, the trajectory of energy transition spending, and the capital allocation balance between the hydrocarbons segment and the ISA infrastructure platform. The Ministerio de Hacienda y Crédito Público and the Ministerio de Minas y Energía will both play key roles in establishing the post-election policy framework under which Ecopetrol operates. Institutional investors holding exposure to Ecopetrol via NYSE: EC or BVC: ECOPETROL must weigh Q1’s genuine operational improvement — most visibly in refining margins and EBITDA stability — against a governance and policy transition risk profile that is unlikely to be resolved before the August handover.

Ecopetrol’s Cartagena refinery (photo courtesy Ecopetrol)

The rating upgrade reflects Gran Tierra’s expanded scale and asset diversification following the company’s acquisition of i3 Energy North Sea and i3 Energy Canada Ltd., doubling Gran Tierra’s proven reserves (1P) on a pro forma basis. Fitch projects production could reach approximately 60,000 barrels of oil equivalent per day (boe/d) by 2026, aligning with a ‘B+’ rating level.

Key Rating Factors

Expanded Scale
With the acquisition, Gran Tierra’s proven developed producing (PDP) reserves have increased to 91 million barrels of oil equivalent (mmboe), while 1P reserves reached 183 mmboe, effectively doubling the company’s scale. Fitch projects daily production to approach 60,000 boe/d by 2025. Financial metrics are expected to strengthen, with estimated debt levels reaching around $8/boe for PDP reserves and $4/boe for 1P reserves, marking the lowest debt levels among comparable ‘B’ rated companies.

Enhanced Geographic Diversification
The acquisition adds 19,000 boe/d of production in Canada, offering Gran Tierra a foothold in a stable, investment-grade jurisdiction. The transaction also introduces natural gas to Gran Tierra’s portfolio, which will make up roughly 20% of its production, reducing its dependency on oil.

Low-Cost Production Structure
Gran Tierra’s production cost is competitive, with a half-cycle cost of $25/boe in 2023, which Fitch expects to maintain over the next few years. This cost structure is expected to improve the company’s resilience to price fluctuations. Fitch’s projections anticipate an average sales discount of $12/bbl to Brent over the rating period.

Stable Capital Structure
Fitch anticipates that Gran Tierra’s gross leverage will remain around 1.5x in 2024 and below 2.0x through the rating horizon. The acquisition is expected to be funded without additional debt, with capital expenditures estimated at $900 million from 2024-2027, covered by internal cash flows. Annual free cash flow (FCF) is forecast to average $40 million over 2024 and 2025.

Comparative Analysis with Peers

Gran Tierra’s credit profile is broadly in line with other independent Colombian oil producers, including SierraCol Energy Limited and GeoPark Limited. Both SierraCol and GeoPark are rated ‘B+’, constrained by the operational risks inherent to smaller oil and gas producers in Colombia. In comparison, 3R Petroleum Óleo e Gás S.A., rated ‘BB-‘, benefits from a larger reserve base and natural gas focus, which distinguishes it within the sector.

Forecast Assumptions and Sensitivity Analysis

Fitch’s rating case assumes a Brent crude price of $80/bbl in 2024, falling to $65/bbl by 2026. Key assumptions include:

• Production targets of 39,000 boe/d in 2024, 61,000 boe/d in 2025, and 68,000 boe/d by 2026.
• Operating costs averaging $11/boe between 2025-2027.
• Capital expenditures of approximately $260 million in 2024.

Factors Supporting Further Upgrades
A consistent rise in production to 75,000 boe/d and maintenance of 1P reserve life at 10 years could lead to an upgrade. Fitch would also consider a further upgrade if Gran Tierra diversifies its operations and enhances oil and gas sales prices.

Factors for Potential Downgrade
Production declines below 45,000 boe/d or a decrease in 1P reserve life below seven years could pressure the rating. Additionally, higher debt levels, reaching a total debt-to-EBITDA ratio of 3.0x, or a significant downturn in oil prices could negatively impact the rating.

Liquidity and Debt Structure

Gran Tierra reported $278 million in cash as of the third quarter of 2024, with $25 million in short-term debt. Fitch’s projections assume positive free cash flow through 2027. In the third quarter, Gran Tierra issued $150 million in new senior notes due 2029 at a 9.5% interest rate, using $100 million for the i3 Energy acquisition.

This rating update reflects Fitch’s assessment of Gran Tierra’s evolving asset base and financial structure, positioning it with greater operational resilience and flexibility.

Fitch noted in its report that GeoPark’s fossil fuel reserves have fallen below seven years, something the firm would be unable to “dramatically reverse” within the next 12 months. Specifically, the big three credit rating agency stated that the company only has a “1P reserve life of 5.4 years” when based on 2022 production standards. And despite the company employing new capital from Ecuador and Colombia to build up its reserves, Fitch believes that GeoPark’s reserve life would likely decrease to 4.6 years by the end of 2023.

In comparison to other independent oil producers in the area, its reserve life is now lower than that of SierraCol (8.0 years), Frontera Energy (8.7 years), and Gran Tierra (7.5 years) while coming in around the same level as CGC Energy (5.4 years).

GeoPark is also noted to have decreased its diversification of resources after the sale of Argentine and Brazilian oil fields, with the company being reliant on the continued steady oil production in Colombia. 

Despite the lack of optimism on that front, however, Fitch believes that GeoPark can increase output to per day to 40,000 barrels of oil equivalent per day by 2024 based on the existing strength of their oil fields in Colombia. This comes even with 2022’s production remaining in comparison to 2021.

A recent report from the company itself showed that its second quarter consolidated average oil and gas production is at 36,581 barrels of equivalent per day, largely due to the stalling of some of its operations in Colombia and Chile. 

In another optimistic turn, Fitch also believes that GeoPark’s gross leverage, or its overall debt to EBITDA ratio, will improve due to rising oil prices, with this number having decreased to 0.8x in 2022 in comparison to the 2.2x the company reported in 2021. 

GeoPark’s conservative financial policies will also likely grant it better financial flexibility in the future, and while its 1P reserve life is below seven years, the credit agency predicts that it will be enough to weather any price volatility in the market in the future. 

The company recently announced that, at predicted oil prices of $80-90 per barrel, it will likely have an EBITDA $490-$560 million USD as well as $120-$140 million USD in free cash flow, of which 40-50% of it will go to the company after taxes.

Photo credit: GeoPark

Key Highlights

• Average Production During the Quarter: Was 29,527 BOE per day, down 10% from fourth quarter 2019; during the Quarter, volumes were impacted by suspended production at the Suroriente and PUT-7 Blocks in the southern Putumayo region due to a local farmers’ blockade, deferred development drilling, shut-in of higher cost production and wells that were off-line awaiting routine mechanical workovers; these wells are expected to remain off-line during the low-price environment
• Decisive Action To Swiftly Shut-In Uneconomic Production: Gran Tierra has temporarily suspended fields with zero or negative netbacks at current oil prices and taken precautions to minimize restart costs  across all assets; Gran Tierra remains focused on the ongoing production and waterflooding of the Company’s core assets at Acordionero, Costayaco and Moqueta, which represent 81% of Gran Tierra’s WI Total Proved Reserves as of December 31, 2019*
• Deferral of Capital Expenditures: The Quarter’s capital expenditures totaled $44.3 million; following the advent of the COVID-19 outbreak and the resulting large decrease in oil demand and prices, the Company has elected to defer the majority of capital expenditures for the remainder of 2020, by stacking all drilling and workover rigs and suspending development activities
• Proactive Measures Taken During Downturn: Gran Tierra has rapidly implemented cost saving initiatives throughout the Company; furthermore, internal initiatives during this downturn are focused on portfolio optimization, deferring short-cycle investments, and pacing projects to allow the Company to properly resume operations when oil prices recover
• Colombian Government Initiatives to Assist the Oil Industry: Gran Tierra plans to make use of new regulations that the Colombian government has issued to support the oil industry in response to the recent drop in oil prices:
  • On April 10, 2020, the Ministry of Finance issued Decree 535 which is designed to expedite the recovery of value-added and income tax receivables from the tax authorities, to ensure that such funds are received by companies in the short-term
  • On March 27, 2020, the National Hydrocarbons Agency (ANH) issued Agreement 01, which grants companies the option to transfer certain commitments among exploration, evaluation or development acreage, providing that certain criteria are met
  • On April 7, 2020, the ANH also issued Agreement 02, which allows oil companies to reduce substantially the amounts covered by letters of credit for block commitments; this new agreement also grants oil companies the option to request 12 months of additional time for the execution of exploration, evaluation and certain exploitation commitments

• Focus on Balance Sheet Protection and Long-Term Value Preservation: During the Quarter, Gran Tierra quickly shifted its focus from production growth and free cash flow generation to protecting the Company’s balance sheet and long-term value; this shift in focus was accomplished through adjusting oil production volumes, deferring capital investments and further optimizing and lowering operating and general and administrative (“G&A“) costs:
  • Significant progress has been made on lowering operating costs through the renegotiation of vendor contracts, with significant discounts achieved to date; additional operating cost initiatives include personnel and rental equipment optimization; in addition to reducing operating costs, the Company is also benefiting from the recent depreciation of the Canadian dollar and Colombian peso; the Colombian peso has declined 18% versus the U.S. dollar from the Company’s original budget estimate; the majority of Gran Tierra’s operating costs (approximately 80%) and G&A costs within Colombia are denominated in Colombian pesos; all G&A costs in Canada are denominated in Canadian dollars
  • Gran Tierra’s Executive Team and Board of Directors have taken 20 percent reductions in salaries and retainer fees, respectively; in addition, a number of cost optimization and efficiency measures are being implemented that will further reduce the Company’s G&A costs to levels consistent with lower anticipated activity levels; Gran Tierra expects these changes to result in a reduction of 30 to 35 percent in G&A costs compared to the Company’s original budget
  • Due to the uncertainty of the financial and operational impact of COVID-19 and the significant decline in world oil prices, the Company is not providing any fiscal or operational outlook at this time

• 2019 Sustainability Report Published: Gran Tierra’s Environmental, Social and Governance (ESG) report for 2019 is now available on the Company’s website; the Company recognizes the importance that many stakeholders attach to its approach to managing the ESG factors that relate to its business;  Gran Tierra’s 2019 Sustainability Report uses data, stories, and images to show how responsible management of these factors is fundamental to the Company’s corporate values

• Key Financial Metrics for the Quarter:
  • Net loss was $252 million compared with net income of $27 million in the Prior Quarter, due to lower revenues primarily from the collapse in oil price and significant non-cash items including unrealized loss on valuation of investments ($65 million) and goodwill impairment ($103 million)
  • Adjusted EBITDA⁽¹⁾ was $35 million, compared with $66 million in the Prior Quarter
  • Funds flow from operations⁽¹⁾ of $22 million ($0.06 per share, basic) decreased by 55% compared with the Prior Quarter, as a result of lower production and a 19% decrease in the Brent oil price
  • At March 31, 2020, net debt⁽¹⁾ to Adjusted EBITDA⁽¹⁾ was 2.75 times on a trailing 12 month basis (on a trailing 12 month basis, net loss was $215 million and Adjusted EBITDA⁽¹⁾ was $272 million)
  • Entered into additional 2020 oil price hedges during the Quarter to provide further downside protection against a near-term, low price environment; currently, approximately 50 percent of production is hedged for the remainder of the second quarter of 2020, with 7,000 bbl of oil per day (“bopd“) hedged for the second half of 2020
  • Oil and gas sales were $86 million, down 33% from $128 million in the Prior Quarter due to the decreases in production and the Brent oil price
  • Operating netback⁽¹⁾ decreased to $14.13 per BOE, which was caused mostly by the drop in the Brent oil price, while other cost components such as operating and transportation expenses and the quality and transportation discount remained relatively unchanged; the drop in the Quarter’s royalties to $5.61 per BOE, down from the Prior Quarter’s $8.11 per BOE, partially offset the negative impact of the crash in oil prices
  • Operating expenses of $12.17 per BOE were down slightly from $12.44 per BOE in the Prior Quarter due to lower power generation costs, reduction in rental equipment and cost savings attributed to the lower operating activities during the Quarter
  • Workover expenses were $4.64 per BOE, up from $3.63 per BOE in the Prior Quarter as a result of fishing and recompletion work at the Chuira field and three workovers at the Costayaco field
  • Transportation expenses were $1.52 per BOE, down from $2.35 per BOE in the Prior Quarter, due to higher wellhead sales
  • Capital expenditures totaled $44.3 million, a decrease of 36% compared to the Prior Quarter; the remainder of the Company’s 2020 capital program is deferred, with only minimal maintenance expenditures planned for the rest of 2020

Operations Update

Acordionero (100% WI, Operator)

• During the Quarter, five development wells oil (AC-55, AC-56, AC-57, AC-58 and AC-59) were drilled, focusing on an optimized waterflood program to maximize ultimate oil recovery and long-term value
• Drilling efficiencies continue to be achieved, with AC-59 drilled in record low cycle time (drilled, completed and on production) of 15 days and AC-57 drilled and completed for a total capital cost of $1.8 million; wells drilled at Acordionero have been consistently delivered with per well capital costs below $2 million; further price negotiations with vendors are forecast to further lower infill drilling costs by approximately 20% to 30%, with revised contract terms once drilling recommences after future oil price recovery
• At the end of the Quarter, a total of 9 oil wells require workovers to restore production; Gran Tierra has elected to defer the workovers of these wells due to the current low oil price environment; if the Brent oil price were to recover to a level above $30 per bbl, the Company would consider initiating these workovers
• From January 1, 2020 until mid-March 2020, the instantaneous voidage replace ratio in the waterflood at Acordionero was steady at a level of 1.0 for the Lisama A and 1.8 for the Lisama C reservoirs, indicating continued prudent waterflood management

Suroriente (52% WI and Operator)

• The Cohembi oil field in the Suroriente Block was producing at approximately 4,000 bopd (WI) prior to the blockades as the field was continuing to positively respond to increased water injection and pump optimizations
• Since assuming operatorship, Gran Tierra had been able to increase production by over 1,000 bopd without drilling any development wells
• Prior to the blockades in late February 2020, activities were underway to expand the Cohembi water treatment, injection and processing facilities under a two-phased expansion program; the combined phased expansion would be expected to boost gross water injection capacity from 19,000 to 60,000 bbl of water per day

Ayombero-Chuira (100% WI)

• Gran Tierra remains encouraged by early results from the Ayombero-1 well, which continues to show stable production which averaged 177 bopd for the Quarter on natural flow and has total cumulative oil production to date of 108,000 bbl
• Ayombero-2 and -3 remain suspended and ready for the next phase of operations to recover the wellbores; Gran Tierra continues detailed planning for the next phase of operations but plans to await a recovery in oil prices before restarting development activities

Message to Shareholders

Gary Guidry, President and Chief Executive Officer of Gran Tierra, commented: “Gran Tierra has taken decisive action to protect our balance sheet and cash flows by swiftly reducing our 2020 capital program. We believe we have a competitive advantage to withstand the current challenging environment in light of our low base decline, conventional oil asset base, ability to control capital allocation and low cost structure. We forecast that the Company currently has the productive capacity to produce over 30,000 bopd with the future completion of workovers in Acordionero, resumption of production in the Suroriente Block and restart of production from our minor fields, although we have prudently suspended these workovers and restarts at the present time. We continue to prioritize financial strength and liquidity and currently believe we will exit strongly from this period of economic turmoil.”

Financial and Operational Highlights (all amounts in $000s, except per share and BOE amounts)

* Gran Tierra’s 2019 year-end reserves were evaluated, in compliance with Canadian National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities  and the Canadian Oil and Gas Evaluation Handbook, by the Company’s independent qualified reserves evaluator McDaniel & Associates Consultants Ltd.  in a report with an effective date of December 31, 2019 (the “GTE McDaniel Reserves Report“).

⁽¹⁾ Net debt is defined as face value of debt ($787 million), less cash and cash equivalents ($39 million). Net debt, funds flow from operations, operating netback, return on average capital employed, cash netback, earnings before interest, taxes and depletion, depreciation and accretion (“DD&A”) and adjusted earnings before interest, taxes and depletion, depreciation and accretion (“EBITDA”) and EBITDA adjusted for loss on redemption of Convertible Notes and loss or gain on investment (“Adjusted EBITDA”) are non-GAAP measures and do not have standardized meanings under generally accepted accounting principles in the United States of America (“GAAP”). Refer to “Non-GAAP Measures” in this press release for descriptions of these non-GAAP measures and reconciliations to the most directly comparable measures calculated and presented in accordance with GAAP.

⁽²⁾ Operating netback is a non-GAAP measure and does not have a standardized meaning under GAAP. Refer to “Non-GAAP Measures” in this press release for a description. The closest related GAAP measure is oil and gas sales price. Operating netback as presented is defined as oil and gas sales less operating, workover and transportation expenses. See the table entitled Financial and Operational Highlights above for the components of consolidated operating netback and corresponding reconciliation.

Gran Tierra’s Corporate Presentation has been updated and is available on the company website at www.grantierra.com.

Update (19 January, 2016) Gran Tierra Energy has closed on its purchase of Petroamerica, says shareholders have been paid – See the SEC Filing: HERE

The tender offer was voted on today and overwhelmingly approved by the holders Petroamerica common shareholders at the special meeting of the Petroamerica Shareholders held earlier today at the Dentons Alberta, Canada law offices. Holders of over 32.05% of the outstanding Petroamerica Shares voted at the meeting, with approximately 98.05% in favor of the buyout.

Today, Petroamerica also obtained a final order from the Court of Queen’s Bench of Alberta to implement the Arrangement.

The Arrangement is more fully described in the management information circular and proxy statement of Petroamerica dated December 3, 2015, which may be viewed on Petroamerica’s profile at www.sedar.com.

Under the arrangement, Petroamerica shareholders will receive, at their election, either 0.40 of a share of common stock of Gran Tierra or $1.33 Canadian Dollars in cash for each Petroamerica share, subject to a maximum of $101,301,755 of the consideration payable in cash.

Petroamerica Oil Corp. is a Canadian oil and gas exploration and production company with interests in fifteen blocks, located in Colombia’s Llanos and Putumayo Basins.  It trades on the TSX Venture Exchange under the symbol PTA.

The vertical amalgamation did not require shareholder approval and was completed to simplify the corporate structure of Petroamerica, said the company in a written statement.  No securities were issued in connection with the vertical amalgamation, and the shares of the subsidiaries were cancelled without any repayment of capital with respect to them.

A Special Meeting of Shareholders will be held next Monday, January 11, At Dentons Canada LLP In Calgary at 10:00 AM

Petroamerica Oil Corp. on November 12 agreed to be purchased by Gran Tierra Energy, Inc. (TSX and NYSE: GTE). With shareholders receiving either 0.4 share of Gran Tierra Energy for each share of Petroamerica Oil Corp stock, or $1.33 Canadian dollars cash per share, limited to 70% of the consideration payable in cash.

Ralph Gillcrist, Petroamerica’s President and CEO said regarding the deal: “This transaction ensures that the high quality assets of Petroamerica will be fully developed and the combination with Gran Tierra will create one of the best-positioned companies in the prolific Putumayo and Llanos basins of Colombia. For Petroamerica’s shareholders, the resulting pro forma company will bring improved liquidity, increased diversity and scale, an outstanding near-term opportunity set and most importantly, the financial capability and balance sheet strength to maximize value of Petroamerica’s portfolio.”

Cover photo – Aguatoca is a popular swimming hole in Casanare, the mostly rural Colombian department where Petroamerica’s Llanos-10 block is located. Photo credit: «Aguatoca» de Juan11211992 – Trabajo propio. Disponible bajo la licencia CC BY-SA 4.0 vía Wikimedia Commons

Gran Tierra’s management said in a statement that it believes that the shares, at times, have been trading in a price range which does not adequately reflect their value in relation to Gran Tierra’s current operations, growth prospects and financial position. At such times, the purchase of shares for cancellation may be advantageous to stockholders by increasing the value of the remaining Shares.

Overall 2015 Capital Budget Increased by $45 million to $185 million

During the first quarter of 2015, the Company incurred $74 million of the $140 million 2015 capital program. Gran Tierra’s board of directors has approved a $45 million increase to its 2015 capital program to $185 million.

The allocation of capital includes an increase of $55 million directed at Colombia development, at negotiated reduced services costs. At forward pricing, the additional capital generates IRRs in excess of 30 percent, and the majority of the increased drilling impacts the 2015 exit rate and the forecasted 2016 average production. The total 2015 capital program in Colombia is now $115 million and the majority of Colombia’s capital program is expected to be spent on development drilling activities on the Moqueta and Costayaco fields. The program includes an expected three wells at Moqueta and three wells at Costayaco. These drilling programs are expected to continue into 2016.

Peru’s capital program has been reduced to $49 million, of which $11 million is expected to be incurred during the remainder of 2015. The Company is focused on limiting total costs (capital expenditures and general and administrative expenses) in Peru over the next 12 months to ensure retention of lands and security of assets. The Company is exploring options to maximize shareholder value for the assets in Peru.

Brasil’s capital program has been reduced to $20 million, of which $6 million is expected to be incurred during the remainder of 2015.

Of the total budget of $185 million, $97 million is allocated for drilling, $45 million for facilities, pipelines and other, and $43 million for geological and geophysical expenditures. The program meets all work obligations and commitments in 2015.

The company expects to finance its 2015 capital program through cash flows from operations and cash on hand, while retaining financial flexibility to undertake further development activities and pursue diversified growth opportunities in Colombia.

Revised 2015 Capital Program ($MM)*:

Production Outlook

With the revised capital program, Gran Tierra expects 2015 gross working interest (“WI”) production to average between 22,500 and 23,500 barrels of oil equivalent per day (“BOEPD”) or between 18,400 and 19,400 BOEPD net after royalty (“NAR”). Production from Colombia is expected to be approximately 17,850 BOEPD NAR, with Costayaco contributing approximately 10,400 BOEPD NAR and Moqueta contributing approximately 5,100 BOEPD NAR, assuming a 2% contingency for potential delivery disruptions. Production from the Company’sBrazil operation is expected to average 770 BOEPD NAR. Approximately 99% of expected production is oil, with the balance natural gas.

The accelerated development associated with the increased capital program at the Moqueta field is expected to provide the production capacity for the Company to maintain consistent production during 2016.The additional development is intended to test Probable and Possible reserves recognized by the Company’s external reserves auditor.

Comparison ($MM):

All dollar amounts are in United States dollars unless otherwise indicated.

The new appointments are as follows:

Ryan Ellson, Chief Financial Officer

Alan Johnson, Vice President, Asset Management

Lawrence West, Vice President, Exploration

Jim Evans, Vice President, Corporate Services

Ryan Ellson has joined the Company as Chief Financial Officer.  Ryan has 15 years of experience in a broad range of international corporate finance and accounting roles.  Most recently, Mr. Ellson was Head of Finance for Glencore E&P (Canada) and prior thereto Vice President, Finance at Caracal Energy, a London Stock Exchange listed company with operations in Chad, Africa.  While at Caracal Energy, Mr. Ellson was instrumental in negotiating a $330 million farm-out to Glencore, secured a $250 million reserve based lending facility (winner of several trade finance deals of the year), and involved in multiple capital raises totaling approximately $500 million. Ryan was also instrumental in the successful listing of the Company on the London Stock Exchange. Prior to Caracal, Mr. Ellson held several management and executive positions with companies operating in Egypt, India and Canada. Mr. Ellson is a Charted Accountant and holds a Bachelor of Commerce and a Master of Professional Accounting from the University of Saskatchewan.  “I am delighted to have four key members from the Caracal team join Gran Tierra.” said Gary Guidry, President and CEO of Gran Tierra. “The addition of Ryan, Alan, Lawrence and Jim will complement the existing excellent team at Gran Tierra.”

Mr. Ellson succeeds James Rozon. James will continue with the Company to assist with a smooth transition.   “On behalf of the Board of Directors, I would like to thank James for his hard work and commitment over the last seven years.  James has built and managed a tremendous finance team in Gran Tierra and was a key member of the executive team.” said Mr. Guidry.

Additional appointments to complement the executive team at Gran Tierra include, Alan Johnson as Vice President Asset Management, Lawrence West as Vice President Exploration and Jim Evans as Vice President Compliance and Corporate Services.

Alan Johnson is a professional engineer with over 21 years of experience working internationally in the oil and gas industry. His experience includes varied technical, managerial and executive roles in drilling, production, reservoir, reserves, corporate planning and asset management. Most recently Alan was Head of Asset Management for Glencore (E&P) Canada and prior thereto Director of Asset Management at Caracal Energy where he was responsible for all development activities in Chad, Africa.  Alan was instrumental in developing oil and gas assets in remote areas of southern Chad, achieving first production in less than 18 months. Mr. Johnson started his E&P career with Shell International in the Dutch North Sea. He then held positions of increasing responsibility with Shell Canada, APF Energy, Rockyview Energy, Delphi Energy and BG Australia. Mr. Johnson graduated with a 1st Class B.Eng (Hons) from Heriot Watt University in Scotland. Mr. Johnson is a Chartered Engineer in the UK and a Professional Engineer in Alberta.

Lawrence West has thirty-five years of experience as an executive, explorer, and geologist. Most recently, Mr. West was Vice President, Exploration at Caracal Energy. Lawrence built a multi-disciplinary team to assess resources and grow reserves in the interior rift basins within Chad and led a successful exploration program. During his tenure he successfully executed two large 2D/3D seismic shoots in remote frontier basins, on time and on budget. Prior to Caracal he has been involved in starting and growing several public and private companies, including Reserve Royalty Corp., Chariot Energy, Auriga Energy and Orion Oil and Gas. Lawrence worked at Alberta Energy Company (AEC), where he was on the team that merged with Conwest.  He built and led the AEC East team to the Rocky Mountain USA basins. His career began with Imperial Oil working on prospect and reservoir characterization, in multi-disciplinary teams, and as a technical mentor to exploration teams. Lawrence has an Honors Bachelor of Science in Geology from McMaster University and an MBA, specializing in economics, from the University of Calgary.

Jim Evans has over 20 years of experience including working the last 10 years in the international oil and gas industry.  Most recently Jim was the Head of Compliance & Corporate Services for Glenore E&P (Canada) and prior thereto Vice President of Compliance & Corporate Services at Caracal Energy where he oversaw the execution of corporate strategy and goals, developed and implemented a robust corporate compliance program, and managed all aspects of IT, document control, security and administration. Mr. Evans also managed the recruitment, training and retention of staff in both Calgary and Chad. He oversaw the growth of the Company from seven employees to in excess of 400 as Caracal Energy exceeded 20,000 barrels of oil per day at the time of sale to Glencore. Prior to Caracal, Mr. Evans held senior management and executive positions at Orion Oil and Gas and Tanganyika Oil, with operating experience in Egypt, Syria and Canada. Mr. Evans is a Certified General Accountant and holds a Bachelor of Commerce degree from the University of Calgary.

According to statements in the SEC form SC 13D filed with the SEC, West Face Capital is of the opinion that Gran Tierra Energy has been too distracted by adventures in Peru, Argentina and Brasil, and not focused enough on Colombia exploration and production. Gran Tierra fired Dana Coffield as CEO in February, when founder Jeffrey Scott took the reins as executive chairman. At the time the company issued a statement saying it would “re-examine the company’s strategy.”

West Face Capital’s nominated slate of directors (Biographies are from the SEC filing):

• Gary Guidry – Guidry is the prospective CEO of Gran Tierra. He is the former CEO at each of Caracal Energy Inc., Orion Oil & Gas, Tanganyika Oil Company and Calpine Natural Gas Trust. He was named The Oil Council CEO of the year in 2014.
• Robert B. Hodgins – Hodgins currently sits on the Boards of AltaGas Ltd., Enerplus Corporation, MEG Energy Corp., StonePoint Energy Inc., and Kicking Horse Energy Inc. He is the former CFO of Pengrowth Energy Trust, VP and Treasurer of Canadian Pacific Limited, CFO of TransCanada Pipelines, and is the former Chairman of Caracal Energy Inc.
• Brooke Wade – Wade is currently the President of Wade Capital Corporation, a private investment Company, and sits on the Boards of Novinium Inc., and IAC Acoustics Limited. He is the former Co-founder, Chairman and CEO of Acetex Corporation, founding President and CEO of Methanex Corporation, and is a former director of Caracal Energy Inc.
• Peter Dey – Dey is Chairman of Paradigm Capital Inc., an investment dealer. He is a Director of GoldCorp Inc. and Granite REIT Inc. Formerly, Mr. Dey was Chairman of the Ontario Securities Commission, Chairman of Morgan Stanley Canada, Senior Partner with Osler, Hoskin & Harcourt LLP, Chairman of the Toronto Stock Exchange Committee on Corporate Governance, and former director of Caracal Energy Inc.
• Ronald Royal – Royal is a private businessman and serves on the Boards of Valeura Energy Inc. and Oando Energy Resources Inc. Mr. Royal is a professional engineer with more than 35 years of experience with Imperial Oil and ExxonMobil’s international, upstream affiliates. Prior to his retirement in 2007, he was President and General Manager of Esso Exploration and Production Chad Inc. He is a former director of Caracal Energy Inc.
• David P. Smith – Smith is Chairman of the Board of Superior Plus Corporation. He is a former Managing Partner of Enterprise Capital Management Inc., an investment manager, and is a former investment banker and energy research analyst.

As of publication, there has been no statement forthcoming from Gran Tierra’s current management. According to West Face Capital, in its filing, Gran Tierra has excessive general and administrative (G&A) expense as compared to its most similar peer companies. Gran Tierra’s G&A was $5.82 per BOE of production in 2014¹. By comparison, a subset of its peers had average G&A of $4.74 per BOE of production in 2014. “ We believe high operating costs are symptomatic of poor management and a culture lacking in accountability, starting at the Board,” stated West Face Capital. Additionally, the investor stated that Gran Tierra should refocus on Colombia.

“Gran Tierra already has a well-established operating advantage in the Putumayo basin, with low-risk opportunities for expansion. In addition, we believe there are many opportunities for value creation in the middle and lower Magdalena basins as well as the Llanos basin. With a focus on proven basins within Colombia, we believe Gran Tierra is well positioned to create shareholder value through organic growth and smart acquisitions. The preponderance of the Company’s capital budget should be targeted to development, with a small allocation to exploration,” stated the activist investor.

Wednesday, April 22, the following day, Gran Tierra Energy’s management issued this statement:

The Gran Tierra Board of Directors and management team are committed to enhancing stockholder value, and we are executing a plan that we believe will enable us to achieve this goal.  We take the views of our stockholders seriously and have had, and will continue to have, conversations with West Face. 

We believe that Gran Tierra’s current strategy of retaining balance sheet strength by minimizing or eliminating expenditures that have no immediate value at current oil prices and making significant operating and general and administrative cost reductions and eliminations through resource re-allocation initiatives is the best path to maximize stockholder value and realize the full potential of our assets.  The Gran Tierra Board has been candid about areas of underperformance and – recognizing the need for change – took decisive action to reshape the Company and usher in a new era at Gran Tierra.  The Company is pursuing a strategy of focusing on its core Colombian properties, curtailing all discretionary expenditures elsewhere.

Gran Tierra’s Board at present is composed of four highly-qualified and proven leaders, three of whom are independent. They are active, engaged and have the expertise needed to drive success and build stockholder value, including:  extensive South American oil and gas energy experience: material participation leading other oil and gas exploration companies; experience with mergers and acquisitions; experience investing in, developing and growing oil and gas exploration companies; as well as expertise in finance and accounting. 

The Gran Tierra Board will consider West Face’s nominations in due course, will continue to look for other qualified nominees and will present details regarding the Board’s recommended slate of director nominees in the Company’s definitive proxy statement and other materials, to be filed with the Securities and Exchange Commission and mailed to all stockholders eligible to vote at the 2015 Annual Meeting, the date of which has yet to be announced.

On April 23, 2015, West Face Capital Inc. issued the following press release:

Incremental Change and Delay Does Not Serve Gran Tierra Shareholders: West Face Capital

TORONTO – April 23, 2015 – West Face Capital Inc. (West Face), whose managed funds beneficially own approximately 9.8% of Gran Tierra Energy Inc. (Gran Tierra) (NYSE MKT: GTE; TSX: GTE), today told its fellow shareholders that the latest statement from the company’s Board of Directors fails to address what is needed to fix Gran Tierra.

In its April 21 letter to Gran Tierra, West Face recommended, among other things, that the company refocus on its core Colombian properties and avoid further high-risk, high-cost ventures in frontier locations. Twenty-four hours later, the Gran Tierra Board clarified for shareholders that its strategic focus is on Colombia.

The current Board also acknowledged “areas of underperformance” after the company’s market value fell by 59% in just over four years.

West Face believes acknowledgement and promises are not sufficient to correct ineffectual oversight, incoherent strategy, inflated overhead costs and failure to align the interests of the Board and shareholders. A fundamental change of course is required for Gran Tierra, not half-measures by the existing Board.

“The current directors should do the right thing for shareholders and accept that a clean slate and a fresh start are needed at Gran Tierra now,” said Thomas Dea, Partner at West Face. “They should ensure that the shareholders’ voice will be heard at the annual meeting, which the company’s website stated would take place on June 24, 2015. There should be no delay.

“It’s time to fix GTE,” Mr. Dea said.

West Face has proposed a proven CEO in Gary Guidry and a new slate of experienced independent directors. Mr. Guidry’s experience was gained working in many international jurisdictions and includes extensive experience in Colombia and other parts of Latin America. West Face believes that the nominee group has strong and relevant South American experience.

The six West Face nominees are Robert B. Hodgins, Brooke Wade, Peter Dey, Ronald Royal, David P. Smith, and Gary Guidry. Further information about the nominees’ qualifications was provided in the news release issued by West Face on April 21, 2015.