Gran Tierra Energy (GTE)
Q3 2012 Earnings Call
November 07, 2012 4:00 pm ET
Executives
Dana Coffield - Chief Executive Officer, President, Executive Director and Member of Reserves Committee
James Rozon - Acting Chief Financial Officer, Principal Accounting Officer and Corporate Controller
Shane P. O’leary - Chief Operating Officer
Analysts
Nathan Piper - RBC Capital Markets, LLC, Research Division
Jamie Somerville - TD Securities Equity Research
Michael Letros
George Toriola - UBS Investment Bank, Research Division
Matthew Portillo - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division
John Malone - Global Hunter Securities, LLC, Research Division
Ian Macqueen - CIBC World Markets Inc., Research Division
Neal Dingmann - SunTrust Robinson Humphrey, Inc., Research Division
Brad Virbitsky
Presentation
Operator
Good day, ladies and gentlemen, and welcome to Gran Tierra Energy Results Conference Call for the 9 months ended September 30, 2012. My name is Angela, and I will be your coordinator for today. [Operator Instructions] I would like to remind everyone that this conference call is being webcast and recorded today, Tuesday, November 7th, 2012 at 4:00 p.m. Eastern Standard Time.
Please be advised that in addition to historical information, certain comments made during this conference call, particularly those anticipated -- anticipating future financial performances, business prospects and overall operating strategies, constitute forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.
Such statements may be identified by words such as anticipate, believe, estimate, expect, intend, predict and hope or similar expressions. Such statements, which include estimated or forward-looking production and financial information or results, are based on management’s current expectations and are subject to a number of factors and uncertainties which could cause actual results to differ materially from those described in the forward-looking statements.
Listeners are urged to carefully review and consider the various disclosures made by Gran Tierra Energy in its reports filed with the Securities and Exchange Commission, including those risks set forth in Gran Tierra Energy’s quarterly report on Form 10-Q filed with the SEC on November 7, 2012 and in its annual report on Form 10-K for the year ended December 31, 2011 filed with the Securities and Exchange Commission February 27, 2012.
If one or more of these risks or uncertainties materialize or if the underlying assumption prove incorrect, Gran Tierra Energy’s actual results may vary materially from those expected or projected. Listeners are urged not to place undue reliance on forward-looking statements made in today’s conference call. Gran Tierra Energy assumes no obligation to update these forward-looking statements other than as may be required by applicable law or regulation.
Today's conference call also includes the non-GAAP measure funds flow from operations. The press release disseminated by Gran Tierra Energy this morning includes a reconciliation of this non-GAAP item with the company's GAAP net income or loss, as well as information about why management believes this measure is useful in evaluating the company's performance, and is available on Grand Tierra Energy's website, www.grantierra.com.
All dollar amounts mentioned in today’s conference call are in U.S. dollars, unless otherwise stated.
Finally, this earnings call is the property of Gran Tierra Energy Inc. Any copying or rebroadcasting of this call is expressly forbidden without the written consent of Grand Tierra Energy.
I will now turn the conference over to Dana Coffield, President and Chief Executive Officer of Gran Tierra Energy. Mr. Coffield, please go ahead.
Dana Coffield
Thank you, and thank you for joining us for Gran Tierra Energy's Third Quarter 2012 Results Conference Call. With me today is Shane O'leary, our Chief Operating Officer; and James Rozon, our Chief Financial Officer.
This morning, we disseminated a press release that include a detailed financial information about the quarter. In addition, Gran Tierra Energy's report on Form 10-Q for the 9 months ending September 30, 2012 has been filed on EDGAR and SEDAR, and will be available on our website at www.grantierra.com.
I'm going to begin today by talking about some of the key developments for the quarter. James will then take a few minutes to discuss the key aspects of this quarter's financial results. Shane will discuss our third quarter operations, then I will return to provide an outlook and some closing remarks.
Overall, Gran Tierra Energy had a strong third quarter, reaching record levels of production and revenue, with associated strong funds flow from operations. We added significantly to our exploration land base in Colombia and Peru and have most recently had very encouraging results from the Moqueta-7 appraisal well.
Gran Tierra Energy's production at third quarter averaged 19,491 barrels of oil per day net after royalties and inventory adjustments. 96% of this was oil and natural gas liquids.
This production was comprised of 15,664 barrels oil equivalent per day in Colombia where it is 99% oil and natural gas liquids; 3,745 barrels of oil equivalent per day in Argentina; and 82 barrels of oil per day in Brazil.
This was a 6% increase compared to the third quarter of 2011, primarily due to the excellent reservoir performance from the Moqueta and Costayaco fields in Colombia and new oil wells in Argentina.
The increase in our production was partially offset by the impact of oil delivery restrictions by disruptions in Ecopetrol-operated OTA pipeline in Colombia. Fortunately, the number of disruptions has significantly decreased compared to the first half of 2012.
We continue to work with authorities and outside parties in Ecopetrol to look at multiple transportation and storage options to help mitigate the impact of pipeline disruptions. These include more continuous use of the Oleoducto San Miguel pipeline, which connects Ecopetrol's Orito gathering facilities to Ecuador; additional storage at Orito, in combination with higher capacity utilization of the OTA pipeline when it is operational; and higher volumes of trucking to other delivery points.
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