Gran Tierra Energy Management Discusses Q4 2012 Results - Earnings Call Transcript
February 26, 2013 8:10 PM ET
Gran Tierra Energy (GTE)
Q4 2012 Earnings Call
February 26, 2013 4:00 pm ET
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
John Malone - Global Hunter Securities, LLC, Research Division
George Toriola - UBS Investment Bank, Research Division
David Popowich - Macquarie Research
Hubert van der Heijden
Justin Anderson - Salman Partners Inc., Research Division
Christopher Beer - RBC Capital Markets, LLC, Research Division
Caio M. Carvalhal - JP Morgan Chase & Co, Research Division
Good afternoon, ladies and gentlemen, and welcome to Gran Tierra Energy's Results Conference Call for the quarter and year ended December 31, 2012. My name is Lisa, and I'll be your coordinator for today. [Operator Instructions] I would also like to remind everyone that this conference is being webcast and recorded today, Tuesday, February 26, 2013, 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 anticipating future financial performance, 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 annual report on Form 10-K for the year ended December 31, 2012, filed with the Securities and Exchange Commission, February 26, 2013.
If one or more of these risks or uncertainties materialize or if underlying assumptions 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 it's available on Gran 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 property of Gran Tierra Energy, Inc. Any copying or rebroadcasting of this call is expressly forbidden without written consent of the Gran Tierra Energy.
I will now turn the conference over to Dana Coffield, President and Chief Financial Officer of Gran Tierra Energy. Mr. Coffield, please proceed. Thank you.
All right. Thank you, Lisa. Good afternoon. Thank you for joining us for Gran Tierra Energy's Fourth Quarter and Fiscal Year End 2012 Results Conference Call. With me today is Shane O'leary, our Chief Operating Officer; and James Rozon, our Chief Financial Officer.
Earlier today, we disseminated a press release that included financial information about the quarter and full year 2012. In addition, Gran Tierra Energy's 2012 report on Form 10-K for the year ended December 31, 2012, has been filed on EDGAR and is available on our website at www.grantierra.com.
I'm going to begin today by talking about some of the key developments for the fourth quarter and year. James will then take a few minutes to discuss key aspects of the year's financial results. Shane will then provide an operational review and outlook, followed by my closing remarks.
Gran Tierra Energy achieved annual production in 2012 of 16,897 barrels of oil equivalent per day, net after royalty and after inventory changes, representing a 3% decrease from the average 2011 production. This decrease was due to unanticipated increase in disruptions on the Trans Andean or OTA pipeline in Colombia. Mitigation plans for disruptions were developed and implemented over the second half of last year. These are now fully operational and we are producing at near-record levels of approximately 21,000 barrels of oil equivalent per day net after royalty for the first 2 months of this year.
Reserve growth last year was outstanding, not only replacing production but substantially adding new reserves. Based on Gran Tierra Energy's 2012 year end SEC reserve calculations, total crude net after royalty reserves increased 19% to approximately 40.6 million barrels of oil equivalent. Total crude plus probable reserves net after royalty increased 15% to approximately 56.2 million barrels of oil equivalent and total crude plus probable plus possible reserves net after royalty increased 1% to approximately 86.3 million barrels of oil equivalent.
Now importantly, the weighting of oil versus gas increased in all 3 categories to 95% for 1P, 95% for 2P and 87% for 3P. All of this oil is light and medium-grade -- sorry, medium crude with no heavy oil in its reserves. Equally important, based on these reserves in Gran Tierra Energy's 2012 total working interest production, Gran Tierra Energy's 1P, 2P and 3P reserve life indices grew to 6.4 years, 8.9 years and 13.6 years, respectively.
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