Gran Tierra has announced financial and operating results for the third quarter ended September 30, 2008.
Total revenue for the third quarter of 2008 was $40.3 million compared to $8.0 million for the same quarter of 2007, and $33.1 million for the second quarter of 2008. Net income for the quarter was $23.0 million, or $0.20 per share basic ($0.18 per share diluted), compared to net income of $1.1 million or $0.01 per share basic and diluted for the corresponding quarter of 2007, and net income of $8.5 million or $0.08 per share basic ($0.07 per share diluted) for the second quarter of 2008.
Revenue for the nine month period ended September 30, 2008 was $94.3 million compared to $16.3 million for same period of 2007. Net income for the period was $36.2 million, or $0.34 per share basic ($0.30 per share diluted), compared to a net loss of $10.6 million or $0.11 per share basic and diluted for the same period of 2007.
Cash and cash equivalents were $57.8 million at September 30, 2008 compared to $18.2 million at December 31, 2007, and $35.3 million at the end of the second quarter of 2008. Total working capital was $43.5 million at September 30, 2008 compared to $8.1 million at December 31, 2007.
Shareholders' equity was $136.4 million at September 30, 2008 compared to $76.8 million at December 31, 2007. The company has no long-term debt.
Average oil production for the third quarter of 2008 was 4,194 barrels per day (BOPD), net after royalty, compared to 1,491 BOPD for the same quarter of 2007, and 3,399 BOPD for the second quarter of 2008.
Third quarter oil production in Colombia grew to 3,613 BOPD, net after royalty, from 2,842 BOPD for the second quarter of 2008, and third quarter oil production in Argentina grew to 581 BOPD, net after royalty, from 557 BOPD for the second quarter of 2008. Current production is averaging approximately 5,700 BOPD, net after royalty, as a result of continued production growth in both Colombia and Argentina.
Average oil production for the nine month period ended September 30, 2008 was 3,482 BOPD, net after royalty, compared to 1,187 BOPD, net after royalty, for the comparable period of 2007.
Average realized oil sales prices, net after royalty, were $103.88 per barrel for the third quarter of 2008 and $98.40 per barrel for the nine months ended September 30, 2008.
The company attained several operational milestones in the third quarter of 2008 that it believes should lead to continued growth for the balance of 2008 and beyond. In Colombia, development activities at the Costayaco Field continued. The company drilled and tested Costayaco-4 and -5 and initiated drilling Costayaco-6. Truck loading and unloading facilities for crude transportation were constructed, and pipeline construction for a line to connect the Costayaco Field to the existing pipeline system was initiated. This line has since been completed and is operational. Upon removal of downstream constraints, this line will have 50,000 BOPD capacity.
Planning continues for a new 100 km pipeline expansion downstream to handle a minimum of 35,000 BOPD from Costayaco in early 2010. A mid-year independent reserve engineering report for the Costayaco field was completed. It reported that effective July 1, 2008, the Costayaco field had gross proved reserves of 20.5 million barrels of oil, gross proved plus probable reserves of 34.9 million barrels of oil and gross proved plus probable plus possible reserves of 61.4 million barrels of oil.
In addition, the company drilled an exploration well in the Rio Magdalena Block, Popa-2, which resulted in a gas-condensate discovery. Testing resulted in 8.5 million cubic feet of gas and 236 barrels of oil and condensate per day. Planning continues for a long-term test program in 2009.
In Argentina, the company completed drilling the Proa.x-1 exploration well in the Surubi Block. This resulted in an oil discovery that tested 2,324 BOPD. The well is currently producing approximately 500 BOPD on long-term test. In Peru, results of a new 20,000 linear kilometer aeromagnetic and gravity data program over Blocks 122 and 128 are being evaluated. A 500 km 2- D seismic acquisition program has been designed and an environmental impact assessment has been initiated in preparation for data acquisition in late 2009.
A business combination between Gran Tierra Energy and Solana Resources Limited announced during the quarter is scheduled to close November 14, 2008, subject to shareholder approval. This combination will provide Gran Tierra Energy with a 100% working interest in the Costayaco field, one of the largest oil field discoveries in Colombia in recent years.
Commenting on the results of the quarter, Dana Coffield, President and Chief Executive Officer of Gran Tierra, stated, "The outstanding third quarter 2008 results represent the fifth consecutive quarterly increase in revenues and profitability. This continuous quarter over quarter growth is the direct result of our focus on developing the full breadth of our exploration and development portfolio as efficiently as possible, with the success of the Costayaco field remaining the focus of our capital program. The balance of 2008 and preliminary 2009 work program and budget is fully funded from existing cash and cash flow from operations at current oil prices. With the pending business combination with Solana Resources, Gran Tierra Energy will be financially and operationally positioned to continue its growth as a premier international oil and gas company."
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