GRAN TIERRA ENERGY INC. (GTE)·Q1 2025 Earnings Summary

Executive Summary

• Record production of 46,647 boepd (+14% q/q, +45% y/y), with stronger volumes from full-quarter Canada contribution and Ecuador exploration results; Q1 2025 oil, gas and NGL sales were $170.5M, net loss was $(19.3)M, and Adjusted EBITDA was $85.2M .
• Operating netback rose to $22.70/boe from $22.19/boe in Q4 (helped by tighter South American differentials), while cash netback improved to $13.04/boe from $11.90/boe .
• Management reaffirmed FY2025 guidance (production 47–53k boepd; EBITDA $380–$420M base case; capex $240–$280M; free cash flow $20M base case) and highlighted added liquidity with a new $75M Colombia RBL facility (36-month maturity) .
• EPS missed sparse Street consensus: Q1 2025 EPS was -$0.54 vs -$0.23 consensus (-$0.31 miss); revenue consensus was unavailable (Values retrieved from S&P Global). Operational execution, debt paydown ($27M), and exploration success were positive stock catalysts, while lower realized prices and Canadian gas exposure weighed on earnings .

What Went Well and What Went Wrong

What Went Well

• Record quarterly production of 46,647 boepd driven by full-quarter Canada and successful Ecuador wells; adjusted EBITDA increased to $85.2M q/q and operating netback held at $22.70/boe despite softer pricing .
• South American differentials tightened materially (Castilla $5.34/bbl vs $8.33 in Q4; Vasconia $2.27 vs $5.02; Oriente $7.65 vs $9.40), supporting realized prices; operating expenses per boe fell 3% vs Q4/Q1’24 .
• Exploration and operations execution: Ecuador Iguana B1/B2 discoveries (avg 1,684 bopd over 30 days) and faster drilling in Colombia (Cohembi wells 60% faster, under budget); management emphasized “front-loaded 2025 capital program… record drilling times and cost efficiencies” .
  • Quote: “Our front-loaded 2025 capital program… delivered record drilling times and cost efficiencies across our key assets.” — CEO Gary Guidry .

What Went Wrong

• GAAP EPS and net income negative: net loss $(19.3)M (EPS $(0.54)), reflecting lower realized prices and mix shift with Canadian gas; funds flow from operations down y/y to $55.3M .
• Operating expenses and transportation costs increased in absolute terms due to Canada/Ecuador volume growth ($67.4M opex, +39% y/y; $6.9M transportation, +51% y/y), although unit costs improved modestly .
• Sparse estimate coverage and lower Brent vs prior periods limited apparent “beat” optics; cash netback/boe down sharply y/y (to $13.04 from $25.13), highlighting pricing headwinds and gas weighting .

Financial Results

Sequential trend (prior two quarters) and current quarter:

Year-over-year comparison:

Segment breakdown (Q1 2025):

Key KPIs and pricing/differentials:

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• Strategy and execution: “Our front-loaded 2025 capital program… delivered record drilling times and cost efficiencies across our key assets… lowering leverage remains a key priority… With current production of approximately 48,400 boe/d and a strong hedge position… well positioned to generate value” — CEO Gary Guidry .
• Financial discipline: “Adjusted EBITDA of $85M… funds flow from operations $55M… repaid $25M of 2025 notes and repurchased $2M of 2029 notes” — CFO Ryan Ellson .
• Operations: “Iguana B1/B2 wells… avg 1,684 bopd over 30 days; Cohembi wells under budget and 60% faster; Acordionero current ~14,500 bopd” — COO Sebastien Morin .

Q&A Highlights

• Working capital and capex timing: Heavy Q1 capital program drove working capital build; unwind expected in Q2; comfortable with base-case gas price outlook given hedge program .
• Capital allocation vs solvency optics: Majority of cash flow directed to debt reduction in Q1; modest buybacks continue, dynamic allocation amid volatility .
• Buybacks rationale: Not for compensation offset; viewed as attractive vs NAV (1P ~$20/sh; 2P ~$40/sh) — management sees repurchases as value-accretive .
• Ecuador development timetable: Target plateau within 2–3 years; flexibility via environmental/development licenses to accelerate ramp .
• Hedge targets: 30–50% 6 months out, 20–30% remainder; increasing hedge position to meet targets .

Estimates Context

• Coverage was limited (EPS had 1 estimate; revenue consensus unavailable)*. Given tighter SA differentials and higher volumes, topline rose despite soft Brent; EPS missed consensus largely on pricing mix and increased Canadian gas weighting.
• Values retrieved from S&P Global*.

Key Takeaways for Investors

• Production trajectory is accelerating: Q1 boepd at record levels, with continued operational gains expected at Acordionero and drilling progress in Cohembi and Ecuador .
• Margin resilience aided by differential tightening, but gas mix tempers realized prices; operating netback held q/q despite pricing headwinds .
• Balance sheet improving: $27M debt reduction and added $75M RBL facility bolster liquidity; net debt at $683M; continued deleveraging targeted .
• Capital program front-loaded: Expect working capital normalization in Q2; monitor capex pacing and hedge coverage for cash flow stability .
• Ecuador discoveries deepen inventory and near-term development optionality; Conejo pad program in Q3’25 is a key catalyst .
• Shareholder returns continue via buybacks, but debt paydown remains priority; allocation remains dynamic with commodity conditions .
• Near-term trading: Positive operational prints and guidance maintenance vs soft GAAP earnings and sparse consensus coverage suggest event-driven moves tied to exploration updates, differential trends, and leverage trajectory .