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GRAN TIERRA ENERGY INC. (GTE)·Q4 2024 Earnings Summary

Executive Summary

  • Record quarterly production of 41,009 boepd alongside $147.3M oil, natural gas and NGL sales; operating netback per boe fell to $22.19 due to lower Brent and a heavier Canadian natural gas mix .
  • Adjusted EBITDA was $76.2M and funds flow from operations was $44.1M, both down sequentially vs Q3; management highlighted robust reserves and reiterated buybacks as a key return lever .
  • 2025 production guidance maintained at 47,000–53,000 boepd; plan calls for 6–8 exploration wells (South America), 5–7 development wells (Suroriente), 2–3 appraisal wells (Ecuador), and 6 development wells (Canada) .
  • Note: Press materials contain a discrepancy on Q4 GAAP net income (narrative: +$34.2M vs table: –$34.2M and –$1.04 EPS); we flag for caution and reliance on reconciled tables and call commentary for analysis .

What Went Well and What Went Wrong

What Went Well

  • Record quarterly production of 41,009 boepd and 2024 average WI production up 6% YoY to 34,710 boepd, supported by Ecuador exploration successes and two months of production from Canadian assets .
  • Highest year-end reserves in company history and sixth consecutive year of 1P growth; before-tax NAV/share $35.23 (1P) and $71.14 (2P) underscore asset depth (“current share price trades at significant discounts”) .
  • Strategic capital returns: since 1/1/2022, 6.8M shares repurchased (~19% of shares outstanding) and NCIB renewed with ASPP to buy in blackout windows; management reiterated buybacks as the primary tool amid market volatility .
  • CEO tone: “2025 is set to be a transformational year” with integrated Canada entry and 6–8 high-impact exploration wells; “repurchases remain a strategic and efficient way to return capital” .

What Went Wrong

  • Operating netback per boe declined to $22.19 in Q4 (vs $34.18 in Q3 and $36.05 in Q4’23) on lower Brent and increased Canadian gas weighting; average realized price fell to $39.73/boe in Q4 .
  • Operating expenses rose YoY to $202.3M (8% increase) and per-boe operating costs edged higher; drivers included diesel subsidy removal and higher gas/electricity costs in Colombia, partially offset by Ecuador cost leverage .
  • Suroriente blockades and Acordionero workover downtime impacted volumes intra-quarter; Q4 WI production surge masked pricing and netback headwinds .
  • Financial disclosure inconsistency: press release narrative cites Q4 net income of +$34.2M, while the detailed table shows –$34.2M and –$1.04 EPS; we anchor on the tabular data and call commentary pending clarification .

Financial Results

Consolidated P&L and Profitability (oldest → newest)

MetricQ4 2023Q3 2024Q4 2024
Oil, Natural Gas & NGL Sales ($USD Millions)$154.9 $151.4 $147.3
Net Income ($USD Millions)$7.7 $1.1 $(34.2)
Diluted EPS ($)$0.23 $0.04 $(1.04)
Adjusted EBITDA ($USD Millions)$93.0 $92.8 $76.2
Operating Netback ($USD Thousands)$103,360 $101,402 $82,241
Funds Flow from Operations ($USD Thousands)$84,663 $60,338 $44,129

Notes: The narrative section of the press release states “net income of $34.2M” for Q4 2024, which contradicts the detailed table above. We rely on tabular GAAP data while flagging the inconsistency for investor caution .

Per-barrel Economics and Pricing (oldest → newest)

MetricQ4 2023Q3 2024Q4 2024
Brent ($/bbl)$82.85 $78.71 $74.01
Avg Realized Price ($/boe)$54.04 $51.03 $39.73
Royalties ($/boe)$13.47 $13.58 $8.83
Transportation ($/boe)$1.38 $1.32 $1.15
Operating Expenses ($/boe)$16.61 $15.53 $16.39
Operating Netback ($/boe)$36.05 $34.18 $22.19
Cash Netback ($/boe)$29.53 $20.35 $11.90

Volume and Balance Sheet KPIs (oldest → newest)

MetricQ4 2023Q3 2024Q4 2024
WI Production (boepd)31,309 32,764 41,009
Sales (boepd)24,949 25,465 32,970
Royalties (% of WI)20% 21% 18%
Capital Expenditures ($USD Thousands)$35,826 $49,779 $70,413
Cash & Cash Equivalents ($USD Thousands)$62,146 —$103,379
Senior Notes ($USD Thousands)$536,619 —$786,619

Reserves Mix (Company-level)

Metric1P (Dec 31, 2024)2P (Dec 31, 2024)
Canada Share of Reserves (%)46% 51%
Total Company Reserves (MMBOE)167 293

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Production (boepd)FY 202547,000–53,000 (“previously forecast”) 47,000–53,000 Maintained
Development wells (Suroriente)FY 2025—5–7 gross wells New detail
Appraisal wells (Ecuador)FY 2025—2–3 wells New detail
Development wells (Canada)FY 2025—6 wells New detail
Exploration wells (South America)FY 2025—6–8 wells New detail
Debt targetsFY 2026–2027—Gross debt $600M (2026), $500M (2027); Net debt/EBITDA <1x New
NCIB/BuybacksNov 6, 2024–Nov 5, 2025Prior NCIB expired Nov 2, 2024 Up to 10% of float; ASPP enables blackout purchases Renewed
Credit facility (Colombia RBL)Apr 2025—New US$75M RBL, 36-month maturity New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Operating costs & subsidiesQ2: unit costs benefitted from lower workovers; Q3: per-bbl operating expense down YoY; drivers included inventory and power generation 2024 costs up 8% YoY; diesel subsidy removal and higher gas/electricity in Colombia; expect unit costs to trend down in 2025–2026 Cost pressure in 2024, easing expected 2025–2026
Oil price differentialsQ2 narrowed (Castilla/Vasconia); Q3 widened vs prior quarter Colombia discounts tightened: Vasconia ~$2, Castilla $5–6; diversification helpful Improving Colombian differentials
Ecuador explorationQ2: Arawana/Bocachico success; Q3: Charapa-B7 highest IP30, 1MM bbl cumulative in Ecuador Iguana SUR-B1 spud Feb 4, testing soon; continued program 6–8 wells in 2025 Sustained success, program scaling
Canada integration & natural gasQ3: i3 acquisition closed; multilateral Clearwater, Dunvegan wells; hedges on gas JV at Simonette; two Dunvegan horizontals drilling; gas expected choppy in 2025, bullish LT; LNG Canada impact Integration progressing; LT gas tailwind
Capital structure & debtQ3: plan to fund amortization with FCF/cash; NCIB renewed Targets: gross debt $600M (2026), $500M (2027); net debt/EBITDA <1x Deleveraging focus reiterated
Regulatory/politicalQ2/Q3: tax planning and surtax changes; guidance lower cash taxes in 2025 Ecuador election: expectation of business-friendly continuity (Noboa) Stable/regulatory clarity improving
Tariffs/macroQ3: TMX influenced differentials Expect minimal to net positive impact from tariffs due to mix and FX; Canadian sales domestic; Colombia heavy crude tightening Neutral to positive company impact

Management Commentary

  • CEO: “2025 is set to be a transformational year… We ended 2024 at record highs across all reserve categories and production… repurchases remain a strategic and efficient way to return capital to our shareholders” .
  • CFO: “We expect 2025 production of 47,000 to 53,000 boe/d… targeting $600M gross debt by end of 2026 and $500M by end of 2027, resulting in net debt to EBITDA of less than 1x” .
  • COO: “2024 saw the highest year-end reserves in our company's history… Canada now represents 46% of 1P and 51% of 2P reserves” .

Q&A Highlights

  • Costs outlook: Unit operating costs expected to trend down through 2025–2026 as Ecuador scales and power solutions improve; fixed-cost leverage to higher production .
  • Tariffs and differentials: Minimal to net positive expected impact given Colombian heavy crude tightening and domestic Canadian sales; FX could offset .
  • Capital structure: 2026 amortization to be funded with cash/FCF; focus on organic deleveraging and longevity investments .
  • Canada integration: Team and technology transfer across geographies; JV accelerating Simonette development .
  • Ecuador politics: Expect continuity and business-friendly environment post election .

Estimates Context

  • Wall Street consensus estimates from S&P Global for Q4 2024 were not available due to an SPGI request limit error at time of retrieval; consequently, comparisons vs consensus cannot be provided here [GetEstimates error].
  • Given the unavailability, investors should anchor on reported GAAP and non-GAAP results (Adjusted EBITDA, funds flow) and management’s 2025 operational guidance when assessing estimate revision risk .

Key Takeaways for Investors

  • Production inflection: Record Q4 volumes and maintained 2025 guidance (47–53k boepd) point to operational momentum across Ecuador, Colombia, and Canada .
  • Pricing/mix headwind: Operating netback/boe compressed on lower Brent and Canadian gas weighting; watch mix normalization and gas price trajectory (LNG Canada ramp) into 2025–2026 .
  • Balance sheet strategy: Clear deleveraging targets ($600M gross debt 2026; $500M 2027; net debt/EBITDA <1x) and new US$75M Colombia RBL enhance flexibility .
  • Capital returns: NCIB renewed with ASPP; cumulative buybacks significant vs float; management reiterated buybacks as the primary tool amidst market volatility .
  • Reserves/NAV support: Highest-ever reserves and material NAV/share discounts support medium-term value realization via development and returns .
  • Disclosure caution: Q4 GAAP net income inconsistency between narrative and tables; rely on detailed tabular data and future filings for definitive resolution .
  • Near-term catalysts: Ecuador well tests (Iguana SUR-B1), Suroriente drilling, Canada Dunvegan/Clearwater onstream and JV acceleration provide multiple event paths for sentiment re-rating .