CALGARY, Dec. 13, 2012 /CNW/ - Gran Tierra Energy Inc. ("Gran Tierra Energy") (NYSE MKT: GTE) , (TSX: GTE), a company focused on oil exploration and production in South America, today announced a 2013 capital spending program of $363 million for its exploration and production development operations in Colombia, Brazil, Peru and Argentina. The capital spending program allocates $202 million for drilling, $65 million for facilities, equipment and pipelines, $93 million for seismic activities and $3 million associated with corporate activities. The budget currently contemplates the drilling of 10 wells in Colombia, 6 wells in Argentina, 2 wells in Brazil and 1 well in Peru. Approximately 50% of the drilling budget is for development and appraisal drilling, and approximately 50% is for exploration drilling. The approved 2013 capital spending program also includes funds for 1,148km of 2D and 308km2 of 3D seismic acquisition programs in Colombia, Peru, Argentina and Brazil, primarily in preparation for additional exploration and production drilling operations in 2013 and beyond.
Excluding potential exploration success, Gran Tierra Energy is expecting 2013 production to average 27,000 barrels of oil equivalent per day ("BOEPD") gross working interest with no pipeline disruptions. Production is expected to average approximately 20,000 BOEPD net after royalty (NAR) before inventory adjustments assuming a 10% contingency for potential disruptions and $90 average price for Brent. Approximately 96% of this production consists of light oil, with the balance consisting of natural gas.
Gran Tierra Energy had $128 million in cash and equivalents and no debt at the end of the third quarter 2012. Based on current oil prices, the 2013 work program and budget is expected to be funded primarily from cash flows from operations, cash on hand and potential periodic draws on our credit facility.
"Gran Tierra Energy will continue executing its current strategy through 2013, a strategy that has consistently grown land, reserves and production year over year for the last seven years. For the first time, we will have active drilling and development activities in all four countries of operations. Our focus on execution sees us entering 2013 with a robust drilling portfolio with a balanced mix of development drilling to maintain our base of reserves and production, and appraisal and exploration drilling to grow that base," said Dana Coffield, President and Chief Executive Officer of Gran Tierra Energy. "This singular focus on execution has allowed us to not only grow year over year, but allowed us to do so with an exceptionally strong balance sheet," concluded Coffield.
The Colombia capital budget for 2013 is $224 million and is expected to include drilling 4 gross exploration wells and 6 gross appraisal and development wells. Gran Tierra Energy's oil exploration drilling program will target prospects in the Putumayo Basin, while development drilling will focus on the Moqueta and Costayaco oil fields, with total drilling expenditures of $119 million.
Facilities work, including continued electrification of the Costayaco and
Moqueta fields, water injection facility work at Costayaco and Moqueta, and a production battery at the Jilguero oil discovery in the Llanos Basin, is expected to be $39 million. Geological and geophysical ("G&G") work consisting of 308km2of 3D seismic and 756km of 2D seismic, along with other costs, is expected to be $66 million. G&G work is planned for the Cauca-6, Cauca-7, Garibay, Piedmonte Norte, Piedmonte Sur, Putumayo 1, Putumayo-10 and Magdelena Blocks to mature leads and prospects for drilling in 2013 and beyond.
SOURCE Gran Tierra Energy Inc.
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