Gran Tierra Energy sees production growth despite temporary setbacks; anticipates strong cash flow and financial flexibility moving into 2026.

Shannon - Moderator - (00:00:34)

Good morning ladies and gentlemen and welcome to Gran Tierra Energy's conference call for third quarter 2025 results. My name is Shannon and I will be your coordinator for today. At this time all participants are in a listen only mode. Following the initial remarks, we will conduct a question and answer session for securities analysts and institutions. Instructions will be provided at that time for you to queue up for your questions. I would like to remind everyone that this conference call is being webcast and recorded today, Friday, October 31, 2025 at 11:00am Eastern Time. Today's discussion may include certain forward looking information, oil and gas information and non GAAP financial measures. Please refer to the earnings and Operational update press release we issued yesterday for important advisories and disclaimers with regard to this information and forward reconciliations of any non GAAP measures discussed on today's call. Finally, this earnings call is the property of Gran Tierra Energy Inc. Any copying or rebroadcasting of this call is expressly forbidden without the written consent of Gran Tierra Energy. I will now turn the conference call over to Gary Guidry, President and Chief Executive officer of Grant. Mr. Guidry, please go ahead.

Gary Guidry - President and Chief Executive Officer - (00:01:44)

Thank you Janet. Good morning and welcome to Gran Tierra's third quarter 2025 results conference call. My name is Gary Guidry, Gran Tierra's President and Chief Executive Officer and with me today are Ryan Ellison, our Executive Vice President and Chief Financial Officer and Sebastian Moran, our Chief Operating officer. On Thursday, October 30, 2025 we issued a press release that included detailed information about our third quarter 2025 results which is available on our website. Ryan and Sebastian will make a few brief comments and then we will open the line for questions. I'll now turn the call over to Ryan to discuss our financial results.

Ryan Ellison - Executive Vice President and Chief Financial Officer - (00:02:28)

Thanks, Gary. Good morning everyone. First I would like to highlight an announcement made last week relating to the prepayment agreement we closed which represents a new prepayment facility backed by our Ecuadorian crude production. The initial advance will be 150 million with the potential for another 50 million once our Pentagon Ecuador acquisition closes and we reach 10,000 boe per day in Ecuador. It's a four year structure, prices SOFR plus 3.8% and includes a three month grace period on principal before amortizing evenly over the remaining term. Importantly, the commercial terms or sales price are an improvement to our previous crude oil sales contract. Overall, this agreement strengthens our balance sheet and gives us added financial flexibility at a very competitive cost. In addition, we increased our current facilities secured by our Canadian assets to 75 million and equally important, move from a 1.1 structure to a 2 year structure with maturity in October 2027. Now onto the quarter. During the third quarter of 2025, Gran Tierra averaged 42,685 boe per day. That's up roughly 30% from a year ago. Driven by our Canadian acquisition and continued success from our exploration in Ecuador. Production during the quarter was temporarily impacted by unusual and externally driven events across our operations, including the landslide and Ecuador, which impacted the main export pipelines in the country requiring us to shut in production, and trunk line repairs at the McKenna Field Group which resulted in the field being shut in for the quarter. The pipeline repairs took longer than anticipated due to ongoing heavy rains through July and August. All pipelines are restored as of October 10th. We want to emphasize that these volumes represent deferred barrels rather than lost production and we already are seeing a strong recovery with current production averaging 45,000 to 200 barrels of oil equivalent per day. Based on deferrals, we are forecasting the lower end of our production guidance range. The underlying assets continue to perform well and our teams remain focused on ongoing optimization and maximizing production efficiency and cash flow. With an expected exit rate of 47,000 to 50,000 boe per day from a cash perspective, it was a solid quarter where we generated 48 million of operating cash flow of up 39% from Q2. We ended the quarter with 49 million in cash and net debt position of approximately 755 million. In terms of pricing, we saw improving differentials across South America, especially in Ecuador, which helped offset some of the impact from temporary facility downtime and pipeline outages. On the capital side, we invested 57 million that focused mainly on high return projects in Colombia, Ecuador and Canada. So overall, despite some temporary production headwinds this quarter we're expecting a strong finish to the year which sets up for a strong 2026. With production already back above 45,200 barrels a day and the added liquidity from our new prepayment agreement and increase and extension of our Canadian credit facility, we're in a great position to finish 2025. The 2025 capital program was primarily focused on fulfilling exploration commitments which resulted in numerous material discoveries. We also invested in facility expansion Syriente including gas to power, which provides us with sufficient process capacity to increase production in the field and lower costs. With substantially all commitments behind us, the focus turns to free cash flow and deleveraging from our large diversified resource base. We release our 2026 budget in mid December which will include a decrease in capital expenditures and emphasis on free cash flow generation. I'll now turn the call over to Sebastian to discuss some of the highlights of our current operations.

Sebastian Moran - Chief Operating Officer - (00:06:20)

Good morning everyone and thank you Ryan the third quarter highlighted continued operational strength across our entire portfolio with solid execution in Ecuador, Colombia and Canada despite some temporary external challenges. In Ecuador we had another strong quarter achieving record production greater than 5,000 barrels of oil per day in August and and greater than 6,000 barrels of oil per day in early October with the delivery of the Conejo A1 exploration well which was drilled on budget and successfully tested both the Hoi in and basal tennis sands flowing over 1300 barrels a day of 26.9 degree ATI oil under normal natural flow conditions. We plan to re enter Conejo A1 later this quarter and install the final completion and selectively test each zone to up optimize long term production. We also recently cased and cemented the Conejo A2 well targeting multiple prospective reservoirs including the Basal Tena and Hoiin. The well discovered 41ft of net reservoir with an average porosity of 14% in the Hoyin formation, suggesting a well connected reservoir with high deliverability potential over the full Conejo structural trap. In addition, we also confirmed a new oil discovery at Cenangue 1 which was a legacy well drilled in 1990 and suspended in 1992 that we re entered to test a bypass Basal Tena interval. It's currently producing 600 barrels a day on jet pump and has opened up a new follow up drilling opportunity on the eastern side of the block with the delivery of the Conejo A2 well. Gran Tierra has completed all of the exploration commitments in Ecuador and we are now well positioned to continue continue to increase production into the development phase and help sustain stable field output. At Cohombe, the waterflood continues to deliver excellent results. The production from the northern area has more than doubled up roughly 135% from 2,800 barrels to 6,700 barrels a day. Total field production recently reached over 9,000 barrels a day, the highest since 2014. We are now executing the final six well drilling program to continue to ramp the field production and extend the Cohenbe field boundary including an exploration well to the north as part of the agreed carry program under our contract extension which we expect to complete by the end of the first half of 2026. In Canada we drilled and brought two additional Lower Montney wells on stream in September, both performing at or above expectations. That brings our 2025 activity at Simonet to four gross or two net. Well, stepping back, what really stands out this quarter is the progress we've made in advancing our technical capabilities and field execution. From the exploration success we had in Ecuador to optimizing mature waterfloods in Colombia and efficiently scaling our Canadian program, our focus remains on disciplined execution and continuous improvement to ensure our assets deliver strong value over time. As Ryan summarized, we had several unplanned production deferrals. Although our average production for the year will be at the lower end of our annual guidance, we'll finish the year strong with an expected exit rate between 47 50,000 barrels of oil produce. I will now turn the call back to the operator and Gary Ryan and I will be happy to take questions. Operator, please go ahead.

OPERATOR - (00:09:54)

Thank you. Ladies and gentlemen, we will now conduct a question and answer session for security analysts. If you have a question, please press the star key followed by one one on your touchtone phone. You will then hear an automated message advising your hand is raised. Your questions will be polled in the order they are received. Please ensure you lift the handset if you're using a speakerphone before pressing any keys. One moment, please, for your first question. Our first question comes from the line of David Round with Sifel. Your line is now open.

David Round - Equity Analyst - (00:10:29)

Thanks. Thanks for the presentation, guys. First one just on Syriente, please. You seem to have seen and experienced a very sudden production response there. I mean, positively so great to see. Can you just talk about, though, please, just sort of what exactly has happened as that program has been going on over the course of this year? What of the new production is due to new wells? What is water flood and how sustainable is it, please?

Sebastian Moran - Chief Operating Officer - (00:10:58)

Yes, I'll take that one. So in a phasing approach, really it was the start of injection on the north pattern, where we're injecting essentially 5,000 barrels of water per day in that north pattern. On Cohombe 25, the other catalyst was, well, upside. So we had a few really key workovers. The one well just south of the pattern, Cohombe 20, was upside, and that went from 500 barrels a day gross to over 2,000. So that one's included in the north pattern. So now as pressure comes up and we continue to increase our injection, we're seeing some really amazing performance from that sand. Just to recall, those are essentially Darcy sands. So the response is very quick.

David Round - Equity Analyst - (00:11:40)

Okay, and then if I think about the production number you've put out there at the moment, I mean, how do we think about that sort of just conceptually going into next year with continual drilling. I mean is that sort of a base? And we should be looking at high end in that.

Sebastian Moran - Chief Operating Officer - (00:11:55)

I think that's extremely fair. What you just described, that's exactly where we're going. So with the extra six wells that we're putting into the field, we expect to continue to increment that production from. their production in reserves.

David Round - Equity Analyst - (00:12:09)

Okay, great. And then just the second one please, just on the prepayment facility. How does that work in terms of availability once the repayments start?

Ryan Ellison - Executive Vice President and Chief Financial Officer - (00:12:22)

Yeah, so effectively you draw the cash at the beginning, the entire amount, the 150 and then just repay those funds over the course of the four years.

David Round - Equity Analyst - (00:12:35)

Okay, over the course of four years. And is it fairly linear in terms.

Ryan Ellison - Executive Vice President and Chief Financial Officer - (00:12:39)

Of how it is? Effectively every time we do a lift in Ecuador we'll pay back a portion of the money borrowed. Perfect.

David Round - Equity Analyst - (00:12:50)

Understood. Thanks guys.

Ryan Ellison - Executive Vice President and Chief Financial Officer - (00:12:52)

Thanks.

OPERATOR - (00:12:54)

Thank you. Our next question comes from the line of Joseph Schacter with the ser. Your line is to open.

Joseph Schacter - Equity Analyst - (00:13:02)

Good morning guys. A couple questions for me. Congratulations on getting Ecuador up to 6,000 in October. You have on slide 26 of your presentation that the potential could be between 11 and 19,000. Does that include the last two wells which have been very encouraging. So guidance potentially would be to the higher end. And the question is what timeline were you using to get to that? And do you need to put water flood in? Do you have enough water? Maybe just give me a guidance of how Ecuador grows. Yeah.

Sebastian Moran - Chief Operating Officer - (00:13:43)

Good morning Joseph. The answer to your question is the guidance on that slide does not include the Conejo discovery to the northwest. And the the guidance is based on water flood of the Basal Tena. We're in a very good position here that we have a water source in the stacked pays that we have in the Hoyin and the T sand and so everything is in place to do that. We're working through the field development plans with the ministry in Ecuador. And now that we fulfilled all of our commitments this year on exploration in Ecuador, we're moving to the development phase and so that will start occurring next year during 2026.

Joseph Schacter - Equity Analyst - (00:14:31)

Okay. The debt issue seems to be the overhang. The market's reaction today, you know, down to a new 52 low, disappointingly, you know, just for the levers maybe.

UNKNOWN - (00:14:45)

Ryan?

Joseph Schacter - Equity Analyst - (00:14:48)

Do we need 75, $80. brent, do we need Ecuador over $10,000? 11,000 boe per day, do we need some non core sales of your non operated assets in Canada? Where do you see getting that debt, you know, is a debt to one Target something that will happen before the end of the decade. And how do you see the levers to get there?

Ryan Ellison - Executive Vice President and Chief Financial Officer - (00:15:11)

Yeah, no, that's a great question. And I think one of the things we wanted to emphasize in the press release and our opening remarks is now with the exploration commitments and a lot of the Syriente and pay commitments behind us, it really sets us up the stage for generating free cash flow. We're laser focused on generating free cash flow in 2026 and beyond. I think if you look at this year's capital program, there's about $150 million in there between exploration and facility expansion and gas to power, etc. So I think with that behind us, when we come up with our budget in mid December, you'll see the focus on free cash flow. We'll continue to look at how to optimize the portfolio as far as asset sales and whatnot, but that will just be incremental deleveraging. Our base plan is deleveraging as much as possible, through our base operations.

Joseph Schacter - Equity Analyst - (00:16:07)

Okay. In some of the cases, like the drillers, Precision and Ensign,, they kind of gave targets to the market and to investors. We're going to knock off 100, 150 million and then they brag when they get there. Are you guys going to be willing to start throwing numbers like that so that people can see guideposts? And yeah, you're heading in the right direction,. Therefore, your valuation, which is, you know, trading at less than 1 times cash flow in Canadian dollars and much below. Your. 1P reserves that you show in your presentation, the new one at 19.51 USD is that the kind of thing where we can show the debt holders are now giving the equity value to the shareholders by doing something like that?

Ryan Ellison - Executive Vice President and Chief Financial Officer - (00:16:55)

Absolutely. When we come out with our budget in December, there will be a clear roadmap.

Joseph Schacter - Equity Analyst - (00:17:02)

Okay, super looking forward to seeing that. Thanks very much for taking my questions.

OPERATOR - (00:17:07)

Thank you, gentlemen. There are no further questions at this time. Please continue.

Gary Guidry - President and Chief Executive Officer - (00:17:14)

Thank you, Shannon. I'd once again like to thank everyone for joining us today. We look forward to speaking with you next quarter and update you on our ongoing progress.

OPERATOR - (00:17:24)

Thank you. This concludes today's conference. Thank you for your participation. You may now disconnect.