Gran Tierra Energy Inc. Quarterly Report on Form 10-Q Quarterly Period Ended March 31, 2025
Gran Tierra Energy Inc. reported its quarterly financial results for the period ended March 31, 2025. The company’s revenue increased by 15% to $123.6 million compared to the same period last year, driven by higher oil prices and increased production. Net income was $21.1 million, or $0.60 per diluted share, compared to a net loss of $12.3 million, or $0.35 per diluted share, in the same period last year. The company’s cash and cash equivalents increased to $143.8 million, and its long-term debt decreased to $245.6 million. Gran Tierra Energy Inc. also reported a significant increase in its proved reserves, with a 34% increase in oil reserves and a 21% increase in natural gas reserves. The company’s management believes that its strong financial position and increased reserves will enable it to continue to invest in its operations and pursue growth opportunities.
Financial and Operational Highlights
Key Highlights for the first quarter of 2025
- Net loss for the first quarter of 2025 was $19.3 million or $(0.54) per share basic and diluted, compared to a net loss of $0.1 million or nil per share basic and diluted for the first quarter of 2024 and a net loss of $34.2 million for the prior quarter.
- Loss before income taxes for the first quarter of 2025 was $15.7 million, compared to income before income taxes of $17.3 million for the first quarter of 2024 and loss before income taxes of $21.9 million for the prior quarter.
- Brent oil price averaged $74.98 per bbl during the quarter, a decrease of 8% from the comparable period in 2024, and a 1% increase from the prior quarter. Castilla, Vasconia and Oriente differentials averaged $5.34, $2.27 and $7.65 per bbl during the quarter, a decrease of 39%, 55% and 5% from the comparable period of 2024, and an increase of 36%, 55% and 19% from the prior quarter, respectively.
- Adjusted EBITDA (2) was $85.2 million for the first quarter of 2025, a decrease from $94.8 million in the first quarter of 2024, and an increase from $76.2 million in the prior quarter.
- Funds flow from operations (2) decreased to $55.3 million compared to $74.3 million in the first quarter of 2024, and increased from $44.1 million in the prior quarter.
- In the first quarter of 2025, we re-purchased 0.5 million shares of Common Stock at a weighted average price of $5.33 per share through the 2024 share re-purchase program. During the period from November 6, 2024 to April 29, 2025, we re-purchased a total of 1.1 million shares or 3% of the outstanding shares as of March 31, 2025.
- NAR production for the first quarter of 2025 increased by 49% to 38,563 BOEPD, compared to 25,845 BOEPD in the first quarter of 2024, and increased by 14% from 33,682 BOEPD in the prior quarter.
- Sales volumes for the first quarter of 2025 increased by 50% to 39,024 BOEPD, compared to 26,080 BOEPD in the first quarter of 2024 and increased by 18% from 32,970 BOEPD in the prior quarter.
- Oil, natural gas and NGL sales for the first quarter of 2025 increased by 8% to $170.5 million, compared to the first quarter of 2024, primarily due to increased sales volumes partially offset by lower oil prices. Oil, natural gas and NGL sales increased by 16% from $147.3 million in the prior quarter due to higher oil and gas prices, lower differentials, and increased sales volumes.
- Operating expenses increased by 39% to $67.4 million when compared to the first quarter of 2024, primarily as a result of new Canadian operations and ramp-up of operations in Ecuador. Operating expenses increased by 11% from $60.8 million in the prior quarter as a result of three months of new Canadian operations opposed to two in the prior quarter.
- Transportation expenses increased by 51% when compared to the first quarter of 2024 primarily due to 50% higher sales volumes from new Canadian operations and higher sales volumes transported in Ecuador during the period. Transportation expenses increased by 62% compared to the prior quarter for the same reason mentioned above.
- Operating netback (2) was $96.3 million compared to $104.5 million in the first quarter of 2024 and $82.2 million in the prior quarter primarily as a result of the addition of the Canadian assets and approximately 50% of Canadian production tied to AECO gas pricing.
- Quality and transportation discounts for the first quarter of 2025 increased to $26.43 per boe compared to $15.36 per boe in the first quarter of 2024 and $25.45 per boe in the prior quarter primarily as a result of the change in production mix with the acquisition of Canadian assets.
- General and administrative (“G&A”) expenses before stock-based compensation for the first quarter of 2025 increased to $12.1 million compared to $10.8 million in the first quarter of 2024 and $10.2 million in the prior quarter due to the addition of a new Canadian operation employees and three full months of operations in the current quarter compared to two in the prior quarter.
- Capital expenditures for the first quarter of 2025 were $94.7 million compared to $55.3 million in the first quarter of 2024 and $78.6 million in the prior quarter due to the addition of the Canadian development program and an active Ecuador exploration program in the first quarter of 2025.
| (Thousands of U.S. Dollars unless otherwise indicated) | Three Months Ended March 31 | Three Months Ended December 31 |
|---|---|---|
| Average Daily Volumes (BOEPD) | 2025 | 2024 |
| Consolidated | ||
| Working Interest (“WI”) Production Before Royalties | 46,647 | 32,242 |
| Royalties | (8,084) | (6,397) |
| Production NAR | 38,563 | 25,845 |
| Increase in Inventory | 461 | 235 |
| Sales (1) | 39,024 | 26,080 |
| Net Loss | $(19,280) | $(78) |
| Operating Netback | ||
| Oil, natural gas and NGL Sales | $170,533 | $157,577 |
| Operating Expenses | (67,354) | (48,466) |
| Transportation Expenses | (6,911) | (4,584) |
| Operating Netback (2) | $96,268 | $104,527 |
| G&A Expenses before Stock-Based Compensation | $12,143 | $10,782 |
| G&A Stock-Based Compensation (Recovery) Expense | $(517) | $3,361 |
| G&A Expenses, including Stock-Based Compensation | $11,626 | $14,143 |
| Adjusted EBITDA (2) | $85,162 | $94,792 |
| Funds Flow from Operations (2) | $55,344 | $74,307 |
| Capital Expenditures | $94,727 | $55,331 |
(1) Sales volumes represent production NAR adjusted for inventory changes. (2) Non-GAAP measures.
Overview of the Company’s Financial Performance
Gran Tierra Energy’s financial performance in the first quarter of 2025 was mixed compared to the prior year and prior quarter. The company reported a net loss of $19.3 million, compared to a small net loss of $0.1 million in the first quarter of 2024 and a larger net loss of $34.2 million in the prior quarter. The loss before income taxes was $15.7 million, compared to income before taxes of $17.3 million in the first quarter of 2024 and a loss of $21.9 million in the prior quarter.
The key drivers of the financial results were:
- Lower Brent oil prices, down 8% from the prior year, though up 1% from the prior quarter.
- Increased sales volumes, up 50% from the first quarter of 2024 and 18% from the prior quarter, due to the addition of Canadian operations and higher production in Ecuador.
- Higher operating expenses, up 39% from the prior year and 11% from the prior quarter, due to the new Canadian operations and increased activity in Ecuador.
- Higher transportation expenses, up 51% from the prior year and 62% from the prior quarter, also due to the Canadian operations and higher volumes in Ecuador.
- Decreased operating netback, down 8% from the prior year but up 17% from the prior quarter, primarily due to the impact of the Canadian assets and AECO gas pricing.
- Increased G&A expenses before stock-based compensation, up 13% from the prior year and 19% from the prior quarter, due to the addition of Canadian staff and a full quarter of operations.
Revenue and Profit Trends
Oil, natural gas and NGL sales increased 8% from the first quarter of 2024, primarily due to the 50% increase in sales volumes, partially offset by the 8% decrease in Brent oil prices. Compared to the prior quarter, oil, natural gas and NGL sales increased 16%, driven by higher oil and gas prices, lower differentials, and increased sales volumes.
The net loss of $19.3 million in the first quarter of 2025 was a significant deterioration from the small net loss of $0.1 million in the first quarter of 2024, but an improvement from the $34.2 million net loss in the prior quarter. The key factors contributing to the net loss were the lower oil prices, higher operating and transportation expenses, and increased G&A costs, partially offset by the higher sales volumes.
Adjusted EBITDA, a non-GAAP measure, decreased 10% from the first quarter of 2024 to $85.2 million, but increased 12% from $76.2 million in the prior quarter. Funds flow from operations, another non-GAAP measure, decreased 26% from the first quarter of 2024 to $55.3 million, but increased 25% from $44.1 million in the prior quarter.
Strengths and Weaknesses
Strengths:
- Increased production and sales volumes, up 49% and 50% respectively from the first quarter of 2024, driven by the addition of Canadian operations and successful exploration in Ecuador.
- Diversified asset base across Colombia, Ecuador, and Canada, providing exposure to different commodity price environments.
- Ongoing share repurchase program, with 1.1 million shares or 3% of outstanding shares repurchased since November 2024.
Weaknesses:
- Lower Brent oil prices, down 8% from the prior year, putting pressure on revenue and profitability.
- Higher operating and transportation expenses, up 39% and 51% respectively from the prior year, due to the new Canadian operations and increased activity in Ecuador.
- Increased quality and transportation discounts, up to $26.43 per boe from $15.36 per boe in the prior year, due to the change in production mix with the Canadian assets.
- Weaker financial performance, with a net loss of $19.3 million compared to a small net loss in the prior year.
Outlook
The outlook for Gran Tierra Energy remains cautiously optimistic. The company’s diversified asset base and ongoing share repurchase program provide some stability, but the higher operating and transportation costs, as well as the impact of the Canadian assets on pricing, present challenges.
The company’s capital expenditure program of $94.7 million in the first quarter of 2025, up 71% from the prior year, indicates a focus on growth through development and exploration, particularly in Ecuador. However, the company will need to carefully manage costs and maintain operational efficiency to improve profitability in the current environment of lower oil prices.
Overall, Gran Tierra Energy’s financial and operational performance in the first quarter of 2025 was mixed, with some positive trends in production and sales volumes offset by higher costs and weaker profitability. The company’s ability to navigate the current market conditions and execute on its strategic objectives will be crucial in determining its future performance.
