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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2024

or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from __________ to __________
 
Commission file number 001-34018
 
GRAN TIERRA ENERGY INC.
(Exact name of registrant as specified in its charter)
 
Delaware98-0479924
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
500 Centre Street S.E.
Calgary,AlbertaCanadaT2G 1A6
 (Address of principal executive offices, including zip code)
(403) 265-3221
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per share
GTE
NYSE American
Toronto Stock Exchange
London Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.         Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes   ☒  No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act.
Large accelerated filer☐Accelerated filer☒
Non-accelerated filer☐Smaller reporting company☒
Emerging growth company☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.                                                                  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).      Yes ☐ No ☒

On October 30, 2024, 30,651,216 shares of the registrant’s Common Stock, $0.001 par value, were issued and outstanding.




Gran Tierra Energy Inc.

Quarterly Report on Form 10-Q

Quarterly Period Ended September 30, 2024

Table of contents
 
  Page
PART IFinancial Information 
Item 1.Financial Statements
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.Quantitative and Qualitative Disclosures About Market Risk
Item 4.Controls and Procedures
PART IIOther Information
Item 1.Legal Proceedings
Item 1A.Risk Factors
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Item 5.Other information
Item 6.Exhibits
SIGNATURES
1

 CAUTIONARY LANGUAGE REGARDING FORWARD-LOOKING STATEMENTS
 
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts included in this Quarterly Report on Form 10-Q regarding our financial position, estimated quantities and net present values of reserves, business strategy, plans and objectives of our management for future operations, covenant compliance, capital spending plans and benefits of the changes in our capital program or expenditures, our liquidity and financial condition and those statements preceded by, followed by or that otherwise include the words “believe”, “expect”, “anticipate”, “intend”, “estimate”, “project”, “target”, “goal”, “plan”, “budget”, “objective”, “should”, or similar expressions or variations on these expressions are forward-looking statements. We can give no assurances that the assumptions upon which the forward-looking statements are based will prove to be correct or that, even if correct, intervening circumstances will not occur to cause actual results to be different than expected. Because forward-looking statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. There are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from the forward-looking statements, including, but not limited to, our ability to successfully integrate the assets and operations of i3 Energy Plc (“i3Energy”) and realize the anticipated benefits and operating synergies expected from the acquisition of i3 Energy; our operations are located in South America and unexpected problems can arise due to guerilla activity, strikes, local blockades or protests; technical difficulties and operational difficulties may arise which impact the production, transport or sale of our products; other disruptions to local operations; global health events; global and regional changes in the demand, supply, prices, differentials or other market conditions affecting oil and gas, including inflation and changes resulting from a global health crisis, geopolitical events, including the conflicts in Ukraine and the Gaza region, or from the imposition or lifting of crude oil production quotas or other actions that might be imposed by OPEC and other producing countries and the resulting company or third-party actions in response to such changes; changes in commodity prices, including volatility or a prolonged decline in these prices relative to historical or future expected levels; the risk that current global economic and credit conditions may impact oil prices and oil consumption more than we currently predict, which could cause further modification of our strategy and capital spending program; prices and markets for oil and natural gas are unpredictable and volatile; the effect of hedges; the accuracy of productive capacity of any particular field; geographic, political and weather conditions can impact the production, transport or sale of our products; our ability to execute our business plan, which may include acquisitions and realize expected benefits from current or future initiatives; the risk that unexpected delays and difficulties in developing currently owned properties may occur; the ability to replace reserves and production and develop and manage reserves on an economically viable basis; the accuracy of testing and production results and seismic data, pricing and cost estimates (including with respect to commodity pricing and exchange rates); the risk profile of planned exploration activities; the effects of drilling down-dip; the effects of waterflood and multi-stage fracture stimulation operations; the extent and effect of delivery disruptions, equipment performance and costs; actions by third parties; the timely receipt of regulatory or other required approvals for our operating activities; the failure of exploratory drilling to result in commercial wells; unexpected delays due to the limited availability of drilling equipment and personnel; volatility or declines in the trading price of our common stock or bonds; the risk that we do not receive the anticipated benefits of government programs, including government tax refunds; our ability to access debt or equity capital markets from time to time to raise additional capital, increase liquidity, fund acquisitions or refinance debt; our ability to comply with financial covenants in our indentures and make borrowings under any future credit agreement; and those factors set out in Part II, Item 1A “Risk Factors” in this Quarterly Report on Form 10-Q and Part I, Item 1A “Risk Factors” in our 2023 Annual Report on Form 10-K (the “2023 Annual Report on Form 10-K”). This information included herein is given as of the filing date of this Quarterly Report on Form 10-Q with the Securities and Exchange Commission (“SEC”) and, except as otherwise required by the securities laws, we disclaim any obligation or undertaking to publicly release any updates or revisions to or to withdraw, any forward-looking statement contained in this Quarterly Report on Form 10-Q to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based.

GLOSSARY OF OIL AND GAS TERMS
 
In this document, the abbreviations set forth below have the following meanings:
 
bblbarrel
BOPDbarrels of oil per day
NARnet after royalty
 
Sales volumes represent production NAR adjusted for inventory changes. Our oil and gas reserves are reported as NAR. Our production is also reported NAR, except as otherwise specifically noted as “working interest production before royalties”.


2

PART I - Financial Information

Item 1. Financial Statements
 
Gran Tierra Energy Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(Thousands of U.S. Dollars, Except for Share and Per Share Amounts)
Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
OIL SALES (Note 7)
$151,373 $179,921 $474,559 $482,013 
 
EXPENSES
Operating46,060 49,367 141,561 139,227 
Transportation3,911 3,842 14,185 10,599 
Depletion, depreciation and
accretion (Note 4)
55,573 55,019 167,213 163,424 
General and administrative (Note 10)
6,346 10,238 37,616 32,800 
Transaction costs (Note 12)
1,459 — 1,459 — 
Foreign exchange (gain) loss(3,084)1,717 (8,312)8,126 
Other gain— (354)— (1,444)
Interest expense (Note 5)
19,892 13,503 56,714 38,017 
 130,157 133,332 410,436 390,749 
INTEREST INCOME684 271 2,393 1,686 
INCOME BEFORE INCOME TAXES 21,900 46,860 66,516 92,950 
INCOME TAX EXPENSE (RECOVERY)
Current (Note 8)
15,217 26,343 61,422 63,706 
Deferred (Note 8)
5,550 13,990 (32,332)43,242 
20,767 40,333 29,090 106,948 
NET AND COMPREHENSIVE INCOME (LOSS)
$1,133 $6,527 $37,426 $(13,998)
NET INCOME (LOSS) PER SHARE (1)
 - BASIC and DILUTED$0.04 $0.20 $1.20 $(0.42)
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC (Note 6)
30,732,807 33,287,368 31,273,861 33,675,160 
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED (Note 6)
30,732,807 33,350,050 31,273,861 33,675,160 

(1) Reflects Company’s 1-for-10 reverse stock split that became effective May 5, 2023.

(See notes to the condensed consolidated financial statements)
3

Gran Tierra Energy Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(Thousands of U.S. Dollars, Except for Share Amounts)
 As at September 30, 2024As at December 31, 2023
ASSETS  
Current Assets  
Cash and cash equivalents (Note 11)
$277,645 $62,146 
Accounts receivable14,724 12,359 
Inventory33,026 29,039 
Taxes receivable (Note 3)
16,515 438 
Other current assets (Note 10 and 11)
3,948 8,482 
Total Current Assets345,858 112,464 
Oil and Gas Properties  
Proved1,051,632 1,055,070 
Unproved74,690 54,116 
Total Oil and Gas Properties1,126,322 1,109,186 
Other capital assets36,194 33,664 
Total Property, Plant and Equipment (Note 4)
1,162,516 1,142,850 
Other Long-Term Assets  
Deferred tax assets 15,967 10,923 
Taxes receivable (Note 3)
1,725 52,089 
Other long-term assets (Note 10 and 11)
7,312 7,963 
Total Other Long-Term Assets25,004 70,975 
Total Assets $1,533,378 $1,326,289 
LIABILITIES AND SHAREHOLDERS’ EQUITY  
Current Liabilities  
Accounts payable and accrued liabilities$216,767 $187,007 
Credit facility (Note 5)
— 35,609 
Current portion of long-term debt (Note 5 and 10)
24,763 — 
Taxes payable (Note 3)
16,014 27,219 
Equity compensation award liability (Note 6)
5,948 10,419 
Total Current Liabilities263,492 260,254 
Long-Term Liabilities  
Long-term debt (Note 5 and 10)
718,380 519,532 
Deferred tax liabilities 27,358 57,453 
Asset retirement obligation79,971 73,029 
Equity compensation award liability (Note 6)
13,487 8,750 
Other long-term liabilities 9,821 10,877 
Total Long-Term Liabilities849,017 669,641 
Contingencies (Note 9)
Shareholders' Equity (1)
  
Common Stock (30,651,216 issued and outstanding shares as at September 30, 2024, and 32,275,113 issued and 32,246,501 outstanding shares of Common Stock as at December 31, 2023, respectively, par value $0.001 per share), (Note 6)
9,934 9,936 
Additional paid-in capital1,236,539 1,249,651 
Treasury Stock (Note 6)
— (163)
Deficit(825,604)(863,030)
Total Shareholders’ Equity420,869 396,394 
Total Liabilities and Shareholders’ Equity$1,533,378 $1,326,289 
(1) Reflects Company’s 1-for-10 reverse stock split that became effective May 5, 2023.
(See notes to the condensed consolidated financial statements)
4

Gran Tierra Energy Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Thousands of U.S. Dollars)
 Nine Months Ended September 30,
 20242023
Operating Activities  
Net income (loss)
$37,426 $(13,998)
Adjustments to reconcile net income (loss) to net cash provided by operating activities: 
Depletion, depreciation and accretion (Note 4)
167,213 163,424 
Deferred tax (recovery) expense (Note 8)
(32,332)43,242 
Stock-based compensation expense (Note 6)
6,376 3,748 
Amortization of debt issuance costs (Note 5)
9,175 3,394 
Unrealized foreign exchange gain
(7,670)(7,814)
Other gain — (1,444)
Cash settlement of asset retirement obligation (262)(376)
Non-cash lease expenses4,164 3,488 
Lease payments(3,540)(1,918)
Net change in assets and liabilities from operating activities (Note 11)
32,164 (34,235)
Net cash provided by operating activities212,714 157,511 
Investing Activities  
Additions to property, plant and equipment (Note 4)
(169,525)(179,707)
Changes in non-cash investing working capital (Note 11)
5,702 (11,051)
Net cash used in investing activities (163,823)(190,758)
Financing Activities  
Proceeds from issuance of Senior Notes, net of issuance costs (Note 5)
222,528 — 
Repayment of debt (Note 5)
(36,364)— 
Proceeds from debt, net of issuance costs (Note 5)
— 48,125 
Purchase of Senior Notes
— (6,805)
Re-purchase of shares of Common Stock (Note 6)
(12,144)(10,825)
Proceeds from exercise of stock options367 8 
Lease payments(9,422)(5,101)
Net cash provided by financing activities164,965 25,402 
Foreign exchange gain on cash, cash equivalents and restricted cash and cash equivalents986 5,897 
Net increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents214,842 (1,948)
Cash and cash equivalents and restricted cash and cash equivalents,
beginning of period (Note 11)
71,038 133,358 
Cash and cash equivalents and restricted cash and cash equivalents,
end of period (Note 11)
$285,880 $131,410 
Supplemental cash flow disclosures (Note 11)
  

(See notes to the condensed consolidated financial statements)
5

Gran Tierra Energy Inc.
Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)
(Thousands of U.S. Dollars)
 Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
Share Capital (1)
  
Balance, beginning of period$9,935 $10,237 $9,936 $10,272 
Cancellation of shares of Common Stock (Note 6)
(1)— (2)(35)
Balance, end of period$9,934 $10,237 $9,934 $10,237 
Additional Paid-in Capital  
Balance, beginning of period$1,237,844 $1,254,449 $1,249,651 $1,291,354 
Exercise of stock options— 3 367 8 
Stock-based compensation (Note 6)
2,312 592 2,883 1,789 
Modification of stock options (Note 6)
— — (4,057)— 
Cancellation of shares of Common Stock (Note 6)
(3,617)— (12,305)(38,107)
Balance, end of period$1,236,539 $1,255,044 $1,236,539 $1,255,044 
Treasury Stock
Balance, beginning of period$(141)$— $(163)$(27,317)
Re-purchase of shares of Common Stock (Note 6)
(3,477)— (12,144)(10,825)
Cancellation of shares of Common Stock (Note 6)
3,618 — 12,307 38,142 
Balance, end of period$— $— $— $— 
Deficit  
Balance, beginning of period$(826,737)$(877,268)$(863,030)$(856,743)
Net income (loss)
1,133 6,527 37,426 (13,998)
Balance, end of period$(825,604)$(870,741)$(825,604)$(870,741)
Total Shareholders’ Equity$420,869 $394,540 $420,869 $394,540 

(1) Reflects Company’s 1-for-10 reverse stock split that became effective May 5, 2023.

(See notes to the condensed consolidated financial statements)
6

Gran Tierra Energy Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Expressed in U.S. Dollars, unless otherwise indicated)
 
1. Description of Business
 
Gran Tierra Energy Inc. a Delaware corporation (the “Company” or “Gran Tierra”), is a publicly traded company focused on international oil and natural gas exploration and production with assets currently in Colombia and Ecuador.

2. Significant Accounting Policies
 
These interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The information furnished herein reflects all normal recurring adjustments that are, in the opinion of management, necessary for the fair presentation of results for the interim periods.

The note disclosure requirements of annual audited consolidated financial statements provide additional disclosures required for interim unaudited condensed consolidated financial statements. Accordingly, these interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements as at and for the year ended December 31, 2023, included in the Company’s 2023 Annual Report on Form 10-K.

The Company’s significant accounting policies are described in Note 2 of the consolidated financial statements, which are included in the Company’s 2023 Annual Report on Form 10-K and are the same policies followed in these interim unaudited condensed consolidated financial statements. The Company has evaluated all subsequent events to the date these interim unaudited condensed consolidated financial statements were issued.

3. Taxes Receivable

The table below shows the break-down of taxes receivable, which are comprised of value added tax (“VAT”) and income tax receivables and payables:

(Thousands of U.S. Dollars)As at September 30, 2024As at December 31, 2023
Taxes Receivable
Current
VAT Receivable
$141 $105 
Income Tax Receivable16,374 333 
$16,515 $438 
Long-Term
Income Tax Receivable
$1,725 $52,089 
Taxes Payable
Current
VAT Payable
$(5,877)$(11,438)
Income Tax Payable(10,137)(15,781)
$(16,014)$(27,219)
Total Net Taxes Receivable$2,226 $25,308 







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The following table shows the movement of VAT and income tax receivables and payables for the period identified below:

(Thousands of U.S. Dollars)VAT PayableIncome Tax ReceivableTotal Net Taxes Receivable
Balance, as at December 31, 2023
$(11,333)$36,641 $25,308 
Collected through direct government refunds
(580)(13,603)(14,183)
Collected through sales contracts
(82,041)— (82,041)
Taxes paid (1)
88,085 20,665 108,750 
Withholding taxes paid
— 27,878 27,878 
Current tax expense
— (61,422)(61,422)
Foreign exchange loss (gain)
133 (2,197)(2,064)
Balance, as at September 30, 2024
$(5,736)$7,962 $2,226 
(1) VAT is paid on certain goods and services and collected on sales in Colombia at a rate of 19%

4. Property, Plant and Equipment
(Thousands of U.S. Dollars)As at September 30, 2024As at December 31, 2023
Oil and natural gas properties  
Proved$5,027,344 $4,876,185 
Unproved74,690 54,116 
 5,102,034 4,930,301 
Other (1)
86,529 73,505 
5,188,563 5,003,806 
Accumulated depletion, depreciation and impairment(4,026,047)(3,860,956)
$1,162,516 $1,142,850 
(1) The “other” category includes right-of-use assets for operating and finance leases of $62.9 million, which had a net book value of $32.0 million as at September 30, 2024 (December 31, 2023 - $53.3 million, which had a net book value of $32.4 million).

During the three months ended September 30, 2024, the Company entered into two operating lease contracts related to motor vehicles and one finance lease contract related to power generation equipment and capitalized $0.1 million and $0.8 million, respectively, right-of-use assets in relation to these contracts.

During the nine months ended September 30, 2024, the Company entered into three operating lease contracts related to the office lease in Ecuador and motor vehicles and six finance lease contracts related to power generation and safety equipment and capitalized $0.6 million and $8.1 million, respectively, right-of-use assets in relation to these contracts.

For the three and nine months ended September 30, 2024 and 2023, the Company had no ceiling test impairment losses. The Company used a 12-month unweighted average of the first-day-of the month Brent price prior to the ending date of the periods September 30, 2024 and 2023 of $82.10 and $83.86 per bbl, respectively, for the purpose of the ceiling test calculations.

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5. Debt and Debt Issuance Costs

The Company’s debt as at September 30, 2024, and December 31, 2023, was as follows:
(Thousands of U.S. Dollars)As at September 30, 2024As at December 31, 2023
Current
Credit facility$— $36,364 
6.25% Senior Notes, due February 2025 (“6.25% Senior Notes”)
24,828 — 
Unamortized debt issuance costs(65)(755)
$24,763 $35,609 
Long-Term
6.25% Senior Notes
$— $24,828 
7.75% Senior Notes, due May 2027 (“7.75% Senior Notes”)
24,201 24,201 
9.50% Senior Notes, due October 2029 (“9.50% Senior Notes”)
737,590 487,590 
Unamortized Senior Notes discount(44,436)(27,958)
Unamortized Senior Notes issuance costs(19,209)(15,679)
698,146 492,982 
Long-term lease obligation (1)
20,234 26,550 
$718,380 $519,532 
Total Debt$743,143 $555,141 
(1) The current portion of the lease obligation has been included in accounts payable and accrued liabilities on the Company’s balance sheet and totaled $14.7 million as at September 30, 2024 (December 31, 2023 - $12.1 million).

Credit Facility

As at December 31, 2023, the Company had a $36.4 million balance outstanding under the Company’s credit facility. On February 6, 2024, the outstanding balance under the credit facility of $36.4 million was fully re-paid and the credit facility was terminated.

On August 19, 2024, the Company entered into a credit facility agreement (“Loan Facility”) with a market leader in the global commodities industry to fund the cash consideration payable to i3 Energy’s shareholders in connection with the acquisition of i3 Energy and associated costs (Note 12). The Loan Facility has a borrowing base of £80.0 million (US$107.0 million) and bears interest based on a three-month secured overnight financing rate posted by the Federal Reserve Bank of New York plus a margin of 3.00% per annum for the first three months after the initial drawdown and 6.00% per annum thereafter. The Loan Facility is subject to a commitment fee equal to the higher of $0.5 million and 0.5% of the borrowing base converted to U.S. dollars using the agreed upon GBP to USD foreign exchange rate at the time of initial drawdown date. The commitment fee is payable on the earlier of the date of the initial drawdown and three months after signing date of the Loan Facility. The undrawn amounts under the Loan Facility bear interest at 0.5% per annum, based on the available amount. The Loan Facility was terminated on October 31, 2024.

As of September 30, 2024, there was no outstanding balance under the Loan Facility.

Senior Notes

On February 6, 2024 and September 18, 2024, the Company issued additional $100.0 million and $150.0 million of 9.50% Senior Notes due October 2029 (the “new 9.50% Senior Notes”), and received cash proceeds of $88.0 million and $139.8 million, respectively. The new 9.50% Senior Notes have the same terms and provisions as the previously issued $487.6 million 9.50% Senior Notes except for the issue price. $100.0 million of new 9.50% Senior Notes accrue interest from October 20, 2023, the date of issuance of the previously issued 9.50% Senior Notes and $150.0 million of new 9.50% Senior Notes accrue interest from April 15, 2024, the date of the last interest payment. The Company received a cash payment of $2.8 million and $6.1 million related to the accrued interest of the $100.0 million and $150.0 million of new 9.50% Senior Notes, respectively.

9

Leases

During the three months ended September 30, 2024, the Company recorded two operating leases of $0.1 million and one finance lease of $0.8 million. The operating leases have a three-year term and the weighted average discount rate of 9.6%. The finance lease has a one-year term and a discount rate of 9.6%.

During the nine months ended September 30, 2024, the Company recorded three operating leases of $0.6 million and six finance leases of $8.1 million. The operating leases have a lease term ranging from three to five years and a weighted average discount rate of 11.1%. The finance leases have a lease term ranging from one to three years and a weighted average discount rate of 9.6%.

Interest Expense

The following table presents the total interest expense recognized in the accompanying interim unaudited condensed consolidated statements of operations:
Three Months Ended September 30,Nine Months Ended September 30,
(Thousands of U.S. Dollars)2024202320242023
Contractual interest and other financing expenses$16,783 $11,909 $47,539 $34,623 
Amortization of debt issuance costs3,109 1,594 9,175 3,394 
$19,892 $13,503 $56,714 $38,017 

6. Share Capital
Shares of Common Stock
Shares issued at December 31, 2023
32,275,113 
Treasury shares (28,612)
Shares issued and outstanding at December 31, 2023
32,246,501
Shares issued on option exercise66,825 
Shares re-purchased and cancelled(1,662,110)
Shares issued and outstanding at September 30, 2024
30,651,216
During the year ended December 31, 2023, the Company implemented a share re-purchase program (the “2023 Program”) through the facilities of the Toronto Stock Exchange (“TSX”), the NYSE American and eligible alternative trading platforms in Canada or the United States. Under the 2023 Program, the Company is able to purchase at prevailing market prices up to 3,234,914 shares of Common Stock, par value of $0.001 per share (“Common Stock”) representing approximately 10% of the public float as of October 20, 2023. The 2023 Program expired on November 2, 2024.

During the three and nine months ended September 30, 2024, the Company re-purchased 371,130 and 1,662,110 shares at a weighted average price of $9.37 and $7.31 per share (three and nine months ended September 30, 2023 - nil and 1,328,650 shares at a weighted average price of nil and $8.15 per share), respectively. As of September 30, 2024, the Company cancelled 28,612 shares held as treasury shares at December 31, 2023, and cancelled 371,130 and 1,662,110 shares re-purchased during the three and nine months ended September 30, 2024, respectively. During the period from November 3, 2023 to September 30, 2024, the Company has re-purchased 2,703,914 shares out of a maximum of 3,234,914 under the 2023 Program.

Equity Compensation Awards

The following table provides information about performance stock units (“PSUs”), deferred share units (“DSUs”), restricted share units (“RSUs”) and stock option activity for the nine months ended September 30, 2024:
10

PSUsDSUsRSUsStock Options
Number of Outstanding Share UnitsNumber of Outstanding Share UnitsNumber of Outstanding Share UnitsNumber of Outstanding Stock OptionsWeighted Average Exercise Price/Stock Option ($)
Balance, December 31, 20233,896,356 776,610 — 2,027,807 9.93 
Granted2,249,299 94,304 531,120 4,596 7.12 
Exercised(1,847,322)— — (211,249)7.00 
Forfeited(176,927)— (6,860)(50,127)9.67 
Expired— — — (201,774)(21.40)
Balance, September 30, 2024
4,121,406 870,914 524,260 1,569,253 8.85 

On May 1, 2024, the Company amended the settlement terms of all outstanding stock option awards. As of this date, all outstanding stock options are to be net settled in cash resulting in a change in classification of stock options from equity to liability. On May 1, 2024, the Company recorded a liability of $4.4 million and an additional stock-based compensation costs of $0.4 million related to the modification of the stock option plan. As at September 30, 2024, the equity compensation award liability on the Company’s balance sheet included $1.7 million of current liability and $0.2 million of long-term liability related to the Company’s outstanding stock options.

The fair value of each stock option award was estimated on the modification date using the Black-Scholes-Merton option-pricing model based on the assumptions noted in the following table:

Fair value of option modification
$0.00 - $6.11
Dividend yield (per share)Nil
Expected volatility
43% to 87%
Risk-free interest rate
4.6% to 5.1%
Expected term
0.1 - 4.9 years
Expected forfeiture rate
0% to 5%

For the three and nine months ended September 30, 2024, there was $3.1 million of stock-based compensation recovery and $6.4 million of stock-based compensation expense, respectively (three and nine months ended September 30, 2023, $1.9 million and $3.7 million of stock-based compensation expense, respectively).

As at September 30, 2024, there was $17.3 million (December 31, 2023 - $8.6 million) of unrecognized compensation costs related to unvested PSUs, RSUs and stock options, which are expected to be recognized over a weighted-average period of 1.9 years. During the nine months ended September 30, 2024, the Company paid out $10.4 million for PSUs vested on December 31, 2023 (nine months ended September 30, 2023 - $15.1 million for PSUs vested on December 31, 2022).

During the three and nine months ended September 30, 2024, the Company awarded nil and 0.5 million RSUs to employees pursuant to the existing 2007 Equity Incentive Plan, respectively. Under the 2007 Equity Incentive Plan, RSUs will vest one-third each year over a three-year period. Upon vesting, RSUs entitle the holder to receive either the underlying number of shares of the Company’s Common Stock or a cash payment equal to the value of the underlying shares of the Company’s Common Stock. The Company intends to settle RSUs outstanding as at September 30, 2024, in cash.

Net Income (Loss) per Share

Basic net income or loss per share is calculated by dividing net income or loss attributable to common shareholders by the weighted average number of shares of Common Stock issued and outstanding during each period.

Diluted net income or loss per share is calculated using the treasury stock method for share-based compensation arrangements. The treasury stock method assumes that any proceeds obtained on the exercise of share-based compensation arrangements would be used to purchase shares of Common Stock at the average market price during the period. The weighted average number of shares is then adjusted by the difference between the number of shares issued from the exercise of share-based
11

compensation arrangements and shares re-purchased from the related proceeds. Anti-dilutive shares represent potentially dilutive securities excluded from the computation of diluted income or loss per share as their impact would be anti-dilutive.

Weighted Average Shares Outstanding
 Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
Weighted average number of shares of Common Stock outstanding30,732,807 33,287,368 31,273,861 33,675,160
Shares issuable pursuant to stock options— 129,299— — 
Shares assumed to be purchased from proceeds of stock options— (66,617)— — 
Weighted average number of diluted shares of Common Stock outstanding30,732,807 33,350,050 31,273,861 33,675,160

For the three and nine months ended September 30, 2024 all options, on a weighted average basis (three and nine months ended September 30, 2023, 1,854,307 and all options, respectively) were excluded from the diluted income (loss) per share calculation as the options were anti-dilutive.

7. Revenue

The Company’s revenues are generated from oil sales at prices that reflect the blended prices received upon shipment by the purchaser at defined sales points or defined by contract relative to ICE Brent and adjusted for Vasconia or Castilla (Colombia sales) or Oriente (Ecuador sales) crude differentials, quality and transportation discounts and premiums each month. For the three and nine months ended September 30, 2024, 100% of the Company’s revenue resulted from oil sales (three and nine months ended September 30, 2023 - 100%). During the three and nine months ended September 30, 2024, quality and transportation discounts were 18% and 17% of the average ICE Brent price (three and nine months ended September 30, 2023 - 14% and 18%), respectively.

During the three and nine months ended September 30, 2024, the Company’s production was sold to one major customer in Colombia and Ecuador, representing 100% of the total sales volumes (three and nine months ended September 30, 2023 - one major customer representing 96% and 97% of the total sales volumes, respectively).

As at September 30, 2024, accounts receivable included $0.1 million of accrued sales revenue related to September 2024 production (December 31, 2023 - nil related to December 2023 production).

8. Taxes

The Company’s effective tax rate was 44% for the nine months ended September 30, 2024, compared to 115% in the corresponding period of 2023.

Current income tax expense was $61.4 million for the nine months ended September 30, 2024, compared to $63.7 million in the corresponding period of 2023, due to lower taxable income in Colombia, partially offset by additional current tax expense related to a tax planning strategy.

For the nine months ended September 30, 2024, the deferred income tax was a recovery of $32.3 million, primarily as a result of the recognition of additional tax losses resulting from a tax planning strategy, which were partially offset by tax depreciation being higher than accounting depreciation and the use of tax losses to offset taxable income in Colombia.

For the nine months ended September 30, 2023, the deferred income tax expense was $43.2 million compared to $36.9 million in the corresponding period of 2022. In each case, primarily attributable to higher tax depreciation compared to accounting depreciation and the utilization of tax losses to offset taxable income in Colombia.

For the nine months ended September 30, 2024, the difference between the effective tax rate of 44% and the 50% Colombian tax rate was primarily due to a lower impact of foreign taxes, 2022 true-up related to tax planning strategy and non-taxable foreign exchange adjustments. These were partially offset by an increase in valuation allowance, other permanent differences, non-deductible stock-based compensation and non-deductible royalties in Colombia.

12

The Company strategically revised its 2022 tax return to use its tax receivable balance to offset current tax liabilities, rather than applying net operating loss carryforwards. This decision was driven by the expectation of higher future income tax rates and increased profitability. As a result, there was an increase in current tax expense which was offset by long-term tax receivable, ensuring no impact on cash flows. This approach preserved the Company’s net operating loss carryforward for future periods, providing greater tax benefits and flexibility in recovering tax receivables, while strengthening our equity position.

For the nine months ended September 30, 2023, the difference between the effective tax rate of 115% and the 50% Colombian tax rate was primarily due to an increase in non-deductible foreign exchange adjustments, the impact of foreign taxes, non-deductible royalties in Colombia and non-deductible stock-based compensation. These were partially offset by a decrease in valuation allowance.

9. Contingencies

Legal Proceedings

The Company has several lawsuits and claims pending. The outcome of the lawsuits and disputes cannot be predicted with certainty; the Company believes the resolution of these matters would not have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows. The Company records costs as they are incurred or become probable and determinable.

Letters of Credit and Other Credit Support

At September 30, 2024, the Company had provided letters of credit and other credit support totaling $234.3 million (December 31, 2023 - $220.1 million) relating to work commitment guarantees in Colombia and Ecuador contained in exploration contracts, the Suroriente Block extension agreement and other capital or operating requirements. Approximately $122.0 million relates to the Suroriente Block extension agreement.

10. Financial Instruments and Fair Value Measurement

Financial Instruments

Financial instruments are initially recorded at fair value, defined as the price that would be received to sell an asset or paid to market participants to settle liability at the measurement date. For financial instruments carried at fair value, GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad levels:

•Level 1 - Inputs representing quoted market prices in active markets for identical assets and liabilities
•Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the assets and liabilities, either directly or indirectly
•Level 3 - Unobservable inputs for assets and liabilities

At September 30, 2024, the Company’s financial instruments recognized on the balance sheet consist of cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, current portion of long-term debt, long-term debt and other long-term liabilities. The Company uses appropriate valuation techniques based on the available information to measure the fair values of assets and liabilities.

13

Fair Value Measurement

The following table presents the Company’s fair value measurements of its financial instruments as of September 30, 2024, and December 31, 2023:
(Thousands of U.S. Dollars)As at September 30, 2024As at December 31, 2023
Level 1
Assets
Prepaid equity forward (“PEF”) - current (1)
$— $5,630 
Liabilities
6.25% Senior Notes
$23,804 $22,994 
7.75% Senior Notes
21,388 20,744 
9.50% Senior Notes
701,632 429,018 
$746,824 $472,756 
Level 2
Assets
Restricted cash and cash equivalents - long-term (2)
$7,093 $7,750 
Liabilities
Credit facility$— $35,609 
(1) The current portion of PEF is included in the other current assets on the Company’s condensed consolidated balance sheet.
(2) The long-term portion of restricted cash and cash equivalents is included in the other long-term assets on the Company’s condensed consolidated balance sheet.

The fair values of cash and cash equivalents, current restricted cash and cash equivalents, accounts receivable and accounts payable and accrued liabilities approximate their carrying amounts due to the short-term maturity of these instruments.

Restricted Cash and Cash Equivalents - Long-Term

The fair value of long-term restricted cash and cash equivalents approximate its carrying value because interest rates are variable and reflective of market rates.

Prepaid Equity Forward

As at September 30, 2024, the Company had no outstanding PEF asset (As at December 31, 2023 - 1.0 million notional shares with a fair value of $5.6 million). For the three and nine months ended September 30, 2024, the Company recorded nil and a $0.3 million loss, respectively, in general and administrative expenses relating to the PEF (three and nine months ended September 30, 2023 - $2.2 million gain and $3.6 million loss, respectively).

During the nine months ended September 30, 2024, the Company settled all outstanding notional PEF shares and received net proceeds of $5.1 million resulting in a $0.3 million loss on settlement.

Senior Notes

Financial instruments recorded at amortized cost at September 30, 2024, were the Senior Notes (Note 5).

At September 30, 2024, the carrying amounts of the 6.25% Senior Notes, 7.75% Senior Notes and 9.50% Senior Notes were $24.8 million, $23.8 million, and $674.3 million, respectively, which represented the aggregate principal amounts less unamortized debt issuance costs and discounts, and the fair values were $23.8 million, $21.4 million, and $701.6 million, respectively.




14

11. Supplemental Cash Flow Information

The following table provides a reconciliation of cash and cash equivalents and restricted cash and cash equivalents shown as a sum of these amounts in the interim unaudited condensed consolidated statements of cash flows:
As at September 30,As at December 31,
(Thousands of U.S. Dollars)2024202320232022
Cash and cash equivalents$277,645 $123,216 $62,146 $126,873 
Restricted cash and cash equivalents - current (1)
1,142 1,142 1,142 1,142 
Restricted cash and cash equivalents - long-term (2)
7,093 7,052 7,750 5,343 
$285,880 $131,410 $71,038 $133,358 
(1) Included in other current assets on the Company’s condensed consolidated balance sheet.
(2) Included in other long-term assets on the Company’s condensed consolidated balance sheet.

Net changes in assets and liabilities from operating activities were as follows:
Nine Months Ended September 30,
(Thousands of U.S. Dollars)20242023
Accounts receivable and other long-term assets$(1,531)$(8,484)
PEF6,218 9,664 
Prepaids and inventory
(3,984)(6,809)
Accounts payable and accrued liabilities, and other long-term liabilities
10,442 (3,040)
Taxes receivable and payable21,019 (25,566)
Net changes in assets and liabilities from operating activities$32,164 $(34,235)

Changes in non-cash investing working capital for the nine months ended September 30, 2024, were comprised of an increase in accounts payable and accrued liabilities of $6.6 million and an increase in accounts receivable of $0.9 million (nine months ended September 30, 2023, a decrease in accounts payable and accrued liabilities of $11.0 million and an increase in accounts receivable of $0.1 million).

The following table provides additional supplemental cash flow disclosures:
Nine Months Ended September 30,
(Thousands of U.S. Dollars)20242023
Cash paid for income taxes $20,665 $48,241 
Cash paid for withholding taxes$27,878 $36,962 
Cash paid for interest$30,073 $29,446 
Non-cash investing activities:
Net liabilities related to property, plant and equipment, end of period$53,117 $44,067 

12. Subsequent Events

On October 31, 2024, the Company acquired all of the issued and outstanding common shares of i3 Energy for $225.4 million, consisting of cash consideration of $168.9 million, a cash dividend of $4.2 million and approximately 6.0 million shares of Gran Tierra’s Common Stock, the fair value of which was determined to be $52.3 million based on the closing price of the Company’s shares on the acquisition date. i3 Energy is an oil and gas exploration and production company, incorporated in England and Wales with production assets located in the Western Canadian Sedimentary basin. The acquisition was accounted for as a business combination using the acquisition method. During the three and nine months ended September 30, 2024, the Company incurred approximately $1.5 million in transaction costs associated with the acquisition of i3 Energy.

In connection with i3 Energy acquisition closing on October 31, 2024, the Company amended and restated the existing revolving credit facility agreement of i3 Energy Canada Ltd. (“i3 Energy Canada”) with National Bank of Canada dated March
15

22, 2024. As a result of the amendment and restatement, among other things, the borrowing base was revised to C$100.0 million (US$74.1 million) with available commitment of a C$50.0 million (US$37.0 million) revolving credit facility comprised of C$35.0 million (US$25.9 million) syndicated facility and C$15.0 million (US$11.1 million) of operating facility. Subject to the next borrowing base redetermination which will occur on or before June 30, 2025, the revolving credit facility is available until October 31, 2025 with a repayment date of October 31, 2026, which may be extended by further periods of up to 364 days, subject to lender approval. The drawn down amounts under the revolving credit facility can either be in Canadian or U.S. dollars and bear interest rates equal to either the Canadian prime rate or U.S. Base Rate plus a margin ranging from 2.00% to 4.00% per annum or for CORRA loans and SOFR loans plus a margin ranging from 3.00% to 5.00% per annum. Undrawn amounts under the revolving credit facility bear standby fee ranging from 0.75% to 1.25% per annum. In each case, the margin or standby fee, as applicable is based on Net Debt to EBITDA ratio of Gran Tierra Canada Ltd.

16

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
The following discussion of our financial condition and results of operations should be read in conjunction with the “Financial Statements” as set out in Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the “Financial Statements and Supplementary Data” included in Part II, Items 7 and 8, respectively, of our 2023 Annual Report on Form 10-K. Please see the cautionary language at the beginning of this Quarterly Report on Form 10-Q regarding the identification of and risks relating to forward-looking statements and the risk factors described in Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q, as well as Part I, Item 1A “Risk Factors” in our 2023 Annual Report on Form 10-K. On May 5, 2023, the Company completed 1-for-10 reverse stock split of the Company’s Common Stock. As a result of the reverse stock split, every ten of the Company’s issued shares of Common Stock were automatically combined into one issued share of Common Stock. All share and per share data included in this quarterly report have been retroactively adjusted to reflect the reverse stock split.

Financial and Operational Highlights

Key Highlights for the third quarter of 2024
•On August 19, 2024, we entered into an agreement to acquire all of the issued and outstanding common shares of i3 Energy for $225.4 million, consisting of a cash consideration of $168.9 million, a cash dividend of $4.2 million and the issuance of approximately 6.0 million shares of our Common Stock. The acquisition closed on October 31, 2024.
•Net income for the third quarter of 2024 was $1.1 million or $0.04 per share basic and diluted, compared to a net income of $6.5 million or $0.20 per share basic and diluted for the third quarter of 2023 and a net income of $36.4 million for the prior quarter
•Brent oil price averaged $78.71 during the quarter, a decrease of 8% from comparable period of 2023 and 7% decrease from the prior quarter. Castilla, Vasconia and Oriente differentials averaged to $8.83, $5.07 and $9.15 during the quarter, an increase of 33%, 41% and 19% from the comparable period of 2023, and an increase of 8%, 27% and 9%, respectively, from the prior quarter
•Income before income taxes for the third quarter of 2024 was $21.9 million, compared to income before income taxes of $46.9 million for the third quarter of 2023 and income before income taxes of $27.3 million for the prior quarter.
•Adjusted EBITDA(2) decreased to $92.8 million, compared to $119.2 million in the third quarter of 2023 and $103.0 million in the prior quarter
•Funds flow from operations(2) decreased to $60.3 million, compared to $79.0 million in the third quarter of 2023 and increased from $46.2 million in the prior quarter
•In the third quarter of 2024, we re-purchased 0.4 million shares of Common Stock through the 2023 share re-purchase program. During the period from November 3, 2023 to September 30, 2024, we have re-purchased a total of 2.7 million shares or 9% of the outstanding shares as of September 30, 2024
•NAR production for the third quarter of 2024 decreased by 3% to 25,988 BOPD, compared to 26,776 BOPD in the third quarter of 2023 and was comparable to 26,002 BOPD in the prior quarter
•Sales volumes for the third quarter of 2024 decreased by 4% to 25,464 BOPD, compared to 26,396 BOPD in the third quarter of 2023 and increased by 1% from 25,191 BOPD in the prior quarter
•Oil sales for the third quarter of 2024 decreased by 16% to $151.4 million, compared to the third quarter of 2023, primarily due to a lower Brent price, lower sales volumes, and higher differentials. Oil sales decreased by 9% from $165.6 million in the prior quarter due to a lower Brent price and higher differentials, partially offset by an increase in sales volumes
•Operating expenses decreased by 7% or $0.67 per bbl to $46.1 million or $19.66 per bbl when compared to the third quarter of 2023, primarily as a result of lower lifting costs, partially offset by higher workover activities. Operating expenses decreased by 2% or $0.86 per bbl from $47.0 million or $20.52 per bbl in the prior quarter as a result of lower workover activities
•Transportation expenses increased by 2% or $0.09 per bbl when compared to the third quarter of 2023 due to an increase in trucking tariffs for Acordionero volumes and higher sales volumes transported in Ecuador. Transportation expenses decreased by 31% or $0.81 per bbl compared to the prior quarter due to the utilization of shorter distance delivery points during the current quarter
•Operating netback(2) decreased to $101.4 million compared to $126.7 million in the third quarter of 2023 and $112.9 million in the prior quarter
•Quality and transportation discounts for the third quarter of 2024 increased to $14.10 per bbl compared to $11.83 per bbl in the third quarter of 2023 and $12.79 per bbl in the prior quarter
17

•General and administrative (“G&A”) expenses before stock-based compensation for the third quarter of 2024 increased to $9.5 million compared to $8.3 million in the third quarter of 2023 due to higher travel and general office expenses and decreased from $11.0 million in the prior quarter due to lower consulting, business development and travel expenses during the current quarter
•Capital additions for the third quarter of 2024 were $52.9 million compared to $43.1 million in the third quarter of 2023 due to a more active exploration program in the third quarter of 2024, and compared to $61.3 million in the prior quarter due to operating one drilling rig during the current quarter compared to two in the prior quarter
(Thousands of U.S. Dollars, unless otherwise indicated)Three Months Ended September 30,Three Months Ended June 30,Nine Months Ended September 30,
 20242023% Change202420242023% Change
Average Daily Volumes (BOPD)
Consolidated
Working Interest (“WI”) Production Before Royalties32,764 33,940 (3)32,776 32,595 33,098 (2)
Royalties(6,776)(7,164)(5)(6,774)(6,650)(6,592)1 
Production NAR25,988 26,776 (3)26,002 25,945 26,506 (2)
Increase in Inventory(524)(380)38 (811)(367)(222)(65)
Sales(1)
25,464 26,396 (4)25,191 25,578 26,284 (3)
Net Income (Loss)
$1,133 $6,527 (83)$36,371 $37,426 $(13,998)367 
Operating Netback
Oil Sales $151,373 $179,921 (16)$165,609 $474,559 $482,013 (2)
Operating Expenses(46,060)(49,367)(7)(47,035)(141,561)(139,227)2 
Transportation Expenses(3,911)(3,842)2 (5,690)(14,185)(10,599)34 
Operating Netback(2)
$101,402 $126,712 (20)$112,884 $318,813 $332,187 (4)
G&A Expenses before Stock-Based Compensation$9,491 $8,307 14 $10,967 $31,240 $29,052 8 
G&A Stock-Based Compensation (Recovery) Expense(3,145)1,931 (263)6,160 6,376 3,748 70 
G&A Expenses, including Stock-Based Compensation$6,346 $10,238 (38)$17,127 $37,616 $32,800 15 
Adjusted EBITDA(2)
$92,794 $119,235 (22)$103,004 $290,590 $306,391 (5)
Funds Flow from Operations(2)
$60,338 $79,000 (24)$46,167 $180,812 $192,122 (6)
Capital Expenditures$52,921 $43,080 23 $61,273 $169,525 $179,707 (6)
(1) Sales volumes represent production NAR adjusted for inventory changes.
(2) Non-GAAP measures.

Operating netback, EBITDA, adjusted EBITDA, and funds flow from operations are non-GAAP measures that do not have any standardized meaning prescribed under GAAP. Management views these measures as financial performance measures. Investors are cautioned that these measures should not be construed as alternatives to oil sales, net income (loss) or other measures of financial performance as determined in accordance with GAAP. Our method of calculating these measures may differ from other companies and, accordingly, may not be comparable to similar measures used by other companies. Disclosure of each non-GAAP financial measure is preceded by the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure.
18


Operating netback, as presented, is defined as oil sales less operating and transportation expenses. Management believes that operating netback is a useful supplemental measure for management and investors to analyze financial performance and provides an indication of the results generated by our principal business activities prior to the consideration of other income and expenses. A reconciliation from oil sales to operating netback is provided in the table above.

EBITDA, as presented, is defined as net income (loss) adjusted for depletion, depreciation and accretion (“DD&A”) expenses, interest expense and income tax expense or recovery. Adjusted EBITDA, as presented, is defined as EBITDA adjusted for non-cash lease expense, lease payments, foreign exchange gain or loss, stock-based compensation expense or recovery, transaction costs related to the acquisition of i3 Energy and other gain or loss. Management uses this supplemental measure to analyze performance and income generated by our principal business activities prior to the consideration of how non-cash items affect that income and believes that this financial measure is useful supplemental information for investors to analyze our performance and our financial results. A reconciliation from net (loss) income to EBITDA and adjusted EBITDA is as follows:

 Three Months Ended September 30,Three Months Ended June 30,Nine Months Ended September 30,
(Thousands of U.S. Dollars)20242023202420242023
Net income (loss)
$1,133 $6,527 $36,371 $37,426 $(13,998)
Adjustments to reconcile net income (loss) to EBITDA and Adjusted EBITDA
DD&A expenses55,573 55,019 55,490 167,213 163,424 
Interest expense19,892 13,503 18,398 56,714 38,017 
Income tax expense (recovery)20,767 40,333 (9,072)29,090 106,948 
EBITDA (non-GAAP)$97,365 $115,382 $101,187 $290,443 $294,391 
Non-cash lease expense1,370 1,235 1,381 4,164 3,488 
Lease payments(1,171)(676)(1,311)(3,540)(1,918)
Foreign exchange (gain) loss
(3,084)1,717 (4,413)(8,312)8,126 
Stock-based compensation (recovery) expense(3,145)1,931 6,160 6,376 3,748 
Transaction costs1,459 — — 1,459 — 
Other gain— (354)— — (1,444)
Adjusted EBITDA (non-GAAP)$92,794 $119,235 $103,004 $290,590 $306,391 

Funds flow from operations, as presented, is defined as net income (loss) adjusted for DD&A expenses, deferred income tax expense or recovery, stock-based compensation expense or recovery, amortization of debt issuance costs, non-cash lease expense, lease payments, unrealized foreign exchange gain and other gain or loss. Management uses this financial measure to analyze performance and income generated by our principal business activities prior to the consideration of how non-cash items affect that income and believes that this financial measure is also useful supplemental information for investors to analyze performance and our financial results. A reconciliation from net income (loss) to funds flow from operations is as follows:
 Three Months Ended September 30,Three Months Ended June 30,Nine Months Ended September 30,
(Thousands of U.S. Dollars)20242023202420242023
Net income (loss)
$1,133$6,527$36,371$37,426 $(13,998)
Adjustments to reconcile net income (loss) to funds flow from operations
DD&A expenses55,57355,01955,490167,213 163,424 
Deferred income tax expense (recovery)5,55013,990(51,361)(32,332)43,242 
Stock-based compensation (recovery) expense(3,145)1,9316,1606,376 3,748 
Amortization of debt issuance costs3,1091,5942,7609,175 3,394 
Non-cash lease expense1,3701,2351,3814,164 3,488 
Lease payments(1,171)(676)(1,311)(3,540)(1,918)
Unrealized foreign exchange gain
(2,081)(266)(3,323)(7,670)(7,814)
Other gain—(354)—— (1,444)
Funds flow from operations (non-GAAP)$60,338$79,000$46,167$180,812 $192,122 










19


Additional Operational Results

 Three Months Ended September 30,Three Months Ended June 30,Nine Months Ended September 30,
(Thousands of U.S. Dollars)20242023% Change202420242023% Change
Oil sales$151,373 $179,921 (16)$165,609 $474,559 $482,013 (2)
Operating expenses46,060 49,367 (7)47,035 141,561 139,227 2 
Transportation expenses3,911 3,842 2 5,690 14,185 10,599 34 
Operating netback(1)
101,402 126,712 (20)112,884 318,813 332,187 (4)
DD&A expenses55,573 55,019 1 55,490 167,213 163,424 2 
G&A expenses before stock-based compensation9,491 8,307 14 10,967 31,240 29,052 8 
G&A stock-based compensation (recovery) expense(3,145)1,931 (263)6,160 6,376 3,748 70 
Foreign exchange (gain) loss(3,084)1,717 (280)(4,413)(8,312)8,126 (202)
Other gain— (354)(100)— — (1,444)(100)
Interest expense19,892 13,503 47 18,398 56,714 38,017 49 
Transaction costs1,459 — 100 — 1,459 — 100 
80,186 80,123 — 86,602 254,690 240,923 6 
Interest income684 271 152 1,017 2,393 1,686 42 
Income before income taxes21,900 46,860 (53)27,299 66,516 92,950 (28)
Current income tax expense
15,217 26,343 (42)42,289 61,422 63,706 (4)
Deferred income tax expense (recovery)5,550 13,990 (60)(51,361)(32,332)43,242 (175)
20,767 40,333 (49)(9,072)29,090 106,948 (73)
Net income (loss)
$1,133 $6,527 (83)$36,371 $37,426 $(13,998)367 
Sales Volumes (NAR)
Total sales volumes, BOPD25,464 26,396 (4)25,191 25,578 26,284 (3)
Brent Price per bbl$78.71 $85.92 (8)$85.03 $81.82 $81.94 — 
Consolidated Results of Operations per bbl Sales Volumes NAR
Oil sales$64.61 $74.09 (13)$72.24 $67.71 $67.18 1 
Operating expenses19.66 20.33 (3)20.52 20.20 19.40 4 
Transportation expenses1.67 1.58 6 2.48 2.02 1.48 36 
Operating netback(1)
43.28 52.18 (17)49.24 45.49 46.30 (2)
DD&A expenses23.72 22.66 5 24.21 23.86 22.77 5 
G&A expenses before stock-based compensation4.05 3.42 18 4.78 4.46 4.05 10 
20

G&A stock-based compensation (recovery) expense(1.34)0.80 (268)2.69 0.91 0.52 75 
Foreign exchange (gain) loss(1.32)0.71 (286)(1.93)(1.19)1.13 (205)
Other gain— (0.15)(100)— — (0.20)(100)
Interest expense8.49 5.56 53 8.03 8.09 5.30 53 
Transaction costs0.62 — 100 — 0.21 — 100 
34.22 33.00 4 37.78 36.34 33.57 8 
Interest income0.29 0.11 164 0.44 0.34 0.23 48 
Income before income taxes9.35 19.29 (52)11.90 9.49 12.96 (27)
Current income tax expense
6.50 10.85 (40)18.45 8.76 8.88 (1)
Deferred income tax expense (recovery)2.37 5.76 (59)(22.41)(4.61)6.03 (176)
8.87 16.61 (47)(3.96)4.15 14.91 (72)
Net income (loss)
$0.48 $2.68 (82)$15.86 $5.34 $(1.95)374 
 
(1) Operating netback is a non-GAAP measure that does not have any standardized meaning prescribed under GAAP. Refer to note 2 “Non-GAAP measures” in “Financial and Operational Highlights” for a definition of this measure.

Oil Production and Sales Volumes, BOPD
Three Months Ended September 30,Three Months Ended June 30,Nine Months Ended September 30,
Average Daily Volumes (BOPD)20242023202420242023
WI Production Before Royalties32,76433,94032,77632,59533,098
Royalties(6,776)(7,164)(6,774)(6,650)(6,592)
Production NAR25,98826,77626,00225,94526,506
Increase in Inventory(524)(380)(811)(367)(222)
Sales25,46426,39625,19125,57826,284
Royalties, % of WI Production Before Royalties21 %21 %21 %20 %20 %

Oil production NAR for the three and nine months ended September 30, 2024, decreased by 3% and 2%, respectively, compared to the corresponding periods of 2023 due to lower volumes in the Acordionero field caused by downtime related to workovers, partially offset by higher production in the Costayaco field in Colombia and increased production from the Chanangue and Charapa Blocks in Ecuador related to positive exploration well drilling results. Oil production NAR was comparable to the prior quarter.

Royalties as a percentage of WI production for the three and nine months ended September 30, 2024 were comparable to corresponding periods of 2023 and the prior quarter.

21

744

747


22

751
The Midas Block includes the Acordionero field, the Suroriente Block includes the Cohembi field, and the Chaza Block includes the Costayaco and Moqueta fields. Ecuador includes the Charapa and Chanangue Blocks.

Realized price per bbl for the three months ended September 30, 2024, decreased by 13% compared to the corresponding period of 2023, primarily as a result of a 8% decrease in Brent price and higher differentials. For the three months ended September 30, 2024, Castilla, Vasconia and Oriente differentials per bbl increased to $8.83, $5.07 and $9.15 compared to $6.64, $3.59 and $7.69, respectively, in the corresponding period of 2023.

Realized price per bbl for the nine months ended September 30, 2024, increased by 1%, compared to the corresponding period of 2023, as a result of lower differentials. For the nine months ended September 30, 2024, Castilla Vasconia and Oriente differentials per bbl decreased to $8.62, $4.70 and $8.52 from $10.41, $5.66 and $10.85, respectively, in the corresponding period of 2023.

Compared to the prior quarter, the average realized price per bbl decreased by 11%, primarily due to a 7% decrease in Brent price and higher differentials in the current quarter.

23

769

Oil sales for the three months ended September 30, 2024, decreased by 16% to $151.4 million compared to the corresponding period of 2023 due to a 8% decrease in Brent price, 4% lower sales volumes and higher differentials.

Oil sales for the nine months ended September 30, 2024, decreased by 2% to $474.6 million, compared to the corresponding period of 2023 due to 3% lower sales volumes, partially offset by lower differentials.

Compared to the prior quarter, oil sales decreased by 9%, primarily due to a 7% decrease in Brent price and higher differentials, partially offset by a 1% increase in sales volumes.

The following table shows the effect of changes in realized price and sale volumes on our oil sales for the three and nine months ended September 30, 2024, compared to the prior quarter and the corresponding periods of 2023:

(Thousands of U.S. Dollars)Three Months Ended September 30, 2024, Compared with Three Months Ended June 30, 2024Three Months Ended September 30, 2024, Compared with Three Months Ended September 30, 2023Nine Months Ended September 30, 2024 Compared with Nine Months Ended September 30, 2023
Oil sales for the comparative period$165,609 $179,921 $482,013 
Realized sales price (decrease) increase effect(17,872)(22,199)3,770 
Sales volumes increase (decrease) effect3,636 (6,349)(11,224)
Oil sales for the three and nine months ended September 30, 2024
$151,373 $151,373 $474,559 

24

(U.S. Dollars per bbl Sales Volumes NAR)Three Months Ended September 30, 2024, Compared with Three Months Ended June 30, 2024Three Months Ended September 30, 2024, Compared with Three Months Ended September 30, 2023Nine Months Ended September 30, 2024 Compared with Nine Months Ended September 30, 2023
Average realized price, net of transportation expenses for the comparative period$69.76 $72.51 $65.70 
Decrease in benchmark oil prices(6.32)(7.21)(0.12)
(Increase) decrease in quality and transportation discounts(1.31)(2.27)0.65 
Decrease (increase) in transportation expenses0.81 (0.09)(0.54)
Average realized price, net of transportation expenses,
for the three and nine months ended September 30, 2024
$62.94 $62.94 $65.69 
Average realized price, net of transportation expenses as a % of Brent
80 %80 %80 %

Operating Netback

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