Gran Tierra Energy Inc. (NYSE MKT:GTE)(TSX:GTE), a company focused on oil and gas exploration and production in Colombia, is pleased to announce that the Company submitted winning bids totaling a combined $30.4 million for two blocks which Ecopetrol S.A., Colombia's national oil company, offered as part of the Ronda Campos Ecopetrol 2016 in an electronic live auction held on November 25, 2016. Gran Tierra's winning bids are for the Santana and Nancy-Burdine-Maxine Blocks, which are located in the Putumayo Basin. Under the terms of the Bid Round, a purchase and sale agreement relating to each block must be submitted to Ecopetrol by December 7, 2016, and executed by December 22, 2016. Gran Tierra intends to finance these acquisitions with cash on hand and available borrowings under its revolving credit facility.
Ecopetrol holds operatorship and a 100% working interest in each of the Santana and Nancy-Burdine-Maxine Blocks. Upon execution of definitive documents relating to the purchase of these blocks, Ecopetrol will transfer ownership of the blocks' assets, contracts, permits and licenses, as well as 100% ownership of Ecopetrol's rights and obligations in respect of the oil and gas assets, by entering into assignment agreements with Gran Tierra. Each assignment agreement would be subject to the prior approval of Colombia's Agencia Nacional de Hidrocarburos (ANH).
Key Attributes of Acquisitions
Santana and Nancy-Burdine-Maxine Blocks (100% WI)
Gary Guidry, President and Chief Executive Officer of Gran Tierra, commented:
"These acquisitions are a continuation of Gran Tierra's focused strategy to build a high-quality, diversified portfolio to efficiently create value in the multi-horizon, proven hydrocarbon producing basins of Colombia. The Nancy-Burdine-Maxine Block provides upside potential through EOR by investing in advanced drilling and waterflooding techniques. Having already established reserves and production in the Villeta N, T and U sands, the Nancy-Burdine-Maxine Block provides a core operating hub for the identified multi-horizon exploration drilling plans on adjoining Gran Tierra lands over the next 3 years.
Gran Tierra operated the Santana Block through July 2015 when the contract expired, so we know these assets well. The important fluid processing, and transportation infrastructure where we ship, under tariff, Costayaco, Moqueta and Guayuyaco production, will be the core transportation system as we explore and expand throughout the Putumayo. We will be able to scale the system as required, and maintain the efficient cost structure and appropriate investment timing being the operator of the network. As with the Nancy-Burdine-Maxine Block, the Miraflor, Mary, Linda and Toroyaco fields in the Santana Block provide upside with EOR investment, and multi-horizon exploration potential."