Gran Tierra Energy Inc. (AMEX:GTE) Q4 2022 Earnings Call Transcript

Josef Schachter: Okay. Lastly, Gary again, as a shareholder and as somebody who’s been a fan of the company and the opportunity in Colombia and Ecuador, you see a lot of the stocks in Colombia have a discount to valuations. And as you highlighted with your colleagues in the presentation about the discount NAV, and as Ryan mentioned, selling or buying is possible. Is the barrel cheaper on Bay Street and Wall Street than spending money? And is there interest in potentially selling some assets and then doing a substantial issuer bid and waking everybody up to the underlying value that is currently being ignored?

Gary Guidry: Yes, again, the short answer, I think, is on a continuous basis, we’re looking at how we create value. Ryan mentioned the debt levels. If we have discoveries that we see long-term will develop, we’ll adjust accordingly in terms of our balance sheet. We also are looking at other basins around the world. We’ve all seen the large companies starting to divest non-core assets, which we believe, in many cases a company of our size and our portfolio, we can create a lot of value regardless of the valuations on the stock price. We look at it as we’re in this business for the long-term, long-term being the next five years, not the next five weeks. And we will direct our efforts both on our current assets and new assets that we diversify into in other basins, other assets.

And I think you hit a good point. We also are looking at — we’ll look at opportunities to bring in other partners and things that we’re doing to dilute our interest. But everything we have in our portfolio today, we really like and we really believe that we can create value, and we’re just looking to expand that portfolio.

Josef Schachter: Okay. Thanks very much for taking my questions and I’ll be rooting for more breakthroughs in 2023. Thanks very much.

Gary Guidry: Thank you.

Operator: Thank you. Our next question comes from Alexandra Symeonidi from William Blair. Please go ahead.

Alexandra Symeonidi: Hi, thank you for taking my question. Most of my questions have been answered. I just have one. If you have estimated total tax in 2023, given your guidance for production and your estimate for oil prices and the discounts. So, tax that would include the surcharge and the non-deductibility of royalties. Have you made that calculation, that estimate?

Ryan Ellson: Yes, estimate tax based off of $85 Brent and again paid on differentials and what pricing used. But we’d expect our current tax to be $110 million to $130 million.

Alexandra Symeonidi: And this includes several royalties, or what you need to pay for the royalties? I mean the non-deductibility–?

Ryan Ellson: Yes, that our current tax bill for to 2023, which will be paid in two installments in 2024.

Operator: Thank you. Our next question comes from Philip Skolnick with Eight Capital. Please go ahead.

Philip Skolnick: Thanks. Good morning. Just going back to Suroriente. If you were to get the contract renewal, how do we think about the reserve adds with respect to that? And also, would there be any potential changes to this year’s CapEx budget, maybe production target?

Gary Guidry: Yes, I think the answer, Phil, is our plans for Suroriente would be to expand the waterflood. We’ve done a lot of work over the last few years. In terms of the capital program, there would be some minor adjustments. But the we would look more at a three-year type plan to expand the waterflood to increase some of the development drilling in the block. So, you wouldn’t see a major change in the capital program this year. But over the next three years, we would focus a lot of effort on increasing reserves. We are taking a look at what would change in our reserve base going forward. But we don’t want to be premature in waiting for the contract actually to be signed. And we’re working mutually with Ecopetrol and trying to put that program together.