Gran Tierra Energy (GTE)

[dan_s]

Sweet 16 Growth Portfolio: An updated Net Income and Cash Flow Forecast model for Gran Tierra Energy (GTE) has been posted under the Sweet 16 Tab. Members can find my adjusted Fair Value for GTE at the bottom of the forecast model.

GTE is one more example of how screwed up some of the accounting rules are for E&P companies. Quarterly earnings have become almost worthless for E&P companies that have aggressive drilling programs. Just focus on CFPS and don't waste your time trying to figure out this stuff.

GTE did have some production issues (3rd party facilities) in the 1st quarter that are behind them now. 2nd quarter production jumps to over 21,000 boepd (96% oil) and should continue to grow.

These are the highlights that matter:
1st Quarter 2012:
•Funds flow from operations of $78.9 million compared to $66.6 million for the same period in 2011;
•Cash and cash equivalents were $230.1 million at March 31, 2012, compared to $351.7 million at December 31, 2011, largely due to capital spending and timing differences relating to when Ecopetrol settles our accounts receivables;
•Working capital decreased to $171.5 million at March 31, 2012, compared to $213.1 million at December 31, 2011;
•Successfully drilled and tested the Ramiriqui-1 oil exploration well in the Llanos Basin, Colombia. The well tested at a restricted rate of 2,525 barrels of oil per day ("BOPD") gross of 26°API crude oil;
•Successfully drilled and tested the Proa-2 appraisal well in the Proa oil discovery on the Surubi Block, Argentina. The well tested 6,300 BOPD of 46° API crude oil;
•Successfully drilled two appraisal wells on Block 155 in the Recôncavo Basin, Brazil;
•Completed the Moqueta 3D seismic program with interpretation ongoing to assist in full field development planning. Gran Tierra Energy expects to complete the field development planning in the fourth quarter of 2012 (Moqueta Field could add up to 10,000 BOPD in 2013); and
•Advanced location construction and rig mobilization for the La Vega Este-1 oil exploration well on the Azar Block in the Putumayo Basin of Colombia, which Gran Tierra Energy expects to spud in early May.