Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gran Tierra Energy Inc (GTE, Financial) reported a net income of $36 million or $1.16 per share for the second quarter of 2024.
- The company achieved an operating netback of $113 million, up from $105 million in the previous quarter.
- Gran Tierra Energy Inc (GTE) successfully preserved $85 million in net operating loss carryforwards for future tax benefits.
- Oil sales increased by 5% to $166 million due to higher Brent pricing and narrower oil differentials.
- The company repurchased approximately 400,000 shares during the quarter, continuing its share buyback program.
Negative Points
- Capital expenditures rose to $61 million, higher than the previous quarter's $55 million, impacting cash flow.
- Transportation expenses increased by 24% due to the El Niño phenomenon affecting delivery routes.
- Temporary offline status of wells for planned completions impacted production by about 700 barrels per day.
- The company's net debt stood at $521 million, with a net debt to adjusted EBITDA ratio of 1.3 times.
- Operating expenses, although decreased by 3%, still represent a significant cost at $47 million for the quarter.
Q & A Highlights
Q: Can you discuss the production outlook for the second half of the year and provide more details on the tax moves?
A: Sebastien Morin, Chief Operating Officer, stated that they are pleased with the first half results and are looking forward to upcoming catalysts. The company continues to reiterate its guidance for the year. Ryan Ellson, Chief Financial Officer, explained that they retained $85 million of non-capital losses to benefit from a higher tax rate environment and accelerated long-term receivables, resulting in no cash outflow despite booking a current tax expense.
Q: How much do you expect to spend on CapEx during the second half of the year, and will there be any reversal in working capital?
A: Ryan Ellson, Chief Financial Officer, mentioned that they are comfortable with the current capital guidance and do not expect a reversal in working capital in the following quarter, as the release was primarily due to tax filings and moving long-term receivables to current.
Q: What are the key factors contributing to the increase in transportation expenses?
A: Sebastien Morin, Chief Operating Officer, explained that transportation expenses increased due to the El Niño phenomenon causing low water levels in the Magdalena River, which required longer delivery routes. However, river levels have returned to normal, allowing for preferred shorter delivery routes in the second half of 2024.
Q: Can you provide an update on the exploration program in the Chenango block?
A: Sebastien Morin, Chief Operating Officer, reported active drilling and installation of multi-zone selective completions at the Bocachico-Norte AJ1 well. Testing is underway and expected to continue throughout the third quarter, with positive shows indicating potential productive fracture networks.
Q: How is the company progressing with its share buyback program?
A: Ryan Ellson, Chief Financial Officer, stated that share buybacks remain a key area for allocating free cash flow. Since January 1, 2023, Gran Tierra has repurchased approximately 11% of outstanding shares, including 400,000 shares during the second quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
