Gran Tierra Energy Inc.

Good morning, ladies and gentlemen, and welcome to Grand Tierra Energy's results conference call for the second quarter of 2023. My name is Shannon, and I will be your coordinator for today. At this time, all participants are in listening mode. Following the initial remarks, we will conduct a question and answer session for securities analysts and institutions. Instructions will be provided at that time for you to queue up for questions. I would like to remind everyone that this conference call is being webcast and recorded today, Wednesday, August 2, 2023, at 11 o'clock a.m. Eastern Time. Today's discussion may include certain forward-looking state information, as well as certain non-GAAP financial measures. Please refer to the earnings and operational update press release we issued yesterday for important disclaimers with regard to this information and reconciliations of any non-GAAP measures discussed on today's call. Any production volumes are based on working interest sales before royalties. Finally, this earnings call is the property of Grand Tierra Energy, Inc. Any copying or rebroadcasting of this call is expressly forbidden without the written consent of Grand Tierra Energy. I will now turn the conference call over to Gary Guidry, President and Chief Executive Officer of Grand Tierra. Mr. Guidry, please go ahead.

Thank you, operator. Good morning and thank you for joining Granteer's second quarter 2023 results conference call. My name is Gary Guidry, President and Chief Executive Officer, and with me today are Ryan Elson, our Executive Vice President and Chief Financial Officer, and Rob Will, our Vice President of Asset Management. On Tuesday, August 1st, 2023, we issued two press releases that included detailed information on our second quarter 2023 results and about our mid-year 2023 reserves update, both of which are available on our website. Ryan and Rob will make a few brief comments, and then we will open the line for questions. I'll now turn the call over to Ryan.

Thanks, Gary. Good morning, everyone. During the first half of 2023, Grand Tierra completed its development campaign with a drone of 21 development wells in three of our major fields, which have been producing oil at rates in line or exceeding our expectations. Grand Tierra achieved another strong quarter by delivering $53 million of funds flow while incurring $66 million in capital expenditures, which were both broadly the same as the first quarter of this year. Adjusted EBITDA was $85 million compared to $89 million in the prior quarter. Both fund flow and adjusted EBITDA were negatively impacted by $13 million in realized foreign exchange loss during the quarter, which was caused by a strengthening of the Colombian peso versus the U.S. dollar. With the development campaign now complete, we expect capital expenditures to be lower for the second half of the year, while benefiting from the increased production from our new producing wells. Looking ahead, we are entering an exciting phase of growth where we are gearing up to drill exploration wells in Ecuador in the fourth quarter, of 2023, building on our successful 2022 exploration campaign. As of June 30th, 2023, the company had a cash balance of $69 million and net debt of $503 million. With a forecasted free cash flow in the second half of 2023, we expect to exit 2023 with over $150 million of cash. Looking to pricing, during the quarter, the Brent oil price averaged $77.73 per barrel, which was down 31% from one year ago and down 5% from the prior quarter. The company's quality and transportation discount narrowed to $14.10 per barrel, down from $18.45 per barrel in the prior quarter. The Castilla and Vasconia oil differentials have continued to narrow throughout 2023. During the second quarter, the Vasconia differential narrowed to $5.53 per barrel, down from $7.87 per barrel in the prior quarter, while the Castilla oil differential narrowed to $9.41 per barrel, down from $15.17 per barrel over the same time period. In July 2023, we have continued to see differentials narrowing, with the Vasconia differential down to $3.96 per barrel and the Castilla differential down to $6.64 per barrel. Grand Tiers average production for second quarter was 33,719 barrels per day, up 10% from one year ago, an increase of 7% compared to the prior quarter. The company's second quarter to date 2023 average production has been approximately 35,300. The company's operating net back was $34.58 per barrel, down 42% from one year ago and down 2% from the prior quarter. The drop in operating net back over the last year was largely driven by the decrease in oil price and the higher differentials over the time period. With the strong current production base, Brent oil price above $80 per barrel, narrow differentials, and the majority of capital expenditures behind us, we're very excited about the second half of the year. We're also pleased to announce we plan to invest again in the protection and conservation of the Indian Amazon rainforest in the Putamayo Basin of Columbia by extending our support to the Natural Amazonas Project. During the first six years of the project, Grand Tierra's initial investment of $13 million has already produced impactful results and benefited the environment and local communities, including the reforestation and restoration of over 14,000 hectares of land and planting of over 1.2 million trees. We look forward to our continued partnership with the NGO Conservation International and are excited to build upon the positive impacts we've already made with the Natural Amazonas project. I'll now turn the call over to Rob to discuss our mid-year 2023 reserve update and operational highlights from our second quarter results.