GRAN TIERRA ENERGY INC
For the period ended Sep 30, 2024. Filed Nov 4, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 4, 2024
GTE$9.42+0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-07-31.
0001273441-24-000023
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-04.
0001273441-24-000036
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 85 previous paragraphs and 90 current paragraphs.
28 unchanged; 40 reworded; 22 added; 17 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 19 previous and 19 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (22)
Current report
•On August 19, 2024, we entered into an agreement to acquire all of the issued and outstanding common shares of i3 Energy for $225.4 million, consisting of a cash consideration of $168.9 million, a cash dividend of $4.2 million and the issuance of approximately 6.0 million shares of our Common Stock. The acquisition closed on October 31, 2024.
Current report
•Brent oil price averaged $78.71 during the quarter, a decrease of 8% from comparable period of 2023 and 7% decrease from the prior quarter. Castilla, Vasconia and Oriente differentials averaged to$8.83, $5.07 and $9.15 during the quarter, an increase of 33%, 41% and 19% from the comparable period of 2023, and an increase of 8%, 27% and 9%, respectively, from the prior quarter
Current report
•Adjusted EBITDA(2) decreased to $92.8 million, compared to $119.2 million in the third quarter of 2023 and $103.0 million in the prior quarter
Current report
•Oil sales for the third quarter of 2024 decreased by 16% to $151.4 million, compared to the third quarter of 2023, primarily due to a lower Brent price, lower sales volumes, and higher differentials. Oil sales decreased by 9% from $165.6 million in the prior quarter due to a lower Brent price and higher differentials, partially offset by an increase in sales volumes
Current report
•Transportation expenses increased by 2% or $0.09 per bbl when compared to the third quarter of 2023 due to an increase in trucking tariffs for Acordionero volumes and higher sales volumes transported in Ecuador. Transportation expenses decreased by 31% or $0.81 per bbl compared to the prior quarter due to the utilization of shorter distance delivery points during the current quarter
Current report
•Operating netback(2)decreased to $101.4 million compared to $126.7 million in the third quarter of 2023 and $112.9 million in the prior quarter
Current report
Realized price per bblfor the three months ended September 30, 2024, decreased by 13% compared to the corresponding period of 2023, primarily as a result of a 8% decrease in Brent price and higher differentials. For the three months ended September 30, 2024, Castilla, Vasconia and Oriente differentials per bbl increased to$8.83, $5.07 and $9.15 compared to $6.64,$3.59 and$7.69, respectively, in the corresponding period of 2023.
Current report
Realized price per bbl for the nine months ended September 30, 2024, increased by 1%, compared to the corresponding period of 2023, as a result of lower differentials. For the nine months ended September 30, 2024, Castilla Vasconia and Oriente differentials per bbl decreased to$8.62,$4.70 and$8.52 from$10.41, $5.66 and $10.85, respectively, inthe corresponding period of 2023.
Current report
Oil sales for the nine months ended September 30, 2024, decreased by 2% to $474.6 million, compared to the corresponding period of 2023 due to 3% lower sales volumes, partially offset by lower differentials.
Current report
Operating expenses for the three months ended September 30, 2024, decreased by 7% to $46.1 million or by $0.67 per bbl to $19.66 compared to the corresponding period of 2023, primarily due to $0.96 per bbl lower lifting costs associated with power generation, equipment rental and road maintenance which were partially offset by $0.29 per bbl higher workover activities.
Current report
Operating expenses for the nine months ended September 30, 2024, increased by 2% to $141.6 million or by $0.80 per bbl to $20.20 per bbl compared to the corresponding period of 2023, primarily as a result of $1.02 per bbl higher workover costs which were partially offset by $0.22 per bbl lower power generation costs.
Current report
Compared to the prior quarter, operating expenses decreased by 2% from $47.0 million, or by$0.86 per bbl from $20.52 per bblprimarily due to $1.41 per bbl lower workover costs which were partially offset by$0.55 per bbl higher lifting costs primarily associated with inventory fluctuation in Ecuador and community aid initiatives in Colombia.
Current report
Transportation expenses for the three and nine months ended September 30, 2024, increased by 2% and 34% to $3.9 million and $14.2 million, respectively, compared to the corresponding periods of 2023, due to an increase in trucking tariffs for Acordionero volumes and higher sales volumes transported in Ecuador during the current quarter.
Current report
Transportation expenses decreased by 31% or $0.81 per bbl from $5.7 million or $2.48 per bbl in the prior quarter due to the utilization of shorter distance delivery points during the current quarter.
Current report
G&A expenses before stock-based compensation for the three and nine months ended September 30, 2024, increased by 14% and 8% or $0.63 and $0.41 per bbl, respectively, compared to the corresponding periods of 2023, primarily due to higher travel and general office expenses.
Current report
G&A expenses after stock-based compensation for the three months ended September 30, 2024, decreased by 38% or $1.51 per bbl, compared to the corresponding period of 2023, due to stock-based compensation recovery attributed to a lower share price during the current quarter.
Current report
G&A expenses after stock-based compensation for the nine months ended September 30, 2024, increased by 15%, or $0.80 per bbl, compared to the corresponding period of 2023 due to higher travel and general office expenses and higher stock-based compensation expense attributed to higher share price during current period.
Current report
Compared to the prior quarter, G&A expenses after stock-based compensation decreased by 63% or $4.76 per bbl due to stock-based compensation recovery attributed to a lower share price during the current quarter.
Current report
On August 19, 2024, we entered into a credit facility agreement (“Loan Facility”) with a market leader in the global commodities industry to fund the cash consideration payable to i3 Energy’s shareholders in connection with the acquisition of i3 Energy and associated costs (Note 12). The Loan Facility has a borrowing base of £80.0 million (US$107.0 million) and bears interest based on a three-month secured overnight financing rate posted by the Federal Reserve Bank of New York plus a margin of 3.00% per annum for the first three months after the initial drawdown and 6.00% per annum thereafter. The Loan Facility is subject to a commitment fee equal to the higher of $0.5 million and 0.5% of the borrowing base converted to US dollars using the agreed upon GBP to USD foreign exchange rate at the time of initial drawdown date. The commitment fee is payable on the earlier of the date of the initial drawdown and the three months after signing date of the Loan Facility. The undrawn amounts under the Loan Facility bear interest at 0.5% per annum, based on the available amount. The Loan Facility was terminated on October 31, 2024.
Current report
As of September 30, 2024, there was no outstanding balance under the Loan Facility.
Current report
On October 31, 2024, we acquired all of the issued and outstanding common shares of i3 Energy for $225.4 million, consisting of cash consideration of $168.9 million, a cash dividend of $4.2 million and approximately 6.0 million shares of Gran Tierra’s Common Stock, the fair value of which was determined to be $52.3 million based on the closing price of the Company’s shares on the acquisition date. i3 Energy is an oil and gas exploration and production company, incorporated in England and Wales with production assets located in the Western Canadian Sedimentary basin. The acquisition was accounted for as a business combination using the acquisition method. During the three and nine months ended September 30, 2024, we incurred approximately $1.5 million in transaction costs associated with the acquisition of i3 Energy.
Current report
In connection with i3 Energy acquisition closing on October 31, 2024, we amended and restated the existing revolving credit facility agreement of i3 Energy Canada Ltd. (“i3 Energy Canada”) with National Bank of Canada dated March 22, 2024. As a result of the amendment and restatement, among other things, the borrowing base was revised to C$100.0 million (US$74.1 million) with available commitment of a C$50.0 million (US$37.0 million) revolving credit facility comprised of C$35.0 million (US$25.9 million) syndicated facility and C$15.0 million (US$11.1 million) of operating facility. Subject to the next borrowing base redetermination which will occur on or before June 30, 2025, the revolving credit facility is available until October 31, 2025 with a repayment date of October 31, 2026, which may be extended by further periods of up to 364 days, subject to lender approval. The drawn down amounts under the revolving credit facility can either be in Canadian or U.S. dollars and bear interest rates equal to either the Canadian prime rate or U.S. Base Rate plus a margin ranging from 2.00% to 4.00% per annum or for CORRA loans and SOFR loans plus a margin ranging from 3.00% to 5.00% per annum. Undrawn amounts under the revolving credit facility bear standby fee ranging from 0.75% to 1.25% per annum. In each case, the margin or standby fee, as applicable is based on Net Debt to EBITDA ratio of Gran Tierra Canada Ltd.
Removed paragraphs (17)
Previous report
•Funds flow from operations(2)was $46.2 million, compared to $53.1 million in the second quarter of 2023 and $74.3 million in the prior quarter
Previous report
•Oil sales for the second quarter of 2024 were $165.6 million, 5% higher compared to the second quarter of 2023, primarily due to an increase in Brent price and lower Castilla, Vasconia, and Oriente differentials. Oil sales increased by 5% from $157.6 million in the prior quarter for the same reason mentioned above
Previous report
•Operating expenses decreased by 3% to $47.0 million when compared to the second quarter of 2023, primarily as a result of lower lifting costs. On per bbl basis, operating expenses increased by $0.98 to $20.52 compared to the corresponding period of 2023 as a result of 8% lower sales volumes in the current quarter. Operating expenses decreased from $48.5 million in the prior quarter as a result of lower workover activities and were comparable on a per bbl basis
Previous report
•Transportation expenses per bbl increased by $0.99 and $0.55 when compared to the second quarter of 2023 and the prior quarter, respectively, resulting from the utilization of longer distance delivery points in response to lower water levels in the Magdalena river
Previous report
•Operating netback(2)increased to $112.9 million compared to $105.7 million in the second quarter of 2023 and $104.5 million in the prior quarter
Previous report
Realized price per bblfor the three and six months ended June 30, 2024, increased by 14% and 9%, respectively, compared to the corresponding periods of 2023, primarily as a result of a 9% and 4% increase in Brent price and lower differentials. For the three and six months ended June 30, 2024, Castilla differentials decreased to$8.21 and $8.51 per barrel from$9.41 and $12.29 per barrel, respectively, in the corresponding periods of 2023. Vasconia differentials decreased to $4.00 and $4.52 per barrel from$5.53 and $6.70 per barrel, respectively, in the corresponding periods of 2023. Oriente differentials decreased to$8.38 and$8.20 per barrel from $11.43 and $12.43 per barrel, respectively, in the corresponding periods of 2023.
Previous report
Operating expenses for the six months ended June 30, 2024, increased by 6% to $95.5 million or by $1.54 per bbl to $20.47 per bbl compared to the corresponding period of 2023, primarily as a result of higher workover costs.
Previous report
Compared to the prior quarter, operating expenses decreased by 3% from $48.5 million, primarily due to lower workover activities and were comparable on a per bbl basis.
Previous report
On a per bbl basis, transportation expenses for the three and six months ended June 30, 2024, increased by $0.99 and $0.78 to $2.48 and $2.20, respectively, compared to the corresponding periods of 2023 for the same reason mentioned above.
Previous report
Transportation expenses increased by 24% or $0.55 per bbl from $4.6 million, or $1.93 per bbl in the prior quarter for the same reason mentioned above.
Previous report
DD&A expenses for the three months ended June 30, 2024, were comparable to the corresponding period of 2023. On a per bbl basis, DD&A expenses increased by $1.56 due to lower sales volumes in the current quarter.
Previous report
Severance Expenses
Previous report
For the three and six months ended June 30, 2024, severance expenses were $0.2 million and $1.5 million, respectively, compared with no severance expenses in each of the corresponding periods of 2023, as a result of headcount optimization. Severance expenses were recorded as incurred based on existing employee contracts, statutory requirements, completed negotiations and company policy.
Previous report
G&A expenses before stock-based compensation for the three months ended June 30, 2024, increased by 12% or $0.83 per bbl due to higher information technology expenses, general office expenses and bank fees compared to the corresponding period of 2023.
Previous report
G&A expenses before stock-based compensation for the six months ended June 30, 2024, decreased by 2% to $20.3 million due to lower legal costs compared to the corresponding period of 2023. On a per bbl basis, G&A expenses before stock-based compensation were comparable to the corresponding period of 2023.
Previous report
G&A expenses after stock-based compensation for the three and six months ended June 30, 2024, increased by 71% and 32%, or $3.39 and $1.63 per bbl, respectively, compared to the corresponding periods of 2023 due to share price appreciation and the modification of the accounting for the stock option plan from equity to liability which resulted in additional compensation costs in the current quarter of $0.4 million.
Previous report
Compared to the prior quarter, G&A expenses after stock-based compensation increased by 31% or $1.94 per bbl for the same reason mentioned above.
Reworded paragraphs (40)
Previous wording
Key Highlights for the second quarter of 2024
Current wording
Key Highlights for the third quarter of 2024
Previous wording
•Net income in the second quarter of 2024 was $36.4 million or $1.16 per share basic and diluted, compared to a net loss of $10.8 million or $(0.33) per share basic and diluted in the second quarter of 2023 and a net loss of $0.1 million in the prior quarter
Current wording
•Net income for the third quarter of 2024 was $1.1 million or $0.04 per share basic and diluted, compared to a net income of $6.5 million or $0.20 per share basic and diluted for the third quarter of 2023 and a net income of $36.4 million for the prior quarter
Previous wording
•Income before income taxes in the second quarter of 2024 was $27.3 million, compared to income before income taxes of $22.9 million in the second quarter of 2023
Current wording
•Income before income taxes for the third quarter of 2024 was $21.9 million, compared to income before income taxes of $46.9 million for the third quarter of 2023 and income before income taxes of $27.3 million for the prior quarter.
Previous wording
•Adjusted EBITDA(2) increased to $103.0 million, compared to $97.3 million in the second quarter of 2023 and increased from $94.8 million in the prior quarter
Current wording
•Funds flow from operations(2)decreased to $60.3 million, compared to $79.0 million in the third quarter of 2023 and increased from $46.2 million in the prior quarter
Previous wording
•In the second quarter of 2024, we re-purchased 0.4 million shares of Common Stock through the 2023 share re-purchase program. During the period from October 20, 2023 to July 29, 2024 we have re-purchased a total of 2.6 million shares or 8% of the outstanding shares as of June 30, 2024
Current wording
•In the third quarter of 2024, we re-purchased 0.4 million shares of Common Stock through the 2023 share re-purchase program. During the period from November 3, 2023 to September 30, 2024, we have re-purchased a total of 2.7 million shares or 9% of the outstanding shares as of September 30, 2024
Previous wording
•NAR production for the second quarter of 2024 decreased by 4% to 26,002 BOPD, compared to 27,204 BOPD in the second quarter of 2023 and was comparable to 25,845 BOPD in the prior quarter
Current wording
•NAR production for the third quarter of 2024 decreased by 3% to 25,988 BOPD, compared to 26,776 BOPD in the third quarter of 2023 and was comparable to 26,002 BOPD in the prior quarter
Previous wording
•Sales volumes for the second quarter of 2024 decreased by 8% to 25,191 BOPD, compared to 27,271 BOPD in the second quarter of 2023 and decreased by 3% from 26,080 BOPD in the prior quarter
Current wording
•Sales volumes for the third quarter of 2024 decreased by 4% to 25,464 BOPD, compared to 26,396 BOPD in the third quarter of 2023 and increased by 1% from 25,191 BOPD in the prior quarter
Previous wording
Operating expenses for the three months ended June 30, 2024, decreased by 3% to $47.0 million compared to the corresponding period of 2023, primarily due to lower lifting costs, partially offset by higher workover activities. On a per bbl basis, operating expenses increased by $0.98 per bbl to $20.52 per bbl compared to the corresponding period of 2023 as a result of 8% lower sales volumes in the current quarter.
Current wording
•Operating expenses decreased by 7% or $0.67 per bbl to $46.1 million or $19.66 per bbl when compared to the third quarter of 2023, primarily as a result of lower lifting costs, partially offset by higher workover activities. Operating expenses decreasedby 2% or$0.86 per bbl from$47.0 million or $20.52 per bbl in the prior quarter as a result of lower workover activities
Previous wording
•Quality and transportation discounts for the second quarter of 2024 decreased to $12.79 per bbl compared to $14.10 per bbl in the second quarter of 2023 and $15.36 per bbl in the prior quarter, primarily as a result of the tightening of the Castilla, Vasconia, and Oriente differentials
Current wording
•Quality and transportation discounts for the third quarter of 2024 increased to $14.10 per bbl compared to $11.83 per bbl in the third quarter of 2023 and $12.79 per bbl in the prior quarter
Previous wording
•General and administrative (“G&A”) expenses before stock-based compensation for the second quarter of 2024 increased to $10.7 million compared to $9.5 million in the second quarter of 2023 and $9.5 million in the prior quarter due to higher information technology expenses, general office expenses and bank fees during the current quarter
Current wording
•General and administrative (“G&A”) expenses before stock-based compensation for the third quarter of 2024 increased to $9.5 million compared to $8.3 million in the third quarter of 2023 due to higher travel and general office expenses and decreased from $11.0 million in the prior quarter due to lower consulting, business development and travel expenses during the current quarter
Previous wording
•Capital additions for the second quarter of 2024 were $61.3 million compared to $65.6 million in the second quarter of 2023 due to a lower number of wells drilled in the second quarter of 2024, and compared to $55.3 million in the prior quarter due to the commencement of the 2024 seismic program in Ecuador
Current wording
•Capital additions for the third quarter of 2024 were $52.9 million compared to $43.1 million in the third quarter of 2023 due to a more active exploration program in the third quarter of 2024, and compared to $61.3 million in the prior quarter due to operating one drilling rig during the current quarter compared to two in the prior quarter
Previous wording
Operating netback, EBITDA, adjusted EBITDA, and funds flow from operations are non-GAAP measures that do not have any standardized meaning prescribed under GAAP. Management views these measures as financial performance measures. Investors are cautioned that these measures should not be construed as alternatives to oil sales, net (loss) income or other measures of financial performance as determined in accordance with GAAP. Our method of calculating these measures may differ from other companies and, accordingly, may not be comparable to similar measures used by other companies. Disclosure of each non-GAAP financial measure is preceded by the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure.
Current wording
Operating netback, EBITDA, adjusted EBITDA, and funds flow from operations are non-GAAP measures that do not have any standardized meaning prescribed under GAAP. Management views these measures as financial performance measures. Investors are cautioned that these measures should not be construed as alternatives to oil sales, net income (loss) or other measures of financial performance as determined in accordance with GAAP. Our method of calculating these measures may differ from other companies and, accordingly, may not be comparable to similar measures used by other companies. Disclosure of each non-GAAP financial measure is preceded by the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure.
Previous wording
EBITDA, as presented, is defined as net income (loss) adjusted for depletion, depreciation and accretion (“DD&A”) expenses, interest expense and income tax expense. Adjusted EBITDA, as presented, is defined as EBITDA adjusted for non-cash lease expense, lease payments, foreign exchange gain or loss, stock-based compensation expense and other gain or loss. Management uses this supplemental measure to analyze performance and income generated by our principal business activities prior to the consideration of how non-cash items affect that income and believes that this financial measure is useful supplemental information for investors to analyze our performance and our financial results. A reconciliation from net (loss) income to EBITDA and adjusted EBITDA is as follows:
Current wording
EBITDA, as presented, is defined as net income (loss) adjusted for depletion, depreciation and accretion (“DD&A”) expenses, interest expense and income tax expense or recovery. Adjusted EBITDA, as presented, is defined as EBITDA adjusted for non-cash lease expense, lease payments, foreign exchange gain or loss, stock-based compensation expense or recovery, transaction costs related to the acquisition of i3 Energy and other gain or loss. Management uses this supplemental measure to analyze performance and income generated by our principal business activities prior to the consideration of how non-cash items affect that income and believes that this financial measure is useful supplemental information for investors to analyze our performance and our financial results. A reconciliation from net (loss) income to EBITDA and adjusted EBITDA is as follows:
Previous wording
Funds flow from operations, as presented, is defined as net income (loss) adjusted for DD&A expenses, deferred income tax expense or recovery, stock-based compensation expense, amortization of debt issuance costs, non-cash lease expense, lease payments, unrealized foreign exchange gain or loss and other gain or loss. Management uses this financial measure to analyze performance and income generated by our principal business activities prior to the consideration of how non-cash items affect that income and believes that this financial measure is also useful supplemental information for investors to analyze performance and our financial results. A reconciliation from net income (loss) to funds flow from operations is as follows:
Current wording
Funds flow from operations, as presented, is defined as net income (loss) adjusted for DD&A expenses, deferred income tax expense or recovery, stock-based compensation expense or recovery, amortization of debt issuance costs, non-cash lease expense, lease payments, unrealized foreign exchange gain and other gain or loss. Management uses this financial measure to analyze performance and income generated by our principal business activities prior to the consideration of how non-cash items affect that income and believes that this financial measure is also useful supplemental information for investors to analyze performance and our financial results. A reconciliation from net income (loss) to funds flow from operations is as follows:
Previous wording
Oil production NAR for the three and six months ended June 30, 2024, decreased by 4% and 2%, respectively, compared to the corresponding periods of 2023 due to lower volumes in the Acordionero field caused by downtime related to workovers, partially offset by higher production in the Costayaco field in Colombia, and increased production from the Chanangue Block in Ecuador related to positive exploration well drilling results. Oil production NAR was comparable to the prior quarter.
Current wording
Oil production NAR for the three and nine months ended September 30, 2024, decreased by 3% and 2%, respectively, compared to the corresponding periods of 2023 due to lower volumes in the Acordionero field caused by downtime related to workovers, partially offset by higher production in the Costayaco field in Colombia and increased production from the Chanangue and Charapa Blocks in Ecuador related to positive exploration well drilling results. Oil production NAR was comparable to the prior quarter.
Previous wording
Royalties as a percentage of WI production for the three and six months ended June 30, 2024 increased to 21% and 20%, respectively, compared to the corresponding periods of 2023 and the prior quarter, commensurate with the increase in benchmark oil prices and the price sensitive royalty regime in Colombia and Ecuador.
Current wording
Royalties as a percentage of WI production for the three and nine months ended September 30, 2024 were comparable to corresponding periods of 2023 and the prior quarter.
Previous wording
Compared to the prior quarter, the average realized price per bbl increased by 9%, primarily due to a 4% increase in Brent price and lower differentials in the current quarter.
Current wording
Compared to the prior quarter, the average realized price per bbl decreased by 11%, primarily due to a 7% decrease in Brent price and higher differentials in the current quarter.
Previous wording
Oil salesfor the three and six months ended June 30, 2024, increased by 5% and 7% to $165.6 million and $323.2 million, respectively, compared to the corresponding periods of 2023 due to a 9% and 4% increase in Brent price and lower Castilla, Vasconia, and Oriente differentials, partially offset by an 8% and a 2% decrease in sales volumes, respectively.
Current wording
Oil salesfor the three months ended September 30, 2024, decreased by 16% to $151.4 million compared to the corresponding period of 2023 due to a 8% decrease in Brent price, 4% lower sales volumes and higher differentials.
Previous wording
Compared to the prior quarter, oil sales increased by 5%, primarily due to a 4% increase in Brent price and lower Castilla and Vasconia differentials, partially offset by a 3% decrease in sales volumes and slightly higher Oriente differential.
Current wording
Compared to the prior quarter, oil sales decreased by 9%, primarily due to a 7% decrease in Brent price and higher differentials, partially offset by a 1% increase in sales volumes.
Previous wording
The following table shows the effect of changes in realized price and sale volumes on our oil sales for the three and six months ended June 30, 2024, compared to the prior quarter and the corresponding periods of 2023:
Current wording
The following table shows the effect of changes in realized price and sale volumes on our oil sales for the three and nine months ended September 30, 2024, compared to the prior quarter and the corresponding periods of 2023:
Previous wording
We have options to sell our oil through multiple pipelines and trucking routes. Each option has varying effects on realized sales price and transportation expenses. The following table shows the percentage of oil volumes we sold in Colombia and Ecuador using each option for the three and six months ended June 30, 2024 and 2023, and the prior quarter:
Current wording
We have options to sell our oil through multiple pipelines and trucking routes. Each option has varying effects on realized sales price and transportation expenses. The following table shows the percentage of oil volumes we sold in Colombia and Ecuador using each option for the three and nine months ended September 30, 2024 and 2023, and the prior quarter:
Previous wording
Transportation expenses for the three and six months ended June 30, 2024, increased by 54% and 52% to $5.7 million and $10.3 million, respectively, compared to the corresponding periods of 2023, due to the utilization of longer distance delivery points in response to low water levels in the Magdalena river.
Current wording
On a per bbl basis, transportation expenses for the three and nine months ended September 30, 2024, increased by $0.09 and $0.54 to $1.67 and $2.02, respectively, compared to the corresponding periods of 2023 due to higher sales volumes transported in Ecuador, an increase in trucking tariffs and the utilization of the longer distance delivery points for the first half of 2024 in response to lower water levels in the Magdalena river.
Previous wording
DD&A expenses for the six months ended June 30, 2024, increased by 5% or by $1.09 per bbl due to higher costs in the depletable base compared to the corresponding period of 2023.
Current wording
DD&A expenses for the three and nine months ended September 30, 2024, increased by 1% and 2% or by$1.06 and$1.08 per bbl, respectively, due to higher costs in the depletable base compared to the corresponding periods of 2023.
Previous wording
DD&A expenses were comparable to prior quarter. On a per bbl basis, DD&A expenses increased by $0.55 compared to the prior quarter, due tolower sales volumes in the current quarter.
Current wording
DD&A expenses were comparable to prior quarter. On a per bbl basis, DD&A expenses decreased by $0.49 per bbl compared to the prior quarter, due to higher sales volumes in the current quarter.
Previous wording
Compared to the prior quarter, G&A expenses before stock-based compensation increased by 13% or $0.67 per bbl due to increased activity and higher information technology expenses.
Current wording
Compared to the prior quarter, G&A expenses before stock-based compensation decreased by 13% or $0.73 per bbl due to lower consulting, business development and travel expenses.
Previous wording
For the three and six months ended June 30, 2024, we had a $4.4 million and $5.2 million gain on foreign exchange compared to a $4.7 million and $6.4 million loss on foreign exchange in the corresponding periods of 2023, respectively, and a $0.8 million gain on foreign exchange in the prior quarter. Accounts payable, taxes receivable and payable and deferred income taxes are considered monetary items and require translation from local currencies to U.S. dollar functional currency at each balance sheet date. This translation was the primary source of the foreign exchange gains and losses in the periods.
Current wording
For the three and nine months ended September 30, 2024, we had a $3.1 million and $8.3 million gain on foreign exchange compared to a $1.7 million and $8.1 million loss on foreign exchange in the corresponding periods of 2023, respectively, and a $4.4 million gain on foreign exchange in the prior quarter. Accounts payable, taxes receivable and payable and deferred income taxes are considered monetary items and require translation from local currencies to U.S. dollar functional currency at each balance sheet date. This translation was the primary source of the foreign exchange gains and losses in the periods.
Previous wording
The following table presents the change in the U.S. dollar against the Colombian peso and Canadian dollar for the three and six months ended June 30, 2024, and 2023:
Current wording
The following table presents the change in the U.S. dollar against the Colombian peso and Canadian dollar for the three and nine months ended September 30, 2024 and 2023:
Previous wording
Current income tax expense was $46.2 million for the six months ended June 30, 2024, compared to $37.4 million in the corresponding period of 2023, primarily due to additional current tax expense related to tax planning strategy, which is partially offset by a decrease in taxable income.
Current wording
Current income tax expense was $61.4 million for the nine months ended September 30, 2024, compared to $63.7 million in the corresponding period of 2023, due to lower taxable income in Colombia, partially offset by additional current tax expense related to a tax planning strategy.
Previous wording
The deferred income tax for the six months ended June 30, 2024, was a recovery of $37.9 million primarily as a result of the recognition of additional tax losses resulting from a tax planning strategy which were partially offset by depreciation being higher than accounting depreciation and the use of tax losses to offset taxable income in Colombia.
Current wording
The deferred income tax for the nine months ended September 30, 2024, was a recovery of $32.3 million primarily as a result of the recognition of additional tax losses resulting from a tax planning strategy, which were partially offset by depreciation being higher than accounting depreciation and the use of tax losses to offset taxable income in Colombia.
Previous wording
For the six months ended June 30, 2024, the difference between the effective tax rate of 19% and the 50% Colombian tax rate was primarily due to a decrease in the impact of foreign taxes, 2022 true-up related to tax planning strategy and non-taxable foreign exchange adjustments. These were partially offset by an increase in valuation allowance, other permanent differences, non-deductible stock-based compensation and non-deductible royalties in Colombia.
Current wording
For the nine months ended September 30, 2024, the difference between the effective tax rate of 44% and the 50% Colombian tax rate was primarily due to a lower impact of foreign taxes, 2022 true-up related to tax planning strategy and non-taxable foreign exchange adjustments. These were partially offset by an increase in valuation allowance, other permanent differences, non-deductible stock-based compensation and non-deductible royalties in Colombia.
Previous wording
The company strategically revised its 2022 tax return to use its tax receivables balance to offset current tax liabilities, rather than applying net operating loss carryforwards. This decision was driven by the expectation of higher future tax rates and increased profitability. As a result, there was an increase in current tax expense, which was offset by long-term tax receivables, ensuring no impact on cash flows. However, the increased tax expense did negatively affect our fund flows. Nonetheless, this approach preserved our net operating loss carryforwards for future periods, providing greater tax benefits and flexibility in recovering tax receivables, while strengthening our equity position.
Current wording
We strategically revised our 2022 tax return to use our tax receivables balance to offset current tax liabilities, rather than applying net operating loss carryforwards. This decision was driven by the expectation of higher future tax rates and increased profitability. As a result, there was an increase in current tax expense, which was offset by long-term tax receivables, ensuring no impact on cash flows. This approach preserved our net operating loss carryforwards for future periods, providing greater tax benefits and flexibility in recovering tax receivables, while strengthening our equity position.
Previous wording
For the six months ended June 30, 2023, the difference between the effective tax rate of 145% and the 50% Colombian tax rate was primarily due to an increase in non-deductible foreign translation adjustments, the impact of foreign taxes, non-deductible royalties in Colombia and non-deductible stock-based compensation. These were partially offset by a decrease in valuation allowance.
Current wording
For the nine months ended September 30, 2023, the difference between the effective tax rate of 115% and the 50% Colombian tax rate was primarily due to an increase in non-deductible foreign exchange adjustments, the impact of foreign taxes, non-deductible royalties in Colombia and non-deductible stock-based compensation. These were partially offset by a decrease in valuation allowance.
Previous wording
The deferred income tax expense for the six months ended June 30, 2023, was $29.3 million, primarily as a result of tax depreciation being higher than accounting depreciation and the use of tax losses to offset taxable income in Colombia.
Current wording
The deferred income tax expense for the nine months ended September 30, 2023, was $43.2 million, primarily as a result of tax depreciation being higher than accounting depreciation and the use of tax losses to offset taxable income in Colombia.
Previous wording
Capital expenditures during the three months ended June 30, 2024, were $61.3 million.
Current wording
Capital expenditures during the three months ended September 30, 2024, were $52.9 million.
Previous wording
We spud one development well in Chaza Block in Colombia, which was in-progress as of June 30, 2024, and two exploration wells in Ecuador, all of which were producing as of June 30, 2024.
Current wording
During the three months ended September 30, 2024, we spud three exploration wells in Ecuador, two of which were producing and one was in-progress as at September 30, 2024. No wells were drilled in Colombia.
Previous wording
On February 6, 2024, we issued an additional $100.0 million of 9.50% Senior Notes due October 2029 (the “new 9.50% Senior Notes”), and received cash proceeds of $88.0 million. The new 9.50% Senior Notes have the same terms and provisions as the previously issued $487.6 million 9.50% Senior Notes except for the issue price. The new 9.50% Senior Notes accrue interest from October 20, 2023, the date of issuance of the previously issued 9.50% Senior Notes. The Company received a cash payment of $2.8 million related to the accrued interest of the new 9.50% Senior Notes.
Current wording
On February 6, 2024 and September 18, 2024, we issued additional $100.0 million and $150.0 million of 9.50% Senior Notes due October 2029 (the “new 9.50% Senior Notes”), and received cash proceeds of $88.0 million and $139.8 million, respectively. The new 9.50% Senior Notes have the same terms and provisions as the previously issued $487.6 million 9.50% Senior Notes except for the issue price. $100.0 million of new 9.50% Senior Notes accrue interest from October 20, 2023, the date of issuance of previously issued 9.50% Senior Notes and $150.0 million of new 9.50% Senior Notes accrue interest from April 15, 2024, the date of last interest payment. We received a cash payment of $2.8 million and $6.1 million related to the accrued interest of the $100.0 million and $150.0 million of new 9.50% Senior Notes, respectively.
Previous wording
At June 30, 2024, we had a $24.8 million aggregate principal amount of 6.25% Senior Notes due 2025 (“6.25% Senior Notes”), $24.2 million aggregate principal amount of 7.75% Senior Notes due 2027, and $587.6 million aggregate principal amount of 9.50% Senior Notes due 2029, outstanding.
Current wording
At September 30, 2024, we had a $24.8 million aggregate principal amount of 6.25% Senior Notes due 2025, $24.2 million aggregate principal amount of 7.75% Senior Notes due 2027, and $737.6 million aggregate principal amount of 9.50% Senior Notes due 2029, outstanding.
Previous wording
During the year ended December 31, 2023, we implemented a share re-purchase program (the “2023 Program”) through the facilities of the Toronto Stock Exchange (“TSX”) and eligible alternative trading platforms in Canada or United States. Under the 2023 Program, we are able to purchase at prevailing market prices up to 3,234,914 shares of Common Stock, representing approximately 10% of the public float as of October 20, 2023. Re-purchases are subject to prevailing market conditions, the trading price of our Common Stock, our financial performance and other conditions.
Current wording
During the year ended December 31, 2023, we implemented a share re-purchase program (the “2023 Program”), which expired on November 2, 2024, through the facilities of the Toronto Stock Exchange (“TSX”), the NYSE American and eligible alternative trading platforms in Canada or United States. Under the 2023 Program, we were able to re-purchase at prevailing market prices up to 3,234,914 shares of Common Stock, representing approximately 10% of the public float as of October 20, 2023. Re-purchases are subject to prevailing market conditions, the trading price of our Common Stock, our financial performance and other conditions.
Previous wording
During the three and six months ended June 30, 2024, we re-purchased 404,314 and 1,290,980 shares at a weighted average price of $9.20 and $6.71 per share (three and six months ended June 30, 2023 - 20,439 and 1,328,650 shares under the 2022 program at a weighted average price of $5.27 and $8.15 per share), respectively. We cancelled 28,612 held as treasury shares as at December 31, 2023 and cancelled 418,620 and 1,276,674 shares re-purchased during the three and six months ended June 30, 2024, respectively. During the period from October 20, 2023 to July 29, 2024, we have re-purchased 2,604,796 shares under the 2023 Program.
Current wording
During the three and nine months ended September 30, 2024, we re-purchased 371,130 and 1,662,110 shares at a weighted average price of $9.37 and $7.31 per share (three and nine months ended September 30, 2023 - nil and 1,328,650 shares under the 2022 program at a weighted average price of nil and $8.15 per share), respectively. We cancelled 28,612 held as treasury shares as at December 31, 2023 and cancelled 371,130 and 1,662,110 shares re-purchased during the three and nine months ended September 30, 2024, respectively. During the period from November 3, 2023 to September 30, 2024, we have re-purchased 2,703,914 shares under the 2023 Program.
Previous wording
One of the primary sources of variability in our cash flows from operating activities is the fluctuation in oil prices. Sales volume changes, costs related to operations and debt transactions also impact cash flows. Our cash flows from operating activities are also impacted by foreign currency exchange rate changes. During the three months ended June 30, 2024, funds flow from operations decreased by 13% compared to the corresponding period of 2023, due to higher income tax and lower sales volumes, partially offset by higher Brent price. Funds flow from operations for the six months ended June 30, 2024, increased by 7%, compared to the corresponding period of 2023, primarily due to an increase in Brent price, lower transportation and quality discounts and realized foreign exchange gain, partially offset by lower sales volumes, higher operating costs, taxes and interest expense.
Current wording
One of the primary sources of variability in our cash flows from operating activities is the fluctuation in oil prices. Sales volume changes, costs related to operations and debt transactions also impact cash flows. Our cash flows from operating activities are also impacted by foreign currency exchange rate changes. During the three months ended September 30, 2024, funds flow from operations decreased by 24% compared to the corresponding period of 2023, due to a decrease in Brent price, higher quality and transportation discounts, lower sales volumes and higher interest expense, partially offset by lower operating expenses and lower current income tax expense. Funds flow from operations for the nine months ended September 30, 2024, decreased by 6%, compared to the corresponding period of 2023, primarily due to lower sales volumes, higher operating costs and higher interest expense, partially offset by lower quality and transportation discounts and lower current income tax expense.