Gran Tierra Energy Inc. Achieves 140% 2P Reserv...

CALGARY, Alberta, Jan. 30, 2019 (GLOBE NEWSWIRE) -- Gran Tierra Energy Inc. (“Gran Tierra” or the "Company") (NYSE American:GTE)(TSX:GTE)(LSE:GTE), a company focused on oil exploration and production in Colombia, today announced the Company's 2018 year-end estimated reserves as evaluated by the Company's independent qualified reserves evaluator McDaniel & Associates Consultants Ltd. (“McDaniel”) in a report with an effective date of December 31, 2018 (the “GTE McDaniel Reserves Report”) and estimated prospective resources as evaluated by McDaniel in a report with an effective date of July 31, 2018 (the "GTE McDaniel Prospective Resources Report").

All dollar amounts are in United States ("U.S.") dollars, unless otherwise indicated. Unless otherwise expressly stated, all reserves and resources values, future net revenue and ancillary information contained in this press release have been prepared by McDaniel and calculated in compliance with Canadian National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) and the Canadian Oil and Gas Evaluation Handbook (“COGEH”) and derived from the GTE McDaniel Reserves Report and the GTE McDaniel Prospective Resources Report, as applicable. All reserves, resources and production are on a working interest before royalties ("WI") basis unless otherwise indicated.

Highlights

• Gran Tierra's existing producing assets are forecasted to generate Proved plus Probable ("2P") oil and gas sales of $5.2 billion and before tax free cash flow¹ of $2.5 billion and after tax free cash flow¹ of $1.9 billion over the five year time period of 2019 to 2023
• Demonstrated the significant value Gran Tierra has added to and created within its portfolio:
  °  The acquisitions and discoveries made by the Company over the last four years are estimated to now account for 81% of total Company 2P before tax net present value discounted at 10% ("NPV10") and have grown expected 2019 production to four times the level of Gran Tierra's legacy assets
• Increased average annual Colombia production for 2018 to 36,209 barrels of oil equivalent per day ("BOEPD"), up 15% from 2017
• Increased 2P reserves to 142 million barrels of oil equivalent ("MMBOE"), before tax 2P NPV10 to $2.7 billion and before tax 2P net asset value ("NAV") to $5.96 per share²
• Achieved 2P reserve replacement of 140% with total 2018 2P reserve additions of 19 MMBOE, with approximately 13 MMBOE of these additions attributable to the Acordionero oil field, the Company's single largest asset
• Increased the 2P expected recovery factors in Acordionero to 26.5% in the Lisama A Sand (up from 23.5% a year ago) and to 35.0% in the Lisama C Sand (up from 27.5% a year ago):
  °  This material growth in estimated Acordionero recovery factors was a major driver of Gran Tierra's 2P reserves growth and indicative of positive drilling and production results in 2018
  °  Gran Tierra believes additional growth in Proved ("1P"), 2P and Proved plus Probable plus Possible ("3P") Acordionero recovery factors may be realized with planned increases in water injection
• Grew the number of Company undeveloped drilling locations as follows:
  °  Number of 1P locations is 42, up from 34 at year-end 2017
  °  Number of 2P locations is 92, up from 61 at year-end 2017
  °  Number of 3P locations is 129, up from 83 at year-end 2017
• Achieved Colombia 2P three-year average finding, development and acquisition ("FD&A") costs excluding future development costs ("FDC") of $11.51 per barrel of oil equivalent ("BOE") and 2P three-year average FD&A costs including FDC of $15.56 per BOE
• Estimated reserve life indices of 10 years (2P) and 15 years (3P)
• Maintained a world-class exploration portfolio represented by significant Mean Prospective Resources:
  °  The Company's WI Mean Unrisked Prospective Resources as at July 31, 2018 were 1,419 MMBOE, including 822 MMBOE in the Putumayo Basin A-Limestone play
  °  The Company's WI Mean Risked Prospective Resources as at July 31, 2018 were 361 MMBOE, with 59% or 214 MMBOE attributable to the Putumayo A-Limestone
  °  The A-Limestone represents a potentially substantial future conventional resource play for Gran Tierra, which the Company believes equates to 1,429 prospective drilling opportunities

Gary Guidry, President and Chief Executive Officer of Gran Tierra, commented “During 2018, Gran Tierra grew our 2P reserves to 142 MMBOE and increased our 2P NPV10 to $2.7 billion, as our diversified portfolio in Colombia continued to deliver growth in net asset value per share. Our two most exciting accomplishments this past year occurred in the Acordionero oil field and in the Ayombero-Chuira La Luna conventional carbonate resource play, both in the Middle Magdalena Valley ("MMV") Basin. In 2018, Acordionero was Gran Tierra’s growth engine in terms of reserves additions, while Ayombero provided substantial new Prospective Resources and an inventory of future potential drilling opportunities.

During 2018, successful appraisal and development drilling at Acordionero resulted in 8% growth in the field's 2P reserves to 76 MMBOE as recovery factors increased. We believe ongoing growth in this field’s 1P and 2P reserves will be achievable as we convert Acordionero’s still significant Possible reserves of approximately 21 MMBOE into the 1P and 2P categories.

Acordionero has also proved to be a stellar acquisition in terms of value creation. After paying $525 million in mid-2016 to acquire PetroLatina Energy Ltd., whose major asset was Acordionero, this field's before tax 2P NPV discounted at 10% is now approximately three times higher at $1.7 billion at 2018 year-end. Since the acquisition and during an active capital program, the Acordionero field has generated significant free cash flow and we expect that to continue as we further develop the field.

During 2018, after encouraging initial results from the Ayombero-1 and 2 wells in the MMV Basin, the Ayombero-Chuira La Luna carbonate conventional resource play in the MMV Basin now represents significant WI Mean Unrisked Prospective Resources of 63 MMBOE. We believe planned ongoing appraisal and development drilling at Ayombero in 2019 could start converting some of this large resource base into 1P, 2P and 3P reserves.

Gran Tierra's total working interest Mean Unrisked Prospective Resources of approximately 1.4 billion BOE represent a world-class exploration portfolio. The Putumayo Basin's A-Limestone conventional resource play, with its Mean Unrisked Prospective Resources of 822 MMBOE, comprises 58% of Gran Tierra's total. Our 2019 exploration drilling campaign in the Putumayo of four to five wells is designed to continue quantifying the potential size of the prize of this exciting basin-wide play. With a potential of 1,429 gross unrisked prospective drilling opportunities distributed throughout our blocks in the Putumayo Basin, the A-Limestone conventional carbonate play represents potential for significant growth in net asset value, production and reserves per share over the next five years. In addition to the A-Limestone, we also plan to continue evaluating the B and M2 Limestones based on the success late in 2018.

We are pleased that Gran Tierra has grown both production and reserves on an accretive basis for the third consecutive year. However, the overall 2018 reserve addition results were below our expectation as a result of several delays. In Acordionero, we did commence water injection but were delayed in the facility expansion, including water injection, which we expect to complete in second quarter 2019. We expect water injection ramp up will be a key driver of moving 3P reserves into the 1P and 2P categories in 2019 and beyond.

The appraisal of the Ayombero-Chuira field was slightly delayed as a result of drilling and completion challenges in Ayombero-2, which resulted in us not obtaining sufficient production and reservoir information prior to 2018 year-end to allow more fulsome reserves bookings. Our exploration program in the PUT-7 Block started later than forecast but finished with a successful test in the Pomorroso-1 well.

Notwithstanding the delays in 2018, we are off to a strong start in 2019 with 152 total net feet of potential oil pay based on log analysis identified in the Almendrillo-1 exploration well in the PUT-7 Block and casing set on the Ayombero-3 appraisal well in the MMV Basin. After testing Almendrillo-1, we plan to spud the Pecari-1 well followed by the Tajinos-1 well from the same pad as Almendrillo. We also plan to test the N Sands in Pomorroso-1, which came in on prognosis, over the next month.

We believe that Gran Tierra now has visible production growth from our existing asset base through 2021 on a 2P reserves basis and a world class exploration portfolio that can be funded through cash flow. For 2019, we are excited to continue our development of the prolific Acordionero field and our exploration, appraisal and development of the regional carbonate and N-Sand plays.”

Future Net Revenue

Future net revenue reflects McDaniel’s forecast of revenue estimated using forecast prices and costs, arising from the anticipated development and production of resources, after the deduction of royalties, operating costs, development costs and abandonment and reclamation costs but before consideration of indirect costs such as administrative, overhead and other miscellaneous expenses. The estimate of future net revenue below does not necessarily represent fair market value.

	Consolidated Properties at December 31, 2018
	Proved Plus Probable (2P) Total Future Net Revenue ($ million)
	Forecast Prices and Costs
Years	Sales Revenue		Total Royalties		Operating Costs		Future Development Capital		Abandonment and Reclamation Costs		Future Net Revenue Before Future Taxes		Future Taxes		Future Net Revenue After Future Taxes*
2019-2023 (5 Years)	5,154		(989	)	(1,117	)	(574	)	(1	)	2,473		(537	)	1,936
Remainder	3,909		(703	)	(1,525	)	(1	)	(72	)	1,607		(440	)	1,167
Total (Undiscounted)	9,063		(1,693	)	(2,642	)	(575	)	(73	)	4,080		(977	)	3,103
Total (Discounted @ 10%)	5,806		(1,107	)	(1,494	)	(510	)	(22	)	2,672		(635	)	2,037

*The after-tax net present value of the Company's oil and gas properties reflects the tax burden on the properties on a stand-alone basis. It does not consider the corporate tax situation, or tax planning.  It does not provide an estimate of the value at the Company level which may be significantly different.  The Company's financial statements should be consulted for information at the Company level.

Total Company WI Reserves

The following table summarizes Gran Tierra’s NI 51-101 and COGEH compliant reserves in Colombia derived from the GTE McDaniel Reserves Report calculated using forecasted oil and gas prices and costs.

	Light and Medium Crude Oil	Heavy Crude Oil	Conventional Natural Gas	2018 Year- End
Reserves Category	Mbbl*	Mbbl*	MMcf**	MBOE***
Proved Developed Producing	27,982	13,986	1,339	42,191
Proved Developed Non-Producing	3,132	83	—	3,215
Proved Undeveloped	9,132	11,303	980	20,598
Total Proved	40,246	25,372	2,319	66,004
Total Probable	32,619	43,452	1,352	76,296
Total Proved plus Probable	72,865	68,824	3,671	142,300
Total Possible	37,369	24,216	1,519	61,838
Total Proved plus Probable plus Possible	110,234	93,040	5,190	204,138

*Mbbl (thousand barrels of oil).
**MMcf (million cubic feet).
***MBOE (thousand BOE).

Prospective Resources

The following table represents Gran Tierra's Company WI Prospective Resources prepared by McDaniel at July 31, 2018 and was derived from the GTE McDaniel Prospective Resources Report.

		Company WI Values
		Prospective Resources**
		Unrisked					Risked
Basin	Gross Unrisked Number of Prospective Well Locations or Drilling Opportunities*	Low MMBOE	Best MMBOE	High MMBOE	Mean MMBOE		Mean MMBOE	Chance of Discovery %	Chance of Development %	Oil %
Putumayo Basin - A Limestone	1,429	226	685	1,602	822		214	33	80	100
Putumayo Basin - N Sand	27	33	96	281	134		59	50	88	100
Putumayo Basin - Structural	8	41	108	313	150		25	22	76	100
Llanos Basin	19	38	90	226	117		16	17	79	100
Sinu Basin	2	8	41	207	81		6	11	60	80
MMV Basin	9	39	95	214	115		41	42	87	100
TOTALS	1,494	385	1,115	2,843	1,419		361	29	81	99

*The gross unrisked number of prospective well locations is based on the gross unrisked number of prospects in the GTE McDaniel Prospective Resources Report with the following two exceptions: (i) for the Putumayo Basin - A-Limestone, the gross unrisked number of prospective drilling opportunities is an internal Gran Tierra estimate which is calculated by dividing the McDaniel estimate of A-Limestone property gross (100 % WI) mean unrisked Prospective Resources of 1,072 MMBOE by Gran Tierra's internal estimate of average mean unrisked Prospective Resources of 0.75 MMBOE per A-Limestone drilling opportunity (1,072/0.75 = 1,429); and (ii) for the Sinu Basin, the gross unrisked number of prospective drilling opportunities is based on the gross unrisked number of leads. Prospective drilling opportunities have not been calculated in accordance with COGEH and are not actual drilling locations.
**May not add due to rounding.

NPV Summary

Gran Tierra's reserves were evaluated using McDaniel's commodity price forecasts at January 1, 2019. It should not be assumed that the NPV of cash flow estimated by McDaniel represents the fair market value of the reserves.

Total Company	Discount Rate
($ millions)	0%	5%	10%	15%	20%
Before tax
Proved Developed Producing	1,129	1,032	952	884	826
Proved Developed Non-Producing	83	68	57	49	43
Proved Undeveloped	459	389	333	287	250
Total Proved	1,671	1,489	1,342	1,220	1,119
Total Probable	2,409	1,758	1,330	1,038	828
Total Proved plus Probable	4,080	3,247	2,672	2,258	1,947
Total Possible	2,127	1,462	1,063	807	635
Total Proved plus Probable plus Possible	6,207	4,709	3,735	3,065	2,582
After tax
Proved Developed Producing	1,002	912	837	773	720
Proved Developed Non-Producing	65	53	44	38	32
Proved Undeveloped	323	268	224	188	159
Total Proved	1,390	1,233	1,105	999	911
Total Probable	1,713	1,242	932	719	567
Total Proved plus Probable	3,103	2,475	2,037	1,718	1,478
Total Possible	1,459	1,003	728	551	430
Total Proved plus Probable plus Possible	4,562	3,478	2,765	2,269	1,908

Total Company WI Reserves Reconciliation

	Proved		Proved plus Probable		Proved plus Probable plus Possible
	MBOE		MBOE		MBOE
December 31, 2017	74,123		136,994		202,518
Extensions	7,357		14,760		23,204
Technical Revisions	(5,894	)	(6,725	)	(30,526	)
Discoveries	1,017		3,456		7,893
Acquisitions	2,349		6,614		13,939
Economic Factors	261		410		319
Production	(13,209	)	(13,209	)	(13,209	)
December 31, 2018	66,004		142,300		204,138

Reserve Life Index

	2018*
Total Proved	5
Total Proved plus Probable	10
Total Proved plus Probable plus Possible	15

*Calculated using average fourth quarter 2018 WI production of 38,156 BOEPD.

Future Development Costs

FDC reflects McDaniel's best estimate of what it will cost to bring the proved undeveloped and probable reserves on production. Changes in forecast FDC occur annually as a result of development activities, acquisition and disposition activities, and changes in capital cost estimates based on improvements in well design and performance, as well as changes in service costs. FDC for total 2P Colombia reserves increased to $575 million at year-end 2018 from $445 million at year-end 2017. The increase in FDC in 2018 was predominantly attributed to costs to develop the following properties: Acordionero, Moqueta, Cumplidor, Ayombero, VMM-2 and Vonu.

($ millions)	Total Proved	Total Proved Plus Probable
2019	135	229
2020	117	234
2021	—	103
2022	1	8
2023	—	—
Remainder	1	1
Total (undiscounted)	254	575

2P Finding, Development and Acquisition Costs

Exploration and Development Capital expenditures ($ millions)	Three Years Ended December 31, 2018
Including acquired properties	1,376

2P Finding, Development and Acquisition Costs, excluding FDC⁽¹⁾

Total Proved plus Probable (2P)	Three Years Ended December 31, 2018
Reserve Additions (MBOE)	119
FD&A Costs ($/BOE)	11.51

2P Finding, Development and Acquisition Costs, including FDC⁽¹⁾

Total Proved plus Probable (2P)	Three Years Ended December 31, 2018
Change in FDC ($ millions)	483
Reserve Additions (MBOE)	119
FD&A Costs ($/BOE)	15.56

*See "Disclosure of Oil and Gas Information - Oil and Gas Metrics"

Forecast prices

The pricing assumptions used in estimating NI 51-101 and COGEH compliant reserves data disclosed above with respect to net present values of future net revenue are set forth below. The price forecasts are based on McDaniel’s standard price forecast effective January 1, 2019 and 2018. McDaniel is an independent qualified reserves auditor pursuant to NI 51-101.

	Brent Crude Oil		WTI Crude Oil
Year	$US/bbl		$US/bbl
	January 1, 2019		January 1, 2019
2019	$	64.50	$	56.50
2020	$	67.90	$	63.80
2021	$	70.70	$	67.60
2022	$	73.70	$	71.60
2023	$	75.30	$	73.10

About Gran Tierra Energy Inc.

Gran Tierra Energy Inc. is an international oil and gas exploration and production company, headquartered in Calgary, Canada, incorporated in the United States, trading on the NYSE American (GTE), the Toronto Stock Exchange (GTE) and the London Stock Exchange (GTE), and operating in South America. Gran Tierra holds interests in producing and prospective properties in Colombia. Gran Tierra has a strategy that focuses on establishing a portfolio of producing properties, plus production enhancement and exploration opportunities to provide a base for future growth.

Gran Tierra's Securities and Exchange Commission filings are available on the SEC website at www.sec.gov and on SEDAR at www.sedar.com.

Contact Information

For investor and media inquiries please contact:

Gary Guidry, Chief Executive Officer

Ryan Ellson, Chief Financial Officer

Rodger Trimble, Vice President, Investor Relations
Tel: [phone]
For more information on Gran Tierra please go to: www.grantierra.com.

¹ Free cash flow is not a defined term under generally accepted accounting principles in the United States of America ("GAAP") and is called net revenue in the GTE McDaniel Reserves Report. The non-GAAP term of free cash flow reconciles to the nearest GAAP term of oil and gas sales, which is called sales revenue in the GTE McDaniel Reserves Report. Refer to "Future Net Revenue" in this press release for the applicable reconciliation. Refer to "Oil and Gas Metrics" in this press release for a description of how this non-GAAP measure is calculated.
² Based on December 31, 2018 before tax NPV10 of $2.7 billion, minus estimated year-end 2018 net debt of $366 million, [comprised of working capital surplus of $33 million, senior notes of $289 million (net of unamortized fees, $300 million gross), convertible notes of $112 million (net of unamortized fees; $115 million gross) and reserves-based credit facility of $(2) million (net of unamortized fees; $0 million gross)], divided by the number of shares of Gran Tierra's common stock issued and outstanding at December 31, 2018 of 387.1 million, respectively. Estimated net working capital and debt at December 31, 2018, prepared in accordance with GAAP.

FORWARD LOOKING STATEMENTS ADVISORY

This press release contains opinions, forecasts, projections, and other statements about future events or results that constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and financial outlook and forward looking information within the meaning of applicable Canadian securities laws (collectively, "forward-looking statements"). Such forward-looking statements include, but are not limited to, the Company’s strategies, operations including planned operations and developments, ability to fund the Company's exploration program over a period of time, infrastructure schedules, growth of referenced reserves, forecast prices, five-year expected oil and gas sales and free cash flow and net revenue, prospective drilling opportunities, estimated recovery factors and production growth.

The forward-looking statements contained in this press release reflect several material factors and expectations and assumptions of Gran Tierra including, without limitation, that Gran Tierra will continue to conduct its operations in a manner consistent with its current expectations, the accuracy of testing and production results and seismic data, pricing and cost estimates (including with respect to commodity pricing and exchange rates), rig availability, the effects of drilling down-dip, the effects of waterflood and multi-stage fracture stimulation operations, the extent and effect of delivery disruptions, and the general continuance of current or, where applicable, assumed operational, regulatory and industry conditions including in areas of potential expansion, and the ability of Gran Tierra to execute its current business and operational plans in the manner currently planned. Gran Tierra believes the material factors, expectations and assumptions reflected in the forward-looking statements are reasonable at this time but no assurance can be given that these factors, expectations and assumptions will prove to be correct.

Among the important factors that could cause actual results to differ materially from those indicated by the forward-looking statements in this press release are: Gran Tierra’s operations are located in Colombia, and unexpected problems can arise due to guerilla activity; technical difficulties and operational difficulties may arise which impact the production, transport or sale of our products; geographic, political and weather conditions can impact the production, transport or sale of our products; the ability of Gran Tierra to execute its business plan; the risk that unexpected delays and difficulties in developing currently owned properties may occur; the timely receipt of regulatory or other required approvals for our operating activities; the failure of exploratory drilling to result in commercial wells; unexpected delays due to the limited availability of drilling equipment and personnel; the risk that oil prices could remain weak or continue to decline, or global economic and credit market conditions may impact oil prices and oil consumption more than Gran Tierra currently predicts, which could cause Gran Tierra to further modify its strategy and capital spending program; and the risk factors detailed from time to time in Gran Tierra’s periodic reports filed with the Securities and Exchange Commission, including, without limitation, under the caption "Risk Factors" in Gran Tierra's Annual Report on Form 10-K filed February 27, 2018, and its Quarterly Reports on Form 10-Q. These filings are available on the SEC website at http://www.sec.gov and on SEDAR at www.sedar.com. Although the current capital spending program and long term strategy of Gran Tierra is based upon the current expectations of the management of Gran Tierra, should any one of a number of issues arise, Gran Tierra may find it necessary to alter its business strategy and/or capital spending program and there can be no assurance as at the date of this press release as to how those funds may be reallocated or strategy changed.

Statements relating to “reserves” or “resources” are also deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, including that the reserves and resources described can be profitably produced in the future.

All forward-looking statements are made as of the date of this press release and the fact that this press release remains available does not constitute a representation by Gran Tierra that Gran Tierra believes these forward-looking statements continue to be true as of any subsequent date. Actual results may vary materially from the expected results expressed in forward-looking statements. Gran Tierra disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities laws. Gran Tierra’s forward-looking statements are expressly qualified in their entirety by this cautionary statement.

Non-GAAP Measures

This press release includes non-GAAP measures which do not have a standardized meaning under GAAP. Investors are cautioned that these measures should not be construed as alternatives to net loss or other measures of financial performance as determined in accordance with GAAP. Gran Tierra's method of calculating these measures may differ from other companies and, accordingly, they may not be comparable to similar measures used by other companies.

Unaudited Financial Information

Certain financial and operating results included in this news release include working capital, capital expenditures, and production information are based on unaudited estimated results. These estimated results are subject to change upon completion of the Company's audited financial statements for the year ended December 31, 2018, and changes could be material. Gran Tierra anticipates filing its audited financial statements and related management's discussion and analysis for the year ended December 31, 2018 on or before February 27, 2019.

DISCLOSURE OF OIL AND GAS INFORMATION

Gran Tierra's Statement of Reserves Data and Other Oil and Gas Information on Form 51-101F1 dated effective as at December 31, 2018, which will include further disclosure of its oil and gas reserves and other oil and gas information in accordance with NI 51-101 forming the basis of this press release, will be available on SEDAR at www.sedar.com on or before February 27, 2019.

Estimates of net present value and future net revenue contained herein do not necessarily represent fair market value. Estimates of reserves and future net revenue for individual properties may not reflect the same level of confidence as estimates of reserves and future net revenue for all properties, due to the effect of aggregation. There is no assurance that the forecast price and cost assumptions applied by McDaniel in evaluating Gran Tierra’s reserves will be attained and variances could be material.

All evaluations of future net revenue contained in the GTE McDaniel Reserves Report are after the deduction of royalties, operating costs, development costs, production costs and abandonment and reclamation costs but before consideration of indirect costs such as administrative, overhead and other miscellaneous expenses. It should not be assumed that the estimates of future net revenues presented in this press release represent the fair market value of the reserves. There are numerous uncertainties inherent in estimating quantities of crude oil, reserves and the future cash flows attributed to such reserves. The reserve and associated cash flow information set forth in the GTE McDaniel Reserves Report are estimates only.

BOEs have been converted on the basis of six thousand cubic feet (“Mcf”) natural gas to 1 barrel of oil. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, given that the value ratio based on the current price of oil as compared with natural gas is significantly different from the energy equivalent of six to one, utilizing a BOE conversion ratio of 6 Mcf: 1 bbl would be misleading as an indication of value.

Definitions

Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.

Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.

Possible reserves are those additional reserves that are less certain to be recovered than Probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of Proved plus Probable plus Possible reserves.

Certain terms used in this press release but not defined are defined in NI 51-101, CSA Staff Notice 51-324 - Revised Glossary to NI 51-101 Standards of Disclosure for Oil and Gas Activities (“CSA Staff Notice 51-324”) and/or the COGEH and, unless the context otherwise requires, shall have the same meanings herein as in NI 51-101, CSA Staff Notice 51-324 and the COGEH, as the case may be.

Oil and Gas Metrics

This press release contains a number of oil and gas metrics, including free cash flow, FD&A costs, NAV per share, reserve life index, reserves per share, reserves replacement and ultimate recovery factors, which do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies and should not be used to make comparisons. Such metrics have been included herein to provide readers with additional measures to evaluate the Company's performance; however, such measures are not reliable indicators of the future performance of the Company and future performance may not compare to the performance in previous periods.

• Before tax and after tax free cash flow are non-GAAP terms and are called before tax and after tax net revenue in the GTE McDaniel Reserves Report, respectively. The non-GAAP term of before tax free cash flow reconciles to the nearest GAAP term of oil and gas sales, which is called sales revenue in the GTE McDaniel Reserves Report. Before tax net revenue is calculated by McDaniel by subtracting total royalties, operating costs, future development capital, abandonment and reclamation costs from sales revenue. After tax free cash flow is calculated by McDaniel by subtracting future taxes from before tax net revenue. Refer to "Future Net Revenue" in this press release for the applicable reconciliation. Management uses free cash flow as a measure of the Company's ability to fund its exploration program.
• FD&A costs are calculated as estimated exploration and development capital expenditures in Colombia, divided by the applicable reserves additions both before and after changes in FDC. The FD&A cost calculation also includes the capital expenditures, reserves, and FDC related to acquisitions and divestitures in the total amounts. The calculation of FD&A costs incorporates the change in FDC required to bring proved undeveloped and developed reserves into production. The aggregate of the exploration and development costs incurred in the financial year and the changes during that year in estimated FDC, including those relating to acquisitions and dispositions, may not reflect the total FD&A costs related to reserves additions for that year. Management uses FD&A costs per BOE as a measure of its ability to execute its capital program and of its asset quality.
• NAV per share is calculated as before tax NPV discounted at 10% minus estimated net debt, divided by the number of shares of Gran Tierra's common stock issued and outstanding. Management uses NAV per share as a measure of the relative change of Gran Tierra's net asset value over its outstanding common stock over a period of time.
• Reserve life index is calculated as reserves in the referenced category divided by the referenced estimated Colombia production. Management uses this measure to determine how long the booked reserves will last at current production rates if no further reserves were added.
• Ultimate recovery factors are calculated by McDaniel as the estimated ultimate recovery of oil and gas volumes from an oil and gas field divided by the estimated original oil and gas in place volumes in the same field. Management uses this measure to assess the efficiency of the Company's oil and gas operations at maximizing the ultimate recoveries of oil and gas.

Prospective Resources

Prospective Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective Resources have both an associated chance of discovery and a chance of development. Not all exploration projects will result in discoveries. The chance that an exploration project will result in the discovery of petroleum is referred to as the "chance of discovery." Thus, for an undiscovered accumulation the chance of commerciality is the product of two risk components-the chance of discovery and the chance of development. There is no certainty that any portion of the Prospective Resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the Prospective Resources.

Estimates of the Company's Prospective Resources are based upon the GTE McDaniel Prospective Resources Report. The estimates of Prospective Resources provided in this press release are estimates only and there is no guarantee that the estimated Prospective Resources will be recovered. Actual resources may be greater than or less than the estimates provided in this press release and the differences may be material. There is no assurance that the forecast price and cost assumptions applied by McDaniel in evaluating Gran Tierra's Prospective Resources will be attained and variances could be material. There is no certainty that any portion of the Prospective Resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the Prospective Resources.

Estimates of Prospective Resources are by their nature more speculative than estimates of proved reserves and would require substantial capital spending over a significant number of years to implement recovery. Actual locations drilled and quantities that may be ultimately recovered from our properties will differ substantially. In addition, we have made no commitment to drill, and likely will not drill, all of the drilling locations that have been attributable to these quantities.

The following classification of Prospective Resources is used in this press release:

• Low Estimate means there is at least a 90 percent probability (P90) that the quantities actually recovered will equal or exceed the low estimate.
• Best Estimate means there is at least a 50 percent probability (P50) that the quantities actually recovered will equal or exceed the best estimate.
• High Estimate means there is at least a 10 percent probability (P10) that the quantities actually recovered will equal or exceed the high estimate.
• Mean Estimate represents the arithmetic average of the expected recoverable volume. It is the most accurate single point representation of the volume distribution.

NI 51-101 Resources Disclosure

Putumayo Basin A-Limestone Prospective Resources

The A-Limestone is a conventional carbonate resource play. The deposition of the carbonates is basin-wide throughout the Putumayo basin. There are analogues of this Cretaceous deposition that include productive basins such as the Eagle Ford in Texas and the La Paz field in Venezuela.

Multiple wells within the Putumayo Basin have oil shows. Production has been achieved in the Costayaco field and Vonu well in the northern part of the basin, the PUT-7 block to the south, and the offsetting competitor Churuyaco and Loro fields to the west. McDaniel has assigned proved reserves to the Costayaco field and Vonu well. The description of a resource play indicates that the play extends throughout the basin and trapping does not depend on structure. The A-Limestone and its time-equivalent carbonates extend south into Ecuador and north into Venezuela. The widespread depositional nature of this carbonate platform and the evidence of production and proven reserves indicate significant prospective resource potential.

Significant positive factors for Putumayo A-Limestone Prospective Resources include:

• Producing wells from the formation in several locations in the basin, with initial rates on certain wells over 2,000 bopd.
• Multiple wellbore penetrations have oil shows within chip samples, and petrophysical logs indicating a thick carbonate ranging from 70 to 120 feet.
• Total organic carbon of over 3%, while current production is of high quality 29° API oil.
• The reservoir quality on petrophysical logs shows average porosities of 3-10%.
• Wells producing out of structural closure supported by 3D seismic mapping and material balance calculations.
• Technologies from similar analog plays can be applied to this play (Eagle Ford).

Negative factors for Putumayo A-Limestone Prospective Resources include:

• The time required to access surface drilling pads in some parts of the play due to security or social issues.
• The play is in the early part of the exploration cycle.
• Additional wells are required to validate and demonstrate that recovery efficiencies can be improved.

Chance of Discovery/Development
Through an evaluation of the risks that are relevant to the Putumayo A-Limestone prospective resources, which are described herein, McDaniel has determined that the chance of discovery is 33%, with the chance of development at 80%. The corresponding chance of commerciality is 26%.

Putumayo Basin N-Sand Prospective Resources

The N-Sandstone Play is a stratigraphic play where the reservoir is trapped between the overlying and underlying Villeta Shales. Over 50 penetrations of the N-Sandstone show that there is a minimum thickness of sand that extensively blankets the entire area, and additional deposits which thicken within the basin up to 40 feet in thickness. The sand trends have good reservoir characteristics. The combination of porosity and thickness makes these sands seismically detectable, and enables the explorer to interpret thicker accumulations. Prospective resources for the N-Sandstone are prospect-based and defined on either 2D or 3D seismic data using seismic amplitudes.

Positive factors for the N-Sandstone Prospective Resources include:

• Multiple N-Sand producing wells in the Putumayo basin of Colombia and the Oriente basin in Ecuador.
• Over 50 penetrations of oil-bearing N-Sand in which the N-Play was not the intended target.
• McDaniel estimated parameters of porosity ranging from 13-27%, average pay between 7-27 net feet.
• Both 3D and 2D seismic can be interpreted to predict reservoir thickness, which reduces prospect risk.
• GTE has an extensive, proprietary 3D and 2D database in the basin.

Negative factors for the N-Sand Prospective Resources include:

• The time required to access surface drilling pads on some parts of the play due to security or social issues.
• N-Sands are unconsolidated and production requires sand management techniques.
• 2D seismic estimates of sand thickness are not as reliable as 3D, and estimates of areal distribution have larger uncertainty.
• N-Sand oil tends to be of lower quality, with gravity of 14-24° API.

Chance of Discovery/Development
Through an evaluation of the risks that are relevant to the Putumayo N-Sand prospective resources, which are described herein, McDaniel has determined that the chance of discovery is 50%, while McDaniel estimates chance of development between 88%. The corresponding chance of commerciality is 44%.

Putumayo Basin - Structural Prospective Resources

Structures formed by the uplift of the Andes create a series of traps along the edge of the mountain front. Although these structures can be complicated, structural traps in this region tend to be large. Several structures, similar to prospects included within the prospective resources report, have been drilled and are currently producing. These include the Costayaco and Moqueta fields where productive reservoirs include the Caballos, T-Sands and U-Sands.

Positive factors for the Putumayo Structural Prospective Resources include:

• Large features that can be adequately imaged on 2D seismic.
• Stacked pay of the Caballos, T and U is common.
• Potential for duplication of reservoirs due to thrusting and folding.

Negative factors for the Putumayo Structural Prospective Resources include:

• Surface access to mountainous areas is difficult due to physical and environmental reasons.
• Large uncertainty in internal geometry of some of the prospects.
• Higher execution risk due to the remoteness of most of the prospects.
• Structural prospects require fault seal / or sealing shales.
• The time required to access surface drilling pads in some parts of the play due to security or social issues.

Chance of Discovery/Development
Through an evaluation of the risks that are relevant to the Putumayo Structural prospective resources, which are described herein, McDaniel has determined that the chance of discovery is 22%, with the chance of development at 76%. The corresponding chance of commerciality is 17%.

Llanos Basin Prospective Resources

The prospective resources in the Llanos are divided into a variety of conventional fault traps, seismically detectable stratigraphic traps, and combination trapping configurations that has led to significant reserve adds for competitors in the basin. In addition, there is a dextral slip, fairly non-explored trend in the northern part of the basin that could have significant upside. The prospective resources for the Llanos are based on individual prospect analysis.

Positive factors for Llanos Basin Prospective Resources include:

• Excellent seismic definition of the stratigraphic section with significant 3D seismic coverage.
• Multiple target horizons, which lead to higher prospect probabilities.
• A proven oil basin with a variety of structural and stratigraphic traps.

Negative factors for Llanos Basin Prospective Resources include:

• Changing and difficult social situation.
• Some of the prospectivity is deep, requiring more upfront investment.

Chance of Discovery/Development
Through an evaluation of the risks that are relevant to the Llanos Basin prospective resources, which are described herein, McDaniel has determined that the chance of discovery is 17%, with the chance of development at 79%. The corresponding chance of commerciality is 13%.

Sinu Basin Prospective Resources

The prospective resources in the Sinu San Jacinto (“Sinu”) Basin are divided into a variety of conventional fault traps, and combination trapping configurations. The Sinu basin is a riskier frontier basin. Discoveries of gas have been made in the offshore portion and northern portion of the basin. The prospective resources for the Sinu are based on individual prospect or lead analysis of key prospect factors, 1) source 2) maturation and migration 3) trap 4) seal and 5) reservoir.

Positive factors for Sinu Basin Prospective Resources include:

• Evidence of source maturation and migration due to surface oil seeps, and production from older fields.
• Evidence of gas prospectivity with tests in the northern and offshore portions of the basin.

Negative factors for Sinu Basin Prospective Resources include:

• Lack of data, both seismic and well data, that make the basin a more “frontier” or speculative style of prospectivity.
• Changing and difficult social and security situation.

Chance of Discovery/Development
Through an evaluation of the risks that are relevant to the Sinu Basin prospective resources, which are described herein, McDaniel has determined that the chance of discovery is 11%, with the chance of development at 60%. The corresponding chance of commerciality is 7%.

Middle Magdalena Valley Basin Prospective Resources

Prospective resources within the Middle Magdalena Valley ("MMV") are estimated from a series of structural prospects. These prospects are complex, but drilling and seismic interpretation has shown that this area has significant potential. In 2017 and 2018 Gran Tierra significantly increased reserves and production at the Acordionero field. Prospective resources are calculated within the Lisama A, B, C, and D sands, the La Paz, and the La Luna Formations. The prospective resources for the MMV are based on individual prospect analysis.

Positive factors for the MMV Prospective Resources include:

• Thick, good quality reservoir exists within the Lisama A and C Sands.
• The La Luna is time-equivalent to the A-Limestone play, but can be as thick as 1,500 feet.
• This is a proven basin with multiple working structural trap types.

Negative factors for the MMV Prospective Resources include:

• Surface access is challenging as this area is a prolific agricultural area.
• Complex structures.
• Poor quality of data obtained in 3D seismic shoots to date.

Chance of Discovery/Development
Through an evaluation of the risks that are relevant to the MMV prospective resources, which are described herein, McDaniel has determined that the chance of discovery is 42%, with the chance of development at 87%. The corresponding chance of commerciality is 37%.

Ayombero Prospective Resources
Prospective resources within the Ayombero prospect are estimated based on 3D seismic and the drilling of the Ayombero-1 and Ayombero-2 wells, in addition to production from the Chuira field. Prospective resources have been assigned to two horizons within the La Luna formation: the Galembo, the Pujamana members.

Positive factors for the Ayombero Prospective Resources include:

• Thick, good quality reservoir exists within the La Luna formation, based on testing of the Ayombero-1 well to date. Gran Tierra is currently producing oil from the Galembo member.
• The Ayombero-1 well is believed to be producing from the same structure as the wells in the Chuira field, from which Gran Tierra has existing production.

Negative factors for the Ayombero Prospective Resources include:

• The structure is complex, with potential seal risks in certain areas.
• Poor quality of data obtained in 3D seismic shoots to date.

Chance of Discovery/Development
Through an evaluation of the risks that are relevant to the Ayombero prospective resources, which are described herein, McDaniel has determined that the chance of discovery is 67% (area with lower seal risks) and 37% (area with higher seal risks), with the chance of development at 90%. The corresponding chance of commerciality is 60% (lower seal risks) and 33% (higher seal risks).

Prospect Maturity
The prospective resources associated with the Ayombero structure have been sub-classified as a prospect. COGEH defines "prospect" as a potential accumulation within a play that is sufficiently well defined to present a viable drilling target.

Other Information
Given the uncertainty of discovery associated with such prospective resources, costs and timelines to production, as well as recovery technologies, the chance of development cannot be determined at this time.

Disclosure of Reserve Information and Cautionary Note to U.S. Investors

Unless expressly stated otherwise, all estimates of proved, probable and possible reserves and related future net revenue disclosed in this press release have been prepared in accordance with NI 51-101. Estimates of reserves and future net revenue made in accordance with NI 51-101 will differ from corresponding estimates prepared in accordance with applicable U.S. Securities and Exchange Commission (“SEC”) rules and disclosure requirements of the U.S. Financial Accounting Standards Board (“FASB”), and those differences may be material.  NI 51-101, for example, requires disclosure of reserves and related future net revenue estimates based on forecast prices and costs, whereas SEC and FASB standards require that reserves and related future net revenue be estimated using average prices for the previous 12 months. In addition, NI 51-101 permits the presentation of reserves estimates on a “company gross” basis, representing Gran Tierra’s working interest share before deduction of royalties, whereas SEC and FASB standards require the presentation of net reserve estimates after the deduction of royalties and similar payments. There are also differences in the technical reserves estimation standards applicable under NI 51-101 and, pursuant thereto, the COGEH, and those applicable under SEC and FASB requirements.

In addition to being a reporting issuer in certain Canadian jurisdictions, Gran Tierra is a registrant with the SEC and subject to domestic issuer reporting requirements under U.S. federal securities law, including with respect to the disclosure of reserves and other oil and gas information in accordance with U.S. federal securities law and applicable SEC rules and regulations (collectively, "SEC requirements"). Disclosure of such information in accordance with SEC requirements is included in the Company's Annual Report on Form 10-K and in other reports and materials filed with or furnished to the SEC and, as applicable, Canadian securities regulatory authorities. The SEC permits oil and gas companies that are subject to domestic issuer reporting requirements under U.S. federal securities law, in their filings with the SEC, to disclose only estimated proved, probable and possible reserves that meet the SEC's definitions of such terms. Gran Tierra has disclosed estimated proved, probable and possible reserves in its filings with the SEC. In addition, Gran Tierra prepares its financial statements in accordance with United States generally accepted accounting principles, which require that the notes to its annual financial statements include supplementary disclosure in respect of the Company's oil and gas activities, including estimates of its proved oil and gas reserves and a standardized measure of discounted future net cash flows relating to proved oil and gas reserve quantities. This supplementary financial statement disclosure is presented in accordance with FASB requirements, which align with corresponding SEC requirements concerning reserves estimation and reporting.

In this press release, the Company uses the term Prospective Resources. The SEC rules prohibit the Company from including this information in filings with the SEC. Investors are urged to consider closely the disclosures and risk factors in the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and in the other reports and filings with the SEC, available from the Company's offices or website. These reports can also be obtained from the SEC website at www.sec.gov.