What Gran Tierra Energy (GTE) Said on Its Q3 Earnings Call

Key Points

• Gran Tierra reported a $42 million Q3 net loss, driven largely by noncash stock-based compensation and derivative losses. Adjusted EBITDA fell to $68 million, while funds flow from operations declined 48% sequentially to $32 million.
• The company is pursuing a roughly $1.33 billion sale of its Colombian and Ecuadorian businesses to Maurel & Prom, with a potential close in early to mid-December pending remaining consents and regulatory approvals. If completed, Gran Tierra plans to return some proceeds to shareholders through a repurchase.
• Production averaged 39,904 barrels per day, down 4% from Q2, as lower realized prices and higher operating costs pressured results. Gran Tierra is preparing for 2027 drilling in Canada and Azerbaijan; it ended the quarter with $141 million in cash and $450 million in net debt.

Gran Tierra Energy TSE: GTE reported a $42 million net loss for the third quarter of 2026 as lower realized oil prices and higher operating costs weighed on its results. The company is targeting a year-end close for the proposed sale of its Colombian and Ecuadorian businesses while preparing to drill in Azerbaijan.

The quarterly loss compared with net income of $25 million in the preceding quarter and a $20 million loss a year earlier. Chief Financial Officer Ryan Ellson said the loss was primarily driven by about $30 million in noncash stock-based compensation expense and $29 million in derivative losses, partially offset by a $30 million deferred income tax recovery.

Adjusted EBITDA fell to $68 million from $85 million in the second quarter and $69 million a year earlier. Funds flow from operations was $32 million, or $0.89 per share, down 48% sequentially and 24% from the third quarter of 2025.

Gran Tierra generated approximately $1 million in free cash flow, compared with $6 million in the previous quarter and negative $16 million a year earlier. Capital expenditures fell to $31 million from $54 million sequentially, with no new wells drilled during the quarter.

Sale and shareholder returns

Gran Tierra announced the proposed sale of its Colombian and Ecuadorian businesses to Maurel & Prom during the quarter for approximately $1.33 billion in total consideration, including the assumption of its 2029 and 2031 notes and oil prepayment.

Ellson said the company received the required consents from holders of its 2031 notes in September and stockholder approval on October 9. The transaction remains subject to other closing conditions, including remaining consents and regulatory approvals in Colombia and Ecuador.

Subject to completing the sale, Gran Tierra expects to return a portion of net cash proceeds to shareholders through a repurchase, with the board to determine the structure, size and terms. During the analyst question-and-answer session, Ellson said the company plans to renew its normal course issuer bid and consider the timing of a substantial issuer bid.

Ellson said management was still working through next year’s budget, including spending for the Azerbaijan exploration program. President and Chief Executive Officer Gary Guidry said the company would incorporate cost reductions and general and administrative spending into its 2027 budget after the transaction closes. He referred to a possible close in early to mid-December.

Prices and production

Oil sales were $168 million, down 10% from the previous quarter but up 13% from a year earlier. Ellson said lower South American realized prices reduced cash flow by approximately $17 million from the prior quarter, net of lower royalties. He cited lower Brent prices and wider quality and transportation discounts, including costs associated with alternative routes while the Colombian-Ecuador border remained closed.

Total operating expenses rose 24% sequentially to $64 million, though they were 6% below the year-earlier level. Ellson attributed the quarterly increase primarily to a stronger Colombian peso, higher lifting costs associated with sales of Ecuadorian inventory accumulated in the prior quarter, and increased power costs.

Chief Operating Officer Sebastien Morin said average working interest production was 39,904 barrels of oil per day, about 4% below the preceding quarter and 7% below a year earlier. He attributed the sequential decline to the Lodgepole disposition and lower production at Cohembi, partially offset by higher output at Acordionero and better-than-forecast performance in Ecuador.

Morin said the closed Colombian-Ecuador border increased transportation discounts by approximately $3.7 million during the quarter. The company continued to move Putumayo production through alternative routes.

Canada and Azerbaijan plans

In Canada, Gran Tierra is evaluating the Dawson Clearwater and Mount Head opportunities following the Simonette and Lodgepole dispositions. Morin said field work for the initial Dawson Clearwater development program is underway, with drilling planned to begin very early in the first quarter of 2027.

In Azerbaijan, the country’s parliament ratified Gran Tierra’s exploration, development and production sharing agreement with SOCAR for the onshore Guba region on October 5. The company has completed an airborne survey covering approximately 4,800 square kilometers and is preparing for drilling and well testing in 2027.

Gran Tierra ended the quarter with $141 million in cash and $450 million in net debt. Ellson said the company also had approximately $50 million in undrawn availability under its Canadian revolving credit facility.

About Gran Tierra Energy (TSE:GTE)

Gran Tierra Energy Inc, together with its subsidiaries, is an independent international energy company currently focused on oil and natural gas exploration and production in Canada, Colombia, Ecuador and Azerbaijan. Upon completion of the Transaction described in this press release, the Company's producing operations will be focused on Canada, and the Company will continue to pursue its exploration interests in Azerbaijan and additional new growth opportunities that would further strengthen the Company's portfolio.

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