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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Nevada
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98-0479924
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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300, 625 11 Avenue S.W.
Calgary, Alberta, Canada T2R 0E1
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(Address of principal executive offices, including zip code)
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Page
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PART I
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Financial Information
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Item 1.
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Financial Statements
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Item 2.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 4.
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Controls and Procedures
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PART II
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Other Information
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Item 1.
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Legal Proceedings
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Item 1A.
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Risk Factors
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Item 6.
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Exhibits
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SIGNATURES
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EXHIBIT INDEX
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bbl
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barrel
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Mcf
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thousand cubic feet
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Mbbl
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thousand barrels
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MMcf
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million cubic feet
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MMbbl
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million barrels
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Bcf
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billion cubic feet
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bopd
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barrels of oil per day
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MMBtu
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million British thermal units
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BOE
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barrels of oil equivalent
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NGL
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natural gas liquids
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MMBOE
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million barrels of oil equivalent
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NAR
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net after royalty
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BOEPD
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barrels of oil equivalent per day
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•
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Reserves.
Reserves are estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and gas or related substances to market, and all permits and financing required to implement the project.
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•
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Proved oil and gas reserves.
Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and
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i.
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The area of the reservoir considered as proved includes:
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A.
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The area identified by drilling and limited by fluid contacts, if any; and
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B.
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Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geoscience and engineering data.
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ii.
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In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons as seen in a well penetration unless geoscience, engineering, or performance data and reliable technology establishes a lower contact with reasonable certainty.
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iii.
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Where direct observation from well penetrations has defined a highest known oil ("HKO") elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering, or performance data and reliable technology establish the higher contact with reasonable certainty.
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iv.
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Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when:
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A.
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Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and
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B.
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The project has been approved for development by all necessary parties and entities, including governmental entities.
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v.
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Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.
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•
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Probable reserves.
Probable reserves are those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered.
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i.
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When deterministic methods are used, it is as likely as not that actual remaining quantities recovered will exceed the sum of estimated proved plus probable reserves. When probabilistic methods are used, there should be at least a 50% probability that the actual quantities recovered will equal or exceed the proved plus probable reserves estimates.
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ii.
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Probable reserves may be assigned to areas of a reservoir adjacent to proved reserves where data control or interpretations of available data are less certain, even if the interpreted reservoir continuity of structure or productivity does not meet the reasonable certainty criterion. Probable reserves may be assigned to areas that are structurally higher than the proved area if these areas are in communication with the proved reservoir.
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iii.
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Probable reserves estimates also include potential incremental quantities associated with a greater percentage recovery of the hydrocarbons in place than assumed for proved reserves.
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iv.
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See also guidelines in paragraphs (a)(17)(iv) and (a)(17)(vi) of section 210.4-10(a) of Regulations S-X.
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•
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Possible reserves.
Possible reserves are those additional reserves that are less certain to be recovered than probable reserves.
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i.
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When deterministic methods are used, the total quantities ultimately recovered from a project have a low probability of exceeding proved plus probable plus possible reserves. When probabilistic methods are used, there should be at least a 10% probability that the total quantities ultimately recovered will equal or exceed the proved plus probable plus possible reserves estimates.
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ii.
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Possible reserves may be assigned to areas of a reservoir adjacent to probable reserves where data control and interpretations of available data are progressively less certain. Frequently, this will be in areas where geoscience and engineering data are unable to define clearly the area and vertical limits of commercial production from the reservoir by a defined project.
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iii.
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Possible reserves also include incremental quantities associated with a greater percentage recovery of the hydrocarbons in place than the recovery quantities assumed for probable reserves.
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iv.
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The proved plus probable and proved plus probable plus possible reserves estimates must be based on reasonable alternative technical and commercial interpretations within the reservoir or subject project that are clearly documented, including comparisons to results in successful similar projects.
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v.
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Possible reserves may be assigned where geoscience and engineering data identify directly adjacent portions of a reservoir within the same accumulation that may be separated from proved areas by faults with displacement less than formation thickness or other geological discontinuities and that have not been penetrated by a wellbore, and the registrant believes that such adjacent portions are in communication with the known (proved) reservoir. Possible reserves may be assigned to areas that are structurally higher or lower than the proved area if these areas are in communication with the proved reservoir.
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vi.
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Pursuant to paragraph (a)(22)(iii) of section 210.4-10(a) of Regulations S-X, where direct observation has defined a HKO elevation and the potential exists for an associated gas cap, proved oil reserves should be assigned in the structurally higher portions of the reservoir above the HKO only if the higher contact can be established with reasonable certainty through reliable technology. Portions of the reservoir that do not meet this reasonable certainty criterion may be assigned as probable and possible oil or gas based on reservoir fluid properties and pressure gradient interpretations.
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•
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Reasonable certainty.
If deterministic methods are used, reasonable certainty means a high degree of confidence that the quantities will be recovered. A high degree of confidence exists if the quantity is much more likely to be achieved than not, and as changes due to increased availability of geoscience (geological, geophysical and geochemical), engineering and economic data are made to estimated ultimate recovery ("EUR") with time, reasonably certain EUR is much more likely to increase or remain constant than to decrease.
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•
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Deterministic estimate.
The method of estimating reserves or resources is called deterministic when a single value for each parameter (from the geoscience, engineering, or economic data) in the reserves calculation is used in the reserves estimation procedure.
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•
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Probabilistic estimate.
The method of estimating reserves or resources is called probabilistic when the full range of values that could reasonably occur for each unknown parameter (from the geoscience, engineering or economic data) is used to generate a full range of possible outcomes and their associated probabilities of occurrences.
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•
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Developed oil and gas reserves
. Developed oil and gas reserves are reserves of any category that can be expected to be recovered:
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i.
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Through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared with the cost of a new well; and
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ii.
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Through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well.
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•
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Undeveloped oil and gas reserves
. Undeveloped oil and gas reserves are reserves of any category that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.
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i.
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Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances.
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ii.
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Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances, justify a longer time.
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iii.
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Under no circumstances shall estimates for undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, as defined in paragraph (a)(2) of section 201.4-10(a) of Regulation S-X, or by other evidence using reliable technology establishing reasonable certainty.
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Three Months Ended June 30,
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Six Months Ended June 30,
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||||||||||||
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2014
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2013
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2014
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2013
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||||||||
REVENUE AND OTHER INCOME
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|
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Oil and natural gas sales
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$
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147,888
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$
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150,250
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$
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298,993
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$
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336,490
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Interest income
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|
638
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324
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|
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1,388
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|
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671
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||||
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148,526
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150,574
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300,381
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337,161
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EXPENSES
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Operating
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25,346
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23,970
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47,212
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56,013
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Depletion, depreciation, accretion and impairment
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41,937
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55,592
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86,201
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|
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106,054
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General and administrative
|
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13,932
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|
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9,090
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|
|
26,795
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|
|
18,112
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|
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Foreign exchange loss (gain)
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10,044
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|
|
(12,622
|
)
|
|
5,834
|
|
|
(18,979
|
)
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||||
Financial instruments gain (Note 10)
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(2,604
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)
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—
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(5,013
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)
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—
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||||
Other loss (Notes 9 and 10)
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—
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—
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|
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—
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|
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4,400
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||||
|
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88,655
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|
|
76,030
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|
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161,029
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165,600
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||||
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||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
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59,871
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74,544
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139,352
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171,561
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||||
Income tax expense (Note 8)
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|
(28,387
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)
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(24,960
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)
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(58,096
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)
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(61,977
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)
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||||
INCOME FROM CONTINUING OPERATIONS
|
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31,484
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|
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49,584
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81,256
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|
109,584
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Loss from discontinued operations, net of income taxes (Note 3)
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(22,347
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)
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(1,801
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)
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|
(26,990
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)
|
|
(3,888
|
)
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||||
NET INCOME AND COMPREHENSIVE INCOME
|
|
9,137
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|
|
47,783
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|
|
54,266
|
|
|
105,696
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|
||||
RETAINED EARNINGS, BEGINNING OF PERIOD
|
|
456,090
|
|
|
342,586
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|
|
410,961
|
|
|
284,673
|
|
||||
RETAINED EARNINGS, END OF PERIOD
|
|
$
|
465,227
|
|
|
$
|
390,369
|
|
|
$
|
465,227
|
|
|
$
|
390,369
|
|
|
|
|
|
|
|
|
|
|
||||||||
INCOME (LOSS) PER SHARE
|
|
|
|
|
|
|
|
|
||||||||
BASIC
|
|
|
|
|
|
|
|
|
||||||||
INCOME FROM CONTINUING OPERATIONS
|
|
$
|
0.11
|
|
|
$
|
0.18
|
|
|
$
|
0.29
|
|
|
$
|
0.38
|
|
LOSS FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES
|
|
(0.08
|
)
|
|
(0.01
|
)
|
|
(0.10
|
)
|
|
(0.01
|
)
|
||||
NET INCOME
|
|
$
|
0.03
|
|
|
$
|
0.17
|
|
|
$
|
0.19
|
|
|
$
|
0.37
|
|
DILUTED
|
|
|
|
|
|
|
|
|
||||||||
INCOME FROM CONTINUING OPERATIONS
|
|
$
|
0.11
|
|
|
$
|
0.18
|
|
|
$
|
0.28
|
|
|
$
|
0.38
|
|
LOSS FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES
|
|
(0.08
|
)
|
|
(0.01
|
)
|
|
(0.09
|
)
|
|
(0.01
|
)
|
||||
NET INCOME
|
|
$
|
0.03
|
|
|
$
|
0.17
|
|
|
$
|
0.19
|
|
|
$
|
0.37
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC (Note 6)
|
|
283,773,204
|
|
|
282,822,383
|
|
|
283,505,690
|
|
|
282,482,343
|
|
||||
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED (Note 6)
|
|
287,856,959
|
|
|
285,449,708
|
|
|
288,338,698
|
|
|
285,646,763
|
|
|
June 30,
|
|
December 31,
|
||||
|
2014
|
|
2013
|
||||
ASSETS
|
|
|
|
||||
Current Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
332,359
|
|
|
$
|
428,800
|
|
Restricted cash
|
855
|
|
|
1,478
|
|
||
Accounts receivable
|
111,182
|
|
|
49,703
|
|
||
Marketable securities (Note 10)
|
14,251
|
|
|
—
|
|
||
Other financial instruments (Note 10)
|
12
|
|
|
—
|
|
||
Inventory (Note 5)
|
25,410
|
|
|
13,725
|
|
||
Taxes receivable
|
14,998
|
|
|
9,980
|
|
||
Prepaids
|
4,362
|
|
|
6,450
|
|
||
Deferred tax assets (Note 8)
|
1,364
|
|
|
2,256
|
|
||
Total Current Assets
|
504,793
|
|
|
512,392
|
|
||
|
|
|
|
||||
Oil and Gas Properties (using the full cost method of accounting)
|
|
|
|
|
|
||
Proved
|
760,483
|
|
|
794,069
|
|
||
Unproved
|
479,075
|
|
|
456,001
|
|
||
Total Oil and Gas Properties
|
1,239,558
|
|
|
1,250,070
|
|
||
Other capital assets
|
9,118
|
|
|
10,102
|
|
||
Total Property, Plant and Equipment (Note 5)
|
1,248,676
|
|
|
1,260,172
|
|
||
|
|
|
|
||||
Other Long-Term Assets
|
|
|
|
|
|
||
Restricted cash
|
2,571
|
|
|
2,300
|
|
||
Deferred tax assets (Note 8)
|
1,438
|
|
|
1,407
|
|
||
Taxes receivable
|
10,907
|
|
|
18,535
|
|
||
Other long-term assets
|
7,037
|
|
|
7,163
|
|
||
Goodwill
|
102,581
|
|
|
102,581
|
|
||
Total Other Long-Term Assets
|
124,534
|
|
|
131,986
|
|
||
Total Assets
|
$
|
1,878,003
|
|
|
$
|
1,904,550
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
||
Current Liabilities
|
|
|
|
|
|
||
Accounts payable
|
$
|
58,352
|
|
|
$
|
72,400
|
|
Accrued liabilities
|
98,730
|
|
|
89,567
|
|
||
Taxes payable
|
13,455
|
|
|
102,887
|
|
||
Deferred tax liabilities (Note 8)
|
1,317
|
|
|
1,193
|
|
||
Asset retirement obligation (Note 7)
|
4,895
|
|
|
518
|
|
||
Total Current Liabilities
|
176,749
|
|
|
266,565
|
|
||
|
|
|
|
||||
Long-Term Liabilities
|
|
|
|
|
|
||
Deferred tax liabilities (Note 8)
|
179,504
|
|
|
177,082
|
|
||
Asset retirement obligation (Note 7)
|
15,206
|
|
|
21,455
|
|
||
Other long-term liabilities
|
11,394
|
|
|
9,540
|
|
||
Total Long-Term Liabilities
|
206,104
|
|
|
208,077
|
|
||
|
|
|
|
||||
Contingencies (Note 9)
|
|
|
|
|
|
||
Shareholders’ Equity
|
|
|
|
|
|
||
Common Stock (Note 6) (274,821,285 and 272,327,810 shares of Common Stock and 10,395,144 and 10,882,440 exchangeable shares, par value $0.001 per share, issued and outstanding as at June 30, 2014, and December 31, 2013, respectively)
|
10,189
|
|
|
10,187
|
|
||
Additional paid in capital
|
1,019,734
|
|
|
1,008,760
|
|
||
Retained earnings
|
465,227
|
|
|
410,961
|
|
||
Total Shareholders’ Equity
|
1,495,150
|
|
|
1,429,908
|
|
||
Total Liabilities and Shareholders’ Equity
|
$
|
1,878,003
|
|
|
$
|
1,904,550
|
|
|
Six Months Ended June 30,
|
||||||
|
2014
|
|
2013
|
||||
Operating Activities
|
|
|
|
||||
Net income
|
$
|
54,266
|
|
|
$
|
105,696
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|||
Loss from discontinued operations, net of income taxes (Note 3)
|
26,990
|
|
|
3,888
|
|
||
Depletion, depreciation, accretion and impairment
|
86,201
|
|
|
106,054
|
|
||
Deferred tax recovery (Note 8)
|
(841
|
)
|
|
(15,715
|
)
|
||
Non-cash stock-based compensation
|
2,624
|
|
|
4,110
|
|
||
Unrealized foreign exchange loss (gain)
|
4,567
|
|
|
(18,366
|
)
|
||
Unrealized financial instruments gain
|
(351
|
)
|
|
—
|
|
||
Equity tax
|
(1,642
|
)
|
|
(1,718
|
)
|
||
Other loss (Notes 9 and 10)
|
—
|
|
|
4,400
|
|
||
Net change in assets and liabilities from operating activities
|
|
|
|
|
|
||
Accounts receivable and other long-term assets
|
(67,862
|
)
|
|
(780
|
)
|
||
Inventory
|
(9,348
|
)
|
|
13,067
|
|
||
Prepaids
|
1,642
|
|
|
617
|
|
||
Accounts payable and accrued and other liabilities
|
9,747
|
|
|
(9,083
|
)
|
||
Taxes receivable and payable
|
(77,306
|
)
|
|
37,660
|
|
||
Net cash provided by operating activities of continuing operations
|
28,687
|
|
|
229,830
|
|
||
Net cash (used in) provided by operating activities of discontinued operations
|
(4,792
|
)
|
|
18,950
|
|
||
Net cash provided by operating activities
|
23,895
|
|
|
248,780
|
|
||
|
|
|
|
||||
Investing Activities
|
|
|
|
|
|
||
Decrease (increase) in restricted cash
|
351
|
|
|
(4,285
|
)
|
||
Additions to property, plant and equipment
|
(158,171
|
)
|
|
(169,354
|
)
|
||
Proceeds from sale of Argentina business unit, net of cash sold and transaction costs
|
42,755
|
|
|
—
|
|
||
Proceeds from sale of oil and gas properties (Note 5)
|
—
|
|
|
1,500
|
|
||
Net cash used in investing activities of continuing operations
|
(115,065
|
)
|
|
(172,139
|
)
|
||
Net cash used in investing activities of discontinued operations
|
(12,384
|
)
|
|
(10,300
|
)
|
||
Net cash used in investing activities
|
(127,449
|
)
|
|
(182,439
|
)
|
||
|
|
|
|
||||
Financing Activities
|
|
|
|
|
|
||
Proceeds from issuance of shares of Common Stock (Note 6)
|
7,113
|
|
|
3,013
|
|
||
Net cash provided by financing activities
|
7,113
|
|
|
3,013
|
|
||
|
|
|
|
||||
Net (decrease) increase in cash and cash equivalents
|
(96,441
|
)
|
|
69,354
|
|
||
Cash and cash equivalents, beginning of period
|
428,800
|
|
|
212,624
|
|
||
Cash and cash equivalents, end of period
|
$
|
332,359
|
|
|
$
|
281,978
|
|
|
|
|
|
||||
Cash
|
$
|
300,415
|
|
|
$
|
279,377
|
|
Term deposits
|
31,944
|
|
|
2,601
|
|
||
Cash and cash equivalents, end of period
|
$
|
332,359
|
|
|
$
|
281,978
|
|
|
|
|
|
||||
Supplemental cash flow disclosures:
|
|
|
|
|
|
||
Cash paid for income taxes
|
$
|
124,882
|
|
|
$
|
12,631
|
|
|
|
|
|
||||
Non-cash investing activities:
|
|
|
|
|
|
||
Net liabilities related to property, plant and equipment, end of period
|
$
|
76,506
|
|
|
$
|
62,377
|
|
|
Six Months Ended June 30,
|
|
Year Ended December 31,
|
||||
|
2014
|
|
2013
|
||||
Share Capital
|
|
|
|
||||
Balance, beginning of period
|
$
|
10,187
|
|
|
$
|
7,986
|
|
Issue of shares of Common Stock (Note 6)
|
2
|
|
|
2,201
|
|
||
Balance, end of period
|
10,189
|
|
|
10,187
|
|
||
|
|
|
|
||||
Additional Paid in Capital
|
|
|
|
|
|
||
Balance, beginning of period
|
1,008,760
|
|
|
998,772
|
|
||
Exercise of stock options (Note 6)
|
7,111
|
|
|
1,570
|
|
||
Stock-based compensation (Note 6)
|
3,863
|
|
|
8,418
|
|
||
Balance, end of period
|
1,019,734
|
|
|
1,008,760
|
|
||
|
|
|
|
||||
Retained Earnings
|
|
|
|
|
|
||
Balance, beginning of period
|
410,961
|
|
|
284,673
|
|
||
Net income
|
54,266
|
|
|
126,288
|
|
||
Balance, end of period
|
465,227
|
|
|
410,961
|
|
||
|
|
|
|
||||
Total Shareholders’ Equity
|
$
|
1,495,150
|
|
|
$
|
1,429,908
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(Thousands of U.S. Dollars)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Revenue and other income
|
|
$
|
14,161
|
|
|
$
|
18,234
|
|
|
$
|
31,985
|
|
|
$
|
37,020
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loss from operations of discontinued operations before income taxes
|
|
$
|
(2,079
|
)
|
|
$
|
(424
|
)
|
|
$
|
(6,252
|
)
|
|
$
|
(2,089
|
)
|
Income tax expense
|
|
(988
|
)
|
|
(1,377
|
)
|
|
(1,458
|
)
|
|
(1,799
|
)
|
||||
Loss from operations of discontinued operations
|
|
(3,067
|
)
|
|
(1,801
|
)
|
|
(7,710
|
)
|
|
(3,888
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Loss on sale before income taxes
|
|
(18,235
|
)
|
|
—
|
|
|
(18,235
|
)
|
|
—
|
|
||||
Income tax expense
|
|
(1,045
|
)
|
|
—
|
|
|
(1,045
|
)
|
|
—
|
|
||||
Loss on sale
|
|
(19,280
|
)
|
|
—
|
|
|
(19,280
|
)
|
|
—
|
|
||||
Loss from discontinued operations, net of income taxes
|
|
$
|
(22,347
|
)
|
|
$
|
(1,801
|
)
|
|
$
|
(26,990
|
)
|
|
$
|
(3,888
|
)
|
|
As at
|
||
(Thousands of U.S. Dollars)
|
December 31, 2013
|
||
Current assets (1)
|
$
|
39,125
|
|
Property, plant and equipment
|
94,446
|
|
|
Other long-term assets
|
1,839
|
|
|
|
$
|
135,410
|
|
|
|
||
Current liabilities
|
$
|
37,612
|
|
Long-term liabilities
|
9,755
|
|
|
|
$
|
47,367
|
|
|
Three Months Ended June 30, 2014
|
||||||||||||||||||
(Thousands of U.S. Dollars, except per unit of production amounts)
|
Colombia
|
|
Peru
|
|
Brazil
|
|
All Other
|
|
Total
|
||||||||||
Oil and natural gas sales
|
$
|
139,350
|
|
|
$
|
—
|
|
|
$
|
8,538
|
|
|
$
|
—
|
|
|
$
|
147,888
|
|
Interest income
|
184
|
|
|
—
|
|
|
434
|
|
|
20
|
|
|
638
|
|
|||||
Depletion, depreciation, accretion and impairment
|
39,348
|
|
|
103
|
|
|
2,241
|
|
|
245
|
|
|
41,937
|
|
|||||
Depletion, depreciation, accretion and impairment - per unit of production
|
26.14
|
|
|
—
|
|
|
25.12
|
|
|
—
|
|
|
26.30
|
|
|||||
Income (loss) from continuing operations before income taxes
|
62,481
|
|
|
(2,408
|
)
|
|
3,750
|
|
|
(3,952
|
)
|
|
59,871
|
|
|||||
Segment capital expenditures
|
45,688
|
|
|
41,912
|
|
|
3,433
|
|
|
306
|
|
|
91,339
|
|
|||||
|
Three Months Ended June 30, 2013
|
||||||||||||||||||
(Thousands of U.S. Dollars, except per unit of production amounts)
|
Colombia
|
|
Peru
|
|
Brazil
|
|
All Other
|
|
Total
|
||||||||||
Oil and natural gas sales
|
$
|
144,333
|
|
|
$
|
—
|
|
|
$
|
5,917
|
|
|
$
|
—
|
|
|
$
|
150,250
|
|
Interest income
|
143
|
|
|
12
|
|
|
2
|
|
|
167
|
|
|
324
|
|
|||||
Depletion, depreciation, accretion and impairment
|
48,364
|
|
|
137
|
|
|
6,843
|
|
|
248
|
|
|
55,592
|
|
|||||
Depletion, depreciation, accretion and impairment - per unit of production
|
29.01
|
|
|
—
|
|
|
102.20
|
|
|
—
|
|
|
32.06
|
|
|||||
Income (loss) from continuing operations before income taxes
|
84,470
|
|
|
(2,353
|
)
|
|
(2,887
|
)
|
|
(4,686
|
)
|
|
74,544
|
|
|||||
Segment capital expenditures (1)
|
48,743
|
|
|
19,601
|
|
|
19,981
|
|
|
228
|
|
|
88,553
|
|
|||||
|
Six Months Ended June 30, 2014
|
||||||||||||||||||
(Thousands of U.S. Dollars, except per unit of production amounts)
|
Colombia
|
|
Peru
|
|
Brazil
|
|
All Other
|
|
Total
|
||||||||||
Oil and natural gas sales
|
$
|
284,285
|
|
|
$
|
—
|
|
|
$
|
14,708
|
|
|
$
|
—
|
|
|
$
|
298,993
|
|
Interest income
|
321
|
|
|
—
|
|
|
859
|
|
|
208
|
|
|
1,388
|
|
|||||
Depletion, depreciation, accretion and impairment
|
80,598
|
|
|
311
|
|
|
4,820
|
|
|
472
|
|
|
86,201
|
|
|||||
Depletion, depreciation, accretion and impairment - per unit of production
|
25.78
|
|
|
—
|
|
|
30.99
|
|
|
—
|
|
|
26.26
|
|
|||||
Income (loss) from continuing operations before income taxes
|
148,492
|
|
|
(4,466
|
)
|
|
5,700
|
|
|
(10,374
|
)
|
|
139,352
|
|
|||||
Segment capital expenditures
|
96,231
|
|
|
62,805
|
|
|
13,799
|
|
|
605
|
|
|
173,440
|
|
|||||
|
Six Months Ended June 30, 2013
|
||||||||||||||||||
(Thousands of U.S. Dollars, except per unit of production amounts)
|
Colombia
|
|
Peru
|
|
Brazil
|
|
All Other
|
|
Total
|
||||||||||
Oil and natural gas sales
|
$
|
324,336
|
|
|
$
|
—
|
|
|
$
|
12,154
|
|
|
$
|
—
|
|
|
$
|
336,490
|
|
Interest income
|
304
|
|
|
26
|
|
|
11
|
|
|
330
|
|
|
671
|
|
|||||
Depletion, depreciation, accretion and impairment
|
94,320
|
|
|
199
|
|
|
11,014
|
|
|
521
|
|
|
106,054
|
|
|||||
Depletion, depreciation, accretion and impairment - per unit of production
|
27.63
|
|
|
—
|
|
|
84.21
|
|
|
—
|
|
|
29.92
|
|
|||||
Income (loss) from continuing operations before income taxes
|
186,138
|
|
|
(3,580
|
)
|
|
(3,326
|
)
|
|
(7,671
|
)
|
|
171,561
|
|
|||||
Segment capital expenditures (1)
|
79,150
|
|
|
48,848
|
|
|
34,520
|
|
|
239
|
|
|
162,757
|
|
|
As at June 30, 2014
|
||||||||||||||||||||||||||
(Thousands of U.S. Dollars)
|
Colombia
|
|
Peru
|
|
Brazil
|
|
All Other
|
|
Total Excluding Discontinued Operations
|
|
Discontinued Operations
|
|
Total
|
||||||||||||||
Property, plant and equipment
|
$
|
861,331
|
|
|
$
|
241,025
|
|
|
$
|
143,226
|
|
|
$
|
3,094
|
|
|
$
|
1,248,676
|
|
|
$
|
—
|
|
|
$
|
1,248,676
|
|
Goodwill
|
102,581
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
102,581
|
|
|
—
|
|
|
102,581
|
|
|||||||
All other assets
|
247,012
|
|
|
30,211
|
|
|
24,747
|
|
|
224,776
|
|
|
526,746
|
|
|
—
|
|
|
526,746
|
|
|||||||
Total Assets
|
$
|
1,210,924
|
|
|
$
|
271,236
|
|
|
$
|
167,973
|
|
|
$
|
227,870
|
|
|
$
|
1,878,003
|
|
|
$
|
—
|
|
|
$
|
1,878,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
As at December 31, 2013
|
||||||||||||||||||||||||||
(Thousands of U.S. Dollars)
|
Colombia
|
|
Peru
|
|
Brazil
|
|
All Other
|
|
Total Excluding Discontinued Operations
|
|
Discontinued Operations
|
|
Total
|
||||||||||||||
Property, plant and equipment
|
$
|
850,359
|
|
|
$
|
178,531
|
|
|
$
|
133,874
|
|
|
$
|
2,962
|
|
|
$
|
1,165,726
|
|
|
$
|
94,446
|
|
|
$
|
1,260,172
|
|
Goodwill
|
102,581
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
102,581
|
|
|
—
|
|
|
102,581
|
|
|||||||
All other assets
|
233,336
|
|
|
24,240
|
|
|
24,477
|
|
|
218,780
|
|
|
500,833
|
|
|
40,964
|
|
|
541,797
|
|
|||||||
Total Assets
|
$
|
1,186,276
|
|
|
$
|
202,771
|
|
|
$
|
158,351
|
|
|
$
|
221,742
|
|
|
$
|
1,769,140
|
|
|
$
|
135,410
|
|
|
$
|
1,904,550
|
|
|
As at June 30, 2014
|
|
As at December 31, 2013
|
||||||||||||||||||||
(Thousands of U.S. Dollars)
|
Cost
|
|
Accumulated
depletion,
depreciation
and
impairment
|
|
Net book value
|
|
Cost
|
|
Accumulated
depletion,
depreciation
and
impairment
|
|
Net book value
|
||||||||||||
Oil and natural gas properties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Proved
|
$
|
1,870,800
|
|
|
$
|
(1,110,317
|
)
|
|
$
|
760,483
|
|
|
$
|
1,799,544
|
|
|
$
|
(1,005,475
|
)
|
|
$
|
794,069
|
|
Unproved
|
479,075
|
|
|
—
|
|
|
479,075
|
|
|
456,001
|
|
|
—
|
|
|
456,001
|
|
||||||
|
2,349,875
|
|
|
(1,110,317
|
)
|
|
1,239,558
|
|
|
2,255,545
|
|
|
(1,005,475
|
)
|
|
1,250,070
|
|
||||||
Furniture and fixtures and leasehold improvements
|
8,656
|
|
|
(6,567
|
)
|
|
2,089
|
|
|
8,919
|
|
|
(6,568
|
)
|
|
2,351
|
|
||||||
Computer equipment
|
12,954
|
|
|
(6,391
|
)
|
|
6,563
|
|
|
14,786
|
|
|
(7,605
|
)
|
|
7,181
|
|
||||||
Automobiles
|
802
|
|
|
(336
|
)
|
|
466
|
|
|
1,381
|
|
|
(811
|
)
|
|
570
|
|
||||||
Total Property, Plant and Equipment
|
$
|
2,372,287
|
|
|
$
|
(1,123,611
|
)
|
|
$
|
1,248,676
|
|
|
$
|
2,280,631
|
|
|
$
|
(1,020,459
|
)
|
|
$
|
1,260,172
|
|
|
RSUs
|
Options
|
||||||
|
Number of Outstanding Share Units
|
|
Number of Outstanding Options
|
|
Weighted Average Exercise Price $/Option
|
|||
Balance, December 31, 2013
|
922,045
|
|
|
15,668,458
|
|
|
5.41
|
|
Granted
|
843,455
|
|
|
2,246,775
|
|
|
7.09
|
|
Exercised
|
(409,931
|
)
|
|
(2,006,179
|
)
|
|
(3.55
|
)
|
Forfeited
|
(32,516
|
)
|
|
(138,532
|
)
|
|
(6.55
|
)
|
Expired
|
—
|
|
|
(140,318
|
)
|
|
(6.92
|
)
|
Balance, June 30, 2014
|
1,323,053
|
|
|
15,630,204
|
|
|
5.87
|
|
(Thousands of U.S. Dollars)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Compensation costs for stock options
|
|
$
|
1,847
|
|
|
$
|
1,932
|
|
|
$
|
3,863
|
|
|
$
|
4,181
|
|
Compensation costs for RSUs
|
|
2,397
|
|
|
619
|
|
|
3,641
|
|
|
619
|
|
||||
|
|
4,244
|
|
|
2,551
|
|
|
7,504
|
|
|
4,800
|
|
||||
Less: stock-based compensation costs capitalized
|
|
(1,039
|
)
|
|
(202
|
)
|
|
(1,822
|
)
|
|
(384
|
)
|
||||
Stock-based compensation costs expensed
|
|
$
|
3,205
|
|
|
$
|
2,349
|
|
|
$
|
5,682
|
|
|
$
|
4,416
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||
Weighted average number of common and exchangeable shares outstanding
|
|
283,773,204
|
|
|
282,822,383
|
|
|
283,505,690
|
|
|
282,482,343
|
|
Weighted average shares issuable pursuant to stock options
|
|
13,373,568
|
|
|
10,400,550
|
|
|
13,462,797
|
|
|
5,610,297
|
|
Weighted average shares assumed to be purchased from proceeds of stock options
|
|
(9,289,813
|
)
|
|
(7,773,225
|
)
|
|
(8,629,789
|
)
|
|
(2,445,877
|
)
|
Weighted average number of diluted common and exchangeable shares outstanding
|
|
287,856,959
|
|
|
285,449,708
|
|
|
288,338,698
|
|
|
285,646,763
|
|
|
Six Months Ended
|
|
Year Ended
|
||||
(Thousands of U.S. Dollars)
|
June 30, 2014
|
|
December 31, 2013
|
||||
Balance, beginning of year
|
$
|
21,973
|
|
|
$
|
18,292
|
|
Settlements
|
—
|
|
|
(2,068
|
)
|
||
Liability incurred
|
5,154
|
|
|
2,623
|
|
||
Liabilities associated with the Argentina business unit sold (Note 3)
|
(10,170
|
)
|
|
—
|
|
||
Foreign exchange
|
7
|
|
|
(25
|
)
|
||
Accretion
|
782
|
|
|
1,279
|
|
||
Revisions in estimated liability
|
2,355
|
|
|
1,872
|
|
||
Balance, end of period
|
$
|
20,101
|
|
|
$
|
21,973
|
|
|
|
|
|
||||
Asset retirement obligation - current
|
$
|
4,895
|
|
|
$
|
518
|
|
Asset retirement obligation - long-term
|
15,206
|
|
|
21,455
|
|
||
Balance, end of period
|
$
|
20,101
|
|
|
$
|
21,973
|
|
|
Six Months Ended June 30,
|
||||||
(Thousands of U.S. Dollars)
|
2014
|
|
2013
|
||||
Income (loss) from continuing operations before income taxes
|
|
|
|
||||
United States
|
$
|
(10,791
|
)
|
|
$
|
(4,631
|
)
|
Foreign
|
150,143
|
|
|
176,192
|
|
||
|
139,352
|
|
|
171,561
|
|
||
|
35
|
%
|
|
35
|
%
|
||
Income tax expense from continuing operations expected
|
48,773
|
|
|
60,046
|
|
||
Foreign currency translation adjustments
|
161
|
|
|
(5,262
|
)
|
||
Impact of foreign taxes
|
(1,803
|
)
|
|
(1,686
|
)
|
||
Other local taxes
|
2,014
|
|
|
751
|
|
||
Stock-based compensation
|
1,397
|
|
|
1,043
|
|
||
Increase in valuation allowance
|
294
|
|
|
2,766
|
|
||
Non-deductible third party royalty in Colombia
|
4,505
|
|
|
5,749
|
|
||
Other permanent differences
|
2,755
|
|
|
(1,430
|
)
|
||
Total income tax expense from continuing operations
|
$
|
58,096
|
|
|
$
|
61,977
|
|
|
|
|
|
||||
Current income tax expense from continuing operations
|
|
|
|
||||
United States
|
$
|
721
|
|
|
$
|
726
|
|
Foreign
|
58,216
|
|
|
76,966
|
|
||
|
58,937
|
|
|
77,692
|
|
||
Deferred income tax recovery from continuing operations
|
|
|
|
||||
Foreign
|
(841
|
)
|
|
(15,715
|
)
|
||
Total income tax expense from continuing operations
|
$
|
58,096
|
|
|
$
|
61,977
|
|
|
As at
|
||||||
(Thousands of U.S. Dollars)
|
June 30, 2014
|
|
December 31, 2013
|
||||
Deferred Tax Assets
|
|
|
|
|
|
||
Tax benefit of operating loss carryforwards
|
$
|
35,780
|
|
|
$
|
47,154
|
|
Tax basis in excess of book basis
|
42,412
|
|
|
59,168
|
|
||
Foreign tax credits and other accruals
|
18,142
|
|
|
34,894
|
|
||
Tax benefit of capital loss carryforwards
|
28,792
|
|
|
4,769
|
|
||
Deferred tax assets before valuation allowance
|
125,126
|
|
|
145,985
|
|
||
Valuation allowance
|
(122,324
|
)
|
|
(142,322
|
)
|
||
|
$
|
2,802
|
|
|
$
|
3,663
|
|
|
|
|
|
||||
Deferred tax assets - current
|
$
|
1,364
|
|
|
$
|
2,256
|
|
Deferred tax assets - long-term
|
1,438
|
|
|
1,407
|
|
||
|
2,802
|
|
|
3,663
|
|
||
Deferred tax liabilities - current
|
(1,317
|
)
|
|
(1,193
|
)
|
||
Deferred tax liabilities - long-term
|
(179,504
|
)
|
|
(177,082
|
)
|
||
|
(180,821
|
)
|
|
(178,275
|
)
|
||
Net Deferred Tax Liabilities
|
$
|
(178,019
|
)
|
|
$
|
(174,612
|
)
|
|
Six Months Ended June 30,
|
||||||
|
2014
|
|
2013
|
||||
(Thousands of U.S. Dollars)
|
|
|
|
||||
Unrecognized tax benefit relating to continuing operations at beginning of period
|
$
|
2,900
|
|
|
$
|
5,900
|
|
Increases for positions relating to prior year
|
1,100
|
|
|
—
|
|
||
Unrecognized tax benefit relating to continuing operations at end of period
|
$
|
4,000
|
|
|
$
|
5,900
|
|
|
|
As at
|
||||||
(Thousands of U.S. Dollars)
|
|
June 30, 2014
|
|
December 31, 2013
|
||||
Trading securities (Note 3)
|
|
$
|
14,251
|
|
|
$
|
—
|
|
Foreign currency derivatives
|
|
12
|
|
|
—
|
|
||
Contingent consideration
|
|
1,061
|
|
|
1,061
|
|
||
Contingent liability (Note 9)
|
|
4,400
|
|
|
4,400
|
|
(Thousands of U.S. Dollars)
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Trading securities gain
|
$
|
339
|
|
|
$
|
—
|
|
|
$
|
339
|
|
|
$
|
—
|
|
Foreign currency derivatives gain
|
2,265
|
|
|
—
|
|
|
4,674
|
|
|
—
|
|
||||
|
$
|
2,604
|
|
|
$
|
—
|
|
|
$
|
5,013
|
|
|
$
|
—
|
|
Forward contracts
|
|||||||
Currency
|
|
Contract Type
|
Notional (Millions of Colombian Pesos)
|
Weighted Average Fixed Rate Received (Colombian Pesos - U.S. Dollars)
|
Expiration
|
||
Colombian pesos
|
|
Buy
|
712.2
|
|
1,976
|
|
February 2015
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||
|
|
2014
|
2013
|
% Change
|
|
2014
|
2013
|
% Change
|
||||||||||
Production (BOEPD) (1)(2)
|
|
17,524
|
|
19,058
|
|
(8
|
)
|
|
18,135
|
|
19,583
|
|
(7
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|||||||||
Prices Realized - per BOE (1)
|
|
$
|
92.74
|
|
$
|
86.64
|
|
7
|
|
|
$
|
91.09
|
|
$
|
94.94
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Revenue and Other Income ($000s) (1)
|
|
$
|
148,526
|
|
$
|
150,574
|
|
(1
|
)
|
|
$
|
300,381
|
|
$
|
337,161
|
|
(11
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Income from Continuing Operations ($000s) (1)
|
|
$
|
31,484
|
|
$
|
49,584
|
|
(37
|
)
|
|
$
|
81,256
|
|
$
|
109,584
|
|
(26
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loss from Discontinued Operations, Net of Income Taxes ($000s)
|
|
$
|
(22,347
|
)
|
$
|
(1,801
|
)
|
—
|
|
|
$
|
(26,990
|
)
|
$
|
(3,888
|
)
|
594
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Income ($000s)
|
|
$
|
9,137
|
|
$
|
47,783
|
|
(81
|
)
|
|
$
|
54,266
|
|
$
|
105,696
|
|
(49
|
)
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income (loss) Per Share - Basic
|
|
|
|
|
|
|
|
|
||||||||||
Income from Continuing Operations (1)
|
|
$
|
0.11
|
|
$
|
0.18
|
|
(39
|
)
|
|
$
|
0.29
|
|
$
|
0.38
|
|
(24
|
)
|
Loss from Discontinued Operations, Net of Income Taxes
|
|
(0.08
|
)
|
(0.01
|
)
|
700
|
|
|
(0.10
|
)
|
(0.01
|
)
|
900
|
|
||||
Net income
|
|
$
|
0.03
|
|
$
|
0.17
|
|
(82
|
)
|
|
$
|
0.19
|
|
$
|
0.37
|
|
(49
|
)
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) Per Share - Diluted
|
|
|
|
|
|
|
|
|
||||||||||
Income from Continuing Operations (1)
|
|
$
|
0.11
|
|
$
|
0.18
|
|
(39
|
)
|
|
$
|
0.28
|
|
$
|
0.38
|
|
(26
|
)
|
Loss from Discontinued Operations, Net of Income Taxes
|
|
(0.08
|
)
|
(0.01
|
)
|
700
|
|
|
(0.09
|
)
|
(0.01
|
)
|
800
|
|
||||
Net income
|
|
$
|
0.03
|
|
$
|
0.17
|
|
(82
|
)
|
|
$
|
0.19
|
|
$
|
0.37
|
|
(49
|
)
|
|
|
|
|
|
|
|
|
|
||||||||||
Funds Flow From Continuing Operations ($000s) (1)(3)
|
|
$
|
85,145
|
|
$
|
85,836
|
|
(1
|
)
|
|
$
|
171,814
|
|
$
|
188,349
|
|
(9
|
)
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Capital Expenditures For Continuing Operations ($000s) (1)
|
|
$
|
91,339
|
|
$
|
88,553
|
|
3
|
|
|
$
|
173,440
|
|
$
|
162,757
|
|
7
|
|
|
As at
|
|||||||||
|
June 30, 2014
|
|
December 31, 2013
|
|
% Change
|
|||||
Cash & Cash Equivalents ($000s)
|
$
|
332,359
|
|
|
$
|
428,800
|
|
|
(22
|
)
|
|
|
|
|
|
|
|||||
Working Capital (including cash & cash equivalents) ($000s)
|
$
|
328,044
|
|
|
$
|
245,827
|
|
|
33
|
|
|
|
|
|
|
|
|||||
Property, Plant & Equipment ($000s)
|
$
|
1,248,676
|
|
|
$
|
1,260,172
|
|
|
(1
|
)
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
Funds Flow From Continuing Operations - Non-GAAP Measure ($000s)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net income
|
|
$
|
9,137
|
|
|
$
|
47,783
|
|
|
$
|
54,266
|
|
|
$
|
105,696
|
|
Adjustments to reconcile net income to funds flow from continuing operations
|
|
|
|
|
|
|
|
|
||||||||
Loss from discontinued operations, net of income taxes
|
|
22,347
|
|
|
1,801
|
|
|
26,990
|
|
|
3,888
|
|
||||
DD&A expenses
|
|
41,937
|
|
|
55,592
|
|
|
86,201
|
|
|
106,054
|
|
||||
Deferred tax expense (recovery)
|
|
1,419
|
|
|
(8,213
|
)
|
|
(841
|
)
|
|
(15,715
|
)
|
||||
Non-cash stock-based compensation
|
|
1,144
|
|
|
2,213
|
|
|
2,624
|
|
|
4,110
|
|
||||
Unrealized foreign exchange loss (gain)
|
|
8,745
|
|
|
(11,622
|
)
|
|
4,567
|
|
|
(18,366
|
)
|
||||
Unrealized financial instruments loss (gain)
|
|
2,058
|
|
|
—
|
|
|
(351
|
)
|
|
—
|
|
||||
Equity tax
|
|
(1,642
|
)
|
|
(1,718
|
)
|
|
(1,642
|
)
|
|
(1,718
|
)
|
||||
Other loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,400
|
|
||||
Funds flow from continuing operations
|
|
$
|
85,145
|
|
|
$
|
85,836
|
|
|
$
|
171,814
|
|
|
$
|
188,349
|
|
•
|
For the three and
six months ended June 30, 2014
, oil and gas production NAR before inventory adjustments and losses increased to
19,857
and
19,445
BOEPD compared with
19,373
and
19,004
BOEPD in the corresponding periods in
2013
, respectively. In 2014, production from new wells in the Moqueta field in the Chaza Block and new wells in the Llanos-22 Block and fewer days of pipeline disruptions had a positive effect on production NAR before inventory adjustments and losses in Colombia.
|
•
|
For the three and
six months ended June 30, 2014
, oil and gas production, NAR and adjusted for inventory changes and losses,
decrease
d by
8%
to
17,524
BOEPD and by
7%
to
18,135
BOEPD compared with the corresponding periods in
2013
, respectively, due to inventory changes. During the three and
six months ended June 30, 2014
, a net inventory
increase
accounted for
0.2
MMbbl or
2,333
bopd and
0.2
MMbbl or
1,310
bopd of
reduced
production compared with a net inventory
reduction
in the
six months ended June 30, 2013
, which accounted for
0.1
MMbbl or
578
bopd of
increased
production. In the three and
six months ended June 30, 2014
, production was
82%
from the Chaza Block in Colombia.
|
•
|
For the three and
six months ended June 30, 2014
, revenue and other income
decrease
d by
1%
to
$148.5 million
and by
11%
to
$300.4 million
compared with
$150.6 million
and
$337.2 million
in the corresponding periods in
2013
, respectively. The decrease was primarily due to higher inventory and the effect of changes in realized prices. The average price realized per BOE
increase
d by
7%
to
$92.74
and
decrease
d by
4%
to
$91.09
for the three and
six months ended June 30, 2014
, from
$86.64
and
$94.94
, in the comparable periods in
2013
, respectively.
|
•
|
Income from continuing operations was
$31.5 million
, or
$0.11
per share basic and diluted, and
$81.3 million
, or
$0.29
per share basic and
$0.28
per share diluted, for the three and
six months ended June 30, 2014
, respectively, compared with
$49.6 million
, or
$0.18
per share basic and diluted, and
$109.6 million
, or
$0.38
per share basic and diluted, in the corresponding periods in
2013
, respectively. For the
three months ended June 30, 2014
,
decrease
d oil and natural gas sales as a result of higher inventory, and
higher
operating, general and administrative ("G&A") and income tax expenses and foreign exchange losses, were only partially offset by
decrease
d DD&A expenses and financial instruments gains. For the
six months ended June 30, 2014
,
decrease
d oil and natural gas sales,
increase
d G&A expenses and foreign exchange losses were only partially offset by
lower
operating, DD&A and income tax expenses, financial instruments gains and the absence of other loss.
|
•
|
Loss from discontinued operations, net of income taxes, was
$22.3 million
, or
$0.08
per share basic and diluted, and
$27.0 million
, or
$0.10
per share basic and
$0.09
per share diluted, for the three and
six months ended June 30, 2014
, respectively, compared with loss of
$1.8 million
, or
$0.01
per share basic and diluted, and
$3.9 million
, or
$0.01
per share basic and diluted, in the corresponding periods in
2013
, respectively. Loss from discontinued operations, net of income taxes, increased compared with the corresponding period in 2013 due to the recognition of a loss on sale of the Argentina business unit of
$19.3 million
in the three and
six months ended June 30, 2014
.
|
•
|
Net income was
$9.1 million
, or
$0.03
per share basic and diluted, and
$54.3 million
, or
$0.19
per share basic and diluted, for the three and
six months ended June 30, 2014
, respectively, compared with
$47.8 million
, or
$0.17
per share basic and diluted, and
$105.7 million
, or
$0.37
per share basic and diluted, in the corresponding periods in
2013
, respectively. For the three and
six months ended June 30, 2014
, the decrease was due to lower income from continuing operations and the recognition of a loss on sale of the Argentina business unit.
|
•
|
For the three and
six months ended June 30, 2014
, funds flow from continuing operations
decrease
d by
1%
to
$85.1 million
and by
9%
to
$171.8 million
, respectively. For the
three months ended June 30, 2014
,
decrease
d oil and natural gas sales, and
higher
operating, G&A and income tax expenses and realized foreign exchange losses, were only partially offset by realized financial instruments gains. For the
six months ended June 30, 2014
,
decrease
d oil and natural gas sales,
increase
d G&A expenses and realized foreign exchange losses were only partially offset by
lower
operating and income tax expenses and realized financial instruments gains.
|
•
|
Cash and cash equivalents were
$332.4 million
at
June 30, 2014
, compared with
$428.8 million
at
December 31, 2013
. The
decrease
in cash and cash equivalents during the
six months ended June 30, 2014
, was primarily the result of cash capital expenditures of
$158.2 million
, cash used in investing activities of discontinued operations of
$12.4 million
and a
$143.1 million
change in assets and liabilities from operating activities, partially offset by funds flow from continuing operations of
$171.8 million
, net proceeds from sale of Argentina business unit of
$42.8 million
, cash used in operating activities of discontinued operations of
$4.8 million
and proceeds from the issuance of shares of common stock of
$7.1 million
.
|
•
|
Working capital (including cash and cash equivalents) was
$328.0 million
at
June 30, 2014
, an
$82.2 million
increase
from
December 31, 2013
.
|
•
|
Property, plant and equipment ("PPE") at
June 30, 2014
, was
$1.2 billion
, a
decrease
of
$11.5 million
from
December 31, 2013
, as a result of the sale of the Argentina business unit PPE of
$100.2 million
,
$90.5 million
of depletion, depreciation and impairment expenses related to continuing operations,
$12.9 million
of depletion, depreciation and impairment expenses recorded in loss from discontinued operations, partially offset by
$173.4 million
of capital expenditures related to continuing operations and
$18.7 million
of capital expenditures related to discontinued operations.
|
•
|
Capital expenditures for continuing operations for the
six months ended June 30, 2014
, were
$173.4 million
compared with
$162.8 million
for the
six months ended June 30, 2013
. In
2014
, these capital expenditures included drilling of
$116.6 million
, geological and geophysical (“G&G”) expenditures of
$26.8 million
, facilities of
$14.2 million
and other expenditures of
$15.8 million
.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||
|
|
2014
|
|
2013
|
|
% Change
|
|
2014
|
|
2013
|
|
% Change
|
||||||||||
(Thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and natural gas sales (1)
|
|
$
|
147,888
|
|
|
$
|
150,250
|
|
|
(2
|
)
|
|
$
|
298,993
|
|
|
$
|
336,490
|
|
|
(11
|
)
|
Interest income (1)
|
|
638
|
|
|
324
|
|
|
97
|
|
|
1,388
|
|
|
671
|
|
|
107
|
|
||||
|
|
148,526
|
|
|
150,574
|
|
|
(1
|
)
|
|
300,381
|
|
|
337,161
|
|
|
(11
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating expenses (1)
|
|
25,346
|
|
|
23,970
|
|
|
6
|
|
|
47,212
|
|
|
56,013
|
|
|
(16
|
)
|
||||
DD&A expenses (1)
|
|
41,937
|
|
|
55,592
|
|
|
(25
|
)
|
|
86,201
|
|
|
106,054
|
|
|
(19
|
)
|
||||
G&A expenses (1)
|
|
13,932
|
|
|
9,090
|
|
|
53
|
|
|
26,795
|
|
|
18,112
|
|
|
48
|
|
||||
Foreign exchange loss (gain) (1)
|
|
10,044
|
|
|
(12,622
|
)
|
|
180
|
|
|
5,834
|
|
|
(18,979
|
)
|
|
(131
|
)
|
||||
Financial instruments gain (1)
|
|
(2,604
|
)
|
|
—
|
|
|
—
|
|
|
(5,013
|
)
|
|
—
|
|
|
—
|
|
||||
Other loss (1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,400
|
|
|
(100
|
)
|
||||
|
|
88,655
|
|
|
76,030
|
|
|
17
|
|
|
161,029
|
|
|
165,600
|
|
|
(3
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations before income taxes (1)
|
|
59,871
|
|
|
74,544
|
|
|
(20
|
)
|
|
139,352
|
|
|
171,561
|
|
|
(19
|
)
|
||||
Income tax expense (1)
|
|
(28,387
|
)
|
|
(24,960
|
)
|
|
14
|
|
|
(58,096
|
)
|
|
(61,977
|
)
|
|
(6
|
)
|
||||
Income from continuing operations (1)
|
|
$
|
31,484
|
|
|
$
|
49,584
|
|
|
(37
|
)
|
|
$
|
81,256
|
|
|
$
|
109,584
|
|
|
(26
|
)
|
Loss from discontinued operations, net of income taxes
|
|
(22,347
|
)
|
|
(1,801
|
)
|
|
—
|
|
|
(26,990
|
)
|
|
(3,888
|
)
|
|
594
|
|
||||
Net income
|
|
$
|
9,137
|
|
|
$
|
47,783
|
|
|
(81
|
)
|
|
$
|
54,266
|
|
|
$
|
105,696
|
|
|
(49
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Production (1)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and NGL's, bbl
|
|
1,573,071
|
|
|
1,732,514
|
|
|
(9
|
)
|
|
3,250,049
|
|
|
3,542,674
|
|
|
(8
|
)
|
||||
Natural gas, Mcf
|
|
129,711
|
|
|
10,468
|
|
|
—
|
|
|
194,490
|
|
|
10,468
|
|
|
—
|
|
||||
Total production, BOE
|
|
1,594,690
|
|
1,734,259
|
|
(8
|
)
|
|
3,282,464
|
|
3,544,419
|
|
(7
|
)
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average Prices (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and NGL's per bbl
|
|
$
|
93.72
|
|
|
$
|
86.71
|
|
|
8
|
|
|
$
|
91.74
|
|
|
$
|
94.99
|
|
|
(3
|
)
|
Natural gas per Mcf
|
|
$
|
4.01
|
|
|
$
|
7.18
|
|
|
(44
|
)
|
|
$
|
4.79
|
|
|
$
|
7.18
|
|
|
(33
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Consolidated Results of Operations per BOE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Oil and natural gas sales (1)
|
|
$
|
92.74
|
|
|
$
|
86.64
|
|
|
7
|
|
|
$
|
91.09
|
|
|
$
|
94.94
|
|
|
(4
|
)
|
Interest income (1)
|
|
0.40
|
|
|
0.19
|
|
|
111
|
|
|
0.42
|
|
|
0.19
|
|
|
121
|
|
||||
|
|
93.14
|
|
|
86.83
|
|
|
7
|
|
|
91.51
|
|
|
95.13
|
|
|
(4
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating expenses (1)
|
|
15.89
|
|
|
13.82
|
|
|
15
|
|
|
14.38
|
|
|
15.80
|
|
|
(9
|
)
|
||||
DD&A expenses (1)
|
|
26.30
|
|
|
32.06
|
|
|
(18
|
)
|
|
26.26
|
|
|
29.92
|
|
|
(12
|
)
|
||||
G&A expenses (1)
|
|
8.74
|
|
|
5.24
|
|
|
67
|
|
|
8.16
|
|
|
5.11
|
|
|
60
|
|
||||
Foreign exchange loss (gain) (1)
|
|
6.30
|
|
|
(7.28
|
)
|
|
187
|
|
|
1.78
|
|
|
(5.35
|
)
|
|
(133
|
)
|
||||
Financial instruments gain (1)
|
|
(1.63
|
)
|
|
—
|
|
|
—
|
|
|
(1.53
|
)
|
|
—
|
|
|
—
|
|
||||
Other loss (1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.24
|
|
|
(100
|
)
|
||||
|
|
55.60
|
|
43.84
|
|
27
|
|
|
49.05
|
|
46.72
|
|
5
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income from continuing operations before income taxes (1)
|
|
37.54
|
|
|
42.99
|
|
|
(13
|
)
|
|
42.46
|
|
|
48.41
|
|
|
(12
|
)
|
||||
Income tax expense (1)
|
|
(17.80
|
)
|
|
(14.39
|
)
|
|
24
|
|
|
(17.70
|
)
|
|
(17.49
|
)
|
|
1
|
|
||||
Income from continuing operations (1)
|
|
$
|
19.74
|
|
|
$
|
28.60
|
|
|
(31
|
)
|
|
$
|
24.76
|
|
|
$
|
30.92
|
|
|
(20
|
)
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||
|
|
2014
|
|
2013
|
|
% Change
|
|
2014
|
|
2013
|
|
% Change
|
||||||||||
(Thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and natural gas sales
|
|
$
|
139,350
|
|
|
$
|
144,333
|
|
|
(3
|
)
|
|
$
|
284,285
|
|
|
$
|
324,336
|
|
|
(12
|
)
|
Interest income
|
|
184
|
|
|
143
|
|
|
29
|
|
|
321
|
|
|
304
|
|
|
6
|
|
||||
|
|
139,534
|
|
|
144,476
|
|
|
(3
|
)
|
|
284,606
|
|
|
324,640
|
|
|
(12
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating expenses
|
|
23,281
|
|
|
22,349
|
|
|
4
|
|
|
43,486
|
|
|
52,301
|
|
|
(17
|
)
|
||||
DD&A expenses
|
|
39,348
|
|
|
48,364
|
|
|
(19
|
)
|
|
80,598
|
|
|
94,320
|
|
|
(15
|
)
|
||||
G&A expenses
|
|
5,798
|
|
|
3,379
|
|
|
72
|
|
|
10,181
|
|
|
8,015
|
|
|
27
|
|
||||
Foreign exchange loss (gain)
|
|
10,891
|
|
|
(14,086
|
)
|
|
177
|
|
|
6,523
|
|
|
(20,534
|
)
|
|
(132
|
)
|
||||
Financial instruments gain
|
|
(2,265
|
)
|
|
—
|
|
|
—
|
|
|
(4,674
|
)
|
|
—
|
|
|
—
|
|
||||
Other loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,400
|
|
|
(100
|
)
|
||||
|
|
77,053
|
|
|
60,006
|
|
|
28
|
|
|
136,114
|
|
|
138,502
|
|
|
(2
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations before income taxes
|
|
$
|
62,481
|
|
|
$
|
84,470
|
|
|
(26
|
)
|
|
$
|
148,492
|
|
|
$
|
186,138
|
|
|
(20
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Production (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and NGL's, bbl
|
|
1,483,854
|
|
|
1,665,555
|
|
|
(11
|
)
|
|
3,094,509
|
|
|
3,411,881
|
|
|
(9
|
)
|
||||
Natural gas, Mcf
|
|
129,711
|
|
|
10,468
|
|
|
—
|
|
|
194,490
|
|
|
10,468
|
|
|
—
|
|
||||
Total production, BOE
|
|
1,505,473
|
|
|
1,667,300
|
|
|
(10
|
)
|
|
3,126,924
|
|
|
3,413,626
|
|
|
(8
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average Prices
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and NGL's per bbl
|
|
$
|
93.56
|
|
|
$
|
86.61
|
|
|
8
|
|
|
$
|
91.57
|
|
|
$
|
95.04
|
|
|
(4
|
)
|
Natural gas per Mcf
|
|
$
|
4.01
|
|
|
$
|
7.18
|
|
|
(44
|
)
|
|
$
|
4.79
|
|
|
$
|
7.18
|
|
|
(33
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Segmented Results of Operations per BOE
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and natural gas sales
|
|
$
|
92.56
|
|
|
$
|
86.57
|
|
|
7
|
|
|
$
|
90.92
|
|
|
$
|
95.01
|
|
|
(4
|
)
|
Interest income
|
|
0.12
|
|
|
0.09
|
|
|
33
|
|
|
0.10
|
|
|
0.09
|
|
|
11
|
|
||||
|
|
92.68
|
|
|
86.66
|
|
|
7
|
|
|
91.02
|
|
|
95.10
|
|
|
(4
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating expenses
|
|
15.46
|
|
|
13.40
|
|
|
15
|
|
|
13.91
|
|
|
15.32
|
|
|
(9
|
)
|
||||
DD&A expenses
|
|
26.14
|
|
|
29.01
|
|
|
(10
|
)
|
|
25.78
|
|
|
27.63
|
|
|
(7
|
)
|
||||
G&A expenses
|
|
3.85
|
|
|
2.03
|
|
|
90
|
|
|
3.26
|
|
|
2.35
|
|
|
39
|
|
||||
Foreign exchange loss (gain)
|
|
7.23
|
|
|
(8.45
|
)
|
|
186
|
|
|
2.09
|
|
|
(6.02
|
)
|
|
(135
|
)
|
||||
Financial instruments gain
|
|
(1.50
|
)
|
|
—
|
|
|
—
|
|
|
(1.49
|
)
|
|
—
|
|
|
—
|
|
||||
Other loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.29
|
|
|
(100
|
)
|
||||
|
|
51.18
|
|
|
35.99
|
|
|
42
|
|
|
43.55
|
|
|
40.57
|
|
|
7
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations before income taxes
|
|
$
|
41.50
|
|
|
$
|
50.67
|
|
|
(18
|
)
|
|
$
|
47.47
|
|
|
$
|
54.53
|
|
|
(13
|
)
|
(1)
|
Production represents production volumes NAR adjusted for inventory changes and losses.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(Millions of U.S. Dollars)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Drilling and completions
|
|
$
|
25.7
|
|
|
$
|
24.8
|
|
|
$
|
56.3
|
|
|
$
|
39.7
|
|
G&G
|
|
8.8
|
|
|
11.3
|
|
|
19.9
|
|
|
16.6
|
|
||||
Facilities and equipment
|
|
7.3
|
|
|
10.5
|
|
|
13.5
|
|
|
16.7
|
|
||||
Other
|
|
3.9
|
|
|
3.6
|
|
|
6.5
|
|
|
7.7
|
|
||||
|
|
$
|
45.7
|
|
|
$
|
50.2
|
|
|
$
|
96.2
|
|
|
$
|
80.7
|
|
•
|
On the Chaza Block (100% working interest ("WI"), operated), we drilled and completed the Moqueta-13 development well in the Moqueta field and drilled and started completion work on the Costayaco-21 development well in the Costayaco field. The Costayaco-20 and Costayaco-22 development wells began production as oil producers. The
|
•
|
We acquired 3-D seismic on the Putumayo-1 Block (55% WI, operated) and 2-D seismic on the Piedemonte Sur Block (100% WI, operated) and Cauca-7 Block (100% WI, operated) and completed an aerogravity and magnetic survey on the Sinu-1 (60% WI, operated) and Sinu-3 Blocks (51% WI, operated). We continued work in preparation for a future seismic program on the Sinu-1 and Sinu-3 Blocks and completed regional field studies and continued work to obtain the necessary environmental and social permits for future seismic programs on the Chaza Block.
|
•
|
We also continued facilities work at the Costayaco and Moqueta fields on the Chaza Block and the Llanos-22 Block (45% WI, non-operated).
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||
|
2014
|
|
2013
|
|
% Change
|
|
2014
|
|
2013
|
|
% Change
|
||||||||||
(Thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest income
|
$
|
—
|
|
|
$
|
12
|
|
|
(100
|
)
|
|
$
|
—
|
|
|
$
|
26
|
|
|
(100
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
DD&A expenses
|
103
|
|
|
137
|
|
|
(25
|
)
|
|
311
|
|
|
199
|
|
|
56
|
|
||||
G&A expenses
|
2,329
|
|
|
1,381
|
|
|
69
|
|
|
3,971
|
|
|
2,387
|
|
|
66
|
|
||||
Foreign exchange (gain) loss
|
(24
|
)
|
|
847
|
|
|
(103
|
)
|
|
184
|
|
|
1,020
|
|
|
82
|
|
||||
|
2,408
|
|
|
2,365
|
|
|
2
|
|
|
4,466
|
|
|
3,606
|
|
|
24
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Loss from continuing operations before income taxes
|
$
|
(2,408
|
)
|
|
$
|
(2,353
|
)
|
|
2
|
|
|
$
|
(4,466
|
)
|
|
$
|
(3,580
|
)
|
|
25
|
|
•
|
On Block 95 (100% WI, operated), we drilled the Bretaña-1WD water disposal well on the Bretaña field, started engineering, procurement and construction work in preparation for long-term production test and purchased long-lead items for future drilling activities on this field.
|
•
|
On Block 107 and Block 133 (both 100% WI, operated), we continued work to obtain the necessary environmental and social permits for future seismic programs. We also continued the refurbishment of a seismic camp on Block 107.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||
|
2014
|
|
2013
|
|
% Change
|
|
2014
|
|
2013
|
|
% Change
|
||||||||||
(Thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil sales
|
$
|
8,538
|
|
|
$
|
5,917
|
|
|
44
|
|
|
$
|
14,708
|
|
|
$
|
12,154
|
|
|
21
|
|
Interest income
|
434
|
|
|
2
|
|
|
—
|
|
|
859
|
|
|
11
|
|
|
—
|
|
||||
|
8,972
|
|
|
5,919
|
|
|
52
|
|
|
15,567
|
|
|
12,165
|
|
|
28
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating expenses
|
2,066
|
|
|
1,621
|
|
|
27
|
|
|
3,726
|
|
|
3,712
|
|
|
—
|
|
||||
DD&A expenses
|
2,241
|
|
|
6,843
|
|
|
(67
|
)
|
|
4,820
|
|
|
11,014
|
|
|
(56
|
)
|
||||
G&A expenses
|
1,424
|
|
|
317
|
|
|
349
|
|
|
2,075
|
|
|
743
|
|
|
179
|
|
||||
Foreign exchange (gain) loss
|
(509
|
)
|
|
25
|
|
|
—
|
|
|
(754
|
)
|
|
22
|
|
|
—
|
|
||||
|
5,222
|
|
|
8,806
|
|
|
(41
|
)
|
|
9,867
|
|
|
15,491
|
|
|
(36
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) from continuing operations before income taxes
|
$
|
3,750
|
|
|
$
|
(2,887
|
)
|
|
(230
|
)
|
|
$
|
5,700
|
|
|
$
|
(3,326
|
)
|
|
(271
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Production (1)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and NGL's, bbl
|
89,217
|
|
|
66,959
|
|
|
33
|
|
|
155,540
|
|
|
130,793
|
|
|
19
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average Prices
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and NGL's per bbl
|
$
|
95.70
|
|
|
$
|
88.37
|
|
|
8
|
|
|
$
|
94.56
|
|
|
$
|
92.93
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Segmented Results of Operations per bbl
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil sales
|
$
|
95.70
|
|
|
$
|
88.37
|
|
|
8
|
|
|
$
|
94.56
|
|
|
$
|
92.93
|
|
|
2
|
|
Interest income
|
4.86
|
|
|
0.03
|
|
|
—
|
|
|
5.52
|
|
|
0.08
|
|
|
—
|
|
||||
|
100.56
|
|
|
88.40
|
|
|
14
|
|
|
100.08
|
|
|
93.01
|
|
|
8
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating expenses
|
23.16
|
|
|
24.21
|
|
|
(4
|
)
|
|
23.96
|
|
|
28.38
|
|
|
(16
|
)
|
||||
DD&A expenses
|
25.12
|
|
|
102.20
|
|
|
(75
|
)
|
|
30.99
|
|
|
84.21
|
|
|
(63
|
)
|
||||
G&A expenses
|
15.96
|
|
|
4.73
|
|
|
237
|
|
|
13.34
|
|
|
5.68
|
|
|
135
|
|
||||
Foreign exchange (gain) loss
|
(5.71
|
)
|
|
0.37
|
|
|
—
|
|
|
(4.85
|
)
|
|
0.17
|
|
|
—
|
|
||||
|
58.53
|
|
|
131.51
|
|
|
(55
|
)
|
|
63.44
|
|
|
118.44
|
|
|
(46
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) from continuing operations before income taxes
|
$
|
42.03
|
|
|
$
|
(43.11
|
)
|
|
(197
|
)
|
|
$
|
36.64
|
|
|
$
|
(25.43
|
)
|
|
(244
|
)
|
(1)
|
Production represents production volumes NAR adjusted for inventory changes.
|
•
|
On Block REC-T-155 (100% WI, operated), we successfully completed the dual completion of the 3-GTE-03-BA development well and continued to evaluate alternatives for the 1-GTE-07-BA exploration well.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||
|
2014
|
|
2013 (1)
|
|
% Change
|
|
2014 (1)
|
|
2013 (1)
|
|
% Change
|
||||||||||
(Thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest income
|
$
|
20
|
|
|
$
|
167
|
|
|
(88
|
)
|
|
$
|
208
|
|
|
$
|
330
|
|
|
(37
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
DD&A expenses
|
245
|
|
|
248
|
|
|
(1
|
)
|
|
472
|
|
|
521
|
|
|
(9
|
)
|
||||
G&A expenses
|
4,381
|
|
|
4,012
|
|
|
9
|
|
|
10,568
|
|
|
6,967
|
|
|
52
|
|
||||
Foreign exchange (gain) loss
|
(315
|
)
|
|
593
|
|
|
(153
|
)
|
|
(119
|
)
|
|
513
|
|
|
(123
|
)
|
||||
Financial instruments gain
|
(339
|
)
|
|
—
|
|
|
—
|
|
|
(339
|
)
|
|
—
|
|
|
—
|
|
||||
|
3,972
|
|
|
4,853
|
|
|
(18
|
)
|
|
10,582
|
|
|
8,001
|
|
|
32
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Loss from continuing operations before income taxes
|
$
|
(3,952
|
)
|
|
$
|
(4,686
|
)
|
|
(16
|
)
|
|
$
|
(10,374
|
)
|
|
$
|
(7,671
|
)
|
|
35
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||
|
2014 (1)
|
|
2013 (1) (2)
|
|
% Change
|
|
2014 (1)
|
|
2013 (1) (2)
|
|
% Change
|
||||||||||
(Thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and natural gas sales
|
$
|
14,518
|
|
|
$
|
17,931
|
|
|
(19
|
)
|
|
$
|
31,938
|
|
|
$
|
36,470
|
|
|
(12
|
)
|
Interest income
|
(357
|
)
|
|
303
|
|
|
(218
|
)
|
|
47
|
|
|
550
|
|
|
(91
|
)
|
||||
|
14,161
|
|
|
18,234
|
|
|
(22
|
)
|
|
31,985
|
|
|
37,020
|
|
|
(14
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating expenses
|
8,184
|
|
|
7,932
|
|
|
3
|
|
|
14,612
|
|
|
16,904
|
|
|
(14
|
)
|
||||
DD&A expenses
|
4,790
|
|
|
7,430
|
|
|
(36
|
)
|
|
13,684
|
|
|
15,380
|
|
|
(11
|
)
|
||||
G&A expenses
|
3,239
|
|
|
2,656
|
|
|
22
|
|
|
5,579
|
|
|
5,055
|
|
|
10
|
|
||||
Foreign exchange loss
|
27
|
|
|
640
|
|
|
(96
|
)
|
|
4,362
|
|
|
1,770
|
|
|
146
|
|
||||
|
16,240
|
|
|
18,658
|
|
|
(13
|
)
|
|
38,237
|
|
|
39,109
|
|
|
(2
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Loss from operations of discontinued operations before income taxes
|
$
|
(2,079
|
)
|
|
$
|
(424
|
)
|
|
390
|
|
|
$
|
(6,252
|
)
|
|
$
|
(2,089
|
)
|
|
199
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Production (3)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and NGL's, bbl
|
172,602
|
|
|
228,382
|
|
|
(24
|
)
|
|
377,795
|
|
|
470,959
|
|
|
(20
|
)
|
||||
Natural gas, Mcf
|
289,006
|
|
|
307,603
|
|
|
(6
|
)
|
|
713,262
|
|
|
640,216
|
|
|
11
|
|
||||
Total production, BOE
|
220,770
|
|
|
279,649
|
|
|
(21
|
)
|
|
496,672
|
|
|
577,662
|
|
|
(14
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average Prices
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and NGL's per bbl
|
$
|
75.23
|
|
|
$
|
72.32
|
|
|
4
|
|
|
$
|
75.98
|
|
|
$
|
71.80
|
|
|
6
|
|
Natural gas per Mcf
|
$
|
5.31
|
|
|
$
|
4.60
|
|
|
15
|
|
|
$
|
4.53
|
|
|
$
|
4.15
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Segmented Results of Operations per BOE
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and natural gas sales
|
$
|
65.76
|
|
|
$
|
64.12
|
|
|
3
|
|
|
$
|
64.30
|
|
|
$
|
63.13
|
|
|
2
|
|
Interest income
|
(1.62
|
)
|
|
1.08
|
|
|
(250
|
)
|
|
0.09
|
|
|
0.95
|
|
|
(91
|
)
|
||||
|
64.14
|
|
|
65.20
|
|
|
(2
|
)
|
|
64.39
|
|
|
64.08
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating expenses
|
37.07
|
|
|
28.36
|
|
|
31
|
|
|
29.42
|
|
|
29.26
|
|
|
1
|
|
||||
DD&A expenses
|
21.70
|
|
|
26.57
|
|
|
(18
|
)
|
|
27.55
|
|
|
26.62
|
|
|
3
|
|
||||
G&A expenses
|
14.67
|
|
|
9.50
|
|
|
54
|
|
|
11.23
|
|
|
8.75
|
|
|
28
|
|
||||
Foreign exchange loss
|
0.12
|
|
|
2.29
|
|
|
(95
|
)
|
|
8.78
|
|
|
3.06
|
|
|
187
|
|
||||
|
73.56
|
|
|
66.72
|
|
|
10
|
|
|
76.98
|
|
|
67.69
|
|
|
14
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Loss from operations of discontinued operations before income taxes
|
$
|
(9.42
|
)
|
|
$
|
(1.52
|
)
|
|
520
|
|
|
$
|
(12.59
|
)
|
|
$
|
(3.61
|
)
|
|
249
|
|
•
|
all bilateral aid, except anti-narcotics and humanitarian aid, would be suspended;
|
•
|
the Export-Import Bank of the United States and the Overseas Private Investment Corporation would not approve financing for new projects in Colombia;
|
•
|
United States representatives at multilateral lending institutions would be required to vote against all loan requests from Colombia, although such votes would not constitute vetoes; and
|
•
|
the President of the United States and Congress would retain the right to apply future trade sanctions.
|
•
|
expand our systems effectively or efficiently or in a timely manner;
|
•
|
allocate our human resources optimally;
|
•
|
identify and hire qualified employees or retain valued employees; or
|
•
|
incorporate effectively the components of any business that we may acquire in our effort to achieve growth.
|
•
|
dilution caused by our issuance of additional shares of Common Stock and other forms of equity securities, which we expect to make in connection with acquisitions of other companies or assets;
|
•
|
announcements of new acquisitions, reserve discoveries or other business initiatives by our competitors;
|
•
|
fluctuations in revenue from our oil and natural gas business;
|
•
|
changes in the market and/or WTI or Brent price for oil and natural gas commodities and/or in the capital markets generally, or under our credit agreement;
|
•
|
changes in the demand for oil and natural gas, including changes resulting from the introduction or expansion of alternative fuels;
|
•
|
changes in the social, political and/or legal climate in the regions in which we will operate;
|
•
|
changes in the valuation of similarly situated companies, both in our industry and in other industries;
|
•
|
changes in analysts’ estimates affecting us, our competitors and/or our industry;
|
•
|
changes in the accounting methods used in or otherwise affecting our industry;
|
•
|
announcements of technological innovations or new products available to the oil and natural gas industry;
|
•
|
announcements by relevant governments pertaining to incentives for alternative energy development programs;
|
•
|
fluctuations in interest rates, exchange rates and the availability of capital in the capital markets; and
|
•
|
significant sales of shares of our Common Stock, including sales by future investors in future offerings we expect to make to raise additional capital.
|
•
|
quarterly variations in our revenues and operating expenses; and
|
•
|
additions and departures of key personnel.
|
Date: August 6, 2014
|
|
/s/ Dana Coffield
|
|
|
By: Dana Coffield
|
|
|
Chief Executive Officer and President
|
|
|
(Principal Executive Officer)
|
Date: August 6, 2014
|
|
/s/ James Rozon
|
|
|
By: James Rozon
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|
Exhibit No.
|
Description
|
|
Reference
|
2.1
|
Arrangement Agreement, dated as of July 28, 2008, by and among Gran Tierra Energy Inc., Solana Resources Limited and Gran Tierra Exchangeco Inc.
|
|
Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K, filed with the SEC on August 1, 2008 (SEC File No. 001-34018).
|
|
|
|
|
2.2
|
Amendment No. 2 to Arrangement Agreement, which supersedes Amendment No. 1 thereto and includes the Plan of Arrangement, including appendices.
|
|
Incorporated by reference to Exhibit 2.2 to the Registration Statement on Form S-3, filed with the SEC on October 10, 2008 (SEC File No. 333-153376).
|
|
|
|
|
2.3
|
Arrangement Agreement, dated January 17, 2011, by and between Gran Tierra Energy Inc. and Petrolifera Petroleum Limited.
+
|
|
Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K, filed with the SEC on January 21, 2011 (SEC File No. 001-34018).
|
|
|
|
|
2.4
|
Share Purchase and Sale Offer, dated May 29, 2014, by Gran Tierra Petroco Inc. +
|
|
Incorporated by reference to Exhibit 2.1 to the Quarterly Report on Form 10-Q, filed with the SEC on July 1, 2014 (SEC File No. 001-34018).
|
|
|
|
|
2.5
|
Share Purchase and Sale Offer, dated May 29, 2014, by Gran Tierra Energy Inc., an Alberta corporation, and PCESA Petroleros Canadienses De Ecuador S.A. +
|
|
Incorporated by reference to Exhibit 2.2 to the Quarterly Report on Form 10-Q, filed with the SEC on July 1, 2014 (SEC File No. 001-34018).
|
|
|
|
|
3.1
|
Amended and Restated Articles of Incorporation.
|
|
Incorporated by reference to Exhibit 3.1 to the Annual Report on Form 10-K, filed with the SEC on February 26, 2014 (SEC File No. 001-34018).
|
|
|
|
|
3.2
|
Amended and Restated Bylaws of Gran Tierra Energy Inc.
|
|
Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, filed with the SEC on February 26, 2014 (SEC File No. 001-34018).
|
|
|
|
|
4.1
|
Reference is made to Exhibits 3.1 to 3.2.
|
|
|
|
|
|
|
4.2
|
Details of the Goldstrike Special Voting Share.
|
|
Incorporated by reference to Exhibit 10.14 to the Annual Report on Form 10-KSB/A for the period ended December 31, 2005, and filed with the SEC on April 21, 2006 (SEC File No. 333-111656).
|
|
|
|
|
4.3
|
Goldstrike Exchangeable Share Provisions.
|
|
Incorporated by reference to Exhibit 10.15 to the Annual Report on Form 10-KSB/A for the period ended December 31, 2005, and filed with the SEC on April 21, 2006 (SEC File No. 333-111656).
|
|
|
|
|
4.4
|
Provisions Attaching to the GTE–Solana Exchangeable Shares.
|
|
Incorporated by reference to Annex E to the Proxy Statement on Schedule 14A filed with the SEC on October 14, 2008 (SEC File No. 001-34018).
|
|
|
|
|
10.1
|
Amendment dated April 15, 2014 to Expat Assignment Letter Agreement between Gran Tierra Energy Inc. and Duncan Nightingale.
|
|
Incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q, filed with the SEC on May 7, 2014 (SEC File No. 001-34018).
|
|
|
|
|
10.2
|
Compensation Arrangements with Shane O’Leary, as retiring Chief Operating Officer,
Duncan Nightingale, as Chief Operating Officer, and Adrian Coral, as President of Gran Tierra Energy Colombia, Ltd.
|
|
Described in Item 5.02 of the Current Report on Form 8-K, filed with the SEC on July 1, 2014 (SEC File No. 001-34018), which description is incorporated by reference here.
|
|
|
|
|
10.3
|
Executive Employment Agreement dated July 31, 2014, between Gran Tierra Energy Canada ULC, Gran Tierra Energy Inc. and Duncan Nightingale.
|
|
Filed herewith.
|
|
|
|
|
10.4
|
Employment Agreement dated July 31, 2014, between Gran Tierra Energy Colombia Ltd. and Adrián Santiago Coral Pantoja.
|
|
Filed herewith.
|
|
|
|
|
31.1
|
Certification of Principal Executive Officer.
|
|
Filed herewith.
|
|
|
|
|
31.2
|
Certification of Principal Financial Officer.
|
|
Filed herewith.
|
|
|
|
|
32.1
|
Section 1350 Certifications.
|
|
Filed herewith.
|
A.
|
The Executive has specialized knowledge and valuable skills and experience which are critical to the management and success of the business;
|
B.
|
The Company wishes to secure the services of the Executive as the Chief Operating Officer of Gran Tierra;
|
C.
|
The Executive is currently an employee of the Company pursuant to an employment agreement between the GTE ULC (as assignee of Gran Tierra Energy Inc., an Alberta corporation), Gran Tierra and the Executive formed by the signature of GTE ULC and Gran Tierra on July 29, 2009, and of the Executive on July 30, 2009 (the “
Prior Agreement
”); and
|
D.
|
The Executive is currently engaged in an expatriate assignment pursuant to an expatriate assignment letter agreement dated December 7, 2010, and as subsequently amended (the “
Expatriate Agreement
”)
|
E.
|
The Parties wish to set forth their entire understanding and agreement with respect to the subject matter herein and, as set forth herein, terminate the Expatriate Agreement and replace the Prior Agreement in its entirety with this Executive Employment Agreement (the “
Agreement
”).
|
(a)
|
the Executive’s annual bonus target will be 80% of the Executive’s Base Salary (for certainty, the 2014 annual bonus calculation shall be 60% of the Executive’s Base Salary from January 1, 2014 to the Effective Date and 80% of the Executive’s Base Salary from the Effective Date to December 31, 2014); and
|
(b)
|
the annual bonus weighting will be based on 70% Corporate performance and 30% Executive individual performance (for certainty, the 2014 annual bonus weighting will use a weighting of 30% Corporate performance, 30% Executive individual performance and 40% Colombia business unit performance from January 1, 2014 to the Effective Date and a weighting of 70% Corporate performance and 30% Executive individual performance from the Effective Date to December 31, 2014).
|
(c)
|
the acquisition by any person, entity or group within the meaning of Section 13(d) or 14(d) of the Exchange Act, or any comparable successor provisions (excluding any employee benefit plan, or related trust, sponsored or maintained by the Company or any affiliate of the Company) of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act, or comparable successor rule) of securities of the Company representing at least fifty percent (50%) of the combined voting power entitled to vote in the election of directors.
|
|
(a) Gran Tierra shall purchase and maintain, throughout the period during which the Executive acts as a director or officer of Gran Tierra or a Member Company and for a period of two years after the date that the Executive ceases to act as a director or officer of Gran Tierra or a Member Company, directors’ and officers’ liability insurance for the benefit of the Executive and the Executive’s heirs, executors, administrators and other legal representatives, such that the Executive’s insurance coverage is, at all times, at least equal to or better than any insurance coverage Gran Tierra purchases and maintains for the benefit of its then current directors and officers, from time to time.
|
|
(b) If for any reason whatsoever, any directors’ and officers’ liability insurer asserts that the Executive or the Executive’s heirs, executors, administrators or other legal representatives are subject to a deductible under any existing or future directors’ and officers’ liability insurance purchased and maintained by Gran Tierra for the benefit of the Executive and the Executive’s heirs, executors, administrators and other legal representatives, Gran Tierra shall pay the deductible for and on behalf of the Executive
|
(a)
|
pursuant to Article 11 of the Prior Agreement, the Prior Agreement is terminated and replaced in its entirety by this Agreement and the provisions of the Prior Agreement shall have no further force or effect; and
|
(b)
|
the expatriate assignment pursuant to the Expatriate Agreement terminates and the repatriation entitlement as described in the Expatriate Agreement shall be applicable to the Executive’s repatriation to Calgary, Alberta.
|
GRAN TIERRA ENERGY CANADA ULC, an Alberta corp
|
GRAN TIERRA ENERGY INC., a Nevada corporation
|
Alberta corporation
|
corporation
|
|
|
By:
/s/ Dana Coffield
|
By:
/s/ Dana Coffield
|
Name: Dana Coffield
|
Name: Dana Coffield
|
Title: President and CEO
|
Title: President and CEO
|
Date: “
July 31, 2014”
|
Date:
“July 31, 2014”
|
|
|
|
EXECUTIVE
|
SIGNED, SEALED & DELIVERED
In the presence of:
________________________________
Witness
|
|
In the presence of:
|
|
|
By:
/s/ Duncan Nightingale
|
/s/ Alejandra Escobar
Witness
|
Duncan Nightingale
|
Witness
|
Date:
“July 31, 2014”
|
Para constancia de todo lo anterior, se firma el presente contrato de trabajo en la ciudad de Bogotá D.C., a los “31” días del mes de Julio de 2014.
GRAN TIERRA ENERGY COLOMBIA LTD:
/s/ Duncan Nightingale
DUNCAN NIGHTINGALE
/s/ Alejandra Escobar
ALEJANDRA ESCOBAR
EL EMPLEADO,
/s/ Adrian Santiago Coral Pantoja
ADRIÁN SANTIAGO CORAL
PANTOJA
________________ ________________
TESTIGOS
TESTIGO
/s/ Alvaro Castaño
|
In witness hereof, this agreement is signed in the city of Bogotá, D.C. on “31” July, 2014.
GRAN TIERRA ENERGY COLOMBIA LTD:
/s/ Duncan Nightingale
DUNCAN NIGHTINGALE
/s/ Alejandra Escobar
ALEJANDRA ESCOBAR
EL EMPLEADO,
/s/ Adrian Santiago Coral Pantoja
ADRIÁN SANTIAGO CORAL
PANTOJA
________________ ________________
WITNESS
WITNESS
/s/ Alvaro Castaño
|
GRAN TIERRA ENERGY COLOMBIA LTD:
/s/ Duncan Nightingale
DUNCAN NIGHTINGALE
/s/ Alejandra Escobar
ALEJANDRA ESCOBAR
EL EMPLEADO,
/s/ Adrian Santiago Coral Pantoja
ADRIÁN SANTIAGO CORAL
PANTOJA
|
GRAN TIERRA ENERGY COLOMBIA LTD:
/s/ Duncan Nightingale
DUNCAN NIGHTINGALE
/s/ Alejandra Escobar
ALEJANDRA ESCOBAR
EMPLOYEE:
/s/ Adrian Santiago Coral Pantoja
ADRIÁN SANTIAGO CORAL
PANTOJA
|
Date: August 6, 2014
|
/s/ Dana Coffield
|
|
Dana Coffield
|
|
Chief Executive Officer and President
|
|
(Principal Executive Officer)
|
Date: August 6, 2014
|
/s/ James Rozon
|
|
|
James Rozon
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
|
(1)
|
The Report, to which this Certification is attached as Exhibit 32.1, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Dana Coffield
|
|
/s/ James Rozon
|
Dana Coffield
|
|
James Rozon
|
Chief Executive Officer and President
|
|
Chief Financial Officer
|