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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 number)
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300, 625 11 Avenue S.W.
Calgary, Alberta, Canada
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T2R 0E1
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(Address of principal executive offices)
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(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
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(do not check if a smaller reporting company) Smaller Reporting Company
o
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Page
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PART I
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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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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 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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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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BOPD
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barrels of oil per day
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Mbbl
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thousand barrels
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Mcf
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thousand cubic feet
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MMbbl
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million barrels
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MMcf
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million cubic feet
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BOE
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barrels of oil equivalent
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Bcf
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billion cubic feet
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MMBOE
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million barrels of oil equivalent
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NGL
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natural gas liquids
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BOEPD
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barrels of oil equivalent per day
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NAR
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net after royalty
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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 government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.
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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 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
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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 highest known oil (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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Three Months Ended June 30,
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Six Months Ended June 30,
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2012
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2011
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2012
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2011
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REVENUE AND OTHER INCOME
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Oil and natural gas sales
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$
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114,542
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$
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161,664
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$
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269,790
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$
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283,960
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Interest income
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608
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456
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1,311
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679
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115,150
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162,120
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271,101
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284,639
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EXPENSES
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Operating
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27,333
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23,160
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51,820
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39,556
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Depletion, depreciation, accretion and impairment (Note 5)
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32,571
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46,965
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92,938
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110,322
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General and administrative
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17,599
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16,410
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33,498
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30,048
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Equity tax (Note 8)
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—
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221
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—
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8,271
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Financial instruments gain (Notes 3 and 6)
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—
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(1,292
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)
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—
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(1,522
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)
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Gain on acquisition (Note 3)
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—
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2,601
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—
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(21,699
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)
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Foreign exchange loss
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4,807
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14,495
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29,182
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19,694
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82,310
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102,560
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207,438
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184,670
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INCOME BEFORE INCOME TAXES
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32,840
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59,560
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63,663
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99,969
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Income tax expense (Note 8)
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(19,736
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)
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(27,993
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)
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(50,872
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)
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(54,689
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)
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NET INCOME AND COMPREHENSIVE INCOME
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13,104
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31,567
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12,791
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45,280
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RETAINED EARNINGS, BEGINNING OF PERIOD
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184,701
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71,810
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185,014
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58,097
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RETAINED EARNINGS, END OF PERIOD
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$
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197,805
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$
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103,377
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$
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197,805
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$
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103,377
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NET INCOME PER SHARE — BASIC
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$
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0.05
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$
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0.11
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$
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0.05
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$
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0.17
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NET INCOME PER SHARE — DILUTED
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$
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0.05
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$
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0.11
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$
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0.05
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$
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0.16
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WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC (Note 6)
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280,714,786
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277,297,728
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279,726,434
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269,159,453
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WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED (Note 6)
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284,141,287
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284,451,536
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283,500,228
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277,530,126
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June 30,
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December 31,
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||||
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2012
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2011
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||||
ASSETS
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Current Assets
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|
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||||
Cash and cash equivalents
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$
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128,528
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$
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351,685
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|
Restricted cash
|
4,034
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|
|
1,655
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Accounts receivable
|
95,004
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|
|
69,362
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|
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Inventory (Note 5)
|
27,055
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|
|
7,116
|
|
||
Taxes receivable
|
19,267
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|
|
21,485
|
|
||
Prepaids
|
3,444
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|
|
3,597
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|
||
Deferred tax assets (Note 8)
|
3,223
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|
|
3,029
|
|
||
Total Current Assets
|
280,555
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|
|
457,929
|
|
||
|
|
|
|
||||
Oil and Gas Properties (using the full cost method of accounting)
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|
|
|
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||
Proved
|
665,346
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|
|
618,982
|
|
||
Unproved
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425,922
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|
|
417,868
|
|
||
Total Oil and Gas Properties
|
1,091,268
|
|
|
1,036,850
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|
||
Other capital assets
|
8,875
|
|
|
7,992
|
|
||
Total Property, Plant and Equipment (Note 5)
|
1,100,143
|
|
|
1,044,842
|
|
||
|
|
|
|
||||
Other Long-Term Assets
|
|
|
|
|
|
||
Restricted cash
|
33,854
|
|
|
13,227
|
|
||
Deferred tax assets (Note 8)
|
7,974
|
|
|
4,747
|
|
||
Other long-term assets
|
9,299
|
|
|
3,454
|
|
||
Goodwill
|
102,581
|
|
|
102,581
|
|
||
Total Other Long-Term Assets
|
153,708
|
|
|
124,009
|
|
||
|
|
|
|
||||
Total Assets
|
$
|
1,534,406
|
|
|
$
|
1,626,780
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
||
Current Liabilities
|
|
|
|
|
|
||
Accounts payable
|
$
|
51,556
|
|
|
$
|
82,189
|
|
Accrued liabilities
|
55,101
|
|
|
66,832
|
|
||
Taxes payable
|
13,117
|
|
|
95,482
|
|
||
Asset retirement obligation (Note 7)
|
167
|
|
|
326
|
|
||
Total Current Liabilities
|
119,941
|
|
|
244,829
|
|
||
|
|
|
|
||||
Long-Term Liabilities
|
|
|
|
|
|
||
Deferred tax liability (Note 8)
|
196,241
|
|
|
186,799
|
|
||
Equity tax payable (Note 8)
|
5,294
|
|
|
6,484
|
|
||
Asset retirement obligation (Note 7)
|
12,504
|
|
|
12,343
|
|
||
Other long-term liabilities
|
2,119
|
|
|
2,007
|
|
||
Total Long-Term Liabilities
|
216,158
|
|
|
207,633
|
|
||
|
|
|
|
||||
Commitments and Contingencies (Note 9)
|
|
|
|
|
|
||
Shareholders’ Equity
|
|
|
|
|
|
||
Common shares (Note 6) (267,819,245 and 264,256,159 common shares and 13,869,520 and 13,869,520 exchangeable shares, par value $0.001 per share, issued and outstanding as at June 30, 2012 and December 31, 2011, respectively)
|
7,986
|
|
|
7,510
|
|
||
Additional paid in capital
|
992,516
|
|
|
980,014
|
|
||
Warrants (Note 6)
|
—
|
|
|
1,780
|
|
||
Retained earnings
|
197,805
|
|
|
185,014
|
|
||
Total Shareholders’ Equity
|
1,198,307
|
|
|
1,174,318
|
|
||
|
|
|
|
||||
Total Liabilities and Shareholders’ Equity
|
$
|
1,534,406
|
|
|
$
|
1,626,780
|
|
|
Six Months Ended June 30,
|
||||||
|
2012
|
|
2011
|
||||
Operating Activities
|
|
|
|
||||
Net income
|
$
|
12,791
|
|
|
$
|
45,280
|
|
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
|
|
|
|
|
|||
Depletion, depreciation, accretion and impairment
|
92,938
|
|
|
110,322
|
|
||
Deferred taxes (Note 8)
|
(10,050
|
)
|
|
(5,406
|
)
|
||
Stock-based compensation (Note 6)
|
6,922
|
|
|
5,945
|
|
||
Unrealized gain on financial instruments (Note 3)
|
—
|
|
|
(1,354
|
)
|
||
Unrealized foreign exchange loss
|
16,164
|
|
|
16,102
|
|
||
Settlement of asset retirement obligation (Note 7)
|
(404
|
)
|
|
(309
|
)
|
||
Equity tax
|
(1,785
|
)
|
|
6,251
|
|
||
Gain on acquisition (Note 3)
|
—
|
|
|
(21,699
|
)
|
||
Net change in assets and liabilities from operating activities
|
|
|
|
|
|
||
Accounts and other receivables
|
(17,668
|
)
|
|
(100,955
|
)
|
||
Inventory
|
(13,485
|
)
|
|
(213
|
)
|
||
Prepaids
|
154
|
|
|
(211
|
)
|
||
Accounts payable and accrued and other liabilities
|
(28,567
|
)
|
|
(2,508
|
)
|
||
Taxes receivable and payable
|
(82,262
|
)
|
|
(18,120
|
)
|
||
Net cash (used in) provided by operating activities
|
(25,252
|
)
|
|
33,125
|
|
||
|
|
|
|
||||
Investing Activities
|
|
|
|
|
|
||
Increase in restricted cash
|
(23,006
|
)
|
|
(8,139
|
)
|
||
Additions to property, plant and equipment
|
(178,644
|
)
|
|
(182,408
|
)
|
||
Proceeds from disposition of oil and gas property (Note 5)
|
—
|
|
|
3,253
|
|
||
Cash acquired on acquisition (Note 3)
|
—
|
|
|
7,747
|
|
||
Proceeds on sale of asset-backed commercial paper (Note 3)
|
—
|
|
|
22,679
|
|
||
Net cash used in investing activities
|
(201,650
|
)
|
|
(156,868
|
)
|
||
|
|
|
|
||||
Financing Activities
|
|
|
|
|
|
||
Settlement of bank debt (Note 3)
|
—
|
|
|
(22,853
|
)
|
||
Proceeds from issuance of common shares
|
3,745
|
|
|
2,523
|
|
||
Net cash provided by (used in) financing activities
|
3,745
|
|
|
(20,330
|
)
|
||
|
|
|
|
||||
Net decrease in cash and cash equivalents
|
(223,157
|
)
|
|
(144,073
|
)
|
||
Cash and cash equivalents, beginning of period
|
351,685
|
|
|
355,428
|
|
||
Cash and cash equivalents, end of period
|
$
|
128,528
|
|
|
$
|
211,355
|
|
|
|
|
|
||||
Cash
|
$
|
78,929
|
|
|
$
|
135,142
|
|
Term deposits
|
49,599
|
|
|
76,213
|
|
||
Cash and cash equivalents, end of period
|
$
|
128,528
|
|
|
$
|
211,355
|
|
|
|
|
|
||||
Supplemental cash flow disclosures:
|
|
|
|
|
|
||
Cash paid for interest
|
$
|
—
|
|
|
$
|
1,344
|
|
Cash paid for income taxes
|
$
|
139,482
|
|
|
$
|
64,205
|
|
|
|
|
|
||||
Non-cash investing activities:
|
|
|
|
|
|
||
Non-cash working capital related to property, plant and equipment, end of period
|
$
|
18,447
|
|
|
$
|
39,118
|
|
|
Six Months Ended
|
|
Year Ended
|
||||
|
June 30, 2012
|
|
December 31, 2011
|
||||
Share Capital
|
|
|
|
||||
Balance, beginning of period
|
$
|
7,510
|
|
|
$
|
4,797
|
|
Issue of common shares
|
476
|
|
|
2,713
|
|
||
Balance, end of period
|
7,986
|
|
|
7,510
|
|
||
|
|
|
|
||||
Additional Paid in Capital
|
|
|
|
|
|
||
Balance, beginning of period
|
980,014
|
|
|
821,781
|
|
||
Issue of common shares
|
2,902
|
|
|
142,109
|
|
||
Exercise of warrants (Note 6)
|
1,590
|
|
|
411
|
|
||
Expiry of warrants (Note 6)
|
190
|
|
|
—
|
|
||
Exercise of stock options (Note 6)
|
367
|
|
|
1,990
|
|
||
Stock-based compensation (Note 6)
|
7,453
|
|
|
13,723
|
|
||
Balance, end of period
|
992,516
|
|
|
980,014
|
|
||
|
|
|
|
||||
Warrants
|
|
|
|
|
|
||
Balance, beginning of period
|
1,780
|
|
|
2,191
|
|
||
Exercise of warrants (Note 6)
|
(1,590
|
)
|
|
(411
|
)
|
||
Expiry of warrants (Note 6)
|
(190
|
)
|
|
—
|
|
||
Balance, end of period
|
—
|
|
|
1,780
|
|
||
|
|
|
|
||||
Retained Earnings
|
|
|
|
|
|
||
Balance, beginning of period
|
185,014
|
|
|
58,097
|
|
||
Net income
|
12,791
|
|
|
126,917
|
|
||
Balance, end of period
|
197,805
|
|
|
185,014
|
|
||
|
|
|
|
||||
Total Shareholders’ Equity
|
$
|
1,198,307
|
|
|
$
|
1,174,318
|
|
Exercise price (CDN dollars per warrant)
|
$
|
9.67
|
|
Risk-free interest rate
|
1.3
|
%
|
|
Expected life
|
0.45
|
Years
|
|
Volatility
|
44
|
%
|
|
Expected annual dividend per share
|
Nil
|
|
|
Estimated fair value per warrant (CDN dollars)
|
$
|
0.32
|
|
(Thousands of U.S. Dollars)
|
|
||
Consideration Transferred:
|
|
||
Common shares issued net of share issue costs
|
$
|
141,690
|
|
Replacement Warrants
|
1,354
|
|
|
|
$
|
143,044
|
|
|
|
|
|
Allocation of Consideration Transferred:
|
|
|
|
Oil and gas properties
|
|
|
|
Proved
|
$
|
58,457
|
|
Unproved
|
161,278
|
|
|
Other long-term assets
|
4,417
|
|
|
Net working capital (including cash acquired of $7.7 million and accounts receivable of $6.4 million)
|
(17,223
|
)
|
|
Asset retirement obligation
|
(4,901
|
)
|
|
Bank debt
|
(22,853
|
)
|
|
Other long-term liabilities
|
(14,432
|
)
|
|
Gain on acquisition
|
(21,699
|
)
|
|
|
$
|
143,044
|
|
|
Six Months Ended June 30,
|
||
(Thousands of U.S. Dollars except per share amounts)
|
2011
|
||
Revenue and other income
|
$
|
293,834
|
|
Net income
|
$
|
12,457
|
|
Net income per share - basic
|
$
|
0.05
|
|
Net income per share - diluted
|
$
|
0.04
|
|
|
Three Months Ended June 30, 2012
|
||||||||||||||||||||||
(Thousands of U.S. Dollars, except per unit of production amounts)
|
Colombia
|
|
Argentina
|
|
Peru
|
|
Brazil
|
|
All Other
|
|
Total
|
||||||||||||
Oil and natural gas sales
|
$
|
92,018
|
|
|
$
|
21,482
|
|
|
$
|
—
|
|
|
$
|
1,042
|
|
|
$
|
—
|
|
|
$
|
114,542
|
|
Interest income
|
223
|
|
|
39
|
|
|
—
|
|
|
272
|
|
|
74
|
|
|
608
|
|
||||||
Depletion, depreciation, accretion and impairment
|
23,084
|
|
|
7,990
|
|
|
991
|
|
|
266
|
|
|
240
|
|
|
32,571
|
|
||||||
Depletion, depreciation, accretion and impairment - per unit of production
|
24.61
|
|
|
23.78
|
|
|
—
|
|
|
23.14
|
|
|
—
|
|
|
25.34
|
|
||||||
Income (loss) before income taxes
|
42,481
|
|
|
1,268
|
|
|
(2,573
|
)
|
|
(1,228
|
)
|
|
(7,108
|
)
|
|
32,840
|
|
||||||
Segment capital expenditures
|
$
|
42,247
|
|
|
$
|
2,739
|
|
|
$
|
16,007
|
|
|
$
|
5,442
|
|
|
$
|
169
|
|
|
$
|
66,604
|
|
|
Three Months Ended June 30, 2011
|
||||||||||||||||||||||
(Thousands of U.S. Dollars, except per unit of production amounts)
|
Colombia
|
|
Argentina
|
|
Peru
|
|
Brazil
|
|
All Other
|
|
Total
|
||||||||||||
Oil and natural gas sales
|
$
|
148,473
|
|
|
$
|
12,857
|
|
|
$
|
—
|
|
|
$
|
334
|
|
|
$
|
—
|
|
|
$
|
161,664
|
|
Interest income
|
158
|
|
|
28
|
|
|
134
|
|
|
—
|
|
|
136
|
|
|
456
|
|
||||||
Depletion, depreciation, accretion and impairment
|
39,609
|
|
|
5,505
|
|
|
1,530
|
|
|
156
|
|
|
165
|
|
|
46,965
|
|
||||||
Depletion, depreciation, accretion and impairment - per unit of production
|
28.49
|
|
|
21.45
|
|
|
—
|
|
|
38.87
|
|
|
—
|
|
|
28.45
|
|
||||||
Income (loss) before income taxes
|
73,729
|
|
|
(3,099
|
)
|
|
(2,371
|
)
|
|
(1,376
|
)
|
|
(7,323
|
)
|
|
59,560
|
|
||||||
Segment capital expenditures
|
$
|
54,216
|
|
|
$
|
7,138
|
|
|
$
|
11,287
|
|
|
$
|
28,287
|
|
|
$
|
561
|
|
|
$
|
101,489
|
|
|
Six Months Ended June 30, 2012
|
||||||||||||||||||||||
(Thousands of U.S. Dollars, except per unit of production amounts)
|
Colombia
|
|
Argentina
|
|
Peru
|
|
Brazil
|
|
All Other
|
|
Total
|
||||||||||||
Oil and natural gas sales
|
$
|
230,651
|
|
|
$
|
36,851
|
|
|
$
|
—
|
|
|
$
|
2,288
|
|
|
$
|
—
|
|
|
$
|
269,790
|
|
Interest income
|
427
|
|
|
86
|
|
|
15
|
|
|
567
|
|
|
216
|
|
|
1,311
|
|
||||||
Depletion, depreciation, accretion and impairment
|
55,370
|
|
|
13,915
|
|
|
1,106
|
|
|
22,074
|
|
|
473
|
|
|
92,938
|
|
||||||
Depletion, depreciation, accretion and impairment - per unit of production
|
25.29
|
|
|
23.35
|
|
|
—
|
|
|
919.14
|
|
|
—
|
|
|
33.08
|
|
||||||
Income (loss) before income taxes
|
102,601
|
|
|
791
|
|
|
(3,300
|
)
|
|
(23,297
|
)
|
|
(13,132
|
)
|
|
63,663
|
|
||||||
Segment capital expenditures
|
$
|
62,596
|
|
|
$
|
16,844
|
|
|
$
|
32,662
|
|
|
$
|
41,698
|
|
|
$
|
395
|
|
|
$
|
154,195
|
|
|
Six Months Ended June 30, 2011
|
||||||||||||||||||||||
(Thousands of U.S. Dollars, except per unit of production amounts)
|
Colombia
|
|
Argentina
|
|
Peru
|
|
Brazil
|
|
All Other
|
|
Total
|
||||||||||||
Oil and natural gas sales
|
$
|
265,777
|
|
|
$
|
17,849
|
|
|
$
|
—
|
|
|
$
|
334
|
|
|
$
|
—
|
|
|
$
|
283,960
|
|
Interest income
|
245
|
|
|
28
|
|
|
134
|
|
|
11
|
|
|
261
|
|
|
679
|
|
||||||
Depletion, depreciation, accretion and impairment
|
69,645
|
|
|
6,652
|
|
|
33,463
|
|
|
252
|
|
|
310
|
|
|
110,322
|
|
||||||
Depletion, depreciation, accretion and impairment - per unit of production
|
26.75
|
|
|
18.85
|
|
|
—
|
|
|
62.80
|
|
|
—
|
|
|
37.27
|
|
||||||
Income (loss) before income taxes
|
131,615
|
|
|
(3,529
|
)
|
|
(34,996
|
)
|
|
(2,744
|
)
|
|
9,623
|
|
|
99,969
|
|
||||||
Segment capital expenditures (1)
|
$
|
96,480
|
|
|
$
|
18,760
|
|
|
$
|
25,574
|
|
|
$
|
28,674
|
|
|
$
|
1,104
|
|
|
$
|
170,592
|
|
(Thousands of U.S. Dollars)
|
As at June 30, 2012
|
||||||||||||||||||||||
|
Colombia
|
|
Argentina
|
|
Peru
|
|
Brazil
|
|
All Other
|
|
Total
|
||||||||||||
Property, plant and equipment
|
$
|
817,431
|
|
|
$
|
132,190
|
|
|
$
|
65,860
|
|
|
$
|
81,546
|
|
|
$
|
3,116
|
|
|
$
|
1,100,143
|
|
Goodwill
|
102,581
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
102,581
|
|
||||||
Other assets
|
170,076
|
|
|
46,260
|
|
|
11,712
|
|
|
11,719
|
|
|
91,915
|
|
|
331,682
|
|
||||||
Total Assets
|
$
|
1,090,088
|
|
|
$
|
178,450
|
|
|
$
|
77,572
|
|
|
$
|
93,265
|
|
|
$
|
95,031
|
|
|
$
|
1,534,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
As at December 31, 2011
|
||||||||||||||||||||||
(Thousands of U.S. Dollars)
|
Colombia
|
|
Argentina
|
|
Peru
|
|
Brazil
|
|
All Other
|
|
Total
|
||||||||||||
Property, plant and equipment
|
$
|
816,396
|
|
|
$
|
129,072
|
|
|
$
|
34,305
|
|
|
$
|
61,875
|
|
|
$
|
3,194
|
|
|
$
|
1,044,842
|
|
Goodwill
|
102,581
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
102,581
|
|
||||||
Other assets
|
269,843
|
|
|
34,672
|
|
|
9,597
|
|
|
17,065
|
|
|
148,180
|
|
|
479,357
|
|
||||||
Total Assets
|
$
|
1,188,820
|
|
|
$
|
163,744
|
|
|
$
|
43,902
|
|
|
$
|
78,940
|
|
|
$
|
151,374
|
|
|
$
|
1,626,780
|
|
|
As at June 30, 2012
|
|
As at December 31, 2011
|
||||||||||||||||||||
(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
|
$
|
1,325,336
|
|
|
$
|
(659,990
|
)
|
|
$
|
665,346
|
|
|
$
|
1,181,503
|
|
|
$
|
(562,521
|
)
|
|
$
|
618,982
|
|
Unproved
|
425,922
|
|
|
—
|
|
|
425,922
|
|
|
417,868
|
|
|
—
|
|
|
417,868
|
|
||||||
|
1,751,258
|
|
|
(659,990
|
)
|
|
1,091,268
|
|
|
1,599,371
|
|
|
(562,521
|
)
|
|
1,036,850
|
|
||||||
Furniture and fixtures and leasehold improvements
|
7,649
|
|
|
(4,551
|
)
|
|
3,098
|
|
|
6,973
|
|
|
(4,002
|
)
|
|
2,971
|
|
||||||
Computer equipment
|
10,076
|
|
|
(4,968
|
)
|
|
5,108
|
|
|
8,443
|
|
|
(4,174
|
)
|
|
4,269
|
|
||||||
Automobiles
|
1,295
|
|
|
(626
|
)
|
|
669
|
|
|
1,295
|
|
|
(543
|
)
|
|
752
|
|
||||||
Total Property, Plant and Equipment
|
$
|
1,770,278
|
|
|
$
|
(670,135
|
)
|
|
$
|
1,100,143
|
|
|
$
|
1,616,082
|
|
|
$
|
(571,240
|
)
|
|
$
|
1,044,842
|
|
|
Six Months Ended June 30, 2012
|
||||||||||||||||||
(Thousands of U.S. Dollars)
|
Colombia
|
|
Argentina
|
|
Peru
|
|
Brazil
|
|
Total
|
||||||||||
Capitalized G&A, including stock-based compensation
|
$
|
4,219
|
|
|
$
|
1,915
|
|
|
$
|
1,623
|
|
|
$
|
2,107
|
|
|
$
|
9,864
|
|
Capitalized stock-based compensation
|
$
|
190
|
|
|
$
|
148
|
|
|
$
|
—
|
|
|
$
|
193
|
|
|
$
|
531
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Six Months Ended June 30, 2011
|
||||||||||||||||||
(Thousands of U.S. Dollars)
|
Colombia
|
|
Argentina
|
|
Peru
|
|
Brazil
|
|
Total
|
||||||||||
Capitalized G&A, including stock-based compensation
|
$
|
4,121
|
|
|
$
|
1,022
|
|
|
$
|
824
|
|
|
$
|
228
|
|
|
$
|
6,195
|
|
Capitalized stock-based compensation
|
$
|
189
|
|
|
$
|
114
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
303
|
|
|
Number of
Outstanding
Options
|
|
Weighted Average
Exercise Price
$/Option
|
|||
Balance, December 31, 2011
|
12,864,002
|
|
|
$
|
4.90
|
|
Granted in 2012
|
3,260,650
|
|
|
5.80
|
|
|
Exercised in 2012
|
(267,673
|
)
|
|
(3.14
|
)
|
|
Forfeited in 2012
|
(197,314
|
)
|
|
(6.99
|
)
|
|
Balance, June 30, 2012
|
15,659,665
|
|
|
$
|
5.09
|
|
|
Three Months Ended June 30,
|
|
|
2012
|
|
|
|
|
Dividend yield (per share)
|
nil
|
|
Volatility
|
75
|
%
|
Risk-free interest rate
|
0.4
|
%
|
Expected term
|
4-6 years
|
|
Exercise price (CDN dollars per warrant)
|
$
|
9.67
|
|
Risk-free interest rate
|
1.2
|
%
|
|
Expected life
|
0.16
|
Years
|
|
Volatility
|
42
|
%
|
|
Expected annual dividend per share
|
Nil
|
|
|
Estimated fair value per warrant (CDN dollars)
|
$
|
0.003
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||
Weighted average number of common and exchangeable shares outstanding
|
280,714,786
|
|
|
277,297,728
|
|
|
279,726,434
|
|
|
269,159,453
|
|
Shares issuable pursuant to warrants
|
170,145
|
|
|
2,728,361
|
|
|
339,495
|
|
|
2,789,122
|
|
Shares issuable pursuant to stock options
|
5,942,583
|
|
|
5,191,288
|
|
|
6,078,405
|
|
|
6,079,268
|
|
Shares to be purchased from proceeds of stock options
|
(2,686,227
|
)
|
|
(765,841
|
)
|
|
(2,644,106
|
)
|
|
(497,717
|
)
|
Weighted average number of diluted common and exchangeable shares outstanding
|
284,141,287
|
|
|
284,451,536
|
|
|
283,500,228
|
|
|
277,530,126
|
|
|
Six Months Ended
|
|
Year Ended
|
||||
(Thousands of U.S. Dollars)
|
2012
|
|
2011
|
||||
Balance, beginning of period
|
$
|
12,669
|
|
|
$
|
4,807
|
|
Settlements
|
(404
|
)
|
|
(345
|
)
|
||
Disposal
|
—
|
|
|
(172
|
)
|
||
Liability incurred
|
513
|
|
|
867
|
|
||
Liability assumed in a business combination (Note 3)
|
—
|
|
|
4,901
|
|
||
Foreign exchange
|
9
|
|
|
17
|
|
||
Accretion
|
500
|
|
|
673
|
|
||
Revisions in estimated liability
|
(616
|
)
|
|
1,921
|
|
||
Balance, end of period
|
$
|
12,671
|
|
|
$
|
12,669
|
|
|
|
|
|
||||
Asset retirement obligation - current
|
$
|
167
|
|
|
$
|
326
|
|
Asset retirement obligation - long-term
|
12,504
|
|
|
12,343
|
|
||
Balance, end of period
|
$
|
12,671
|
|
|
$
|
12,669
|
|
|
Six Months Ended June 30,
|
||||||
(Thousands of U.S. Dollars)
|
2012
|
|
2011
|
||||
Income before income taxes
|
$
|
63,663
|
|
|
$
|
99,969
|
|
|
35
|
%
|
|
35
|
%
|
||
Income tax expense expected
|
22,282
|
|
|
34,989
|
|
||
Foreign currency translation adjustments
|
8,101
|
|
|
4,956
|
|
||
Impact of foreign taxes
|
(86
|
)
|
|
(3,134
|
)
|
||
Stock-based compensation
|
2,326
|
|
|
1,825
|
|
||
Increase in valuation allowance
|
5,457
|
|
|
24,065
|
|
||
Branch and other foreign loss pick-up in the United States and Canada
|
(2,159
|
)
|
|
(2,898
|
)
|
||
Non-deductible third party royalty in Colombia
|
7,140
|
|
|
4,115
|
|
||
Non-taxable gain on acquisition
|
—
|
|
|
(7,595
|
)
|
||
Other permanent differences
|
7,811
|
|
|
(1,634
|
)
|
||
Total income tax expense
|
$
|
50,872
|
|
|
$
|
54,689
|
|
|
|
|
|
||||
Current income tax
|
60,922
|
|
|
63,439
|
|
||
Deferred tax recovery
|
(10,050
|
)
|
|
(8,750
|
)
|
||
Total income tax expense
|
$
|
50,872
|
|
|
$
|
54,689
|
|
|
As at
|
||||||
(Thousands of U.S. Dollars)
|
June 30, 2012
|
|
December 31, 2011
|
||||
Deferred Tax Assets
|
|
|
|
|
|
||
Tax benefit of loss carryforwards
|
$
|
71,805
|
|
|
$
|
63,910
|
|
Tax basis in excess of book basis
|
15,261
|
|
|
17,065
|
|
||
Foreign tax credits and other accruals
|
27,445
|
|
|
27,164
|
|
||
Capital losses
|
5,510
|
|
|
2,433
|
|
||
Deferred tax assets before valuation allowance
|
120,021
|
|
|
110,572
|
|
||
Valuation allowance
|
(108,824
|
)
|
|
(102,796
|
)
|
||
|
$
|
11,197
|
|
|
$
|
7,776
|
|
|
|
|
|
||||
Deferred tax assets - current
|
$
|
3,223
|
|
|
$
|
3,029
|
|
Deferred tax assets - long-term
|
7,974
|
|
|
4,747
|
|
||
|
11,197
|
|
|
7,776
|
|
||
Deferred Tax Liabilities
|
|
|
|
|
|
||
Long-term - book value in excess of tax basis
|
(196,241
|
)
|
|
(186,799
|
)
|
||
Net Deferred Tax Liabilities
|
$
|
(185,044
|
)
|
|
$
|
(179,023
|
)
|
|
Six Months Ended June 30,
|
||||||
|
2012
|
|
2011
|
||||
(Thousands of U.S. Dollars)
|
|
|
|
||||
Unrecognized tax benefit at January 1
|
$
|
20,500
|
|
|
$
|
4,175
|
|
Changes for positions relating to prior year
|
—
|
|
|
(257
|
)
|
||
Additions to tax position related to the current year
|
—
|
|
|
9,190
|
|
||
Unrecognized tax benefit at June 30
|
$
|
20,500
|
|
|
$
|
13,108
|
|
|
As at June 30, 2012
|
||||||||||||||||||
|
Payments Due in Period
|
||||||||||||||||||
|
Total
|
|
Less than 1
Year
|
|
1 to 3 years
|
|
3 to 5 years
|
|
More than 5
years
|
||||||||||
(Thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil transportation services
|
$
|
32,560
|
|
|
$
|
8,710
|
|
|
$
|
7,100
|
|
|
$
|
7,100
|
|
|
$
|
9,650
|
|
Drilling and geological and geophysical
|
39,480
|
|
|
38,374
|
|
|
1,106
|
|
|
—
|
|
|
—
|
|
|||||
Completions
|
30,828
|
|
|
24,560
|
|
|
6,268
|
|
|
—
|
|
|
—
|
|
|||||
Facility construction
|
31,000
|
|
|
17,049
|
|
|
13,951
|
|
|
—
|
|
|
—
|
|
|||||
Operating leases
|
6,882
|
|
|
2,861
|
|
|
3,003
|
|
|
1,018
|
|
|
—
|
|
|||||
Software and telecommunication
|
8,093
|
|
|
3,685
|
|
|
4,408
|
|
|
—
|
|
|
—
|
|
|||||
Consulting
|
1,058
|
|
|
1,058
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
149,901
|
|
|
$
|
96,297
|
|
|
$
|
35,836
|
|
|
$
|
8,118
|
|
|
$
|
9,650
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||
|
2012
|
|
2011
|
|
% Change
|
|
2012
|
|
2011
|
|
% Change
|
||||||||||
Production (BOEPD) (1)
|
14,127
|
|
|
18,141
|
|
|
(22
|
)
|
|
15,435
|
|
|
16,354
|
|
|
(6
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Prices Realized - per BOE
|
$
|
89.10
|
|
|
$
|
97.93
|
|
|
(9
|
)
|
|
$
|
96.04
|
|
|
$
|
95.93
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Revenue and Other Income ($000s)
|
$
|
115,150
|
|
|
$
|
162,120
|
|
|
(29
|
)
|
|
$
|
271,101
|
|
|
$
|
284,639
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Net Income ($000s)
|
$
|
13,104
|
|
|
$
|
31,567
|
|
|
(58
|
)
|
|
$
|
12,791
|
|
|
$
|
45,280
|
|
|
(72
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Net Income Per Share - Basic
|
$
|
0.05
|
|
|
$
|
0.11
|
|
|
(55
|
)
|
|
$
|
0.05
|
|
|
$
|
0.17
|
|
|
(71
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Net Income Per Share - Diluted
|
$
|
0.05
|
|
|
$
|
0.11
|
|
|
(55
|
)
|
|
$
|
0.05
|
|
|
$
|
0.16
|
|
|
(69
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Funds Flow From Operations ($000s) (2)
|
$
|
37,633
|
|
|
$
|
88,572
|
|
|
(58
|
)
|
|
$
|
116,576
|
|
|
$
|
155,132
|
|
|
(25
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Capital Expenditures ($000s)
|
$
|
66,604
|
|
|
$
|
101,489
|
|
|
(34
|
)
|
|
$
|
154,195
|
|
|
$
|
170,592
|
|
|
(10
|
)
|
|
As at
|
|||||||||
|
June 30, 2012
|
|
December 31, 2011
|
|
% Change
|
|||||
Cash & Cash Equivalents ($000s)
|
$
|
128,528
|
|
|
$
|
351,685
|
|
|
(63
|
)
|
|
|
|
|
|
|
|||||
Working Capital (including cash & cash equivalents) ($000s)
|
$
|
160,614
|
|
|
$
|
213,100
|
|
|
(25
|
)
|
|
|
|
|
|
|
|||||
Property, Plant & Equipment ($000s)
|
$
|
1,100,143
|
|
|
$
|
1,044,842
|
|
|
5
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
Funds Flow From Operations - Non-GAAP Measure ($000s)
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Net income
|
$
|
13,104
|
|
|
$
|
31,567
|
|
|
$
|
12,791
|
|
|
$
|
45,280
|
|
Adjustments to reconcile net income to funds flow from operations
|
|
|
|
|
|
|
|
||||||||
DD&A expenses
|
32,571
|
|
|
46,965
|
|
|
92,938
|
|
|
110,322
|
|
||||
Deferred taxes
|
(4,800
|
)
|
|
(5,219
|
)
|
|
(10,050
|
)
|
|
(5,406
|
)
|
||||
Stock-based compensation
|
3,730
|
|
|
2,492
|
|
|
6,922
|
|
|
5,945
|
|
||||
Unrealized gain on financial instruments
|
—
|
|
|
(1,292
|
)
|
|
—
|
|
|
(1,354
|
)
|
||||
Unrealized foreign exchange (gain) loss
|
(5,187
|
)
|
|
11,644
|
|
|
16,164
|
|
|
16,102
|
|
||||
Settlement of asset retirement obligation
|
—
|
|
|
(305
|
)
|
|
(404
|
)
|
|
(309
|
)
|
||||
Equity tax
|
(1,785
|
)
|
|
119
|
|
|
(1,785
|
)
|
|
6,251
|
|
||||
Gain on acquisition
|
—
|
|
|
2,601
|
|
|
—
|
|
|
(21,699
|
)
|
||||
Funds flows from operations
|
$
|
37,633
|
|
|
$
|
88,572
|
|
|
$
|
116,576
|
|
|
$
|
155,132
|
|
•
|
Effective June 30, 2012, Costayaco Field reserves, NAR, calculated in accordance with SEC rules, increased, adjusted for production from the first half of 2012, from year-end 2011 reserves as follows: total proved reserves increased 33% to approximately 19.6 MMbbl, total proved plus probable reserves increased 35% to approximately 22.2 MMbbl, and total proved plus probable plus possible reserves increased 18% to approximately 25.6 MMbbl.
|
•
|
In the
second
quarter of
2012
, oil and natural gas production, NAR and adjusted for inventory changes, averaged
14,127
BOEPD, a decrease of
22%
over the
second
quarter of
2011
. The decrease was primarily due to oil delivery restrictions during disruptions in the Ecopetrol-operated Trans-Andean oil pipeline (“the OTA pipeline”) in Colombia, partially offset by production from new producing wells in Colombia. For the first half of
2012
, oil and gas production, NAR and adjusted for inventory changes, decreased by
6%
to
15,435
BOEPD compared with the first half of
2011
. Production during the first half of
2012
was impacted by an increase in oil inventory in the OTA pipeline as a result of the change in the sales point in Colombia and pipeline disruptions.
|
•
|
Revenue and other income decreased by
29%
to
$115.2 million
in the
second
quarter of
2012
compared with
$162.1 million
in the
second
quarter of
2011
due to lower production and realized oil prices. The average price realized in the
second
quarter of
2012
was
$89.10
per BOE, a decrease of
9%
compared with
$97.93
per BOE in the
second
quarter of
2011
. The price was impacted by the settlement of a third party royalty dispute in Colombia which reduced the average realized price by
$8.48
per BOE in the
second
quarter of
2012
and
$3.88
per BOE in the first half of
2012
. For the first half of
2012
, the average price realized per BOE was consistent with the comparative period in
2011
at
$96.04
.
T
he third party royalty settlement related to production from July 2009 to May 2012, represented less than 1% of the reported revenue for the periods under dispute, and is not expected to have a materially different effect on future revenue.
|
•
|
Net income was
$13.1 million
in the
second
quarter of
2012
, representing basic and diluted net income per share of
$0.05
. This compares with net income of
$31.6 million
, or
$0.11
per share basic and diluted in the
second
quarter of
2011
. In the
second
quarter of
2012
, lower oil and natural gas sales due to reduced production resulting from pipeline restrictions and lower average realized oil prices, were partially offset by lower DD&A and income tax expense, and foreign exchange losses. Net income decreased by
72%
to
$12.8 million
or
$0.05
per share basic and diluted for the first half of
2012
compared with
$45.3 million
or
$0.17
per share basic and
$0.16
per share diluted recorded in the comparable period of
2011
. In the first half of
2012
, lower oil and natural gas sales due to reduced production, increased operating and G&A expenses, increased foreign exchange losses and the absence of the comparative period gain on acquisition were partially offset by lower impairment charges and the absence of the Colombian equity tax expense. Net income in the comparable period in 2011 included a gain on the acquisition of Petrolifera Petroleum Limited ("Petrolifera") of
$21.7 million
.
|
•
|
Funds flow from operations decreased by
58%
to
$37.6 million
in the
second
quarter of
2012
from
$88.6 million
in the comparable quarter of
2011
. The decrease was primarily due to lower oil and natural gas sales due to reduced production and lower realized oil prices, increased operating expenses and realized foreign exchange losses, partially offset by lower income tax expense. For the first half of 2012, funds flow from operations decreased by
25%
from
$155.1 million
to
$116.6 million
primarily due to lower oil and gas sales, increased operating and G&A expenses and realized foreign exchange losses.
|
•
|
Cash and cash equivalents were
$128.5 million
at
June 30, 2012
, compared with
$351.7 million
at
December 31, 2011
. The change in cash and cash equivalents during the first half of
2012
was primarily the result of funds flow from operations of
$116.6 million
and proceeds from issuance of common shares of
$3.7 million
being more than offset by an increase in assets and liabilities from operating activities of
$141.9 million
, capital expenditures of
$178.6 million
and a
$23.0 million
increase in restricted cash.
|
•
|
Working capital (including cash and cash equivalents) was
$160.6 million
at
June 30, 2012
, a
$52.5 million
decrease from
December 31, 2011
. The decrease was primarily a result of a
$223.2 million
decrease in cash and cash equivalents, partially offset by a
$25.6 million
increase in accounts receivable due to the timing of collection of receivables, a
$19.9 million
increase in inventory due to the new transportation agreement in Colombia, an
$82.4 million
decrease in taxes payable due to the payment of 2011 income taxes in Colombia, and a
$42.8 million
decrease in accounts payable, accrued liabilities and other.
|
•
|
Property, plant and equipment at
June 30, 2012
was
$1.1 billion
, an increase of
$55.3 million
from
December 31, 2011
, as a result of
$154.2 million
of capital expenditures (excluding changes in non-cash working capital), partially offset by
$98.9 million
of depletion, depreciation and impairment expenses.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||
|
|
2012
|
|
2011
|
|
% Change
|
|
2012
|
|
2011
|
|
% Change
|
||||||||||
(Thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and natural gas sales
|
|
$
|
114,542
|
|
|
$
|
161,664
|
|
|
(29
|
)
|
|
$
|
269,790
|
|
|
$
|
283,960
|
|
|
(5
|
)
|
Interest income
|
|
608
|
|
|
456
|
|
|
33
|
|
|
1,311
|
|
|
679
|
|
|
93
|
|
||||
|
|
115,150
|
|
|
162,120
|
|
|
(29
|
)
|
|
271,101
|
|
|
284,639
|
|
|
(5
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating expenses
|
|
27,333
|
|
|
23,160
|
|
|
18
|
|
|
51,820
|
|
|
39,556
|
|
|
31
|
|
||||
DD&A expenses
|
|
32,571
|
|
|
46,965
|
|
|
(31
|
)
|
|
92,938
|
|
|
110,322
|
|
|
(16
|
)
|
||||
G&A expenses
|
|
17,599
|
|
|
16,410
|
|
|
7
|
|
|
33,498
|
|
|
30,048
|
|
|
11
|
|
||||
Equity tax
|
|
—
|
|
|
221
|
|
|
(100
|
)
|
|
—
|
|
|
8,271
|
|
|
(100
|
)
|
||||
Financial instruments gain
|
|
—
|
|
|
(1,292
|
)
|
|
(100
|
)
|
|
—
|
|
|
(1,522
|
)
|
|
(100
|
)
|
||||
Loss (gain) on acquisition
|
|
—
|
|
|
2,601
|
|
|
(100
|
)
|
|
—
|
|
|
(21,699
|
)
|
|
(100
|
)
|
||||
Foreign exchange loss
|
|
4,807
|
|
|
14,495
|
|
|
(67
|
)
|
|
29,182
|
|
|
19,694
|
|
|
48
|
|
||||
|
|
82,310
|
|
|
102,560
|
|
|
(20
|
)
|
|
207,438
|
|
|
184,670
|
|
|
12
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income before income taxes
|
|
32,840
|
|
|
59,560
|
|
|
(45
|
)
|
|
63,663
|
|
|
99,969
|
|
|
(36
|
)
|
||||
Income tax expense
|
|
(19,736
|
)
|
|
(27,993
|
)
|
|
(29
|
)
|
|
(50,872
|
)
|
|
(54,689
|
)
|
|
(7
|
)
|
||||
Net income
|
|
$
|
13,104
|
|
|
$
|
31,567
|
|
|
(58
|
)
|
|
$
|
12,791
|
|
|
$
|
45,280
|
|
|
(72
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Production
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and NGL's, bbl
|
|
1,223,289
|
|
|
1,594,735
|
|
|
(23
|
)
|
|
2,684,693
|
|
|
2,888,188
|
|
|
(7
|
)
|
||||
Natural gas, Mcf
|
|
373,710
|
|
|
336,837
|
|
|
11
|
|
|
746,657
|
|
|
431,154
|
|
|
73
|
|
||||
Total production, BOE (1)
|
|
1,285,574
|
|
|
1,650,875
|
|
|
(22
|
)
|
|
2,809,136
|
|
|
2,960,047
|
|
|
(5
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average Prices
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and NGL's per bbl
|
|
$
|
92.48
|
|
|
$
|
100.68
|
|
|
(8
|
)
|
|
$
|
99.49
|
|
|
$
|
97.82
|
|
|
2
|
|
Natural gas per Mcf
|
|
$
|
3.78
|
|
|
$
|
3.32
|
|
|
14
|
|
|
$
|
3.60
|
|
|
$
|
3.31
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Consolidated Results of Operations per BOE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Oil and natural gas sales
|
|
$
|
89.10
|
|
|
$
|
97.93
|
|
|
(9
|
)
|
|
$
|
96.04
|
|
|
$
|
95.93
|
|
|
—
|
|
Interest income
|
|
0.47
|
|
|
0.28
|
|
|
68
|
|
|
0.47
|
|
|
0.23
|
|
|
104
|
|
||||
|
|
89.57
|
|
|
98.21
|
|
|
(9
|
)
|
|
96.51
|
|
|
96.16
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating expenses
|
|
21.26
|
|
|
14.03
|
|
|
52
|
|
|
18.45
|
|
|
13.36
|
|
|
38
|
|
||||
DD&A expenses
|
|
25.34
|
|
|
28.45
|
|
|
(11
|
)
|
|
33.08
|
|
|
37.27
|
|
|
(11
|
)
|
||||
G&A expenses
|
|
13.69
|
|
|
9.94
|
|
|
38
|
|
|
11.92
|
|
|
10.15
|
|
|
17
|
|
||||
Equity tax
|
|
—
|
|
|
0.13
|
|
|
(100
|
)
|
|
—
|
|
|
2.79
|
|
|
(100
|
)
|
||||
Financial instruments gain
|
|
—
|
|
|
(0.78)
|
|
|
(100
|
)
|
|
—
|
|
|
(0.51)
|
|
|
(100
|
)
|
||||
Loss (gain) on acquisition
|
|
—
|
|
|
1.58
|
|
|
(100
|
)
|
|
—
|
|
|
(7.33)
|
|
|
(100
|
)
|
||||
Foreign exchange loss
|
|
3.74
|
|
|
8.78
|
|
|
(57
|
)
|
|
10.39
|
|
|
6.65
|
|
|
56
|
|
||||
|
|
64.03
|
|
|
62.13
|
|
|
3
|
|
|
73.84
|
|
|
62.38
|
|
|
18
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income before income taxes
|
|
25.54
|
|
|
36.08
|
|
|
(29
|
)
|
|
22.67
|
|
|
33.78
|
|
|
(33
|
)
|
||||
Income tax expense
|
|
(15.35)
|
|
|
(16.96)
|
|
|
(9
|
)
|
|
(18.11)
|
|
|
(18.48)
|
|
|
(2
|
)
|
||||
Net income
|
|
$
|
10.19
|
|
|
$
|
19.12
|
|
|
(47
|
)
|
|
$
|
4.56
|
|
|
$
|
15.30
|
|
|
(70
|
)
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||
|
|
2012
|
|
2011
|
|
% Change
|
|
2012
|
|
2011
|
|
% Change
|
||||||||||
(Thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and natural gas sales
|
|
$
|
92,018
|
|
|
$
|
148,473
|
|
|
(38
|
)
|
|
$
|
230,651
|
|
|
$
|
265,777
|
|
|
(13
|
)
|
Interest income
|
|
223
|
|
|
158
|
|
|
41
|
|
|
427
|
|
|
245
|
|
|
74
|
|
||||
|
|
92,241
|
|
|
148,631
|
|
|
(38
|
)
|
|
231,078
|
|
|
266,022
|
|
|
(13
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating expenses
|
|
17,721
|
|
|
15,558
|
|
|
14
|
|
|
34,195
|
|
|
28,343
|
|
|
21
|
|
||||
DD&A expenses
|
|
23,084
|
|
|
39,609
|
|
|
(42
|
)
|
|
55,370
|
|
|
69,645
|
|
|
(20
|
)
|
||||
G&A expenses
|
|
6,976
|
|
|
5,426
|
|
|
29
|
|
|
13,575
|
|
|
8,739
|
|
|
55
|
|
||||
Equity tax
|
|
—
|
|
|
221
|
|
|
(100
|
)
|
|
—
|
|
|
8,271
|
|
|
(100
|
)
|
||||
Foreign exchange loss
|
|
1,979
|
|
|
14,088
|
|
|
(86
|
)
|
|
25,337
|
|
|
19,409
|
|
|
31
|
|
||||
|
|
49,760
|
|
|
74,902
|
|
|
(34
|
)
|
|
128,477
|
|
|
134,407
|
|
|
(4
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income before income taxes
|
|
$
|
42,481
|
|
|
$
|
73,729
|
|
|
(42
|
)
|
|
$
|
102,601
|
|
|
$
|
131,615
|
|
|
(22
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Production
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Oil and NGL's, bbl
|
|
928,258
|
|
|
1,380,210
|
|
|
(33
|
)
|
|
2,177,839
|
|
|
2,583,825
|
|
|
(16
|
)
|
||||
Natural gas, Mcf
|
|
58,686
|
|
|
60,315
|
|
|
(3
|
)
|
|
68,160
|
|
|
115,572
|
|
|
(41
|
)
|
||||
Total production, BOE (1)
|
|
938,039
|
|
|
1,390,263
|
|
|
(33
|
)
|
|
2,189,199
|
|
|
2,603,087
|
|
|
(16
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Average Prices
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Oil and NGL's per bbl
|
|
$
|
98.96
|
|
|
$
|
107.39
|
|
|
(8
|
)
|
|
$
|
105.82
|
|
|
$
|
102.68
|
|
|
3
|
|
Natural gas per Mcf
|
|
$
|
2.62
|
|
|
$
|
4.25
|
|
|
(38
|
)
|
|
$
|
2.73
|
|
|
$
|
4.15
|
|
|
(34
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Segmented Results of Operations per BOE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Oil and natural gas sales
|
|
$
|
98.10
|
|
|
$
|
106.79
|
|
|
(8
|
)
|
|
$
|
105.36
|
|
|
$
|
102.10
|
|
|
3
|
|
Interest income
|
|
0.24
|
|
|
0.11
|
|
|
118
|
|
|
0.20
|
|
|
0.09
|
|
|
122
|
|
||||
|
|
98.34
|
|
|
106.90
|
|
|
(8
|
)
|
|
105.56
|
|
|
102.19
|
|
|
3
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating expenses
|
|
18.89
|
|
|
11.19
|
|
|
69
|
|
|
15.62
|
|
|
10.89
|
|
|
43
|
|
||||
DD&A expenses
|
|
24.61
|
|
|
28.49
|
|
|
(14
|
)
|
|
25.29
|
|
|
26.75
|
|
|
(5
|
)
|
||||
G&A expenses
|
|
7.44
|
|
|
3.90
|
|
|
91
|
|
|
6.20
|
|
|
3.36
|
|
|
85
|
|
||||
Equity tax
|
|
—
|
|
|
0.16
|
|
|
(100
|
)
|
|
—
|
|
|
3.18
|
|
|
(100
|
)
|
||||
Foreign exchange loss
|
|
2.11
|
|
|
10.13
|
|
|
(79
|
)
|
|
11.57
|
|
|
7.46
|
|
|
55
|
|
||||
|
|
53.05
|
|
|
53.87
|
|
|
(2
|
)
|
|
58.68
|
|
|
51.64
|
|
|
14
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income before income taxes
|
|
$
|
45.29
|
|
|
$
|
53.03
|
|
|
(15
|
)
|
|
$
|
46.88
|
|
|
$
|
50.55
|
|
|
(7
|
)
|
(1)
|
Production represents production volumes NAR adjusted for inventory changes. NGL volumes are converted to BOE on a one-to-one basis with oil. Gas volumes are converted to BOE at the rate of 6 Mcf of gas per bbl of oil, based upon the approximate relative energy content of gas and oil. The rate is not necessarily indicative of the relationship between oil and gas prices.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(Millions of U.S. Dollars)
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Drilling and completions
|
$
|
29.9
|
|
|
$
|
26.4
|
|
|
$
|
40.4
|
|
|
$
|
56.8
|
|
Facilities and equipment
|
3.3
|
|
|
9.9
|
|
|
10.6
|
|
|
15.0
|
|
||||
G&G
|
4.5
|
|
|
4.3
|
|
|
6.2
|
|
|
5.1
|
|
||||
Other
|
4.6
|
|
|
13.6
|
|
|
5.4
|
|
|
19.6
|
|
||||
|
$
|
42.3
|
|
|
$
|
54.2
|
|
|
$
|
62.6
|
|
|
$
|
96.5
|
|
•
|
Drilling commenced for the La Vega Este-1 oil exploration well on the Azar Block (40 % WI, operated).
|
•
|
The Bordon-1 oil exploration well was drilled on the Garibay Block (50 % WI, non-operated). This well reached total depth ("TD") of 9,680 feet during June 2012, but was plugged and abandoned.
|
•
|
The Costayaco-16 development well was successfully drilled and is intended to be a producing well.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||
|
|
2012
|
|
2011
|
|
% Change
|
|
2012
|
|
2011
|
|
% Change
|
||||||||||
(Thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and natural gas sales
|
|
$
|
21,482
|
|
|
$
|
12,857
|
|
|
67
|
|
|
$
|
36,851
|
|
|
$
|
17,849
|
|
|
106
|
|
Interest income
|
|
39
|
|
|
28
|
|
|
39
|
|
|
86
|
|
|
28
|
|
|
207
|
|
||||
|
|
21,521
|
|
|
12,885
|
|
|
67
|
|
|
36,937
|
|
|
17,877
|
|
|
107
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating expenses
|
|
8,947
|
|
|
7,428
|
|
|
20
|
|
|
16,293
|
|
|
10,975
|
|
|
48
|
|
||||
DD&A expenses
|
|
7,990
|
|
|
5,505
|
|
|
45
|
|
|
13,915
|
|
|
6,652
|
|
|
109
|
|
||||
G&A expenses
|
|
2,759
|
|
|
2,779
|
|
|
(1
|
)
|
|
5,010
|
|
|
3,697
|
|
|
36
|
|
||||
Foreign exchange loss
|
|
557
|
|
|
272
|
|
|
105
|
|
|
928
|
|
|
82
|
|
|
1,032
|
|
||||
|
|
20,253
|
|
|
15,984
|
|
|
27
|
|
|
36,146
|
|
|
21,406
|
|
|
69
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income (loss) before income taxes
|
|
$
|
1,268
|
|
|
$
|
(3,099
|
)
|
|
(141
|
)
|
|
$
|
791
|
|
|
$
|
(3,529
|
)
|
|
(122
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Production
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Oil and NGL's, bbl
|
|
283,538
|
|
|
210,512
|
|
|
35
|
|
|
482,838
|
|
|
300,350
|
|
|
61
|
|
||||
Natural gas, Mcf
|
|
315,024
|
|
|
276,522
|
|
|
14
|
|
|
678,497
|
|
|
315,582
|
|
|
115
|
|
||||
Total production, BOE (1)
|
|
336,042
|
|
|
256,599
|
|
|
31
|
|
|
595,921
|
|
|
352,947
|
|
|
69
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Average Prices
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Oil and NGL's per bbl
|
|
$
|
71.32
|
|
|
$
|
57.01
|
|
|
25
|
|
|
$
|
71.13
|
|
|
$
|
56.27
|
|
|
26
|
|
Natural gas per Mcf
|
|
$
|
4.00
|
|
|
$
|
3.11
|
|
|
29
|
|
|
$
|
3.69
|
|
|
$
|
3.00
|
|
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Segmented Results of Operations per BOE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Oil and natural gas sales
|
|
$
|
63.93
|
|
|
$
|
50.11
|
|
|
28
|
|
|
$
|
61.84
|
|
|
$
|
50.57
|
|
|
22
|
|
Interest income
|
|
0.12
|
|
|
0.11
|
|
|
9
|
|
|
0.14
|
|
|
0.08
|
|
|
75
|
|
||||
|
|
64.05
|
|
|
50.22
|
|
|
28
|
|
|
61.98
|
|
|
50.65
|
|
|
22
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating expenses
|
|
26.62
|
|
|
28.95
|
|
|
(8
|
)
|
|
27.34
|
|
|
31.10
|
|
|
(12
|
)
|
||||
DD&A expenses
|
|
23.78
|
|
|
21.45
|
|
|
11
|
|
|
23.35
|
|
|
18.85
|
|
|
24
|
|
||||
G&A expenses
|
|
8.21
|
|
|
10.83
|
|
|
(24
|
)
|
|
8.41
|
|
|
10.47
|
|
|
(20
|
)
|
||||
Foreign exchange loss
|
|
1.66
|
|
|
1.06
|
|
|
57
|
|
|
1.56
|
|
|
0.23
|
|
|
578
|
|
||||
|
|
60.27
|
|
|
62.29
|
|
|
(3
|
)
|
|
60.66
|
|
|
60.65
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income (loss) before income taxes
|
|
$
|
3.78
|
|
|
$
|
(12.07
|
)
|
|
(131
|
)
|
|
$
|
1.32
|
|
|
$
|
(10.00
|
)
|
|
(113
|
)
|
(1)
|
Production represents production volumes NAR adjusted for inventory changes. NGL volumes are converted to BOE on a one-to-one basis with oil. Gas volumes are converted to BOE at the rate of 6 Mcf of gas per bbl of oil, based upon the approximate relative energy content of gas and oil. The rate is not necessarily indicative of the relationship between oil and
|
•
|
The R.N. x-1008 oil exploration well on the Rinconada Norte Block (35% WI, non-operated) was drilled to a TD of 1,050 feet and completed as a producing well.
|
•
|
The Los Incas-1 exploration well on the Puesto Guevera Block (100% WI, operated) was drilled, but was plugged and abandoned.
|
•
|
On the Surubi Block (85% WI, operated), the Proa-2 oil development well reached TD of 12,894 feet in April 2012 and is currently producing.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||
|
|
2012
|
|
2011
|
|
% Change
|
|
2012
|
|
2011
|
|
% Change
|
||||||||||
(Thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest income
|
|
$
|
—
|
|
|
$
|
134
|
|
|
(100
|
)
|
|
$
|
15
|
|
|
$
|
134
|
|
|
(89
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating expenses
|
|
80
|
|
|
108
|
|
|
(26
|
)
|
|
161
|
|
|
$
|
172
|
|
|
(6
|
)
|
|||
DD&A expenses
|
|
991
|
|
|
1,530
|
|
|
(35
|
)
|
|
1,106
|
|
|
33,463
|
|
|
(97
|
)
|
||||
G&A expenses
|
|
1,466
|
|
|
1,000
|
|
|
47
|
|
|
2,082
|
|
|
1,565
|
|
|
33
|
|
||||
Foreign exchange loss (gain)
|
|
36
|
|
|
(133
|
)
|
|
(127
|
)
|
|
(34
|
)
|
|
(70
|
)
|
|
(51
|
)
|
||||
|
|
2,573
|
|
|
2,505
|
|
|
3
|
|
|
3,315
|
|
|
35,130
|
|
|
(91
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Loss before income taxes
|
|
$
|
(2,573
|
)
|
|
$
|
(2,371
|
)
|
|
9
|
|
|
$
|
(3,300
|
)
|
|
$
|
(34,996
|
)
|
|
(91
|
)
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||
|
|
2012
|
|
2011
|
|
% Change
|
|
2012
|
|
2011
|
|
% Change
|
||||||||||
(Thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and natural gas sales
|
|
$
|
1,042
|
|
|
$
|
334
|
|
|
212
|
|
|
$
|
2,288
|
|
|
$
|
334
|
|
|
585
|
|
Interest income
|
|
272
|
|
|
—
|
|
|
—
|
|
|
567
|
|
|
11
|
|
|
5,055
|
|
||||
|
|
1,314
|
|
|
334
|
|
|
293
|
|
|
2,855
|
|
|
345
|
|
|
728
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating expenses
|
|
585
|
|
|
66
|
|
|
786
|
|
|
1,171
|
|
|
66
|
|
|
1,674
|
|
||||
DD&A expenses
|
|
266
|
|
|
156
|
|
|
71
|
|
|
22,074
|
|
|
252
|
|
|
8,660
|
|
||||
G&A expenses
|
|
456
|
|
|
1,396
|
|
|
(67
|
)
|
|
1,137
|
|
|
2,665
|
|
|
(57
|
)
|
||||
Foreign exchange loss
|
|
1,235
|
|
|
92
|
|
|
1,242
|
|
|
1,770
|
|
|
106
|
|
|
1,570
|
|
||||
|
|
2,542
|
|
|
1,710
|
|
|
49
|
|
|
26,152
|
|
|
3,089
|
|
|
747
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Loss before income taxes
|
|
$
|
(1,228
|
)
|
|
$
|
(1,376
|
)
|
|
(11
|
)
|
|
$
|
(23,297
|
)
|
|
$
|
(2,744
|
)
|
|
749
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Production (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and NGL's, bbl
|
|
11,493
|
|
|
4,013
|
|
|
186
|
|
|
24,016
|
|
|
4,013
|
|
|
498
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average Prices
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and NGL's per bbl
|
|
$
|
90.66
|
|
|
$
|
83.23
|
|
|
9
|
|
|
$
|
95.27
|
|
|
$
|
83.23
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Segmented Results of Operations per BOE
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and natural gas sales
|
|
$
|
90.66
|
|
|
$
|
83.23
|
|
|
9
|
|
|
$
|
95.27
|
|
|
$
|
83.23
|
|
|
14
|
|
Interest income
|
|
23.67
|
|
|
—
|
|
|
—
|
|
|
23.61
|
|
|
2.74
|
|
|
762
|
|
||||
|
|
114.33
|
|
|
83.23
|
|
|
37
|
|
|
118.88
|
|
|
85.97
|
|
|
38
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating expenses
|
|
50.90
|
|
|
16.45
|
|
|
209
|
|
|
48.76
|
|
|
16.45
|
|
|
196
|
|
||||
DD&A expenses
|
|
23.14
|
|
|
38.87
|
|
|
(40
|
)
|
|
919.14
|
|
|
62.80
|
|
|
1,364
|
|
||||
G&A expenses
|
|
39.68
|
|
|
347.87
|
|
|
(89
|
)
|
|
47.34
|
|
|
664.09
|
|
|
(93
|
)
|
||||
Foreign exchange loss
|
|
107.46
|
|
|
22.93
|
|
|
369
|
|
|
73.70
|
|
|
26.41
|
|
|
179
|
|
||||
|
|
221.18
|
|
|
426.12
|
|
|
(48
|
)
|
|
1,088.94
|
|
|
769.75
|
|
|
41
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Loss before income taxes
|
|
$
|
(106.85
|
)
|
|
$
|
(342.89
|
)
|
|
(69
|
)
|
|
$
|
(970.06
|
)
|
|
$
|
(683.78
|
)
|
|
42
|
|
(1)
|
Production represents production volumes NAR adjusted for inventory changes. NGL volumes are converted to BOE on a one-to-one basis with oil.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||
|
|
2012
|
|
2011
|
|
% Change
|
|
2012
|
|
2011
|
|
% Change
|
||||||||||
(Thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest income
|
|
$
|
74
|
|
|
$
|
136
|
|
|
(46
|
)
|
|
$
|
216
|
|
|
$
|
261
|
|
|
(17
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
DD&A expenses
|
|
240
|
|
|
165
|
|
|
45
|
|
|
473
|
|
|
310
|
|
|
53
|
|
||||
G&A expenses
|
|
5,942
|
|
|
5,809
|
|
|
2
|
|
|
11,694
|
|
|
13,382
|
|
|
(13
|
)
|
||||
Financial instruments gain
|
|
—
|
|
|
(1,292
|
)
|
|
(100
|
)
|
|
—
|
|
|
(1,522
|
)
|
|
(100
|
)
|
||||
Gain on acquisition
|
|
—
|
|
|
2,601
|
|
|
(100
|
)
|
|
—
|
|
|
(21,699
|
)
|
|
(100
|
)
|
||||
Foreign exchange loss
|
|
1,000
|
|
|
176
|
|
|
468
|
|
|
1,181
|
|
|
167
|
|
|
607
|
|
||||
|
|
7,182
|
|
|
7,459
|
|
|
(4
|
)
|
|
13,348
|
|
|
(9,362
|
)
|
|
(243
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loss (income) before income taxes
|
|
$
|
(7,108
|
)
|
|
$
|
(7,323
|
)
|
|
(3
|
)
|
|
$
|
(13,132
|
)
|
|
$
|
9,623
|
|
|
(236
|
)
|
|
As at June 30, 2012
|
||||||||||||||||||
|
Payments Due in Period
|
||||||||||||||||||
|
Total
|
|
Less than 1
Year
|
|
1 to 3 years
|
|
3 to 5 years
|
|
More than 5
years
|
||||||||||
(Thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil transportation services
|
$
|
32,560
|
|
|
$
|
8,710
|
|
|
$
|
7,100
|
|
|
$
|
7,100
|
|
|
$
|
9,650
|
|
Drilling and geological and geophysical
|
39,480
|
|
|
38,374
|
|
|
1,106
|
|
|
—
|
|
|
—
|
|
|||||
Completions
|
30,828
|
|
|
24,560
|
|
|
6,268
|
|
|
—
|
|
|
—
|
|
|||||
Facility construction
|
31,000
|
|
|
17,049
|
|
|
13,951
|
|
|
—
|
|
|
—
|
|
|||||
Operating leases
|
6,882
|
|
|
2,861
|
|
|
3,003
|
|
|
1,018
|
|
|
—
|
|
|||||
Software and telecommunication
|
8,093
|
|
|
3,685
|
|
|
4,408
|
|
|
—
|
|
|
—
|
|
|||||
Consulting
|
1,058
|
|
|
1,058
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
149,901
|
|
|
$
|
96,297
|
|
|
$
|
35,836
|
|
|
$
|
8,118
|
|
|
$
|
9,650
|
|
•
|
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
|
•
|
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;
|
•
|
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 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 7, 2012
|
/s/ Dana Coffield
|
|
By: Dana Coffield
|
|
Chief Executive Officer and
President
|
|
(Principal Executive Officer)
|
Date: August 7, 2012
|
/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 (SEC File No. 001-34018), filed with the SEC on August 1, 2008.
|
|
|
|
|
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 (SEC File No. 333-153376), filed with the SEC on October 10, 2008.
|
|
|
|
|
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).
|
|
|
|
|
3.1
|
Amended and Restated Articles of Incorporation.
|
|
Incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q/A (SEC File No. 001-34018), filed with the SEC on January 6, 2010.
|
|
|
|
|
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 September 22, 2008 (SEC File No. 000-52594).
|
|
|
|
|
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 to Employment Agreement dated May 2, 2012 between Gran Tierra Energy Inc. and Martin Eden
|
|
Incorporated by reference to Exhibit 10.10 to the Quarterly Report on Form 10-Q filed with the SEC on May 7, 2012, (SEC File No. 001-34018).
|
|
|
|
|
10.2
|
Amendment to Employment Agreement dated May 2, 2012 between Gran Tierra Energy Inc. and David Hardy
|
|
Incorporated by reference to Exhibit 10.11 to the Quarterly Report on Form 10-Q filed with the SEC on May 7, 2012, (SEC File No. 001-34018).
|
|
|
|
|
10.3
|
Executive Employment Agreement dated May 2, 2012 between Gran Tierra Energy Inc. and James Rozon
|
|
Incorporated by reference to Exhibit 10.12 to the Quarterly Report on Form 10-Q filed with the SEC on May 7, 2012, (SEC File No. 001-34018).
|
|
|
|
|
10.4
|
Resignation, Consent and
Appointment Agreement and Amendment Agreement, effective May 17, 2012, assigning the Credit Agreement among Solana Resources Limited, Gran Tierra Energy Inc., BNP Paribas and Lenders, to Wells Fargo Bank, National Association
|
|
Filed herewith.
|
|
|
|
|
10.5
|
Fifth Amendment to Credit Agreement, dated as of May 18, 2012, among Solana Resources Limited, Gran Tierra Energy Inc. Wells Fargo Bank, National Association, and the Lenders
|
|
Filed herewith.
|
|
|
|
|
10.6
|
Amended and Restated 2007
Equity Incentive Plan
|
|
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.
|
1.
|
I have reviewed this Form 10-Q of Gran Tierra Energy Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Dana Coffield
|
|
Dana Coffield
Chief Executive Officer
|
|
1.
|
I have reviewed this Form 10-Q of Gran Tierra Energy Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ James Rozon
|
|
James Rozon
Chief 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
|
|
Chief Financial Officer
|