Gran Tierra Energy has signed agreements with private companies to acquire the vendors' working interest in and operatorship of assets in Putumayo and Llanos Basins.
Image: Gran Tierra will pay a price $104.2m for the transaction. Photo courtesy of rawpixel on Unsplash.
The acquisition includes working interest in and operatorship of the Suroriente Block to increase Gran Tierra’s stake in Suroriente from 15.83% to 52%. The transaction also includes acquisition of 50% working interest in and operatorship of Putumayo-8 Block (PUT-8) and 100% working interest in the Llanos-5 Block (LLA-5).
PUT-8 is contiguous with Suroriente and Gran Tierra’s PUT-31 Block and LLA-5 is contiguous with Gran Tierra’s LLA-1, -10 and -70 Blocks.
Gran Tierra will pay a price $104.2m for the transaction, subject to certain adjustments and the satisfaction of customary conditions.
Gran Tierra president and CEO Gary Guidry said: “This highly strategic acquisition further consolidates our dominant position in the Putumayo Basin, with assets that are highly complementary to our existing land base, and adds a new core area in the Llanos Basin. A major US independent has also acquired a material position in the Putumayo and Llanos basins, offsetting Gran Tierra.
“The acquisition immediately adds production, reserves, cash flow and drill-ready exploration prospects to our portfolio. We are excited by the opportunity to accelerate Suroriente’s already successful waterflood in the Cohembi N Sand field and to apply technical knowledge from this field to our N Sand plays across the Putumayo Basin.”
The acquisition is expected to further strengthen Gran Tierra’s position as the operator and top landholder in the Putumayo Basin, and makes it the 100% operator of Putumayo Blocks.
By securing operatorship of Suroriente, the company intends to accelerate waterflooding on the block, to further increase its value. The company also expects at least two exciting drill-ready exploration prospects at PUT-8 and makes plans for potential drilling in 2019 using existing pads.
The acquisition of LLA-5 Block expands Gran Tierra’s existing acreage in the Llanos Basin, creating a contiguous land base of 620,000 gross acres (525,000 net acres) located close to the prolific Cano Limon production complex and the Capachos block.
Gran Tierra is expected to fund the acquisition from cash on hand and existing credit facilities
Guidry added: “This acquisition fits perfectly with Gran Tierra’s focused strategy by further expanding our portfolio in the proven, underexplored Putumayo Basin, with access to established infrastructure. We will also become the operator of 100% of our Putumayo asset base and have complete flexibility and control over the allocation of our capital in the Putumayo.”