Gran Tierra Energy (TSE:GTE) executives highlighted a series of balance sheet actions, a new international expansion initiative, and sharply higher 2025 production during the company’s conference call covering fourth-quarter and full-year 2025 results.
Management said the company “recently successfully executed” an exchange of its 9.5% senior secured amortizing notes due 2029, with approximately 88% participation. Chief Financial Officer Ryan Ellson said the exchange, combined with an amended and expanded prepayment agreement and the company’s recent Simonette disposition, positions Gran Tierra with “meaningfully enhanced liquidity” entering 2026 and a stronger balance sheet.
Debt actions and liquidity updates
With an improved maturity profile, Ellson said the company can shift away from near-term refinancing needs toward “disciplined, opportunistic debt reduction,” including bond buybacks at discounts, while still investing in high-return development opportunities.
During 2025, Gran Tierra bought back $21.3 million face value of its 2029 senior notes. On the call, management emphasized that debt reduction remains the priority in capital allocation decisions. In response to a question about share buybacks versus debt reduction, management noted a covenant structure tied to the recent exchange: any restricted payments would require a 2-to-1 ratio of debt reduction versus share repurchases.
2025 financial results: loss driven by non-cash impairment
For 2025, Gran Tierra reported a net loss of $193 million, or $5.45 per share, which included $136 million of non-cash ceiling test impairment losses. That compared with net income of $3.2 million, or $0.10 per share, in 2024.
Adjusted EBITDA for 2025 was $284 million, down 23% from $367 million in 2024. Funds flow from operations totaled $178 million, or $5.02 per share, versus $225 million in 2024, which management attributed to lower Brent prices year over year.
Net cash provided by operating activities was $313 million, up 31% from $239 million in 2024. Cash and cash equivalents were $83 million at Dec. 31, 2025, compared with $103 million a year earlier. Ellson also noted the company’s CAD 75 million Can-Can facility was fully undrawn.
Net oil and gas sales were $597 million for the year, down 4% from 2024. Capital expenditures increased slightly to $256 million, up $8 million, as the company drilled more wells across Colombia, Ecuador, and Canada.
Total operating expenses rose to $249 million from $202 million, though operating expenses per BOE decreased 6% to $15.17. Ellson said the increase in total operating expenses was driven by higher Ecuador operating costs related to a production ramp-up and a full-year contribution from the Can-Can operations.
Hedging and near-term price exposure
Management detailed how sales are priced across regions in response to an analyst question on near-term price exposure:
- In Colombia, pricing is based on the monthly average Brent price.
- In Ecuador, pricing is “M minus one,” meaning the month of lifting is priced using the prior month.
- In Canada, pricing is based on the monthly average WTI.
On hedging, Ellson said oil volumes are about 50% hedged across 2026 using three-ways, collars, and puts, with an average floor around $60. In Q&A, management added that the average ceiling price is about $74. For natural gas, the company has AECO swaps averaging 14,200 GJ per day at about $2.77 per GJ for 2026.
Ellson said Gran Tierra has started adding some hedges into the first quarter of 2027, but noted the futures curve is “steeply backwardated.” He said the company may add some shorter-term options, potentially increasing hedge coverage above 50% through puts in the coming months.
Operations, reserves, and production growth
Chief Operating Officer Sebastien Morin reviewed year-end reserves that were evaluated by McDaniel and announced Jan. 28, 2026. Gran Tierra reported:
- 142 million BOE of 1P reserves
- 258 million BOE of 2P reserves
- 329 million BOE of 3P reserves
Morin said South America delivered greater than 100% reserve replacement on both a proved developed producing (PDP) and 2P basis, driven by exploration success and asset performance. He provided South American replacement metrics of 101% for PDP, 61% for 1P, and 105% for 2P.
In Canada, Morin said certain natural gas reserves were reclassified to contingent resources due to low gas prices under reserve booking standards. He emphasized that Gran Tierra can reallocate capital toward quick-payout gas development if prices improve, and cited long-term demand tailwinds from LNG expansion and power generation growth. He also referenced approximately 0.3 TCF of unrisked 3P contingent resources in the Glauconitic formation and 0.4 TCF of 3P gas reserves across Canadian assets.
Morin said the company’s diversification increased with Canadian operations fully integrated. He said about 18% of production, 19% of 1P reserves, and 22% of 2P reserves are attributable to natural gas, while Canada represents 39% of 1P and 44% of 2P reserves.
Gran Tierra’s 2025 average working interest production was 45,709 barrels per day, up 32% from 2024. Morin attributed the increase to exploration and drilling results in Ecuador and a full year of Canadian production, partially offset by lower production in southern Colombia and Ecuador due to two major export pipeline disruptions. He said the Moqueta field was shut in during the third quarter of 2025 due to trunkline repairs.
Operationally, Morin highlighted the Raju-2 well on the Suroriente Block, targeting the northern extent of the Cohembi field. The well is producing about 790 barrels of oil per day with less than 1% water cut, which he said is ahead of initial expectations. Morin added that the result supports northern development potential and advances the Suroriente capital carry commitment, expected to be completed by mid-2026.
Azerbaijan entry and 2026 outlook themes
Ellson said the company is “very pleased” to announce its entry into Azerbaijan, calling it a capital-efficient addition to the portfolio. He said Gran Tierra is partnering with SOCAR and views the entry as scaled exposure to a stable jurisdiction with established infrastructure and a long production history, with strategic potential tied to supplying European energy markets.
In Q&A, management said it is still waiting for the production sharing contract to be ratified, and that capital guidance for Azerbaijan is expected to relate primarily to 2027 and beyond, with some capital likely in 2026.
Management also reiterated its focus on free cash flow and deleveraging. In response to a question about targets, the company said it is targeting net debt to EBITDA of 1x by 2028, contingent on commodity prices.
On operating costs, management said a forecast reduction in 2026 operating expenses reflects structural changes, including savings in Canada following the i3 integration and efforts in Ecuador to move from diesel to gas-to-power as development progresses.
Gran Tierra said it will revise guidance after closing a pending transaction referenced during the call, which management indicated could close within “the next week or two” and has an effective date of Jan. 1, 2026. Management described the impact as not material.
About Gran Tierra Energy (TSE:GTE)
Gran Tierra Energy Inc is an independent energy company. It is engaged in the acquisition, exploration, development, and production of oil and gas properties in proven, under-explored hydrocarbon basins that have access to established infrastructure. The firm produces primarily light crude oil, supplemented with medium crude and natural gas. Gran Tierra holds interests in producing and prospective properties in Colombia and prospective properties in Ecuador. The company has a strategy that focuses on establishing a portfolio of producing properties, plus production enhancement and exploration opportunities to provide a base for future growth.
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