Business Context and Reporting Period
Gran Tierra Energy Inc. filed this Form 8-K on July 27, 2011, reporting the entry into material definitive agreements on that date. The company, incorporated in Nevada with principal offices in Calgary, Alberta, operates through wholly owned subsidiaries in Colombia.
Key Financial Metrics
This filing does not provide specific revenue, profit, cash flow, margin, debt, or liquidity figures. The document focuses exclusively on the terms of new commercial agreements rather than historical financial performance.
Material Changes and Agreements
On July 27, 2011, two wholly owned subsidiaries entered into agreements with Ecopetrol to sell crude oil production:
- Gran Tierra Energy Colombia Ltd. agreed to sell all crude oil production from the Chaza, Santana, and Guayuyaco Blocks.
- Solana Petroleum Exploration Colombia Ltd. agreed to sell all crude oil production from the same blocks (Chaza, Santana, and Guayuyaco).
Both agreements exclude volumes owned by the National Hydrocarbons Agency (ANH) as royalties. If Ecopetrol does not accept full delivery, the subsidiaries retain the right to sell the remaining volume to other parties. The agreements became legally enforceable on August 1, 2011, and expire on June 30, 2012.
Pricing and Terms
The sale price for the crude oil is determined by a formula based on the West Texas Intermediate (WTI) price. This base price is adjusted for crude oil quality and reduced by a "marker" discount, transportation and loading fees, transportation tax, and handling and commercialization fees. The specific discount and fee amounts vary depending on the delivery and export points.
Investor Verification Checklist
- Verify the specific production volumes expected from the Chaza, Santana, and Guayuyaco Blocks to assess the revenue impact of these agreements.
- Confirm the current WTI price and the specific "marker" discount rates applicable to the delivery points to estimate realized pricing.
- Review the company's subsequent filings to confirm whether Ecopetrol accepted full delivery or if the subsidiaries exercised the right to sell to alternative buyers.
- Monitor the expiration date of June 30, 2012, for potential renewal or renegotiation of these supply agreements.