Gran Tierra defers spending, cites prices, disruptions

Busy Colombia operator Gran Tierra Energy Inc., Calgary, is targeting $60 million of capital expenditure deferments from its previously announced 2012 budget of $440 million in connection with curtailed production and lower commodity prices experienced this year.

Gran Tierra said the deferred expenditures are expected to be from areas that do not impact production capacity or near-term, high-value reserve addition projects.

Meanwhile, Gran Tierra said its production in the quarter ended June 30 averaged 12,350 b/d of oil equivalent in Colombia, 3,800 boe/d in Argentina, and 150 boe/d in Brazil, 96% of overall volumes being light oil.

Production and sales have been affected by oil delivery restrictions due to disruptions on the Ecopetrol-operated Oleoducto Transandino pipeline in Colombia, the latest of which occurred on July 3. Gran Tierra Energy continued production at a reduced rate while the OTA pipeline was down, selling part of its crude via trucking and storing the excess. The OTA pipeline continues to be offline with production expected to return to normal levels early next week.

Gran Tierra expects its 2012 exit production rate to remain at 20,000-21,000 boe/d net after royalties, but due to the repeated OTA pipeline disruptions that have occurred to date the company does not expect to attain that level of average production for 2012.