Oil & Gas Firm's Cash Flow Expected to Remain Strong Through 2022, Analyst Says

Source: Streetwise Reports   11/15/2021

“Higher commodity prices are providing Gran Tierra Energy with additional financial flexibility to service debt and to fund growth in 2022,” noted a Research Capital Corporation report.

In a Nov. 2 research note, analyst Bill Newman reported that Research
Capital Corporation increased its target price on Gran Tierra Energy Inc. (GTE:TSX; GTE:NYSE.MKT) to CA$1.95 per share from CA$1.50 because the company’s cash flow is expected to remain high through 2022. The current share price, in comparison, is about CA$1.16.

Newman highlighted that with the release of Q3/21 operational and financial results, Gran Tierra maintained its full-year 2021 cash flow guidance of between US$215 million (US$215M) and US$315M, due to improved oil prices. Also, prices along with Gran Tierra’s lack of hedges in 2022 should boost cash flow next year.

“Higher commodity prices are providing additional financial flexibility to service debt and to fund growth in 2022,” Newman commented.

While FY21 cash flow is expected to be strong, FY21 production is estimated to be about 1,000 barrels per day (1 Mbbl/d) lower than Gran Tierra originally guided to. Revised guidance is between 26.5 Mbbl/d and 27.5 Mbbl/d. Specifically, decreased production is expected at the Suroriente and PUT-7 blocks in Q4/21 while the Colombian government resolves the current blockade by protesting farmers. Offsetting that in part, though, should be production targeted to come online in the Cohembi field in Q4/21.

As for Q3/21 results, Newman relayed, production before royalties averaged 28,957 bbl/d, 26% higher than Q2/21 production of 23,034 bbl/d. Two fields outperformed in Q3/21. One was Acordionero, where production was 14,427 bbl/d, a record high since Q4/19. The other was Costayaco, where production totaled 6,292 bbl/d versus 4,190 bbl/d in Q2/21, due to completion of a three-well infill drill program there.

Adjusted funds flow during Q3/21 was US$69.1M, consistent with Research Capital’s estimate of US$71.2M. Capital expenditures during Q3/21 amounted to US$34.8M.

As for net debt, at the end of Q3/21 it was US$720.94M, down from US$799.60M at the end of Q2/21. The company’s outstanding credit balance at Q3/21′s end was US$150M. Gran Tierra aims to decrease it to US$80M by year-end 2021.  

Research Capital has a Buy rating on Gran Tierra.

Sign up for our FREE newsletter at: www.streetwisereports.com/get-news

Disclosures:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.  
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.  

Research Capital’s Relevant Disclosures for Gran Tierra
None Applicable for this Issuer.

( Companies Mentioned: GTE:TSX; GTE:NYSE.MKT, )