Gran Tierra Energy Inc. (GTE): Business Model Canvas [11-2024 Updated]

Gran Tierra Energy Inc. (GTE) stands at the forefront of the South American oil industry, leveraging strategic partnerships and a commitment to sustainability. This blog post delves into GTE's Business Model Canvas, exploring how the company navigates the complexities of oil exploration and production while maintaining strong relationships with key stakeholders. Discover the intricacies of their operations, from value propositions to revenue streams, and learn how GTE positions itself in a competitive market.

Gran Tierra Energy Inc. (GTE) - Business Model: Key Partnerships

Collaborations with local governments in Colombia and Ecuador

Gran Tierra Energy Inc. (GTE) engages in strategic collaborations with local governments in Colombia and Ecuador to facilitate its operations and ensure compliance with regulatory requirements. These partnerships are crucial for securing exploration and production licenses, as well as for addressing community concerns.

In Colombia, GTE's operations are influenced by its relationship with the Ministry of Mines and Energy, which oversees the oil and gas sector. As of September 30, 2024, GTE's production in Colombia was approximately 25,988 barrels of oil per day (BOPD), a decrease of 3% from the previous year, partly due to regulatory challenges and community engagement efforts.

In Ecuador, GTE has established partnerships with local authorities to enhance its exploration activities in the Chanangue and Charapa blocks. These collaborations have resulted in increased production, with positive exploration well drilling results contributing to operational success.

Partnerships with contractors for drilling and exploration

GTE partners with various contractors for its drilling and exploration activities, which include companies specializing in drilling services, geological surveys, and environmental assessments. For the third quarter of 2024, GTE reported capital expenditures of $52.9 million, with a significant portion allocated to drilling and completions.

The following table illustrates GTE's capital expenditures across different segments for the third quarter of 2024:

Segment	Amount (Millions of USD)
Exploration	32.5
Development	20.4
Total Capital Expenditures	52.9

These partnerships allow GTE to leverage specialized expertise and technology, enhancing operational efficiency while managing costs effectively.

Strategic alliances with financial institutions for funding

Gran Tierra Energy has formed strategic alliances with financial institutions to secure funding for its operations and expansion plans. As of September 30, 2024, GTE issued $150.0 million of 9.50% Senior Notes, which are due in October 2029, to enhance its liquidity position. The following table summarizes GTE's outstanding debt as of the same date:

Debt Type	Principal Amount (Millions of USD)	Due Date
6.25% Senior Notes	24.8	2025
7.75% Senior Notes	24.2	2027
9.50% Senior Notes	737.6	2029
Total Debt	786.6	-

These financial partnerships enable GTE to pursue growth opportunities and manage operational risks effectively, ensuring a stable financial foundation for its projects.

Gran Tierra Energy Inc. (GTE) - Business Model: Key Activities

Oil exploration and production in South America

Gran Tierra Energy Inc. focuses on oil exploration and production primarily in Colombia and Ecuador. For the third quarter of 2024, the company reported average daily production volumes of 25,988 barrels of oil per day (BOPD), a decrease of 3% from 26,776 BOPD in the same period of 2023. The Brent price averaged $78.71 per barrel during this quarter, reflecting an 8% decrease from the comparable period in 2023.

During the nine months ended September 30, 2024, the company's total oil sales reached $474.6 million, slightly down from $482.0 million in the same period of 2023. The production was primarily sold to one major customer, which accounted for 100% of total sales volumes.

Period	Average Daily Production (BOPD)	Oil Sales (USD)	Brent Price (USD/bbl)
Q3 2024	25,988	$151.4 million	$78.71
Q3 2023	26,776	$179.9 million	$85.92
9M 2024	25,578	$474.6 million	$81.82
9M 2023	26,506	$482.0 million	$81.94

Management of oilfield operations

The management of oilfield operations is critical to Gran Tierra's business model. Operating expenses for Q3 2024 were reported at $46.1 million, a reduction of 7% compared to $49.4 million in Q3 2023. This decrease was attributed to lower lifting costs and reduced workover activities, which offset the increase in costs related to equipment rental and road maintenance.

Gran Tierra's operating netback, which represents the revenue remaining after deducting operating expenses, was $101.4 million in Q3 2024, down from $126.7 million in Q3 2023. The company also incurred transportation expenses of $3.9 million during this quarter, reflecting a 2% increase from the previous quarter.

Measure	Q3 2024	Q3 2023
Operating Expenses (USD)	$46.1 million	$49.4 million
Operating Netback (USD)	$101.4 million	$126.7 million
Transportation Expenses (USD)	$3.9 million	$3.8 million

Regulatory compliance and environmental management

Gran Tierra Energy is committed to adhering to regulatory requirements and environmental management practices. The company's effective tax rate for the nine months ended September 30, 2024, was 44%, significantly lower than the 115% in the same period of 2023. This reflects a strategic approach to tax planning, including the recognition of tax losses and adjustments in tax liabilities.

Environmental management is crucial to the company's operations, especially in sensitive regions like Colombia and Ecuador. Gran Tierra has implemented various initiatives to ensure compliance with environmental regulations while minimizing its ecological footprint. For the nine months ended September 30, 2024, the company reported a deferred income tax recovery of $32.3 million, indicating effective management of tax liabilities through strategic planning.

Measure	Q3 2024	Q3 2023
Effective Tax Rate	44%	115%
Deferred Income Tax Recovery (USD)	$32.3 million	$43.2 million

Gran Tierra Energy Inc. (GTE) - Business Model: Key Resources

Oil and gas properties in Colombia and Ecuador

Gran Tierra Energy Inc. operates significant oil and gas properties primarily located in Colombia and Ecuador. As of September 30, 2024, the company reported a net production of 25,988 barrels of oil per day (BOPD), reflecting a 3% decrease from the previous year. The average realized price for Brent crude oil during this period was $78.71 per barrel, an 8% decrease compared to the same quarter in 2023. The operating netback for the third quarter of 2024 was reported at $101.4 million, marking a 20% decrease year-over-year.

Property Location	Production (BOPD)	Brent Price ($/bbl)	Operating Netback ($ million)
Colombia	25,988	$78.71	$101.4
Ecuador	—	—	—

Skilled workforce and technical expertise

Gran Tierra Energy attributes its operational success to a skilled workforce and technical expertise in oil and gas exploration and production. The company focuses on maintaining a highly trained team capable of executing complex drilling operations and managing production efficiently. As of September 30, 2024, Gran Tierra's total headcount included approximately 400 employees, with a significant portion dedicated to technical roles in engineering and geology. The expertise of this workforce is critical, especially in optimizing production techniques and managing the logistical challenges associated with oil extraction in remote locations.

Financial resources from equity and debt financing

As of September 30, 2024, Gran Tierra Energy reported total shareholders' equity of $420.9 million, an increase from $394.5 million in the previous year. The company has utilized various financing mechanisms to support its operations, including equity financing and debt issuance. In 2024, Gran Tierra issued $100 million and $150 million in new 9.50% Senior Notes, bringing the total outstanding debt to approximately $743.1 million. The effective interest expense for the third quarter was reported at $19.9 million, which reflects a 47% increase compared to the same period in 2023. This financial structure allows Gran Tierra to invest in exploration and development projects while managing its operational costs effectively.

Financial Metric	2024 Amount ($ million)	2023 Amount ($ million)	% Change
Total Shareholders' Equity	420.9	394.5	6.9%
Outstanding Debt	743.1	555.1	33.9%
Interest Expense	19.9	13.5	47.0%

Gran Tierra Energy Inc. (GTE) - Business Model: Value Propositions

Reliable supply of crude oil to major customers

Gran Tierra Energy Inc. (GTE) ensures a reliable supply of crude oil, primarily serving a major customer in Colombia and Ecuador, which accounted for 100% of total sales volumes during the third quarter of 2024. The company’s production decreased slightly, with an average daily production of 25,988 barrels of oil per day (BOPD) for the third quarter of 2024, compared to 26,776 BOPD in the same quarter of 2023.

Metric	Q3 2024	Q3 2023	Change (%)
Average Daily Production (BOPD)	25,988	26,776	-3%
Total Sales Volumes (BOPD)	25,464	26,396	-4%
Oil Sales ($ million)	151.4	179.9	-16%

Commitment to sustainable and responsible operations

Gran Tierra Energy is committed to sustainable and responsible operations, actively working on minimizing environmental impact and prioritizing community engagement. The company focuses on responsible resource management and has initiated various sustainability projects aimed at improving operational efficiencies and environmental stewardship. This commitment is reflected in its operational metrics, as the company reported a decrease in operating expenses per barrel to $19.66 in Q3 2024 from $20.52 in Q3 2023, highlighting improved efficiency.

Metric	Q3 2024	Q3 2023	Change (%)
Operating Expenses ($ million)	46.1	49.4	-7%
Operating Expenses per Barrel ($)	19.66	20.52	-4.2%
Capital Expenditures ($ million)	52.9	43.1	23%

Competitive pricing aligned with market conditions

Gran Tierra Energy adopts a competitive pricing strategy aligned with market conditions, which is crucial in maintaining its market position during fluctuating oil prices. The average Brent price during Q3 2024 was $78.71 per barrel, an 8% decrease compared to $85.92 in Q3 2023. The company’s average realized price per barrel, after accounting for quality and transportation discounts, was $64.61 in Q3 2024.

Metric	Q3 2024	Q3 2023	Change (%)
Brent Price ($ per barrel)	78.71	85.92	-8%
Average Realized Price ($ per barrel)	64.61	74.09	-13%
Operating Netback ($ million)	101.4	126.7	-20%

Gran Tierra Energy's value propositions are designed to meet the needs of its primary customer base while adhering to responsible operational practices and competitive pricing strategies. These elements collectively enhance the company's market positioning and contribute to its operational resilience.

Gran Tierra Energy Inc. (GTE) - Business Model: Customer Relationships

Long-term contracts with major buyers

Gran Tierra Energy Inc. relies on long-term contracts with major buyers for its oil sales, which constitutes a significant portion of its revenue. For the three months ended September 30, 2024, the company reported oil sales amounting to $151.4 million, a decrease of 16% compared to $179.9 million in the same period of 2023. The company sold 100% of its production to a single major customer in Colombia and Ecuador, ensuring stable demand and predictable cash flow.

Focus on customer service and satisfaction

Gran Tierra emphasizes customer service and satisfaction as part of its core values. The company aims to maintain strong relationships with its customers through effective communication and reliable delivery of products. For instance, during the third quarter of 2024, the average realized price per barrel was $64.61, down from $74.09 in the same quarter of 2023, indicating the need for enhanced customer engagement strategies to maintain satisfaction amid fluctuating prices.

Engagement in community initiatives to build trust

Gran Tierra actively engages in community initiatives in Colombia and Ecuador to foster trust and strengthen relationships with local stakeholders and customers. The company has invested in various community programs, which contribute to its reputation as a responsible operator. For example, the company allocated $52.9 million for capital expenditures in the third quarter of 2024, part of which supports community aid initiatives and infrastructure development.

Metric	Q3 2024	Q3 2023	Change (%)
Oil Sales ($ million)	$151.4	$179.9	-16%
Average Realized Price per Barrel ($)	$64.61	$74.09	-13%
Capital Expenditures ($ million)	$52.9	$43.1	+23%

Gran Tierra Energy Inc. (GTE) - Business Model: Channels

Direct sales to oil purchasers in Colombia and Ecuador

Gran Tierra Energy Inc. primarily sells its oil to a single major customer in Colombia and Ecuador, which accounted for 100% of total sales volumes during the three and nine months ended September 30, 2024. The company’s oil sales for the third quarter of 2024 reached $151.4 million, reflecting a 16% decrease compared to $179.9 million in the same period of 2023. This decline was attributed to a combination of lower Brent prices and reduced sales volumes.

Online platforms for financial and operational updates

Gran Tierra utilizes its website and other online platforms to communicate financial and operational updates to stakeholders. For the nine months ended September 30, 2024, the company reported funds flow from operations of $180.8 million, which represents a 6% decrease from $192.1 million in the corresponding period of 2023. This indicates the company's commitment to transparency and regular updates, which are essential for investor relations and maintaining market confidence.

Industry conferences and trade shows for networking

Participating in industry conferences and trade shows is a key strategy for Gran Tierra Energy to enhance its visibility and build relationships within the oil and gas sector. The company has a significant focus on networking to foster partnerships and explore new business opportunities. As of September 30, 2024, Gran Tierra’s operating expenses were reported at $141.6 million for the nine months ended, a 2% increase from $139.2 million in the same period of 2023. This reflects ongoing investments in operational activities, including attendance at industry events to promote its business model.

Channel	Key Metrics	Financial Data
Direct Sales	Sales Volume	100% of sales from one major customer
Online Platforms	Funds Flow from Operations	$180.8 million (9M 2024)
Industry Conferences	Operating Expenses	$141.6 million (9M 2024)

Gran Tierra Energy Inc. (GTE) - Business Model: Customer Segments

Major oil companies purchasing crude oil

Gran Tierra Energy Inc. primarily sells its crude oil to major oil companies, which constitute a significant portion of its customer base. As of September 30, 2024, the company's oil sales totaled $151.4 million for the quarter, reflecting a 16% decrease from $179.9 million in the same quarter of 2023. This decline is attributed to a lower Brent oil price, which averaged $78.71 per barrel, down 8% from the prior year.

Local and regional markets in South America

Gran Tierra's operations are heavily concentrated in South America, particularly in Colombia and Ecuador. The company reported production NAR (net after royalties) of 25,988 barrels of oil per day (BOPD) for Q3 2024, which is a 3% decline from 26,776 BOPD in Q3 2023. The local market dynamics, including sales volumes and pricing, are influenced by regional factors such as transportation logistics and local demand.

Market Segment	Q3 2024 Production (BOPD)	Sales Volume (BOPD)	Oil Sales ($ millions)	Brent Price ($/bbl)
Colombia	25,988	25,464	151.4	78.71
Ecuador	Included in total	Included in total	Included in total	Included in total

Institutional investors interested in energy sector

Gran Tierra Energy attracts institutional investors focused on the energy sector, particularly those interested in oil and gas opportunities in Latin America. The company's financial performance, including an adjusted EBITDA of $92.8 million for Q3 2024, is appealing to these investors, despite a decrease from $119.2 million in Q3 2023.

As of September 30, 2024, Gran Tierra had a total debt of $737.6 million in senior notes due 2029, which indicates the company's strategy to leverage capital markets to fund operations and growth.

Financial Metric	Q3 2024	Q3 2023	Change (%)
Adjusted EBITDA ($ millions)	92.8	119.2	-22.2
Net Income ($ millions)	1.1	6.5	-83.1
Debt ($ millions)	737.6	N/A	N/A

Gran Tierra Energy Inc. (GTE) - Business Model: Cost Structure

Operating expenses related to exploration and production

For the three months ended September 30, 2024, Gran Tierra Energy reported operating expenses of $46.1 million, which translates to $19.66 per barrel of oil sold. This reflects a 7% decrease compared to the same period in 2023, primarily due to lower lifting costs, partially offset by increased workover activities. For the nine months ended September 30, 2024, total operating expenses increased to $141.6 million, or $20.20 per barrel.

Period	Total Operating Expenses (millions)	Cost per Barrel
Q3 2024	$46.1	$19.66
Q3 2023	$49.4	$20.33
9M 2024	$141.6	$20.20
9M 2023	$139.2	$19.40

Transportation and logistics costs for oil delivery

Transportation expenses for the three months ended September 30, 2024, were reported at $3.9 million, which is an increase of 2% compared to the same period in 2023. On a per-barrel basis, transportation costs rose to $1.67. For the nine months ended September 30, 2024, transportation expenses totaled $14.2 million, reflecting a 34% increase year-over-year.

Period	Total Transportation Expenses (millions)	Cost per Barrel
Q3 2024	$3.9	$1.67
Q3 2023	$3.8	$1.58
9M 2024	$14.2	$2.02
9M 2023	$10.6	$1.48

Administrative and general expenses including salaries

General and administrative (G&A) expenses before stock-based compensation for Q3 2024 amounted to $9.5 million, marking an increase of 14% compared to Q3 2023. For the nine months ended September 30, 2024, G&A expenses totaled $31.2 million, up 8% from the previous year. Notably, stock-based compensation for Q3 2024 recorded a recovery of $3.1 million, compared to an expense of $1.9 million in Q3 2023.

Period	Total G&A Expenses (millions)	Stock-Based Compensation (millions)
Q3 2024	$9.5	($3.1)
Q3 2023	$8.3	$1.9
9M 2024	$31.2	$6.4
9M 2023	$29.0	$3.7

Gran Tierra Energy Inc. (GTE) - Business Model: Revenue Streams

Oil sales as primary source of revenue

Gran Tierra Energy Inc. (GTE) derives its revenue predominantly from oil sales. For the three months ended September 30, 2024, oil sales amounted to $151.4 million, reflecting a 16% decrease compared to $179.9 million during the same period in 2023. The decline was attributed to an 8% decrease in the average Brent oil price and a 4% reduction in sales volumes. For the nine months ended September 30, 2024, oil sales totaled $474.6 million, a slight 2% decrease from $482.0 million in the prior year.

The average realized price per barrel (bbl) for the three months ended September 30, 2024, was $62.94, down from $72.51 year-over-year. The average daily production for the same period was 25,988 BOPD, a 3% decrease from 26,776 BOPD in the prior year. The following table summarizes the oil sales performance:

Period	Oil Sales (Thousands of USD)	Average Realized Price (USD/bbl)	Sales Volume (BOPD)
Q3 2024	151,373	62.94	25,464
Q3 2023	179,921	72.51	26,396
9M 2024	474,559	65.69	25,578
9M 2023	482,013	67.71	26,284

Potential income from joint ventures and partnerships

Gran Tierra Energy engages in strategic joint ventures and partnerships to enhance its operational efficiency and expand its resource base. While specific revenue figures from joint ventures were not detailed in the latest reports, the partnerships have historically contributed positively to the company’s overall revenue streams. The company's exploration and production activities in Colombia and Ecuador benefit significantly from these collaborative efforts, allowing for shared resources and risk mitigation.

Interest income from financial assets and cash reserves

In addition to oil sales, Gran Tierra Energy generates interest income from its financial assets and cash reserves. For the three months ended September 30, 2024, the company recorded $684,000 in interest income, an increase of 152% compared to $271,000 in the same period of 2023. For the nine months ended September 30, 2024, interest income rose to $2.4 million, up from $1.7 million in the prior year. The growth in interest income reflects improved cash management strategies and higher cash reserves during the reporting period.

Updated on 16 Nov 2024

Resources:

1. Gran Tierra Energy Inc. (GTE) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Gran Tierra Energy Inc. (GTE)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Gran Tierra Energy Inc. (GTE)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.