Gran Tierra Energy, Inc is pleased to announce that Compania General de Combustibles S.A. (CGC) has accepted an offer from Gran Tierra Energy to purchase a mix of production and exploration properties in Argentina. Total consideration for the acquisition is US$ 37.8 million. The acquisitions are expected to add approximately 760 barrels per day of oil/liquids production (net before royalties) and approximately 8.5 million cubic feet per day of natural gas production (net before royalties) to the Company. Proven reserves are estimated at approximately 1.9 million barrels of oil/liquids and 23 billion cubic feet of gas (net before royalties).
Gran Tierra's entry strategy in Argentina was initially to acquire production with drilling upside, purchasing approximately 350 barrels per day of oil production in September 2005 and augmenting production later in the year via a successful well. The CGC acquisitions provide a broader base of production and drilling opportunity, increasing production to about 1,600 barrels of oil equivalent per day (on a price basis, net before royalties) and expanding the company's land inventory via a participation in 5,100 gross square kilometers (1.3 million acres) of land for future drilling. The transactions are subject to standard closing conditions including the execution of mutually acceptable agreements on or before April 30, 2006, the receipt of necessary regulatory and governmental approvals, the provision of necessary financing and are subject to preferential acquisition rights of partners in certain properties.
Dana Coffield, Gran Tierra's President and CEO, stated, "This acquisition represents a dramatic step forward for our company and is a substantiation of our strategy to build a portfolio of assets, quickly and sensibly, to provide a base for continued growth in South America. With the successful closing of this transaction we will have achieved a critical mass, a regional focus, a leadership role as operator and a significant platform for growth in Argentina. We are moving purposefully and aggressively, as we said we would."
