Gran Tierra Energy Inc. – Financial Analysis Report: Net Profit Growth of \$37.4 Million

Business Description

Gran Tierra Energy Inc. is a publicly traded company focused on international oil and natural gas exploration and production. The company has assets primarily located in Colombia and Ecuador. Gran Tierra operates primarily in the energy sector, with its core business operations centered around the exploration, development, and production of crude oil.

Industry Position and Competitors

Gran Tierra Energy Inc. operates within the highly competitive oil and gas industry. Key competitors include other international oil and gas exploration and production companies. The company’s market share is not explicitly stated in the report, but it is implied that it is a significant player within its operating regions.

Revenue Streams and Customer Base

The company’s revenues are generated exclusively from oil sales. During the third quarter of 2024, Gran Tierra’s production was sold to one major customer in Colombia and Ecuador, representing 100% of the total sales volumes.

Supply Chain and Competitive Advantage

Gran Tierra’s supply chain involves the exploration, production, and transportation of crude oil. The company has multiple transportation options, including pipelines and trucking routes, which impact realized sales prices and transportation expenses. A competitive advantage includes its strategic presence in Colombia and Ecuador, regions with significant oil reserves.

Financial Statement Analysis

Income Statement

For the nine months ended September 30, 2024, Gran Tierra reported oil sales of \$474.6 million, a slight decrease from \$482.0 million in the same period of 2023. The company achieved a net profit of \$37.4 million, a significant improvement from a net loss of \$14.0 million in the prior year.

Balance Sheet

As of September 30, 2024, Gran Tierra reported total assets of \$1.53 billion, an increase from \$1.33 billion as of December 31, 2023. The company’s cash and cash equivalents increased significantly to \$277.6 million from \$62.1 million. Total liabilities amounted to \$1.11 billion, with shareholders’ equity increasing to \$420.9 million from \$396.4 million.

Cash Flow Statement

Net cash provided by operating activities for the nine months ended September 30, 2024, was \$212.7 million, compared to \$157.5 million in the same period of 2023. Net cash used in investing activities was \$163.8 million, primarily due to capital expenditures. Financing activities provided \$165.0 million, mainly from the issuance of Senior Notes.

Key Findings and Recommendations

Strengths

• Significant net profit growth to \$37.4 million from a net loss in the prior year.
• Substantial increase in cash and cash equivalents, providing liquidity for future investments and operations.
• Strategic acquisition of i3 Energy, expected to enhance production capabilities and market presence.

Risks

• Exposure to volatile oil prices and geopolitical risks in operating regions.
• Potential integration challenges with the recent acquisition of i3 Energy.
• High debt levels, including significant Senior Notes due in the coming years.

Special Activities

Gran Tierra has taken strategic actions to improve profitability, including the acquisition of i3 Energy and a share re-purchase program that acquired 2.7 million shares under the 2023 Program.

Investor Recommendations

If you are currently holding Gran Tierra Energy Inc. stock, it is recommended to hold your position. The company has demonstrated significant net profit growth and increased liquidity, which bode well for future performance.

If you are not currently holding Gran Tierra Energy Inc. stock, it is recommended to consider investing. The company’s strategic acquisitions and improved financial health present a compelling investment opportunity.

Disclaimer

This analysis is based on the financial report provided and is intended for informational purposes only. Investors should conduct their own research or consult with a financial advisor before making any investment decisions.