Good morning, ladies and gentlemen. And welcome to Gran Tierra Energy Results Conference Call for the Second Quarter of 2024. My name is Michelle, and I’ll be your coordinator for today. At this time, all participants are in a listen-only mode. Following the initial remarks, we will conduct a question-and-answer session for securities analysts and institutions. Instructions will be provided at that time for you to queue up for questions. I would like to remind everyone that this conference call is being webcast and recorded today, Thursday, August 1, 2024, at 11 a.m. Eastern Time. Today’s discussion may include certain forward-looking information, as well as certain non-GAAP financial measures. Please refer to the earnings and operational update press release we issued yesterday for important disclaimers with regards to this information and reconciliations of any non-GAAP measures discussed on today’s call. Any production volumes are based on working interest sales before royalties. Finally, this earnings call is the property of Gran Tierra Energy, Inc. Any copying or rebroadcasting of this call is expressly forbidden without the written consent of Gran Tierra Energy. I will now turn the conference call over to Gary Guidry, President and Chief Executive Officer of Gran Tierra. Mr. Guidry, please go ahead.

Thank you, Operator. Good morning. And thanks for joining Gran Tierra’s second quarter 2024 results conference call. My name is Gary Guidry, President and Chief Executive Officer; and with me today are Ryan Ellson, our Executive Vice President and Chief Financial Officer; and Sebastien Morin, our Chief Operating Officer. On Wednesday, July 31, 2024, we issued a press release that included detailed information on our second quarter 2024 results, which is available on our website. Ryan and Sebastien will make a few brief comments and then we will open the line for questions. Ryan, please go ahead.

Thank you, Gary. Good morning, everyone. I will start off by saying that we’re very pleased with how Gran Tierra has wrapped up the first half of 2024. During the second quarter, we were able to begin our high-impact exploration campaign that started off with the previously announced discovery at Arawana. In addition, we have also progressed a number of our development programs, including initiating civil works in the Suroriente Block to kick off a five-well drilling campaign with the second rig in the second half of 2024. During the quarter, Gran Tierra delivered net income of $36 million or $1.16 per share. Further, Gran Tierra achieved operating net back of $113 million, which is up from $105 million in the prior quarter and an adjustment of $103 million, which was up from $95 million in the prior quarter. The company also strategically revised its 2022 tax return during the quarter to use its long-term tax receivable balance to offset current tax liabilities, rather than applying net operating loss carry forwards. This decision was driven by higher current and future tax rates and increased profitability in Colombia. As a result, the current tax expense increased by $28 million, but this was offset by long-term tax receivable, resulting in no cash outflow. We were able to preserve our net operating loss carry forwards of approximately $85 million for future periods, providing greater tax benefit in 2024 and in the future. This tax initiative also allowed us to recover $18 million of taxes receivable in 2024 and accelerate the recovery of an estimated $65 million of taxes receivable over the next three years. During the quarter, the company spent $61 million in capital expenditures, which were higher than the $55 million in the prior quarter due to the commencement of the 3D…

Good morning, everyone. As Ryan mentioned, capital expenditures of $61 million were higher than the prior quarter of $55 million and down from $66 million compared to the second quarter of 2023. Total average working interest production during the quarter was 32,776 barrels of oil per day, an increase of 2% compared to the prior quarter, and up 4% on a per share basis since the second quarter of 2023. During the second quarter of 2024, Gran Tierra installed selective completions, systematically stimulated multiple zones and added electrical submersible pumps at 56, 57, 58 and 59, which were drilled as part of our first half 2024 development campaign. While the temporary offline status of these wells for the planned selective completion did impact second quarter production by about 700 barrels per day, the improvements have resulted in enhanced production with rates exceeding initial peak rates with all wells now back online. Given the ongoing positive performance from our core fields on water floods and recent exploration success, we remain very comfortable with our 2024 production guidance. Looking to operating expenses, they decreased by 3% to $47 million compared to the prior quarter, primarily due to lower work over activities as a result of continued improvement in artificial lift reliability. On a per oil basis, operating expenses also decreased by 1% when compared to the prior quarter as the company continues to focus on pushing forward further cost savings and operational efficiency initiatives. The company’s transportation expenses increased by 24% to $5.7 million compared to the prior quarter of $4.6 million due to El Nino phenomena causing low water levels in the Magdalena River, resulting in Gran Tierra utilizing longer delivery points. The river levels have now returned to normal conditions, allowing for use of our preferred shorter delivery routes for…

Thank you. [Operator Instructions] Our first question comes from Alejandra Andrade with JPM. Your line is open.

Hi. Good morning. Thanks for taking my question. I just have two questions. First, I wanted to discuss a little bit the production outlook for the second half of the year. And then also, if you could give a little bit more color on all the tax moves that are happening in the numbers, that would be great? Thank you.

I think we’re very, very pleased with our first half results and continue to look forward to our exciting catalysts that are coming. As we’ve just stated, both of our two new exploration wells are currently on testing, which we’re happy with. And so we continue to reiterate our guidance for the year.

Perfect.

And on the taxes, yeah, and probably, the best thing is if you look in the notes in the financial statements, we did put a reconciliation to try to explain some of the movements. But effectively, what we were able to do with the refiling is just to keep $85 million of non-capital losses. Those rates were done at a 35% tax rate, with the current rate being 50%. So we get -- and so we get the benefit of utilizing those losses in a higher tax rate environment. That’s the first one. But it also allowed us to accelerate some of these long-term receivables that we had. So although we had to book a current tax expense, there was no cash outflow. We actually netted the payable that was generated from that refiling with long-term receivable that we had. So really, there was acceleration of those receivables. It allows us to collect further money $65 million over the next three years.

Great. Thanks.

You’re welcome.

Thank you. Our next question comes from Diego Espinoza with BTG Pactual. Your line is open.

Hi. Thank you for taking my question. Can you hear me?

Yeah. We hear you.

Perfect. Just have a couple of questions. First one is that CapEx, right now you have around $120 million. How much do you expect to spend during the second half of the year? And in terms of working capital, we saw some relief during this quarter. Do you expect that this should be reversed during the next quarter or in the fourth quarter? That’s it.

Great. Yeah. On the capital guidance, we’re comfortable with the guidance that we have in the market right now. So we think that’s a reasonable range given our first half results and our program for the second half. And then with respect to working capital, yeah, a lot of that working capital release was from the tax balance and moving the long-term receivable into current receivable. I’m sorry, long-term into current. So we don’t expect that to reverse the following quarter. But it was more of a one-time item this quarter.

Perfect. Thank you very much.

Great. Thank you.

Thank you. Gentlemen, there are no further questions at this time. Please continue.

Okay. Thank you, Operator. I would like to thank everyone once again for joining us today. We look forward to speaking with you over the next quarter and update you on our ongoing progress. Thank you very much.

Thank you for your participation. This does conclude the program. You may now disconnect. Everyone, have a great day.