CALGARY, Alberta - Gran Tierra Energy Inc. (NYSE American:NYSE:GTE) (TSX:GTE) (LSE:GTE), an international oil and natural gas company, today disclosed its plans to offer additional senior secured notes in a private placement, aiming to raise funds for the acquisition of i3 Energy (LON:I3E) plc. The energy firm intends to issue more of its 9.500% Senior Secured Amortizing Notes due 2029, which will be guaranteed by certain subsidiaries.
The company currently has $587.59 million of these notes in circulation. The new issuance will be on the same terms as the existing ones, except for the issue date and price. They are expected to trade under the same CUSIP number post-settlement, with a temporary difference for those sold outside the United States under Regulation S of the Securities Act.
Gran Tierra plans to use the net proceeds from the offering primarily to finance the cash portion of the consideration for the proposed acquisition of i3 Energy plc, a UK-based public limited company. Any remaining funds will be directed towards general corporate purposes, which may include capital to develop exploration discoveries, debt repayment, working capital, and potential further acquisitions.
The offering targets qualified institutional buyers in the United States under Rule 144A and non-U.S. persons in offshore transactions under Regulation S. Additionally, the placement will be made pursuant to certain prospectus exemptions in Canada.
The notes will not be registered under the U.S. Securities Act or any state securities laws, and they may not be offered or sold within the United States absent an exemption from registration requirements.
This announcement is based on a press release statement and does not constitute an offer to sell or a solicitation of an offer to buy the notes. It is issued in accordance with Rule 135c under the Securities Act.
Gran Tierra, which operates mainly in Colombia and Ecuador, is focusing on developing its portfolio of assets and seeking growth opportunities to enhance its position in the market.
In other recent news, Gran Tierra Energy Inc. reported a new oil discovery at the Bocachico Norte-J1 well in Ecuador, marking the company's fourth consecutive find in the region. The company has also reported stabilized production rates of 1,353 barrels of oil per day at the T-Sand oil zone. These recent developments are expected to contribute to production growth, reserve additions, and free cash flow for Gran Tierra in the coming years.
Gran Tierra Energy also reported a solid financial performance for the second quarter of 2024, with a net income of $36 million, or $1.16 per share. The company's operating net back stood at $113 million, supported by oil sales of $166 million. Capital expenditures for the quarter were $61 million, leaving the company with a cash balance of $115 million and net debt of $521 million as of June 30th.
In addition to its financial results, Gran Tierra has plans to drill in Ecuador and complete infrastructure in the Suroriente block. The company remains positive about the second half of 2024 and is on track with its capital plan.
InvestingPro Insights
As Gran Tierra Energy Inc. (NYSE American:GTE) embarks on its new venture to acquire i3 Energy plc, it's important to consider the company's financial health and market performance. According to InvestingPro, Gran Tierra is expected to see a rise in net income this year, which could bolster investor confidence amidst its plans for expansion. Additionally, analysts are optimistic about the company's profitability, predicting that it will be profitable this year.
InvestingPro Data provides a clearer picture of the company's recent performance. Over the last twelve months leading up to Q2 2024, Gran Tierra reported a revenue of $658.05 million, with a growth rate of 3.94%. The company's gross profit margin stood strong at 68.0%, indicating a robust ability to control costs relative to its revenue. However, the stock has experienced significant volatility, with a one-week price total return showing a decline of 11.18% and a one-month return plummeting by 28.38%. This volatility is reflected in the stock's three-month price total return, which has seen a substantial drop of 40.3%.
Despite the recent downturn in stock price, Gran Tierra maintains a moderate level of debt, which could be a factor for investors to consider when assessing the company's long-term financial stability, especially in light of the new debt issuance for the i3 Energy acquisition. It is also noteworthy that the company does not pay dividends, which may influence investment decisions for those seeking regular income from their investments.
For those interested in a deeper analysis, InvestingPro offers additional insights with a total of 10 InvestingPro Tips for Gran Tierra. These tips provide valuable information on various aspects of the company's financial health and market performance that could be crucial for making informed investment decisions.
Gran Tierra's next earnings date is scheduled for October 31, 2024, an event that investors will be watching closely to assess the company's financial trajectory following its strategic moves. With a fair value estimated at $8.06, as per analyst targets, the market will be keen to see if Gran Tierra's operational strategies and the acquisition will enhance shareholder value in the long term.
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