GranTierra Energy Inc.

The stable outlook reflects our view that GTE will continue to consolidate its recent acquisitions, focusing on increasing oil production and reserves. The outlook also reflects our expectation that the company's leverage will remain below 2x and liquidity to stay strong in the next 12-18 months. We could lower the rating if GTE's exploration efforts are unsuccessful, resulting in a production decline that could erode revenue and EBITDA, raising debt to EBITDA above 3.0x for a sustained period. This could also happen if the oil prices drop significantly below our price deck expectations. We view don't believe a positive rating action can occur during the next 12-18 months. However, we could raise the rating if the company increases its reserves

...Gran Tierra's acquisitions have enhanced its portfolio, but operations are still concentrated in Colombia.After the PetroLatina's acquisition, GranTierra Energy Inc. (GTE) continues to make small accretive acquisitions, aiming to expand through exploration and enhanced oil recovery. During the third quarter of 2018, the company acquired a 45% of working interest in the Putumayo-1 block and 60% of the VMM-2 block in the Middle Magdalena Valley region. Both blocks are located in Colombia, adding 5.2 million of proved and probable barrels. However, the company's operation continues to be mostly located in Colombia's Middle Magdalena Basin. The company benefits from low-cost and high operating netbacks. GTE has kept steady operating cost levels with an average cost of $10 dollars per barrel, which have been below of the peer average of $15 dollars per barrel. This has been mainly because of the company's very low lifting costs in blocks such as Acordionero, where it reduced drilling days and...

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