Oil And Gas Producer Gran Tierra Upgraded To 'B' From 'B-' Amid Higher Oil Prices And Deleveraging, Outlook Stable

Canada-based oil and gas producer Gran Tierra Energy Inc. (GTE) has focused on increasing its production before royalties, reaching 28,957 barrels of oil equivalent per day (boepd) as of Sept. 30, 2021, up 82.9% compared with the same period in 2020 (18,944 boepd). However, this is still 12% below that for the same period of 2019 (32,918 boepd). Higher production volumes, together with rising prices (using Brent as a reference) of about $69.08 per barrel (bbl) by June 30, 2021, allowed GTE to increase EBITDA and reduce debt to EBITDA to 3.7x on an annualized basis from 9.8x in 2020. On Oct. 21, 2021, S&P Global Ratings raised its issuer-credit and issue-level ratings on GTE to 'B' from 'B-'. The

...secured RCF to $225 million (from $300 million initially) of which the company had drawn $204 million as of May 31, 2020. However, GTE reduced the outstanding balance to $140 million as of Oct. 8, 2021. Our base-case scenario assumes that GTE will continue to benefit from production and price increases, reducing debt repayment risk on its RCF due November 2022. However, as long as GTE continues repaying its RCF, its liquidity position won't strengthen....

Ratings Action