The Calgary, Alberta-based company said that its Zabaleta-K1 well is the fourth exploration well drilled in the Chanangue Block, according to a recent news release.
The successful Zabaleta test “further validates the proven Basal Tena geological model four kilometers [2.5 miles] away from Arawana-J1 and supports the significant potential of the Arawana/Zabaleta productive trend,” it added.
Gran Tierra said it has run production casing, cemented and perforated the Basal Tena oil zone and has begun production testing. The rig was moved to drill the Zabaleta Oeste exploration well which was spud on November 21, marking the fulfillment of the final exploration commitment in the Chanangue block.
Gran Tierra President and CEO Gary Guidry said, “The success of this well solidifies Gran Tierra’s understanding of the field area and will be a key pillar of development growth plans in South America for years to come”.
Further, Gran Tierra is divesting 50 percent and operatorship of a portion of its Simonette Montney assets for approximately $37.11 million (CAD 52 million) in cash, to Logan Energy Corp., subject to customary adjustments.
After the closing of the transaction, Gran Tierra will retain 50 percent working interest in the assets, which include approximately 25 net sections of Simonette Montney lands with 0.8 million barrels of oil equivalent (mmboe) of Proved Developed Producing (PDP) reserves, 3.9 mmboe of Proved (1P) reserves and 13.8 mmboe of (2P) reserves, in each case, as of July 31, 2024.
The transaction provides a growth-focused platform to advance Gran Tierra’s Montney development and is aligned with the company’s corporate strategy of long-term value creation, it said. The closing of the transaction is expected to occur by the end of 2024, subject to the satisfaction of customary closing conditions.
The total consideration from Logan includes carried development of the first Simonette well drilled in the Lower Montney region for estimated non-cash proceeds of CAD 3 million net to Gran Tierra. As a result of the transaction, Gran Tierra said it expects to accelerate 2 wells at the 1-24 pad in the Simonette Montney area into the fourth quarter, which were originally anticipated to be drilled in the first quarter of 2026.
“We are also thrilled to announce the sale of a portion of our interest in the Simonette Montney play while keeping a material stake in its future growth. This strategic partnership with a top-tier operator, who already has established infrastructure in the area, will significantly accelerate development and generate near-term cash flow. We intend to use a portion of the proceeds to deliver value to our shareholders through development of other key assets in the portfolio and share buybacks, while also strengthening our balance sheet by reducing net debt. We are also pleased to monetize by diluting half of our interest in one of the assets recently acquired in the i3 Energy acquisition by selling approximately 4 percent of production, and 1P reserves we acquired for approximately 19 percent of total consideration while still maintaining material interest and value in the assets. This transaction validates Gran Tierra’s position as a top-tier growth focused mid-cap E&P company,” Guidry said.
