Gran Tierra Energy Inc., through its Swiss subsidiary Gran Tierra Energy Colombia GmbH, has signed a new commercial agreement for the sale of Oriente crude oil, backed by a total prepayment of up to $200mn. The financial arrangement, structured in two tranches, includes an initial disbursement of $150mn, followed by a potential additional $50mn subject to specific contractual conditions.
Secured deliveries in exchange for cash advances
Repayment of the prepayment will be made through scheduled deliveries of Oriente crude oil from the company’s Ecuadorian production. This operation aims to strengthen Gran Tierra’s financial structure by ensuring predictable cash flows and reducing exposure to market volatility. The company has not disclosed the exact duration of the agreement nor the commercial counterparties involved.
Borrowing base reduction in Colombia
At the same time, Gran Tierra announced an amendment to its existing Colombian credit agreement. The revision authorises the implementation of the crude oil agreement and adjusts several financial parameters. The borrowing base under the bank credit facility has been reduced from $75mn to $60mn, while certain financial covenants have been revised to reflect the newly implemented prepayment structure.
Pursuit of sustainable financial balance
According to Gran Tierra’s Chief Financial Officer, the purpose of this transaction is to reinforce financial discipline while generating sustainable free cash flow. The company continues to focus on low-decline, high-netback production to support its capital programme and explore new business opportunities in the Andean region.
