Gran Tierra Energy Announces Year-End 2008 Reserves

Proved Reserves Increase To 19.2 MMBO Net After Royalty; A 200% Increase From Year-End 2007


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CALGARY, Alberta, February 9, 2009, Gran Tierra Energy Inc. (NYSE Alternext: GTE; TSX: GTE), a company focused on oil exploration and production in South America, today announced the results of an independent reserve evaluation of the company's reserves by GLJ Petroleum Consultants Ltd. effective December 31, 2008.

Proved Reserves Reported in Accordance with United States Reporting Requirements

The following reserves are reported consistent with United States Securities and Exchange Commission rules.

The following table summarizes Gran Tierra Energy's year-end 2008 working interest reserves and net after royalty reserves (with constant December 31, 2008 oil price and cost). Also shown in the following table are Gran Tierra Energy's net after royalty reserves for year-end 2007 (with constant December 31, 2007 oil price and cost).

Total

Total company

Light and Medium Oil

(SEC Compliant)

 

2008 Year-End

Gran Tierra Energy Working Interest Reserves

2008 Year-End Gran Tierra Energy NAR Reserves

2007 Year-End

Gran Tierra Energy NAR Reserves

Reserves Category

MMBO *

MMBO *

MMBO *

Proved

 

 

 

 

 

Developed Producing

11.053

8.967

3.121

 

Developed Nonproducing

1.489

1.299

2.142

 

Undeveloped

11.687

8.972

1.155

Total Proved

24.229

19.238

6.418

* MMBO (million barrels of oil).

NAR (net after royalty).

       Proved light and medium oil reserves are 19.238 MMBO NAR at year-end 2008 compared to 6.418 MMBO NAR at year-end 2007, an increase of 200%. In addition to the above proved light and medium oil reserves, Gran Tierra Energy also has year-end 2008 NAR proved gas reserves of approximately 1.2 BCF (billion cubic feet). Gran Tierra Energy had no proved gas reserves at year-end 2007.

Colombia

Gran Tierra Energy's Colombia year-end 2008 working interest and net after royalty reserves are shown in the following table (with constant December 31, 2008 oil price and cost). Also shown in the following table are Gran Tierra Energy's Colombian net after royalty reserves for year-end 2007 (with constant December 31, 2007 oil price and cost).

Colombia

Light and Medium Oil

(SEC Compliant)

 

2008 Year-End Gran Tierra Energy Working Interest Reserves

2008 Year-End

Gran Tierra Energy NAR Reserves

2007 Year-End

Gran Tierra Energy NAR Reserves

Reserves Category

MMBO

MMBO

MMBO

Proved

 

 

 

 

 

Developed Producing

9.752

7.833

2.145

 

Developed Nonproducing

1.215

1.060

1.299

 

Undeveloped

11.476

8.788

0.939

Total Proved

22.443

17.681

4.383

       The increase in proved reserves in Colombia is mainly associated with the acquisition of Solana Resources Limited and new appraisal drilling in the Costayaco Field.

       In addition to the above proved light and medium oil reserves, Gran Tierra Energy also has year-end 2008 NAR proved gas reserves of approximately 1.2 BCF in Colombia. Gran Tierra Energy had no proved gas reserves in Colombia at year-end 2007.

The Costayaco Field 2008 year-end net after royalty reserves are shown in the following table (with constant December 31, 2008 oil price and cost). Also shown in the following table is a comparison of the Costayaco Field 2008 year-end gross lease reserves (with constant December 31, 2008 oil price and cost) to the gross lease reserves estimated in July 1, 2008 (with constant June 30, 2008 oil price and cost).

Costayaco

Light and Medium Oil

(SEC Compliant)

 

2008 Year-End Costayaco

Gran Tierra Energy

NAR Reserves

2008 Year-End Costayaco Gross Lease Reserves

July 1, 2008

Costayaco Gross Lease Reserves

Reserves Category

MMBO

MMBO

MMBO

Proved

 

 

 

 

 

Developed Producing

6.506

8.172

9.637

Total Proved

15.294

19.649

20.542

Argentina

Gran Tierra Energy's Argentina working interest and net after royalty reserves are shown in the following table (with constant December 31, 2008 oil price and cost). Also shown in the following table is Gran Tierra Energy's Argentina net after royalty reserves for year-end 2007 (with constant December 31, 2007 oil price and cost).

Argentina

Light and Medium Oil

(SEC Compliant)

 

2008 Year-End Gran Tierra Energy Working Interest Reserves

2008 Year-End Gran Tierra Energy NAR Reserves

2007 Year-End

Gran Tierra Energy NAR Reserves

Reserves Category

MMBO

MMBO

MMBO

Proved

 

 

 

 

 

Developed Producing

1.301

1.134

0.976

 

Developed Nonproducing

0.274

0.239

0.843

 

Undeveloped

0.211

0.184

0.216

Total Proved

1.786

1.557

2.035

       Gran Tierra Energy had no proved gas reserves in Argentina at year-end 2008 or 2007.

Reserves Reported in Accordance with Canadian Reporting Requirements

The following reserves are compliant with Canadian National Instrument 51-101 (NI 51-101) and the Canadian Oil and Gas Evaluation Handbook (COGEH) (with escalated oil price and costs):

Total

Total company

Light and Medium Oil

(NI 51-101 compliant)

 

2008 Year-End

Gran Tierra Energy Working Interest Reserves

2008 Year-End Gran Tierra Energy NAR Reserves

2007 Year-End

Gran Tierra Energy NAR Reserves

Reserves Category

MMBO *

MMBO *

MMBO *

Proved

 

 

 

 

 

Developed Producing

11.877

9.194

3.095

 

Developed Nonproducing

1.526

1.328

2.132

 

Undeveloped

11.621

8.289

1.178

Total Proved

25.024

18.811

6.405

Total Probable

12.512

8.676

5.024

Total Proved plus Probable

37.536

27.487

11.429

Total Possible

26.233

18.599

4.863

Total PPP

63.769

46.086

16.292

* MMBO (million barrels of oil).

NAR (net after royalty).

Gran Tierra Energy's year-end 2008 NAR reserves compared to year-end 2007 NAR reserves (compliant with NI 51-101 and COGEH) are as follows:

       Proved light and medium oil reserves are 18.811 MMBO compared to 6.405 MMBO at year-end 2007, an increase of 194%. In addition to the above proved light and medium oil reserves, Gran Tierra Energy also has year-end 2008 NAR proved gas reserves of approximately 1.2 BCF (billion cubic feet). Gran Tierra Energy had no proved gas reserves at year-end 2007.

       Probable light and medium oil reserves are 8.676 MMBO compared to 5.024 MMBO at year-end 2007, an increase of 73%. In addition to the above probable light and medium oil reserves, Gran Tierra Energy also has year-end 2008 NAR probable gas reserves of approximately 1.8 BCF. Gran Tierra Energy had year-end 2007 NAR probable gas reserves of approximately 1.2 BCF.

       Possible light and medium oil reserves are 18.599 MMBO compared to 4.863 MMBO at year-end 2007, an increase of 282%. In addition to the above possible light and medium oil reserves, Gran Tierra Energy also has year-end 2008 NAR possible gas reserves of approximately 16.6 BCF. Gran Tierra Energy had year-end 2007 NAR possible gas reserves of approximately 27.3 BCF.

Colombia

Gran Tierra Energy's year-end 2008 Colombia working interest and net after royalty reserves are shown in the following table (NI 51-101 compliant with escalated oil price and cost). Also shown in the following table are Gran Tierra Energy's Colombian net after royalty reserves for year-end 2007 (NI 51-101 compliant with escalated oil price and cost).

Colombia

Light and Medium Oil

(NI 51-101 compliant)

 

2008 Year-End Gran Tierra Energy Working Interest Reserves

2008 Year-End Gran Tierra Energy NAR Reserves

2007 Year-End

Gran Tierra Energy NAR Reserves

Reserves Category

MMBO

MMBO

MMBO

Proved

 

 

 

 

 

Developed Producing

10.564

8.050

2.119

 

Developed Nonproducing

1.240

1.079

1.290

 

Undeveloped

11.414

8.108

0.961

Total Proved

23.218

17.237

4.370

Total Probable

11.401

7.706

3.933

Total Proved plus Probable

34.619

24.943

8.303

Total Possible

23.038

15.806

3.527

Total PPP

57.657

40.749

11.830

       The increases in proved, probable, and possible reserves in Colombia are mainly associated with the acquisition of Solana Resources Limited and new appraisal drilling in the Costayaco Field;

       In addition to the above proved light and medium oil reserves, Gran Tierra Energy also has year-end 2008 NAR proved gas reserves of approximately 1.2 BCF in Colombia. Gran Tierra Energy had no proved gas reserves at year-end 2007 in Colombia;

       In addition to the above probable light and medium oil reserves, Gran Tierra Energy also has year-end 2008 NAR probable gas reserves of approximately 0.7 BCF in Colombia. Gran Tierra Energy had no proved gas reserves at year-end 2007 in Colombia;

       In addition to the above possible light and medium oil reserves, Gran Tierra Energy also has year-end 2008 NAR possible gas reserves of approximately 1.9 BCF in Colombia. Gran Tierra Energy had no possible gas reserves at year-end 2007 in Colombia;

The Costayaco Field 2008 year-end net after royalty reserves are shown in the following table (with escalated oil price and cost). Also shown in the following table is a comparison of the Costayaco Field 2008 year-end gross lease reserves (with escalated oil price and cost) to the gross lease reserves estimated in July 1, 2008 (with escalated oil price and cost).

Costayaco

Light and Medium Oil

(NI 51-101 compliant)

 

2008 Year-End Costayaco

Gran Tierra Energy

NAR Reserves

2008 Year-End Costayaco Gross Lease Reserves

July 1, 2008

Costayaco Gross Lease Reserves

Reserves Category

MMBO

MMBO

MMBO

Proved

 

 

 

 

 

Developed Producing

6.639

8.888

9.637

Total Proved

14.747

20.302

20.382

Total Probable

6.744

10.293

14.528

Total Proved plus Probable

21.491

30.595

34.910

Total Possible

14.757

21.823

26.330

Total PPP

36.248

52.418

61.240

Approximately 1.09 MMBO was produced from July 1, 2008 to December 31, 2008. Taking the production volume into account, there is a small increase in proved reserves along with reductions in probable and possible reserves. The reductions in probable and possible reserves are mainly associated with short well test results from Costayaco-6 in December, 2008, that produced 100% water. Gran Tierra Energy plans to perform further testing at Costayaco-6 with a jet pump in early February 2009 to confirm whether oil is present or not.

The drilling of Costayaco-7 is scheduled to commence in February, 2009. Costayaco-7 will be located with the intent of converting probable and possible reserves at the north end of the field into proved reserves. Costayaco-8 is scheduled to be drilled after Costayaco-7. Costayaco-8 will be located with the intent of converting probable and possible reserves at the south end of the field into proved reserves. These two wells are intended to add significant production capacity and contribute to Gran Tierra Energy's expected 2009 exit rate of 19,000 barrels of oil/day (BOPD) net after royalty from Colombia.

Argentina

Gran Tierra Energy's Argentina year-end 2008 working interest and net after royalty reserves are shown in the following table (NI 51-101 compliant with escalated oil price and cost). Also shown in the following table is Gran Tierra Energy's Argentina net after royalty reserves for year-end 2007 (NI 51-101 compliant with escalated oil price and cost).

Argentina

Light and Medium Oil

(NI 51-101 compliant)

 

2008 Year-End Gran Tierra Energy Working Interest Reserves

2008 Year-End Gran Tierra Energy NAR Reserves

2007 Year-End

Gran Tierra Energy NAR Reserves

Reserves Category

MMBO

MMBO

MMBO

Proved

 

 

 

 

 

Developed Producing

1.313

1.144

0.976

 

Developed Ponproducing

0.286

0.249

0.842

 

Undeveloped

0.207

0.181

0.217

Total Proved

1.806

1.574

2.035

Total Probable

1.111

0.970

1.091

Total Proved plus Probable

2.917

2.544

3.126

Total Possible

3.195

2.793

1.336

Total PPP

6.112

5.337

4.462

       The additions in probable and possible reserves associated with the Proa-1 oil discovery made in 2008 is offset by the write down of reserves at La Reina Field and Nacatimbay Field;

       Gran Tierra Energy had no proved gas reserves in Argentina at year-end 2008 or year-end 2007;

       In addition to the above probable light and medium oil reserves, Gran Tierra Energy also has year-end 2008 NAR probable gas reserves of approximately 1.2 BCF in Argentina. Gran Tierra Energy had year-end 2007 NAR probable gas reserves of approximately 1.2 BCF;

       In addition to the above possible light and medium oil reserves, Gran Tierra Energy also has year-end 2008 NAR possible gas reserves of approximately 14.7 BCF in Argentina. Gran Tierra Energy had year-end 2007 NAR possible gas reserves of approximately 27.3 BCF.

Current Production

Gran Tierra Energy is currently producing approximately 12,000 BOPD net after royalty. About 11,000 BOPD net after royalty production is from Colombia and approximately 1,000 BOPD net after royalty production is from Argentina.

With the spare production capacity available from existing wells, Gran Tierra Energy plans to increase its net after royalty production in Colombia from 11,000 BOPD to 14,000 BOPD in the first quarter of 2009. This rate is expected to be maintained until the third quarter of 2009. With the planned development drilling in Costayaco and Juanambu, Gran Tierra Energy's net after royalty production in Colombia is expected to increase to 19,000 BOPD in the third quarter of 2009. This rate is expected to remain relatively constant throughout the remainder of 2009.

Gran Tierra Energy's net after royalty production rate for Argentina is expected to remain constant at approximately 1,000 BOPD throughout 2009.

Dana Coffield, President and CEO commented "2008 has proven to be another outstanding year in the growth of Gran Tierra Energy's reserve base, fueled in large part by our acquisition of Solana. The tripling of the company's proved reserves during the year provides a strong foundation for growth in 2009. The development drilling program scheduled for 2009 is expected to continue adding to our production growth, and should convert more of the company's probable and possible reserves to the proved category. We continue to expect attaining net after royalty production of 15,000 BOPD in the first quarter, and 20,000 BOPD in the third quarter, of this year. This activity, in addition to our planned 2009 exploration program, is expected to be funded out of available cash and cashflow from operations, allowing the company to remain debt free."

About Gran Tierra Energy Inc.

Gran Tierra Energy Inc. is an international oil and gas exploration and production company operating in South America, headquartered in Calgary, Canada, incorporated in the United States, and trading on the NYSE Alternext (GTE) and the Toronto Stock Exchange (GTE). The company holds interests in producing and prospective properties in Colombia, Argentina, and Peru. The company has a strategy that focuses on growing a portfolio of producing properties, plus production enhancement and exploration opportunities to provide a base for future growth. Additional information concerning Gran Tierra Energy is available at www.grantierra.com. Investor inquiries may be directed to info@grantierra.com or 1-800-916-GTRE (4873).

Cautionary Statement

Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves. The estimate of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties, due to the effects of aggregation.

Forward Looking Statements

The statements in this news release regarding Gran Tierra Energy's timing, plans and expectations for testing, drilling, production, reserve growth, funding of operations, are forward looking information, forward looking statements or financial outlooks (collectively, "forward-looking statements") under the meaning of applicable securities laws, including Canadian Securities Administrators' National Instrument 51-102 Continuous Disclosure Obligations and the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results or outcomes to differ materially from those contemplated by the forward-looking statements. Although, Gran Tierra Energy believes that the assumptions underlying, and expectations reflected in, these forward-looking statements are reasonable, it can give no assurance that these assumptions and expectations will prove to be correct. Important factors that could cause the results or outcomes discussed herein to differ materially from those indicated by these forward-looking statements, include, among other things: Gran Tierra Energy's operations are located in South America, and unexpected problems can arise due to guerilla activity, technical difficulties, operational difficulties and geographic, political and weather conditions which can impact the production, transport or sale of its products. Further information on potential factors that could affect Gran Tierra Energy are included in risks detailed from time to time in Gran Tierra Energy's Securities and Exchange Commission filings, including, without limitation, under the caption "Item 1A – Risk Factors" in Part II of Gran Tierra Energy's Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on November 6, 2008. These filings are available on a Web site maintained by the Securities and Exchange Commission at http://www.sec.gov and on SEDAR at http://www.sedar.com. The forward-looking statements contained herein are made as at the date of this press release. Gran Tierra Energy does not undertake an obligation to update forward-looking or other statements in this release except as may be required by law. Gran Tierra Energy's forward-looking statements are expressly qualified in their entirety by this cautionary statement.