10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the quarterly period ended June 30, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the transition period from __________ to __________

Commission file number 001-34018

GRAN TIERRA ENERGY INC.

(Exact name of registrant as specified in its charter)

Delaware				98-0479924
(State or other jurisdiction of incorporation or organization)				(I.R.S. Employer Identification No.)
500 Centre Street S.E.
	Calgary,	Alberta	Canada	T2G 1A6
(Address of principal executive offices, including zip code)

(403) 265-3221

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	GTE	NYSE American
		Toronto Stock Exchange
		London Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes   ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.                                                                  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).      Yes ☐ No ☒

On August 5, 2022, 368,871,685 shares of the registrant’s Common Stock, $0.001 par value, were issued.

Gran Tierra Energy Inc.

Quarterly Report on Form 10-Q

Quarterly Period Ended June 30, 2022

Table of contents

		Page
PART I	Financial Information
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33
PART II	Other Information
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 6.	Exhibits	35
SIGNATURES		36

1

 CAUTIONARY LANGUAGE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts included in this Quarterly Report on Form 10-Q regarding our financial position, estimated quantities and net present values of reserves, business strategy, plans and objectives of our management for future operations, covenant compliance, capital spending plans and benefits of the changes in our capital program or expenditures, our liquidity, the impacts of the coronavirus (COVID-19) pandemic and those statements preceded by, followed by or that otherwise include the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “target,” “goal,” “plan,” “budget,” “objective,” “could,” “should,” or similar expressions or variations on these expressions are forward-looking statements. We can give no assurances that the assumptions upon which the forward-looking statements are based will prove to be correct or that, even if correct, intervening circumstances will not occur to cause actual results to be different than expected. Because forward-looking statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. There are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from the forward-looking statements, including, but not limited to, our operations are located in South America and unexpected problems can arise due to guerilla activity, strikes, local blockades or protests; technical difficulties and operational difficulties may arise which impact the production, transport or sale of our products; other disruptions to local operations; global health events (including the ongoing COVID-19 pandemic); global and regional changes in the demand, supply, prices, differentials or other market conditions affecting oil and gas, including inflation and changes resulting from a global health crisis, the Russian invasion of Ukraine, or from the imposition or lifting of crude oil production quotas or other actions that might be imposed by OPEC and other producing countries and the resulting company or third-party actions in response to such changes; changes in commodity prices, including volatility or a decline in these prices relative to historical or future expected levels; the risk that current global economic and credit conditions may impact oil prices and oil consumption more than we currently predicts, which could cause further modification of our strategy and capital spending program; prices and markets for oil and natural gas are unpredictable and volatile; the effect of hedges; the accuracy of productive capacity of any particular field; geographic, political and weather conditions can impact the production, transport or sale of our products; our ability to execute its business plan and realize expected benefits from current initiatives; the risk that unexpected delays and difficulties in developing currently owned properties may occur; the ability to replace reserves and production and develop and manage reserves on an economically viable basis; the accuracy of testing and production results and seismic data, pricing and cost estimates (including with respect to commodity pricing and exchange rates); the risk profile of planned exploration activities; the effects of drilling down-dip; the effects of waterflood and multi-stage fracture stimulation operations; the extent and effect of delivery disruptions, equipment performance and costs; actions by third parties; the timely receipt of regulatory or other required approvals for our operating activities; the failure of exploratory drilling to result in commercial wells; unexpected delays due to the limited availability of drilling equipment and personnel; volatility or declines in the trading price of our common stock or bonds; the risk that we do not receive the anticipated benefits of government programs, including government tax refunds; our ability to obtain a new credit agreement and comply with financial covenants in its credit agreement and indentures and make borrowings under any credit agreement; and those factors set out in Part II, Item 1A “Risk Factors” in this Quarterly Report on Form 10-Q and Part I, Item 1A “Risk Factors” in our 2021 Annual Report on Form 10-K (the “2021 Annual Report on Form 10-K”), and in our other filings with the Securities and Exchange Commission (“SEC”). The unprecedented nature of the COVID-19 pandemic and volatility in the worldwide economy and oil and gas industry makes, including the unpredictable nature of the resurgence of cases, possible variants and governmental responses, it more difficult to predict the accuracy of forward-looking statements. The information included herein is given as of the filing date of this Quarterly Report on Form 10-Q with the SEC and, except as otherwise required by the federal securities laws, we disclaim any obligation or undertaking to publicly release any updates or revisions to or to withdraw, any forward-looking statement contained in this Quarterly Report on Form 10-Q to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based.

GLOSSARY OF OIL AND GAS TERMS

In this document, the abbreviations set forth below have the following meanings:

bbl	barrel
BOPD	barrels of oil per day
NAR	net after royalty

Sales volumes represent production NAR adjusted for inventory changes. Our oil and gas reserves are reported as NAR. Our production is also reported NAR, except as otherwise specifically noted as "working interest production before royalties."

2

PART I - Financial Information

Item 1. Financial Statements

Gran Tierra Energy Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(Thousands of U.S. Dollars, Except Share and Per Share Amounts)

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
OIL SALES (Note 7)	$	205,785	$	96,623	$	380,354	$	192,116
EXPENSES
Operating	39,494		26,247		74,429		56,918
Transportation	2,513		3,002		5,347		5,601
Depletion, depreciation and accretion	42,216		28,927		83,179		60,245
General and administrative (Note 10)	9,836		9,006		22,172		19,494
Foreign exchange loss (gain)	2,722		91		(1,003)		13,174
Derivative instruments loss (Note 10)	5,172		21,239		26,611		44,937
Other financial instruments loss (Note 10)	—		2,614		—		1,209
Interest expense (Note 5)	12,194		13,935		24,322		27,747
	114,147		105,061		235,057		229,325
INCOME (LOSS) BEFORE INCOME TAXES	91,638		(8,438)		145,297		(37,209)
INCOME TAX EXPENSE
Current (Note 8)	25,425		(14)		46,252		(14)
Deferred (Note 8)	13,241		9,203		31,954		17,854
	38,666		9,189		78,206		17,840
NET AND COMPREHENSIVE INCOME (LOSS)	$	52,972	$	(17,627)	$	67,091	$	(55,049)
NET INCOME (LOSS) PER SHARE
BASIC AND DILUTED	$	0.14	$	(0.05)	$	0.18	$	(0.15)
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC (Note 6)	368,571,378		366,982,456		367,982,294		366,982,008
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED (Note 6)	374,233,600		366,982,456		372,977,695		366,982,008

(See notes to the condensed consolidated financial statements)

3

Gran Tierra Energy Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(Thousands of U.S. Dollars, Except Share and Per Share Amounts)

	As at June 30, 2022		As at December 31, 2021
ASSETS
Current Assets
Cash and cash equivalents (Note 11)	$	108,558	$	26,109
Restricted cash and cash equivalents (Note 11)	1,142		392
Accounts receivable	10,987		13,185
Taxes receivable (Note 3)	42		45,506
Other current assets (Note 10)	28,082		16,609
Total Current Assets	148,811		101,801
Oil and Gas Properties
Proved	920,918		859,580
Unproved	106,536		131,865
Total Oil and Gas Properties	1,027,454		991,445
Other capital assets	11,543		4,352
Total Property, Plant and Equipment (Note 4)	1,038,997		995,797
Other Long-Term Assets
Deferred tax assets	27,526		61,494
Taxes receivable (Note 3)	24,473		17,522
Other long-term assets (Note 10)	16,337		12,497
Total Other Long-Term Assets	68,336		91,513
Total Assets	$	1,256,144	$	1,189,111
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable and accrued liabilities	$	163,881	$	148,694
Current portion of long-term debt (Note 5)	—		66,987
Derivatives (Note 10)	7,230		2,976
Taxes payable (Note 3)	23,661		6,620
Other (Note 6 and 10)	15,937		2,710
Total Current Liabilities	210,709		227,987
Long-Term Liabilities
Long-term debt (Notes 5 and 10)	595,861		587,404
Asset retirement obligation	56,783		54,525
Equity compensation award liability (Note 6 and 10)	14,872		13,718
Other long-term liabilities	6,253		3,397
Total Long-Term Liabilities	673,769		659,044
Contingencies (Note 9)
Shareholders' Equity
Common Stock (Note 6) (368,871,685 and 367,144,500 shares issued and outstanding of Common Stock, par value $0.001 per share, as at June 30, 2022, and December 31, 2021, respectively)	10,272		10,270
Additional paid-in capital	1,290,075		1,287,582
Deficit	(928,681)		(995,772)
Total Shareholders’ Equity	371,666		302,080
Total Liabilities and Shareholders’ Equity	$	1,256,144	$	1,189,111

(See notes to the condensed consolidated financial statements)

4

Gran Tierra Energy Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Thousands of U.S. Dollars)

	Six Months Ended June 30,
	2022		2021
Operating Activities
Net Income (Loss)	$	67,091	$	(55,049)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depletion, depreciation and accretion	83,179		60,245
Deferred tax expense	31,954		17,854
Stock-based compensation expense (Note 6)	6,546		5,544
Amortization of debt issuance costs (Note 5)	2,018		1,775
Unrealized foreign exchange (gain) loss	(498)		13,480
Derivative instruments loss (Note 10)	26,611		44,937
Cash settlements on derivatives instruments	(26,392)		(37,709)
Other financial instruments gain (Note 10)	—		1,209
Cash settlement of asset retirement obligation	(242)		(248)
Non-cash lease expenses	1,158		814
Lease payments	(732)		(855)
Net change in assets and liabilities from operating activities (Note 11)	56,329		27,157
Net cash provided by operating activities	247,022		79,154
Investing Activities
Additions to property, plant and equipment	(106,682)		(74,811)
Proceeds on disposition of investment, net of transaction costs	—		14,632
Changes in non-cash investing working capital (Note 11)	10,964		3,176
Net cash used in investing activities	(95,718)		(57,003)
Financing Activities
Repayment of debt (Note 5)	(67,525)		(15,126)
Proceeds from issuance of shares of Common Stock, net of issuance costs	2		—
Proceeds from exercise of stock options	1,283		8
Lease payments	(1,261)		(513)
Net cash used in financing activities	(67,501)		(15,631)
Foreign exchange loss on cash, cash equivalents and restricted cash and cash equivalents	(680)		(488)
Net increase in cash, cash equivalents and restricted cash and cash equivalents	83,123		6,032
Cash, cash equivalents and restricted cash and cash equivalents, beginning of period (Note 11)	31,404		17,523
Cash, cash equivalents and restricted cash and cash equivalents, end of period (Note 11)	$	114,527	$	23,555
Supplemental cash flow disclosures (Note 11)

(See notes to the condensed consolidated financial statements)

5

Gran Tierra Energy Inc.

Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)

(Thousands of U.S. Dollars)

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Share Capital
Balance, beginning of period	$	10,272	$	10,270	$	10,270	$	10,270
Issuance of Common Stock (Note 6)	—		—		2		—
Balance, end of period	10,272		10,270		10,272		10,270
Additional Paid-in Capital
Balance, beginning of period	1,289,162		1,285,597		1,287,582		1,285,018
Exercise of stock options	303		8		1,283		8
Stock-based compensation (Note 6)	610		630		1,210		1,209
Balance, end of period	1,290,075		1,286,235		1,290,075		1,286,235
Deficit
Balance, beginning of period	(981,653)		(1,075,676)		(995,772)		(1,038,254)
Net income (loss)	52,972		(17,627)		67,091		(55,049)
Balance, end of period	(928,681)		(1,093,303)		(928,681)		(1,093,303)
Total Shareholders’ Equity	$	371,666	$	203,202	$	371,666	$	203,202

(See notes to the condensed consolidated financial statements)

6

Gran Tierra Energy Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Expressed in U.S. Dollars, unless otherwise indicated)

1. Description of Business

Gran Tierra Energy Inc., a Delaware corporation (the “Company” or “Gran Tierra”), is a publicly traded company focused on international oil and natural gas exploration and production with assets currently in Colombia and Ecuador.

2. Significant Accounting Policies

These interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The information furnished herein reflects all normal recurring adjustments that are, in the opinion of management, necessary for the fair presentation of results for the interim periods.

The note disclosure requirements of annual consolidated financial statements provide additional disclosures required for interim unaudited condensed consolidated financial statements. Accordingly, these interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements as at and for the year ended December 31, 2021, included in the Company’s 2021 Annual Report on Form 10-K and interim financial statements as at and for the period ending March 31, 2022, included on the Company’s Form 10-Q.

The Company’s significant accounting policies are described in Note 2 of the consolidated financial statements, which are included in the Company’s 2021 Annual Report on Form 10-K and are the same policies followed in these interim unaudited condensed consolidated financial statements. The Company has evaluated all subsequent events to the date these interim unaudited condensed consolidated financial statements were issued.

3. Taxes Receivable and Payable

The table below shows the break-down of taxes receivable and payable, which are comprised of value added tax (“VAT”) and income tax:

(Thousands of U.S. Dollars)	As at June 30, 2022		As at December 31, 2021
Taxes Receivable
Current
VAT Receivable	$	42	$	21,918
Income Tax Receivable	—		23,588
	$	42	$	45,506
Long-Term
Income Tax Receivable	$	24,473	$	17,522
Taxes Payable
Current
VAT Payable	$	14,473	$	6,620
Income Tax Payable	9,188		—
	$	23,661	$	6,620
Total Taxes Receivable net of Taxes Payable	$	854	$	56,408

7

The following table shows the movement of VAT and income tax receivables for the period identified below:

(Thousands of U.S. Dollars)	VAT Receivable (Payable)		Income Tax Receivable		Total Net Taxes Receivable
Balance, as at December 31, 2021	$	15,298	$	41,110	$	56,408
Collected through direct government refunds	(265)		(99)		(364)
Collected through sales contracts	(86,092)		—		(86,092)
Taxes paid (1)	55,759		20,468		76,227
Current tax expense	—		(46,252)		(46,252)
Foreign exchange loss	869		58		927
Balance, as at June 30, 2022	$	(14,431)	$	15,285	$	854

(1)VAT is paid on certain goods and services and collected on sales in Colombia at a rate of 19%

4. Property, Plant and Equipment

(Thousands of U.S. Dollars)	As at June 30, 2022		As at December 31, 2021
Oil and natural gas properties
Proved	$	4,444,894	$	4,302,473
Unproved	106,536		131,865
	4,551,430		4,434,338
Other(1)	43,830		34,943
	4,595,260		4,469,281
Accumulated depletion and depreciation and impairment	(3,556,263)		(3,473,484)
	$	1,038,997	$	995,797

(1) The “other” category includes right-of-use assets for operating and finance leases of $22.2 million, which had a net book value of $10.7 million as at June 30, 2022 (December 31, 2021 - $13.9 million, which had a net book value of $3.9 million).

For the three and six months ended June 30, 2022, and 2021, the Company had no ceiling test impairment losses. The Company used an average Brent price of $87.88 and $52.74 per bbl, for the purposes of the June 30, 2022 and 2021 ceiling test calculations, respectively.

8

5. Debt and Debt Issuance Costs

The Company’s debt at June 30, 2022, and December 31, 2021, was as follows:

(Thousands of U.S. Dollars)	As at June 30, 2022		As at December 31, 2021
Current
Revolving credit facility	$	—	$	67,500
Unamortized debt issuance costs	—		(513)
	$	—	$	66,987
Long-Term
6.25% Senior Notes, due February 2025	$	300,000	$	300,000
7.75% Senior Notes, due May 2027	300,000		300,000
Unamortized debt issuance costs	(12,550)		(14,030)
	587,450		585,970
Long-term lease obligation(1)	8,411		1,434
	$	595,861	$	587,404
	$	595,861	$	654,391

(1) The current portion of the lease obligation has been included in accounts payable and accrued liabilities on the Company’s balance sheet and totaled $2.8 million as at June 30, 2022 (December 31, 2021 - $3.3 million).

As of June 30, 2022, the borrowing base of the Company’s Senior Secured Credit Facility (the “revolving credit facility”) was $150 million, with $125 million readily available and $25 million subject to approval by major lenders. During the three months ended June 30, 2022, the Company completely paid off the outstanding balance on the revolving credit facility and subsequent to the quarter, the revolving credit facility was terminated. As of June 30, 2022 and the date of termination, respectively, the Company was in compliance with all applicable covenants in the revolving credit facility.

Interest Expense

The following table presents the total interest expense recognized in the accompanying interim unaudited condensed consolidated statements of operations:

	Three Months Ended June 30,				Six Months Ended June 30,
(Thousands of U.S. Dollars)	2022		2021		2022		2021
Contractual interest and other financing expenses	$	11,063	$	13,041	$	22,304	$	25,972
Amortization of debt issuance costs	1,131		894		2,018		1,775
	$	12,194	$	13,935	$	24,322	$	27,747

6. Share Capital

	Shares of Common Stock
Balance, December 31, 2021	367,144,500
Shares issued on option exercise	1,727,185
Balance, June 30, 2022	368,871,685

Equity Compensation Awards

The following table provides information about performance stock units (“PSUs”), deferred share units (“DSUs”), and stock option activity for the six months ended June 30, 2022:

9

	PSUs	DSUs	Stock Options
	Number of Outstanding Share Units	Number of Outstanding Share Units	Number of Outstanding Stock Options	Weighted Average Exercise Price/Stock Option ($)
Balance, December 31, 2021	30,365,196	5,710,764	17,848,722	1.20
Granted	6,761,105	494,955	2,753,165	1.41
Exercised	(4,396,646)	—	(1,727,185)	0.74
Forfeited	(166,687)	—	(105,020)	1.69
Expired	—	—	(1,187,309)	2.80
Balance, June 30, 2022	32,562,968	6,205,719	17,582,373	1.17

For the three and six months ended June 30, 2022 stock-based compensation expense was $2.0 million and $6.5 million, respectively. For the three and six months ended June 30, 2021 stock-based compensation expense was $1.9 million and $5.5 million, respectively.

At June 30, 2022, there was $19.7 million (December 31, 2021 - $11.8 million) of unrecognized compensation costs related to unvested PSUs and stock options, which are expected to be recognized over a weighted-average period of 1.7 years. During the six months ended June 30, 2022, the Company paid out $2.4 million for PSUs vested on December 31, 2021 (six months ended June 30, 2021 - $0.6 million for PSUs vested on December 31, 2020).

Net Income (Loss) per Share

Basic net income (loss) per share is calculated by dividing net income (loss) attributable to common shareholders by the weighted average number of shares of common stock issued and outstanding during each period.

Diluted net income per share is calculated using the treasury stock method for share-based compensation arrangements. The treasury stock method assumes that any proceeds obtained on the exercise of share-based compensation arrangements would be used to purchase common shares at the average market price during the period. The weighted average number of shares is then adjusted by the difference between the number of shares issued from the exercise of share-based compensation arrangements and shares repurchased from the related proceeds. Anti-dilutive shares represent potentially dilutive securities excluded from the computation of diluted income or loss per share as their impact would be anti-dilutive.

Weighted Average Shares Outstanding

	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Weighted average number of common shares outstanding	368,571,378	366,982,456	367,982,294	366,982,008
Shares issuable pursuant to stock options	11,806,859	—	12,351,243	—
Shares assumed to be purchased from proceeds of stock options	(6,144,637)	—	(7,355,842)	—
Weighted average number of diluted common shares outstanding	374,233,600	366,982,456	372,977,695	366,982,008

For the three and six months ended June 30, 2022, 6,092,908 and 5,738,428 options, on a weighted average basis (three and six months ended June 30, 2021 - all options), were excluded from the diluted income (loss) per share calculation as the options were anti-dilutive.

7. Revenue

The Company’s revenues are generated from oil sales at prices that reflect the blended prices received upon shipment by the purchaser at defined sales points or defined by contract relative to ICE Brent and adjusted for Vasconia or Castilla crude differentials, quality, and transportation discounts each month. For the three and six months ended June 30, 2022, 100% (three and six months ended June 30, 2021 - 100%) of the Company’s revenue resulted from oil sales. During the three and six months

10

ended June 30, 2022, quality and transportation discounts were 12% of the average ICE Brent price (three and six months ended June 30, 2021 - 17% and 16%, respectively).

During the three months ended June 30, 2022, the Company’s production was sold primarily to two major customers in Colombia, representing 55% and 44% of total sales volumes (three months ended June 30, 2021 - two, representing 75% and 14% of total sales volumes). During the six months ended June 30, 2022, the Company’s production was sold primarily to two major customers in Colombia, representing 56% and 43% of total sales volumes (six months ended June 30, 2021 - two, representing 71% and 22% of total sales volumes).

As at June 30, 2022, accounts receivable included nil of accrued sales revenue related to June 2022 production (December 31, 2021 - nil related to December 2021 production).

8. Taxes

The Company's effective tax rate was 54% for the six months ended June 30, 2022, compared to (48)% in the comparative period of 2021. Current income tax expense was $46.3 million for the six months ended June 30, 2022, compared to a recovery in the corresponding period of 2021, primarily due to an increase in taxable income.

The deferred income tax expense for the six months ended June 30, 2022, was mainly the result of tax depreciation being higher than accounting depreciation and the use of tax losses to offset taxable income in Colombia. The deferred income tax expense in the comparative period of 2021 was also the result of excess tax depreciation compared with accounting depreciation and the use of tax losses to offset taxable income in Colombia.

For the six months ended June 30, 2022, the difference between the effective tax rate of 54% and the 35% Colombian tax rate was primarily due to an increase in the impact of foreign taxes, foreign translation adjustments, increase in the valuation allowance, non-deductible third-party royalty in Colombia, and non-deductible stock-based compensation.

For the six months ended June 30, 2021, the difference between the effective tax rate of (48)% and the 31% Colombian tax rate was primarily due to an increase in the impact of foreign taxes, foreign translation adjustments, and other permanent differences, which was partially offset by a decrease in valuation allowance.

9. Contingencies

Legal Proceedings

Gran Tierra has a number of lawsuits and claims pending, including a dispute with the Agencia Nacional de Hidrocarburos (National Hydrocarbons Agency) (“ANH”) relating to the calculation of high price share royalties. Although the outcome of these lawsuits and disputes cannot be predicted with certainty, Gran Tierra believes the resolution of these matters would not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. Gran Tierra records costs as they are incurred or become probable and determinable.

Letters of credit and other credit support

At June 30, 2022, the Company had provided letters of credit and other credit support totaling $105.1 million (December 31, 2021 - $103.0 million) as security relating to work commitment guarantees in Colombia and Ecuador contained in exploration contracts and other capital or operating requirements.

10. Financial Instruments and Fair Value Measurement

Financial Instruments

Financial instruments are initially recorded at fair value, defined as the price that would be received to sell an asset or paid to market participants to settle liability at the measurement date. For financial instruments carried at fair value, GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad levels:

•Level 1 - Inputs representing quoted market prices in active markets for identical assets and liabilities

•Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the assets and liabilities, either directly or indirectly

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•Level 3 - Unobservable inputs for assets and liabilities

At June 30, 2022, the Company’s financial instruments recognized on the balance sheet consist of cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, other long-term assets, accounts payable and accrued liabilities, derivatives, other short-term payables, long-term debt, long-term equity compensation reward liability and other long-term liabilities. The Company uses appropriate valuation techniques based on the available information to measure the fair values of assets and liabilities.

Fair Value Measurement

The following table presents the Company’s fair value measurements of its financial instruments as of June 30, 2022, and December 31, 2021:

	As at June 30, 2022		As at December 31, 2021
(Thousands of U.S. Dollars)
Level 1
Assets
Prepaid equity forward - current (2)	$	6,891	$	—
Prepaid equity forward - long-term(1)	11,494		7,578
	$	18,385	$	7,578
Liabilities
DSUs liability - long-term(3)	$	7,136	$	4,346
6.25% Senior Notes	281,460		273,672
7.75% Senior Notes	275,124		271,500
	$	563,720	$	549,518
Level 2
Assets
Derivative asset(2)	$	—	$	219
Restricted cash and cash equivalents - long-term(1)	4,827		4,903
	$	4,827	$	5,122
Liabilities
Derivative liability	$	7,230	$	2,976
Revolving credit facility	—		66,987
PSUs liability - current (4)	12,516		2,710
PSUs liability - long-term(3)	7,736		9,372
	$	27,482	$	82,045
Level 3
Liabilities
Asset retirement obligation - current(4)	$	3,421	$	—
Asset retirement obligation - long-term	56,783		54,525
	$	60,204	$	54,525

(1)The long-term portion of restricted cash and Prepaid equity forward are included in the other long-term assets on the Company’s balance sheet

(2) Included in the other current assets on the Company’s balance sheet

(3) Long-term DSUs and PSUs liabilities are included in the long-term equity compensation award liability on the Company’s balance sheet

(4) Current portion of PSU liability and asset retirement obligation are included in the other short-term liabilities on the Company’s balance sheet

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The fair values of cash and cash equivalents, current restricted cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their carrying amounts due to the short-term maturity of these instruments.

The fair value of long-term restricted cash and cash equivalents approximate its carrying value because interest rates are variable and reflective of market rates.

Prepaid Equity Forward (“PEF”)

To reduce the Company’s exposure to changes in the trading price of the Company’s common shares on outstanding PSUs, the Company entered into a PEF. At the end of the term, the counterparty will pay the Company an amount equivalent to the notional amount of the shares using the price of the Company’s common shares at the valuation date. The Company has the discretion to increase or decrease the notional amount of the PEF or terminate the agreement early. As at June 30, 2022, the Company’s PEF had a notional amount of 16 million shares with a fair value of $18.4 million (As at December 31, 2021 - 10 million shares with a fair value of $7.6 million). During the three and six months ended June 30, 2022, the Company recorded a $5.2 million loss and $2.7 million gain, respectively, on the PEF in general and administrative expenses (three and six months ended June 30, 2021- $0.1 million gain). The fair value of the PEF asset was estimated using the Company’s share price quoted in active markets at the end of each reporting period.

DSUs liability

The fair value of DSUs liability was estimated using Company’s share price quoted in active markets at the end of each reporting period.

PSUs liability

The fair value of the PSUs liability was estimated based on a pricing model using inputs, such as Company’s share price and PSUs performance factor.

Derivative asset and derivative liability

The fair value of derivatives is estimated based on various factors, including quoted market prices in active markets and quotes from third parties. The Company also performs an internal valuation to ensure the reasonableness of third party quotes. In consideration of counterparty credit risk, the Company assessed whether the counterparty to the derivative would default by failing to make any contractually required payments. Additionally, the Company considers that it is of substantial credit quality and has the financial resources and willingness to meet its potential repayment obligations associated with the derivative transactions.

The following table presents gains or losses on derivatives and other financial instruments recognized in the accompanying interim unaudited condensed consolidated statements of operations:

	Three Months Ended June 30,				Six Months Ended June 30,
(Thousands of U.S. Dollars)	2022		2021		2022		2021
Commodity price derivatives loss	$	5,172	$	21,217	$	26,611	$	44,849
Foreign currency derivatives loss	—		22		—		88
Derivative instruments loss	$	5,172	$	21,239	$	26,611	$	44,937
Unrealized PetroTal investment loss (gain)	$	—	$	2,614	$	—	$	(3,861)
Loss on sale of PetroTal shares	—		—		—		5,070
Other financial instruments loss	$	—	$	2,614	$	—	$	1,209

Revolving credit facility and Senior Notes

Financial instruments not recorded at fair value at June 30, 2022, included the Senior Notes and the revolving credit facility (Note 5).

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At June 30, 2022, the carrying amounts of the 6.25% Senior Notes and the 7.75% Senior Notes were $294.8 million and $292.6 million, respectively, which represented the aggregate principal amount less unamortized debt issuance costs, and the fair values were $281.5 million and $275.1 million, respectively. The fair value of long-term restricted cash and cash equivalents and the revolving credit facility approximated their carrying value because interest rates are variable and reflective of market rates. The fair values of other financial instruments approximate their carrying amounts due to the short-term maturity of these instruments.

Asset retirement obligation

The Company’s non-recurring fair value measurements include asset retirement obligation. The fair value of an asset retirement obligation is measured by reference to the expected future cash outflows required to satisfy the retirement obligation discounted at the Company’s credit-adjusted risk-free interest rate. The significant level 3 inputs used to calculate such liabilities include estimates of costs to be incurred, the Company’s credit-adjusted risk-free interest rate, inflation rates, and estimated dates of abandonment. Accretion expense is recognized over time as the discounted liabilities are accreted to their expected settlement value, while the asset retirement cost is amortized over the estimated productive life of the related assets.

Commodity Price Derivatives

The Company may utilize commodity price derivatives to manage the variability in cash flows associated with the forecasted sale of its oil production, reduce commodity price risk and provide a base level of cash flows to assure it can execute at least a portion of its planned capital spending.

All Company’s commodity price derivatives expired on June 30, 2022 and as at June 30, 2022, the Company had no outstanding commodity price derivatives.

11. Supplemental Cash Flow Information

The following table provides a reconciliation of cash and cash equivalents and restricted cash and cash equivalents shown as a sum of these amounts in the interim unaudited condensed consolidated statements of cash flows:

(Thousands of U.S. Dollars)	As at June 30,				As at December 31,
	2022		2021		2021		2020
Cash and cash equivalents	$	108,558	$	19,573	$	26,109	$	13,687
Restricted cash and cash equivalents - current	1,142		392		392		427
Restricted cash and cash equivalents - long-term (1)	4,827		3,590		4,903		3,409
	$	114,527	$	23,555	$	31,404	$	17,523

(1) Included in other long-term assets on the Company’s balance sheet

Net changes in assets and liabilities from operating activities were as follows:

	Six Months Ended June 30,
(Thousands of U.S. Dollars)	2022		2021
Accounts receivable and other long-term assets	$	2,356	$	28
Derivatives	(6,961)		6,264
Inventory	(736)		(1,934)
Prepaids	(3,075)		(631)
Accounts payable and accrued and other long-term liabilities	8,264		11,991
Taxes receivable and payable	56,481		11,439
Net changes in assets and liabilities from operating activities	$	56,329	$	27,157

Changes in non-cash investing working capital for the six months ended June 30, 2022, are comprised of an increase in accounts payable and accrued liabilities of $11.2 million and an increase in accounts receivable of $0.2 million (six months

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ended June 30, 2021, an increase in accounts payable and accrued liabilities of $3.7 million and an increase in accounts receivable of $0.5 million).

The following table provides additional supplemental cash flow disclosures:

	Six Months Ended June 30,
(Thousands of U.S. Dollars)	2022		2021
Cash paid for income taxes	$	20,468	$	7,139
Cash paid for interest	$	11,933	$	25,659
Non-cash investing activities:
Net liabilities related to property, plant and equipment, end of period	$	41,106	$	31,887

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations should be read in conjunction with the “Financial Statements” as set out in Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as the “Financial Statements and Supplementary Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II, Items 7 and 8, respectively, of our 2021 Annual Report on Form 10-K. Please see the cautionary language at the beginning of this Quarterly Report on Form 10-Q regarding the identification of and risks relating to forward-looking statements and the risk factors described in Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q, as well as Part I, Item 1A “Risk Factors” in our 2021 Annual Report on Form 10-K.

Financial and Operational Highlights

Key Highlights for the second quarter of 2022

•Net income in the second quarter of 2022 was $53.0 million or $0.14 per share basic and diluted, compared to a net loss of $17.6 million or $(0.05) per share basic and diluted in the second quarter of 2021

•Income before income taxes in the second quarter of 2022 was $91.6 million compared to a loss before income taxes of $8.4 million in the second quarter of 2021

•During the second quarter of 2022, we completely repaid the amount drawn under the revolving credit facility, and as of June 30, 2022, the credit facility remained undrawn. Subsequent to quarter-end, the credit facility was terminated

•Funds flow from operations(2) increased by 345% to $103.6 million compared to the second quarter of 2021 and increased 19% from the first quarter of 2022

•During the second quarter, the Company generated $38.4 million of free cash flow(2), which was partially used for debt reduction

•NAR production for the second quarter of 2022 was 23,215 BOPD representing a 22% increase from 18,976 BOPD in the second quarter of 2021, primarily due to a successful drilling and workover campaign in the Acordionero and Costayaco fields. NAR production was comparable to the first quarter of 2022

•Sales volumes for the second quarter of 2022 were 22,847 BOPD representing a 24% increase from 18,454 BOPD in the second quarter of 2021 and was comparable to the first quarter of 2022

•Oil sales were $205.8 million, 113% higher compared to $96.6 million in the second quarter of 2021, as a result of a 62% increase in Brent price and higher sales volumes offset by higher quality and transportation discounts. Oil sales increased by 18% compared to $174.6 million in the first quarter of 2022 as a result of a 14% increase in Brent price, partially offset by higher quality and transportation discounts

•Operating expenses were $39.5 million, 50% higher than $26.2 million in the second quarter of 2021, due to increased workovers and higher power generation costs as a result of increased production in all major fields. Operating expenses increased by 13% from $34.9 million in the first quarter of 2022, primarily due to higher workover activities during current quarter

•Transportation expenses decreased by 16% compared to the second quarter of 2021. During the second quarter of 2021, there was a change in delivery points in response to national blockades in Colombia, which resulted in higher transportation costs for the period. Compared to the first quarter of 2022, transportation expenses decreased by 11% as a result of a change in transportation routes which had lower transportation costs per bbl

•Operating netback(2) increased by 143% to $163.8 million compared to $67.4 million in the second quarter of 2021 and increased 20% from $136.8 million in the first quarter of 2022

•Adjusted EBITDA(2) increased by 286% to $140.1 million compared to $36.3 million in the second quarter of 2021 and increased 17% from $119.4 million in the first quarter of 2022

•Quality and transportation discounts for the second quarter of 2022, increased to $13.00 per bbl compared to $11.54 per bbl in the second quarter of 2021 and $12.57 per bbl in the first quarter of 2022

•General and administrative expenses (“G&A”) before stock-based compensation increased by 10% compared to the second quarter of 2021 due to higher costs for special projects and travel costs in the current quarter. G&A expenses before stock-based compensation were comparable to the first quarter of 2022

•Capital additions for the second quarter of 2022 were $65.2 million, an increase of 74% and 57%, respectfully, compared to the second quarter of 2021 and the first quarter of 2022, as a result of the drilling program in the Acordionero and Costayaco fields

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(Thousands of U.S. Dollars, unless otherwise indicated)	Three Months Ended June 30,					Three Months Ended March 31,		Six Months Ended June 30,
	2022		2021		% Change	2022		2022		2021		% Change
Average Daily Volumes (BOPD)
Consolidated
Working Interest (“WI”) Production Before Royalties	30,607		23,035		33	29,362		29,988		23,745		26
Royalties	(7,392)		(4,059)		82	(6,529)		(6,962)		(3,995)		74
Production NAR	23,215		18,976		22	22,833		23,026		19,750		17
Increase in Inventory	(368)		(522)		30	(103)		(236)		(393)		40
Sales(1)	22,847		18,454		24	22,730		22,790		19,357		18
Net Income (Loss)	$	52,972	$	(17,627)	401	$	14,119	$	67,091	$	(55,049)	222
Operating Netback
Oil Sales	$	205,785	$	96,623	113	$	174,569	$	380,354	$	192,116	98
Operating Expenses	(39,494)		(26,247)		50	(34,935)		(74,429)		(56,918)		31
Transportation Expenses	(2,513)		(3,002)		(16)	(2,834)		(5,347)		(5,601)		(5)
Operating Netback(2)	$	163,778	$	67,374	143	$	136,800	$	300,578	$	129,597	132
G&A Expenses Before Stock-Based Compensation	$	7,847	$	7,133	10	$	7,779	$	15,626	$	13,950	12
G&A Stock-Based Compensation Expense	1,989		1,873		6	4,557		6,546		5,544		18
G&A Expenses, Including Stock-Based Compensation	$	9,836	$	9,006	9	$	12,336	$	22,172	$	19,494	14
Adjusted EBITDA(2)	$	140,113	$	36,299	286	$	119,378	$	259,491	$	78,203	232
Funds Flow From Operations(2)	$	103,625	$	23,272	345	$	87,310	$	190,935	$	52,245	265
Capital Expenditures	$	65,199	$	37,384	74	$	41,483	$	106,682	$	74,811	43

(1) Sales volumes represent production NAR adjusted for inventory changes.

(2) Non-GAAP measures

Operating netback, EBITDA, adjusted EBITDA, funds flow from operations, and free cash flow are non-GAAP measures that do not have any standardized meaning prescribed under GAAP. Management views these measures as financial performance measures. Investors are cautioned that these measures should not be construed as alternatives to oil sales, net income (loss) or other measures of financial performance as determined in accordance with GAAP. Our method of calculating these measures may differ from other companies and, accordingly, may not be comparable to similar measures used by other companies. Disclosure of each non-GAAP financial measure is preceded by the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure.

Operating netback, as presented, is defined as oil sales less operating and transportation expenses. Management believes that operating netback is a useful supplemental measure for management and investors to analyze financial performance and provides an indication of the results generated by our principal business activities prior to the consideration of other income and expenses. A reconciliation from oil sales to operating netback is provided in the table above.

EBITDA, as presented, is defined as net income or loss adjusted for depletion, depreciation and accretion (“DD&A”) expenses, interest expense and income tax expense. Adjusted EBITDA, as presented, is defined as EBITDA adjusted for non-cash lease expense, lease payments, unrealized foreign exchange gain or loss, stock-based compensation expense or recovery, unrealized derivative instruments gain or loss, and other financial instruments gain or loss. Management uses this supplemental measure to analyze performance and income generated by our principal business activities prior to the consideration of how non-cash items affect that income and believes that this financial measure is useful supplemental information for investors to analyze our performance and our financial results. A reconciliation from net income (loss) to EBITDA and adjusted EBITDA is as follows:

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	Three Months Ended June 30,				Three Months Ended March 31,		Six Months Ended June 30,
(Thousands of U.S. Dollars)	2022		2021		2022		2022		2021
Net income (loss)	$	52,972	$	(17,627)	$	14,119	$	67,091	$	(55,049)
Adjustments to reconcile net income (loss) to EBITDA and Adjusted EBITDA
DD&A expenses	42,216		28,927		40,963		83,179		60,245
Interest expense	12,194		13,935		12,128		24,322		27,747
Income tax expense	38,666		9,189		39,540		78,206		17,840
EBITDA (non-GAAP)	$	146,048	$	34,424	$	106,750	$	252,798	$	50,783
Non-cash lease expense	747		370		411		1,158		814
Lease payments	(388)		(393)		(344)		(732)		(855)
Unrealized foreign exchange loss (gain)	4,341		477		(4,839)		(498)		13,480
Stock-based compensation expense	1,989		1,873		4,557		6,546		5,544
Unrealized derivative instruments (gain) loss	(12,624)		(3,066)		12,843		219		7,228
Other financial instruments loss	—		2,614		—		—		1,209
Adjusted EBITDA (non-GAAP)	$	140,113	$	36,299	$	119,378	$	259,491	$	78,203

Funds flow from operations, as presented, is defined as net income or loss adjusted for DD&A expenses, deferred tax expense or recovery, stock-based compensation expense or recovery, amortization of debt issuance costs, non-cash lease expense, lease payments, unrealized foreign exchange gain or loss, derivative instruments gain or loss, cash settlement on derivative instruments and other financial instruments gain or loss. Management uses this financial measure to analyze performance and income generated by our principal business activities prior to the consideration of how non-cash items affect that income and believes that this financial measure is also useful supplemental information for investors to analyze performance and our financial results. Free cash flow, as presented, is defined as funds flow less capital expenditures. Management uses this financial measure to analyze cash flow generated by our principal business activities after capital requirements and believes that this financial measure is also useful supplemental information for investors to analyze performance and our financial results. A reconciliation from net income (loss) to funds flow from operations, and free cash flow is as follows:

	Three Months Ended June 30,				Three Months Ended March 31,		Six Months Ended June 30,
(Thousands of U.S. Dollars)	2022		2021		2022		2022		2021
Net income (loss)	$	52,972	$	(17,627)	$	14,119	$	67,091	$	(55,049)
Adjustments to reconcile net income (loss) to funds flow from operations
DD&A expenses	42,216		28,927		40,963		83,179		60,245
Deferred tax expense	13,241		9,203		18,713		31,954		17,854
Stock-based compensation expense	1,989		1,873		4,557		6,546		5,544
Amortization of debt issuance costs	1,131		894		887		2,018		1,775
Non-cash lease expense	747		370		411		1,158		814
Lease payments	(388)		(393)		(344)		(732)		(855)
Unrealized foreign exchange loss (gain)	4,341		477		(4,839)		(498)		13,480
Derivative instruments loss	5,172		21,239		21,439		26,611		44,937
Cash settlements on derivative instruments	(17,796)		(24,305)		(8,596)		(26,392)		(37,709)
Other financial instruments loss	—		2,614		—		—		1,209
Funds flow from operations (non-GAAP)	$	103,625	$	23,272	$	87,310	$	190,935	$	52,245
Capital expenditures	$	65,199	$	37,384	$	41,483	$	106,682	$	74,811
Free cash flow (non-GAAP)	$	38,426	$	(14,112)	$	45,827	$	84,253	$	(22,566)

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Additional Operational Results

	Three Months Ended June 30,					Three Months Ended March 31,		Six Months Ended June 30,
(Thousands of U.S. Dollars)	2022		2021		% Change	2022		2022		2021		% Change
Oil sales	$	205,785	$	96,623	113	$	174,569	$	380,354	$	192,116	98
Operating expenses	39,494		26,247		50	34,935		74,429		56,918		31
Transportation expenses	2,513		3,002		(16)	2,834		5,347		5,601		(5)
Operating netback(1)	163,778		67,374		143	136,800		300,578		129,597		132
DD&A expenses	42,216		28,927		46	40,963		83,179		60,245		38
G&A expenses before stock-based compensation	7,847		7,133		10	7,779		15,626		13,950		12
G&A stock-based compensation expense	1,989		1,873		6	4,557		6,546		5,544		18
Foreign exchange loss (gain)	2,722		91		2,891	(3,725)		(1,003)		13,174		(108)
Derivative instruments loss	5,172		21,239		(76)	21,439		26,611		44,937		(41)
Other financial instruments loss	—		2,614		(100)	—		—		1,209		(100)
Interest expense	12,194		13,935		(12)	12,128		24,322		27,747		(12)
	72,140		75,812		(5)	83,141		155,281		166,806		(7)
Income (loss) before income taxes	91,638		(8,438)		1,186	53,659		145,297		(37,209)		490
Current income tax expense	25,425		(14)		181,707	20,827		46,252		(14)		330,471
Deferred income tax expense	13,241		9,203		44	18,713		31,954		17,854		79
	38,666		9,189		321	39,540		78,206		17,840		338
Net income (loss)	$	52,972	$	(17,627)	401	$	14,119	$	67,091	$	(55,049)	222
Sales Volumes (NAR)
Total sales volumes, BOPD	22,847		18,454		24	22,730		22,847		19,357		18
Brent Price per bbl	$	111.98	$	69.08	62	$	97.90	$	104.94	$	65.23	61
Consolidated Results of Operations per bbl Sales Volumes NAR
Oil sales	$	98.98	$	57.54	72	$	85.33	$	92.21	$	54.83	68
Operating expenses	19.00		15.62		22	17.08		18.04		16.24		11
Transportation expenses	1.21		1.79		(32)	1.39		1.30		1.60		(19)
Operating netback(1)	78.77		40.13		96	66.86		72.87		36.99		97
DD&A expenses	20.31		17.23		18	20.02		20.17		17.20		17
G&A expenses before stock-based compensation	3.77		4.25		(11)	3.80		3.79		3.98		(5)
G&A stock-based compensation expense	0.96		1.12		(14)	2.23		1.59		1.58		1
Foreign exchange loss (gain)	1.31		0.05		2,520	(1.82)		(0.24)		3.76		(106)

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Derivative instruments loss	2.49		12.65		(80)	10.48		6.45		12.83		(50)
Other financial instruments loss	—		1.56		(100)	—		—		0.35		(100)
Interest expense	5.87		8.30		(29)	5.93		5.90		7.92		(26)
	34.71		45.16		(23)	40.64		37.66		47.62		(21)
Income (loss) before income taxes	44.06		(5.03)		976	26.22		35.21		(10.63)		431
Current income tax expense	12.23		(0.01)		122,400	10.18		11.21		—		100
Deferred income tax expense	6.37		5.48		16	9.15		7.75		5.10		52
	18.60		5.47		240	19.33		18.96		5.10		272
Net income (loss)	$	25.46	$	(10.50)	342	$	6.89	$	16.25	$	(15.73)	203

(1) Operating netback is a non-GAAP measure that does not have any standardized meaning prescribed under GAAP. Refer to “Financial and Operational Highlights—non-GAAP measures” for a definition of this measure.

Oil Production and Sales Volumes, BOPD

	Three Months Ended June 30,				Three Months Ended March 31,		Six Months Ended June 30,
	2022		2021		2022		2022		2021
Average Daily Volumes (BOPD)
WI Production Before Royalties	30,607		23,035		29,362		29,988		23,745
Royalties	(7,392)		(4,059)		(6,529)		(6,962)		(3,995)
Production NAR	23,215		18,976		22,833		23,026		19,750
Increase in Inventory	(368)		(522)		(103)		(236)		(393)
Sales	22,847		18,454		22,730		22,790		19,357
Royalties, % of WI Production Before Royalties	24	%	18	%	22	%	23	%	17	%

Oil production NAR for the three and six months ended June 30, 2022, increased by 22% and 17% compared to the corresponding periods of 2021 due to the successful drilling and workover campaign in the Acordionero and Costayaco fields. Oil production NAR was comparable to the prior quarter.

Royalties as a percentage of production for the three and six months ended June 30, 2022, increased to 24% and 23% compared to the corresponding periods of 2021 and increased compared to the prior quarter commensurate with the increase in benchmark oil prices and the price sensitive royalty regime in Colombia.

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The Midas block includes the Acordionero, Chuira, and Ayombero oil fields, and the Chaza block includes the Costayaco and Moqueta oil fields.

21

Operating Netback

	Three Months Ended June 30,				Three Months Ended March 31,		Six Months Ended June 30,
(Thousands of U.S. Dollars)	2022		2021		2022		2022		2021
Oil Sales	$	205,785	$	96,623	$	174,569	$	380,354	$	192,116
Transportation Expenses	(2,513)		(3,002)		(2,834)		(5,347)		(5,601)
	203,272		93,621		171,735		375,007		186,515
Operating Expenses	(39,494)		(26,247)		(34,935)		(74,429)		(56,918)
Operating Netback(1)	$	163,778	$	67,374	$	136,800	$	300,578	$	129,597
(U.S. Dollars Per bbl Sales Volumes NAR)
Brent	$	111.98	$	69.08	$	97.90	$	104.94	$	65.23
Quality and Transportation Discounts	(13.00)		(11.54)		(12.57)		(12.73)		(10.40)
Average Realized Price	98.98		57.54		85.33		92.21		54.83
Transportation Expenses	(1.21)		(1.79)		(1.39)		(1.30)		(1.60)
Average Realized Price Net of Transportation Expenses	97.77		55.75		83.94		90.91		53.23
Operating Expenses	(19.00)		(15.62)		(17.08)		(18.04)		(16.24)
Operating Netback(1)	$	78.77	$	40.13	$	66.86	$	72.87	$	36.99

(1) Operating netback is a non-GAAP measure that does not have any standardized meaning prescribed under GAAP. Refer to “Financial and Operational Highlights—non-GAAP measures” for a definition of this measure.

22

Oil sales for the three months ended June 30, 2022, increased by 113% to $205.8 million due to a 62% increase in Brent price and 24% higher sales volumes, partially offset by a 13% increase in the quality and transportation discounts as a result of the widening of the Castilla and Vasconia differentials to $7.82 and $5.09 per bbl for the three months ended June 30, 2022 from $5.02 and $2.89 for the corresponding period of 2021, respectively. For the six months ended June 30, 2022, oil sales increased by 98% to $380.4 million compared to the corresponding period of 2021 due to 61% increase in Brent price and 18% higher sales volumes, partially offset by 22% increase in the quality and transportation discounts as a result of widening of Castilla and Vasconia differentials to $7.10 and $4.35 for the six months ended June 30, 2022 from $4.50 and $2.65 per bbl for the corresponding period of 2021, respectively. Compared to the prior quarter, oil sales increased 18%, primarily as a result of a 14% increase in Brent price, partially offset by 3% higher quality and transportation discounts.

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The following table shows the effect of changes in realized price and sales volumes on our oil sales for the three and six months ended June 30, 2022, compared to the prior quarter and the corresponding periods of 2021:

(Thousands of U.S. Dollars)	Second Quarter 2022 Compared with First Quarter 2022		Second Quarter 2022 Compared with Second Quarter 2021		Six Months Ended June 30, 2022 Compared with Six Months Ended June 30, 2021
Oil sales for the comparative period	$	174,569	$	96,623	$	192,116
Realized sales price increase effect	28,371		86,159		154,176
Sales volumes increase effect	2,845		23,003		34,062
Oil sales for the three and six months ended June 30, 2022	$	205,785	$	205,785	$	380,354

The average realized price for the three and six months ended June 30, 2022, increased by 72% and 68%, compared to the corresponding periods of 2021. The increase was commensurate with the increase in benchmark oil prices, offset by higher Castilla and Vasconia differentials. Compared to the prior quarter, the average realized price increased 16% due to higher benchmark oil prices, offset by higher Castilla and Vasconia differentials.

Operating expenses for the three months ended June 30, 2022, increased by 50% to $39.5 million or by $3.38 per bbl to $19.00 per bbl, primarily as a result of $1.16 per bbl increased workovers and $1.95 per bbl higher power generation costs as a result of increased production in all major fields compared to the corresponding period of 2021. Lower operating activities during the second quarter of 2021 were attributed to national blockades in Colombia affecting all major fields.

Operating expenses for the six months ended June 30, 2022, increased by 31% to $74.4 million or by $1.80 per bbl to $18.04 per bbl, primarily due to $0.58 per bbl increased workovers and $1.11 per bbl higher power generation costs as a result of increased production in all major fields. Compared to the prior quarter, operating expenses increased by 13% or $1.92 per bbl from $34.9 million or $17.08 per bbl, primarily due to higher workover activities.

We have options to sell our oil through multiple pipelines and trucking routes. Each option has varying effects on realized sales price and transportation expenses. The following table shows the percentage of oil volumes we sold in Colombia using each option for the three and six months ended June 30, 2022 and 2021, and the prior quarter:

	Three Months Ended June 30,				Three Months Ended March 31,		Six Months Ended June 30,
	2022		2021		2022		2022		2021
Volume transported through pipeline	—	%	9	%	—	%	—	%	5	%
Volume sold at wellhead	48	%	67	%	47	%	48	%	58	%
Volume transported via truck to sales point	52	%	24	%	53	%	52	%	37	%
	100	%	100	%	100	%	100	%	100	%

Volumes transported through pipeline or via truck receive a higher realized price but incur higher transportation expenses. Conversely, volumes sold at the wellhead have the opposite effect of a lower realized price, offset by lower transportation expenses.

Transportation expenses for the three and six months ended June 30, 2022, decreased by 16% and 5% to $2.5 million and $5.3 million, respectively, compared to the corresponding periods of 2021. On a per bbl basis, transportation expenses decreased by 32% and 19% to $1.21 and $1.30 for the three and six months ended June 30, 2022 compared to the corresponding periods of 2021. The decrease in transportation expenses per bbl compared to the corresponding periods of 2021 was a result of change in transportation routes that had lower transportation costs per bbl. During the second quarter of 2021, there was a change in delivery points in response to national blockades in Colombia which had higher transportation costs per bbl.

For the three months ended June 30, 2022, transportation expenses decreased by 11% compared to $2.8 million in the prior quarter. On a per bbl basis, transportation expenses decreased by 13% from $1.39 in the prior quarter due to higher volumes

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sold at wellhead and lower volumes transported from Suroriente block which was impacted by local farmers blockade during the second quarter of 2022.

DD&A Expenses

	Three Months Ended June 30,				Three Months Ended March 31,		Six Months Ended June 30,
	2022		2021		2022		2022		2021
DD&A Expenses, thousands of U.S. Dollars	$	42,216	$	28,927	$	40,963	$	83,179	$	60,245
DD&A Expenses, U.S. Dollars per bbl	20.31		17.23		20.02		20.17		17.20

DD&A expenses for the three and six months ended June 30, 2022, increased 46% and 38% or $3.08 and $2.97 per bbl due to increased production and higher costs in the depletable base compared to the corresponding periods of 2021.

For the three months ended June 30, 2022, DD&A expenses increased 3% when compared to the prior quarter due to higher production in the current quarter. On a per bbl basis, DD&A expenses increased by $0.29 when compared to the prior quarter due to higher costs in the depletable base.

G&A Expenses

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	Three Months Ended June 30,					Three Months Ended March 31,		Six Months Ended June 30,
(Thousands of U.S. Dollars)	2022		2021		% Change	2022		2022		2021		% Change
G&A Expenses Before Stock-Based Compensation	$	7,847	$	7,133	10	$	7,779	$	15,626	$	13,950	12
G&A Stock-Based Compensation Expense	1,989		1,873		6	4,557		6,546		5,544		18
G&A Expenses, Including Stock-Based Compensation	$	9,836	$	9,006	9	$	12,336	$	22,172	$	19,494	14
(U.S. Dollars Per bbl Sales Volumes NAR)
G&A Expenses Before Stock-Based Compensation	$	3.77	$	4.25	(11)	$	3.80	$	3.79	$	3.98	(5)
G&A Stock-Based Compensation Expense	0.96		1.12		(14)	2.23		1.59		1.58		1
G&A Expenses, Including Stock-Based Compensation	$	4.73	$	5.37	(12)	$	6.03	$	5.38	$	5.56	(3)

For the three and six months ended June 30, 2022, G&A expenses before stock-based compensation increased by 10% to $7.8 million and 12% to $15.6 million, respectively, primarily due to higher costs for special projects and increase in travel expenses compared to corresponding periods of 2021. On a per bbl basis, G&A expenses before stock-based compensation decreased by $0.48 and $0.19 per bbl to $3.77 and $3.79 per bbl, respectively, primarily due higher sales volumes in 2022 compared to the corresponding periods of 2021. When compared to prior quarter, G&A expenses before stock-based compensation and on per bbl basis were comparable.

G&A expenses after stock-based compensation for the three and six months ended June 30, 2022, increased by 9% per bbl and 14% per bbl respectively, due to higher share price compared to the corresponding periods of 2021. On a per bbl basis, G&A expenses after stock-based compensation decreased by $0.64 and $0.18 per bbl, respectively, compared to the corresponding periods of 2021, mainly due to higher sales volumes in 2022. Compared to prior quarter, G&A expenses after stock-based compensation decreased by 20% or $1.30 on a per bbl basis, due to lower stock-based compensation resulting from a lower share price in the second quarter of 2022.

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Foreign Exchange Gains and Losses

For the three and six months ended June 30, 2022, we had a $2.7 million loss and $1.0 million gain, respectively, on foreign exchange compared to a $0.1 million and $13.2 million loss, respectively, for the corresponding periods of 2021. Accounts receivable, taxes receivable, deferred income taxes, accounts payable, and prepaid equity forward (“PEF”) are considered monetary items and require translation from local currency to U.S. dollar functional currency at each balance sheet date. This translation was the primary source of the foreign exchange gains and losses in the periods.

The following table presents the change in the U.S. dollar against the Colombian peso and Canadian dollar for the three and six months ended June 30, 2022, and 2021:

	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Change in the U.S. dollar against the Colombian peso	strengthened by	strengthened by	strengthened by	strengthened by
	10%	1%	4%	9%
Change in the U.S. dollar against the Canadian dollar	strengthened by	weakened by	strengthened by	weakened by
	3%	1%	2%	3%

Financial Instrument Gains and Losses

The following table presents the nature of our derivative and other financial instruments gains and losses for the three and six months ended June 30, 2022, and 2021:

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	Three Months Ended June 30,				Six Months Ended June 30,
(Thousands of U.S. Dollars)	2022		2021		2022		2021
Commodity price derivatives loss	$	5,172	$	21,217	$	26,611	$	44,849
Foreign currency derivatives loss	—		22		—		88
Derivative instruments loss	$	5,172	$	21,239	$	26,611	$	44,937
Unrealized PetroTal investment loss (gain)	$	—	$	2,614	$	—	$	(3,861)
Loss on sale of PetroTal shares	—		—		—		5,070
Other financial instruments loss	$	—	$	2,614	$	—	$	1,209

Income Tax Expense

	Three Months Ended June 30,						Six Months Ended June 30,
(Thousands of U.S. Dollars)	2022			2021			2022			2021
Income (loss) before income tax	$	91,638		$	(8,438)		$	145,297		$	(37,209)
Current income tax expense	$	25,425		$	(14)		$	46,252		$	(14)
Deferred income tax expense	13,241			9,203			31,954			17,854
Total income tax expense	$	38,666		$	9,189		$	78,206		$	17,840
Effective tax rate	42		%	(109)		%	54		%	(48)		%

Current income tax expense was $46.3 million for the six months ended June 30, 2022, compared to a small recovery in the corresponding period in 2021, primarily due to an increase in taxable income. The deferred income tax expense for the six months ended June 30, 2022, was also the result of tax depreciation being higher than accounting depreciation and the use of tax losses to offset taxable income in Colombia. The deferred income tax expense in the comparative period of 2021 resulted from excess tax depreciation compared with accounting depreciation and the use of tax losses to offset taxable income in Colombia.

For the six months ended June 30, 2022, the difference between the effective tax rate of 54% and the 35% Colombian tax rate was primarily due to $26.6 million of hedging loss and $24.3 million of financing cost related to senior notes, and $21.5 million of corporate costs, which were incurred in a jurisdictions where no tax benefit is recognized.

For the six months ended June 30, 2021, the difference between the effective tax rate of (48)% and the 31% Colombian tax rate was primarily due to $44.9 million hedging loss, $27.7 million financing cost related to Senior Notes and foreign exchange loss, which were incurred in a jurisdictions where no tax benefit is recognized. These were partially offset by a decrease in valuation allowance.

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Net Income and Funds Flow from Operations (a Non-GAAP Measure)

(Thousands of U.S. Dollars)	Second Quarter 2022 Compared with First Quarter 2022		% change	Second Quarter 2022 Compared with Second Quarter 2021		% change	Six Months Ended June 30, 2022 Compared with Six Months Ended June 30, 2021		% change
Net income (loss) for the comparative period	$	14,119		$	(17,627)		$	(55,049)
Increase (decrease) due to:
Sales price	28,371			86,159			154,176
Sales volumes	2,845			23,003			34,062
Expenses:
Operating	(4,559)			(13,247)			(17,511)
Transportation	321			489			254
Cash G&A	(68)			(714)			(1,676)
Net lease payments	292			382			467
Severance	—			—			—
Interest, net of amortization of debt issuance costs	178			1,978			3,668
Realized foreign exchange	2,733			1,233			199
Cash settlements on derivative instruments	(9,200)			6,509			11,317
Current taxes	(4,598)			(25,439)			(46,266)
Net change in funds flow from operations(1) from comparative period	16,315			80,353			138,690
Expenses:
Depletion, depreciation and accretion	(1,253)			(13,289)			(22,934)
Goodwill impairment	—			—			—
Asset impairment	—			—			—
Deferred tax	5,472			(4,038)			(14,100)
Amortization of debt issuance costs	(244)			(237)			(243)
Stock-based compensation	2,568			(116)			(1,002)
Derivative instruments gain or loss, net of settlements on derivative instruments	25,467			9,558			7,009
Other financial instruments loss	—			2,614			1,209
Unrealized foreign exchange	(9,180)			(3,864)			13,978
Other loss	—			—			—
Net lease payments	(292)			(382)			(467)
Net change in net income (loss)	38,853			70,599			122,140
Net income for the current period	$	52,972	275%	$	52,972	401%	$	67,091	222%

(1)Funds flow from operations is a non-GAAP measure that does not have any standardized meaning prescribed under GAAP. Refer to "Financial and Operational Highlights—non-GAAP measures" for a definition and reconciliation of this measure.

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Capital expenditures during the three months ended June 30, 2022 were $65.2 million:

(Millions of U.S. Dollars)
Colombia:
Exploration	$	10.0
Development:
Drilling and Completions	34.6
Facilities	4.7
Other	12.6
	61.9
Corporate & Ecuador	3.3
	$	65.2

During the three months ended June 30, 2022, we commenced drilling the following wells in Colombia:

	Number of wells (Gross and Net)
Exploration	1.0
Development	9.0
Service	4.0
	14.0

We spud one exploration, nine development and four water injection wells of which 11 were in the Midas Block, and three were in the Chaza Block. Of the wells spud during the quarter 10 were completed, three were in-progress and one exploration well was dry as of June 30, 2022.

Liquidity and Capital Resources 

	As at
(Thousands of U.S. Dollars)	June 30, 2022		% Change	December 31, 2021
Cash and Cash Equivalents	$	108,558	316	$	26,109
Revolving Credit Facility	$	—	(100)	$	67,500
6.25% Senior Notes	$	300,000	—	$	300,000
7.75% Senior Notes	$	300,000	—	$	300,000

We believe that our capital resources, including cash on hand, cash generated from operations and available borrowings under new credit facility which we are planning to obtain will provide us with sufficient liquidity to meet our strategic objectives and planned capital program for the next 12 months and beyond, given current oil price trends and production levels. We plan to replace our prior credit facility with a smaller one to align with our current business objectives. We may also access capital markets to pursue financing and refinance our Senior Notes. In accordance with our investment policy, available cash balances are held in our primary cash management banks or may be invested in U.S. or Canadian government-backed federal, provincial or state securities or other money market instruments with high credit ratings and short-term liquidity. We believe that our current financial position provides us with the flexibility to respond to both internal growth opportunities and those available through acquisitions. We intend to pursue growth opportunities and acquisitions from time to time, which may require significant capital, be located in basins or countries beyond our current operations, involve joint ventures, or be sizable as compared to our current assets and operations.

30

As at June 30, 2022, the borrowing base of our Senior Secured Credit Facility (the “revolving credit facility”) was $150 million, with $125 million readily available and $25 million subject to approval by majority lenders. During the three months ended June 30, 2022, we completely paid-off the outstanding balance on the revolving credit facility and subsequent to the quarter, the revolving credit facility was terminated. At June 30, 2022, and the date of termination, respectively, we were in compliance with all applicable covenants.

At June 30, 2022, we had a $300.0 million aggregate principal amount of 6.25% Senior Notes due 2025 and a $300.0 million aggregate principal amount of 7.75% Senior Notes due 2027 outstanding. An event of default under the revolving credit facility would result in a default under the indentures governing the senior notes, which could allow the noteholders to require us to repurchase all of the outstanding Senior Notes.

In accordance with our investment policy, available cash balances are held in our primary cash management banks or invested in U.S. or Canadian government-backed federal, provincial, or state securities or other money market instruments with high credit ratings and short-term liquidity.

Derivative Positions

All our outstanding commodity price derivatives expired on June 30, 2022 and as at June 30, 2022, we had no outstanding foreign exchange or commodity price derivative positions.

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Cash Flows

The following table presents our primary sources and uses of cash and cash equivalents for the periods presented:

	Six Months Ended June 30,
(Thousands of U.S. Dollars)	2022		2021
Sources of cash and cash equivalents:
Net income (loss)	$	67,091	$	(55,049)
Adjustments to reconcile net loss to Adjusted EBITDA(1)  and funds flow from operations(1)
DD&A expenses	83,179		60,245
Interest expense	24,322		27,747
Income tax expense	78,206		17,840
Other loss	—		—
Non-cash lease expenses	1,158		814
Lease payments	(732)		(855)
Unrealized foreign exchange (gain) loss	(498)		13,480
Stock-based compensation expense	6,546		5,544
Unrealized derivative instruments loss	219		7,228
Other financial instruments loss	—		1,209
Adjusted EBITDA(1)	259,491		78,203
Current income tax (expense) recovery	(46,252)		14
Contractual interest and other financing expenses	(22,304)		(25,972)
Funds flow from operations(1)	190,935		52,245
Proceeds from issuance of exercise of stock options	1,283		8
Proceeds from issuance of shares of Common Stock, net of issuance costs	2		—
Proceeds from disposition of investment, net of transaction costs	—		14,632
Net changes in assets and liabilities from operating activities	56,329		27,157
Changes in non-cash investing working capital	10,964		3,176
	259,513		97,218
Uses of cash and cash equivalents:
Additions to property, plant and equipment	(106,682)		(74,811)
Repayment of debt	(67,525)		(15,126)
Settlement of asset retirement obligations	(242)		(248)
Lease payments	(1,261)		(513)
Foreign exchange loss on cash, cash equivalents and restricted cash and cash equivalents	(680)		(488)
	(176,390)		(91,186)
Net increase in cash and cash equivalents and restricted cash and cash equivalents	$	83,123	$	6,032

(1) Adjusted EBITDA and funds flow from operations are a non-GAAP measures which do not have any standardized meaning prescribed under GAAP. Refer to “Financial and Operational Highlights - non-GAAP measures” for a definition and reconciliation of this measure.

One of the primary sources of variability in our cash flows from operating activities is the fluctuation in oil prices. Sales volume changes and costs related to operations and debt service also impact cash flows. Our cash flows from operating activities are also impacted by foreign currency exchange rate changes. During the six months ended June 30, 2022, funds flow from operations increased by 265% compared to the corresponding period of 2021 primarily due to a significant increase in Brent price and increase in production, which were partially offset by higher Castilla and Vasconia differentials and an increase in operating expenses and cash settlements on derivative instruments.

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Critical Accounting Policies and Estimates

Our critical accounting policies and estimates are disclosed in Item 7 of our 2021 Annual Report on Form 10-K and have not changed materially since the filing of that document.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Commodity price risk

Our principal market risk relates to oil prices. Oil prices are volatile and unpredictable and influenced by concerns over world supply and demand imbalance and many other market factors outside of our control. Most of our revenues are from oil sales at prices which reflect the blended prices received upon shipment by the purchaser at defined sales points or are defined by contract relative to ICE Brent and adjusted for quality each month.

Foreign currency risk

Foreign currency risk is a factor for our Company but is ameliorated to a certain degree by the nature of expenditures and revenues in the countries where we operate. Our reporting currency is U.S. dollars and 100% of our revenues are related to the U.S. dollar price of Brent or WTI oil. We receive 100% of our revenues in U.S. dollars and the majority of our capital expenditures is in U.S. dollars or is based on U.S. dollar prices. The majority of income and value added taxes, operating and G&A expenses in Colombia are in local currency. Certain G&A expenses incurred at our head office in Canada are denominated in Canadian dollars. While we operate in South America exclusively, the majority of our acquisition expenditures have been valued and paid in U.S. dollars.

Additionally, foreign exchange gains and losses result primarily from the fluctuation of the U.S. dollar to the Colombian peso due to our current and deferred tax liabilities, which are monetary liabilities, denominated in the local currency of the Colombian foreign operations. As a result, a foreign exchange gain or loss must be calculated on conversion to the U.S. dollar functional currency.

Interest Rate Risk

Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. We are exposed to interest rate fluctuations on our revolving credit facility, which bears floating rates of interest. At June 30, 2022, our outstanding balance under revolving credit facility was nil (December 31, 2021 - $67.5 million). Subsequent to the quarter, the revolving credit facility was terminated and the Company is no longer exposed to fluctuations on market interest rates.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We have established disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, or Exchange Act). Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by Gran Tierra in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report, as required by Rule l3a-15(b) of the Exchange Act. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that Gran Tierra’s disclosure controls and procedures were effective as of June 30, 2022.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2022, that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

PART II - Other Information

33

Item 1. Legal Proceedings

See Note 9 in the Notes to the Condensed Consolidated Financial Statements (Unaudited) in Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference, for any material developments with respect to matters previously reported in our Annual Report on Form 10-K for the year ended December 31, 2021, and any material matters that have arisen since the filing of such report.

Item 1A. Risk Factors

There are numerous factors that affect our business and results of operations, many of which are beyond our control. In addition to information set forth in this quarterly report on Form 10-Q, including in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, you should carefully read and consider the factors set out in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021. These risk factors could materially affect our business, financial condition and results of operations. The unprecedented nature of the current pandemic and the volatility in the worldwide economy and oil and gas industry may make it more difficult to identify all the risks to our business, results of operations and financial condition and the ultimate impact of identified risks.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

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Item 6. Exhibits

Exhibit No.	Description	Reference
3.1	Certificate of Incorporation.	Incorporated by reference to Exhibit 3.3 to the Current Report on Form 8-K, filed with the SEC on November 4, 2016 (SEC File No. 001-34018).
3.2	Bylaws of Gran Tierra Energy Inc.	Incorporated by reference to Exhibit 3.4 to the Current Report on Form 8-K, filed with the SEC on November 4, 2016 (SEC File No. 001-34018).
3.3	Certificate of Retirement dated July 9, 2018	Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on July 9, 2018 (SEC File No. 001-34018).
3.4	Amendment No.1 to Bylaws of Gran Tierra Energy Inc.	Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on August 4, 2021 (SEC File No. 001-34018).
10.1#	Amended and Rotated Gran Tierra Energy Inc. 2007 Equity Incentive Plan	Incorporated by reference to the Appendix of the Definitive Proxy Statement filed with the SEC on March 25, 2022 (SEC File No. 001-34018).
31.1	Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith.
31.2	Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith.
32.1	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith.

101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH Inline XBRL Taxonomy Extension Schema Document

101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document

104.The cover page from Gran Tierra Energy Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, formatted in Inline XBRL (included within the Exhibit 101 attachments).

# Management contract or compensatory plan or arrangement.

35

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

GRAN TIERRA ENERGY INC.

Date: August 8, 2022	/s/ Gary S. Guidry
	By: Gary S. Guidry
	President and Chief Executive Officer
	(Principal Executive Officer)

Date: August 8, 2022	/s/ Ryan Ellson
	By: Ryan Ellson
	Executive Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

36

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)

OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Gary S. Guidry, certify that:

1. I have reviewed this Form 10-Q of Gran Tierra Energy Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2022	/s/ Gary S. Guidry
	By: Gary S. Guidry
	President and Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)

OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Ryan Ellson, certify that:

1. I have reviewed this Form 10-Q of Gran Tierra Energy Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2022	/s/ Ryan Ellson
	By: Ryan Ellson
	Executive Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

EX-32.1

EXHIBIT 32.1

Certification of Chief Executive Officer and Chief Financial Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Section 1350, Chapter 63 of Title 18 of the United States Code (18 U.S.C-§1350), each of Gary S. Guidry, President and Chief Executive Officer of Gran Tierra Energy Inc., a Delaware corporation (the “Company”), and Ryan Ellson, Chief Financial Officer of the Company, does hereby certify, to such officer’s knowledge that:

The Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 (the “Form 10-Q”) to which this Certification is attached as Exhibit 32.1 fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act. The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

IN WITNESS WHEREOF, the undersigned have set their hands hereto as of the 8th day of August 2022.

/s/ Gary S. Guidry	/s/ Ryan Ellson
By: Gary S. Guidry	By: Ryan Ellson
President and Chief Executive Officer	Executive Vice President and Chief Financial Officer

The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350, Chapter 63 of Title 18, United States Code) and is not deemed filed with the Securities and Exchange Commission as part of the Form 10-Q or as a separate disclosure document and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

XML

Cover Page - shares	6 Months Ended
	Jun. 30, 2022	Aug. 05, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2022
Document Transition Report	false
Entity File Number	001-34018
Entity Registrant Name	GRAN TIERRA ENERGY INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	98-0479924
Entity Address, Address Line One	500 Centre Street S.E.
Entity Address, City or Town	Calgary,
Entity Address, State or Province	AB
Entity Address, Country	CA
Entity Address, Postal Zip Code	T2G 1A6
City Area Code	403
Local Phone Number	265-3221
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	GTE
Security Exchange Name	NYSEAMER
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		368,871,685
Entity Central Index Key	0001273441
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Income Statement [Abstract]
OIL SALES (Note 7)	$ 205,785	$ 96,623	$ 380,354	$ 192,116
EXPENSES
Operating	39,494	26,247	74,429	56,918
Transportation	2,513	3,002	5,347	5,601
Depletion, depreciation and accretion	42,216	28,927	83,179	60,245
General and administrative (Note 10)	9,836	9,006	22,172	19,494
Foreign exchange loss (gain)	2,722	91	(1,003)	13,174
Derivative instruments loss (Note 10)	5,172	21,239	26,611	44,937
Other financial instruments loss (Note 10)	0	2,614	0	1,209
Interest expense (Note 5)	12,194	13,935	24,322	27,747
EXPENSES	114,147	105,061	235,057	229,325
INCOME (LOSS) BEFORE INCOME TAXES	91,638	(8,438)	145,297	(37,209)
INCOME TAX EXPENSE
Current (Note 8)	25,425	(14)	46,252	(14)
Deferred (Note 8)	13,241	9,203	31,954	17,854
INCOME TAX EXPENSE	38,666	9,189	78,206	17,840
NET AND COMPREHENSIVE INCOME (LOSS)	52,972	(17,627)	67,091	(55,049)
NET AND COMPREHENSIVE INCOME (LOSS)	$ 52,972	$ (17,627)	$ 67,091	$ (55,049)
NET INCOME (LOSS) PER SHARE
BASIC (in dollars per share)	$ 0.14	$ (0.05)	$ 0.18	$ (0.15)
DILUTED (in dollars per share)	$ 0.14	$ (0.05)	$ 0.18	$ (0.15)
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC (Note 6) (in shares)	368,571,378	366,982,456	367,982,294	366,982,008
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED (Note 6) (in shares)	374,233,600	366,982,456	372,977,695	366,982,008

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Current Assets
Cash and cash equivalents (Note 11)	$ 108,558	$ 26,109
Restricted cash and cash equivalents (Note 11)	1,142	392
Accounts receivable	10,987	13,185
Taxes receivable (Note 3)	42	45,506
Other current assets (Note 10)	28,082	16,609
Total Current Assets	148,811	101,801
Oil and Gas Properties
Proved	920,918	859,580
Unproved	106,536	131,865
Total Oil and Gas Properties	1,027,454	991,445
Other capital assets	11,543	4,352
Total Property, Plant and Equipment (Note 4)	1,038,997	995,797
Other Long-Term Assets
Deferred tax assets	27,526	61,494
Taxes receivable (Note 3)	24,473	17,522
Other long-term assets (Note 10)	16,337	12,497
Total Other Long-Term Assets	68,336	91,513
Total Assets	1,256,144	1,189,111
Current Liabilities
Accounts payable and accrued liabilities	163,881	148,694
Current portion of long-term debt (Note 5)	0	66,987
Derivatives (Note 10)	7,230	2,976
Taxes payable (Note 3)	23,661	6,620
Other (Note 6 and 10)	15,937	2,710
Total Current Liabilities	210,709	227,987
Long-Term Liabilities
Long-term debt (Notes 5 and 10)	595,861	587,404
Asset retirement obligation	56,783	54,525
Equity compensation award liability (Note 6 and 10)	14,872	13,718
Other long-term liabilities	6,253	3,397
Total Long-Term Liabilities	673,769	659,044
Contingencies (Note 9)
Shareholders' Equity
Common Stock (Note 6) (368,871,685 and 367,144,500 shares issued and outstanding of Common Stock, par value $0.001 per share, as at June 30, 2022, and December 31, 2021, respectively)	10,272	10,270
Additional paid-in capital	1,290,075	1,287,582
Deficit	(928,681)	(995,772)
Total Shareholders’ Equity	371,666	302,080
Total Liabilities and Shareholders’ Equity	$ 1,256,144	$ 1,189,111

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Common stock, shares issued (in shares)	368,871,685	367,144,500
Common stock, shares outstanding (in shares)	368,871,685	367,144,500
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Operating Activities
Net Income (Loss)	$ 67,091	$ (55,049)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depletion, depreciation and accretion	83,179	60,245
Deferred tax expense	31,954	17,854
Stock-based compensation expense (Note 6)	6,546	5,544
Amortization of debt issuance costs (Note 5)	2,018	1,775
Unrealized foreign exchange (gain) loss	(498)	13,480
Derivative instruments loss (Note 10)	26,611	44,937
Cash settlements on derivatives instruments	(26,392)	(37,709)
Other financial instruments gain (Note 10)	0	1,209
Cash settlement of asset retirement obligation	(242)	(248)
Non-cash lease expenses	1,158	814
Lease payments	(732)	(855)
Net change in assets and liabilities from operating activities (Note 11)	56,329	27,157
Net cash provided by operating activities	247,022	79,154
Investing Activities
Additions to property, plant and equipment	(106,682)	(74,811)
Proceeds on disposition of investment, net of transaction costs	0	14,632
Changes in non-cash investing working capital (Note 11)	10,964	3,176
Net cash used in investing activities	(95,718)	(57,003)
Financing Activities
Repayment of debt (Note 5)	(67,525)	(15,126)
Proceeds from issuance of shares of Common Stock, net of issuance costs	2	0
Proceeds from exercise of stock options	1,283	8
Lease payments	(1,261)	(513)
Net cash used in financing activities	(67,501)	(15,631)
Foreign exchange loss on cash, cash equivalents and restricted cash and cash equivalents	(680)	(488)
Net increase in cash, cash equivalents and restricted cash and cash equivalents	83,123	6,032
Cash, cash equivalents and restricted cash and cash equivalents, beginning of period (Note 11)	31,404	17,523
Cash, cash equivalents and restricted cash and cash equivalents, end of period (Note 11)	$ 114,527	$ 23,555

XML

Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Share Capital	Additional Paid-in Capital	Deficit
Balance, beginning of period at Dec. 31, 2020		$ 10,270	$ 1,285,018	$ (1,038,254)
Increase (Decrease) in Stockholders' Equity
Issuance of Common Stock (Note 6)		0
Exercise of stock options			8
Stock-based compensation (Note 6)			1,209
Net income (loss)	$ (55,049)			(55,049)
Balance, end of period at Jun. 30, 2021	203,202	10,270	1,286,235	(1,093,303)
Balance, beginning of period at Mar. 31, 2021		10,270	1,285,597	(1,075,676)
Increase (Decrease) in Stockholders' Equity
Issuance of Common Stock (Note 6)		0
Exercise of stock options			8
Stock-based compensation (Note 6)			630
Net income (loss)	(17,627)			(17,627)
Balance, end of period at Jun. 30, 2021	203,202	10,270	1,286,235	(1,093,303)
Balance, beginning of period at Dec. 31, 2021		10,270	1,287,582	(995,772)
Increase (Decrease) in Stockholders' Equity
Issuance of Common Stock (Note 6)		2
Exercise of stock options			1,283
Stock-based compensation (Note 6)			1,210
Net income (loss)	67,091			67,091
Balance, end of period at Jun. 30, 2022	371,666	10,272	1,290,075	(928,681)
Balance, beginning of period at Mar. 31, 2022		10,272	1,289,162	(981,653)
Increase (Decrease) in Stockholders' Equity
Issuance of Common Stock (Note 6)		0
Exercise of stock options			303
Stock-based compensation (Note 6)			610
Net income (loss)	52,972			52,972
Balance, end of period at Jun. 30, 2022	$ 371,666	$ 10,272	$ 1,290,075	$ (928,681)

XML

Description of Business	6 Months Ended
	Jun. 30, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Description of Business	Description of Business Gran Tierra Energy Inc., a Delaware corporation (the “Company” or “Gran Tierra”), is a publicly traded company focused on international oil and natural gas exploration and production with assets currently in Colombia and Ecuador.

XML

Significant Accounting Policies

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Significant Accounting Policies

Significant Accounting Policies

These interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The information furnished herein reflects all normal recurring adjustments that are, in the opinion of management, necessary for the fair presentation of results for the interim periods.

The note disclosure requirements of annual consolidated financial statements provide additional disclosures required for interim unaudited condensed consolidated financial statements. Accordingly, these interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements as at and for the year ended December 31, 2021, included in the Company’s 2021 Annual Report on Form 10-K and interim financial statements as at and for the period ending March 31, 2022, included on the Company’s Form 10-Q.

The Company’s significant accounting policies are described in Note 2 of the consolidated financial statements, which are included in the Company’s 2021 Annual Report on Form 10-K and are the same policies followed in these interim unaudited condensed consolidated financial statements. The Company has evaluated all subsequent events to the date these interim unaudited condensed consolidated financial statements were issued.

XML

Taxes Receivable and Payable

6 Months Ended

Jun. 30, 2022

Tax Receivable Agreement [Abstract]

Taxes Receivable and Payable

Taxes Receivable and Payable

The table below shows the break-down of taxes receivable and payable, which are comprised of value added tax (“VAT”) and income tax:

(Thousands of U.S. Dollars)	As at June 30, 2022		As at December 31, 2021
Taxes Receivable
Current
VAT Receivable	$	42	$	21,918
Income Tax Receivable	—		23,588
	$	42	$	45,506
Long-Term
Income Tax Receivable	$	24,473	$	17,522
Taxes Payable
Current
VAT Payable	$	14,473	$	6,620
Income Tax Payable	9,188		—
	$	23,661	$	6,620
Total Taxes Receivable net of Taxes Payable	$	854	$	56,408

The following table shows the movement of VAT and income tax receivables for the period identified below:

(Thousands of U.S. Dollars)	VAT Receivable (Payable)		Income Tax Receivable		Total Net Taxes Receivable
Balance, as at December 31, 2021	$	15,298	$	41,110	$	56,408
Collected through direct government refunds	(265)		(99)		(364)
Collected through sales contracts	(86,092)		—		(86,092)
Taxes paid (1)	55,759		20,468		76,227
Current tax expense	—		(46,252)		(46,252)
Foreign exchange loss	869		58		927
Balance, as at June 30, 2022	$	(14,431)	$	15,285	$	854

(1)VAT is paid on certain goods and services and collected on sales in Colombia at a rate of 19%

XML

Property, Plant and Equipment

6 Months Ended

Jun. 30, 2022

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, Plant and Equipment

(Thousands of U.S. Dollars)	As at June 30, 2022		As at December 31, 2021
Oil and natural gas properties
Proved	$	4,444,894	$	4,302,473
Unproved	106,536		131,865
	4,551,430		4,434,338
Other(1)	43,830		34,943
	4,595,260		4,469,281
Accumulated depletion and depreciation and impairment	(3,556,263)		(3,473,484)
	$	1,038,997	$	995,797

(1) The “other” category includes right-of-use assets for operating and finance leases of $22.2 million, which had a net book value of $10.7 million as at June 30, 2022 (December 31, 2021 - $13.9 million, which had a net book value of $3.9 million).

For the three and six months ended June 30, 2022, and 2021, the Company had no ceiling test impairment losses. The Company used an average Brent price of $87.88 and $52.74 per bbl, for the purposes of the June 30, 2022 and 2021 ceiling test calculations, respectively.

XML

Debt and Debt Issuance Costs

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Debt and Debt Issuance Costs

Debt and Debt Issuance Costs

The Company’s debt at June 30, 2022, and December 31, 2021, was as follows:

(Thousands of U.S. Dollars)	As at June 30, 2022		As at December 31, 2021
Current
Revolving credit facility	$	—	$	67,500
Unamortized debt issuance costs	—		(513)
	$	—	$	66,987
Long-Term
6.25% Senior Notes, due February 2025	$	300,000	$	300,000
7.75% Senior Notes, due May 2027	300,000		300,000
Unamortized debt issuance costs	(12,550)		(14,030)
	587,450		585,970
Long-term lease obligation(1)	8,411		1,434
	$	595,861	$	587,404
	$	595,861	$	654,391

(1) The current portion of the lease obligation has been included in accounts payable and accrued liabilities on the Company’s balance sheet and totaled $2.8 million as at June 30, 2022 (December 31, 2021 - $3.3 million).

As of June 30, 2022, the borrowing base of the Company’s Senior Secured Credit Facility (the “revolving credit facility”) was $150 million, with $125 million readily available and $25 million subject to approval by major lenders. During the three months ended June 30, 2022, the Company completely paid off the outstanding balance on the revolving credit facility and subsequent to the quarter, the revolving credit facility was terminated. As of June 30, 2022 and the date of termination, respectively, the Company was in compliance with all applicable covenants in the revolving credit facility.

Interest Expense

The following table presents the total interest expense recognized in the accompanying interim unaudited condensed consolidated statements of operations:

	Three Months Ended June 30,				Six Months Ended June 30,
(Thousands of U.S. Dollars)	2022		2021		2022		2021
Contractual interest and other financing expenses	$	11,063	$	13,041	$	22,304	$	25,972
Amortization of debt issuance costs	1,131		894		2,018		1,775
	$	12,194	$	13,935	$	24,322	$	27,747

XML

Share Capital

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

Share Capital

Share Capital

	Shares of Common Stock
Balance, December 31, 2021	367,144,500
Shares issued on option exercise	1,727,185
Balance, June 30, 2022	368,871,685

Equity Compensation Awards

The following table provides information about performance stock units (“PSUs”), deferred share units (“DSUs”), and stock option activity for the six months ended June 30, 2022:

	PSUs	DSUs	Stock Options
	Number of Outstanding Share Units	Number of Outstanding Share Units	Number of Outstanding Stock Options	Weighted Average Exercise Price/Stock Option ($)
Balance, December 31, 2021	30,365,196	5,710,764	17,848,722	1.20
Granted	6,761,105	494,955	2,753,165	1.41
Exercised	(4,396,646)	—	(1,727,185)	0.74
Forfeited	(166,687)	—	(105,020)	1.69
Expired	—	—	(1,187,309)	2.80
Balance, June 30, 2022	32,562,968	6,205,719	17,582,373	1.17

For the three and six months ended June 30, 2022 stock-based compensation expense was $2.0 million and $6.5 million, respectively. For the three and six months ended June 30, 2021 stock-based compensation expense was $1.9 million and $5.5 million, respectively.At June 30, 2022, there was $19.7 million (December 31, 2021 - $11.8 million) of unrecognized compensation costs related to unvested PSUs and stock options, which are expected to be recognized over a weighted-average period of 1.7 years. During the six months ended June 30, 2022, the Company paid out $2.4 million for PSUs vested on December 31, 2021 (six months ended June 30, 2021 - $0.6 million for PSUs vested on December 31, 2020).

Net Income (Loss) per Share

Basic net income (loss) per share is calculated by dividing net income (loss) attributable to common shareholders by the weighted average number of shares of common stock issued and outstanding during each period.

Diluted net income per share is calculated using the treasury stock method for share-based compensation arrangements. The treasury stock method assumes that any proceeds obtained on the exercise of share-based compensation arrangements would be used to purchase common shares at the average market price during the period. The weighted average number of shares is then adjusted by the difference between the number of shares issued from the exercise of share-based compensation arrangements and shares repurchased from the related proceeds. Anti-dilutive shares represent potentially dilutive securities excluded from the computation of diluted income or loss per share as their impact would be anti-dilutive.

Weighted Average Shares Outstanding

	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Weighted average number of common shares outstanding	368,571,378	366,982,456	367,982,294	366,982,008
Shares issuable pursuant to stock options	11,806,859	—	12,351,243	—
Shares assumed to be purchased from proceeds of stock options	(6,144,637)	—	(7,355,842)	—
Weighted average number of diluted common shares outstanding	374,233,600	366,982,456	372,977,695	366,982,008

For the three and six months ended June 30, 2022, 6,092,908 and 5,738,428 options, on a weighted average basis (three and six months ended June 30, 2021 - all options), were excluded from the diluted income (loss) per share calculation as the options were anti-dilutive.

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Revenue

6 Months Ended

Jun. 30, 2022

Revenue from Contract with Customer [Abstract]

Revenue

RevenueThe Company’s revenues are generated from oil sales at prices that reflect the blended prices received upon shipment by the purchaser at defined sales points or defined by contract relative to ICE Brent and adjusted for Vasconia or Castilla crude differentials, quality, and transportation discounts each month. For the three and six months ended June 30, 2022, 100% (three and six months ended June 30, 2021 - 100%) of the Company’s revenue resulted from oil sales. During the three and six months

ended June 30, 2022, quality and transportation discounts were 12% of the average ICE Brent price (three and six months ended June 30, 2021 - 17% and 16%, respectively).

During the three months ended June 30, 2022, the Company’s production was sold primarily to two major customers in Colombia, representing 55% and 44% of total sales volumes (three months ended June 30, 2021 - two, representing 75% and 14% of total sales volumes). During the six months ended June 30, 2022, the Company’s production was sold primarily to two major customers in Colombia, representing 56% and 43% of total sales volumes (six months ended June 30, 2021 - two, representing 71% and 22% of total sales volumes).

As at June 30, 2022, accounts receivable included nil of accrued sales revenue related to June 2022 production (December 31, 2021 - nil related to December 2021 production).

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Taxes

6 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

Taxes

Taxes

The Company's effective tax rate was 54% for the six months ended June 30, 2022, compared to (48)% in the comparative period of 2021. Current income tax expense was $46.3 million for the six months ended June 30, 2022, compared to a recovery in the corresponding period of 2021, primarily due to an increase in taxable income.

The deferred income tax expense for the six months ended June 30, 2022, was mainly the result of tax depreciation being higher than accounting depreciation and the use of tax losses to offset taxable income in Colombia. The deferred income tax expense in the comparative period of 2021 was also the result of excess tax depreciation compared with accounting depreciation and the use of tax losses to offset taxable income in Colombia.

For the six months ended June 30, 2022, the difference between the effective tax rate of 54% and the 35% Colombian tax rate was primarily due to an increase in the impact of foreign taxes, foreign translation adjustments, increase in the valuation allowance, non-deductible third-party royalty in Colombia, and non-deductible stock-based compensation.

For the six months ended June 30, 2021, the difference between the effective tax rate of (48)% and the 31% Colombian tax rate was primarily due to an increase in the impact of foreign taxes, foreign translation adjustments, and other permanent differences, which was partially offset by a decrease in valuation allowance.

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Contingencies

6 Months Ended

Jun. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Contingencies

Contingencies

Legal Proceedings

Gran Tierra has a number of lawsuits and claims pending, including a dispute with the Agencia Nacional de Hidrocarburos (National Hydrocarbons Agency) (“ANH”) relating to the calculation of high price share royalties. Although the outcome of these lawsuits and disputes cannot be predicted with certainty, Gran Tierra believes the resolution of these matters would not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. Gran Tierra records costs as they are incurred or become probable and determinable.

Letters of credit and other credit support

At June 30, 2022, the Company had provided letters of credit and other credit support totaling $105.1 million (December 31, 2021 - $103.0 million) as security relating to work commitment guarantees in Colombia and Ecuador contained in exploration contracts and other capital or operating requirements.

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Financial Instruments and Fair Value Measurement

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Financial Instruments and Fair Value Measurement

Financial Instruments and Fair Value Measurement

Financial Instruments

Financial instruments are initially recorded at fair value, defined as the price that would be received to sell an asset or paid to market participants to settle liability at the measurement date. For financial instruments carried at fair value, GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad levels:

•Level 1 - Inputs representing quoted market prices in active markets for identical assets and liabilities

•Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the assets and liabilities, either directly or indirectly

•Level 3 - Unobservable inputs for assets and liabilities

At June 30, 2022, the Company’s financial instruments recognized on the balance sheet consist of cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, other long-term assets, accounts payable and accrued liabilities, derivatives, other short-term payables, long-term debt, long-term equity compensation reward liability and other long-term liabilities. The Company uses appropriate valuation techniques based on the available information to measure the fair values of assets and liabilities.

Fair Value Measurement

The following table presents the Company’s fair value measurements of its financial instruments as of June 30, 2022, and December 31, 2021:

	As at June 30, 2022		As at December 31, 2021
(Thousands of U.S. Dollars)
Level 1
Assets
Prepaid equity forward - current (2)	$	6,891	$	—
Prepaid equity forward - long-term(1)	11,494		7,578
	$	18,385	$	7,578
Liabilities
DSUs liability - long-term(3)	$	7,136	$	4,346
6.25% Senior Notes	281,460		273,672
7.75% Senior Notes	275,124		271,500
	$	563,720	$	549,518
Level 2
Assets
Derivative asset(2)	$	—	$	219
Restricted cash and cash equivalents - long-term(1)	4,827		4,903
	$	4,827	$	5,122
Liabilities
Derivative liability	$	7,230	$	2,976
Revolving credit facility	—		66,987
PSUs liability - current (4)	12,516		2,710
PSUs liability - long-term(3)	7,736		9,372
	$	27,482	$	82,045
Level 3
Liabilities
Asset retirement obligation - current(4)	$	3,421	$	—
Asset retirement obligation - long-term	56,783		54,525
	$	60,204	$	54,525

(1)The long-term portion of restricted cash and Prepaid equity forward are included in the other long-term assets on the Company’s balance sheet

(2) Included in the other current assets on the Company’s balance sheet

(3) Long-term DSUs and PSUs liabilities are included in the long-term equity compensation award liability on the Company’s balance sheet

(4) Current portion of PSU liability and asset retirement obligation are included in the other short-term liabilities on the Company’s balance sheet

The fair values of cash and cash equivalents, current restricted cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their carrying amounts due to the short-term maturity of these instruments.

The fair value of long-term restricted cash and cash equivalents approximate its carrying value because interest rates are variable and reflective of market rates.

Prepaid Equity Forward (“PEF”)

To reduce the Company’s exposure to changes in the trading price of the Company’s common shares on outstanding PSUs, the Company entered into a PEF. At the end of the term, the counterparty will pay the Company an amount equivalent to the notional amount of the shares using the price of the Company’s common shares at the valuation date. The Company has the discretion to increase or decrease the notional amount of the PEF or terminate the agreement early. As at June 30, 2022, the Company’s PEF had a notional amount of 16 million shares with a fair value of $18.4 million (As at December 31, 2021 - 10 million shares with a fair value of $7.6 million). During the three and six months ended June 30, 2022, the Company recorded a $5.2 million loss and $2.7 million gain, respectively, on the PEF in general and administrative expenses (three and six months ended June 30, 2021- $0.1 million gain). The fair value of the PEF asset was estimated using the Company’s share price quoted in active markets at the end of each reporting period.

DSUs liability

The fair value of DSUs liability was estimated using Company’s share price quoted in active markets at the end of each reporting period.

PSUs liability

The fair value of the PSUs liability was estimated based on a pricing model using inputs, such as Company’s share price and PSUs performance factor.

Derivative asset and derivative liability

The fair value of derivatives is estimated based on various factors, including quoted market prices in active markets and quotes from third parties. The Company also performs an internal valuation to ensure the reasonableness of third party quotes. In consideration of counterparty credit risk, the Company assessed whether the counterparty to the derivative would default by failing to make any contractually required payments. Additionally, the Company considers that it is of substantial credit quality and has the financial resources and willingness to meet its potential repayment obligations associated with the derivative transactions.

The following table presents gains or losses on derivatives and other financial instruments recognized in the accompanying interim unaudited condensed consolidated statements of operations:

	Three Months Ended June 30,				Six Months Ended June 30,
(Thousands of U.S. Dollars)	2022		2021		2022		2021
Commodity price derivatives loss	$	5,172	$	21,217	$	26,611	$	44,849
Foreign currency derivatives loss	—		22		—		88
Derivative instruments loss	$	5,172	$	21,239	$	26,611	$	44,937
Unrealized PetroTal investment loss (gain)	$	—	$	2,614	$	—	$	(3,861)
Loss on sale of PetroTal shares	—		—		—		5,070
Other financial instruments loss	$	—	$	2,614	$	—	$	1,209

Revolving credit facility and Senior Notes

Financial instruments not recorded at fair value at June 30, 2022, included the Senior Notes and the revolving credit facility (Note 5).

At June 30, 2022, the carrying amounts of the 6.25% Senior Notes and the 7.75% Senior Notes were $294.8 million and $292.6 million, respectively, which represented the aggregate principal amount less unamortized debt issuance costs, and the fair values were $281.5 million and $275.1 million, respectively. The fair value of long-term restricted cash and cash equivalents and the revolving credit facility approximated their carrying value because interest rates are variable and reflective of market rates. The fair values of other financial instruments approximate their carrying amounts due to the short-term maturity of these instruments.

Asset retirement obligation

The Company’s non-recurring fair value measurements include asset retirement obligation. The fair value of an asset retirement obligation is measured by reference to the expected future cash outflows required to satisfy the retirement obligation discounted at the Company’s credit-adjusted risk-free interest rate. The significant level 3 inputs used to calculate such liabilities include estimates of costs to be incurred, the Company’s credit-adjusted risk-free interest rate, inflation rates, and estimated dates of abandonment. Accretion expense is recognized over time as the discounted liabilities are accreted to their expected settlement value, while the asset retirement cost is amortized over the estimated productive life of the related assets.

Commodity Price Derivatives

The Company may utilize commodity price derivatives to manage the variability in cash flows associated with the forecasted sale of its oil production, reduce commodity price risk and provide a base level of cash flows to assure it can execute at least a portion of its planned capital spending.

All Company’s commodity price derivatives expired on June 30, 2022 and as at June 30, 2022, the Company had no outstanding commodity price derivatives.

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Supplemental Cash Flow Information

6 Months Ended

Jun. 30, 2022

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Information

Supplemental Cash Flow Information

The following table provides a reconciliation of cash and cash equivalents and restricted cash and cash equivalents shown as a sum of these amounts in the interim unaudited condensed consolidated statements of cash flows:

(Thousands of U.S. Dollars)	As at June 30,				As at December 31,
	2022		2021		2021		2020
Cash and cash equivalents	$	108,558	$	19,573	$	26,109	$	13,687
Restricted cash and cash equivalents - current	1,142		392		392		427
Restricted cash and cash equivalents - long-term (1)	4,827		3,590		4,903		3,409
	$	114,527	$	23,555	$	31,404	$	17,523

(1) Included in other long-term assets on the Company’s balance sheet

Net changes in assets and liabilities from operating activities were as follows:

	Six Months Ended June 30,
(Thousands of U.S. Dollars)	2022		2021
Accounts receivable and other long-term assets	$	2,356	$	28
Derivatives	(6,961)		6,264
Inventory	(736)		(1,934)
Prepaids	(3,075)		(631)
Accounts payable and accrued and other long-term liabilities	8,264		11,991
Taxes receivable and payable	56,481		11,439
Net changes in assets and liabilities from operating activities	$	56,329	$	27,157

Changes in non-cash investing working capital for the six months ended June 30, 2022, are comprised of an increase in accounts payable and accrued liabilities of $11.2 million and an increase in accounts receivable of $0.2 million (six months

ended June 30, 2021, an increase in accounts payable and accrued liabilities of $3.7 million and an increase in accounts receivable of $0.5 million).

The following table provides additional supplemental cash flow disclosures:

	Six Months Ended June 30,
(Thousands of U.S. Dollars)	2022		2021
Cash paid for income taxes	$	20,468	$	7,139
Cash paid for interest	$	11,933	$	25,659
Non-cash investing activities:
Net liabilities related to property, plant and equipment, end of period	$	41,106	$	31,887

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Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2022
Accounting Policies [Abstract]
Basis of Presentation	These interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The information furnished herein reflects all normal recurring adjustments that are, in the opinion of management, necessary for the fair presentation of results for the interim periods.

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Taxes Receivable and Payable (Tables)

6 Months Ended

Jun. 30, 2022

Tax Receivable Agreement [Abstract]

Schedule of Taxes Receivable Components

The table below shows the break-down of taxes receivable and payable, which are comprised of value added tax (“VAT”) and income tax:

(Thousands of U.S. Dollars)	As at June 30, 2022		As at December 31, 2021
Taxes Receivable
Current
VAT Receivable	$	42	$	21,918
Income Tax Receivable	—		23,588
	$	42	$	45,506
Long-Term
Income Tax Receivable	$	24,473	$	17,522
Taxes Payable
Current
VAT Payable	$	14,473	$	6,620
Income Tax Payable	9,188		—
	$	23,661	$	6,620
Total Taxes Receivable net of Taxes Payable	$	854	$	56,408

Schedule of Taxes Receivable Roll Forward

The following table shows the movement of VAT and income tax receivables for the period identified below:

(Thousands of U.S. Dollars)	VAT Receivable (Payable)		Income Tax Receivable		Total Net Taxes Receivable
Balance, as at December 31, 2021	$	15,298	$	41,110	$	56,408
Collected through direct government refunds	(265)		(99)		(364)
Collected through sales contracts	(86,092)		—		(86,092)
Taxes paid (1)	55,759		20,468		76,227
Current tax expense	—		(46,252)		(46,252)
Foreign exchange loss	869		58		927
Balance, as at June 30, 2022	$	(14,431)	$	15,285	$	854

(1)VAT is paid on certain goods and services and collected on sales in Colombia at a rate of 19%

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Property, Plant and Equipment (Tables)

6 Months Ended

Jun. 30, 2022

Property, Plant and Equipment [Abstract]

Schedule of Property, Plant and Equipment

(Thousands of U.S. Dollars)	As at June 30, 2022		As at December 31, 2021
Oil and natural gas properties
Proved	$	4,444,894	$	4,302,473
Unproved	106,536		131,865
	4,551,430		4,434,338
Other(1)	43,830		34,943
	4,595,260		4,469,281
Accumulated depletion and depreciation and impairment	(3,556,263)		(3,473,484)
	$	1,038,997	$	995,797

(1) The “other” category includes right-of-use assets for operating and finance leases of $22.2 million, which had a net book value of $10.7 million as at June 30, 2022 (December 31, 2021 - $13.9 million, which had a net book value of $3.9 million).

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Debt and Debt Issuance Costs (Tables)

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Schedule of Debt

The Company’s debt at June 30, 2022, and December 31, 2021, was as follows:

(Thousands of U.S. Dollars)	As at June 30, 2022		As at December 31, 2021
Current
Revolving credit facility	$	—	$	67,500
Unamortized debt issuance costs	—		(513)
	$	—	$	66,987
Long-Term
6.25% Senior Notes, due February 2025	$	300,000	$	300,000
7.75% Senior Notes, due May 2027	300,000		300,000
Unamortized debt issuance costs	(12,550)		(14,030)
	587,450		585,970
Long-term lease obligation(1)	8,411		1,434
	$	595,861	$	587,404
	$	595,861	$	654,391

(1) The current portion of the lease obligation has been included in accounts payable and accrued liabilities on the Company’s balance sheet and totaled $2.8 million as at June 30, 2022 (December 31, 2021 - $3.3 million).

Schedule of Interest Expense Recognized

The following table presents the total interest expense recognized in the accompanying interim unaudited condensed consolidated statements of operations:

	Three Months Ended June 30,				Six Months Ended June 30,
(Thousands of U.S. Dollars)	2022		2021		2022		2021
Contractual interest and other financing expenses	$	11,063	$	13,041	$	22,304	$	25,972
Amortization of debt issuance costs	1,131		894		2,018		1,775
	$	12,194	$	13,935	$	24,322	$	27,747

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Share Capital (Tables)

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

Schedule of Common Stock

	Shares of Common Stock
Balance, December 31, 2021	367,144,500
Shares issued on option exercise	1,727,185
Balance, June 30, 2022	368,871,685

Schedule of PSU, DSU, RSU and Stock Option Activity

The following table provides information about performance stock units (“PSUs”), deferred share units (“DSUs”), and stock option activity for the six months ended June 30, 2022:

	PSUs	DSUs	Stock Options
	Number of Outstanding Share Units	Number of Outstanding Share Units	Number of Outstanding Stock Options	Weighted Average Exercise Price/Stock Option ($)
Balance, December 31, 2021	30,365,196	5,710,764	17,848,722	1.20
Granted	6,761,105	494,955	2,753,165	1.41
Exercised	(4,396,646)	—	(1,727,185)	0.74
Forfeited	(166,687)	—	(105,020)	1.69
Expired	—	—	(1,187,309)	2.80
Balance, June 30, 2022	32,562,968	6,205,719	17,582,373	1.17

Schedule of Weighted Average Shares Outstanding

Weighted Average Shares Outstanding

	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Weighted average number of common shares outstanding	368,571,378	366,982,456	367,982,294	366,982,008
Shares issuable pursuant to stock options	11,806,859	—	12,351,243	—
Shares assumed to be purchased from proceeds of stock options	(6,144,637)	—	(7,355,842)	—
Weighted average number of diluted common shares outstanding	374,233,600	366,982,456	372,977,695	366,982,008

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Financial Instruments and Fair Value Measurement (Tables)

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Schedule of Fair Value Measurements

The following table presents the Company’s fair value measurements of its financial instruments as of June 30, 2022, and December 31, 2021:

	As at June 30, 2022		As at December 31, 2021
(Thousands of U.S. Dollars)
Level 1
Assets
Prepaid equity forward - current (2)	$	6,891	$	—
Prepaid equity forward - long-term(1)	11,494		7,578
	$	18,385	$	7,578
Liabilities
DSUs liability - long-term(3)	$	7,136	$	4,346
6.25% Senior Notes	281,460		273,672
7.75% Senior Notes	275,124		271,500
	$	563,720	$	549,518
Level 2
Assets
Derivative asset(2)	$	—	$	219
Restricted cash and cash equivalents - long-term(1)	4,827		4,903
	$	4,827	$	5,122
Liabilities
Derivative liability	$	7,230	$	2,976
Revolving credit facility	—		66,987
PSUs liability - current (4)	12,516		2,710
PSUs liability - long-term(3)	7,736		9,372
	$	27,482	$	82,045
Level 3
Liabilities
Asset retirement obligation - current(4)	$	3,421	$	—
Asset retirement obligation - long-term	56,783		54,525
	$	60,204	$	54,525

(1)The long-term portion of restricted cash and Prepaid equity forward are included in the other long-term assets on the Company’s balance sheet

(2) Included in the other current assets on the Company’s balance sheet

(3) Long-term DSUs and PSUs liabilities are included in the long-term equity compensation award liability on the Company’s balance sheet

(4) Current portion of PSU liability and asset retirement obligation are included in the other short-term liabilities on the Company’s balance sheet

Schedule of Gains or Losses on Financial Instruments Recognized

The following table presents gains or losses on derivatives and other financial instruments recognized in the accompanying interim unaudited condensed consolidated statements of operations:

	Three Months Ended June 30,				Six Months Ended June 30,
(Thousands of U.S. Dollars)	2022		2021		2022		2021
Commodity price derivatives loss	$	5,172	$	21,217	$	26,611	$	44,849
Foreign currency derivatives loss	—		22		—		88
Derivative instruments loss	$	5,172	$	21,239	$	26,611	$	44,937
Unrealized PetroTal investment loss (gain)	$	—	$	2,614	$	—	$	(3,861)
Loss on sale of PetroTal shares	—		—		—		5,070
Other financial instruments loss	$	—	$	2,614	$	—	$	1,209

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Supplemental Cash Flow Information (Tables)

6 Months Ended

Jun. 30, 2022

Supplemental Cash Flow Elements [Abstract]

Reconciliation of Cash, Cash Equivalents and Restricted Cash and Cash Equivalents

The following table provides a reconciliation of cash and cash equivalents and restricted cash and cash equivalents shown as a sum of these amounts in the interim unaudited condensed consolidated statements of cash flows:

(Thousands of U.S. Dollars)	As at June 30,				As at December 31,
	2022		2021		2021		2020
Cash and cash equivalents	$	108,558	$	19,573	$	26,109	$	13,687
Restricted cash and cash equivalents - current	1,142		392		392		427
Restricted cash and cash equivalents - long-term (1)	4,827		3,590		4,903		3,409
	$	114,527	$	23,555	$	31,404	$	17,523

(1) Included in other long-term assets on the Company’s balance sheet

Schedule of Net Changes in Assets and Liabilities

Net changes in assets and liabilities from operating activities were as follows:

	Six Months Ended June 30,
(Thousands of U.S. Dollars)	2022		2021
Accounts receivable and other long-term assets	$	2,356	$	28
Derivatives	(6,961)		6,264
Inventory	(736)		(1,934)
Prepaids	(3,075)		(631)
Accounts payable and accrued and other long-term liabilities	8,264		11,991
Taxes receivable and payable	56,481		11,439
Net changes in assets and liabilities from operating activities	$	56,329	$	27,157

Schedule of Additional Supplemental Cash Flow Disclosures

The following table provides additional supplemental cash flow disclosures:

	Six Months Ended June 30,
(Thousands of U.S. Dollars)	2022		2021
Cash paid for income taxes	$	20,468	$	7,139
Cash paid for interest	$	11,933	$	25,659
Non-cash investing activities:
Net liabilities related to property, plant and equipment, end of period	$	41,106	$	31,887

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Taxes Receivable and Payable (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Current
VAT Receivable	$ 42	$ 21,918
Income Tax Receivable	0	23,588
Tax Receivable	42	45,506
Long-Term
Income Tax Receivable	24,473	17,522
Current
VAT Payable	14,473	6,620
Income Tax Payable	9,188	0
Taxes Payable	23,661	6,620
Total Taxes Receivable net of Taxes Payable	854	$ 56,408
VAT Receivable (Payable)
Beginning balance	15,298
Collected through direct government refunds	(265)
Collected through sales contracts	(86,092)
Taxes paid	55,759
Current tax expense	0
Foreign exchange loss	869
Ending balance	(14,431)
Income Tax Receivable
Beginning balance	41,110
Collected through direct government refunds	(99)
Collected through sales contracts	0
Taxes paid	20,468
Current tax expense	(46,252)
Foreign exchange loss	58
Ending balance	15,285
Total Net Taxes Receivable
Beginning balance	56,408
Collected through direct government refunds	(364)
Collected through sales contracts	(86,092)
Taxes paid	76,227
Current tax expense	(46,252)
Foreign exchange loss	927
Ending balance	$ 854
Colombia
Taxes Receivable [Line Items]
Value added tax, percent	19.00%

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Property, Plant and Equipment (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2022 USD ($) $ / bbl	Jun. 30, 2021 $ / bbl	Dec. 31, 2021 USD ($)
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 4,595,260		$ 4,469,281
Accumulated depletion and depreciation and impairment	(3,556,263)		(3,473,484)
Total Property, Plant and Equipment (Note 4)	1,038,997		995,797
Right-of-use asset, gross	22,200		13,900
Right-of-use asset, net	$ 10,700		3,900
Crude Oil and NGL
Property, Plant and Equipment [Line Items]
Average Brent price per barrel (in USD per barrel) | $ / bbl	87.88	52.74
Oil and natural gas properties
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 4,551,430		4,434,338
Proved
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	4,444,894		4,302,473
Unproved
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	106,536		131,865
Other
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 43,830		$ 34,943

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Debt and Debt Issuance Costs - Schedule of Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021	May 20, 2019	Feb. 15, 2018
Current
Current portion of long-term debt (Note 5)	$ 0	$ 66,987
Long-Term
Long-term debt, total	587,450	585,970
Long-term lease obligation	8,411	1,434
Long-term debt excluding current maturity	595,861	587,404
Long-term and Short-term total	595,861	654,391
Current portion of lease obligation	2,800	3,300
Senior notes
Current
Unamortized debt issuance costs	$ (12,550)	(14,030)
Senior notes | 6.25% Senior Notes, due February 2025
Long-Term
Stated interest rate	6.25%			6.25%
Convertible senior notes and revolving credit facility	$ 300,000	300,000
Senior notes | 7.75% Senior Notes, due May 2027
Long-Term
Stated interest rate	7.75%		7.75%
Convertible senior notes and revolving credit facility	$ 300,000	300,000
Revolving credit facility
Current
Revolving credit facility	0	67,500
Unamortized debt issuance costs	$ 0	$ (513)

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Debt and Debt Issuance Costs - Narrative (Details) - Line of Credit - Revolving credit facility $ in Millions	Jun. 30, 2022 USD ($)
Line of Credit Facility [Line Items]
Borrowing base	$ 150
Readily Available
Line of Credit Facility [Line Items]
Borrowing base	125
Subject to Approval by Major Lenders
Line of Credit Facility [Line Items]
Borrowing base	$ 25

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Debt and Debt Issuance Costs - Schedule of Interest Expense Recognized (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Debt Disclosure [Abstract]
Contractual interest and other financing expenses	$ 11,063	$ 13,041	$ 22,304	$ 25,972
Amortization of debt issuance costs	1,131	894	2,018	1,775
Total interest expense recognized	$ 12,194	$ 13,935	$ 24,322	$ 27,747

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Share Capital - Schedule of Common Stock (Details)	6 Months Ended
	Jun. 30, 2022 shares
Increase (Decrease) in Common Stock
Common shares outstanding, as at beginning of period (in shares)	367,144,500
Shares issued on option exercise (in shares)	1,727,185
Common shares outstanding, as at period end (in shares)	368,871,685
Shares of Common Stock
Increase (Decrease) in Common Stock
Common shares outstanding, as at beginning of period (in shares)	367,144,500
Shares issued on option exercise (in shares)	1,727,185
Common shares outstanding, as at period end (in shares)	368,871,685

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Share Capital - Schedule of PSU, DSU, RSU and Stock Option Activity (Details)	6 Months Ended
	Jun. 30, 2022 $ / shares shares
Number of Outstanding Stock Options
Beginning Balance (in shares)	17,848,722
Granted (in shares)	2,753,165
Exercised (in shares)	(1,727,185)
Forfeited (in shares)	(105,020)
Expired (in shares)	(1,187,309)
Ending Balance (in shares)	17,582,373
Weighted Average Exercise Price/Stock Option ($)
Beginning balance (in dollars per share) | $ / shares	$ 1.20
Granted (in dollars per share) | $ / shares	1.41
Exercised (in dollars per share) | $ / shares	0.74
Forfeited (in dollars per share) | $ / shares	1.69
Expired (in dollars per share) | $ / shares	2.80
Ending balance (in dollars per share) | $ / shares	$ 1.17
PSUs
Number of Outstanding Share Units
Beginning Balance (in shares)	30,365,196
Granted (in shares)	6,761,105
Exercised (in shares)	(4,396,646)
Forfeited (in shares)	(166,687)
Expired (in shares)	0
Ending Balance (in shares)	32,562,968
DSUs
Number of Outstanding Share Units
Beginning Balance (in shares)	5,710,764
Granted (in shares)	494,955
Exercised (in shares)	0
Forfeited (in shares)	0
Expired (in shares)	0
Ending Balance (in shares)	6,205,719

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Share Capital - Equity Compensation Awards (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 2.0	$ 1.9	$ 6.5	$ 5.5
Unrecognized compensation cost	$ 19.7		$ 19.7		$ 11.8
Weighted average period for recognition			1 year 8 months 12 days
PSUs | Vested on December 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Payments for units vested in period			$ 2.4
PSUs | Vested on December 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Payments for units vested in period				$ 0.6

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Share Capital - Weighted Average Shares Outstanding (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Share-Based Payment Arrangement [Abstract]
Weighted average number of common shares outstanding, basic (in shares)	368,571,378	366,982,456	367,982,294	366,982,008
Shares issuable pursuant to stock options (in shares)	11,806,859	0	12,351,243	0
Shares assumed to be purchased from proceeds of stock options (in shares)	(6,144,637)	0	(7,355,842)	0
Weighted average number of diluted common shares outstanding (in shares)	374,233,600	366,982,456	372,977,695	366,982,008

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Share Capital - Antidilutive Securities (Details) - shares	3 Months Ended	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2022
Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from diluted income (loss) per share calculation (in shares)	6,092,908	5,738,428

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Revenue (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Concentration Risk [Line Items]
Variable adjustment for transportation, location, quality, and other elements, percentage	12.00%	17.00%	(12.00%)	16.00%
Accrued sales revenue	$ 0		$ 0		$ 0
Product Concentration Risk | Revenue from Contract with Customer
Concentration Risk [Line Items]
Concentration risk, percentage	100.00%	100.00%	100.00%	100.00%
Product Concentration Risk | Revenue from Contract with Customer | Colombia | Customer 1
Concentration Risk [Line Items]
Concentration risk, percentage	55.00%	75.00%	56.00%	71.00%
Product Concentration Risk | Revenue from Contract with Customer | Colombia | Customer 2
Concentration Risk [Line Items]
Concentration risk, percentage	44.00%	14.00%	43.00%	22.00%

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Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Income Tax Disclosure [Abstract]
Effective tax rate			54.00%	(48.00%)
Current income tax expense	$ 25,425	$ (14)	$ 46,252	$ (14)

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Contingencies (Details) - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
Letters of credit and other credit support provided	$ 105.1	$ 103.0

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Financial Instruments and Fair Value Measurement - Schedule of Fair Value Measurements (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021	Jun. 30, 2021	Dec. 31, 2020	May 20, 2019	Feb. 15, 2018
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Restricted cash and cash equivalents - long-term	$ 4,827	$ 4,903	$ 3,590	$ 3,409
Total Assets	1,256,144	1,189,111
Liability - long-term	673,769	659,044
Liability - current	210,709	227,987
Asset retirement obligation - long-term	$ 56,783	54,525
6.25% Senior Notes, due February 2025 | Senior notes
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Stated interest rate	6.25%					6.25%
7.75% Senior Notes, due May 2027 | Senior notes
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Stated interest rate	7.75%				7.75%
Recurring | Level 2
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total Assets	$ 4,827	5,122
Recurring | Not Designated as Hedging Instrument | 6.25% Senior Notes, due February 2025 | Senior notes
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Debt instrument, fair value disclosure	281,500
Recurring | Not Designated as Hedging Instrument | 7.75% Senior Notes, due May 2027 | Senior notes
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Debt instrument, fair value disclosure	275,100
Recurring | Not Designated as Hedging Instrument | Level 1
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Prepaid equity forward - current - current	6,891	0
Prepaid equity forward - current - long-term	11,494	7,578
Total Assets	18,385	7,578
Liabilities	563,720	549,518
Recurring | Not Designated as Hedging Instrument | Level 1 | DSUs
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Liability - long-term	7,136	4,346
Recurring | Not Designated as Hedging Instrument | Level 1 | 6.25% Senior Notes, due February 2025 | Senior notes
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Debt instrument, fair value disclosure	281,460	273,672
Recurring | Not Designated as Hedging Instrument | Level 1 | 7.75% Senior Notes, due May 2027 | Senior notes
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Debt instrument, fair value disclosure	275,124	271,500
Recurring | Not Designated as Hedging Instrument | Level 2
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Restricted cash and cash equivalents - long-term	4,827	4,903
Debt instrument, fair value disclosure	0	66,987
Derivative liability	7,230	2,976
Liabilities	27,482	82,045
Recurring | Not Designated as Hedging Instrument | Level 2 | PSUs
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Liability - long-term	7,736	9,372
Liability - current	12,516	2,710
Recurring | Not Designated as Hedging Instrument | Level 3
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Asset retirement obligation - current	3,421	0
Asset retirement obligation - long-term	56,783	54,525
Asset retirement obligation	60,204	54,525
Recurring | Designated as Hedging Instrument | Level 2
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Derivative asset	$ 0	$ 219

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Financial Instruments and Fair Value Measurement - Narrative (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021	May 20, 2019	Feb. 15, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
PEF, notional amount (in shares)	16,000,000		16,000,000		10,000,000
Investments, fair value	$ 18,400,000		$ 18,400,000		$ 7,600,000
Gain (loss) on prepaid equity forwards	(5,200,000)	$ 100,000	2,700,000	$ 100,000
Commodity Hedge
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Outstanding derivative	$ 0		$ 0
Senior notes | 6.25% Senior Notes, due February 2025
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Stated interest rate	6.25%		6.25%				6.25%
Senior notes | 6.25% Senior Notes, due February 2025 | Recurring | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, fair value disclosure	$ 281,500,000		$ 281,500,000
Senior notes | 7.75% Senior Notes, due May 2027
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Stated interest rate	7.75%		7.75%			7.75%
Senior notes | 7.75% Senior Notes, due May 2027 | Recurring | Not Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, fair value disclosure	$ 275,100,000		$ 275,100,000
Carrying amount | Senior notes | 6.25% Senior Notes, due February 2025
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, fair value disclosure	294,800,000		294,800,000
Carrying amount | Senior notes | 7.75% Senior Notes, due May 2027
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, fair value disclosure	$ 292,600,000		$ 292,600,000

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Financial Instruments and Fair Value Measurement - Schedule of Gains or Losses on Financial Instruments Recognized (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Derivative Instruments, Gain (Loss) [Line Items]
Derivative instruments loss	$ 5,172	$ 21,239	$ 26,611	$ 44,937
Unrealized PetroTal investment loss (gain)	0	2,614	0	(3,861)
Loss on sale of PetroTal shares	0	0	0	5,070
Other financial instruments loss	0	2,614	0	1,209
Commodity price derivatives loss
Derivative Instruments, Gain (Loss) [Line Items]
Derivative instruments loss	5,172	21,217	26,611	44,849
Foreign currency derivatives loss
Derivative Instruments, Gain (Loss) [Line Items]
Derivative instruments loss	$ 0	$ 22	$ 0	$ 88

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Supplemental Cash Flow Information - Reconciliation of Cash, Cash Equivalents and Restricted Cash and Cash Equivalents (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021	Jun. 30, 2021	Dec. 31, 2020
Supplemental Cash Flow Elements [Abstract]
Cash and cash equivalents	$ 108,558	$ 26,109	$ 19,573	$ 13,687
Restricted cash and cash equivalents - current	1,142	392	392	427
Restricted cash and cash equivalents - long-term	4,827	4,903	3,590	3,409
Cash, cash equivalents and restricted cash and cash equivalents	$ 114,527	$ 31,404	$ 23,555	$ 17,523

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Supplemental Cash Flow Information - Schedule of Net Changes in Assets and Liabilities (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Supplemental Cash Flow Elements [Abstract]
Accounts receivable and other long-term assets	$ 2,356	$ 28
Derivatives	(6,961)	6,264
Inventory	(736)	(1,934)
Prepaids	(3,075)	(631)
Accounts payable and accrued and other long-term liabilities	8,264	11,991
Taxes receivable and payable	56,481	11,439
Net changes in assets and liabilities from operating activities	56,329	27,157
Increase (decrease) in accounts payable and accrued liabilities	11,200	3,700
Increase in accounts receivable	$ 200	$ 500

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Supplemental Cash Flow Information - Schedule of Additional Supplemental Cash Flow Disclosures (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Supplemental Cash Flow Elements [Abstract]
Cash paid for income taxes	$ 20,468	$ 7,139
Cash paid for interest	11,933	25,659
Non-cash investing activities:
Net liabilities related to property, plant and equipment, end of period	$ 41,106	$ 31,887