Gran Tierra Energy Inc. Announces Fourth Quarter and 2012 Year-End Results

  Gran Tierra Energy Inc. Announces Fourth Quarter and 2012 Year-End Results

PR Newswire

CALGARY, Feb. 26, 2013

Drilling and Operations Success Results in Record Reserves and Funds Flows
From Operations

CALGARY, Feb. 26, 2013 /PRNewswire/ - Gran Tierra Energy Inc. ("Gran Tierra
Energy") (NYSE MKT: GTE) (TSX: GTE), a company focused on oil and gas
exploration and production in South America, today announced its financial and
operating results for the quarter and year ended December31, 2012.All dollar
amounts are in United States ("U.S.") dollars unless otherwise indicated.

Financial and operating highlights for the year include:

  *In 2012, oil and natural gas production net after royalty ("NAR") and
    adjusted for inventory changes, was 16,897 barrels of oil equivalent per
    day ("BOEPD"), a decrease of 3% from 2011. Production was impacted by an
    increase in oil inventory in the Ecopetrol-operated Trans-Andean oil
    pipeline (the "OTA pipeline") in Colombia and associated Ecopetrol owned
    facilities in the Putumayo Basin as a result of pipeline disruptions and a
    change in the sales point, and an increase in oil inventory with another
    customer. Alternative transportation measures have been put in place to
    mitigate future disruptions. Despite pipeline downtime, year-to-date
    production before inventory adjustments up to and including February 24,
    2013 averaged approximately 21,000 BOEPD NAR;
  *Total Proved ("1P") reserves NAR increased 19% to approximately 40.6
    million barrels of oil equivalent ("MMBOE") (approximately 95% light and
    medium oil and liquids; an increase compared to 91% at year-end 2011);
    total Proved plus Probable ("2P") reserves NAR increased 15% to
    approximately 56.2 MMBOE (approximately 95% light and medium oil and
    liquids; an increase compared to 85% at year-end 2011); total Proved plus
    Probable plus Possible ("3P") reserves NAR increased 1% to approximately
    86.3 MMBOE (approximately 87% light and medium oil and liquids; an
    increase compared to 69% at year-end 2011);
  *Based on Gran Tierra Energy's 2012 year-end U.S. Securities and Exchange
    Commission ("SEC") company interest reserves and Gran Tierra Energy's 2012
    total working interest production, Gran Tierra Energy's 1P, 2P, and 3P
    reserves life indices grew to 6.4 years, 8.9 years, and 13.6 years
    respectively;
  *Revenue and other income for the year was $585.2 million, a 2% decrease
    over 2011;
  *Net income fell by 21% from the prior year to $99.7 million, representing
    basic and diluted net income per share of $0.35, compared with net income
    of $126.9 million, or $0.46 per share basic and $0.45 per share diluted,
    in 2011;
  *Funds flow from operations increased to $323.8 million from $319.0 million
    in  2011;
  *Cash and cash equivalents were $212.6 million at December31, 2012,
    compared with $351.7 million at December31, 2011;
  *Continued the development of the Moqueta field in the Putumayo Basin,
    Colombia with drilling results from the Moqueta-7 and -8 appraisal wells
    adding substantial reserves in all categories;
  *Successfully drilled and tested the Ramiriqui-1 oil exploration well in
    the Llanos Basin, Colombia. The well tested at a restricted rate of 2,525
    barrels of oil per day ("BOPD") gross of 26°API crude oil;
  *Started drilling the Bretaña Norte 95-2-1XD exploration well in Block 95,
    Peru, and completed drilling subsequent to year-end. The well encountered
    an oil-bearing sandstone reservoir in the Vivian Formation with an
    approximate gross oil column thickness of 99 feet and 53 feet net pay
    thickness. The well flow tested, on natural flow without pumps, 1,984
    BOPD of 18.5 degree API quality oil.
  *In Brazil, production was initiated from two new wells drilled in the Tiê
    Field on Block 155, with production growing to approximately 1,000 BOPD
    gross or 850 BOPD NAR;
  *Drilled the 1-GTE-05HP horizontal well in Block 142, the first horizontal
    well to be drilled in the tight sands of the Gomo formation in the
    Recôncavo Basin of Brazil. Fracture stimulation operations are expected
    to be completed in the second quarter of 2013;
  *Successfully drilled and tested the Proa-2 appraisal well in the Proa oil
    discovery on the Surubi Block, Argentina. The well tested 6,300 BOPD of
    46° API crude oil;
  *Drilled the PMN-1117 horizontal well in the Puesto Morales Block, the
    first horizontal multi-stage fracture stimulated well drilled in the tight
    sands of the Loma Montosa formation of Argentina. This wellflow tested at
    a rate of approximately 840 BOPD initially and is currently flowing
    naturally at a choke-restricted rate of 100 BOPD of 33.8°API oil with a
    27% water cut;
  *Gran Tierra Energy was the successful bidder on Sinu-1 and Sinu-3 Blocks
    in the Sinu Basin of northern Colombia in the National Hydrocarbon Agency
    2012 Bid Round. In addition, working interest in Blocks 129, 142, 155 and
    244 in Brazil increased to 100% working interest, in Block 95 in Peru
    increased to 100% and working interest and operatorship in Blocks 123 and
    129 in Peru increased to 100%, subject to government approval.

"Gran Tierra Energy had another excellent  year, growing our land position  in 
each of our core areas of operations, growing oil reserves on those lands, and
growing  production  capacity  from   those  reserves,"said  Dana   Coffield, 
President and Chief Executive Officer  of Gran Tierra Energy. "2012  presented 
significant challenges  in  utilizing  that new  production  capacity  due  to 
unexpected increases  in pipeline  downtime in  Colombia. In  spite of  those 
transportation challenges, we  were able to  successfully execute our  planned 
work program, attain record funds flow from operations, and remain debt free,"
added  Coffield.  "The  downtime  challenges  have  now  been   substantially 
mitigated and we are currently consistently producing at near record  levels. 
In addition, we have active drilling operations on-going in all our core areas
of operations,  with  outstanding success  already  reported in  Peru,  as  we 
continue to execute our growth strategy," concluded Coffield.

Production                                 
review
                                                                Three Months Ended                          
                  Three Months Ended December 31, 2012              December 31, 2011
(Barrels of
Oil
Equivalent)   Colombia     Argentina    Brazil       Total        Colombia     Argentina   Brazil       Total
Gross         1,783,195    373,372    85,506    2,242,073     1,938,685    303,374   22,620    2,264,679 
production
Royalties     (473,229)   (45,753)  (10,736)    (529,718)     (513,374)   (35,690)  (2,822)    (551,886) 
Inventory     (128,784)      3,537   (5,146)    (130,393)       (2,386)    (4,298)  (2,177)      (8,861) 
adjustment
Production,   1,181,182    331,156    69,624    1,581,962     1,422,925    263,386   17,621    1,703,932 
NAR
                                                                                                        
Production       12,839      3,600       757       17,196        15,467      2,863      192       18,522 
per day,
NAR (BOEPD)
                                                                                                        
                                                                Year Ended December                         
                      Year Ended December 31, 2012                      31, 2011
(Barrels of
Oil
Equivalent)   Colombia     Argentina    Brazil       Total        Colombia     Argentina   Brazil       Total
Gross         7,073,526  1,448,169   121,882    8,643,577     7,470,409  1,040,349   53,830    8,564,588 
production
Royalties   (1,850,357)  (174,458)  (15,059)  (2,039,874)   (2,066,860)  (119,545)  (6,657)  (2,193,062) 
Inventory     (411,742)    (2,051)   (5,624)    (419,417)      (10,062)    (3,446)  (4,115)     (17,623) 
adjustment
Production,   4,811,427  1,271,660   101,199    6,184,286     5,393,487    917,358   43,058    6,353,903 
NAR
                                                                                                        
Production       13,146      3,474       277       16,897        14,777      2,513      118       17,408 
per day,
NAR (BOEPD)
                                                                                                

                   
Financial           
review
           Three Months Ended December 31,      Year Ended December 31, 
                                      %                                   %
            2012       2011     Change      2012        2011     Change
Revenue    $ 145,153  $ 161,735     (10)   $ 585,187   $ 597,407     (2)
and Other                                                            
Income
($000s)
Net Income $  42,263  $  32,552      30   $  99,659   $ 126,917    (21)
($000s)                                                              
Net Income $    0.15  $    0.12      25   $    0.35   $    0.46    (24)
Per Share                                                            
- Basic
Net Income $    0.15  $    0.12      25   $    0.35   $    0.45    (22)
Per Share                                                            
- Diluted
                                                        

Net income reconciled to funds flow from operations^(1) is as follows:

                         
                         
                        Three Months Ended December  Year Ended December 31,
                                                 31,
Funds Flow From                                                  
Operations - Non-GAAP       2012            2011          2012          2011
Measure ($000s)
                                                                  
Net income                $   42,263    $    32,552   $  99,659  $  126,917
Adjustments to reconcile                                           
net income to funds
flow from operations
Depletion, depreciation,     44,055        71,061    182,037    231,235
accretion and impairment
   Deferred taxes           35,129      (13,958)     26,274   (28,685)
   Stock-based               2,152         3,384     12,006     12,767
    compensation
   Unrealized gain on            —             —          —    (1,354)
    financial
    instruments
   Unrealized foreign        2,982       (1,607)     17,054    (2,232)
    exchange loss (gain)
   Settlement of asset           —          (36)      (404)      (345)
    retirement
    obligation
Other gain                  (9,336)             —    (9,336)          —
   Equity tax                    —         (299)    (3,534)      2,442
   Gain on acquisition           —             —          —   (21,699)
Funds flow from           $  117,245    $    91,097   $ 323,756  $  319,046
operations
                                                         

^(1) Funds flow from operations is a non-GAAP measure which does not have  any 
standardized meaning prescribed under generally accepted accounting principles
in the  United States  of  America ("GAAP").  Management uses  this  financial 
measure to  analyze operating  performance and  the income  generated by  Gran 
Tierra Energy's 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 
operating performance and  Gran Tierra Energy's  financial results.  Investors 
should  be  cautioned  that  this  measure  should  not  be  construed  as  an 
alternative to  net  income or  other  measures of  financial  performance  as 
determined in accordance with GAAP. Gran Tierra Energy's method of calculating
this measure may differ from other  companies and, accordingly, it may not  be 
comparable to  similar  measures used  by  other companies.  Funds  flow  from 
operations, as presented, is net income adjusted for depletion,  depreciation, 
accretion and impairment ("DD&A"),  deferred taxes, stock-based  compensation, 
unrealized gain on financial instruments, unrealized foreign exchange loss  or 
gain, settlement of asset  retirement obligation, other  gain, equity tax  and 
gain on acquisition.

Fiscal 2012 Financial Highlights:

Revenue and other income  decreased by 2% to  $585.2 million in 2012  compared 
with $597.4 million in 2011 due  to decreased production, partially offset  by 
increased average realized oil prices. The  decrease in production was due  to 
increased oil inventory  in the  OTA pipeline and  associated Ecopetrol  owned 
facilities in the  Putumayo Basin  as a  result of  oil delivery  restrictions 
caused by OTA pipeline  disruptions in Colombia, a  change in the sales  point 
for volumes  sold  to Ecopetrol,  and  increased oil  inventory  with  another 
customer and in our  storage facilities, partially  offset by production  from 
new producing wells in Colombia and Argentina.

Average realized oil prices increased by 1% to $97.31 per bbl from $96.60  per 
bbl for the year  ended December 31, 2012.  In Colombia, the average  realized 
oil price increased by 2%  to $103.04 per bbl.  Gran Tierra Energy received  a 
premium to West Texas  Intermediate ("WTI") in Colombia  during 2012. WTI  oil 
prices for 2012 were $94.20 per barrel ("bbl") compared with $95.06 per bbl in
2011. Average Brent  oil prices for  2012 were $111.67  per bbl compared  with 
$111.26 per bbl in 2011.

Operating expenses in 2012  were $124.9 million, or  $20.20 per barrel of  oil 
equivalent ("BOE"), compared with $86.5 million,  or $13.61 per BOE, in  2011. 
The increase in operating expenses was  primarily due to an increase of  $29.3 
million in Colombia  mainly due to  OTA pipeline oil  transportation costs  of 
$3.77 per BOE, previously deducted from realized sales prices and now included
as operating costs due to the change in the Ecopetrol sales point in  February 
2012, and  increased  trucking to  other  sales  points due  to  OTA  pipeline 
disruptions.

DD&A expenses in 2012 decreased to $182.0 million from $231.2 million in 2011.
DD&A expenses in 2012 included a $20.2 million ceiling test impairment in  our 
Brazil cost center related to seismic  and drilling costs on Block  BM-CAL-10. 
DD&A expenses in 2011 included a $42.0 million ceiling test impairment in  our 
Peru cost center related to drilling costs  from a dry well and seismic  costs 
on relinquished blocks, and  a $25.7 million ceiling  test impairment loss  in 
our Argentina cost center related to an increase in estimated future operating
and capital costs  to produce our  remaining Argentina proved  reserves and  a 
decrease in reserve volumes. On a per BOE basis, the depletion rate  decreased 
by 19% to $29.44 from $36.39. The decrease was mainly due to lower  impairment 
charges of $3.42 per BOE in 2012 compared with $10.65 per BOE in 2011.

General and administrative ("G&A") expenses in 2012 of $58.9 million decreased
by 2% from $60.4  million in 2011. Increased  employee related costs and  bank 
fees reflecting  expanded  operations  were  more  than  offset  by  increased 
recoveries, increased capitalized costs  in Peru and  the absence of  expenses 
related to the 2011 Petrolifera Petroleum Limited ("Petrolifera") acquisition.
G&A expenses in  2011 included $1.2  million of expenses  associated with  the 
acquisition of Petrolifera  and $1.6  million of interest  on the  Petrolifera 
debt. G&A expenses  per BOE in  2012 of  $9.52 were comparable  with $9.50  in 
2011.

Other gain of $9.3 million  in the year ended December  31, 2012 relates to  a 
value added tax recovery resulting from the completion of a reorganization  of 
companies and  their Colombian  branches in  the Colombian  reporting  segment 
during the fourth quarter of 2012.

In 2012, the foreign exchange loss  was $31.3 million, of which $17.1  million 
was an  unrealized  non-cash  foreign  exchange  loss.  The  realized  foreign 
exchange loss in 2012  primarily arose upon payment  of 2011 Colombian  income 
tax liabilities. For the year ended December 31, 2011, there was an unrealized
non-cash foreign exchange gain of $2.2  million, but this was almost  entirely 
offset by realized foreign exchange losses. The Colombian Peso strengthened by
9.0% and  weakened  by  1.5%  against  the  U.S.  dollar  in  2012  and  2011, 
respectively.

Income tax expense was $97.7 million for 2012, compared with $107.3 million in
2011. The decrease was primarily due to lower income before tax.

Net income in 2012 was $99.7 million, a 21% decrease from 2011. On a per share
basis, net income decreased  to $0.35 per share  basic and diluted from  $0.46 
per share basic and $0.45 per share diluted in 2011. In 2012, decreased  DD&A, 
G&A and  income tax  expenses, the  realization  of a  gain upon  a  corporate 
reorganization in  Colombia,  and the  absence  of the  Colombian  equity  tax 
expense were  more  than  offset  by decreased  oil  and  natural  gas  sales, 
increased operating expenses and foreign  exchange losses, and the absence  of 
the 2011  gain on  acquisition. Net  income in  2011 included  a gain  on  the 
acquisition of Petrolifera of $21.7 million.

Balance Sheet Highlights:

Cash and cash equivalents were  $212.6 million at December31, 2012,  compared 
with $351.7  million  at  December31,  2011. The  change  in  cash  and  cash 
equivalents during 2012 was primarily the result of funds flow from operations
of $323.8 million, an $11.9 million decrease in restricted cash, and  proceeds 
from issuance  of common  stock of  $4.3  million being  more than  offset  by 
capital  expenditures  of  $276.1  million,  a  net  increase  in  assets  and 
liabilities from operating activities of $167.4  million and cash paid for  an 
acquisition in Brazil of $35.5 million.

Working capital (including cash  and cash equivalents)  was $222.5 million  at 
December31, 2012,  a  $9.4  million  increase  from  December31,  2011.  The 
increase was primarily a result of the following: a $50.5 million increase in
accounts receivable due to a change  in the timing of collection of  Ecopetrol 
receivables and increased revenue  in Argentina; a  $26.4 million increase  in 
inventory primarily due to the new sales agreement with Ecopetrol in  Colombia 
which changed the sales  point from Orito  Station to the  Port of Tumaco;  an 
$18.4 million increase in taxes receivable  due to value added tax and  income 
tax  recoveries  in  Colombia  generated   upon  completion  of  a   corporate 
reorganization; a $73.1 million decrease  in taxes payable due to  utilization 
ofoperating loss carry-forwards and deductions  for dry hole costs  resulting 
from the same corporate reorganization, and lower taxable income in  Colombia; 
partially offset by a $139.1 million decrease in cash and cash equivalents and
a $19.7 million increase  in accounts payable and  accrued liabilities due  to 
increased capital expenditures in Peru  and Brazil immediately prior to  year 
end.

Reserve and Production Highlights:

Reserves NAR calculated in accordance with  SEC rules as at December31,  2012 
are approximately  40.6 MMBOE  proved,  15.6 MMBOE  probable, and  30.1  MMBOE 
possible, and 86.3 MMBOE  total 3P reserves. This  compares to reserves as  at 
December31, 2011 of  34.0 MMBOE proved,  14.8 MMBOE probable  and 37.0  MMBOE 
possible, and total 3P reserves of approximately 85.8 MMBOE.

As per Canadian National Instrument 51-101  - Standards of Disclosure for  Oil 
and Gas Activities ("NI 51-101") and the reserves definitions in the  Canadian 
Oil and Gas Evaluation Handbook ("COGEH"), reserves NAR to Gran Tierra  Energy 
as at  December31,  2012 are  approximately  40.4 MMBOE  proved,  15.9  MMBOE 
probable, and 30.7  MMBOE possible,  and 87.0  MMBOE total  3P reserves.  This 
compares to reserves as at December 31, 2011 of 34.0 MMBOE proved, 14.9  MMBOE 
probable and 37.6 MMBOE possible, and total 3P reserves of approximately  86.6 
MMBOE.

Possible reserves are those  additional reserves that are  less certain to  be 
recovered than  probable  reserves.  There  is  a  10%  probability  that  the 
quantities actually recovered will equal or exceed the sum of 3P reserves.

Annual production  for 2012  averaged approximately  18,043 BOEPD  NAR  before 
inventory changes or 16,897 BOEPD NAR  after inventory changes, a decrease  of 
approximately 3% versus  17,408 BOEPD NAR  in 2011, and  consisting of  13,146 
BOEPD NAR in  Colombia, 3,474  BOEPD NAR  in Argentina  and 277  BOPD NAR  in 
Brazil. Production in the fourth quarter of 2012 averaged approximately 18,613
BOEPD NAR before inventory  adjustments, while year-to-date production  before 
inventory  adjustments  up  to  and  including  February  24,  2013   averaged 
approximately 21,000 BOEPD NAR.

Production for  2012 was  below target  due to  an unanticipated  increase  in 
pipeline disruptions in Colombia,  particularly on the Ecopetrol-operated  OTA 
pipeline. Alternative  transportation  measures have  been  put in  place  to 
mitigate future disruptions. These  include a new pumping  station on OTA  to 
increase  throughput  capacity   on  that  line,   entering  into   additional 
interruptible  trucking  contracts  to  potentially  evacuate  all  production 
capacity  when  required  and  securing  additional  pipeline   transportation 
capacity with Ecopetrol through Ecuador pipeline options.

Fourth Quarter 2012 Operational Highlights

Colombia 

Chaza Block, Putumayo Basin (Gran Tierra Energy 100% WI and operator)

Moqueta Field

Gran Tierra  Energy  completed  initial testing  of  Moqueta-7  by  collecting 
reservoir  data  and  fluid  samples  with  a  hydraulic  jet  pump  from  the 
T-Sandstone and  Caballos  formations in  three  repeated fault  blocks.  The 
T-Sandstone formation in  the primary fault  block consisted of  44 feet  true 
vertical depth  ("TVD")  gross reservoir  or  33  feet TVD  of  net  reservoir 
thickness. It was perforated and tested from 6,641 feet to 6,710 feet measured
depth ("MD") for 78 hours at a rate  of 463 BOPD of 23.7° API oil with  a0.4% 
water cut. The underlying Caballos formation consisted of 200 feet TVD  gross 
reservoir or  68 feet  TVD net  reservoir thickness.  It was  perforated  and 
tested from 6,890 feet to 7,183 feet MD for 59 hours at a rate of 267 BOPD  of 
23.8° API oil with a1.1% water cut.

A repeated oil-bearing Caballos Sandstone reservoir section was encountered in
a new,  previously  unrecognized,  fault  block with  90  feet  TVD  of  gross 
reservoir or 55 feet TVD of net reservoir thickness. The interval from  7,466 
feet to 7,528 feet MD was perforated and tested with a hydraulic jet pump  for 
5 hours  at  100  BOPD of  25.3°  API  oil  with a  stabilized  water  cut  of 
approximately 1%.

A  second  repeated  oil-bearing  Caballos  Sandstone  reservoir  section  was 
encountered in a new, previously unrecognized fault block with 139 feet TVD of
gross reservoir or 60 feet TVD of net reservoir thickness. The  intervalfrom 
7,680 feet to  7,790 feet MD  was perforated and  tested for 13  hours with  a 
hydraulic jet pump at 316 BOPD of 26.5° API oil with a 2.8% water cut.

The Moqueta-7  bottom  hole  location  is believed  to  be  near  the  western 
extremity of the main block  of the Moqueta field.  The well, because of  its 
bottom hole  position, will  be completed  as a  water injector  for  pressure 
maintenance to enhance oil recovery and production from producing wells in the
main block.

Moqueta-8 was drilled and  reached total depth in  basement in the main  fault 
block before  year-end.  Subsequent to  year-end,  testing was  initiated  by 
collecting reservoir data and  fluid samples using a  hydraulic jet pump  from 
the Caballos formation, along  with the T-Sandstone  and U-Sandstone from  the 
Villeta formations. The Caballos  formation consisted of  209 feet TVD  gross 
reservoir or 104  feet TVD  net reservoir  thickness. It  was perforated  and 
tested from 5,361 feet to 5,538 feet MD for 57 hours at a rate of 651 BOPD  of 
28.2° API oil with a0.4% water cut.The T-Sandstone formation consisted  of 
85 feet TVD gross reservoir or 72 feet TVD of net reservoir thickness. It was
perforated and tested from  5,153 feet to  5,256 feet MD for  16.4 hours at  a 
rate of  925 BOPD  of 27.0°  API oil  and astabilized  0.4% water  cut.  The 
U-Sandstone formation consisted of 44 feet TVD gross reservoir or 32 feet  TVD 
net reservoir thickness.  It was  perforated and  tested from  4,866 feet  to 
4,911 feet MD for 24 hours at a rate  of 24 BOPD of 16.3° API oil with  a0.4% 
water cut. This well is being completed as a production well.

Moqueta-9, the  next well  in  the appraisal  program  to further  define  the 
reserve potential of the field, was spud on January 20, 2013 and is  targeting 
the northern portion of  the Moqueta field. Initial  results are expected  in 
late March.

Argentina

Puesto Morales Block, Neuquen Basin (100% working interest and operator)

The PMN-1117 horizontal  well reached  a total depth  ("TD") of  approximately 
2,130 meters MD (1,408 meters TVD) on October 27, 2012. The well was  drilled 
with a 483 meter horizontal  section and multi-stage fracture stimulation  was 
conducted on the well with production testing initiated on December 2,  2012. 
During the first 24  hours, this wellflow tested  at a rate of  approximately 
840 BOPD from the  tight oil Loma Montosa  reservoir. This well is  currently 
flowing naturally at a choke-restricted rate of 100 BOPD of 33.8°API oil  with 
a 27% water cut.

Peru

Block 95 (100% working interest and operator)

Bretaña Norte 95-2-1XD exploration well  began drilling in December 2012,  and 
reached TD subsequent to  year-end. Oil shows were  encountered at the top  of 
the target Vivian Formation reservoir section and coring operations were  then 
initiated, resulting in the  recovery of oil-saturated core  over most of  the 
oil-column  and  additional  core  in   the  underlying  water  column.   Log 
interpretations and MDT fluid and  pressure sampling indicate the presence  of 
an oil-bearing sandstone reservoir in the Vivian Formation beginning at  9,408 
feet MD or 8,851 feet TVD with an approximate gross oil column thickness of 99
feet and 53 feet net pay thickness.

A drill stem test was conducted over a 29 foot interval from 9,409 feet MD  to 
9,438 feet MD. Approximately 1,170 BOPD was produced on natural flow  without 
pumps for 19.65 hours with 0% water cut through a 46/64 inch choke. The  choke 
size  was  then  increased  to  a  64/64  inch  and  oil  flow  increased   to 
approximately 1,984 BOPD on  natural flow without pumps  over a period of  1.5 
hours with  0%  water  cut.  Cumulative production  over  the  testing  period 
amounted  to  1,082  barrels  of  oil.  The  wellhead  flowing  pressure   and 
temperature were increasing  through the test,  indicating that the  formation 
was cleaning up and oil  flow was increasing over  the duration of the  test. 
The test was successfully concluded when available crude oil storage  capacity 
had been achieved.

In its press  release dated June  11, 2012, Gran  Tierra Energy announced  the 
results of a contingent gross lease resource estimate for the oil discovery on
Block  95,  provided  by  its  independent  reserves  auditor,  GLJ  Petroleum 
Consultants effective June 1, 2012, prior to the drilling of the Bretaña Norte
95-2-1XD  exploration  well.  The  resource  estimate  has  been  prepared  in 
compliance with National Instrument 51-101  - Standards of Disclosure for  Oil 
and Gas Activities  and the  Canadian Oil  and Gas  Evaluation Handbook.  The 
estimates included a low  estimate "1C" contingent  resources of 11.5  million 
stock tank barrels of oil ("MMSTB"), a best estimate "2C" contingent resources
of 31.6 MMSTB, and a high estimate "3C" contingent resources of 88.1  MMSTB. 
There is  no certainty  that it  will be  commercially viable  to produce  any 
portion of the resources.  Additional information respecting such  contingent 
resource estimates is included  in the June 11,  2012 press release and  under 
the heading "Forward-Looking Statements and Legal Advisories" below.

The Supreme  Decree approving  the assignment  of the  additional 40%  working 
interest in  Block 95  to Gran  Tierra Energy  Peru S.R.L.was  issued by  the 
Government of  Peru on  January 23,  2013. The  Public Deed  to finalize  the 
assignment and  vest a  100%  working interest  in  the company  was  executed 
February 15, 2013.

Blocks 123 and 129 (100% working interest, subject to government approval, and
operator)

PeruPetro   S.A.  approved  Gran  Tierra  Energy  Peru  S.R.L.  assumption  of 
operatorship of  Blocks 123  and 129,  located  on the  eastern flank  of  the 
prolific  Marañon  Basin  of  northern  Peru,  effective  January  1,   2013. 
Assumption of 100% working interest is pending government approval.

Brazil

The 1-GTE-05HP-BA  horizontal  oil  exploration  well  on  Block  142  onshore 
Recôncavo Basin Brazil was drilled, the horizontal liner has been set and  the 
multi-stage fracture  stimulation  is ongoing.  The  1-GTE-06HP-BA  horizontal 
sidetrack on Block 129  was drilled in January  2013, the horizontal liner  is 
being set, and  the multi-stage fracture  stimulation is planned  to begin  in 
March  2013.  Planning  continues   for  the  1-GTE-07HP-BA  horizontal   oil 
exploration well on Block 155,  with fracture stimulation operations  expected 
to be conducted in the second quarter of 2013.

2013 Work Program and Capital Expenditure Program

Gran Tierra Energy previously announced a $363 million planned capital program
for its exploration and  production operations in  Colombia, Brazil, Peru  and 
Argentina for 2013. The  capital spending program  allocates $202 million  for 
drilling, $65 million for  facilities, pipelines and  other, and $93  million 
for geological and geophysical expenditures. Of the $202 million allocated  to 
drilling, approximately $101 million is for exploration and the balance is for
appraisal and  development drilling.  The  budget currently  contemplates  the 
drilling of 10 wells in  Colombia, 6 wells in  Argentina, two wells in  Brazil 
and one  well  in Peru.  The  approved  2013 capital  spending  program  also 
includes funds for  1,148 km  of 2D  and 308  km^2 of  3D seismic  acquisition 
programs in Colombia, Peru, Argentina and Brazil, primarily in preparation for
additional exploration and production drilling operations in 2013 and beyond.
The 2013 work program and budget is expected to be funded primarily from  cash 
and cash flows from  operations with potential periodic  draws on Gran  Tierra 
Energy's credit facility at current oil prices.

Excluding potential exploration  success, production  in 2013  is expected  to 
average 27,000  BOEPD gross  working interest  with no  pipeline  disruptions. 
Production is  expected  to  average approximately  20,000  BOEPD  NAR  before 
inventory adjustments assuming a 10% contingency for potential disruptions and
$90 average price for Brent. Approximately 96% of this production consists  of 
light oil, with the balance consisting of natural gas.

Conference Call Information:

Gran Tierra Energy Inc. will host  its fourth quarter 2012 results  conference 
call on Tuesday, February26, 2013, at 2:00 p.m. Mountain Time (MT).

President and Chief Executive Officer, Dana Coffield, Chief Operating Officer,
Shane O'Leary, and  Chief Financial  Officer, James Rozon,  will discuss  Gran 
Tierra Energy's financial and operating results for the quarter and then  take 
questions from securities analysts and institutional shareholders.

Interested parties may  access the conference  call by dialing  1-800-901-5241 
(domestic) or  1-617-786-2963 (international),  pass code  29650165. The  call 
will    also    be    available    via    webcast    at    www.grantierra.com, 
www.streetevents.com, or www.fulldisclosure.com. The webcast will be available
on Gran Tierra Energy's website until the next earnings call.

For interested parties unable to participate, an audio replay of the call will
be available beginning two hours after the call until 11:59 p.m. on March  12, 
2013.To access the replay  dial 1-888-286-8010 (domestic) or  1-617-801-6888 
(international) pass code 76566855.

Please connect at  least 15  minutes prior to  the conference  call to  ensure 
adequate time  for any  software download  that may  be required  to join  the 
webcast.

About Gran Tierra Energy Inc.

Gran Tierra  Energy Inc.  is  an international  oil  and gas  exploration  and 
production company,  headquartered in  Calgary,  Canada, incorporated  in  the 
United States, trading on  the NYSE MKT (GTE)  and the Toronto Stock  Exchange 
(GTE), and operating in South America.  Gran Tierra Energy holds interests  in 
producing and prospective properties in Argentina, Colombia, Peru, and Brazil.
Gran Tierra Energy has a strategy that focuses on establishing a portfolio  of 
producing   properties,   plus   production   enhancement   and    exploration 
opportunities to  provide a  base for  future growth.  Additional  information 
concerning Gran  Tierra Energy  is available  at www.grantierra.com.  Investor 
inquiries may be directed to info@grantierra.com or (403) 265-3221.

Gran Tierra Energy's Securities and Exchange Commission filings are  available 
on  a  website  maintained  by  the  Securities  and  Exchange  Commission  at 
http://www.sec.gov and on SEDAR at http://www.sedar.com.

Forward Looking Statements and Legal Advisories:

Readers are cautioned that the well-flow test results disclosed in this  press 
release are not necessarily indicative of long term performance or of ultimate
recovery.

Contingent resources  are those  quantities of  petroleum estimated,  as of  a 
given date,  to  be potentially  recoverable  from known  accumulations  using 
established technology  or technology  under development,  but which  are  not 
currently considered  to  be  commercially  recoverable due  to  one  or  more 
contingencies. Contingencies  may include  factors  such as  economic,  legal, 
environmental, political, and regulatory matters, or a lack of markets. It  is 
also appropriate to classify as contingent resources the estimated  discovered 
recoverable quantities  associated  with a  project  in the  early  evaluation 
stage. Contingent  resources are  further classified  in accordance  with  the 
level of  certainty associated  with the  estimates and  may be  subclassified 
based on project maturity and/or characterized by their economic status.

This   news    release   contains    certain   forward-looking    information, 
forward-looking   statements    and    forward-looking    financial    outlook 
(collectively, "forward-lookingstatements") under  the meaning of  applicable 
securities  laws,  including  Canadian  Securities  Administrators'   National 
Instrument 51-102 -  Continuous Disclosure Obligations  and the United  States 
Private Securities  Litigation  Reform Act  of  1995.  The use  of  the  words 
"expect", "plan", "estimate",  "believe", "anticipate", "will",  "potential", 
"may" derivations  of these  words  and similar  expressions are  intended  to 
identify forward-looking statements. In  particular, but without limiting  the 
foregoing, forward-looking statements include statements regarding:  drilling, 
testing and production expectations, including without limitation, the  timing 
of  operations,   the  oil-bearing   potential  of   certain  reservoirs   and 
expectations with respect to the results of drilling, testing and  exploration 
activities; reserves  life  indices;  Gran  Tierra  Energy's  planned  capital 
program and the allocation of capital, including under the caption "2013  Work 
Program and  Capital  Expenditure Program"  expected  funding of  the  capital 
program out of cash flow and cash on hand at current production and  commodity 
price  levels,  and  potential  draws  on  the  credit  facility;  production 
expectations; Gran Tierra Energy's planned operations, including as  described 
under the captions "Colombia", "Peru", "Brazil" and "Argentina" in the section
"Fourth  Quarter  2012  Operational   Highlights"  together  with  all   other 
statements regarding  expected  or  planned  development,  testing,  drilling, 
production, expenditures or  exploration, or that  otherwise reflect  expected 
future  results   or   events.   Statements  relating   to   "resources"   are 
forward-looking statements as  they involve the  implied assessment, based  on 
estimates  and  assumptions,  that  the  resources  described  exist  in   the 
quantities predicted  or  estimated and  can  be profitably  produced  in  the 
future.

The forward-looking statements contained in this news release reflect  several 
material factors  and  expectations  and assumptions  of  Gran  Tierra  Energy 
including, without limitation, assumptions  relating to log evaluations,  that 
Gran Tierra  Energy  will continue  to  conduct  its operations  in  a  manner 
consistent with  past  operations,  the accuracy  of  testing  and  production 
results and seismic data,  pricing and cost  estimates, rig availability,  the 
effects of  drilling  down-dip,  the effects  of  waterflood  and  multi-stage 
fracture stimulation operations  and the  general continuance  of current  or, 
where applicable,  assumed operational,  regulatory and  industry  conditions. 
Gran Tierra Energy believes the material factors, expectations and assumptions
reflected in the forward-looking statements are reasonable at this time but no
assurance can be given that  these factors, expectations and assumptions  will 
prove to be correct.

The forward-looking statements contained in this news release are subject to
risks, uncertainties and other factors that could cause actual results or
outcomes to differ materially from those contemplated by the forward-looking
statements, including, among others: Gran Tierra Energy's operations are
located in South America, and unexpected problems can arise due to guerilla
activity, technical difficulties and operational difficulties which may impact
its testing and drilling operations, and the production, transportation or
sale of its products; geographic, political, regulatory and weather conditions
can impact testing and drilling operations and the production, transportation
or sale of its products; the OTA pipeline may continue to experience
disruptions and if further disruptions occur, service at the OTA pipeline may
not resume on the timelines or to the capacity expected by or favorable to
Gran Tierra Energy; attempts to mitigate the effect of disruptions of the OTA
pipeline may not have the impact currently anticipated by Gran Tierra Energy;
waterflood and multi-stage fracture stimulation operations may not have the
impact, including with respect to reserve recovery improvements, currently
anticipated by Gran Tierra Energy; permits and approvals from regulatory and
governmental authorities may not be received in the manner or on the timelines
expected or at all; and the risk that current global economic and credit
market conditions may impact oil prices and oil consumption more than Gran
Tierra Energy currently predicts, which could cause Gran Tierra Energy to
modify its exploration, drilling and/or construction activities. Although the
current capital spending program of Gran Tierra Energy is based upon the
current expectations of the management of Gran Tierra Energy, there may be
circumstances in which, for unforeseen reasons, a reallocation of funds may be
necessary as may be determined at the discretion of Gran Tierra Energy and
there can be no assurance as at the date of this press release as to how those
funds may be reallocated. Should any one of a number of issues arise, Gran
Tierra Energy may find it necessary to alter its current business strategy
and/or capital spending program.

Accordingly, readers should  not place undue  reliance on the  forward-looking 
statements contained  herein. Further  information on  potential factors  that 
could affect Gran Tierra  Energy are included in  risks detailed from time  to 
time in  Gran  Tierra Energy's  Securities  and Exchange  Commission  filings, 
including, without limitation, under the caption "Risk Factors" in Gran Tierra
Energy's Annual Report on Form 10-K filed February26, 2013. These filings are
available on a website maintained by the Securities and Exchange Commission at
http://www.sec.gov  and  on   SEDAR  at  www.sedar.com.The   forward-looking 
statements contained herein are expressly qualified in their entirety by  this 
cautionary statement. The  forward-looking statements included  in this  press 
release are made as of the date  of this press release and Gran Tierra  Energy 
disclaims any intention or obligation to update or revise any  forward-looking 
statements,  whether  as  a  result  of  new  information,  future  events  or 
otherwise, except as expressly required by applicable securities legislation.

BOE's may be misleading, particularly if  used in isolation. A BOE  conversion 
ratio of 6 Mcf  : 1 bbl  is based on an  energy equivalency conversion  method 
primarily applicable  at  the  burner  tip and  does  not  represent  a  value 
equivalency at the wellhead. In addition, given that the value ratio based  on 
the current  price  of oil  as  compared  with natural  gas  is  significantly 
different from the energy equivalent of six to one, utilizing a BOE conversion
ratio of 6 Mcf: 1 bbl would be misleading as an indication of value.

Basis of Presentation of Financial Results:

Gran Tierra Energy's financial results  are reported in United States  dollars 
and prepared in  accordance with generally  accepted accounting principles  in 
the United States.

Gran Tierra Energy Inc.
Condensed Consolidated Statements of Operations and Retained Earnings
(Unaudited)
(Thousands of U.S. Dollars, Except Share and Per Share Amounts)

                            
                  Three Months Ended December
                                           31,          Year Ended December 31,
                    2012           2011           2012            2011
REVENUE AND                                                 
OTHER INCOME                                                             
 Oil and              144,703                                $
  natural gas
  sales          $               $     161,407   $     583,109         596,191
 Interest                 450                                
  income                                 328          2,078           1,216
                     145,153       161,735       585,187       597,407
EXPENSES                                                           
Operating              36,788        25,214       124,903        86,497
 Depletion,            44,055                                
  depreciation,
  accretion and
  impairment                          71,061        182,037         231,235
 General and           12,488                                
  administrative                      14,025         58,882          60,389
 Other gain          (9,336)             —       (9,336)             —
 Equity tax                —             —             —         8,271
 Financial                  —                                
  instruments
  gain                                     —              —         (1,522)
 Gain on                    —                                
  acquisition                              —              —        (21,699)
 Foreign                3,471                                
  exchange loss
  (gain)                             (3,784)         31,338            (11)
                      87,466       106,516       387,824       363,160
                                                                  
INCOME BEFORE                                                
INCOME TAXES            57,687          55,219        197,363        234,247
Income tax                                                
expense               (15,424)        (22,667)       (97,704)      (107,330)
NET INCOME AND                                               
COMPREHENSIVE
INCOME                  42,263          32,552         99,659        126,917
RETAINED                                                     
EARNINGS,
BEGINNING OF
YEAR                   242,410         152,462        185,014         58,097
RETAINED         $              $               $               $
EARNINGS, END OF
YEAR                   284,673         185,014        284,673        185,014
                                                                  
NET INCOME PER   $              $               $               $
SHARE — BASIC             0.15            0.12           0.35           0.46
NET INCOME PER   $              $               $               $
SHARE — DILUTED           0.15            0.12           0.35           0.45
WEIGHTED AVERAGE                                             
SHARES
OUTSTANDING -
BASIC              281,794,879     277,897,512    280,741,255    273,491,564
WEIGHTED AVERAGE                                             
SHARES
OUTSTANDING -
DILUTED            284,895,511     287,547,237    284,172,254    281,287,002

Gran Tierra Energy Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(ThousandsofU.S.Dollars, Except Share and Per Share Amounts)

                                                                            
                                                       As at December 31,
                                                       2012         2011
ASSETS                                                                   
Current Assets                                                           
             Cash and cash equivalents              $   212,624  $   351,685
             Restricted cash                             1,404       1,655
             Accounts receivable                       119,844      69,362
             Inventory                                  33,468       7,116
             Taxes receivable                           39,922      21,485
             Prepaids                                    4,074       3,597
             Deferred tax assets                         2,517       3,029
Total Current Assets                                    413,853     457,929
                                                                        
Oil and Gas Properties (using the full cost method                
of accounting)                                                             
             Proved                                    813,247     618,982
             Unproved                                  383,414     417,868
Total Oil and Gas Properties                          1,196,661   1,036,850
             Other capital assets                        8,765       7,992
Total Property, Plant and Equipment                   1,205,426   1,044,842
                                                                        
Other Long-Term Assets                                                   
             Restricted cash                             1,619      13,227
             Deferred tax assets                         1,401       4,747
             Taxes receivable                            1,374           —
             Other long-term assets                      6,621       3,454
             Goodwill                                  102,581     102,581
Total Other Long-Term Assets                            113,596     124,009
                                                                         
Total Assets                                         $ 1,732,875  $ 1,626,780
LIABILITIES AND SHAREHOLDERS' EQUITY                                      
Current Liabilities                                                       
             Accounts payable                       $   102,263  $    82,189
             Accrued liabilities                        66,418      66,832
             Taxes payable                              22,339      95,482
             Deferred tax liabilities                      337           —
             Asset retirement obligation                    28         326
Total Current Liabilities                               191,385     244,829
                                                                        
Long-Term Liabilities                                                    
             Deferred tax liabilities                  225,195     186,799
             Equity tax payable                          3,562       6,484
             Asset retirement obligation                18,264      12,343
             Other long-term liabilities                 3,038       2,007
Total Long-Term Liabilities                             250,059     207,633
                                                                        
Shareholders' Equity                                                     
Common stock (268,482,445 and 262,304,249 shares of               
Common Stock
and 13,421,488 and 16,323,819 exchangeable shares,
par value $0.001
per share, issued and outstanding as at December 31,
2012, and
December 31, 2011, respectively)                           7,986        7,510
             Additional paid in capital                998,772     980,014
             Warrants                                        —       1,780
             Retained earnings                         284,673     185,014
Total Shareholders' Equity                            1,291,431   1,174,318
                                                                        
Total Liabilities and Shareholders' Equity           $ 1,732,875  $ 1,626,780
                                                                        

Gran Tierra Energy Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(ThousandsofU.S.Dollars)

                           Three Months Ended    
                               December 31,          Year Ended December 31,
                            2012        2011        2012          2011
Operating Activities                                              
Net income                $   42,263  $   32,552  $    99,659  $   126,917
Adjustments to reconcile                                          
net income to net cash
provided by operating
activities:
    Depletion,              44,055     71,061     182,037     231,235
     depreciation,
     accretion and
     impairment
    Deferred taxes          35,129   (13,958)      26,274    (28,685)
    Stock-based              2,152      3,384      12,006      12,767
     compensation
    Unrealized gain on           —          —           —     (1,354)
     financial
     instruments
    Unrealized foreign       2,982    (1,607)      17,054     (2,232)
     exchange loss (gain)
    Settlement of asset          —       (36)       (404)       (345)
     retirement
     obligation
    Other gain             (9,336)          —     (9,336)           —
    Equity tax                   —      (299)     (3,534)       2,442
    Gain on acquisition          —          —           —    (21,699)
Net change in assets and                                          
liabilities from
operating activities
    Accounts receivable     39,987     74,387    (56,669)    (15,627)
     and other long-term
     assets
    Inventory              (8,426)      (552)    (18,195)       (548)
    Prepaids               (1,564)    (1,545)       (477)     (1,321)
    Accounts payable and    17,573     24,004     (8,387)      16,780
     accrued and other
     liabilities
    Taxes receivable and  (24,428)     25,764    (83,709)      35,422
     payable
Net cash provided by        140,387    213,155     156,319     353,752
operating activities
                                                                 
Investing Activities                                              
    Decrease (increase)     33,563   (10,457)      11,859    (10,197)
     in restricted cash
    Additions to          (53,965)   (81,121)   (276,084)   (333,194)
     property, plant and
     equipment
    Proceeds from                —      1,197           —       4,450
     disposition of oil
     and gas property
    Cash paid for         (35,495)          —    (35,495)           —
     acquisition
    Cash acquired on             —          —           —       7,747
     acquisition
    Proceeds on sale of          —          —           —      22,679
     asset-backed
     commercial paper
Net cash used in           (55,897)   (90,381)   (299,720)   (308,515)
investing activities
                                                                 
Financing Activities                                              
    Settlement of bank           —          —           —    (54,103)
     debt
    Proceeds from              543      2,541       4,340       5,123
     issuance of shares
     of Common Stock
Net cash provided by            543      2,541       4,340    (48,980)
(used in) financing
activities
                                                                 
Net (decrease) increase      85,033    125,315   (139,061)     (3,743)
in cash and cash
equivalents
Cash and cash               127,591    226,370     351,685     355,428
equivalents, beginning of
period
Cash and cash             $  212,624  $  351,685  $   212,624  $   351,685
equivalents, end of
period
                                                                  
Cash                      $  207,392  $  172,645  $   207,392  $   172,645
Term deposits                  5,232    179,040       5,232     179,040
Cash and cash             $  212,624  $  351,685  $   212,624  $   351,685
equivalents, end of year
                                                       







SOURCE Gran Tierra Energy Inc.

Contact:

Contact Information

For investor and media inquiries please contact:
Jason Crumley
Director, Investor Relations
403-265-3221
info@granterra.com
www.grantierra.com
 
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