Gran Tierra secures $75 million credit facility

Gran Tierra Energy Inc. (NYSE American:NYSE:GTE), a crude petroleum and natural gas company generating annual revenues of $621.85 million, has entered into a substantial credit agreement, securing a $75 million revolving credit facility. The deal, finalized on April 16, 2025, involves Gran Tierra Energy Colombia GmbH as the borrower, with the parent company and certain subsidiaries acting as guarantors. According to InvestingPro analysis, the company maintains a moderate debt level with a debt-to-equity ratio of 1.84.

The credit facility, which matures on April 16, 2028, is backed by a range of assets, including but not limited to Colombian assets, collateral accounts, and certain agreements related to exploration, production, and operations. This financial arrangement is designed to support Gran Tierra’s general corporate activities, encompassing working capital and other corporate expenditures. With a current ratio of 0.66, InvestingPro data indicates the company’s short-term obligations exceed its liquid assets, making this credit facility particularly strategic.

Under the terms of the agreement, the borrowing base will be reassessed annually starting in 2026. The interest rate for the borrowed funds is set at either a base rate plus a 4.50% margin or a term SOFR reference rate plus the same margin. The company is obliged to adhere to specific financial covenants, such as maintaining a consolidated net debt to consolidated adjusted EBITDA ratio not exceeding 3.00 to 1.00, and a consolidated interest coverage ratio of at least 2.50 to 1.00. With an EBITDA of $349.16 million and an impressive gross profit margin of 64.49%, the company demonstrates strong operational efficiency despite challenging market conditions.

The credit agreement also imposes restrictions on further indebtedness, liens, and other financial activities, ensuring prudent financial management. Events that could trigger a default include a Change in Control as defined within the agreement’s terms.

This strategic move will provide Gran Tierra with financial flexibility to navigate its operations and growth strategies. The agreement underscores the company’s commitment to maintaining a strong balance sheet and liquidity position.

The information regarding this financial development is based on a press release statement filed with the U.S. Securities and Exchange Commission.

In other recent news, Gran Tierra Energy Inc. reported a significant improvement in its financial performance for the fourth quarter of 2024, achieving a net income of $3 million, a notable turnaround from a net loss of $6.3 million in the previous year. Revenue from net oil sales slightly decreased by 2% to $622 million, while adjusted EBITDA fell by 8% to $367 million. The company set its production guidance for 2025 at 47,000 to 53,000 barrels of oil equivalent per day, with plans to allocate 25% of its capital program to exploration. Despite these positive earnings results, the company’s stock experienced a decline, reflecting investor concerns about future earnings potential. Gran Tierra Energy has also announced its intention to reduce gross debt to $600 million by the end of 2026 and $500 million by 2027. Analysts from firms such as Bank of America and Stifel have inquired about the company’s cost management and integration of new assets, indicating a focus on operational efficiency and strategic growth. The company remains committed to long-term shareholder value creation, as evidenced by its share repurchase program.

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