Gran Tierra sells Colombia, Ecuador assets for $1.33 billion, eyes Canada

Gran Tierra agreed to sell its Colombia and Ecuador oil business to Maurel & Prom for $1.33 billion, leaving the producer debt-free with $315 million in net cash proceeds.

"The transaction transfers our South American business and substantially all of our net liabilities to Maurel & Prom, leaving Gran Tierra debt-free with significant liquidity," Gary Guidry, president and chief executive officer of Gran Tierra, said.

The divested business represents about 29,000 barrels of oil equivalent per day of first-half 2026 average working-interest production, 144 million barrels of proved-plus-probable reserves and 1.4 million gross acres. The $1.33 billion consideration implies 4.3 times earnings before interest, taxes, depreciation and amortization over the trailing 12 months to June 30, 2026, and $9.24 per barrel of 2P reserves.

The deal, targeted to close on or about Dec. 31, 2026, with an economic effective date of March 31, 2026, sets up Gran Tierra to return capital to stockholders through a share repurchase while funding growth in Canada and Azerbaijan. The continuing company expects to retain production of 12,000 to 13,000 boepd and 86 million boe of 2P reserves.

The pro-forma net asset value of $12.49 a share represents a premium of about 83 percent to Gran Tierra's 20-day volume-weighted average price of $6.825. The net cash proceeds alone equate to $8.21 a share, a premium of about 20 percent before ascribing any value to the retained assets.

The purchaser will assume the company's 9.750 percent senior secured amortizing notes due 2031 and 9.500 percent senior notes due 2029, along with a prepayment facility. After the assumption of substantially all liabilities, working capital adjustments and the redemption of its 7.750 percent notes due 2027, Gran Tierra expects about $250 million in cash at closing, with the remaining $65 million payable 364 days later under an unsecured note.

A Debt-Free Balance Sheet Funds the Pivot

Following closing, Gran Tierra expects to eliminate substantially all of its interest costs, saving about $80 million a year, and retains an undrawn $75 million (Canadian) credit facility. Management intends to concentrate capital on its Canadian assets and an exploration, development and production sharing agreement signed in February for the onshore Guba-Khazaryani region in Azerbaijan, where it holds a 65 percent working interest and operatorship. The repositioning began in 2024 with the acquisition of Canadian assets, which the company has since trimmed through the sale of its Lodgepole properties and a Clearwater land swap.

Maurel & Prom Builds a South American Core

For Maurel & Prom, the acquisition establishes Colombia and Ecuador as a core pillar of its portfolio. The Euronext Paris-listed operator, 72.65 percent owned by the international upstream arm of Indonesia's Pertamina, reported a net cash position of $257 million as of June 30 and $500 million in immediately available bank liquidity, and is executing a drilling campaign on the Sinú-9 block in Colombia. Pertamina reported revenue of about $71 billion and production above one million boepd for 2025.

BofA Securities is acting as lead financial advisor to Gran Tierra and rendered a fairness opinion, with RBC Capital Markets also advising. Bracewell LLP is legal counsel to Gran Tierra, while Herbert Smith Freehills Kramer LLP advises the purchaser.

The deal requires approval from Gran Tierra stockholders, consents from certain creditors and prepayment buyers, and regulatory approvals in Colombia and Ecuador. If stockholder approval is not obtained, the company said it would reconsider the amount, nature and timing of any alternative return of capital.

This article is for informational purposes only and does not constitute investment advice.