Gran Tierra Energy Inc. Announces Signing of Onshore Exploration, Development and Production Sharing Agreement with the State Oil Company of the Republic of Azerbaijan

Executive Summary

• Gran Tierra Energy Inc. has signed an Exploration, Development, and Production Sharing Agreement (EDPSA) with the State Oil Company of the Republic of Azerbaijan (SOCAR) for the onshore Guba-Khazaryani region.
• The agreement grants Gran Tierra a 65% working interest and operatorship of the Contract Area, covering approximately 0.4 million gross acres, which is more than double the company's current acreage in Ecuador.
• The deal includes a five-year exploration and appraisal phase followed by a 25-year development period (with a potential five-year extension), with initial activities including an airborne gravity study in 2026 and seismic/drilling operations commencing in 2027.

Key Details

• Parties: Gran Tierra Energy Inc. (via an indirect wholly owned subsidiary) and the State Oil Company of the Republic of Azerbaijan (“SOCAR”).
• Asset: Onshore Guba-Khazaryani region within the Republic of Azerbaijan (“Contract Area”).
• Working Interest: Gran Tierra holds a 65% working interest and operatorship.
• Acreage: Approximately 0.4 million gross acres.
• Term:
  • Exploration and Appraisal: 5 years (Initial 3-year phase + optional second 2-year phase).
  • Development: 25 years for any economic discoveries, with potential to extend an additional 5 years.
• Exploration Commitments:
  • Initial Phase: Acquisition of a gravity study, drilling of two wells, and acquisition of 250 km² of 3D seismic.
  • Second Phase (Optional): Drilling of two additional wells and acquisition of an additional 250 km² of 3D seismic.
• Timeline:
  • Airborne gravity study expected to commence in 2026.
  • Seismic acquisition and drilling activities planned to begin in 2027.
• Funding: Activities expected to be funded by the Company’s forecasted net cash provided by operating activities.
• Conditions Precedent: Effectiveness is subject to customary legal conditions, including approval by the legislature of the Republic of Azerbaijan and other requisite legal formalities.
• Regional Context: The Contract Area surrounds a structure that has produced over 100 million barrels of oil and over 200 billion cubic feet of natural gas.

Notable Quotes

• “We are extremely excited about the opportunity to enter Azerbaijan, which we view as a compelling addition to Gran Tierra’s portfolio, and we are honored to be welcomed by the Republic of Azerbaijan and to partner with SOCAR, a highly professional, world-class integrated energy company,” said Gary Guidry, President and Chief Executive Officer of Gran Tierra.