Gran Tierra Energy Inc. has reached a deal to sell its oil operations in Colombia and Ecuador to Établissements Maurel & Prom S.A. for $1.33 billion. The agreement includes all of Gran Tierra’s South American assets, signaling a significant strategic shift. The sale represents a repositioning of the company's future focus and operations.
What the deal means for Gran Tierra
Under the sale terms, Maurel & Prom will assume most of Gran Tierra’s liabilities. This arrangement leaves Gran Tierra with $250 million in cash at the time of closing. Additionally, the company will receive $65 million through an unsecured note from the divested assets in the next 12 months.
By transferring most of its debts to Maurel & Prom, Gran Tierra will become debt-free. It will also retain an undrawn CAD $75 million credit facility, providing the company with the necessary financial flexibility to invest in its operations in Canada and Azerbaijan.
What's in it for Maurel & Prom
Maurel & Prom, a Paris-based firm backed by Indonesian energy giant Pertamina, is acquiring a major chunk of oil production and reserves. The deal includes an estimated 29,000 barrels of oil per day in production and 144 million barrels of proved-plus-probable reserves in South America.
The assets Maurel & Prom is acquiring cover approximately 1.4 million acres in Colombia and Ecuador. This acquisition strengthens its presence in the region and expands its production portfolio significantly.
The transaction involves an enterprise value of $1.33 billion. This includes the assumption of specific debts and financing agreements by Maurel & Prom. The financial terms of the sale reflect a well-calculated strategy to enhance the company's overall portfolio.
What happens next for Gran Tierra
Gran Tierra plans to use a portion of the $315 million in net cash proceeds from the sale to repurchase some of its outstanding shares. The company has not yet outlined the exact terms or size of the buyback, which will be communicated once the board completes its evaluation and finalizes the plan.
The remaining funds will be directed toward funding Gran Tierra’s operations in Canada and Azerbaijan. The company is shifting its focus to fully funded growth in these regions, aligning with its broader strategic vision.
Gran Tierra’s CEO described the sale as an extension of a long-term strategy that began with the acquisition of Canadian assets in 2024. The move aligns with a signed agreement for an exploration and production sharing deal in the Guba-Khazaryani region of Azerbaijan.
To finalize the deal, Gran Tierra must secure approval from its shareholders and creditors. Regulatory clearances in Colombia and Ecuador are also necessary. The company anticipates the transaction will close before the end of 2026, with an effective date of March 31.
The transaction is expected to result in a pro-forma net asset value of around $12.49 per share for Gran Tierra, which is an 83% increase compared to the company’s 20-day volume-weighted average stock price. This valuation showcases investor confidence in the company’s future performance.
The sale positions Gran Tierra as a debt-free company with substantial liquidity. At closing, it will have $250 million in cash, a $65 million note receivable due in less than a year, and an undrawn credit facility, all of which contribute to its strong financial footing.
As part of the deal, Gran Tierra will also redeem its 7.750% Senior Notes due in 2027. This ensures all necessary financial obligations are met, and the company remains in solid financial condition post-sale.
The agreement includes adjustments for working capital and other closing conditions. Gran Tierra will continue to navigate the regulatory landscape to finalize the deal efficiently.
Maurel & Prom, a well-established player in the energy sector, brings credibility and experience to the transaction. Its involvement provides stability and reinforces the strategic rationale behind Gran Tierra’s decision to transition its business model.