SecProbe.io

CORRESP
1
filename1.htm

      Unassociated Document

              Jason
                H. Scott

              jscott@mcguirewoods.com

              Direct:
                704.373.8862

              Direct
                Fax: 704.353.6181

    August
      8,
      2006

    Mr.
      H.
      Roger Schwall

    Assistant
      Director

    Division
      of Corporation Finance

    Mail
      Stop
      7010

    Washington,
      D.C. 20549-7010

              Re:

              Gran
                Tierra Energy Inc. (the
                “Company”)

    Registration
      Statement on Form SB-2

    Filed
      March 10, 2006

    File
      No. 333-132352

    Form
      10-KSB for the fiscal year ended December 31, 2005

    Filed
      March 10, 2006

    File
      No. 333-111656

    Dear
      Mr.
      Schwall:

    This
      is
      in response to your comment letter of May 10, 2006 to Dana Coffield with respect
      to the above-referenced filings. The Company is simultaneously filing Amendment
      No. 2 to Registration Statement No. 333-132352. The Company previously filed
      Amendment No. 2 to the Annual Report on Form 10-KSB for the period ended
      December 31, 2005 on July 18, 2006.

    We
      have
      set forth below the comments in your letter of May 10, 2006 in italics with
      the
      Company’s responses to each.

    General

            1.

              You
                will expedite the review process if you address each portion of every
                numbered comment that appears in this letter. Provide complete responses
                and, where disclosure has changed, indicate precisely where in the
                marked
                version of the amendment you file we will find your responsive changes.
                Similarly, to minimize the likelihood that we will reissue comments,
                please make corresponding changes where applicable throughout your
                document. For example, we might comment on one section or example,
                but our
                silence on similar or related disclosure elsewhere does not relieve
                you of
                the need to make appropriate revisions elsewhere in the same document
                or
                other document as
                appropriate.

    RESPONSE:
      We have
      addressed your comments in the letter below and in the filed amendment to the
      Company’s registration statement on Form SB-2/A, as well as the filed amendment
      to the Company’s annual report on Form 10-KSB/A filed July 18, 2006. We have
      indicated in this letter where our responsive changes appear in the Form SB-2/A.

    Registration Statement on Form
      SB-2

        August
          8,
          2006

        Page
          3

    Recent
      Developments, page 2

            2.

              Expand
                this section to clearly discuss the reverse takeover cited in prior
                comment 3. We note your discussion on page
                39.

    RESPONSE:
      We
      have
      modified the “Recent Developments” section on page 2 of the Form SB-2/A in
      response to this comment 2.

            3.

              We
                note your response to our prior comment 5. We note your updated disclosure
                in regard to the loan. Please explain what you mean when you say
                the loan
                “will be extinguished.”

    RESPONSE:
      The
      original loan agreement between Goldstrike and Gran Tierra Canada specified
      that
      the original bridge loan amount would be deemed forgiven on the date of the
      merger.  However, since Goldstrike and Gran Tierra Canada became part
      of the same corporate entity on the merger date, the companies have decided
      to retain the intercompany debt between the two legal entities.  The
      Company has no immediate plans for repayment and does not intend to forgive
      this loan. We have modified page 2 of the Form SB-2/A to reflect that the loan
      will remain outstanding.

            4.

              We
                note your response to our prior comment 6. You indicated in your
                response
                that you provided copies of the private placement memorandum and
                Canadian
                offering memorandum. However, these documents were not included in
                the
                package you sent us. Please provide these
                documents.

    RESPONSE:
      The
      relevant documents were sent to Donna Levy on July 18, 2006.

            5.

              Please
                separate your discussion of the first and second private placements
                to
                more clearly state the total proceeds received from each placement
                (we
                note that you discuss the first placement and the first closing on
                the
                second placement together), the amount of cash commissions paid from
                the
                proceeds, identifying the persons who received the commissions, the
                net
                proceeds to you, and the use of proceeds. Please also provide the
                same
                information for the third
                offering.

    RESPONSE:
      We
      have
      modified page 2 of the Form SB-2/A in response to this comment 5.

            6.

              You
                provide two different dates for the date of the first closing on
                the
                second private placement, September 27 and October 27. Please revise
                or
                advise.

      RESPONSE:
        October
        27 is the date of the first closing on the second private placement. We have
        modified page 2 of the Form SB-2/A to disclose that the closing occurred
        on
        October 27.

      Selling
        Stockholders, page 17

        August
          8,
          2006

        Page
          4

              7.

              We
                note your response to our prior comment 11. However, there are still
                several entities for which the identity of the natural persons with
                power
                to vote or to dispose of the securities offered for resale has not
                been
                provided. Please provide this
                information.

    RESPONSE:
      We
      have
      modified the footnotes in the “Selling Stockholders” section on pages 21-26 of
      the Form SB-2/A to identify the natural persons with the power to vote or
      dispose of the securities.

    Management’s
      Discussion and Analysis

            8.

              We
                note that you have included a discussion about your ability to continue
                as
                a going concern in response to prior comment 13 in our letter dated
                April
                7, 2006. As previously explained, you should also disclose that there
                is
                substantial doubt about your ability to continue as a going concern,
                and
                include details of your plans to overcome your financial difficulties,
                to
                comply with the guidance in FRC Section 607.02; comparable disclosure
                is
                generally required in your financial statements under this guidance.
                In
                addition, indicate what you believe the outcome will be in the event
                your
                plans are unsuccessful in addressing the going concern
                uncertainty.

    RESPONSE:
      We
      have
      modified the “Management’s Discussion and Analysis” section on page 29 of the
      Form SB-2/A in response to this comment 8, and we previously modified the
“Management’s Discussion and Analysis” section on page 14 of the Form 10-KSB/A
      filed July 18, 2006.

    Plan
      of Operations, page 28

            9.

              Within
                your response to prior comment 16 in our letter dated April 7, 2006,
                you
                state the consummations of the acquisitions you announced in the
                Form 8-Ks
                are not considered probable. Given that you had deemed information
                about
                these agreements to be material to security holders in filing the
                Form
                8-K’s, coupled with the level of detail of the terms of the agreements
                you
                have provided in the press releases, it is unclear to us how you
                reached
                the conclusion that these acquisitions are not
                probable.

    The
      determination of a transaction’s probability of occurrence is based on facts and
      circumstances; however, FRC 506.02.c.ii, states that the consummation of a
      transaction is considered probable whenever the registrant’s financial
      statements alone would not provide investors adequate financial information
      with
      which to make an investment decision. Based on the information you have
      disclosed, these potential acquisitions would appear to be material to your
      current and future financial position, results of operations and cash flows,
      and
      would therefore trigger a reporting obligation under this
      guidance.

    Please
      provide further detail to support the conclusions you have reached
      regarding the probability of these acquisitions as well as the potential
      acquisition of Argosy Energy International, announced in the Form 8-K that
      you
      filed on April 7, 2006. It should be clear how you have evaluated each aspect
      of
      each transaction, including the likelihood of satisfying each of the
      contingencies mentioned.

        August
          8,
          2006

        Page
          5

    Please
      provide further detail to support the conclusions you have reached regarding
      the
      probability of these acquisitions as well as the potential acquisition of Argosy
      Energy International, announced in the Form 8-K that you filed on April 7,
      2006.
      It should be clear how you have evaluated each aspect of each transaction,
      including the likelihood of satisfying each of the contingencies
      mentioned.

    If
      you continue to regard these transactions as being not probable, you should
      submit the draft disclosure revisions that you would file in amendments to
      each
      of the Form 8-K’s to advise readers of your skepticism and uncertainty
      surrounding the prospect of completing these acquisitions, including details
      sufficient to understand the basis for your earlier disclosures, and the reasons
      that you believe financial information about the targets is no longer relevant.
      Under these circumstances, disclosure in your registration statement would
      also
      be essential to correct any misperceptions over the likelihood of
      occurrence.

    To
      the extent these business combinations are considered probable, you will be
      required to include financial statements of these businesses along with related
      pro forma financial information to comply with item 310(c) and (d) of Regulation
      SB. Please note we presume these acquisitions would be considered significant
      at
      the greater than 50% level; therefore, the acquiree financial statements would
      need to be included within the registration statement.

    In
      addition, please discuss the terms of each of these agreements (including the
      amount of any break-up fees), how you intend to fund the acquisitions, your
      increase in your capital expenditures, and how you anticipate these interests
      will impact your future results of operations and cash flows. If required by
      Item 601(10)(C) of Regulation S-B, please also file the acquisition agreements
      as exhibits.

    RESPONSE:
      The
      Company acquired Argosy Energy International on June 20, 2006. We have provided
      financial statements of Argosy Energy International along with related pro
      forma
      financial information to comply with Item 310(c) and (d) of Regulation S-B.

    On
      page
      32 of the SB-2/A we have made additional disclosure regarding the acquisition
      of
      the CGC properties. There are eight separate CGC properties that are subject
      to
      the Company’s offer. The Company considers four of the properties to be minor
      properties and four of the properties to be more significant. The total cash
      consideration for the four minor properties is $2.1 million. In order to
      complete the purchase of the four minor properties, the Company would have
      to
      renew its offer and receive court approval for the sale. We believe that there
      is a much greater chance that the Company will be able to acquire these four
      minor properties than any of the other four CGC properties. However, significant
      challenges remain in order to complete the acquisition of these four minor
      properties. If the Company were to complete the acquisition of these four minor
      properties, financial statements of the four minor properties and pro forma
      financial information would not be required due to the size of the
      acquisitions.

      The
        consideration for the four more significant properties is $35.7 million.
        Of the
        four more significant properties, only one property is individually material
        to
        the Company. There are challenges that dramatically reduce the possibility
        that
        the Company will acquire any of these four properties. In light of the
        challenges presented by these four acquisitions and as a result of the Company’s
        acquisition of Argosy, the Company does not expect to complete the acquisition
        of all four of these properties.

        August
          8,
          2006

        Page
          6

    In
      addition to the fact that the offer has expired, these four acquisitions are
      subject to court approval in Argentina. Also, the interests in these four
      properties are interests in joint ventures. The partners in those joint ventures
      have a right of first refusal. If the Company is able to acquire any of these
      properties, it is likely that some of the joint venture partners in these
      properties will exercise their right of first refusal and that the Company
      will
      not acquire the CGC interests in those properties. Finally, the
      acquisition of the interest in the property that would be material to the
      Company requires the consent of third-parties, and the Company believes that
      it
      is highly unlikely that it will obtain all of the third-party consents necessary
      to acquire the interests in this material property. The Company does not believe
      that the combined interest in any of the eight properties that may be able
      to be
      acquired will be material to the Company, and the acquisition, if any, of CGC
      properties will not require financial statements or related pro forma financial
      information in order to comply with Item 310(c) and (d) of Regulation S-B.

    A
      third
      acquisition in Argentina (an interest in the Vinalar Block) is not material
      to
      the Company and does not require financial disclosure. A subsequent acquisition
      of exploration acreage in Peru is also not material to the Company.

    The
      Company has filed an amended Form 8-K/A to describe the current status of the
      CGC acquisitions, as elaborated in the SB-2/A. We have disclosed details
      regarding the CGC offer