SecProbe.io

CORRESP
1
filename1.htm

      Unassociated Document

            Jason H. Scott

               jscott@mcguirewoods.com

            Direct: 704.373.8862

               Direct
                Fax:
                704.353.6181

    November
      1, 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”)
                Amendment
                  No. 2 to Registration Statement on Form SB-2

                Filed
                  August 8, 2006

                File
                  No. 333-132352

                Amendment
                  No. 1 to Annual Report on Form 10-KSB/A for the fiscal year ended
                  December
                  31, 2005

                Filed
                  July 18, 2006

                File
                  No. 333-111656

    Dear
      Mr.
      Schwall:

    This
      is
      in response to your comment letters to Dana Coffield dated August 8, 2006 and
      August 31, 2006 with respect to the above-referenced filings. Our responses
      to
      your comments from the letter dated August 8, 2006 appear first as numbers
      1 to
      6, on pages 2 to 8. Our responses to your comments from the letter dated August
      31, 2006 are set forth as numbers 1 to 26, on pages 9 to 22. The Company intends
      to file Amendment No. 3 to Registration Statement No. 333-132352 and Amendment
      No. 3 to Form 10-KSB upon completion of its audit for the nine month period
      ended September 30, 2006 and completion of the Staff’s review of the proposed
      amendments set forth below.

    We
      have
      set forth below the comments in your letters of August 8, 2006 and August 31,
      2006 in italics with the Company’s responses to each.

    Responses
      to August 8, 2006 Comments

    Form
      SB-2/A1 Filed April 21, 2006

    General

              1.

              We
                note from your response to prior comment 9 in our letter dated May
                10,
                2006 that you will defer filing an amendment to your registration
                statement until you resolve uncertainties surrounding your previously
                announced plans to acquire various entities. Although you state that
                you
                will file any required financial statements for acquired businesses,
                please understand the requirement for purposes of the registration
                statement also extends to businesses to be acquired, prior to acquisition,
                when probable. In all instances that you have filed Form 8-Ks announcing
                agreements to acquire businesses that you believe are not sufficiently
                certain to be considered probable of occurring, you should promptly
                amend
                those filings to clarify your views as they presently
                stand.

            November
              1, 2006

            Page
              2

    RESPONSE:
      The
      Company deferred filing an amendment to its registration statement until August
      8, 2006. In connection with the filing of the Company’s amended registration
      statement, the Company provided the financial statements of Argosy Energy
      International along with the related pro forma financial information required
      by
      Item 310 (c) and (d) of Regulation S-B. In addition, the Company filed a current
      report on Form 8-K on June 21, 2006, to disclose the completion of the
      acquisition of Argosy Energy and filed an amendment to that current report
      on
      August 21, 2006, to provide the financial statements and pro forma financial
      information required under Item 9.01 of Form 8-K. The Company intends to amend
      its current report on Form 8-K to include pro forma financial information for
      the quarter ended September 30, 2006 and to make other revisions to the
      financial statements and pro forma financial information previously provided
      under Item 9.01 of Form 8-K. The Company intends to amend its Form SB-2/A to
      include the revised financial statements and pro forma financial information
      provided in the Form 8-K/A.

    On
      August
      8, 2006, the Company filed an amendment to its current report on Form 8-K
      relating to the acquisition of the CGC properties and provided timely disclosure
      regarding the status of the CGC asset acquisitions. On October 24, 2006, the
      Company filed a current report on Form 8-K to disclose that court approval
      to
      dispose the CGC assets in Argentina was granted. According
      to the purchase agreement with CGC, the Company is now obligated to purchase
      interests in four properties (a 93.18% participation in the Valle Morado Block,
      a 100% interest in the Santa Victoria Block and the remaining 50% interests
      in
      the Nacatimbay and Ipaguazu Blocks (in which the Company currently holds 50%
      interests)) for a total consideration of $2.1 million. The Company is
      considering its options to acquire the interests in the remaining four
      properties, which interests remain subject to rights of first refusal among
      joint venture partners and other third party consents.

    Form
      10-KSB/A1 for the Fiscal Year Ended December 31, 2005

    Financial
      Statements, page 20

    General

              2.

              We
                note your response to prior comment 24 in our letter dated May 10,
                2006 in
                which you explain that you did not acquire substantially all the
                assets of
                Don Won Corporation. Please tell us what percent of the net assets,
                revenues and related results of operations and cash flows of Don
                Won
                Corporation you obtained when you acquired the 14 percent interest
                in the
                Palmar Largo joint venture and the 50 percent interests in the Nacatimbay
                and Ipaguazu concessions.

              We
                continue to believe complete financial statements of the predecessor
                entity are necessary to satisfy the requirements of Item 310(c) of
                Regulation S-B; therefore, if you acquired only a component of the
                business of Don Won Corporation, you should present financial statements
                of the acquired component. These carve out financial statements should
                be
                prepared in accordance with the guidance provided at SAB Topic 1:B:1
                and
                should include a complete balance sheet, income statement and statement
                of
                cash flows.

            November
              1, 2006

            Page
              3

              As
                previously indicated, the accommodation for presenting Statements
                of Gross
                Revenues and Direct Lease Operating expenses in lieu of presenting
                complete financial statements is not generally extended to situations
                calling for the financial statements of a predecessor
                entity.

    RESPONSE:
      Pursuant
      to a conversation with the Staff, the Company intends to include audited
      financial statements for the nine-month period ended September 30, 2006 in
      its
      amended Form SB-2. The Company also intends to file the audited financial
      statements for the nine-month period ended September 30, 2006 along with its
      unaudited interim statements for the period ended September 30, 2006 with its
      quarterly report for the period ended September 30, 2006 or in a current report
      on Form 8-K filed thereafter.

    The
      audited financial statements for the period ended December 31, 2005 will also
      still be included in the amended SB-2. When the Company files its amended SB-2
      including the audited financial statements for the nine month period ended
      September 30, 2006, one complete year of financial statements for the Company
      will have been audited.

    In
      addition, the Schedule of Revenues, Royalties and Operating Costs corresponding
      to the 14% interests in the Palmar Largo joint venture for the eight month
      period ended August 31, 2005 and the years ended December 31, 2004 and December
      31, 2003 have been audited and the Company intends to file the report of their
      independent registered public accountants, which report will reflect the fact
      that such Schedules of Revenues, Royalties and Operating Costs has been
      audited.

    Note
      1—Description of Business and Going Concern, page 26

              3.

              We
                note your response to prior comment 28 in our letter dated May 10,
                2006 in
                which you explain that you had a statutory right to acquire the remaining
                shares of Gran Tierra Canada on the same terns and conditions as
                the
                initial share exchange. However, you did not tell us why you did
                not
                account for the purchase of the remaining shares of Gran Tierra Canada
                as
                an acquisition of a minority interest. Please explain to us why you
                did
                not account for the acquisition of this non-controlling interest
                under the
                purchase method in accordance with paragraph 14 of SFAS
                141.

    RESPONSE:
      The
      Company did not account for the purchase of the remaining shares of Gran Tierra
      Canada as an acquisition of a minority interest because the purchase of those
      remaining shares occurred simultaneously with the purchase of all of the other
      shares of Gran Tierra Canada’s capital stock. First, Goldstrike Exchange Co.
      acquired substantially all of Gran Tierra Canada’s capital stock. Second,
      immediately following that acquisition, Goldstrike Exchange Co. acquired the
      remaining shares of Gran Tierra Canada outstanding after the initial share
      exchange. In theory, these two transactions occurred one after the other;
      however, the closing of the transactions was simultaneous.

    As
      a
      result of these two parts of the larger acquisition transaction whereby
      Goldstrike Exchange Co. acquired all of the capital stock of Gran Tierra Canada
      and Goldstrike Inc. changed its name to Gran Tierra Energy Inc. and assumed
      the
      management and business operations of Gran Tierra Canada, Gran Tierra Canada
      became a wholly-owned subsidiary of Gran Tierra Energy Inc.

            November
              1, 2006

            Page
              4

    Thus,
      the
      combination of Gran Tierra Canada and Goldstrike Inc. was a reverse merger
      in
      which a private company (Gran Tierra Canada) merged into a non-operating public
      shell company (Goldstrike Inc.). The owners and management of Gran Tierra Canada
      maintained effective control of the company and the shareholders of Goldstrike
      Inc. continued as passive investors.

    The
      Company intends to revise its Form 10-KSB and its Form SB-2/A to clearly and
      consistently state that the purchase of the Gran Tierra Canada capital stock
      by
      Goldstrike Exchange Co. in two steps was part of a single transaction, whereby
      Gran Tierra Canada became a wholly-owned subsidiary of Goldstrike
      Inc.

    Prior
      to
      the reverse takeover transaction, Goldstrike Exchange Co. was created as a
      wholly owned subsidiary of Goldstrike Inc. Gran Tierra Canada was a private
      company not under the control of Goldstrike. At the time of the reverse takeover
      transaction, Goldstrike Exchange Co. issued exchangeable shares to shareholders
      of Gran Tierra Canada who elected to receive exchangeable shares, in
      consideration for the transaction. Simultaneously, Goldstrike Inc. issued common
      shares to purchase the remaining shares of Gran Tierra Canada. Immediately
      prior
      to the transaction, Gran Tierra Canada was not a subsidiary of Goldstrike or
      Goldstrike Exchange Co.

    Paragraph
      14 of SFAS 141 requires acquisition of some or all of the noncontrolling equity
      interests in a subsidiary by a parent or another subsidiary to be accounted
      for
      using the purchase method. Paragraph 14 directs the reader to paragraphs A5-A7
      for further guidance.

            -

              Paragraph
                A5 references Technical Bulletin 85-5 which addresses how a parent
                company
                accounts for a minority interest in an exchange of stock between
                two of
                its subsidiaries if one or both of the subsidiaries are partially
                owned.
                Prior to the reverse acquisition transaction which occurred on November
                10, 2005, Goldstrike Exchange Co. was a wholly owned subsidiary of
                Goldstrike Inc., and Gran Tierra Canada was a separate private company.
                In
                connection with the reverse acquisition transaction, Goldstrike Exchange
                Co. acquired all of the capital stock of Gran Tierra Canada, resulting
                in
                Gran Tierra Canada becoming a wholly-owned subsidiary of Goldstrike
                Inc.,
                and as a result Paragraph A5 does not
                apply.

            -

              The
                reverse acquisition transaction between Goldstrike Inc. and Gran
                Tierra
                Canada, whereby Goldstrike Inc. acquired all of the capital stock
                of Gran
                Tierra Canada is not a transaction described in, or contemplated
                by
                Paragraph A6 which relates to the acquisition of a minority
                interest.

            -

              Paragraph
                A7 relates to a transaction whereby a subsidiary exchanges its common
                stock for the outstanding voting common stock of its parent. In the
                reverse acquisition transaction between Goldstrike Inc. and Gran
                Tierra
                Canada, Goldstrike Exchange Co. issued Exchangeable shares to the
                shareholders in Gran Tierra Canada that elected to receive them and
                Goldstrike Inc. issued its common stock for the remaining shareholders
                who
                elected to receive Goldstrike Inc. shares. Prior to this transaction,
                Gran
                Tierra Canada was not a subsidiary of Goldstrike Inc. There was no
                exchange of common shares between Goldstrike Exchange Co. and Goldstrike
                Inc. as part of the transaction.

            November
              1, 2006

            Page
              5

    The
      SEC
      Division of Corporation Finance: Frequently Requested Accounting and Financial
      Reporting Interpretations and Guidance, March 31, 2001 Section I-F references
      a
      December 1989 consensus by the Emerging Issues Committee of the Canadian
      Institute of Chartered Accountants which indicates that the post
      reverse-acquisition comparative historical financial statements furnished for
      the “legal acquirer” should be those of the “legal acquiree” (ie. the
“accounting acquirer”), with appropriate disclosure concerning the change in the
      capital structure effected at the acquisition date.

    The
      specific circumstances o