SEC Company Response from GRAN TIERRA ENERGY INC. (GTE) (CIK 0001273441) (GTE) — May 24, 2017
GRAN TIERRA ENERGY INC. (GTE) (CIK 0001273441)
Date: May 24, 2017 · CIK: 0001273441 · Accession: 0001144204-17-029257
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-34018
Referenced dates: May 10, 2017
Letter
May 24, 2017
Mr. Karl Hiller
Branch Chief, Office of Natural Resources
United States Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Washington, D.C. 20549
Mail Stop 4628
Re: Gran Tierra Energy Inc.
Form 10-K for the Fiscal Year Ended December 31, 2016
Filed March 1, 2017
File No. 001-34018
Ladies and Gentlemen:
Set forth below are the responses of Gran Tierra Energy Inc. (“Gran Tierra,” the “Company”, “we,” “us” or “our”), to comments received from the staff of the Division of Corporation Finance (the “Staff”) of the Securities and Exchange Commission (the “Commission”) by letter dated May 10, 2017, with respect to the Company’s Annual Report on Form 10-K for the Fiscal Year ended December 31, 2016, File No. 001-34018, filed with the Commission on March 1, 2017 (the “2016 Form 10-K”).
For your convenience, our response is prefaced by the exact text of the Staff’s comment in bold, italicized text. All references to page numbers and captions correspond to the 2016 Form 10-K unless otherwise specified.
Form 10-K for the Fiscal Year Ended December 31, 2016
Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 48
Consolidated Results of Continuing Operations for the Year Ended December 31, 2016, Compared with the Results for the Years Ended December 31, 2015 and 2014, page
Funds Flow From Continuing Operations, page 62
1. We note you present the non-GAAP measure identified as Funds Flow From Continuing Operations without presenting the most directly comparable GAAP measure. See Question 102.10 of the updated Non-GAAP Compliance and Disclosure Interpretations issued on May 17, 2016 and review this guidance when preparing your next filing.
Response:
We have reviewed question 102.10 of the updated Non-GAAP Compliance and Disclosure Interpretations issued on May 17, 2016 (the “C&DI”), and when preparing our next Form 10-Q for the quarterly period ended June 30, 2017 (the “Second Quarter 2017 Form 10-Q”) we intend to present the most directly comparable GAAP measure with equal or greater prominence to the non-GAAP measure.
Suite 900, 520 – 3rd Avenue SW Calgary, Alberta, Canada, T2P 0R3 (403) 265-3221 Fax (403) 265-3242 www.grantierra.com
GTE-001
2. We note that you present Funds Flow from Continuing Operations for all periods presented and utilize this measure to analyze your liquidity. Please revise your presentation to comply with Item 10(e)(1)(ii)(A) of Regulation S-K which prohibits exclusion of charges or liabilities that required or will require cash settlement from non-GAAP liquidity measures.
Response:
We have reviewed our use of the non-GAAP measure “Funds Flow from Continuing Operations” and the use of similar non-GAAP measures by our peers in the oil and gas industry. Based on this review, we have determined that “Funds Flow from Continuing Operations” is a financial measure used by management to analyze the company’s performance compared to other companies in our industry and trends in the company’s performance between periods. Management does not currently use this measure to assess the company’s ability to meet its short term obligations, and therefore, does not believe this is a liquidity measure. Because management uses Funds Flow from Continuing Operations as a performance measure and not a liquidity measure, we believe the most directly comparable GAAP measure is net income or loss from continuing operations. In our Second Quarter 2017 Form 10-Q, we intend clarify the manner in which management uses Funds Flow from Continuing Operations and reconcile the non-GAAP measure Funds Flow from Continuing Operations to net income or loss from continuing operations.
Form 8-K filed May 3, 2017
Exhibit 99.1
3. The presentation in your earnings release pertaining to your 2017 first quarter results, including the bullet points under Key Highlights, results in non-GAAP measures being presented with greater prominence than GAAP measures. See Question 102.10 of the updated Non-GAAP Compliance and Disclosure Interpretations issued on May 17, 2016 and review this guidance when preparing your next earnings release.
Response:
We have reviewed question 102.10 of the C&DI, and when preparing our next earnings release we intend to present the most directly comparable GAAP measure with equal or greater prominence to any non-GAAP measure, including ensuring that the most directly comparable GAAP measure precedes the non-GAAP measure.
Form 8-K filed March 1, 2017
Exhibit 99.1
4. We note that you disclose net asset value of $4.85 per share, based on before tax net present value discounted at 10% of 2P reserves. It appears that all estimates of proved, probable and possible reserves and related future net revenue disclosed in the press release have been prepared in accordance with NI 51-101. Please tell us how you considered providing disclosures of reserves and net asset value based on SEC and FASB standards to supplement those disclosed under NI 51-101, to the extent the measures are materially different.
GTE-002
Response:
National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) of the Canadian Securities Administrators and the Canadian oil and Gas Evaluation Handbook (“COGEH”) requires Canadian-registered oil and gas companies to present certain information with respect to reserves and related net present value, including the net present value discounted at 10% of 2P reserves calculated in accordance with NI 51-101 and COGEH. Companies in our Canadian peer group generally disclose net asset value (“NAV”) calculated in accordance with NI 51-101 and COGEH in their annual earnings releases, and we believe that future net revenue calculated in accordance with NI 51-101 and COGEH is useful information about the NAV of our oil and gas properties and provides investors with a useful tool for comparing against others in our industry.
We disclosed the standardized measure of our proved reserves based on SEC and FASB standards as at December 31, 2016, in our Annual Report on Form 10-K filed with the SEC on March 1, 2017. However, the standardized measure of our proved reserves does not value probable reserves, and would not be comparable to the net present value discounted at 10% of 2P reserves calculated in accordance with NI 51-101 and COGEH. As a result of this incomparability, management believed it would not be useful to include reserve and net asset value calculations based on SEC and FASB standards in this press release.
* * * *
If you have any questions with respect to the foregoing or if any additional supplemental information is required by the Staff, please contact James M. Prince of Vinson & Elkins L.L.P. at (713) 758-3710.
Sincerely,
Gran Tierra Energy Inc.
Show Raw Text
CORRESP
1
filename1.htm
May 24, 2017
Mr. Karl Hiller
Branch Chief, Office of Natural
Resources
United States Securities and
Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Washington, D.C. 20549
Mail Stop 4628
Re: Gran Tierra Energy Inc.
Form 10-K for the Fiscal Year
Ended December 31, 2016
Filed March 1, 2017
File No. 001-34018
Ladies and Gentlemen:
Set forth below
are the responses of Gran Tierra Energy Inc. (“Gran Tierra,” the “Company”,
“we,” “us” or “our”), to comments received from the
staff of the Division of Corporation Finance (the “Staff”) of the Securities and Exchange Commission
(the “Commission”) by letter dated May 10, 2017, with respect to the Company’s Annual Report
on Form 10-K for the Fiscal Year ended December 31, 2016, File No. 001-34018, filed with the Commission on March 1, 2017 (the “2016
Form 10-K”).
For your convenience,
our response is prefaced by the exact text of the Staff’s comment in bold, italicized text. All references to page numbers
and captions correspond to the 2016 Form 10-K unless otherwise specified.
Form 10-K for the Fiscal Year
Ended December 31, 2016
Management’s Discussion
and Analysis of Financial Condition and Results of Operations, page 48
Consolidated Results of Continuing
Operations for the Year Ended December 31, 2016, Compared with the Results for the Years Ended December 31, 2015 and 2014, page
55
Funds Flow From Continuing
Operations, page 62
1. We note you present
the non-GAAP measure identified as Funds Flow From Continuing Operations without presenting the most directly comparable GAAP measure.
See Question 102.10 of the updated Non-GAAP Compliance and Disclosure Interpretations issued on May 17, 2016 and review this guidance
when preparing your next filing.
Response:
We have reviewed question 102.10
of the updated Non-GAAP Compliance and Disclosure Interpretations issued on May 17, 2016 (the “C&DI”),
and when preparing our next Form 10-Q for the quarterly period ended June 30, 2017 (the “Second Quarter 2017 Form 10-Q”)
we intend to present the most directly comparable GAAP measure with equal or greater prominence to the non-GAAP measure.
Suite
900, 520 – 3rd Avenue SW Calgary, Alberta, Canada, T2P 0R3 (403) 265-3221 Fax (403) 265-3242 www.grantierra.com
GTE-001
2. We note that you present
Funds Flow from Continuing Operations for all periods presented and utilize this measure to analyze your liquidity. Please revise
your presentation to comply with Item 10(e)(1)(ii)(A) of Regulation S-K which prohibits exclusion of charges or liabilities that
required or will require cash settlement from non-GAAP liquidity measures.
Response:
We have reviewed our use of the
non-GAAP measure “Funds Flow from Continuing Operations” and the use of similar non-GAAP measures by our peers in the
oil and gas industry. Based on this review, we have determined that “Funds Flow from Continuing Operations” is a financial
measure used by management to analyze the company’s performance compared to other companies in our industry and trends in
the company’s performance between periods. Management does not currently use this measure to assess the company’s ability
to meet its short term obligations, and therefore, does not believe this is a liquidity measure. Because management uses Funds
Flow from Continuing Operations as a performance measure and not a liquidity measure, we believe the most directly comparable GAAP
measure is net income or loss from continuing operations. In our Second Quarter 2017 Form 10-Q, we intend clarify the manner in
which management uses Funds Flow from Continuing Operations and reconcile the non-GAAP measure Funds Flow from Continuing Operations
to net income or loss from continuing operations.
Form 8-K filed May 3, 2017
Exhibit 99.1
3. The presentation in
your earnings release pertaining to your 2017 first quarter results, including the bullet points under Key Highlights, results
in non-GAAP measures being presented with greater prominence than GAAP measures. See Question 102.10 of the updated Non-GAAP Compliance
and Disclosure Interpretations issued on May 17, 2016 and review this guidance when preparing your next earnings release.
Response:
We have reviewed question 102.10
of the C&DI, and when preparing our next earnings release we intend to present the most directly comparable GAAP measure with
equal or greater prominence to any non-GAAP measure, including ensuring that the most directly comparable GAAP measure precedes
the non-GAAP measure.
Form 8-K filed March 1, 2017
Exhibit 99.1
4. We note that you disclose
net asset value of $4.85 per share, based on before tax net present value discounted at 10% of 2P reserves. It appears that all
estimates of proved, probable and possible reserves and related future net revenue disclosed in the press release have been prepared
in accordance with NI 51-101. Please tell us how you considered providing disclosures of reserves and net asset value based on
SEC and FASB standards to supplement those disclosed under NI 51-101, to the extent the measures are materially different.
GTE-002
Response:
National Instrument
51-101 - Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) of the Canadian Securities
Administrators and the Canadian oil and Gas Evaluation Handbook (“COGEH”) requires Canadian-registered
oil and gas companies to present certain information with respect to reserves and related net present value, including the net
present value discounted at 10% of 2P reserves calculated in accordance with NI 51-101 and COGEH. Companies in our Canadian peer
group generally disclose net asset value (“NAV”) calculated in accordance with NI 51-101 and COGEH in
their annual earnings releases, and we believe that future net revenue calculated in accordance with NI 51-101 and COGEH is useful
information about the NAV of our oil and gas properties and provides investors with a useful tool for comparing against others
in our industry.
We disclosed the standardized
measure of our proved reserves based on SEC and FASB standards as at December 31, 2016, in our Annual Report on Form 10-K filed
with the SEC on March 1, 2017. However, the standardized measure of our proved reserves does not value probable reserves, and would
not be comparable to the net present value discounted at 10% of 2P reserves calculated in accordance with NI 51-101 and COGEH.
As a result of this incomparability, management believed it would not be useful to include reserve and net asset value calculations
based on SEC and FASB standards in this press release.
* * * *
If you have any questions with
respect to the foregoing or if any additional supplemental information is required by the Staff, please contact James M. Prince
of Vinson & Elkins L.L.P. at (713) 758-3710.
Sincerely,
Gran Tierra Energy Inc.
By:
/s/ Ryan Ellson
Ryan Ellson
Chief Financial Officer
cc: Gary Guidry, Gran Tierra Energy Inc.
David E. Hardy, Gran Tierra Energy Inc.
Douglas E. McWilliams, Vinson & Elkins L.L.P.
James M. Prince, Vinson & Elkins
L.L.P.
Scott D. Rubinsky, Vinson & Elkins L.L.P.
GTE-003