Placed 3rd for CFA | InvestYoung Stock Pitch Competition November 4, 2014

Jonathan J. Chang, Queen’s Commerce 2017 TSE: GTE

Table of Contents

Company Overview

Internal/External Analysis

Investment Thesis

Valuation

Key Catalysts

Associate Risks

Price Target

Appendix/Bibliography

2

3

4

6

9

13

14

16

17

Jun 3, 2014

Jun 26, 2014

Company Overview

3 Company Overview Internal/External Investment Thesis Valuation Catalysts Associate Risks Price Target

Business Overview and Strategy Recent News

Management Relevant M&A Transactions of Subordinates (2009-14)

Business Strategy:• Establishing bases of assets by:

• Closed sale of its Argentina Business for ~$69 million USD• Sold to Madalena Energy

• Increased focus on Colombia and Peru for second half of 2014

Past Experiences• VP of EnCana

Corporation • New Ventures

Manager for Alberta Energy Company

DANA COFFIELDCEO

Past Experiences• Financial management

of Canadian and American oil and gas E&P companies

JAMES ROZON

CFO

Past Experiences• President and CEO of

First Calgary Petroleums Ltd

SHANE P. O’LEARYCOO

• 2014 drilling campaign: initial well test results are promising for the Bretaña and Moqueta oil fields in Peru and Colombia

Acquired

May 29, 2014

Acquired

Aug 19,2013

Acquired

Jan 17, 2011

Acquired

Sep 20,2010

Acquired

Aug 30, 2010

Acquired

Apr 9,2009

Selective acquisitions; reserve & production growth through drilling

Duplicating business model in other areas

Disposal of non-core assets through farm-outs or outright disposition of assets

Independent international company

Oil and Natural Gas

Acquisition, exploration, development, production

+ +

Internal Analysis

4 Company Overview Internal/External Investment Thesis Valuation Catalysts Associate Risks Price Target

Areas of Operations: Colombia, Peru, and Brazil

Independent O&G Segmentation by Market Cap Absolute Return Relative to E&P S&P Index (XOP)

Calgary Headquarters

7% 1%

59%

22%

2% 9%

Canadian-Based Small to Large Market Cap O&G Companies

Baytex

Bellatrix

Canadian NaturalResources

Crescent Point

Gran Tierra

Talisman

-35.0%

-25.0%

-15.0%

-5.0%

5.0%

15.0%

25.0%

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41

XOP GTE

Operations carried out in South America in Colombia, Peru and Brazil, and headquartered in Calgary, Alberta, Canada

88

89

90

91

92

93

94

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2014 2015

External Analysis: Oil Pricing

5

Oil Outlook OPEC Overview

Crude and Brent Oil Spread (Active Contract COA) Total World Demand

• Contrasting the fall in WTI crude oil prices this year, oil equities have rallied and hover above their historical average

• Crude has been performing better relatively to Brent

OPEC pumped avg 1.7 MM/day more than its 24.845 MM 2008-11 Daily QuotaBasket Price: $74.05 Nov 19, 2014

0

2

4

6

8

10

12

14

16

80

85

90

95

100

105

110

115

Jan 3 Mar 3 May 3 Jul 3 Sep 3

Crude Brent Spread

1,200B, 81%

277B, 19%

OPEC’s Share of World Oil

OPEC Non-OPEC

Company Overview Internal/External Investment Thesis Valuation Catalysts Associate Risks Price Target

Surge in U.S. and Saudi Arabia crude oil production will displace imported light blends and reduce U.S. reliance on imports

Imports to fall below 6M barrels in 2015

Basket Price: $74.05 Nov 19, 2014

External Analysis: Bullish Outlook

6

Sanctions on Russia – Boost Oil Prices Shortfall in Forecasts

Production Rates using Different Technologies Supply Prospects for 2025 (mtpa) by BG Group

Forecasts for additions in liquefied natural gas by 2025 fell by 35%

0

50

100

150

200

250

300

0 50 100 150 200 250 300

Flo

w r

ates

, m^

3/d

ay

Time since the beginning of the work, days

Horizontal wells with multistage hydraulic fracturing

Vertical wells with hydraulic fracturing

Multiple of 3.5 x

0

100

200

300

400

500

600

700

2013 2025

Onstream Under Construction Future Supply Prospects

-35% Current outlook for

2025 Supply

Company Overview Internal/External Investment Thesis Valuation Catalysts Associate Risks Price Target

Oil companies in Russia are being barred access to latest US and European exploration and production technology as a consequence of political sanctions

2013: Russia contributed

12.4% to global supply

Technology differences:

Horizontal vs. Vertical wells

Will reduce Russia oil

exports and raise prices

Many planned liquefaction plants never open because of complexity and expenses

Half of existing planned capacity additions are being planned by companies with no prior experience

Reduced supply will increase energy prices

Investment Thesis

7

Strong fundamental metrics with the lowest netbacks in peer group and competitive advantage through R&D

• Upcoming pipeline repairs and updated capex guidelines

• The Moqueta oil field in Colombia growth and Bretaňaoil discovery

Relative Valuation• GTE undervalued on every metric; trading at 8.7 x

2015E P/E — below the industry average of 18.1 x• GTE’s stature as a leader in Latin America and growth

warrant a higher valuation

Argument I: Highest Netbacks and Upside Positioning

Argument II: Production and Reserve Growth

Argument III: Valuation

Intrinsic Valuation• Both discounted cash flow and net asset value

suggest target prices conservative to analyst estimates

Company Overview Internal/External Investment Thesis Valuation Catalysts Associate Risks Price Target

Current financials make GTE attractive M&A takeover candidate and company is well-positioned for expansion into neighbouring countries such as Mexico

Public Company Comparables

O&G Specific Multiples

Precedent Transactions

Net Asset Value Discounted Cash Flow

Daily Production EBITDAXBase Fully Risked

• Increase in cash inflow• Medium-term

production growth • Long-term growth

beyond 2020

• Cash flow support the growth initiatives, mitigating need to raise equity in the future

71

62

Gran Tierra Peer Group

Netbacks ($/bbl)

$0Debt

Investment Thesis

8

Argument I: Highest Netbacks and Upside Positioning

Potential M&A Candidate Future Potential Upside Opportunities

Highest Netbacks within Peer Group Research and Development Costs

GTE future netbacks:~$75-79 (2014-18)

Suggested high premium potential

• Management hints at possibility to do business in Mexico

• GTE positioned well to participate in Mexico’s planned licensing rounds

• Spending $37 million to evaluate two unconventional oil-saturated sands in the Recôncavo Basin

• Oil demand increase: 9.9% (Sept 2013-14)

• Updated Report of Current Assets:

Left Graph: 2010-13 Average Costs ($/boe)Higher price realizations and transportation cost reductions

Future Upside Opportunities

Company Overview Internal/External Investment Thesis Valuation Catalysts Associate Risks Price Target

$14

$20

$0

$5

$10

$15

$20

$25

R&D Costs Peer R&D

10 million net acres of potential land without reserves

Attractive takeover candidate for firms looking for a foothold in region

Major E&P player in Latin America

Currently running on no debt

Brazil

Mexico

Proven: 77% reserve increaseProven + Probable: ~48% reserve increase

$64

$23

$36

$22

$46

$71

Clayton Williams

Peyto

Breitburn

Valient

Bankers

Gran Tierra

Investment Thesis

9

Argument II: Production and Reserve Growth

Historical Reserves (mboe) Historical Production (bod/d)

Attractive Opportunities for Reserve Growth Expanding Reserves of Current Mines

2P Expected 2014E:

122mm boe

0

50

100

150

200

2008 2009 2010 2011 2012 2013

2P

Re

serv

es (m

bo

e)

Proven Reserves Probable Reserves Possible Reserves10,000

12,500

15,000

17,500

20,000

22,500

25,000

2009 2010 2011 2012 2013

Pro

du

ctio

n (

bo

e /

d)

2014 Capex and Updated Guidelines

Pipeline Repairs

• Pipeline in Colombia was recently damaged due to landslide• Had to transport its oil by truck

• Cash inflow of $40 per boe when pipeline is repaired

• CAPEX program of $482 million • Poised for additional production growth

Company Overview Internal/External Investment Thesis Valuation Catalysts Associate Risks Price Target

8.0 x

4.0 x

Gran Tierra Closest Light Oil Peer:Petrominerales

Resource Potential (Reserve / Prod)

30,000 boe/d gross working interest

Drilling in Bretana, Exploration success in the Putumayo Basin

Located: 50% in Colombia

Valuation

10

Argument III: Valuation

EV / EBITDAX Multiple (5.0 x Exit) EV/Daily Production Multiple ($100 Exit)

Enterprise Value: $2,171

Less: Total Debt 0

Less: Preferred Securities 0

Less: Noncontrolling Interest 0

Plus: Cash and Cash Equivalents 347

Implied Equity Value: $2,518

Shares Oustanding: 275

Implied Price Per Share: 9 .16$

Enterprise Value: $1,552

Less: Total Debt 0

Less: Preferred Securities 0

Less: Noncontrolling Interest 0

Plus: Cash and Cash Equivalents 347

Implied Equity Value: $1,899

Shares Oustanding: 275

Implied Price Per Share: 6 .91$

Company Overview Internal/External Investment Thesis Valuation Catalysts Associate Risks Price Target

Valuation Statistic s Capital ization Enterprise Value / Enterprise Value /

Equity Enterprise P / E Multiple P / BV Multiple

EV/Prdn

(bod/d) EV/DACF EV/2P

Company Name Value Value LTM FY1 LTM FY1 LTM FY1 Total Tangible 2013E 2013E 2013E

CLAYTON WILLIAMS ENERGY 889$ 1,486$ 3.1 x 3.2 x 5.1 x 4.8 x 16.3 x 19.6 x 2.9 x 2.2 x NM 5.1 x 25.1 x

APACHE CORPORATION 28,995 39,505 2.6 x 2.8 x 3.9 x 3.9 x 24.5 x 12.3 x 1.2 x 0.9 x 132.9 x 7.3 x 35.9 x

CARRIZO OIL & GAS 2,223 3,236 5.2 x 4.6 x 11.9 x 6.0 x NM 17.7 x 3.7 x 2.6 x 58.4 x 4.2 x 16.8 x

LAREDO PETROLEUM 2,720 3,821 5.6 x 5.0 x 9.1 x 7.2 x 41.6 x 22.1 x 3.5 x 2.2 x 136.6 x 2.2 x 21.7 x

PEYTO EXP & DEV CORP 4,723 5,558 11.0 x 6.8 x 13.3 x 8.7 x 25.7 x 18.8 x 4.4 x 3.6 x 95.4 x 10.3 x 12.1 x

BREITBURN ENERGY 2,274 4,268 5.1 x 5.5 x 25.6 x 9.2 x NM NM 1.5 x 1.1 x 133.6 x 7.5 x 20.2 x

Median 2,497$ 4 ,044$ 5 .1 x 4 .8 x 10.5 x 6 .6 x 25.1 x 18.8 x 3 .2 x 2 .2 x 132.9 x 6 .2 x 21.0 x

Mean 6,971$ 9 ,646$ 5 .4 x 4 .6 x 11.5 x 6 .6 x 27.0 x 18.1 x 2 .9 x 2 .1 x 111.4 x 6 .1 x 22.0 x

Gran Tierra Energy Inc 1 ,395$ 1 ,047$ 1 .6 x 1 .5 x 2 .2 x 2 .1 x 18.4 x 8 .7 x 1 .5 x 1 .0 x 46.7 x 2 .9 x 9 .4 x

Relative Premium (Discount) to Median (69%) (69%) (79%) (68%) (27%) (54%) (52%) (52%) (65%) (53%) (55%)

Revenue EBITDA

Valuation

11

Discounted Cash Flow (DCF) Analysis($ in millions, except per share data)

Gran Tierra Energy Inc - Cash Flow Projections Gran Tierra Energy -

FY2011 FY2012 FY2013 FY 2014E FY 2015E FY 2016E FY 2017E FY 2018E

Revenue: $596 $583 $720 760$ 847$ 890$ 934$ 981$

EBITDAX: $464 $377 $526 526$ 580$ 623$ 654$ 687$

Operating Income: $233 $195 $258 321$ 373$ 394$ 414$ 435$

Less: Taxes ($107) ($98) ($136) ($136) ($168) ($163) ($171) ($179)

Plus: Depreciation & Amortization $231 $182 $267 $183 $185 $210 $210 $210

Plus: Stock-Based Compensation $13 $12 $9 $0 $0 $13 $13 $13

Plus: Asset Retirement Accretion $0 $0 $0 $0 $0 $0 $0 $0

Plus: Dry Hole Expense $0 $0 $0 $0 $0 $0 $0 $0

Plus: Deferred Income Tax -29 26 -29 ($70) $34 ($14) ($14) ($14)

Plus: Non-Cash Derivative Losses $0 $0 $0 $0 $0 $0 $0 $0

Plus: Other Non-Cash Items $0 $0 $0 $0 $0 $0 $0 $0

Less: Increase in Working Capital: $38 ($167) $168 ($88) $0 $0 $0 $0

Less: Capital Expenditures ($333) ($276) ($367) ($355) ($300) ($300) ($300) ($300)

Unlevered Free Cash Flow $46 (126)$ $170 (145)$ 124$ 141$ 152$ 164$

Present Value of Free Cash Flow 161$ (122)$ 94$ 95$ 92$ 89$

Normal Discount Period: 1.00 2.00 3.00 4.00 5.00 6.00

Mid-Year Discount: 0.50 1.50 2.50 3.50 4.50 5.50

Free Cash Flow Growth Rate: (373.0%) (235.6%) (184.8%) (185.7%) 13.5% 8.2% 8.0%

Sensitivities

Gran Tierra Energy - Net Present Value Sensitiv ity - Terminal EBITDAX Multiples

Discount Rate

9.16$ 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% 14.0%

2.0 x 6.08$ 5.86$ 5.65$ 5.46$ 5.27$ 5.10$ 4.93$

3.0 x 7.66$ 7.35$ 7.06$ 6.79$ 6.54$ 6.29$ 6.07$

4.0 x 9.23$ 8.84$ 8.47$ 8.13$ 7.80$ 7.49$ 7.21$

5.0 x 10.80$ 10 .33$ 9 .88$ 9 .46$ 9 .07$ 8 .69$ 8 .34$

6.0 x 12.38$ 11.82$ 11.29$ 10.80$ 10.33$ 9.89$ 9.48$

7.0 x 13.95$ 13.30$ 12.70$ 12.13$ 11.60$ 11.09$ 10.62$

8.0 x 15.52$ 14.79$ 14.11$ 13.47$ 12.86$ 12.29$ 11.76$

Term

inal

EB

ITD

AX

Mu

ltip

le

Gran Tierra Energy - Net Present Value Sensitiv ity - Dai ly Production Multiple

Discount Rate

6.91$ 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% 14.0%

$130.00 9.57$ 9.16$ 8.77$ 8.41$ 8.07$ 7.75$ 7.45$

$120.00 9.06$ 8.68$ 8.32$ 7.98$ 7.66$ 7.36$ 7.08$

$110.00 8.55$ 8.19$ 7.86$ 7.55$ 7.25$ 6.97$ 6.71$

$100.00 8.04$ 7 .71$ 7 .40$ 7 .11$ 6 .84$ 6 .59$ 6 .34$

$90.00 7.53$ 7.23$ 6.95$ 6.68$ 6.43$ 6.20$ 5.98$

$80.00 7.02$ 6.74$ 6.49$ 6.25$ 6.02$ 5.81$ 5.61$

$70.00 6.51$ 6.26$ 6.03$ 5.82$ 5.61$ 5.42$ 5.24$

Dai

ly P

rod

uct

ion

Mu

ltip

les

($ P

er

McF

)

Company Overview Internal/External Investment Thesis Valuation Catalysts Associate Risks Price Target

Valuation

12

NAVPS Explanation

NAVPS AnalysisNet Asset Value (2014 FY1) Post-Tax PV

Risked

mmBOE $m m

$C /

Share

Colombia 2P 50.9 $1,067.3 $4.10

Peru 2P 61.5 $277.4 $1.07

Brazil 2P 5.3 $106.4 $0.41

Total 2P Reserves 117.7 $1,451.1 $5.58

Net Cash/Debt $251.5 $0.97

Discounted proceeds from in-the-money options $5.2 0.02

Other Long-Term Investments $20.5 0.08

Base NAV 117.6 $1,728.3 6.64

Colombia Resource 28.4 $425.0 $1.57

Peru Resource 173 $840.8 $3.11

Brazil Resource 15.4 $108.1 $0.40

Total Upside Resources 216.8 $1,373.9 $5.07

Discounted proceeds from exercise-below-target options $51.8 $0.19

Discounted G&A ($228.5) ($0.84)

Fully Risked NAV 334.4 $2,925.6 10.8

Company Overview Internal/External Investment Thesis Valuation Catalysts Associate Risks Price Target

Since international E&P’s may not have as many standards as Canada, lower multiple from international E&P’s requiring a risk premium for their lack of regulation in comparison to Canadian companies.

0.8 x0.5 x

2.2 x

0.9 x1.1 x

0.4 x

GTE Base GTE Fully Risked Avg CDN Base Avg CDN FullyRisked

Avg InternationalBase

Avg InternationalFully Risked

Avg

$13.77

13.04

19.06

13.27

8.29

12.49

20.31

15.20

6.64

7.80

6.95

7.80

6.95

10.28

9.17

9.66

$14.48

13.47

20.69

13.40

8.83

12.88

22.64

15.74

10.80

11.29

7.25

11.29

7.25

12.02

9.30

10.07

LTM EV / Revenue

FY1 EV / Revenue

LTM EV / EBITDA

FY1 EV / EBITDA

LTM P / E

FY1 P / E

P / BV

P / Tangible BV

NAVPS

DCF Multiples Method (9-13%, 3.0-7.0 x)

DCF Gordon Growth (9-13%, 1-5% Growth)

EV / EBIT

EV / EBITDA

EV/Prdn…

EV/DACF

EV/2P

Public Company Comparables

Book Value Multiples and NAV

DCF Valuation

Precedent Transaction Analysis

Oil & Gas Specific Multiples

Valuation

13

Summary

• Relative valuation suggests much higher value and Gran Tierra is trading at a significant discount to the industry• Our NAVPS and DCF have more moderate estimates on future prices which are in line with the median of analyst targets• We have taken a conservative approach to our price target• Gran Tierra’s significant discount makes it a promising opportunity for investors interested in small-cap companies

Price Target: $8.00

Median Analyst Target: $9.78

Indicative Valuation Analysis: Football Field Graph

Company Overview Internal/External Investment Thesis Valuation Catalysts Associate Risks Price Target

Catalysts

14

Global Environment Permits

Successful Joint Drilling Campaign Leading to Increased Reserves

• Expected to receive its global development permit for the Moquetafield imminently

• GTE can develop the field with its optimal drilling locations; especially if the Corunta location is successful

• Colombia announced plans to expedite environmental permit approvals

• Will speed up infrastructure, mining and oil projects (to reduce the time to 5 months)

Drilling campaign in Peru in Block 107 would improve the additional oil potential in the region and add up to $1.4/per share in value for GTE, or about 20-30% of current price

Colombia: Moqueta-13development well was successfully drilled, tested ~1,500 barrels of oil per day ("bopd")

November 27 OPEC Meeting

Recent decreases in oil prices from Saudi Arabia raising oil production to protect market share against the US

Company Overview Internal/External Investment Thesis Valuation Catalysts Associate Risks Price Target

• Peruvian government is speeding up the permitting process anticipating the field’s development curve

Block 107 is estimated to have a prospective resource potential of ~50mn boe (adjusted by probability of success)

Costayaco-21development went well. Production from both is expected to start in the 3Q of 2014

Furthermore, It would not make sense for Saudi Arabia to wage a price war and injure the US, an ally in the war against Islamic State

Nov 20 price: $75.58

$153.40

$100.00

$80.00

$83.60

Iran

Russia

US

SaudiArabia

Pricing Needed to Breakeven

National BudgetAccording to IMF

Estimates

Associate Risks

15

Guerilla Activity in Colombia Lack of Diversification

Storage/Transportation and Sales Dependence Core Production Base

2012 and 2013:

Highly susceptible to regional factors such as geographic remoteness or weather conditions

• The Company relies on local infrastructure and the availability of transportation for storage and shipment of its product

87

103

Colombia

Argentina

Brazil

Peru

All Other

Costayaco Field (Colombia)

Moqueta Field (Colombia)

• Tested from the T-Sandstone formation at a rate 1,353 bbl/d of 27° API oil with 0.3% water cut

• Producing at a plateau rate of17,900 bbl/d gross

Putumayo-31 Block (Colombia)

• GTE was determined to be the successful bidder of the Putumayo-31 Block in the 2014 Bid Round in Colombia subject to ANH approval

2013 Revenue Segmentation:

Company Overview Internal/External Investment Thesis Valuation Catalysts Associate Risks Price Target

International market prices, lack of competition and reliance on a limited customers for sales

Main Buyer in Brazil

Main Buyer in Colombia

Main Colombia Delivery Contractor

Oil prices in Colombia are related to :

Guerrilla activity in Colombia increased significantlywhich creates a greater risk for operations and

employees

Areas known for breeding place of guerilla activity

Putumayo region Catatumbo region

Associate Risks

16

Susceptibility to Commodity Prices and Markets GTE vs. COA (Crude Oil, Brent Active Contract)

GTE vs. CLA (Crude Oil, WTI Contract) GTE vs. XOP (S&P E&P Index)

• GTE has a fair correlation to both crude and brent oil prices• Crude represented by CLA Index• Brent represented by COA Index

• Fair Correlation with S&P E&P Index

y = 0.3825x + 0.1367R² = 0.2539

-8

-6

-4

-2

0

2

4

6

8

-10 -5 0 5 10

y = 0.1495x - 0.0823R² = 0.1048

-6

-4

-2

0

2

4

6

-10 -5 0 5 10

y = 0.1383x - 0.239R² = 0.0962

-6

-5

-4

-3

-2

-1

0

1

2

3

4

5

-10 -5 0 5 10

Company Overview Internal/External Investment Thesis Valuation Catalysts Associate Risks Price Target

*2013 Annual Report: “We did not engage in any formal hedging activity with regard to foreign currency risk”

• As a small-cap company, a risk premium must be attributed and considered

• No found information on any hedging position to mitigate risk

Price Target

17

Price-Volume Chart Analyst Price Target Comparison

Distribution of Analyst Ratings Target and Return Summary

4

5

6

7

8

9

10

11

12

0%

20%

40%

60%

80%

100%

Oct-14 Aug-14 Jun-14 Apr-14 Feb-14 Dec-13

Buy Hold Price Target Price

Price November 4: 4.81Capital Return: 66.3%Dividend Return: 0%Total Implied Return: 66.3%

Target Price $8.00

Soft Stop-Loss: $4.50Hard Stop-Loss: $4.00

0 2 4 6 8 10 12 14

Our Target Price

Morningstar

Desjardins Capital Markets

Mackie Research

TD Securities

Cormarck Securities

Nov 5 Price: $4.81

M

2M

4M

6M

8M

10M

12M

14M

$4.0

$5.0

$6.0

$7.0

$8.0

$9.0

$10.0

$11.0

3-Jan 28-Feb 25-Apr 20-Jun 15-Aug 10-Oct

Target Price: $8.00

Stop Loss: $4.50

Company Overview Internal/External Investment Thesis Valuation Catalysts Associate Risks Price Target

Bibliography

18

Equity Research Reports: Analyst:

Wright GTE

ValueEngine

TD Securities Jamie Somerville

MRA Research Michael Anderegg

HSBC Franciso Schumacher, Kevin Gonzalez

Morningstar David McColl

Canaccord Genuity Christopher Brown

Cormack Securities Garett Ursa, Calvin Bohdan

Desjardins Capital Justin Anderson

Mackie Research Bill Newman, Valentino Pintea

Reports:• Will Gran Tierra Energy Inc. Perform Long Term?• ValuEngine Rating and Forecast Report for GTE• Colombia Equity Insights:-Tax reform plans reinforce our underweight on

Colombian equities• (GTE-T) On the Road with GTE• Red Book Sept. 2014(report)• Permit & pipe problems present opportunity; maintain BUY

recommendation and C$9.50 target• South America Oil E & P Play – Potential Event Catalysts Upcoming• Rising Costs, Project Delays Reduced Appetite for EU Oil Shares (Bloomberg

E&P Industry Primer)• BG’s Egypt Diversions, Higher Costs Overshadow Brazil Growth• Q2/14 Results In Line; Colombian Exploration Program Provides Steady

Stream Of Catalysts• GTE's quiet summer coming to a close; catalysts set for 4Q14• THOMSON REUTERS STREETEVENTS EDITED TRANSCRIPT GTE - Q2 2014

Gran Tierra Energy Inc Earnings Call• Exploration Program Coming Up In H2/14• OPEC Annual Statistical Bulletin 2013• Company’s Annual Reports

Authors:

Marissa Goodbody

Seth Barnet

Forbes

Hasmir Abdula

Jim Brewer

Articles:• Weak On High Volume: Gran Tierra Energy (GTE)• Gran Tierra Energy Sees Large Increase in Short

Interest (GTE)• Relative Strength Alert For Gran Tierra Energy

(GTE)• Gran Tierra Energy Given Consensus Rating of

“Buy” by Analysts (NYSE:GTE)• Short Interest in Gran Tierra Energy Decreases By

18.8% (GTE)

(Sources cited and additional reading material)

Analytic Services:

Bloomberg

Thomson One

Capital IQ

Back to Table of Contents

Appendix Table of Contents

19

Click a box below to reach the slide

WACC/Cap Table

Precedent Comps

Precedent M&A List

Colombia Properties

Argentina Properties

Brazil Properties

Comps Calculations

Broker Analysis

Rolling Ratios

Institutional Ownership

Implied Valuation

Appendix

20

Multiples Implied Valuation

Low High Metric Low High

Public Company Comparables:

LTM EV / Revenue 5.1 x 5.4 x 654$ 13.77$ 14.48$

FY1 EV / Revenue 4.6 x 4.8 x 700$ 13.04 13.47

LTM EV / EBITDA 10.5 x 11.5 x 466$ 19.06 20.69

FY1 EV / EBITDA 6.6 x 6.6 x 503$ 13.27 13.40

LTM P / E 25.1 x 27.0 x 77$ 8.29 8.83

FY1 P / E 18.1 x 18.8 x 170$ 12.49 12.88

NAVPS and Book Value Multiples

P / BV 2.9 x 3.2 x 1,826$ 20.31 22.64

P / Tangible BV 2.1 x 2.2 x 1,826$ 15.20 15.74

NAVPS 6.64 10.80

DCF Valuation

DCF Multiples Method (9-13%, 3.0-7.0 x) 7.80 11.29

DCF Gordon Growth (9-13%, 1-5% Growth) 6.95 7.25

Precedent Transaction Analysis

EV / EBIT 24.1 x 30.1 x $68 7.80 11.29

EV / EBITDA 11.35 13.33 466$ 6.95 7.25

Balance Sheet Adj. 347.00

Shares Outstanding 275.00

Implied Valuation

Appendix

21

WACC Analysis and Capitalization Table

Capitalization TableConsolidated Market Cap 1,321

- Cash and Short Term 347

+ Short Term Debt -

+ Long Term Debt -

+ Preferred Stock -

+ Minority Interest -

= Enterprise Value 974

Go Back to Appendix Overview

WACC Analysis($ in millions, except per share data)

Discount Rate Calculation - Assumptions

Risk-Free Rate: 2.4%

Equity Risk Premium: 7.0%

Interest Rate on Debt: 0.0%

Comparable Companies - Unlevered Beta Calculation

Levered Equity Unlevered

Name Beta Debt Va lue Tax Rate Beta

CLAYTON WILLIAMS ENERGY, INC. 2.56 632$ 889$ 36.0% 1.76

APACHE CORPORATION 1.43 9,675 28,995 45.7% 1.21

CARRIZO OIL & GAS, INC. 2.00 1,022 2,223 35.0% 1.54

LAREDO PETROLEUM, INC 1.95 1,501 2,720 39.0% 1.46

PEYTO EXP/DEV CORP 0.40 825 4,723 35.0% 0.36

BREITBURN ENERGY PARTNERS L.P. 0.3 1812 2,274 35.0% 0.20

Median 1.69 1.33

Gran Tierra Energy Inc 1.17

Gran Tierra - Levered Beta & WACC Calculation

Unlevered Equity Levered

Beta Debt Va lue Tax Rate Beta

Gran Tierra Energy Inc 1.33 -$ 1,395$ 35% 1.33$

Cost of Equity Based on Comparables: 11.8%

Cost of Equity Based on Historical Beta: 10.6%

WACC 11.8%

WACC = Cost of Equity * % Equity + Cost of Debt * % Debt *

(1 - Tax Rate) + Cost of Preferred Stock * % Preferred Stock

Appendix

22

Precedent Transaction Analysis: Deal Breakdown and Multiples

Deal Attribute

Target Multiples # Deals Min - Max Median Min Max Average

   Net Income 5 7.33 - 88.03 58.7 x 7.3 x 88.0 x 47.7 x

   Free Cashflow 4 8.98 - 77.72 53.3 x 9.0 x 77.7 x 43.4 x

   Income B/F XO 5 7.33 - 79.05 52.4 x 7.3 x 79.1 x 43.2 x

   Net Income + Deprec 5 2.67 - 88.03 32.7 x 2.7 x 88.0 x 45.4 x

   EBIT 5 3.95 - 56.33 24.1 x 4.0 x 56.3 x 30.1 x

   EBITDA 5 2.15 - 24.51 11.4 x 2.2 x 24.5 x 13.3 x

   Cashflow from Ops. 5 2.46 - 33.56 8.5 x 2.5 x 33.6 x 18.0 x

   Revenue 6 1.23 - 193.53 8.0 x 1.2 x 193.5 x 97.4 x

   Book Value 6 .94 - 68.45 6.0 x 0.9 x 68.5 x 34.7 x

   Stockholder Eqty 6 .94 - 68.45 6.0 x 0.9 x 68.5 x 34.7 x

   Market Cap 3 1.06 - 3.14 2.8 x 1.1 x 3.1 x 2.1 x

   Total Assets 6 .58 - 21.60 1.8 x 0.6 x 21.6 x 11.1 x

   Enterprise Value 3 1.25 - 2.02 1.3 x 1.3 x 2.0 x 1.6 x

Premiums Paid # Deals Volume Percent

   50.01-75% 1 1.34B 8% 8%

   25.01-50% 2 2.32B 13%

Go Back to Appendix Overview

Appendix

23

Precedent Transaction Analysis: Listed Deal Transactions

Deal

Type

Announce

Date Target Name Acquirer Name Seller Name

Announced Total

Value (mil.)

Payment

Type TV/EBITDA Deal Status

M&A 11/13/2013 Petrobras Energia Peru SA China National Petroleum Corp Petroleo Brasileiro SA 2600 Cash Completed

M&A 4/30/2014 Heritage Oil PLC Al Mirqab Capital SPC 1883.74 Cash 11.35 Completed

M&A 8/19/2013 BC-10 block/Brazil Sinochem International Corp Petroleo Brasileiro SA 1540 Cash Terminated

INV 6/14/2013 Petrobras Oil & Gas BV

Grupo BTG Pactual,Helios Investment Partners LLP (Fund: Helios

Investors II LP) Petroleo Brasileiro SA 1525 Cash Completed

M&A 9/29/2013 Petrominerales Ltd Pacific Rubiales Energy Corp 1335.01 Cash 2.67 Completed

M&A 11/22/2013 Northern Blizzard Resources Inc Potential Buyer

Riverstone Holdings LLC,NGP

Energy Capital Management LLC 1000 Cash Withdrawn

M&A 2/12/2014 Argentinian business YPF SA Apache Corp 852 Cash Completed

M&A 5/7/2013 Blocks BM-C-39 & BM-C-40 Petroliam Nasional Bhd Oleo e Gas Participacoes SA 850 Cash Terminated

INV 3/24/2014 Transportadora de Gas del Peru SA Canada Pension Plan Investment Board

Tecpetrol SA,Tecpetrol

International SA,Tecpetrol

Internacional SLU 607 Cash 24.51 Completed

M&A 8/16/2013 Trinidad and Tobago Holdings LLC National Gas Co of Trinidad & Tobago Ltd ConocoPhillips 600 Cash Completed

INV 12/9/2013 Oleoducto Central SA

AFP Proteccion SA,Grupo Aval Acciones y Valores,Advent

International Corp (Fund: Advent International GPE VII LP) Talisman Energy Inc 595 Cash Completed

M&A 10/14/2013 BC-10 block/Brazil Oil & Natural Gas Corp Ltd Petroleo Brasileiro SA 529 Cash Completed

INV 9/18/2014 Sierra Oil & Gas S de RL de CV

Infraestructura Institucional Srl,Riverstone Holdings LLC (Fund:

Riverstone Global Energy & Power Fund V LP)… 525 Cash Completed

M&A 11/19/2012 C&C Energia Ltd Pacific Rubiales Energy Corp 440.85

Cash and

Stock 2.15 Completed

M&A 11/26/2013 OFD Holding Inc Yara International ASA Omimex Resources Inc 377 Cash Completed

INV 10/31/2013 OAS Oleo e Gas FI-FGTS 357.85 Cash Completed

INV 8/20/2013

Primax Comercial Del Ecuador

SA,Manu Peru Holding SA,Atimasa SA Romero Trading SA Empresa Nacional del Petroleo 308.5 Cash Completed

M&A 3/25/2013 Occidental Quimica do Brasil Ltda Unipar Carbocloro SA Occidental Petroleum Corp 300.4 Cash Completed

M&A 12/16/2013 Harvest Vinccler Dutch Holding BV Pluspetrol Resources Corp NV,Petroandina Resources Corp NV Harvest Natural Resources Inc 275 Undisclosed Completed

M&A 11/26/2012 Block BS-4/Santos Basin Oleo e Gas Participacoes SA Petroleo Brasileiro SA 270 Cash Completed

M&A 5/13/2014 Verano Energy Ltd Parex Resources Inc 260.94

Cash and

Stock Completed

INV 11/20/2013 Transportadora de Gas del Peru SA Grana y Montero SAA Pluspetrol SA 237 Cash 18.2 Completed

Go Back to Appendix Overview

Appendix

24

Properties in Colombia

Go Back to Appendix Overview

Appendix

25

Properties in Argentina that were Sold

Go Back to Appendix Overview

Appendix

26

Properties in Brazil

Go Back to Appendix Overview

Appendix

27

Comparable Companies - Exploration Oil and Gas Companies, with Market Caps Above 800M($ in Millions Except Per Share and Per Unit Data)

Operating Stati s t i cs Capi ta l i za tion Projected Projected

Equi ty Enterpri se Revenue EBITDA Reported Net Incom e Revenue EBITDA EBITDA Marg in

Com pany Nam e Value Va lue LTM F Y1 LTM F Y1 LTM F Y1 G rowth G rowth LTM F Y1

CLAYTON WILLIAMS ENERGY 889$ 1,486$ 486$ 466$ 292$ 307$ 55$ 42$ 83.8% 103.7% 60.2% 65.9%

APACHE CORPORATION 28,995 39,505 15,347 14,255 10,239 10,052 15 2,431 21.1% (22.7%) 66.7% 70.5%

CARRIZO OIL & GAS 2,223 3,236 625 710 273 544 (11) 122 144.5% (17.5%) 43.7% 76.6%

LAREDO PETROLEUM 2,720 3,821 681 759 418 533 62 130 50.7% (1.8%) 61.5% 70.2%

PEYTO EXP & DEV CORP 4,723 5,558 620 821 515 638 181 254 35.8% 38.6% 83.0% 77.7%

BREITBURN ENERGY 2,274 4,268 838 780 167 463 (198) (54) 31.9% (16.2%) 19.9% 59.4%

Median 2,497$ 4 ,044$ 653$ 769$ 355$ 538$ 35$ 126$ 43 .2% (9.0%) 60.8% 70.3%

Mean 6,971$ 3 ,382$ 621$ 722$ 278$ 481$ (5 )$ 62$ 32 .9% (17.2%) 47.8% 67.0%

Gran Tierra Energy Inc 1 ,395$ 1 ,047$ 654$ 700$ 466$ 503$ 77$ 170$ 37 .0% (5.5%) 71.4% 71.9%

Go Back to Appendix Overview

Appendix

28

Broker Analyst Recommendation Target Date

HSBC LUIZ CARVALHO overweight 7.94 20-Nov-14

JPMorgan FELIPE DOS SANTOS overweight 10.23 13-Nov-14

RBC Capital Markets NATHAN PIPER outperform 11.00 10-Nov-14

Canaccord Genuity Corp CHRISTOPHER BROWN buy 9.50 10-Nov-14

Morningstar, Inc JASON STEVENS buy 10-Nov-14

Cormark Securities Inc. GARETT URSU buy 9.00 7-Nov-14

FirstEnergy Capital Corp DARREN B ENGELS outperform 9.00 7-Nov-14

TD Securities JAMIE SOMERVILLE buy 10.00 7-Nov-14

Mackie Research Capital Corp. BILL NEWMAN buy 8.75 7-Nov-14

Credit Suisse DAVID PHUNG outperform 8.58 6-Nov-14

Peters & Co Ltd DAN GRAGER sector outperform 7.50 6-Nov-14

Scotia Capital GAVIN WYLIE sector outperform 11.00 6-Nov-14

Paradigm Capital Inc IAN W MACQUEEN buy 9.25 6-Nov-14

GMP DAVID BEDDIS buy 10.75 6-Nov-14

Edgecrest Capital VICTOR VALLANCE buy 7.00 6-Nov-14

Goldman Sachs SERGIO CONTI neutral/neutral 7.50 26-Oct-14

ITG Investment Research IAN NIEBOER no rating system 8-Jul-14

EVA Dimensions NEIL FONSECA buy 28-Apr-14

Morningstar, Inc DAVID MCCOLL hold 10.00 8-Apr-14

Jennings Capital JAMES HUMEN Under Review 31-Jan-14

Tudor Pickering & Co MATTHEW PORTILLO hold 11.15 29-Jan-14

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Go Back to Appendix Overview

Appendix

29

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14

Price Earnings Ratio (Rolling FY1, FY2, FY3)

P/E FY1 P/E FY2 P/E FY3

1.50

2.00

2.50

3.00

3.50

4.00

Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14

EV EBITDA Ratio (Rolling FY1, FY2, FY3)

EV/EBITDA FY1 EV/EBITDA FY2 EV/EBITDA FY3

Rolling Ratios P / E and EV / EBITDA

Go Back to Appendix Overview

Appendix

30

Institutional Ownership Breakdown

Holder Name Position Position Change Market Value

% of

Ownership Report Date Source Country

FMR LLC 19,572,002 -3,980,589 100,600,090 7.09% 9/30/2014 ULT-AGG UNITED STATES

MASSACHUSETTS FINANC 15,572,380 5,841,019 80,042,033 5.64% 9/30/2014 13F UNITED STATES

WASATCH ADVISORS INC 13,257,723 1,359,621 68,144,696 4.80% 9/30/2014 13F UNITED STATES

AMBER CAPITAL LP 9,035,358 -1,203,009 46,441,740 3.27% 9/30/2014 13F UNITED STATES

JPMORGAN CHASE & CO 8,473,686 66,514 43,554,746 3.07% 9/30/2014 ULT-AGG UNITED STATES

CANADA PENSION PLAN 8,408,300 -1,573,302 43,218,662 3.05% 9/30/2014 13F CANADA

GRANTHAM MAYO VAN OT 5,373,162 625,962 27,618,053 1.95% 9/30/2014 13F UNITED STATES

INVESCO LTD 4,883,043 68,103 25,098,841 1.77% 9/30/2014 ULT-AGG CANADA

BCIMC INVESTMENT MAN 4,801,338 0 24,678,877 1.74% 3/31/2014 CAN-PE CANADA

FRANKLIN RESOURCES 4,491,102 440,401 23,084,264 1.63% 9/30/2014 ULT-AGG UNITED STATES

INGALLS & SNYDER 4,489,453 127,000 23,075,788 1.63% 9/30/2014 13F UNITED STATES

IG INVESTMENT MANAGE 4,451,039 -312,930 22,878,340 1.61% 9/30/2014 13F CANADA

CARMIGNAC GESTION 4,327,000 0 22,240,780 1.57% 9/30/2014 MF-AGG FRANCE

THORNBURG INVESTMENT 4,072,673 0 20,933,539 1.48% 6/30/2014 MF-USA UNITED STATES

SCHRODER INVESTMENT 3,711,312 -1,534,457 19,076,144 1.34% 9/30/2014 13F BRITAIN

LIBRA ADVISORS LLC 3,505,880 2,544,200 18,020,223 1.27% 9/30/2014 13F UNITED STATES

NUMERIC INVESTORS LL 3,411,726 571,600 17,536,272 1.24% 9/30/2014 13F UNITED STATES

GRANDEUR PEAK GLOBAL 3,078,350 390,225 15,822,719 1.12% 9/30/2014 13F UNITED STATES

VANGUARD GROUP INC 3,034,285 233,557 15,596,225 1.10% 9/30/2014 13F UNITED STATES

TORONTO-DOMINION BAN 2,864,691 -52,072 14,724,512 1.04% 9/30/2014 ULT-AGG CANADA

Go Back to Appendix Overview