Filed
by the Registrant x
|
|
Filed
by a Party other than the Registrant ¨
|
|
Check
the appropriate box:
|
|
x
|
Preliminary
Proxy Statement
|
¨
|
Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
|
¨
|
Definitive
Proxy Statement
|
¨
|
Definitive
Additional Materials
|
¨
|
Soliciting
Material Pursuant to §240.14a-12
|
Gran
Tierra Energy Inc.
|
||
(Name
of Registrant as Specified In Its Charter)
|
||
|
||
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
|
||
|
||
Payment
of Filing Fee (Check the appropriate box):
|
||
¨
|
No
fee required.
|
|
x
|
Fee
computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
|
|
(1)
|
Title
of each class of securities to which transaction
applies:
|
|
|
Common
shares of Solana Resources Limited (“Common
Shares”)
|
|
(2)
|
Aggregate
number of securities to which transaction applies:
|
|
|
126,426,792
Common Shares; 3,945,000 options to purchase Common Shares with an
exercise price of less than US$3.89 per share; and 7,500,000 warrants
to
purchase Common Shares with an exercise price of less than US$1.89
per
share (U.S. dollar amounts based on an exchange rate of CDN$1.00
=
US$0.9428 (the “Exchange
Rate”)).
|
|
(3)
|
Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
|
|
|
Calculated
solely for purposes of determining the filing fee. The maximum aggregate
value of the transaction was determined by adding:
(A) 126,426,792 Common Shares multiplied by US$3.87 per share
(value of one Common Share, based on the high and low prices of the
Common
Shares on the TSX Venture Exchange on September 3, 2008, converted
to U.S.
dollars based
on the Exchange Rate);
(B) options to purchase 3,945,000 Common Shares multiplied by
US$2.09 (which is the difference between US$3.87 and the weighted
average
exercise price of US$1.78 per share, based on the Exchange Rate);
and
(C) warrants to purchase 7,500,000 Common Shares multiplied by
US$1.98 (which is the difference between US$3.87 and the weighted
average
exercise price of US$1.89 per share based on the Exchange Rate).
In
accordance with Section 14(g) of the Securities Exchange Act of 1934,
as amended, the filing fee was determined by multiplying 0.0000393
by the
sum of the preceding sentence.
|
|
(4)
|
Proposed
maximum aggregate value of transaction:
|
|
|
$512,366,735.
|
|
(5)
|
Total
fee paid:
|
|
|
$20,136.
|
|
¨
|
Fee
paid previously with preliminary materials.
|
|
¨
|
Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
|
|
(1)
|
Amount
Previously Paid:
|
|
(2)
|
Form,
Schedule or Registration Statement No.:
|
|
(3)
|
Filing
Party:
|
|
(4)
|
Date
Filed:
|
|
Persons
who are to respond to the collection of information contained in
this form
are not required to respond unless the form displays a currently
valid OMB
control number.
|
NOTICE
OF PETITION
|
viii
|
|
EXCHANGE
RATE OF CANADIAN AND U.S. DOLLARS
|
x
|
|
ABBREVIATIONS
& CONVERSIONS
|
xi
|
|
JOINT
MANAGEMENT INFORMATION CIRCULAR AND PROXY
STATEMENT
|
1
|
|
PROXY
SUMMARY INFORMATION
|
7
|
|
RISK
FACTORS
|
23
|
|
CAUTIONARY
STATEMENT ABOUT FORWARD LOOKING STATEMENTS
|
28
|
|
INFORMATION
ABOUT THE MEETINGS AND VOTING
|
30
|
|
DESCRIPTION
OF THE ARRANGEMENT
|
38
|
|
THE
ARRANGEMENT AGREEMENT
|
73
|
|
CERTAIN
INFORMATION ABOUT THE COMBINED COMPANY
|
83
|
|
CERTAIN
INFORMATION ABOUT GRAN TIERRA
|
96
|
|
CERTAIN
INFORMATION ABOUT SOLANA
|
121
|
|
COMPARISON
OF STOCKHOLDER RIGHTS
|
141
|
|
INFORMATION
ABOUT TAX CONSIDERATIONS
|
151
|
|
BUSINESS
OF THE GRAN TIERRA SPECIAL MEETING
|
165
|
|
OTHER
MATTERS
|
176
|
|
SOLANA
GENERAL
PROXY MATTERS
|
177
|
|
CERTAIN
FINANCIAL INFORMATION ABOUT THE COMBINED COMPANY
|
179
|
|
CERTAIN
FINANCIAL INFORMATION ABOUT SOLANA
|
187
|
|
GRAN
TIERRA DOCUMENTS INCORPORATED BY REFERENCE
|
|
218
|
ANNEX
A
|
Form
of Arrangement Resolution
|
|
ANNEX
B
|
Arrangement
Agreement
|
|
ANNEX
C
|
Interim
Order of the Court
|
|
ANNEX
D
|
Plan
of Arrangement
|
|
ANNEX
E
|
Provisions
Attaching to the GTE–Solana Exchangeable
Shares
|
|
ANNEX
F
|
Form
of Support Agreement
|
|
ANNEX
G
|
Form
of Voting and Exchange Trust Agreement
|
|
ANNEX
H
|
Opinion
of Blackmont Capital Inc.
|
|
ANNEX
I
|
Opinion
of Tristone Capital Inc.
|
|
ANNEX
J
|
Section
191 of the Alberta Business Corporations Act Respecting Dissenters’ Rights
of Appraisal
|
ANNEX
K
|
Text
of amendment to Gran Tierra’s articles of incorporation, as described in
Gran Tierra’s Proposal 2
|
|
ANNEX
L
|
|
Text
of amendment to Gran Tierra’s articles of incorporation, as described in
Gran Tierra’s Proposal 3
|
Yours
very truly,
|
/s/
J. Scott Price
J.
Scott Price
President
and Chief Executive Officer
|
By
Order of the Board of Directors
|
|
/s/
Martin Eden
|
|
Martin
Eden
|
Chief
Financial Officer and Secretary
|
(a) |
to
consider and, if thought advisable, to pass, with or without variation,
a
special resolution (the “Arrangement
Resolution”),
the full text of which is set forth in Annex A to the accompanying
Joint
Management Information Circular and Proxy Statement
dated ●,
2008 (the “Joint
Proxy Statement”),
to approve an arrangement (the “Arrangement”)
involving Solana, Gran
Tierra Energy Inc., Gran Tierra Exchangeco Inc. and the holders of
the
Solana Securities (“Solana
Securityholders”),
all as more particularly described in the Joint Proxy Statement;
and
|
(b) |
to
transact such further and other business as may properly be brought
before
the Solana Special Meeting or any adjournment
thereof.
|
BY
ORDER OF THE BOARD OF DIRECTORS OF
Solana
Resources Limited
/S/ RAY
ANTONY
|
Ray
Antony
Chairman
|
(a) |
a
declaration that the terms and conditions of the Arrangement are
fair to
the Solana Securityholders from a substantive and a procedural point
of
view;
|
(b) |
an
order approving the Arrangement pursuant to the provisions of section
193
of the ABCA;
|
(c) |
a
declaration that the Arrangement will, upon the filing of the Articles
of
Arrangement pursuant to the provisions of Section 193 of the ABCA,
become
effective in accordance with its terms and will be binding on and
after
the Effective Date as defined in the Arrangement;
and
|
(d) |
such
other and further orders, declarations and directions as the Court
may
deem just.
|
Davis
llp
|
1000,
250 - 2nd
Street S.W.
|
Calgary,
Alberta T2P OC1
|
Attention:
Kenneth P. Reh
|
BY
ORDER OF THE BOARD OF DIRECTORS OF SOLANA
RESOURCES LIMITED
|
/s/
J. Scott Price
|
J.
Scott Price
President
and Chief Executive Officer
|
Six Month Period
Ended June 30,
|
Twelve Month Period Ended December 31,
|
||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
2003
|
||||||||||||||
High
|
US$
|
1.0291
|
US$ |
1.0908
|
US$ |
0.9100
|
US$ |
0.8690
|
US$ |
0.8493
|
US$ |
0.7738
|
|||||||
Low
|
0.9714
|
0.8437
|
0.8528
|
0.7872
|
0.7158
|
0.6384
|
|||||||||||||
Average
|
0.9950
|
0.9376
|
0.8844
|
0.8276
|
0.7702
|
0.7186
|
|||||||||||||
Period
End
|
0.9818
|
1.0120
|
0.8582
|
0.8579
|
0.8310
|
0.7738
|
Six Month
Period Ended
June 30,
|
Twelve Month Period Ended December 31,
|
||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
2003
|
||||||||||||||
High
|
CDN$
|
1.0324
|
CDN$
|
1.1853
|
CDN$
|
1.1726
|
CDN$
|
1.2704
|
CDN$
|
1.3968
|
CDN$
|
1.5747
|
|||||||
Low
|
0.9719
|
0.9170
|
1.0990
|
1.1507
|
1.1774
|
1.2924
|
|||||||||||||
Average
|
1.0054
|
1.0666
|
1.1308
|
1.2085
|
1.2980
|
1.3914
|
|||||||||||||
Period
End
|
1.0186
|
0.9881
|
1.1653
|
1.1659
|
1.2036
|
1.2924
|
Oil
and Natural Gas Liquids
|
Natural
Gas
|
||
Bbl
|
barrel
|
Mcf
|
thousand
cubic feet
|
Bbls
|
barrels
|
MMcf
|
million
cubic feet
|
MBbls
|
thousand
barrels
|
Mcf/d
|
thousand
cubic feet per day
|
MMbbls
|
million
barrels
|
||
Bbls/d
|
barrels
per day
|
||
BOPD
|
barrels
of oil per day
|
Boe
|
barrel
of oil equivalent of natural gas and crude oil on the basis of 1
Boe for 6
Mcf of natural gas
|
Boe/d
|
barrel
of oil equivalent per day
|
CDN$
|
Canadian
dollars
|
Col$
|
Colombian
pesos
|
MBoe
|
1,000
barrels of oil equivalent
|
WTI
|
West
Texas Intermediate, the reference price paid in United States dollars
at
Cushing, Oklahoma for crude oil of standard grade
|
GAAP
|
Generally
Accepted Accounting Principles
|
To
Convert From
|
To
|
Multiply
By
|
Mcf
|
Cubic
metres
|
28.174
|
Cubic
metres
|
Cubic
feet
|
35.494
|
Bbls
|
Cubic
metres
|
0.159
|
Cubic
metres
|
Bbls
oil
|
6.290
|
Feet
|
Metres
|
0.305
|
Metres
|
Feet
|
3.281
|
Miles
|
Kilometres
|
1.609
|
Kilometres
|
Miles
|
0.621
|
Acres
|
Hectares
|
0.405
|
Hectares
|
Acres
|
2.471
|
· |
a
stockholder of Gran Tierra, and the Gran Tierra board of directors,
or the
“Gran
Tierra Board”,
is soliciting your proxy to vote at a special meeting of the stockholders
of Gran Tierra, or the “Gran
Tierra Special Meeting”,
relating to, among other things, this transaction,
or
|
· |
a
shareholder, optionholder or warrantholder of Solana, and the Solana
board
of directors, or the “Solana
Board”,
is soliciting your proxy to vote at a special meeting of the
securityholders of Solana, or the “Solana
Special Meeting”,
relating to this transaction.
|
· |
Gran
Tierra expects the combined company to have a larger asset base with
a
100% working interest in the Costayaco field, one of the major oil
discoveries in Colombia in recent years, allowing for more efficient
development of the field;
|
· |
Gran
Tierra expects the combined company to have substantially increased
cash
flows and working capital which will allow for the pursuit of additional
exploration opportunities on the combined company’s large undeveloped land
base in Colombia, Argentina and Peru, and additional new venture
growth
opportunities;
|
· |
Gran
Tierra expects the combined company to have a larger market capitalization
and better access to capital and financial markets, which would enable
the
combined company to raise additional capital more easily, if needed,
to
fund its expansion plans than either company could if not
combined;
|
· |
Gran
Tierra expects the shares of the combined company to have greater
public
float and liquidity; and
|
· |
Gran
Tierra expects to achieve economies of scale and synergies by combining
the two companies.
|
·
|
0.9527918
of a share of Gran Tierra common stock or 0.9527918 of a GTE–Solana
Exchangeable Share represents a significant premium of approximately
26%
over the trading price of Solana Shares immediately prior to the
announcement of the combination;
|
·
|
Solana
expects the combined company to have a larger asset base with a 100%
working interest in the Costayaco field, one of the major oil discoveries
in Colombia in recent years, allowing for more efficient development
of
the field;
|
·
|
Solana
expects the combined company to have a larger market capitalization
and
better access to capital and financial markets, which would enable
the
combined company to raise additional capital more easily, if needed,
to
fund its expansion plans than either company could if not
combined;
|
·
|
Solana
expects the shares of the combined company to have greater public
float
and liquidity;
|
·
|
Solana
expects the combined company to have substantially increased cash
flows
which will allow for the pursuit of additional exploration opportunities
on the combined company’s large undeveloped land base in Colombia,
Argentina and Peru, and additional new venture growth opportunities,
thereby increasing the probability of additional exploration
success;
|
·
|
the
transaction is structured to provide a tax deferral opportunity for
certain Canadian resident Solana Shareholders;
|
· |
Solana
expects the combined company to benefit from the strong leadership
of
directors from both Solana and Gran Tierra;
and
|
·
|
Solana
warrantholders and some Solana optionholders can elect to participate
in
the combined company by ultimately receiving shares of Gran Tierra
common
stock or GTE–Solana Exchangeable Shares, as applicable, or can elect to
receive a cash payment in exchange for their securities, or a combination
of the foregoing, providing alternatives for such
securityholders.
|
·
|
exchange
their shares for Gran Tierra common stock on a one-for-one basis
(GTE–Solana Exchangeable Shares will automatically be exchanged for Gran
Tierra common stock five years from closing of the transaction, and
in
specified other events);
|
· |
vote
indirectly through a voting trust arrangement at meetings of Gran
Tierra
stockholders; and
|
· |
receive
dividends, if any, on the same basis as Gran Tierra
stockholders.
|
·
|
Solana
will become an indirect wholly-owned subsidiary of Gran
Tierra;
|
·
|
Solana
Shareholders will cease to be shareholders of Solana and (other than
Dissenting Shareholders) will receive, for each Solana Share held,
either
0.9527918 of a share of Gran Tierra common stock or, if a Canadian
resident that is not exempt from tax under Part I of the Income
Tax Act
(Canada) and, if a partnership, is a Canadian partnership for purposes
of
the Income
Tax Act
(Canada), 0.9527918 of a GTE–Solana Exchangeable
Share;
|
·
|
each
GTE–Solana Exchangeable Share will have economic and voting rights
equivalent to one share of Gran Tierra common stock, will be exchangeable
at the option of the holder for one share of Gran Tierra common stock,
and
will automatically be exchanged for Gran Tierra common stock five
years
from closing and in specified other events;
|
·
|
each
Solana option will fully vest and terminate and the holder of such
options
will either receive Solana Shares or cash equal to the value of the
Solana
option or, if the holder will continue as an employee, officer, director
or consultant of the combined company or a subsidiary of the combined
company, the holder may convert such Solana option to an option to
purchase Gran Tierra common stock, or any combination thereof;
and
|
·
|
each
holder of Solana warrants will either receive Solana Shares or cash
equal
to the value of the Solana warrant or, if the holder elects, such
Solana
warrants will become exercisable for Gran Tierra common stock under
the
terms of the warrants, or any combination
thereof.
|
· |
2007
oil and natural gas liquids production, net of royalties, of 2,177
barrels
per day;
|
· |
first
six months of 2008 oil and natural gas liquids production, net of
royalties, of 5,763 barrels per
day;
|
· |
2007
year end total land holdings of 6.5 million acres;
|
· |
2007
worldwide gas production of 994 thousand cubic feet per day; and
|
· |
first
six months of 2008 worldwide gas production of 44 thousand cubic
feet per
day.
|
·
|
Gran
Tierra expects the combined company to have a larger asset base with
a
100% working interest in the Costayaco field, one of the major oil
discoveries in Colombia in recent years, allowing for more efficient
development of the field;
|
· |
Gran
Tierra expects the combined company to have substantially increased
cash
flows and working capital which will allow for the pursuit of additional
exploration opportunities on the combined company’s large undeveloped land
base in Colombia, Argentina and Peru, and additional new venture
growth
opportunities;
|
·
|
Gran
Tierra expects the combined company to have a larger market capitalization
and better access to capital and financial markets, which would enable
the
combined company to raise additional capital more easily, if needed,
to
fund its expansion plans than either company could if not
combined;
|
·
|
Gran
Tierra expects the shares of the combined company to have greater
public
float and liquidity; and
|
·
|
Gran
Tierra expects to achieve economies of scale and synergies by combining
the two companies.
|
· |
the
consideration offered under the Arrangement represented a significant
premium over the trading price of Solana Shares immediately prior
to the
announcement of the combination;
|
· |
Solana
believes that the combined company will have a larger asset base
and
greater geographical diversity of operations and markets. The combination
creates a company with a 100% working interest in the Costayaco field,
one
of the most important oil discoveries in Colombia in recent years,
allowing for more efficient development of the
field;
|
· |
Solana
expects the combined company to have a larger market capitalization
and
better access to capital and financial markets, which would enable
the
combined company to raise additional capital more easily, if needed,
to
fund its expansion plans than either company could if not
combined;
|
· |
Solana
expects the shares of the combined company to have greater public
float
and liquidity;
|
· |
Solana
expects the combined company to have substantially increased cash
flows
which will allow for the pursuit of additional exploration opportunities
on the combined company’s large undeveloped land base in Colombia,
Argentina and Peru, and additional new venture growth opportunities,
thereby increasing the probability of additional exploration success;
|
· |
the
structure of the transaction provides a tax deferral opportunity
for
certain Canadian resident Solana Shareholders, but may be a taxable
transaction for non-Canadian holders of Solana Shares;
|
· |
Solana
expects the combined company to benefit from the strong leadership
of
directors from both Solana and Gran Tierra;
and
|
· |
Solana
warrantholders and some Solana optionholders can elect to participate
in
the combined company by ultimately receiving shares of Gran Tierra
common
stock or GTE–Solana Exchangeable Shares, as applicable, or can elect to
receive a cash payment in exchange for their securities, or a combination
of the foregoing, providing alternatives for such
securityholders.
|
·
|
if
the Solana optionholder elects to receive Solana Shares pursuant
to the
cashless exercise of its Solana options, referred to as the “Exchange
Options”,
each such Exchange Option will be deemed to be surrendered to Solana
by
cashless exercise in exchange for such number of Solana Shares as
is equal
to the “in-the-money value” of each Exchange Option divided by the five
day weighted trading price (ending on the seventh trading day before
the
Effective Date) on the TSX of a share of Gran Tierra common stock
multiplied by 0.9527918 and these Solana Shares will then be exchanged
for
shares of Gran Tierra common stock or GTE–Solana Exchangeable Shares
pursuant to the Arrangement (where the “in-the-money value” of each
Exchange Option is equal to the amount by which the Imputed Transaction
Value exceeds the exercise price of such Exchange Option; and where
“Imputed
Transaction Value”
is the five day weighted trading price, ending on the seventh trading
day
before the Effective Date, on the TSX of a share of Gran Tierra common
stock multiplied by 0.9527918); or
|
·
|
if
the Solana optionholder elects to receive a cash payment pursuant
to the
cashless exercise of its Solana options, each such Solana option
will be
deemed to be surrendered to Solana by cashless exercise in exchange
for
the “in-the-money value” of each Solana option (where the “in-the-money
value” of each Solana option is equal to the amount by which the Imputed
Transaction Value exceeds the exercise price of such Solana
option).
|
·
|
if
the Solana warrantholder elects to receive Solana Shares pursuant
to the
cashless exercise of its Solana warrants, referred to as the “Exchange
Warrants”,
each such Exchange Warrant will be deemed to be surrendered to Solana
by
cashless exercise in exchange for such number of Solana Shares as
is equal
to the “in-the-money value” of each Exchange Warrant divided by the five
day weighted trading price (ending on the seventh trading day before
the
Effective Date) on the TSX of a share of Gran Tierra common stock
multiplied by 0.9527918 and these Solana Shares will then be exchanged
for
shares of Gran Tierra common stock or GTE–Solana Exchangeable Shares
pursuant to the Arrangement (where the “in-the-money value” of each
Exchange Warrant is equal to the amount by which the Imputed Transaction
Value exceeds CDN$2.00); or
|
·
|
if
the Solana warrantholder elects to receive a cash payment pursuant
to the
cashless exercise of its Solana warrants, each such Solana warrant
will be
deemed to be surrendered to Solana by cashless exercise in exchange
for
the “in-the-money value” of each Solana warrant (where the “in-the-money
value” of each Solana warrant is equal to the amount by which the Imputed
Transaction Value exceeds
CDN$2.00).
|
·
|
to
be approved, Proposal 1, the approval of issuance of Gran Tierra
common
stock pursuant to the Arrangement, must receive the affirmative vote
of a
majority of the shares present in person or represented by proxy
at the
Gran Tierra Special Meeting and entitled to vote. Broker non-votes
will
have no effect and abstentions will have the same effect as “Against”
votes;
|
·
|
to
be approved, Proposal 2, the amendment to Gran Tierra’s articles of
incorporation to create a new special voting share to enable the
GTE–Solana Exchangeable Shares to vote, as well as to make several
technical changes, must receive a “For” vote
from:
|
·
|
the
holders of shares of Gran Tierra common stock and GTE–Goldstrike
Exchangeable Shares entitling them to exercise at least a majority
of the
combined voting power of the total number of outstanding shares of
Gran
Tierra common stock and GTE–Goldstrike Exchangeable Shares;
and
|
·
|
the
holders of shares of GTE–Goldstrike Exchangeable Shares entitling them to
exercise at least a majority of the voting power of the total number
of
outstanding shares of GTE–Goldstrike Exchangeable
Shares.
|
·
|
to
be approved, Proposal 3, the increase in the number of shares of
Gran
Tierra common stock authorized for issuance and change the board
voting
requirement for issuance of common stock, must receive a “For” vote from
the holders of shares of Gran Tierra common stock and GTE–Goldstrike
Exchangeable Shares entitling them to exercise at least a majority
of the
combined voting power of the total number of outstanding shares of
Gran
Tierra common stock and GTE–Goldstrike Exchangeable Shares. Broker
non-votes and abstentions will have the same effect as “Against” votes;
and
|
·
|
to
be approved, Proposal 4, the approval of Gran Tierra’s 2007 Equity
Incentive Plan, as amended and restated, must receive the affirmative
vote
of a majority of the shares present in person or represented by proxy
at
the Gran Tierra Special Meeting and entitled to vote. Broker non-votes
will have no effect and abstentions will have the same effect as
“Against”
votes.
|
(dollars
in thousands except per share amounts)
|
Year Ended
December 31, 2007 |
Six Months Ended
June 30, 2008 |
|||||
Statement
of Operations Data
|
|||||||
Revenues
and other income
|
|||||||
Oil
and natural gas sales
|
$
|
50,147
|
$
|
101,731
|
|||
Interest
|
1,516
|
1,172
|
|||||
Total
revenues
|
51,663
|
102,903
|
|||||
Expenses
|
|||||||
Operating
|
14,418
|
12,049
|
|||||
Depletion,
depreciation and accretion
|
29,991
|
40,695
|
|||||
General
and administrative
|
29,001
|
15,321
|
|||||
Liquidated
damages
|
7,367
|
-
|
|||||
Derivative
financial instruments
|
3,040
|
7,462
|
|||||
Foreign
exchange loss
|
18,872
|
10,562
|
|||||
Total
expenses
|
102,689
|
86,089
|
|||||
Income
(loss) before income tax
|
(51,026
|
)
|
16,814
|
||||
Income
tax
|
5,051
|
(8,576
|
) | ||||
Net
income (loss)
|
$
|
(45,975
|
)
|
$
|
(8,238
|
) | |
Net
income (loss) per common share — basic
|
$
|
(0.21
|
)
|
$
|
0.04
|
||
Net
income (loss) per common share — diluted
|
$
|
(0.21
|
)
|
$
|
0.03
|
||
Balance
Sheet Data
|
|||||||
Cash
and cash equivalents
|
$
|
96,328
|
|||||
Working
capital (including cash)
|
68,457
|
||||||
Oil
and gas properties
|
873,595
|
||||||
Deferred
tax asset - long term
|
684
|
||||||
Total
assets
|
1,060,137
|
||||||
Deferred
tax liability - long term
|
215,510
|
||||||
Other
long-term liabilities
|
7,329
|
||||||
Shareholders’
equity
|
$
|
740,208
|
(dollars
in thousands, except per share amounts)
|
Year
Ended December 31,
|
Six Months
Ended June 30, |
||||||||||||||
|
2007
|
2006
|
2005
|
2008
|
2007
|
|||||||||||
Statement
of Operations Data
|
||||||||||||||||
Revenues
and other income
|
||||||||||||||||
Oil
and natural gas sales
|
$
|
31,853
|
$
|
11,721
|
$
|
1,059
|
$
|
53,791
|
$
|
7,935
|
||||||
Interest
|
425
|
352
|
—
|
172
|
332
|
|||||||||||
Total
revenues
|
32,278
|
12,073
|
1,059
|
53,963
|
8,267
|
|||||||||||
Expenses
|
||||||||||||||||
Operating
|
10,474
|
4,233
|
395
|
6,253
|
4,106
|
|||||||||||
Depletion,
depreciation and accretion
|
9,415
|
4,088
|
462
|
8,464
|
4,701
|
|||||||||||
General
and administrative
|
10,232
|
6,999
|
2,482
|
8,774
|
4,619
|
|||||||||||
Liquidated
damages
|
7,367
|
1,528
|
—
|
—
|
7,367
|
|||||||||||
Derivative
financial instruments
|
3,040
|
—
|
—
|
7,462
|
677
|
|||||||||||
Foreign
exchange (gain) loss
|
(77
|
)
|
371
|
(31
|
)
|
(383
|
)
|
(7
|
)
|
|||||||
Total
expenses
|
40,451
|
17,219
|
3,308
|
30,570
|
21,463
|
|||||||||||
Income
(loss) before income tax
|
(8,173
|
)
|
(5,146
|
)
|
(2,249
|
)
|
23,393
|
(13,196
|
)
|
|||||||
Income
tax
|
(294
|
)
|
(678
|
)
|
29
|
(10,191
|
)
|
1,474
|
||||||||
Net
Income (loss)
|
$
|
(8,467
|
)
|
$
|
(5,824
|
)
|
$
|
(2,220
|
)
|
$
|
13,202
|
$
|
(11,722
|
)
|
||
Net
income (loss) per common share — basic
|
$
|
(0.09
|
)
|
$
|
(0.08
|
)
|
$
|
(0.16
|
)
|
$
|
0.13
|
$
|
(0.12
|
)
|
||
Net
income (loss) per common share — diluted
|
$
|
(0.09
|
)
|
$
|
(0.08
|
)
|
$
|
(0.16
|
)
|
$
|
0.11
|
$
|
(0.12
|
)
|
Year
Ended December 31,
|
Six Months
Ended June 30, |
|||||||||||||||
Statement
of Cash Flows Data
|
2007 (As
Restated) (1) |
2006 (As
Restated)(1) |
2005
|
2008
|
2007
|
|||||||||||
Operating
activities
|
$
|
8,762
|
$
|
2,010
|
$
|
(1,877
|
)
|
$
|
12,422
|
$
|
(3,689
|
)
|
||||
Investing
activities
|
(15,393
|
)
|
(48,207
|
)
|
(9,108
|
)
|
(11,764
|
)
|
(10,569
|
)
|
||||||
Financing
activities
|
719
|
68,076
|
13,206
|
16,456
|
—
|
|||||||||||
(Decrease)
Increase in cash
|
$
|
(5,912
|
)
|
$
|
21,879
|
$
|
2,221
|
$
|
17,114
|
$
|
(14,258
|
)
|
At
December 31,
|
At
June 30,
|
|||||||||||||||
2007
|
2006
|
2005
|
2008
|
2007
|
||||||||||||
Balance
Sheet Data
|
||||||||||||||||
Cash
and cash equivalents
|
$
|
18,189
|
$
|
24,101
|
$
|
2,221
|
$
|
35,303
|
$
|
9,842
|
||||||
Working
capital (including cash)
|
8,058
|
14,541
|
2,765
|
31,699
|
7,154
|
|||||||||||
Oil
and gas properties
|
63,202
|
56,093
|
7,887
|
71,771
|
60,715
|
|||||||||||
Deferred
tax asset
|
2,058
|
444
|
—
|
1,832
|
496
|
|||||||||||
Total
assets
|
112,797
|
105,537
|
12,371
|
167,607
|
98,764
|
|||||||||||
Deferred
tax liability
|
(11,675
|
)
|
(9,876
|
)
|
—
|
(10,582
|
)
|
(11,373
|
)
|
|||||||
Other
long-term liabilities
|
(1,986
|
)
|
(634
|
)
|
(68
|
)
|
(3,932
|
)
|
(2,037
|
)
|
||||||
Shareholders’
equity
|
$
|
(76,792
|
)
|
$
|
(76,195
|
)
|
$
|
(11,039
|
)
|
$
|
(107,578
|
)
|
$
|
(72,203
|
)
|
(1) |
As
discussed in Note 13 to Gran Tierra’s December 31, 2007 consolidated
financial statements, cashflows from operating activities and cash
flows
from investing activities have been restated as a result of a
misclassification of accounts payable and accrued liabilities between
the
two categories.
|
Year
Ended December 31,
|
Period Ended June 30,
|
|||||||||||||||||||||
2003
|
2004
|
2005
|
2006
|
2007
|
2007
|
2008
|
||||||||||||||||
Statement
of Operations Data
|
||||||||||||||||||||||
Revenues
and other income
|
||||||||||||||||||||||
Oil
sales
|
$
|
—
|
$
|
—
|
$
|
6,010,571
|
$
|
8,561,235
|
$
|
17,441,340
|
$
|
2,383,884
|
$
|
47,921,945
|
||||||||
Natural
gas sales
|
—
|
350,864
|
749,930
|
919,676
|
853,049
|
417,584
|
18,403
|
|||||||||||||||
Interest
|
2,468
|
132,892
|
714,397
|
1,531,032
|
1,091,321
|
470,399
|
999,774
|
|||||||||||||||
Total
revenues
|
2,468
|
483,756
|
7,474,898
|
11,011,943
|
19,385,710
|
3,271,867
|
48,940,122
|
|||||||||||||||
Expenses
|
||||||||||||||||||||||
Operating
|
-
|
394,327
|
1,454,204
|
3,123,305
|
3,944,131
|
1,474,253
|
6,051,140
|
|||||||||||||||
Depletion,
impairment, depreciation and accretion
|
274,626
|
1,246,080
|
4,809,927
|
35,163,420
|
5,789,093
|
2,212,543
|
6,478,965
|
|||||||||||||||
General
and administrative
|
121,946
|
964,060
|
2,849,913
|
4,602,952
|
5,129,153
|
2,380,267
|
2,811,552
|
|||||||||||||||
Stock
-based compensation
|
-
|
938,946
|
1,801,780
|
3,029,830
|
13,640,012
|
2,825,074
|
3,480,991
|
|||||||||||||||
Foreign
exchange (gain) loss
|
39,255
|
428,204
|
(203,808
|
)
|
(2,145,686
|
)
|
77,290
|
224,888
|
(248,301
|
)
|
||||||||||||
Total
expenses
|
435,827
|
3,971,617
|
10,712,016
|
43,773,821
|
28,579,679
|
9,177,425
|
18,574,347
|
|||||||||||||||
Loss
before income tax
|
(433,359
|
)
|
(3,487,861
|
)
|
(3,237,118
|
)
|
(32,761,878
|
)
|
(9,193,969
|
)
|
(5,845,558
|
)
|
30,365,775
|
|||||||||
Income
tax expense (recovery)
|
—
|
153,238
|
213,552
|
(5,153,272
|
)
|
89,257
|
89,257
|
3,119,646
|
||||||||||||||
Net
loss
|
$
|
(433,358
|
)
|
$
|
(3,641,099
|
)
|
$
|
(3,450,670
|
)
|
$
|
(27,608,606
|
)
|
$
|
(9,283,226
|
)
|
$
|
(5,934,815
|
)
|
$
|
27,246,129
|
||
Net
loss per common share — basic
|
$
|
(0.02
|
)
|
$
|
(0.05
|
)
|
$
|
(0.05
|
)
|
$
|
(0.34
|
)
|
$
|
(0.09
|
)
|
$
|
(0.06
|
)
|
$
|
0.21
|
||
Net
loss per common share — diluted
|
$ | (0.02 | ) | $ | (0.05 | ) | $ | (0.05 | ) | $ | (0.34 | ) | $ | (0.09 | ) | $ | (0.06 | ) | $ | 0.22 | ||
Statement
of Cash Flows Data
|
||||||||||||||||||||||
Operating
activities
|
$
|
(102,014
|
)
|
$
|
2,514,525
|
$
|
5,453,812
|
$
|
7,114,937
|
$
|
12,893,927
|
$
|
(1,484,716
|
)
|
$
|
23,680,156
|
||||||
Investing
activities
|
(246,536
|
)
|
(14,855,544
|
)
|
(32,184,351
|
)
|
(29,112,940
|
)
|
(31,908,116
|
)
|
(12,595,370
|
)
|
(28,076,989
|
)
|
||||||||
Financing
activities
|
2,975,856
|
54,473,335
|
1,068,660
|
34,428,044
|
57,348,910
|
23,711
|
6,259,129
|
|||||||||||||||
Foreign
exchange gain (loss)
|
—
|
169,776
|
270,000
|
(300,000
|
)
|
19,676
|
58,156
|
1,644
|
||||||||||||||
(Decrease)
Increase in cash
|
$
|
2,627,306
|
$
|
42,302,092
|
$
|
(25,391,879
|
)
|
$
|
12,130,041
|
$
|
38,354,397
|
$
|
(13,998,219
|
)
|
$
|
1,863,940
|
At
December 31,
|
At
June 30,
|
|||||||||||||||||||||
2003
|
2004
|
2005
|
2006
|
2007
|
2007
|
2008
|
||||||||||||||||
Balance
Sheet Data
|
||||||||||||||||||||||
Cash
and cash equivalents
|
$
|
2,209,868
|
$
|
45,780,741
|
$
|
20,660,693
|
$
|
29,909,168
|
$
|
71,537,827
|
$
|
18,158,274
|
$
|
73,401,767
|
||||||||
Working
capital (including cash)
|
2,168,827
|
48,750,038
|
24,407,788
|
37,106,929
|
70,974,442
|
18,039,837
|
88,303,377
|
|||||||||||||||
Oil
and gas properties
|
2,566,986
|
37,638,845
|
63,142,705
|
54,313,189
|
81,963,075
|
70,078,418
|
102,929,728
|
|||||||||||||||
Deferred
tax asset
|
—
|
—
|
—
|
—
|
—
|
—
|
4,000,375
|
|||||||||||||||
Total
assets
|
5,550,076
|
89,052,743
|
95,897,095
|
98,615,541
|
166,641,302
|
97,884,761
|
211,120,142
|
|||||||||||||||
Deferred
tax liability
|
—
|
5,067,880
|
5,231,970
|
—
|
—
|
—
|
—
|
|||||||||||||||
Other
long-term liabilities
|
—
|
351,452
|
536,547
|
1,556,823
|
1,973,938
|
7,350,731
|
2,134,858
|
|||||||||||||||
Shareholders’
equity
|
$
|
5,489,373
|
$
|
81,984,051
|
$
|
84,180,499
|
$
|
93,654,111
|
$
|
155,359,807
|
$
|
90,534,030
|
$
|
192,346,056
|
Year
Ended December 31,
|
|||||||
2006
|
2007
|
||||||
Statement
of Operations Data
|
|||||||
Revenues
and other income
|
|||||||
Oil
sales
|
$
|
8,561,235
|
$
|
17,441,340
|
|||
Natural
gas sales
|
919,676
|
853,049
|
|||||
Interest
|
1,531,032
|
1,091,321
|
|||||
Total
revenues
|
11,011,943
|
19,385,710
|
|||||
Expenses
|
|||||||
Operating
|
3,123,305
|
3,944,131
|
|||||
Depletion,
impairment, depreciation and accretion
|
43,078,099
|
4,593,556
|
|||||
General
and administrative
|
4,602,952
|
5,129,153
|
|||||
Stock
-based compensation
|
3,029,830
|
13,640,012
|
|||||
Foreign
exchange (gain) loss
|
(2,145,686
|
)
|
77,290
|
||||
Total
expenses
|
51,688,500
|
27,384,142
|
|||||
Loss
before income tax
|
(40,676,557
|
)
|
(7,998,432
|
)
|
|||
Income
tax expense (recovery)
|
(5,153,272
|
)
|
89,257
|
||||
Net
loss
|
$
|
(35,523,285
|
)
|
$
|
(8,087,689
|
)
|
|
Net
loss per common share — basic and diluted
|
$
|
(0.43
|
)
|
$
|
(0.08
|
)
|
|
Statement
of Cash Flows Data
|
|||||||
Operating
activities
|
$
|
(799,742
|
)
|
$
|
14,089,464
|
||
Investing
activities
|
(21,198,261
|
)
|
(33,103,653
|
)
|
|||
Financing
activities
|
34,428,044
|
57,348,910
|
|||||
Foreign
exchange gain (loss)
|
(300,000
|
)
|
19,676
|
||||
Increase
in cash
|
$
|
12,130,041
|
$
|
38,354,397
|
At
December 31,
|
|||||||
2006
|
2007
|
||||||
Balance
Sheet Data
|
|||||||
Cash
and cash equivalents
|
$
|
29,909,168
|
$
|
71,537,827
|
|||
Working
capital (including cash)
|
37,106,929
|
70,974,442
|
|||||
Oil
and gas properties
|
43,679,601
|
72,525,024
|
|||||
Total
assets
|
87,981,954
|
157,203,251
|
|||||
Other
long-term liabilities
|
1,556,823
|
1,973,938
|
|||||
Shareholders’
equity
|
$
|
83,020,523
|
$
|
145,921,756
|
· |
projections
of market prices and costs;
|
· |
supply
and demand for oil and natural gas;
|
· |
the
quantity of reserves;
|
· |
oil
and natural gas production levels;
|
· |
capital
expenditure programs;
|
· |
treatment
under governmental regulatory and taxation regimes;
and
|
· |
expectations
regarding Solana’s ability to raise capital and to continually add to
reserves through acquisitions and
development.
|
· |
the
Colombian legislative and regulatory
environment;
|
· |
the
impact of increasing competition;
and
|
· |
Solana’s
ability to obtain additional financing on satisfactory
terms.
|
· |
volatility
in the market prices for oil and natural
gas;
|
· |
uncertainties
associated with estimating
reserves;
|
· |
geological,
technical, drilling and processing
problems;
|
· |
liabilities
and risks, including environmental liabilities and risks, inherent
in oil
and natural gas operations;
|
· |
incorrect
assessments of the value of
acquisitions;
|
· |
competition
for, among other things, capital, acquisitions of reserves, undeveloped
lands and skilled personnel; and
|
· |
the
other factors referred to under "Risk
Factors".
|
· |
to
approve the issuance of shares of Gran Tierra common stock to be
issued in
connection with the acquisition of the outstanding securities of
Solana;
|
· |
to
approve an amendment to Gran Tierra’s articles of incorporation to create
a new special voting share to enable the GTE–Solana Exchangeable Shares to
be issued in the transaction to vote, as well as to make several
technical
changes;
|
· |
to
approve an amendment to Gran Tierra’s articles of incorporation to
increase the total number of shares of common stock authorized by
300,000,000 and change the board voting requirement for issuance
of common
stock; and
|
· |
to
approve Gran Tierra’s 2007 Equity Incentive Plan, as amended and restated,
to increase the number of shares available for issuance thereunder
from
9,000,000 shares to 18,000,000
shares.
|
·
|
to
vote in person, come to the meeting and we will give you a ballot
when you
arrive;
|
·
|
to
vote using the proxy card, simply complete, sign and date the enclosed
proxy card and return it promptly in the envelope provided. If you
return your signed proxy card to us by 11:59 p.m., Mountain Time,
on
●, 2008,
we will vote your shares as you direct;
and
|
·
|
to
vote on the Internet, go to http://www.proxyvote.com to complete
an
electronic proxy card. You
will be asked to provide the company number and control number from
the
enclosed proxy card. Your
vote must be received by 11:59 p.m., Mountain Time, on ●, 2008 to be
counted.
|