Fitch rates Gran Tierra B, notes B+/RR3

Fitch Ratings said it assigned long-term foreign and local currency issuer default ratings of B to Gran Tierra Energy Inc.

The agency also assigned an expected rating of B+(EXP)/RR3 to Gran Tierra's proposed seven-year senior unsecured issuance of up to $300 million.

The outlook is stable.

Fitch said the rating reflects Gran Tierra's small production size, its asset concentration, and an aggressive capex plan totaling nearly $900 million through 2020.

“Fitch expects Gran Tierra will remain a low-cost producer while incrementally increasing production levels to above 35,000 by 2018 and maintaining a sustainable production average of 35,000 boe/d by 2021,” the agency said in a news release.

“Despite improved operating metrics and relatively low leverage compared to rating peers, the rating is constrained by the company's relatively small size and low diversification of oil fields.

“An increase in production to 40,000 boe/d or more while maintaining reserve life near 10 years coupled with a conservative capital structure would bode positively for Gran Tierra's credit quality,” Fitch added in the release.

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