$25 million in net income for Q2 2026 closed a $144 million gap from Gran Tierra Energy Inc.'s (TSE:GTE) prior-quarter loss of $119 million. Adjusted EBITDA reached $85 million, up from $74 million in Q1 2026 and $77 million in Q2 2025. Funds flow from operations rose 41% sequentially and 12% year over year to $60 million, or $1.70 per share, with free cash flow of approximately $6 million.
Margin recovery: prices and cost cuts
Oil sales totaled $187 million in Q2 2026, up 9% from Q1 2026 and 25% from Q2 2025. CFO Ryan Ellson said the year-over-year increase reflected higher Brent crude prices, partly offset by lower volumes and elevated quality and transportation discounts in Colombia while the Colombia-Ecuador border was closed.
In Ecuador, Gran Tierra realized an M-1 benchmark price of $101.89 per barrel against an average Brent of $96.68 during the quarter, a premium that added approximately $4 million to revenue.
Total operating expenses fell 22% sequentially and 7% year over year to $52 million. Ellson credited lower workover activity, reduced field personnel costs, and inventory fluctuations. Capital expenditures were $54 million, up from $45 million in Q1 2026, consistent with the company's stated first-half weighting for its 2026 capital program.
Balance sheet: debt retirement and the Suroriente close
Gran Tierra ended Q2 with $127 million in cash, $606 million in gross debt, and $479 million in net debt, plus $53 million in undrawn credit and lending facilities. During H1 2026, the company repurchased $6 million face value of its 9.75% senior notes due 2031 at a 12% discount. After quarter-end it repurchased an additional $50 million face value at a 10% discount, bringing the combined total to $56 million face value retired.
The $123 million Suroriente capital carry commitment with Ecopetrol was completed, with the post-carry period beginning July 18. Gran Tierra also sold a 54% working interest in the Lodgepole area for $9 million, removing $13 million in asset retirement obligations. COO Sebastien Morin said the transaction cut production by approximately 850 barrels per day but was a net benefit after accounting for the obligations transferred.
Production and portfolio: Ecuador expands as Canada contracts
Average working-interest production was approximately 41,500 barrels per day in Q2 2026, down 9% sequentially and 12% year over year. Morin attributed the decline to Canadian asset dispositions and temporary artificial-lift failures at the Acordionero and Coimbi fields.
Ecuador contributed 7,990 barrels per day. Gran Tierra received government approval for three additional field development plans covering Charapa, Conejo, and Perico, bringing total approvals to five of its six discovered fields across approximately 156,000 retained acres, plus approximately 16,000 acres at Espejo pending approval.
A McDaniel resource report assigned best-estimate 2C contingent resources of approximately 6.5 million barrels at Dawson Clearwater in Canada, with unrisked best-estimate prospective resources of approximately 55 million barrels at Dawson Clearwater and 12 million barrels at Mount Head. Gran Tierra holds 100% working interest across approximately 108,000 net acres in both plays.
President and CEO Gary Guidry confirmed Gran Tierra entered a definitive agreement to sell its oil businesses in Colombia and Ecuador, while noting contractual restrictions limit disclosures to public filings; a special stockholder meeting will consider deal approval. Gran Tierra plans to drill two wells in Azerbaijan next year while currently conducting gravity surveys there.