CALGARY, May 29, 2014 /PRNewswire/ – Gran Tierra Energy Inc. (“Gran Tierra Energy”) (NYSE MKT, TSX: GTE), a company focused on oil and gas exploration and production in South
America, today announced it has entered into agreements (the
“Agreements”) whereby Madalena Energy Inc. (“Madalena”) (TSX-V: MVN)
has agreed to acquire Gran Tierra Energy’s Argentina business unit for
an aggregate consideration of approximately US$69 million, comprised of
US$49 million in cash, US$14 million in Madalena shares, and expected
working capital adjustments of approximately US$6 million. Gran Tierra
Energy has received a deposit of US$12.6 million and Madalena is
expected to raise the remainder of the cash required to complete the
transaction pursuant to a subscription receipt offering on a bought
deal basis.

“The board of directors and management team of Gran Tierra Energy are
committed to continuously managing its portfolio of opportunities in
South America to enhance value for our shareholders,” said Dana
Coffield, Gran Tierra Energy President and Chief Executive Officer. “As
a result of our recent significant exploration success in Peru, ongoing
success in Colombia and ongoing evaluations in Brazil, we are focusing
Gran Tierra Energy’s human and capital resources in areas that we
believe will provide the greatest return for our shareholders and drive
growth in the future.”

In 2013, the Argentina business unit contributed average annual
production of 3,028 barrels of oil equivalent per day, net after
royalty and spent US$6.5 million of its 2014 planned Argentina capital
program of US$48 million in the first quarter of 2014.

“With the April 30, 2014 effective date of the transaction, Gran Tierra
Energy plans to reduce its 2014 corporate capital spending program by
an amount comparable to the planned Argentina capital program of US$48
million, less the amount spent up to the closing date of the
transaction. This reduction in corporate capital spending, in addition
to the approximate US$69 million aggregate consideration, will further
strengthen the balance sheet for future capital spending requirements
and allow us to dedicate our resources to where they will have maximum
impact and to focus on our more profitable operations,” concluded
Coffield.

The Madalena board of directors has unanimously approved the
Agreements. The closing date is expected to be on or before June 30,
2014 and it is subject to TSX Venture Exchange approval.

J.P. Morgan Securities LLC is acting as exclusive financial advisor to
Gran Tierra Energy in connection with this transaction.

About Gran Tierra Energy Inc.

Gran Tierra Energy is an international oil and gas exploration and
production company, headquartered in Calgary, Canada, incorporated in
the United States, trading on the NYSE MKT (GTE) and the Toronto Stock
Exchange (GTE), and operating in South America. Gran Tierra Energy
holds interests in producing and prospective properties in Colombia,
Argentina, Peru, and Brazil. Gran Tierra Energy has a strategy that
focuses on establishing a portfolio of producing properties, plus
production enhancement and exploration opportunities to provide a base
for future growth.

Gran Tierra Energy’s Securities and Exchange Commission filings are
available on a web site maintained by the Securities and Exchange
Commission at http://www.sec.gov and on SEDAR at http://www.sedar.com.

About Madalena – International and Domestic Assets (Pre-Acquisition)

Madalena is an independent, Canadian-based, domestic and international
upstream oil and gas company whose main business activities include
exploration, development and production of crude oil, natural gas
liquids and natural gas.

Internationally, Madalena holds three large blocks within the Neuqu n
basin in Argentina where it is focused on the delineation of large
petroleum in-place shale and unconventional resources in the Vaca
Muerta and Lower Agrio shales, in addition to multiple tight sand
plays. The Company is also implementing horizontal drilling and
completions technology to high impact international plays and is
currently focused on a conventional oil play in the Sierras Blancas
formation. Madalena holds approximately 132,200 net acres on the Coiron
Amargo (34,951 net acres), Curamhuele (50,595 net acres) and Cortadera
(46,656 net acres) blocks.

Domestically, Madalena’s core area of operations is located in the
Greater Paddle River area of west-central Alberta where the Company
holds approximately 196 gross (>150 net) sections of land
(approximately 78% average W.I.) encompassing light oil and
liquids-rich gas resource plays. Madalena’s primary domestic focus is
to exploit its large inventory of horizontal drilling locations on its
Ostracod oil and emerging oil & liquids-rich gas resource plays.

Madalena trades on the TSX Venture Exchange under the symbol MVN. Basic
corporate information, recent news releases and regularly updated
corporate presentations are available on the Company’s website at www.madalenaenergy.com.

Forward Looking Statements and Advisories

This news release contains certain forward-looking information and
forward-looking statements (collectively, “forward-looking statements”)
under the meaning of applicable securities laws, including Canadian
Securities Administrators’ National Instrument 51-102 – Continuous Disclosure Obligations and the United States Private Securities Litigation Reform Act of 1995.
The use of the words “will”, “expected”, “believe” and “plans”,
derivations thereof and similar terms identify forward-looking
statements. In particular, but without limiting the foregoing, this
news release contains forward-looking statements regarding: the ability
of Madalena to raise the remainder of the cash required to complete the
transaction; the anticipated benefits of the transaction to Gran Tierra
Energy and its shareholders; the anticipated receipt of approvals for
the transaction; the anticipated timing of the closing of the
transaction; and changes to Gran Tierra Energy’s planned capital
program for 2014 and the anticipated benefits of such changes.

The forward-looking statements contained in this news release reflect
several material factors and expectations and assumptions of Gran
Tierra Energy including, without limitation, assumptions relating to
the ability to receive, in a timely manner, the necessary approvals and
the ability of Madalena to raise the remainder of the cash required to
complete the transaction and political and economic uncertainties in
South America. Gran Tierra Energy believes the material factors,
expectations and assumptions reflected in the forward-looking
statements are reasonable at this time but no assurance can be given
that these factors, expectations and assumptions will prove to be
correct.

The forward-looking statements contained in this news release are
subject to risks, uncertainties and other factors that could cause
actual results or outcomes to differ materially from those contemplated
by the forward-looking statements, including among others: failure to
realize the anticipated benefits of the transaction, failure to obtain
the necessary approvals, or to otherwise satisfy the conditions of the
transaction, in a timely manner, or at all. Failure to obtain such
approvals, or the failure to otherwise satisfy the conditions of the
transaction, may result in the transaction no being completed on the
proposed terms, or at all.

Accordingly, readers should not place undue reliance on the
forward-looking statements contained herein. Further information on
potential factors that could affect Gran Tierra Energy are included in
risks detailed from time to time in Gran Tierra Energy’s Securities and
Exchange Commission filings, including, without limitation, under the
caption “Risk Factors” in Gran Tierra Energy’s Quarterly Report on Form
10-Q filed May 6, 2014. These filings are available on a Web site
maintained by the Securities and Exchange Commission at http://www.sec.gov and on SEDAR at www.sedar.com. The forward-looking statements contained herein are expressly
qualified in their entirety by this cautionary statement. The
forward-looking statements included in this press release are made as
of the date of this press release and Gran Tierra Energy disclaims any
intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise, except as expressly required by applicable securities
legislation.

Barrels of oil equivalent (“BOE”) may be misleading, particularly if
used in isolation. A BOE conversion ratio of 6 Mcf: 1 bbl is based on
an energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the wellhead.
In addition, given that the value ratio based on the current price of
oil as compared with natural gas is significantly different from the
energy equivalent of six to one, utilizing a BOE conversion ratio of 6
Mcf: 1 bbl would be misleading as an indication of value.

SOURCE Gran Tierra Energy Inc.