Statement Regarding Forward-Looking Information

This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included in this Quarterly Report on Form 10-Q, including without limitation, statements in this Management's Discussion and Analysis of Financial Condition and Results of Operations regarding our projected financial position and result, estimated quantities and net present values of reserves, business strategy, plans and objectives of our management for future operations, covenant compliance and those statements preceded by, followed by or that otherwise include the words "believe", "expects", "anticipates", "intends", "estimates", "projects", "target", "goal", "plans", "objective", "should", or similar expressions or variations on such expressions are forward-looking statements. We can give no assurances that the assumptions upon which the forward-looking statements are based will prove to be correct nor can we assure adequate funding will be available to execute our planned future capital program. Because forward-looking statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. There are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from the forward-looking statements, including, but not limited to, those set out in Part II, Item 1A "Risk Factors" in this Quarterly Report on Form 10-Q. Except as otherwise required by the federal securities laws, we disclaim any obligations or undertaking to publicly release any updates or revisions to any forward-looking statement contained in this Quarterly Report on Form 10-Q to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

The following discussion of our financial condition and results of operations should be read in conjunction with the Financial Statements as set out in Part I
- Item 1 of this Quarterly Report on Form 10-Q, as well as the financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission on February 27, 2009.

Overview

We are an independent international energy company incorporated in the United States and engaged in oil and natural gas exploration, development and production. We are headquartered in Calgary, Alberta, Canada and operate in South America in Colombia, Argentina and Peru, and have a business development office in Brazil.

In September 2005, we acquired our initial oil and gas interests and properties, which were in Argentina. During 2006, we increased our oil and gas interests and property base through further acquisitions in Colombia, Argentina and Peru. We funded acquisitions of our properties in Colombia and Argentina through a series of private placements of our securities that occurred between September 2005 and February 2006 and an additional private placement that occurred in June 2006.

Effective November 14, 2008, we completed the acquisition of Solana Resources Limited ("Solana"). Upon completion of the transaction, Solana became an indirect wholly-owned subsidiary of Gran Tierra. Solana is an international resource company engaged in the acquisition, exploration, development and production of oil and natural gas. Solana is incorporated in Alberta, Canada with its head office in Calgary, Alberta. At the date of acquisition, Solana held various working interests in nine blocks in Colombia and was the operator of six of those blocks, four of which contained producing assets. As a result of the acquisition and the subsequent sale of the Guachiria Norte, Guachiria Sur and Guachiria Blocks acquired from Solana, Gran Tierra has increased its working interest in two of the producing blocks and has retained a working interest in four of the seven other purchased blocks.

During the third quarter of 2009, we opened a business development office in Rio de Janeiro, Brazil.

The oil and gas industry has been adversely impacted by the downturn in the global economy and the decline in average crude oil prices during the first three quarters of 2009 compared to the same period in 2008. Although our revenue has been negatively affected by these lower oil prices, our current liquidity position has mitigated the impact of these adverse market conditions. We believe that our current operations and capital expenditure program can be maintained from cash flow from existing operations, cash on hand and our credit facilities, barring unforeseen events. We also have the ability to defer or cancel portions of our capital expenditure program should our operating cash flows decline as a result of reductions in crude oil prices.

Financial and Operational Highlights (1)
                                  Three Months Ended September 30,                   Nine Months Ended September 30,
                               2009               2008          % Change          2009               2008         % Change

Production - Barrels of
Oil Equivalent per Day           12,945              4,194            209            12,000            3,482            245

Per Barrel of Oil
Equivalent Prices
Realized                   $      63.12       $     103.88            (39 )   $       50.86       $    98.40            (48 )

Revenue and Other Income
($000's)                   $     75,354       $     40,339             87     $     167,430       $   94,302             78

Net Income (Loss)
($000's)                   $     (2,816 )     $     22,987           (112 )   $     (16,884 )     $   36,189           (147 )

Net Income (Loss) Per
Share - Basic              $      (0.01 )     $       0.20           (105 )   $       (0.07 )     $     0.34           (121 )

Net Income (Loss) Per
Share - Diluted            $      (0.01 )     $       0.18           (106 )   $       (0.07 )     $     0.30           (123 )

Capital Expenditures
($000's)                   $     19,124       $     14,550             31     $      63,392       $   32,321             96



                                                      As at September 30,       As at December 31,
                                                             2009                      2008              % Change

Cash & Cash Equivalents ($000's)                     $             151,599     $            176,754            (14 )

Working Capital (including cash & cash
equivalents) ($000's)                                $             188,780     $            132,807             42

Property, Plant & Equipment ($000's)                 $             727,933     $            767,552             (5 )

(1) The Financial and Operating Highlights include the operations of Solana subsequent to our acquisition of Solana on November 14, 2008.

Financial Highlights for Three Months Ended September 30, 2009

· In the third quarter of 2009, production of crude oil (net after royalty and inventory adjustments) averaged 12,945 barrels of oil per day ("BOPD"), an increase of 209% over the same period in 2008, due mainly to production from four new development wells in the Costayaco field in the Chaza Block in Colombia where Gran Tierra has a 100% working interest subsequent to the acquisition of Solana.

· Revenue and other income increased by 87% over the same period in 2008 due to increased production partially offset by lower oil prices.

· A foreign exchange loss of $18.9 million, of which $20.3 million is an unrealized non-cash foreign exchange loss, was recorded in the third quarter of 2009 primarily due to the translation of a deferred tax liability recorded on the purchase of Solana. The deferred tax liability is denominated in Colombian pesos and the devaluation of 11% in the US dollar against the Colombian Peso in the current quarter resulted in the foreign exchange loss.

· Oil and gas property expenditures for the third quarter of 2009 include further development drilling in the Costayaco field including the successful drilling of the Costayaco - 9 well in addition to facility construction at Costayaco, and seismic programs in the Rio Magdelena and San Pablo Blocks.

· Our cash position of $151.6 million (excluding restricted cash) at September 30, 2009 decreased from $176.8 million at December 31, 2008 as a result of year-to-date capital expenditures, partially offset by cash provided by operating activities.

· Working capital (including cash & cash equivalents) was $188.8 million at September 30, 2009, which is a $56.0 million increase from December 31, 2008, due mainly to increased receivables as at September 30, 2009 compared to December 31, 2008.

· Property, plant & equipment as at September 30, 2009 was $727.9 million, a decrease from December 31, 2008, primarily as a result of increased depletion, depreciation and accretion ("DD&A"), partially offset by capital additions.

· Standard Bank Plc increased the maximum amount of our credit facility to $200 million, effective August 24, 2009. No amounts have been drawn down under this facility.

Financial Highlights for Nine Months Ended September 30, 2009

· During the first three quarters of 2009, production of crude oil and natural gas (net after royalty and inventory adjustments) averaged 12,000 barrels of oil equivalent per day, an increase of 245% over the same period in 2008, due mainly to production from four new development wells in the Costayaco field in the Chaza Block in Colombia where Gran Tierra has a 100% working interest subsequent to the acquisition of Solana.

· Revenue and other income increased by 78% over the same period in 2008 due to the increased production, partially offset by lower oil prices.

· A foreign exchange loss of $32.4 million, of which $33.0 million is an unrealized non-cash foreign exchange loss, was recorded in the first three quarters of 2009 primarily due to the translation of a deferred tax liability recorded on the purchase of Solana. The deferred tax liability is denominated in Colombian pesos and the devaluation of 14% in the US dollar against the Colombian Peso in the first three quarters of 2009 resulted in the foreign exchange loss.

· Oil and gas property expenditures for the nine months ended September 30, 2009 include further development drilling in the Costayaco field, including Costayaco - 6, Costayaco - 7, Costayaco - 8, and Costayaco - 9, facility construction in Costayaco, the drilling of the Puinaves - 2 exploration well in the Guachiria Norte Block and acquisition of 2D or 3D seismic in the Guachiria, Garibay, Rio Magdelena, Chaza, and San Pablo Blocks, all in Colombia.

Operational Highlights for the Three and Nine Months Ended September 30, 2009

· Costayaco Field Oil Production Milestones

At the end of August 2009, we reached our daily production plateau target of 19,000 BOPD gross for the Costayaco field. In addition, production from the Costayaco field in Colombia reached five million cumulative barrels of gross oil production on September 10, 2009 triggering additional government royalties.

· Successful Production Testing of Costayaco - 8 and Costayaco - 9

In June 2009, we completed logging operations and initiated production testing of Costayaco - 8. Testing of Costayaco - 8 was completed in early July and the well came on production later in the month. In August 2009, after further testing, it was determined that Costayaco - 7 will be completed as a water injector well to dispose of produced water from the Costayaco field, and to provide pressure support for the Villeta T reservoir. In September 2009, we completed logging operations and production testing of Costayaco - 9. Testing of Costayaco - 9 was completed in early September and the well was tied in and put on production later in the month.

· New Exploration and Exploitation Contracts in Colombia

In June 2009, we signed three Exploration and Exploitation contracts with the National Hydrocarbon Agency totaling 235,264 acres in which we have a 100% working interest. The Piedemonte Norte Block lies southwest of the Chaza Block where the Costayaco field is located. The Piedemonte Sur Block is located immediately west of the Orito Field, the largest oil field in the Putumayo Basin. Further south, the Rumiyaco Block is located in the central Putumayo Basin.

· Property Divestment

In April 2009, Gran Tierra closed the sale of its interests in the Guachiria Norte, Guachiria, and Guachiria Sur Blocks in Colombia for net proceeds of $6.3 million.

· Environmental Impact Assessments submitted to Peruvian Government

The seismic and stratigraphic drilling environmental impact assessments were submitted to the Peruvian Government in April 2009, for Block 128, and in June 2009, for Block 122. Consultations with communities in the region have concluded.