Gran Tierra Energy Inc. shares took a bit of a beating on Monday after reporting that its Kanatari-1 exploration well in Peru turned up dry. The South American-focused oil and gas company also produced some good results with approximately 1,700 barrels per day of oil tested from Moqueta-4 in Colombia.

Raymond James analyst Rafi Khouri suggests investors take advantage of this pullback to buy Gran Tierra, noting that the stock fell about 10% in early 2010 on a dry hole and is now roughly 50% higher.

He rates the stock a Strong Buy with a $12 target price. It closed at $8.53 on Monday, after dipping 6.8%, or 63¢.

“With the Street focused on the dry hole in Peru, the good news from Moqueta-4 has flown under the radar for many,” Mr. Khouri said in a research note, adding that the successful results set a flow test record for the Moqueta field.

As for Peru, the analyst doesn’t think it should be written off just yet as a lack of oil does not materially change his opinion of the prospects for the rest of the drilling area.

However, the future of exploration drilling on Blocks 122 and 128 and the potential upside are now far less clear, according to Dundee Capital Markets analyst Alex Klein. He noted that Gran Tierra is still planning an exploration well on Block 95 later in 2011 and a previous discovery their supports a stronger probability of drilling success.

The company also continues to have a solid inventory of exploration drilling prospects in Colombia, Brazil and Argentina.

Mr. Klein trimmed his price target to $10.00 from $11.25 and maintained a Buy recommendation.