Consistent Free Cash Flow From Profitable
Barrels Funded a Stronger Balance Sheet and Increased Shareholder
Returns
GeoPark Limited (“GeoPark” or the “Company”) (NYSE: GPRK), a
leading independent Latin American oil and gas explorer, operator
and consolidator reports its consolidated financial results for the
three-month period ended March 31, 2023 (“First Quarter” or
“1Q2023”). A conference call to discuss 1Q2023 financial results
will be held on May 4, 2023 at 10:00 am (Eastern Daylight
Time).
All figures are expressed in US Dollars and growth comparisons
refer to the same period of the prior year, except when specified.
Definitions and terms used herein are provided in the Glossary at
the end of this document. This release does not contain all of the
Company’s financial information and should be read in conjunction
with GeoPark’s consolidated financial statements and the notes to
those statements for the period ended March 31, 2023, available on
the Company’s website.
FIRST QUARTER 2023 HIGHLIGHTS
Oil and Gas Production
- Consolidated average oil and gas production of 36,578 boepd,
below its production potential of approximately 39,500-40,500
boepd, as previously announced on March 8, 2023, mainly due to
temporarily shut-in production and localized blockades in the CPO-5
block (GeoPark non-operated, 30% WI) in Colombia
Revenue, Adjusted EBITDA, Cash Flow & Net Profit
- Revenue of $182.5 million
- Adjusted EBITDA of $114.9 million (a 63% adjusted EBITDA
margin)
- Operating profit of $76.6 million (a 42% operating profit
margin)
- Cash flow from operations of $91.9 million
- Net profit of $26.3 million ($0.45 basic earnings per
share)
Cost and Capital Efficiency as Key Differentiators
- Despite inflationary pressures, combined G&A and G&G
decreased by 6% to $11.9 million
- Capital expenditures of $45.0 million
- 1Q2023 adjusted EBITDA to capital expenditures ratio of
2.5x
- Last twelve-month return on capital employed (ROCE) of
62%1
Lower Interest Payments and a Strengthened Balance
Sheet
- 1Q2023 interest payments decreased to $13.8 million (from $19.2
million), after reducing gross debt by $275 million from April 2021
to December 2022
- Net leverage of 0.7x and no principal debt maturities until
2027
- Cash in hand of $145.4 million ($128.8 million as of December
31, 2022)
Delivering on Shareholder Returns
- Share buybacks increased by 142% to $7.5 million (acquired 0.6
million shares, over 1% of shares outstanding)
- Cash dividends increased by 55% to $7.5 million (representing
an annualized dividend of approximately $30 million, or a 5%
dividend yield2)
- Quarterly cash dividend of $0.13 per share, or approximately
$7.5 million, payable on May 31, 2023
Enhanced ESG Performance
- Published the 2022 SPEED/ESG Report on April 26, 2023,
available on the Company’s website
- 2022 emissions intensity decreased by 34% to 12.1 kg CO2e/boe3
(or a 40% decrease to 9.7 kg CO2e/boe in core Llanos 34 block)
mainly due to the interconnection of the Llanos 34 block to
Colombia’s national power grid and the start of operations of the
solar plant among other initiatives
- Over 240,000 beneficiaries of the Company’s social and
environmental programs in 2022
- Women hold 50% of GeoPark’s senior executive positions
Portfolio Management
- Commercial negotiations are ongoing with ENAP, the oil offtaker
in Chile, in an effort to resume shut-in production of
approximately 400 bopd
- Implemented a restructuring initiative in Chile in April 2023
to provide further cost reductions, in conjunction with a process
to evaluate farm-out/divestment opportunities
2023 Work Program: Revised Production and Capital
Expenditures Guidance
- Full-year 2023 production guidance has been revised down to
38,000-40,000 boepd mainly due to temporarily shut-in production in
the CPO-5 block, and to a lesser extent, due to shut-in production
in Chile and deferral of certain drilling activities in
Ecuador
- 2H2023 production is expected to average 39,000-42,000 boepd
(excluding the potential production from the 2023 exploration
drilling program)
- Capital expenditures have been revised down to $180-200 million
(from $200-220 million)
- At $80-904 per bbl Brent, GeoPark expects to generate an
Adjusted EBITDA of $490-560 million5 and a free cash flow of
$120-140 million6
- Targeting to return approximately 40-50% of free cash flow
after taxes to shareholders
Upcoming Catalysts
- Drilling 10-12 gross wells in 2Q2023, targeting development and
exploration projects in the Llanos basin in Colombia
- Exploration drilling includes 2-3 new gross wells in the Llanos
basin (Llanos 123 and Llanos 124 blocks)
Andrés Ocampo, Chief Executive Officer of GeoPark, said:
“Despite the challenges faced during the first quarter, GeoPark has
been able to deliver strong results, as well as to adapt quickly by
reducing costs and streamlining capital expenditures to maximize
and protect our cash flow generation, which allow us to continue
strengthening our balance sheet and returning more value to our
shareholders. For the remainder of 2023, we look forward to
continue executing and delivering on our ambitious 2023 work
program to grow our production base and drill low-cost and low-risk
exploration targets with the main focus on our core Llanos
basin."
CONSOLIDATED OPERATING PERFORMANCE
Key performance indicators:
Key Indicators
1Q2023
4Q2022
1Q2022
Oil productiona (bopd)
33,801
35,451
34,442
Gas production (mcfpd)
16,664
17,886
25,096
Average net production (boepd)
36,578
38,433
38,626
Brent oil price ($ per bbl)
82.5
88.8
96.9
Combined realized price ($ per boe)
61.3
68.5
75.8
⁻ Oil ($ per bbl)
66.7
73.7
84.3
⁻ Gas ($ per mcf)
4.6
5.0
4.8
Sale of crude oil ($ million)
175.1
220.7
239.0
Sale of purchased crude oil ($
million)
0.8
3.1
-
Sale of gas ($ million)
6.5
7.1
10.2
Revenue ($ million)
182.5
231.0
249.2
Commodity risk management contracts b ($
million)
0.0
0.5
(78.1
)
Production & operating costsc ($
million)
(52.5
)
(77.0
)
(80.6
)
G&G, G&Ad ($ million)
(11.9
)
(17.4
)
(12.7
)
Selling expenses ($ million)
(2.4
)
(2.8
)
(2.0
)
Operating profit ($ million)
76.6
81.7
58.6
Adjusted EBITDA ($ million)
114.9
132.1
122.6
Adjusted EBITDA ($ per boe)
38.6
39.2
37.3
Net profit ($ million)
26.3
52.2
31.0
Capital expenditures ($ million)
45.0
53.6
39.4
Cash and cash equivalents ($ million)
145.4
128.8
114.1
Short-term financial debt ($ million)
5.7
12.5
8.7
Long-term financial debt ($ million)
485.9
485.1
633.9
Net debt ($ million)
346.2
368.8
528.4
Dividends paid ($ per share)
0.130
0.127
0.082
Shares repurchased (million shares)
0.642
0.942
0.232
Basic shares – at period end (million
shares)
57.596
57.622
60.016
Weighted average basic shares (million
shares)
57.853
58.261
60.090
a)
Includes royalties paid in kind in
Colombia for approximately 1,665, 759 and 1,115 bopd in 1Q2023,
4Q2022 and 1Q2022, respectively. No royalties were paid in kind in
other countries. Production in Ecuador is reported before the
Government’s production share.
b)
Please refer to the Commodity Risk
Management Contracts section below.
c)
Production and operating costs include
operating costs, royalties and economic rights paid in cash, share
based payments and purchased crude oil.
d)
G&A and G&G expenses include
non-cash, share-based payments for $1.4 million, $3.3 million and
$0.9 million in 1Q2023, 4Q2022 and 1Q2022, respectively. These
expenses are excluded from the adjusted EBITDA calculation.
REVISED 2023 PRODUCTION GUIDANCE
As announced on March 8 and April 11, 2023, GeoPark’s 2023 net
production year to date has been below its potential of
approximately 39,500-40,500 boepd, mainly due to: (i) temporarily
shut-in production of the Indico 6 and Indico 7 wells in the CPO-5
block in Colombia for approximately 2,400-3,300 bopd net to
GeoPark, and to a lesser extent (ii) shut-in production of
approximately 400 bopd in Chile due to ongoing commercial
negotiations with ENAP, the oil offtaker, and (iii) the delay of
certain drilling activities in Ecuador.
GeoPark’s previous 2023 production guidance was based on the
CPO-5 block’s operator expectation that shut-in barrels were going
to be back on production in early 2Q2023. Now, those barrels are
not expected to be back before July 2023.
As a result, GeoPark had to revise its 2023 annual average
production guidance down to 38,000-40,000 boepd (from 39,500-41,500
boepd). Assuming production in the CPO-5 block is normalized in
early 3Q2023, GeoPark’s production in 2H2023 is expected to average
39,000-42,000 boepd.
The Indico 6 and Indico 7 wells were drilled in late 2022 and
together tested over 11,000 bopd gross (or 3,300 bopd net to
GeoPark) and are expected to stabilize production at approximately
8,000 bopd gross (or 2,400 bopd net to GeoPark). These two wells
were shut-in (Indico 6 in December 2022 and Indico 7 in early
January 2023) after the regulator (ANH) requested that the CPO-5
block operator temporarily suspend production from these wells
until definite surface facilities are completed.
GeoPark also adjusted its 2023 capital expenditures down to
$180-200 million (from $200-220 million) combining cost
efficiencies and the deferral of certain projects in Colombia and
Ecuador, which allows GeoPark to maintain its free cash flow
guidance.
The table below provides further details about GeoPark’s revised
2023 guidance compared to its previous 2023 guidance.
May 3, 2023 Revision
Previous 2023
Guidance
Brent Assumption ($ per bbl)
$80-907
$80-90
2023 Annual Average Production
(boepd)
38,000-40,000
39,500-41,500
Adjusted EBITDA8
$490-560 million
$510-580 million
2023 Capital Expenditures
$180-200 million
$200-220 million
Cash Income Taxes*
$150-210 million
$150-210 million
Interest Payments
$27-30 million
$27-30 million
Free Cash Flow
$120-140 million
$120-140 million
(*) Cash taxes include GeoPark’s estimates
of the impact of the new tax reform in Colombia, irrespective of
the timing of its cash impact, expected in 2023 or early 2024.
Production: Oil and gas production in 1Q2023 was 36,578
boepd. Adjusting for divestments in Argentina (completed on January
31, 2022), consolidated oil and gas production decreased by 4%
compared to 1Q2022, due to lower production in Colombia, Chile and
Brazil, partially offset by higher production in Ecuador.
Since early March 2023, GeoPark shut-in approximately 400 bopd
of its oil production in Chile due to ongoing commercial
negotiations with the Company’s off-taker, and as a result, Chile
is currently producing approximately 1,600-1,800 boepd compared to
an average production of 1,988 boepd in 1Q2023.
Oil represented 92% and 89% of total reported production in
1Q2023 and 1Q2022, respectively.
For further details, please refer to the 1Q2023 Operational
Update published on April 11, 2023.
Reference and Realized Oil Prices: Brent crude oil prices
decreased by 15% to $82.5 per bbl during 1Q2023, and the
consolidated realized oil sales price decreased by 21% to $66.7 per
bbl in 1Q2023.
A breakdown of reference and net realized oil prices in relevant
countries in 1Q2023 and 1Q2022 is shown in the tables below:
1Q2023 - Realized Oil Prices
($ per bbl)
Colombia
Chile
Argentina9
Ecuador
Brent oil price (*)
82.5
82.3
-
83.5
Local marker differential
(8.4
)
-
-
-
Commercial, transportation discounts &
other
(7.6
)
(8.0
)
-
(12.7
)
Realized oil price
66.5
74.3
-
70.8
Weight on oil sales mix
97.5
%
1.5
%
-
0.7
%
1Q2022 - Realized Oil Prices
($ per bbl)
Colombia
Chile
Argentina
Ecuador
Brent oil price (*)
96.9
103.7
96.9
-
Local marker differential
(3.7
)
-
-
-
Commercial, transportation discounts &
other
(8.8
)
(7.8
)
(40.2
)
-
Realized oil price
84.4
95.9
56.7
-
Weight on oil sales mix
97.8
%
1.1
%
1.0
%
-
(*) Corresponds to the average month of
sale price ICE Brent for Colombia, Ecuador and Argentina, and Dated
Brent for Chile.
Revenue: Consolidated revenue decreased by 27% to $182.5
million in 1Q2023, compared to $249.2 million in 1Q2022, mainly
reflecting lower oil and gas prices and to a lesser extent, lower
deliveries.
Sales of crude oil: Consolidated
oil revenue decreased by 27% to $175.1 million in 1Q2023, mainly
explained by a 21% decrease in realized oil prices and 7% lower
deliveries. Oil revenue was 96% of total revenue in 1Q2023 and
1Q2022.
(In millions of $)
1Q2023
1Q2022
Colombia
170.7
234.0
Chile
1.2
3.1
Argentina
-
1.7
Brazil
0.1
0.2
Ecuador
3.0
-
Oil Revenue
175.1
239.0
- Colombia: 1Q2023 oil revenue decreased by 27% to $170.7
million, reflecting lower realized oil prices and lower oil
deliveries. Realized prices decreased by 21% to $66.5 per bbl due
to lower Brent oil prices while oil deliveries decreased by 7% to
29,638 bopd. Earn-out payments decreased to $6.8 million in 1Q2023,
compared to $8.4 million in 1Q2022 in line with lower oil
prices.
- Chile: 1Q2023 oil revenue decreased by 60% to $1.2 million,
reflecting lower realized prices and lower oil deliveries. Realized
prices decreased by 22% to $74.3 per bbl due to lower Brent oil
prices while oil deliveries decreased by 49% to 185 bopd.
- Ecuador: 1Q2023 oil revenue totaled $3.0 million, reflecting a
realized oil price of $70.8 with deliveries of 478 bopd. Deliveries
in Ecuador are net of the Government’s production share.
Sales of purchased crude oil:
1Q2023 sales of purchased crude oil totaled $0.8 million, which
corresponds to oil trading operations (purchasing and selling crude
oil from third parties with the cost of the oil purchased being
reflected in production and operating costs).
Sales of gas: Consolidated gas
revenue decreased by 36% to $6.5 million in 1Q2023 compared to
$10.2 million in 1Q2022 reflecting 33% lower gas deliveries and 4%
lower gas prices. Gas revenue was 4% of total revenue in 1Q2023 and
1Q2022.
(In millions of $)
1Q2023
1Q2022
Chile
3.2
3.6
Brazil
3.1
5.7
Argentina
-
0.3
Colombia
0.2
0.5
Gas Revenue
6.5
10.2
- Chile: 1Q2023 gas revenue decreased by 10% to $3.2 million,
reflecting lower gas deliveries, partially offset by higher gas
prices. Gas deliveries fell by 12% to 9,462 mcfpd (1,577 boepd).
Gas prices were 2% higher, at $3.8 per mcf ($22.7 per boe) in
1Q2023.
- Brazil: 1Q2023 gas revenue decreased by 45% to $3.1 million,
due to lower gas deliveries and lower gas prices. Gas deliveries
decreased by 43% from the Manati gas field to 5,626 mcfpd (937
boepd). Gas prices decreased by 4% to $6.2 per mcf ($37.2 per boe)
in 1Q2023.
Commodity Risk Management Contracts: Consolidated
commodity risk management contracts amounted to zero in 1Q2023,
compared to a $78.1 million loss in 1Q2022.
The table below provides a breakdown of realized and unrealized
commodity risk management charges in 1Q2023 and 1Q2022:
(In millions of $)
1Q2023
1Q2022
Realized loss
-
(30.5)
Unrealized loss
-
(47.6)
Commodity risk management contracts
-
(78.1)
In 1Q2023 GeoPark had zero cost collars covering 9,500 bopd with
purchased puts with an average price of $66.0 per bbl and sold
calls at an average price of $112.6 per bbl.
Please refer to the “Commodity Risk Oil Management Contracts”
section below for a description of hedges in place as of the date
of this release.
Production and Operating Costs: Consolidated production
and operating costs decreased to $52.5 million from $80.6 million,
mainly resulting from lower royalties and economic rights due to
lower oil prices, partially offset by higher operating costs.
The table below provides a breakdown of production and operating
costs in 1Q2023 and 1Q2022:
(In millions of $)
1Q2023
1Q2022
Royalties
(7.2)
(14.8)
Economic rights
(16.1)
(43.2)
Operating costs
(28.5)
(22.5)
Purchased crude oil
(0.7)
-
Share-based payments
(0.0)
(0.1)
Production and operating costs
(52.5)
(80.6)
Consolidated royalties amounted to $7.2 million in 1Q2023
compared to $14.8 million in 1Q2022, in line with lower oil
prices.
Consolidated economic rights (including high price
participation, x-factor and other economic rights paid to the
Colombian Government) amounted to $16.1 million in 1Q2023 compared
to $43.2 million in 1Q2022, in line with lower oil prices.
Consolidated operating costs increased to $28.5 million in
1Q2023 compared to $22.5 million in 1Q2022.
The breakdown of operating costs is as follows:
- Colombia: Total operating costs increased to $24.5 million in
1Q2023 from $16.2 million in 1Q2022, mainly due to higher operating
costs per boe, partially offset by lower deliveries (deliveries in
Colombia decreased by 7%).
- Chile: Total operating costs decreased to $1.9 million in
1Q2023 from $3.7 million in 1Q2022, in line with lower operating
costs per boe and lower oil and gas deliveries (deliveries in Chile
decreased by 18%).
- Brazil: Total operating costs decreased to $0.7 million in
1Q2023 compared to $1.2 million in 1Q2022, due to lower gas
deliveries from the Manati field (deliveries in Brazil decreased by
43%), partially offset by higher operating costs per boe.
- Ecuador: Total operating costs were $1.3 million in
1Q2023.
- Argentina: The divestment of the Aguada Baguales, El Porvenir
and Puesto Touquet blocks was completed in January 2022. The
comparative period, 1Q2022, included $1.3 million of operating
costs in Argentina.
Consolidated purchased crude oil charges amounted to $0.7
million in 1Q2023, which corresponds to oil trading operations
(purchasing and selling crude oil from third parties with the sale
of purchased oil being reflected in revenue).
Selling Expenses: Consolidated selling expenses increased
to $2.4 million in 1Q2023 compared to $2.0 million in 1Q2022.
Geological & Geophysical Expenses: Consolidated
G&G expenses decreased to $2.5 million in 1Q2023 compared to
$2.7 million in 1Q2022.
Administrative Expenses: Consolidated G&A decreased
to $9.4 million in 1Q2023 compared to $9.9 million in 1Q2022.
Adjusted EBITDA: Consolidated adjusted EBITDA10 decreased
by 6% to $114.9 in 1Q2023 (on a per boe basis, adjusted EBITDA
increased to $38.6 per boe in 1Q2023 from $37.3 per boe in
1Q2022).
(In millions of $)
1Q2023
1Q2022
Colombia
113.5
121.8
Chile
1.5
2.1
Brazil
1.6
3.6
Argentina
(0.7)
(1.7)
Ecuador
1.0
(0.5)
Corporate
(2.0)
(2.8)
Adjusted EBITDA
114.9
122.6
The table below shows production, volumes sold and the breakdown
of the most significant components of adjusted EBITDA for 1Q2023
and 1Q2022, on a per boe basis:
Adjusted EBITDA/boe
Colombia
Chile
Brazil
Ecuador
Totald
1Q23
1Q22
1Q23
1Q22
1Q23
1Q22
1Q23
1Q22
1Q23
1Q22
Production (boepd)
32,580
33,738
1,988
2,279
1,020
1,815
990
190
36,578
38,626
Inventories, RIK & Othera
(2,837
)
(1,635
)
(225
)
(121
)
(65
)
(153
)
(512
)
(190
)
(3,513
)
(2,098
)
Sales volume (boepd)
29,743
32,103
1,763
2,158
955
1,662
478
-
33,065
36,528
% Oil
99.6
%
99.4
%
11
%
17
%
2
%
1
%
100
%
-
92
%
89
%
($ per boe)
Realized oil price
66.5
84.4
74.3
95.9
71.2
104.5
70.8
-
66.7
84.3
Realized gas pricec
19.2
28.8
22.7
22.3
37.2
39.0
-
-
27.8
28.8
Earn-out
(2.5
)
(2.9
)
-
-
-
-
-
-
(2.5
)
(2.9
)
Combined Price
63.8
81.2
28.1
34.6
37.9
39.9
70.8
-
61.3
75.8
Realized commodity risk management
contracts
-
(10.6
)
-
-
-
-
-
-
-
(9.3
)
Operating costse
(9.6
)
(5.9
)
(14.0
)
(18.9
)
(11.4
)
(10.6
)
(31.2
)
-
(10.1
)
(7.2
)
Royalties & economic rights
(8.5
)
(19.7
)
(1.0
)
(1.4
)
(3.0
)
(3.2
)
-
-
(7.8
)
(17.7
)
Purchased crude oilb
-
-
-
-
-
-
-
-
(0.2
)
-
Selling & other expenses
(0.7
)
(0.6
)
(0.4
)
(0.4
)
-
-
(9.6
)
-
(0.8
)
(0.6
)
Operating Netback/boe
45.0
44.3
12.6
13.9
23.4
26.2
30.0
-
42.2
41.0
G&A, G&G & other
(3.6
)
(3.7
)
Adjusted EBITDA/boe
38.6
37.3
a) RIK (Royalties in kind): Includes
royalties paid in kind in Colombia for approximately 1,665 bopd and
1,115 bopd in 1Q2023 and 1Q2022, respectively. No royalties were
paid in kind in Chile, Brazil or Ecuador. Production in Ecuador is
reported before the Government’s production share. Other includes
economic rights paid in kind.
b) Reported in the Corporate business
segment.
c) Conversion rate of $mcf/$boe=1/6.
d) Includes amounts recorded in Argentina
and corporate segments.
e) Operating costs per boe included in
this table include certain adjustments to the reported figures
(IFRS 16 and others).
Depreciation: Consolidated depreciation charges increased
to $27.2 million in 1Q2023 compared to $21.6 million in 1Q2022.
Write-off of unsuccessful exploration efforts: The
consolidated write-off of unsuccessful exploration efforts amounted
to $10.6 million in 1Q2023 and zero in 1Q2022. Amounts recorded in
1Q2023 correspond to unsuccessful exploration efforts in the Llanos
87 block and to a lesser extent, in the Llanos 94 block, both in
Colombia.
Other Income (Expenses): Other operating expenses showed
a $1.4 million loss in 1Q2023, compared to a $4.5 million gain in
1Q2022.
CONSOLIDATED NON-OPERATING RESULTS AND PROFIT FOR THE
PERIOD
Financial Expenses: Net financial expenses decreased to
$9.8 million in 1Q2023 from $15.1 million in 1Q2022, mainly
resulting from a sustained deleveraging process that started in
April 2021 and continued in 2022.
Foreign Exchange: Net foreign exchange losses amounted to
$3.4 million in 1Q2023 compared to $6.6 million loss in 1Q2022.
Income Tax: Income taxes totaled $37.1 million in 1Q2023
compared to $5.9 million in 1Q2022, mainly resulting from higher
profits before income taxes plus the effect of fluctuations of the
Colombian peso and the effects of the tax reform in Colombia
applicable in fiscal year 2023.
Net Profit: Net profit decreased to $26.3 million in
1Q2023 compared to $31.0 million in 1Q2022.
BALANCE SHEET
Cash and Cash Equivalents: Cash and cash equivalents
totaled $145.4 million as of March 31, 2023, compared to $128.8
million as of December 31, 2022.
This net increase is explained by the following:
(In millions of $)
1Q2023
Cash flows from operating activities
91.9
Cash flows used in investing
activities
(45.0)
Cash flows used in financing
activities
(30.7)
Currency Translation
0.3
Net increase in cash & cash
equivalents
16.6
Cash flows from operating activities of $91.9 million in 1Q2023
included income tax payments of $6.0 million. In 2Q2023 the Company
expects to pay $80-90 million related to tax obligations accrued in
the fiscal year 2022.
Cash flows used in financing activities mainly included $13.7
million related to interest payments, $7.5 million related to
executing the Company’s share buyback program and $7.5 million
related to dividend payments.
Financial Debt: Total financial debt net of issuance cost
was $491.6 million, all corresponding to the 2027 Notes. Short-term
financial debt was $5.7 million as of March 31, 2023, and
correspond to interest accrued on the 2027 Notes.
(In millions of $)
March 31, 2023
December 31, 2022
2027 Notes
491.6
497.6
Financial debt
491.6
497.6
For further details, please refer to Note 12 of GeoPark’s
consolidated financial statements as of March 31, 2023, available
on the Company’s website.
FINANCIAL RATIOSa
(In millions of $)
Period-end FinancialDebt Cash and
CashEquivalents Net Debt Net
Debt/LTMAdj. EBITDA LTM InterestCoverage
1Q2022
642.5
114.1
528.4
1.5x
8.4x
2Q2022
585.4
122.5
462.9
1.0x
10.8x
3Q2022
491.1
93.0
398.1
0.8x
12.7x
4Q2022
497.6
128.8
368.8
0.7x
14.9x
1Q2023
491.6
145.4
346.2
0.7x
15.8x
a)
Based on trailing last twelve-month
financial results (“LTM”).
Covenants in the 2027 Notes: The 2027 Notes include
incurrence test covenants that, among others, require that the Net
Debt to Adjusted EBITDA ratio should not exceed 3.25 times and the
Adjusted EBITDA to Interest ratio should exceed 2.5 times.
COMMODITY RISK OIL MANAGEMENT CONTRACTS
The table below summarizes commodity risk management contracts
in place as of the date of this release:
Period
Type
Reference
Volume (bopd)
Contract Terms
(Average $ per bbl)
Purchased Put
Sold Call
2Q2023
Zero cost collar
Brent
10,000
69.3
110.6
3Q2023
Zero cost collar
Brent
7,500
70.0
97.3
4Q2023
Zero cost collar
Brent
5,000
70.0
91.6
SELECTED INFORMATION BY BUSINESS SEGMENT
Colombia
(In millions of $)
1Q2023
1Q2022
Sale of crude oil
170.7
234.0
Sale of gas
0.2
0.5
Revenue
170.9
234.5
Production and operating costsa
(47.4
)
(73.4
)
Adjusted EBITDA
113.5
121.8
Capital expenditure
40.0
28.4
Chile
(In millions of $)
1Q2023
1Q2022
Sale of crude oil
1.2
3.1
Sale of gas
3.2
3.6
Revenue
4.5
6.7
Production and operating costsa
(2.1
)
(4.0
)
Adjusted EBITDA
1.5
2.1
Capital expenditure
0.1
2.9
Brazil
(In millions of $)
1Q2023
1Q2022
Sale of crude oil
0.1
0.3
Sale of gas
3.1
5.7
Revenue
3.3
6.0
Production and operating costsa
(1.0
)
(1.7
)
Adjusted EBITDA
1.6
3.6
Capital expenditure
0.0
0.0
Ecuador
(In millions of $)
1Q2023
1Q2022
Sale of crude oil
3.0
-
Sale of gas
0.0
-
Revenue
3.0
-
Production and operating costsa
(1.3
)
-
Adjusted EBITDA
1.0
(0.5
)
Capital expenditure
4.9
8.1
a)
Production and operating costs = Operating
costs + Royalties + Share-based payments + Purchased crude oil.
CONSOLIDATED STATEMENT OF INCOME (QUARTERLY
INFORMATION UNAUDITED)
(In millions of $)
1Q2023
1Q2022
REVENUE
Sale of crude oil
175.1
239.0
Sale of purchased crude oil
0.8
-
Sale of gas
6.5
10.2
TOTAL REVENUE
182.5
249.2
Commodity risk management contracts
0.0
(78.1
)
Production and operating costs
(52.5
)
(80.6
)
Geological and geophysical expenses
(G&G)
(2.5
)
(2.7
)
Administrative expenses (G&A)
(9.4
)
(9.9
)
Selling expenses
(2.4
)
(2.0
)
Depreciation
(27.2
)
(21.6
)
Write-off of unsuccessful exploration
efforts
(10.6
)
-
Other
(1.4
)
4.5
OPERATING PROFIT
76.6
58.6
Financial costs, net
(9.8
)
(15.1
)
Foreign exchange loss
(3.4
)
(6.6
)
PROFIT BEFORE INCOME TAX
63.4
36.9
Income tax
(37.1
)
(5.9
)
PROFIT FOR THE PERIOD
26.3
31.0
SUMMARIZED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(QUARTERLY INFORMATION UNAUDITED)
(In millions of $)
Mar '23
Dec '22
Non-Current Assets
Property, plant and equipment
673.0
666.8
Other non-current assets
68.7
69.0
Total Non-Current Assets
741.7
735.8
Current Assets
Inventories
18.8
14.4
Trade receivables
56.7
71.8
Other current assets
22.7
23.1
Cash at bank and in hand
145.4
128.8
Total Current Assets
243.6
238.1
Total Assets
985.2
974.0
Total Equity
129.4
115.6
Non-Current Liabilities
Borrowings
485.9
485.1
Other non-current liabilities
155.3
144.1
Total Non-Current Liabilities
641.2
629.2
Current Liabilities
Borrowings
5.7
12.5
Other current liabilities
208.9
216.6
Total Current Liabilities
214.6
229.2
Total Liabilities
855.8
858.4
Total Liabilities and Equity
985.2
974.0
SUMMARIZED CONSOLIDATED STATEMENT OF CASH FLOW
(QUARTERLY INFORMATION UNAUDITED)
(In millions of $)
1Q2023
1Q2022
Cash flow from operating activities
91.9
89.7
Cash flow used in investing activities
(45.0
)
(25.0
)
Cash flow used in financing activities
(30.7
)
(52.9
)
RECONCILIATION OF ADJUSTED EBITDA TO PROFIT BEFORE INCOME
TAX
1Q2023 (In millions of $)
Colombia
Chile
Brazil
Ecuador
Other(a)
Total
Adjusted EBITDA
113.5
1.5
1.6
1.0
(2.7
)
114.9
Depreciation
(22.5
)
(2.8
)
(0.6
)
(1.3
)
(0.0
)
(27.2
)
Unrealized commodity risk management
contracts
-
-
-
-
-
-
Write-off of unsuccessful exploration
efforts & impairment
(10.6
)
-
-
-
-
(10.6
)
Share based payment
(0.0
)
-
-
-
(1.3
)
(1.5
)
Lease Accounting - IFRS 16
1.3
0.3
0.3
0.0
-
1.9
Others
(1.0
)
0.0
(0.1
)
0.0
(0.0
)
(1.0
)
OPERATING PROFIT (LOSS)
80.8
(1.0
)
1.1
(0.4
)
(4.0
)
76.6
Financial costs, net
(9.8
)
Foreign exchange charges, net
(3.4
)
PROFIT BEFORE INCOME TAX
63.4
1Q2022 (In millions of $)
Colombia
Chile
Brazil
Ecuador
Other(a)
Total
Adjusted EBITDA
121.8
2.1
3.6
(0.5
)
(4.5
)
122.6
Depreciation
(17.4
)
(3.3
)
(0.8
)
(0.0
)
(0.0
)
(21.6
)
Unrealized commodity risk management
contracts
(47.6
)
-
-
-
-
(47.6
)
Write-off of unsuccessful exploration
efforts & impairment
-
-
-
-
-
-
Share based payment
(0.2
)
(0.0
)
(0.0
)
(0.0
)
(0.8
)
(1.0
)
Lease Accounting - IFRS 16
1.0
0.4
0.4
0.0
-
1.8
Others
0.7
(0.0
)
(0.1
)
(0.0
)
4.0
4.5
OPERATING PROFIT (LOSS)
58.3
(0.9
)
3.1
(0.5
)
(1.3
)
58.6
Financial costs, net
(15.1
)
Foreign exchange charges, net
(6.6
)
PROFIT BEFORE INCOME TAX
36.9
(a)
Includes Argentina and Corporate.
LAST TWELVE-MONTH RETURN ON AVERAGE CAPITAL EMPLOYED
(In millions of $)
March 2023
March 2022
Last twelve-month Operating Income
447.0
Total Assets – Period-end
985.2
933.9
Current Liabilities – Period-end
(214.6
)
(257.0
)
Capital Employed – Period-end
770.6
676.9
Average Capital Employed
723.7
-
Average Return on Average Capital
Employed
62
%
2022 SPEED/ESG Sustainability Report
GeoPark published its 2022 SPEED/ESG Report on April 26, 2023.
The report is available on the Company’s website.
CONFERENCE CALL INFORMATION
Reporting Date and Conference Call for 1Q2023 Financial
Results
In conjunction with the 1Q2023 results press release, GeoPark
management will host a conference call on May 4, 2023, at 10:00 am
(Eastern Daylight Time).
To listen to the call, participants can access the webcast
located in the Invest with Us section of the Company’s website at
www.geo-park.com, or by clicking below:
https://events.q4inc.com/attendee/236589020
Interested parties may participate in the conference call by
dialing the numbers provided below:
United States Participants: +1 404 975 4839
International Participants: +1 929-526-1599
Passcode: 572781
Please allow extra time prior to the call to visit the website
and download any streaming media software that might be required to
listen to the webcast.
An archive of the webcast replay will be made available in the
Invest with Us section of the Company’s website at www.geo-park.com
after the conclusion of the live call.
GLOSSARY
2027 Notes
5.500% Senior Notes due 2027
Adjusted EBITDA
Adjusted EBITDA is defined as profit for
the period before net finance costs, income tax, depreciation,
amortization, the effect of IFRS 16, certain non-cash items such as
impairments and write-offs of unsuccessful efforts, accrual of
share-based payments, unrealized results on commodity risk
management contracts and other non-recurring events
Adjusted EBITDA per boe
Adjusted EBITDA divided by total boe
deliveries
ANH
Agencia Nacional de Hidrocarburos
(Colombia)
Operating Netback per boe
Revenue, less production and operating
costs (net of depreciation charges and accrual of stock options and
stock awards, the effect of IFRS 16), selling expenses, and
realized results on commodity risk management contracts, divided by
total boe deliveries. Operating Netback is equivalent to Adjusted
EBITDA net of cash expenses included in Administrative, Geological
and Geophysical and Other operating costs
Bbl
Barrel
Boe
Barrels of oil equivalent
Boepd
Barrels of oil equivalent per day
Bopd
Barrels of oil per day
D&M
DeGolyer and MacNaughton
F&D costs
Finding and Development costs, calculated
as capital expenditures divided by the applicable net reserve
additions before changes in Future Development Capital
G&A
Administrative Expenses
G&G
Geological & Geophysical Expenses
LTM
Last Twelve Months
Mboe
Thousand barrels of oil equivalent
Mmbo
Million barrels of oil
Mmboe
Million barrels of oil equivalent
Mcfpd
Thousand cubic feet per day
Mmcfpd
Million cubic feet per day
Mm3/day
Thousand cubic meters per day
PRMS
Petroleum Resources Management System
WI
Working interest
NPV10
Present value of estimated future oil and
gas revenue, net of estimated direct expenses, discounted at an
annual rate of 10%
Sqkm
Square kilometers
NOTICE
Additional information about GeoPark can be found in the Invest
with Us section on the website at www.geo-park.com.
Rounding amounts and percentages: Certain amounts and
percentages included in this press release have been rounded for
ease of presentation. Percentage figures included in this press
release have not in all cases been calculated on the basis of such
rounded figures, but on the basis of such amounts prior to
rounding. For this reason, certain percentage amounts in this press
release may vary from those obtained by performing the same
calculations using the figures in the financial statements. In
addition, certain other amounts that appear in this press release
may not sum due to rounding.
This press release contains certain oil and gas metrics,
including information per share, operating netback, reserve life
index and others, which do not have standardized meanings or
standard methods of calculation and therefore such measures may not
be comparable to similar measures used by other companies. Such
metrics have been included herein to provide readers with
additional measures to evaluate the Company’s performance; however,
such measures are not reliable indicators of the future performance
of the Company and future performance may not compare to the
performance in previous periods.
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING
INFORMATION
This press release contains statements that constitute
forward-looking statements. Many of the forward-looking statements
contained in this press release can be identified by the use of
forward-looking words such as ‘‘anticipate,’’ ‘‘believe,’’
‘‘could,’’ ‘‘expect,’’ ‘‘should,’’ ‘‘plan,’’ ‘‘intend,’’ ‘‘will,’’
‘‘estimate’’ and ‘‘potential,’’ among others.
Forward-looking statements that appear in a number of places in
this press release include, but are not limited to, statements
regarding the intent, belief or current expectations, regarding
various matters, including, revised 2023 guidance as it relates to
annual average production, Adjusted EBITDA, capital expenditures,
cash income taxes and free cash flow, as well as tax obligations to
be paid during 2023. Forward-looking statements are based on
management’s beliefs and assumptions, and on information currently
available to the management. Such statements are subject to risks
and uncertainties, and actual results may differ materially from
those expressed or implied in the forward-looking statements due to
various factors.
Forward-looking statements speak only as of the date they are
made, and the Company does not undertake any obligation to update
them in light of new information or future developments or to
release publicly any revisions to these statements in order to
reflect later events or circumstances, or to reflect the occurrence
of unanticipated events. For a discussion of the risks facing the
Company which could affect whether these forward-looking statements
are realized, see filings with the U.S. Securities and Exchange
Commission (SEC).
Oil and gas production figures included in this release are
stated before the effect of royalties paid in kind, consumption and
losses. Annual production per day is obtained by dividing total
production by 365 days.
Information about oil and gas reserves: The SEC permits
oil and gas companies, in their filings with the SEC, to disclose
only proven, probable and possible reserves that meet the SEC’s
definitions for such terms. GeoPark uses certain terms in this
press release, such as “PRMS Reserves” that the SEC's guidelines do
not permit GeoPark from including in filings with the SEC. As a
result, the information in the Company’s SEC filings with respect
to reserves will differ significantly from the information in this
press release.
NPV10 for PRMS 1P, 2P and 3P reserves is not a substitute for
the standardized measure of discounted future net cash flow for SEC
proved reserves.
The reserve estimates provided in this release are estimates
only, and there is no guarantee that the estimated reserves will be
recovered. Actual reserves may eventually prove to be greater than,
or less than, the estimates provided herein. Statements relating to
reserves are by their nature forward-looking statements.
Non-GAAP Measures: The Company believes Adjusted EBITDA,
free cash flow and operating netback per boe, which are each
non-GAAP measures, are useful because they allow the Company to
more effectively evaluate its operating performance and compare the
results of its operations from period to period without regard to
its financing methods or capital structure. The Company’s
calculation of Adjusted EBITDA, free cash flow, and operating
netback per boe may not be comparable to other similarly titled
measures of other companies.
Adjusted EBITDA: The Company defines Adjusted EBITDA as
profit for the period before net finance costs, income tax,
depreciation, amortization and certain non-cash items such as
impairments and write-offs of unsuccessful exploration and
evaluation assets, accrual of stock options stock awards,
unrealized results on commodity risk management contracts and other
non-recurring events. Adjusted EBITDA is not a measure of profit or
cash flow as determined by IFRS. The Company excludes the items
listed above from profit for the period in arriving at Adjusted
EBITDA because these amounts can vary substantially from company to
company within our industry depending upon accounting methods and
book values of assets, capital structures and the method by which
the assets were acquired. Adjusted EBITDA should not be considered
as an alternative to, or more meaningful than, profit for the
period or cash flow from operating activities as determined in
accordance with IFRS or as an indicator of our operating
performance or liquidity. Certain items excluded from Adjusted
EBITDA are significant components in understanding and assessing a
company’s financial performance, such as a company’s cost of
capital and tax structure and significant and/or recurring
write-offs, as well as the historic costs of depreciable assets,
none of which are components of Adjusted EBITDA. For a
reconciliation of Adjusted EBITDA to the IFRS financial measure of
profit for the year or corresponding period, see the accompanying
financial tables.
Operating Netback per boe: Operating netback per boe
should not be considered as an alternative to, or more meaningful
than, profit for the period or cash flow from operating activities
as determined in accordance with IFRS or as an indicator of the
Company’s operating performance or liquidity. Certain items
excluded from operating netback per boe are significant components
in understanding and assessing a company’s financial performance,
such as a company’s cost of capital and tax structure and
significant and/or recurring write-offs, as well as the historic
costs of depreciable assets, none of which are components of
operating netback per boe. The Company’s calculation of operating
netback per boe may not be comparable to other similarly titled
measures of other companies. For a reconciliation of operating
netback per boe to the IFRS financial measure of profit for the
year or corresponding period, see the accompanying financial
tables.
Net Debt: Net debt is defined as current and non-current
borrowings less cash and cash equivalents.
_____________________________
1 Return on average capital employed is
defined as last twelve-month operating profit divided by average
total assets minus current liabilities.
2 Based on GeoPark’s market capitalization
as of May 2, 2023.
3 Scopes 1 and 2.
4 Brent assumption from May to December
2023.
5 Assuming a Brent to Vasconia
differential averaging $4-5 per bbl from May to December 2023.
6 Free cash flow is used here as Adjusted
EBITDA less capital expenditures, mandatory interest payments and
cash taxes. 2023 cash taxes include GeoPark’s preliminary estimates
of the full impact of the new tax reform in Colombia, irrespective
of the timing of its cash impact, expected in 2023 or early 2024.
The Company is unable to present a quantitative reconciliation of
the 2023 Adjusted EBITDA which is a forward-looking non-GAAP
measure, because the Company cannot reliably predict certain of its
necessary components, such as write-off of unsuccessful exploration
efforts or impairment loss on non-financial assets, etc. Since free
cash flow is calculated based on Adjusted EBITDA, for similar
reasons, the Company does not provide a quantitative reconciliation
of the 2023 free cash flow forecast.
7 Brent assumption from May to December
2023.
8 Assuming a Brent to Vasconia
differential averaging $4-5 per bbl from May to December 2023.
9 The divestment of the Aguada Baguales,
El Porvenir and Puesto Touquet blocks in Argentina was completed on
January 31, 2022.
10 See “Reconciliation of Adjusted EBITDA
to Profit Before Income Tax” included in this press release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230503005729/en/
INVESTORS:
Stacy Steimel Shareholder Value Director T: +562 2242 9600
ssteimel@geo-park.com
Miguel Bello Market Access Director T: +562 2242 9600
mbello@geo-park.com
Diego Gully Investor Relations Director T: +55 21 99636 9658
dgully@geo-park.com
MEDIA:
Communications Department communications@geo-park.com
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