New Exploration Discovery in the Llanos
Basin
Increasing Activity in the Second Half of
2023
Accelerated 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 June 30, 2023 (“Second Quarter” or
“2Q2023”). A conference call to discuss 2Q2023 financial results
will be held on August 10, 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 June 30, 2023, available on
the Company’s website.
SECOND QUARTER 2023 HIGHLIGHTS
Oil and Gas Production and Operations
- Consolidated average oil and gas production of 36,581 boepd,
below production potential of approximately 39,500-40,500 boepd, as
previously announced1, mainly due to temporarily shut-in production
in the CPO-5 block (GeoPark non-operated, 30% WI) in Colombia and
to a lesser extent, in the Fell block (GeoPark operated, 100% WI)
in Chile
- 10 rigs currently in operation (6 drilling rigs and 4 workover
rigs), adding 2 more rigs in 3Q2023 (one drilling rig and one
workover rig)
Successful Exploration and Development Drilling
Activities
Colombia:
- Llanos 123 block (GeoPark operated, 50% WI):
- First well drilled, Saltador 1, resulted in the first
exploration discovery in the block
- The Saltador 1 exploration well initiated testing in late July
2023 and is currently producing 880 bopd with 5% water cut from the
Barco (Guadalupe) formation
- Drilling rig moving to drill the Toritos 1 exploration well,
expected to be spudded in August 2023
- Llanos 34 block (GeoPark operated, 45% WI):
- The second horizontal development well initiated testing in
late July 2023 and is currently producing approximately 2,300 bopd
from the Mirador formation
- This second horizontal well was drilled within budget and ahead
of time, 16% faster, with 10% lower drilling costs, and a 32%
longer lateral length compared to the first horizontal well
- Third horizontal well spudded in August 2023, with 2-3
additional horizontal wells expected in 2H2023
Ecuador:
- Perico block (GeoPark non-operated, 50% WI):
- The Yin 2 well reached total depth in late July 2023.
Preliminary logging information confirmed the development potential
in the Hollin formation and also encountered a new zone with 40
feet of potential net pay in the U-sand formation
- The well is being completed and will start testing in the
U-sand formation by mid-August 2023
Revenue, Adjusted EBITDA and Net Profit
- Revenue of $182.3 million
- Adjusted EBITDA of $103.9 million (57% adjusted EBITDA
margin)
- Operating profit of $69.5 million (38% operating profit
margin)
- Net profit of $33.8 million ($0.59 basic and diluted earnings
per share)
Sustained Capital Returns
- Capital expenditures of $43.4 million
- 2Q2023 adjusted EBITDA to capital expenditures ratio of
2.4x
- Last twelve-month return on capital employed (ROCE) of
51%2
Lower Financial Expenses and Strengthened Balance
Sheet
- Financial expenses decreased to $11.2 million (from $16.6
million), after reducing gross debt by $275 million from April 2021
to December 2022
- Net leverage of 0.8x and no principal debt maturities until
2027
- Cash in hand of $86.4 million (after paying $88.2 million in
cash taxes in 2Q2023)
- New $80 million unsecured committed credit facility in place,
with no amounts drawn
Accelerated Shareholder Returns
- Returned $15 million in cash dividends in 1H2023 ($7.5 million
on March 31 and May 31, respectively, or an annualized dividend of
approximately $30 million, a 5% dividend yield3)
- Acquired 1.7 million shares for $18.7 million in 1H2023 ($7.5
million in 1Q2023 and $11.2 million in 2Q2023), representing
approximately 3% of shares outstanding
- Quarterly cash dividend of $0.132 per share, or approximately
$7.5 million, payable on September 7, 2023
Enhanced ESG Performance and Reporting
- Installed a photovoltaic solar system in the OBA export
pipeline (running from the Platanillo block) that will allow
GeoPark to reduce both its GHG emissions and energy and maintenance
costs
- Participated in the Carbon Disclosure Project in both Water and
Climate, reinforcing GeoPark’s sustainability disclosures
2023 Work Program: Strong Free Cash Flow Generation
- 2023 annual production guidance of 38,000-40,000 boepd
- Fully-funded 2023 capital expenditures program of $180-200
million
- At $80-90 per bbl Brent4, GeoPark expects to generate an
adjusted EBITDA of $450-520 million and a free cash flow of $90-120
million5
- Targeting to return approximately 40-50% of free cash flow
after taxes to shareholders
Upcoming Catalysts
- Drilling 20-25 gross wells in 2H2023, targeting attractive
conventional, short-cycle exploration projects
- Key projects include:
_________________________
1 See press releases dated March 8, April
11, May 3 and July 17, 2023.
2 ROCE is defined as last twelve-month
operating profit divided by average total assets minus current
liabilities.
3 Based on GeoPark’s average market
capitalization from July 1 to July 31, 2023.
4 From July to December 2023.
5 Free cash flow is used here as Adjusted
EBITDA less capital expenditures, mandatory interest payments and
cash taxes. 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. Adjusted EBITDA assumes a Brent to Vasconia differential
averaging $4-5 per bbl from July to December 2023.
Andrés Ocampo, Chief Executive Officer of GeoPark, said:
“Congratulations to our exploration team for a new discovery in the
Llanos basin, as well as a promising new pay zone in the Oriente
basin. Our operations team is also bringing great results from our
horizontal drilling campaign in our core Llanos 34 block and we are
excited about more wells to come. We look forward to accelerating
activities in the second half of the year with more rigs to grow
our production and drill low-cost, low-risk exploration targets
while continuing to develop our reserves and to return value to our
shareholders.”
CONSOLIDATED OPERATING PERFORMANCE
Key performance indicators:
Key Indicators
2Q2023
1Q2023
2Q2022
1H2023
1H2022
Oil productiona (bopd)
33,672
33,801
35,238
33,736
34,892
Gas production (mcfpd)
17,453
16,664
22,212
17,061
23,650
Average net production (boepd)
36,581
36,578
38,940
36,580
38,834
Brent oil price ($ per bbl)
78.2
82.5
111.5
80.3
104.0
Combined realized price ($ per boe)
59.5
61.3
90.0
60.4
83.1
⁻ Oil ($ per bbl)
64.3
66.7
98.7
65.4
91.8
⁻ Gas ($ per mcf)
5.0
4.6
5.1
4.8
4.9
Sale of crude oil ($ million)
173.8
175.1
296.4
348.9
535.4
Sale of purchased crude oil ($
million)
1.2
0.8
5.4
1.9
5.4
Sale of gas ($ million)
7.3
6.5
9.4
13.9
19.6
Revenue ($ million)
182.3
182.5
311.2
364.8
560.4
Commodity risk management contracts b ($
million)
0.0
0.0
(15.5)
0.0
(93.7)
Production & operating costsc ($
million)
(60.7)
(52.5)
(115.1)
(113.2)
(195.7)
G&G, G&Ad ($ million)
(13.9)
(11.9)
(13.8)
(25.8)
(26.5)
Selling expenses ($ million)
(2.2)
(2.4)
(1.2)
(4.6)
(3.2)
Operating profit ($ million)
69.5
76.6
143.4
146.1
202.0
Adjusted EBITDA ($ million)
103.9
114.9
144.8
218.8
267.4
Adjusted EBITDA ($ per boe)
33.9
38.6
41.9
36.2
39.6
Net profit ($ million)
33.8
26.3
67.9
60.0
98.9
Capital expenditures ($ million)
43.4
45.0
32.4
88.3
71.8
Cash and cash equivalents ($ million)
86.4
145.4
122.5
86.4
122.5
Short-term financial debt ($ million)
12.5
5.7
15.3
12.5
15.3
Long-term financial debt ($ million)
486.8
485.9
570.0
486.8
570.0
Net debt ($ million)
412.9
346.2
462.9
412.9
462.9
Dividends paid ($ per share)
0.130
0.130
0.082
0.260
0.164
Shares repurchased (million shares)
1.082
0.642
0.460
1.724
0.691
Basic shares – at period end (million
shares)
56.570
57.596
59.585
56.570
59.585
Weighted average basic shares (million
shares)
57.114
57.853
59.965
57.481
60.027
a)
Includes royalties and other economic
rights paid in kind in Colombia for approximately 2,952 bopd, 2,520
bopd and 1,273 bopd in 2Q2023, 1Q2023 and 2Q2022, 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 $1.7 million, $1.4 million, and
$2.0 million in 2Q2023, 1Q2023 and 2Q2022, respectively. These
expenses are excluded from the adjusted EBITDA calculation.
Production: Oil and gas production in 2Q2023 was 36,581
boepd, down by 6% compared to 2Q2022, due to lower production in
Colombia, Chile and Brazil, and flat production in Ecuador. Oil
represented 92% and 90% of total reported production in 2Q2023 and
2Q2022, respectively.
Compared to 1Q2023, consolidated oil and gas production was
flat, resulting from increased production in Colombia and Brazil
that was offset by lower production in Chile and Ecuador.
For further details, please refer to the 2Q2023 Operational
Update published on July 17, 2023.
Reference and Realized Oil Prices: Brent crude oil prices
decreased by 30% to $78.2 per bbl during 2Q2023, and the
consolidated realized oil sales price decreased by 35% to $64.3 per
bbl in 2Q2023.
A breakdown of reference and net realized oil prices in relevant
countries in 2Q2023 and 2Q2022 is shown in the tables below:
2Q2023 - Realized Oil Prices
($ per bbl)
Colombia
Chile
Ecuador
Brent oil price (*)
78.2
76.7
75.0
Local marker differential
(5.9)
-
-
Commercial, transportation discounts &
other
(7.9)
(30.7)
(13.0)
Realized oil price
64.4
46.0
62.0
Weight on oil sales mix
97.3%
0.4%
2.3%
2Q2022 - Realized Oil Prices
($ per bbl)
Colombia
Chile
Ecuador
Brent oil price (*)
111.5
110.9
114.3
Local marker differential
(5.1)
-
-
Commercial, transportation discounts &
other
(8.0)
(4.4)
(5.5)
Realized oil price
98.5
106.5
108.8
Weight on oil sales mix
97%
2%
1%
(*) Corresponds to the average
month of sale price ICE Brent for Colombia and Ecuador, and Dated
Brent for Chile.
Revenue: Consolidated revenue decreased by 41% to $182.3
million in 2Q2023, compared to $311.2 million in 2Q2022, mainly
reflecting lower oil and gas prices and lower deliveries.
Sales of crude oil: Consolidated
oil revenue decreased by 41% to $173.8 million in 2Q2023, mainly
due to a 35% decrease in realized oil prices and 10% lower
deliveries. Oil revenue was 95% of total revenue in 2Q2023 and
2Q2022.
The table below provides a breakdown of crude oil revenue in
2Q2023 and 2Q2022:
Oil Revenue (In millions of $)
2Q2023
2Q2022
Colombia
169.2
287.9
Chile
0.5
5.2
Brazil
0.1
0.3
Ecuador
4.0
3.1
Oil Revenue
173.8
296.4
- Colombia: 2Q2023 oil revenue decreased by 41% to $169.2
million, reflecting lower realized oil prices and lower oil
deliveries. Realized prices decreased by 35% to $64.4 per bbl due
to lower Brent oil prices while oil deliveries decreased by 10% to
29,956 bopd. Earn-out payments decreased to $6.3 million in 2Q2023,
compared to $9.1 million in 2Q2022 in line with lower oil
prices.
- Chile: 2Q2023 oil revenue decreased by 90% to $0.5 million,
reflecting lower realized prices and lower oil deliveries. Realized
prices decreased by 57% to $46.0 per bbl due to lower Brent oil
prices while oil deliveries decreased by 80% to 109 bopd, affected
by shut-in oil production resulting from ongoing negotiations with
ENAP, the oil offtaker in Chile. The Company expects to resume
shut-in oil production of approximately 400 bopd in 3Q2023.
- Ecuador: 2Q2023 oil revenue increased by 31% to $4.0 million,
reflecting higher deliveries, partially offset by lower realized
prices. Oil deliveries increased by 129% to 714 bopd while realized
prices decreased by 43% to $62.0 per bbl. Deliveries in Ecuador are
net of the Government’s production share.
Sales of purchased crude oil:
2Q2023 sales of purchased crude oil decreased 78% to $1.2 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 22% to $7.3 million in 2Q2023 compared to $9.4
million in 2Q2022, reflecting 21% lower gas deliveries and 1% lower
gas prices. Gas revenue was 5% of total revenue in 2Q2023 and
2Q2022.
The table below provides a breakdown of gas revenue in 2Q2023
and 2Q2022:
Gas Revenue (In millions of $)
2Q2023
2Q2022
Chile
3.1
3.4
Brazil
4.1
5.5
Colombia
0.2
0.5
Gas Revenue
7.3
9.4
- Chile: 2Q2023 gas revenue decreased by 11% to $3.1 million,
reflecting lower gas deliveries, partially offset by higher gas
prices. Gas deliveries fell by 13% to 8,813 mcfpd (1,469 boepd).
Gas prices were 2% higher, at $3.8 per mcf ($22.9 per boe) in
2Q2023.
- Brazil: 2Q2023 gas revenue decreased by 26% to $4.1 million,
reflecting lower gas deliveries, partially offset by higher gas
prices. Gas deliveries decreased by 27% from the Manati gas field
to 6,718 mcfpd (1,120 boepd). Gas prices increased by 1% to $6.7
per mcf ($40.1 per boe) in 2Q2023.
Commodity Risk Management Contracts: Consolidated
commodity risk management contracts amounted to zero in 2Q2023,
compared to a $15.5 million loss in 2Q2022.
The table below provides a breakdown of realized and unrealized
commodity risk management charges in 2Q2023 and 2Q2022:
Commodity Risk Management (In
millions of $)
2Q2023
2Q2022
Realized loss
-
(36.6)
Unrealized loss
-
21.1
Commodity Risk Management Contracts
-
(15.5)
In 2Q2023 GeoPark had zero cost collars covering 10,000 bopd
including purchased puts with an average price of $69.3 per bbl and
sold calls at an average price of $110.6 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 $60.7 million from $115.1 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 2Q2023 and 2Q2022:
Production and Operating Costs (In
millions of $)
2Q2023
2Q2022
Royalties
(3.6)
(18.8)
Economic rights
(23.5)
(64.0)
Operating costs
(32.5)
(27.4)
Purchased crude oil
(1.0)
(4.4)
Share-based payments
(0.2)
(0.4)
Production and Operating Costs
(60.7)
(115.1)
Consolidated royalties amounted to $3.6 million in 2Q2023
compared to $18.8 million in 2Q2022, in line with lower oil prices
and higher volumes of royalties being paid in kind.
Consolidated economic rights (including high price
participation, x-factor and other economic rights paid to the
Colombian Government) amounted to $23.5 million in 2Q2023 compared
to $64.0 million in 2Q2022, in line with lower oil prices.
Consolidated operating costs increased to $32.5 million in
2Q2023 compared to $27.4 million in 2Q2022.
The breakdown of operating costs is as follows:
- Colombia: Total operating costs increased to $27.0 million in
2Q2023 from $21.4 million in 2Q2022, mainly due to higher operating
costs per boe, partially offset by lower deliveries (deliveries in
Colombia decreased by 10%). Increased operating costs per boe in
2Q2023 mainly reflected higher energy costs due to a drought
affecting the energy matrix in Colombia with lower availability of
hydroelectric power.
- Chile: Total operating costs decreased to $1.8 million in
2Q2023 from $4.4 million in 2Q2022, in line with lower operating
costs per boe and lower oil and gas deliveries (deliveries in Chile
decreased by 29%).
- Brazil: Total operating costs were flat at $0.8 million in
2Q2023 and 2Q2022, due to lower gas deliveries from the Manati
field (deliveries in Brazil decreased by 27%), offset by higher
operating costs per boe.
- Ecuador: Total operating costs increased to $2.8 million in
2Q2023 from $0.9 million in 2Q2022, mainly due to higher deliveries
(deliveries in Ecuador increased by 129%) and higher operating
costs per boe.
Consolidated purchased crude oil charges amounted to $1.0
million in 2Q2023, 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 $2.2 million in 2Q2023 compared to $1.2 million in 2Q2022.
Geological & Geophysical Expenses: Consolidated
G&G expenses decreased to $2.5 million in 2Q2023 compared to
$3.0 million in 2Q2022.
Administrative Expenses: Consolidated G&A increased
to $11.3 million in 2Q2023 compared to $10.8 million in 2Q2022.
Adjusted EBITDA: Consolidated adjusted EBITDA6 decreased
by 28% to $103.9 in 2Q2023 (on a per boe basis, adjusted EBITDA
decreased to $33.9 per boe in 2Q2023 from $41.9 per boe in
2Q2022).
_________________________
6 See “Reconciliation of Adjusted EBITDA to Profit Before Income
Tax” included in this press release.
Adjusted EBITDA (In millions of
$)
2Q2023
2Q2022
Colombia
102.1
140.2
Chile
1.1
3.3
Brazil
2.4
3.9
Argentina
(0.5)
(2.1)
Ecuador
0.5
1.3
Corporate
(1.6)
(1.8)
Adjusted EBITDA
103.9
144.8
The table below shows production, volumes sold and the breakdown
of the most significant components of adjusted EBITDA for 2Q2023
and 2Q2022, on a per boe basis:
Adjusted EBITDA/boe
Colombia
Chile
Brazil
Ecuador
Totald
2Q23
2Q22
2Q23
2Q22
2Q23
2Q22
2Q23
2Q22
2Q23
2Q22
Production (boepd)
33,045
34,253
1,690
2,358
1,212
1,695
634
634
36,581
38,940
Inventories, RIK & Othera
(2,984)
(907)
(112)
(127)
(73)
(145)
81
(322)
(2,917)
(950)
Sales volume (boepd)
30,061
33,346
1,578
2,231
1,139
1,550
715
312
33,664
37,990
% Oil
99.7%
99.4%
7%
24%
2%
2%
100%
100%
92%
91%
($ per boe)
Realized oil price
64.4
98.5
46.0
106.5
83.5
111.8
62.0
108.8
64.3
98.7
Realized gas pricec
21.1
27.7
22.9
22.3
40.1
39.6
-
-
30.0
30.3
Earn-out
(2.3)
(3.0)
-
-
-
-
-
-
(2.2)
(2.9)
Combined Price
61.9
95.0
24.5
42.4
40.8
40.7
62.0
108.8
59.5
90.0
Realized commodity risk management
contracts
-
(12.1)
-
-
-
-
-
-
-
(10.6)
Operating costse
(10.8)
(7.5)
(14.2)
(21.6)
(10.1)
(7.9)
(43.3)
(32.7)
(11.6)
(8.5)
Royalties & economic rights
(9.7)
(27.0)
(0.6)
(1.8)
(3.2)
(3.1)
-
0.0
(8.8)
(23.9)
Purchased crude oilb
-
-
-
-
-
-
-
-
(0.3)
(1.3)
Selling & other expenses
(0.7)
(0.2)
(0.4)
(0.5)
-
(0.0)
(5.7)
(14.9)
(0.7)
(0.3)
Operating Netback/boe
40.7
48.2
9.3
18.6
27.6
29.7
13.0
61.2
38.1
45.4
G&A, G&G & other
(4.2)
(3.5)
Adjusted EBITDA/boe
33.9
41.9
a)
RIK (Royalties in kind) & Other:
Includes royalties and other economic rights paid in kind in
Colombia for approximately 2,952 bopd and 1,273 bopd in 2Q2023 and
2Q2022, respectively. No royalties were paid in kind in Chile,
Brazil or Ecuador. Production in Ecuador is reported before the
Government’s production share.
b)
Reported in the Corporate business
segment.
c)
Conversion rate of $mcf/$boe=1/6.
d)
Includes amounts recorded in the Corporate
business segment.
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 $29.4 million in 2Q2023 compared to $23.2 million in 2Q2022.
Write-off of unsuccessful exploration efforts: The
consolidated write-off of unsuccessful exploration efforts amounted
to $1.6 million in 2Q2023 compared to zero in 2Q2022. Amounts
recorded in 2Q2023 correspond mainly to exploration costs incurred
in previous years in the Coati block (GeoPark operated, 100% WI) in
Colombia.
Other Income (Expenses): Other operating expenses showed
a $5.1 million loss in 2Q2023, compared to a $0.9 million gain in
2Q2022.
CONSOLIDATED NON-OPERATING RESULTS AND PROFIT FOR THE
PERIOD
Financial Expenses: Net financial expenses decreased to
$9.5 million in 2Q2023 from $15.5 million in 2Q2022, mainly
resulting from a sustained deleveraging process that started in
April 2021 and continued in 2022.
Foreign Exchange: Net foreign exchange losses amounted to
$9.6 million in 2Q2023 compared to a $7.1 million gain in 2Q2022.
Foreign exchange losses in 2Q2023 reflected the revaluation of the
local currency in Colombia (the Colombian Peso revalued by
approximately 9% from March 31 to June 30, 2023).
Income Tax: Income taxes totaled $16.7 million in 2Q2023
compared to $67.1 million in 2Q2022, mainly resulting from lower
profits before income taxes plus the effect of fluctuations of the
Colombian peso on deferred income taxes.
Net Profit: Net profit decreased to $33.8 million in
2Q2023 compared to $67.9 million in 2Q2022.
BALANCE SHEET
Cash and Cash Equivalents: Cash and cash equivalents
totaled $86.4 million as of June 30, 2023, compared to $128.8
million as of December 31, 2022.
This net increase is explained by the following:
Cash and Cash Equivalents (In millions of
$)
1H2023
Cash flows from operating activities
97.7
Cash flows used in investing
activities
(88.3)
Cash flows used in financing
activities
(52.4)
Currency Translation
0.6
Net increase in cash & cash
equivalents
(42.4)
Cash flows from operating activities of $97.7 million in 2Q2023
included income tax payments of $94.2 million.
Cash flows used in financing activities mainly included $13.7
million related to interest payments, $18.7 million related to
executing the Company’s share buyback program and $15.0 million
related to dividend payments.
Financial Debt: Total financial debt net of issuance cost
was $499.3 million, all corresponding to the 2027 Notes. Short-term
financial debt was $12.5 million as of June 30, 2023, and
corresponds to interest accrued on the 2027 Notes.
Financial Debt (In millions of
$)
June 30, 2023
December 31, 2022
2027 Notes
499.3
497.6
Financial debt
499.3
497.6
For further details, please refer to Note 12 of GeoPark’s
consolidated financial statements as of June 30, 2023, available on
the Company’s website.
FINANCIAL RATIOSa
(In millions of $)
Period-end
Financial Debt
Cash and Cash
Equivalents
Net Debt
Net Debt/LTM Adj.
EBITDA
LTM Interest Coverage
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
2Q2023
499.3
86.4
412.9
0.8x
15.4x
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
3Q2023
Zero cost collar
Brent
9,000
70.0
94.7
4Q2023
Zero cost collar
Brent
8,000
69.4
90.9
1Q2024
Zero cost collar
Brent
6,500
65.0
90.4
2Q2024
Zero cost collar
Brent
2,500
65.0
94.7
SELECTED INFORMATION BY BUSINESS SEGMENT
Colombia
(In millions of $)
2Q2023
2Q2022
Sale of crude oil
169.2
287.9
Sale of gas
0.2
0.5
Revenue
169.4
288.4
Production and operating costsa
(53.8)
(103.7)
Adjusted EBITDA
102.1
140.2
Capital expenditure
37.9
23.7
Chile
(In millions of $)
2Q2023
2Q2022
Sale of crude oil
0.5
5.2
Sale of gas
3.1
3.4
Revenue
3.5
8.6
Production and operating costsa
(1.9)
(4.8)
Adjusted EBITDA
1.1
3.3
Capital expenditure
0.0
7.6
Brazil
(In millions of $)
2Q2023
2Q2022
Sale of crude oil
0.1
0.3
Sale of gas
4.1
5.5
Revenue
4.2
5.8
Production and operating costsa
(1.2)
(1.2)
Adjusted EBITDA
2.4
3.9
Capital expenditure
0.0
0.0
Ecuador
(In millions of $)
2Q2023
2Q2022
Sale of crude oil
4.0
3.1
Sale of gas
0.0
0.0
Revenue
4.0
3.1
Production and operating costsa
(2.8)
(0.9)
Adjusted EBITDA
0.5
1.3
Capital expenditure
5.5
1.2
a) Production and operating costs =
Operating costs + Royalties + Share-based payments + Purchased
crude oil.
CONSOLIDATED STATEMENT OF
INCOME
(QUARTERLY INFORMATION
UNAUDITED)
(In millions of $)
2Q2023
2Q2022
1H2023
1H2022
REVENUE
Sale of crude oil
173.8
296.4
348.9
535.4
Sale of purchased crude oil
1.2
5.4
1.9
5.4
Sale of gas
7.3
9.4
13.9
19.6
TOTAL REVENUE
182.3
311.2
364.8
560.4
Commodity risk management contracts
0.0
(15.5)
0.0
(93.7)
Production and operating costs
(60.7)
(115.1)
(113.2)
(195.7)
Geological and geophysical expenses
(G&G)
(2.5)
(3.0)
(5.1)
(5.7)
Administrative expenses (G&A)
(11.3)
(10.8)
(20.7)
(20.8)
Selling expenses
(2.2)
(1.2)
(4.6)
(3.2)
Depreciation
(29.4)
(23.2)
(56.6)
(44.8)
Write-off of unsuccessful exploration
efforts
(1.6)
-
(12.2)
-
Other
(5.1)
0.9
(6.4)
5.4
OPERATING PROFIT
69.5
143.4
146.1
202.0
Financial costs, net
(9.5)
(15.5)
(19.3)
(30.6)
Foreign exchange (loss) gain
(9.6)
7.1
(13.0)
0.5
PROFIT BEFORE INCOME TAX
50.4
135.0
113.8
171.8
Income tax
(16.7)
(67.1)
(53.8)
(73.0)
PROFIT FOR THE PERIOD
33.8
67.9
60.0
98.9
SUMMARIZED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
(QUARTERLY INFORMATION
UNAUDITED)
(In millions of $)
Jun '23
Dec '22
Non-Current Assets
Property, plant and equipment
686.0
666.8
Other non-current assets
70.7
69.0
Total Non-Current Assets
756.7
735.8
Current Assets
Inventories
18.7
14.4
Trade receivables
56.1
71.8
Other current assets
25.3
23.1
Cash at bank and in hand
86.4
128.8
Total Current Assets
186.5
238.1
Total Assets
943.2
974.0
Total Equity
147.3
115.6
Non-Current Liabilities
Borrowings
486.8
485.1
Other non-current liabilities
137.2
144.1
Total Non-Current Liabilities
623.9
629.2
Current Liabilities
Borrowings
12.5
12.5
Other current liabilities
159.5
216.6
Total Current Liabilities
172.0
229.2
Total Liabilities
795.9
858.4
Total Liabilities and Equity
943.2
974.0
SUMMARIZED CONSOLIDATED STATEMENT OF CASH FLOW
(QUARTERLY INFORMATION
UNAUDITED)
(In millions of $)
2Q2023
2Q2022
1H2023
1H2022
Cash flow from operating activities
5.8
123.2
97.7
212.9
Cash flow used in investing activities
(43.4)
(32.4)
(88.3)
(57.4)
Cash flow used in financing activities
(21.7)
(82.0)
(52.4)
(134.9)
RECONCILIATION OF ADJUSTED EBITDA TO
PROFIT BEFORE INCOME TAX
1H2023 (In millions of $)
Colombia
Chile
Brazil
Ecuador
Other(a)
Total
Adjusted EBITDA
215.6
2.6
4.0
1.4
(4.8)
218.8
Depreciation
(47.3)
(5.5)
(1.2)
(2.5)
(0.0)
(56.6)
Write-off of unsuccessful exploration
efforts
(12.2)
-
-
-
-
(12.2)
Share based payment
(0.5)
(0.0)
(0.0)
(0.0)
(2.8)
(3.4)
Lease Accounting - IFRS 16
4.1
0.5
0.5
0.0
-
5.1
Others
(0.7)
(2.1)
(0.2)
(2.0)
(0.8)
(5.7)
OPERATING PROFIT (LOSS)
159.0
(4.6)
3.1
(3.1)
(8.4)
146.1
Financial costs, net
(19.3)
Foreign exchange charges, net
(13.0)
PROFIT BEFORE INCOME TAX
113.8
1H2022 (In millions of $)
Colombia
Chile
Brazil
Ecuador
Other(a)
Total
Adjusted EBITDA
262.0
5.4
7.5
0.9
(8.4)
267.4
Depreciation
(35.9)
(7.2)
(1.5)
(0.0)
(0.2)
(44.8)
Unrealized commodity risk management
contracts
(26.5)
-
-
-
-
(26.5)
Share based payment
(0.9)
(0.1)
(0.0)
(0.0)
(2.4)
(3.4)
Lease Accounting - IFRS 16
2.6
0.6
0.7
0.0
0.1
4.0
Others
1.5
0.1
(0.1)
(0.0)
3.9
5.4
OPERATING PROFIT (LOSS)
202.7
(1.1)
6.5
0.9
(7.0)
202.0
Financial costs, net
(30.6)
Foreign exchange charges, net
0.5
PROFIT BEFORE INCOME TAX
171.8
(a) Includes Argentina and Corporate.
LAST TWELVE-MONTH RETURN ON AVERAGE CAPITAL EMPLOYED
(In millions of $)
June 2023
June 2022
Last twelve-month Operating Income
373.2
Total Assets – Period-end
943.2
967.3
Current Liabilities – Period-end
(172.0)
(270.5)
Capital Employed – Period-end
771.2
696.8
Average Capital Employed
734.0
-
Average Return on Average Capital
Employed
51%
RECENT EVENTS
Blockades in the Llanos 34 Block in July 2023
Localized blockades in the Llanos basin affected production and
operations in the Llanos 34 block during July 2023, and the block’s
average production in July reached 53,246 bopd gross (compared to
55,307 bopd gross in 2Q2023). As of the date of this release,
blockades have been lifted and production and operations are
gradually normalizing, with the Llanos 34 block currently producing
approximately 55,000 bopd gross.
CONFERENCE CALL INFORMATION
Reporting Date and Conference Call for 2Q2023 Financial
Results
In conjunction with the 2Q2023 results press release, GeoPark
management will host a conference call on August 10, 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/893129503
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: 931988
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, production guidance, shareholder
returns, 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 and 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, 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.
Net Debt: Net debt is defined as current and non-current
borrowings less cash and cash equivalents.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230808031157/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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