Another Active Year Focused on Growth,
Low-risk Development, Exploration Targets, and Sustained
Shareholder Returns
GeoPark Limited (“GeoPark” or the “Company”) (NYSE: GPRK), a
leading independent Latin American oil and gas explorer, operator,
and consolidator, today announced its work program and shareholder
return framework for 2024. All figures are expressed in US
Dollars.
A conference call to discuss third quarter 2023 financial
results and the 2024 work program and shareholder return framework
will be held on November 9, 2023, at 10:00 a.m. Eastern Standard
Time.
2024 Work Program Summary ($80-90/bbl Brent)
Production: 37,000-40,000 boepd average production
(assuming no production from the 2024 exploration drilling
program), 1-10%1 production growth versus 2023E.
The 2024 expected average production reflects growing production
in Colombia and Ecuador (3-11%)2, relatively flat production in
Brazil and declining production in Chile.
Drilling plan: 35-45 gross wells, including 5-10 gross
exploration wells and 30-35 appraisal and development wells.
Capital expenditures program: $150-200 million, with
approximately 20-30% to be allocated to exploration and 70-80% to
be allocated to the development and delineation of high-potential,
short-cycle and near-field projects in the Llanos basin in Colombia
and in the Oriente basin in Ecuador.
Assuming $80-90 per bbl Brent base case, GeoPark expects to
generate an Adjusted EBITDA3 of $420-550 million4 in 2024, or 2-3
times total capital expenditures.
2024 Shareholder Returns
GeoPark’s high-quality asset base and low-breakeven production
have allowed the Company to fully fund its work programs since 2015
while maintaining a strong balance sheet and returning value to
shareholders.
Since January 2021 to date, the Company has reduced gross debt
by $275 million and returned $125 million in direct shareholder
distributions through dividends and buybacks.
In 2023 GeoPark is returning over $50 million on capital returns
to shareholders, including the announced dividend of $7.5 million
to be paid in December, thereby exceeding the target of returning
40-50% of free cash flow to shareholders.
In 2024, GeoPark will continue targeting to return 40-50% of its
free cash flow to shareholders through a combination of base
dividends and discretionary buybacks and/or variable dividends.
The Company’s future shareholder returns, including but not
limited to dividends and buybacks, and the level thereof is
uncertain. Any decision to pay dividends or buyback shares will be
subject to the discretion of the Board of Directors and may depend
on a variety of factors, including, without limitation the
Company's business performance, financial condition, financial
requirements, growth plans, expected capital requirements and other
conditions existing at such future time.
_____________________________
1 Calculated using the mid-point of the
2023E average production of 36,000-37,000 boepd and the 2024E
expected low and high production ranges of 37,000-40,000 boepd.
2 Calculated using the 2024E expected low and high production
ranges in Colombia and Ecuador.
3 The Company is unable to present a
quantitative reconciliation of the 2024 Adjusted EBITDA which is a
forward-looking non-GAAP measure, because the Company cannot
reliably predict certain of the 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.
4 Assuming a $4-5 Vasconia/Brent
differential.
2024 Free Cash Flow & Shareholder Returns
The table below shows the estimated Adjusted EBITDA, free cash
flow and shareholder returns using the base work program targeting
production of 37,000-40,000 boepd and capital expenditures of
$150-200 million:
(in $ million)
(Base Case)
$80-90 per bbl
Adjusted EBITDA3
$420-550
Capital Expenditures
$150-200
Mandatory Debt Service Payments5
$27-30
Cash taxes6
$145-160
Free Cash Flow
$90-160
Shareholder Returns
Dividends & Buybacks
$40-80
Capital Return Yield7 (in %)
7-14%
Adjusted EBITDA Sensitivities: assuming production of
37,000-40,000 boepd, Adjusted EBITDA would be as follows:
- At $70 per bbl Brent: Adjusted EBITDA of $350-390 million
- At $100 per bbl Brent: Adjusted EBITDA of $550-620 million
_____________________________
5 Excluding potential and voluntary
prepayments on existing financial debt.
6 Cash taxes include current taxes plus
withholding and self-witholding taxes. 2024E cash taxes are subject
to change depending on the actual 2023 current tax provision that
will be paid in 2024.
7 Calculated as expected shareholder
returns (dividends and buybacks), divided by GeoPark’s average
market capitalization from October 1 to October 31, 2023.
Production Breakdown
The 2024 production guidance of 37,000-40,000 boepd (assuming no
production from the 2024 exploration drilling program) includes
33,000-35,500 boepd in Colombia, 1,600-2,000 boepd in Ecuador,
1,000-1,300 boepd in Chile, and 1,000-1,200 boepd in Brazil. The
production mix is expected to be ~95% oil and ~5% natural gas.
Capital Expenditures and Activity Breakdown
- Colombia - $140-170 million: Focus on continuing
development of core Llanos 34 Block (GeoPark operated, 45% WI),
accelerating development, delineation and exploration activities in
high-potential blocks near Llanos 34 plus 3D seismic and other
pre-drilling activities to continue adding new plays, leads and
prospects. The activity breakdown in Colombia includes:
- Llanos 34 Block: 18-20 gross development and injector
wells and one exploration well plus infrastructure and facilities
to continue optimizing operations
- CPO-5 Block (GeoPark non-operated, 30% WI): the
operator, ONGC, plans to drill 4-5 gross wells (3-4 development and
appraisal wells and 1-2 exploration wells), acquire 3D seismic and
other infrastructure and facilities
- Llanos 87/Llanos 123 Blocks (GeoPark operated, 50% WI):
3-9 gross appraisal wells and one exploration well (subject to
joint venture approval) with a focus on continuing to delineate the
Toritos and Zorzal Este oil plays
- Put 8 Block (GeoPark operated, 50% WI): 1-2 gross
exploration wells
- Seismic acquisition and reprocessing and other preoperational
activities in the Llanos and Putumayo basins
- Ecuador - $10-30 million: 2-7 gross appraisal wells and
one exploration well plus facilities, environmental and other
optimization projects with focus on the Perico Block (GeoPark
non-operated, 50% WI) and to a lesser extent in the Espejo Block
(GeoPark operated, 50% WI).
Certain activities included in the 2024 work program are still
subject to obtaining required joint venture, environmental, social
or other regulatory approvals. In the blocks that GeoPark does not
operate, activities are subject to timely execution by the
operator.
Work Program Flexible at Different Oil Price
Scenarios
GeoPark’s 2024 work program can be rapidly adapted to different
oil price scenarios, illustrating the high quality of the Company’s
assets and strong financial performance even in volatile oil price
environments.
- Above $90/bbl Brent oil price: Capital expenditures can
be expanded to $200-250 million by adding incremental development
and exploration projects
- Below $70/bbl Brent oil price: Capital expenditures can
be reduced to $100-150 million by focusing on the lowest-risk
projects with shorter payback periods
GeoPark has oil hedges in place providing price risk protection
over the next 12 months. Please refer to Note 4 of GeoPark’s
consolidated financial statements for the period ended September
30, 2023 for further details on volumes, type of contracts, and
average prices.
GeoPark monitors market conditions on a continuous basis and may
enter into additional commodity risk management contracts to secure
minimum oil prices for its 2024 production and beyond.
CONFERENCE CALL INFORMATION
Reporting Date, Conference Call & Webcast for 3Q2023
financial results, and 2024 Work Program and Shareholder Return
Framework
In conjunction with the 3Q2023 results press release, GeoPark
management will host a conference call on November 9, 2023, at
10:00 am (Eastern Standard Time) to discuss the 3Q2023 financial
results and the Work Program and Shareholder Return Framework for
2024.
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/344411932
Interested parties may participate in the conference call by
dialing the numbers provided below:
United States Participants: +1
(646)-904-5544
International Participants: +1
(833)-470-1428
Passcode: 865697
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.
RECONCILIATION OF ADJUSTED EBITDA AND FREE CASH FLOW
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.
Free Cash Flow is defined as Adjusted EBITDA less capital
expenditures, mandatory interest payments and cash tax
payments.
The Company is unable to present a quantitative reconciliation
of the 2024 Adjusted EBITDA which is a forward-looking non-GAAP
measure, because the Company cannot reliably predict certain of the
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 2024 free cash flow forecast.
GLOSSARY
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 sales volumes
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
reserves additions before changes in Future Development Capital
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
NPV10
Present value of estimated future
oil and gas revenues, net of estimated direct expenses, discounted
at an annual rate of 10%
Operating netback
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 and
other non-recurring events. Operating Netback is equivalent to
Adjusted EBITDA net of cash expenses included in Administrative,
Geological and Geophysical and Other operating costs
PRMS
Petroleum Resources Management
System
SPE
Society of Petroleum
Engineers
WI
Working Interest
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.
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 expected oil and gas production,
drilling plan, operational and financial performance, including
Adjusted EBITDA, expected free cash flow and shareholder returns,
dividends and buyback forecasts, increasing shareholder returns,
timing, method and amount of share repurchases, oil prices,
commodity risk management contracts, capital return yield, and our
capital expenditures plan. 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.
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231108177841/en/
For further information, please contact:
INVESTORS:
Stacy Steimel ssteimel@geo-park.com Shareholder Value Director
T: +562 2242 9600
Miguel Bello mbello@geo-park.com Market Access Director T: +562
2242 9600
Diego Gully dgully@geo-park.com Investor Relations Director T:
+55 21 9636 9658
MEDIA:
Communications Department communications@geo-park.com
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