Operational Success Plus Capital Investment
Efficiency Delivers Record Financial Performance
Added New High Value Acreage and Blocks to
Strongest Regional Asset Platform
GeoPark Limited (“GeoPark” or the “Company”) (NYSE: GPRK), a
leading independent Latin American oil and gas explorer, operator
and consolidator with operations and growth platforms in Colombia,
Peru, Argentina, Brazil, Chile and Ecuador reports its consolidated
financial results for the three-month period ended June 30, 2019
(“Second Quarter” or “2Q2019”). A conference call to discuss 2Q2019
financial results will be held on August 8, 2019 at 10:00 am
Eastern 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, 2019 and 2018,
available on the Company’s website.
SECOND QUARTER 2019 HIGHLIGHTS
More Oil and Gas
- Consolidated oil and gas production up 9% to 39,201 boepd
- Oil production increased by 13% to 34,261 bopd
- Colombian oil production increased by 13% to 32,021 bopd
- Flowline in place and operational, connecting the Colombian
Llanos 34 block (GeoPark operated, 45% WI) to regional pipeline
system
Better Bottom Line
- Revenue increased by 6% to $169.5 million
- Lower transportation costs in Colombia improved Adjusted
EBITDA1 by $2 per bbl
- Consolidated operating costs reduced by 5% to $8.1 per boe and
Colombian operating costs reduced by 5% to $5.4 per boe
- Adjusted EBITDA increased by 18% to $98.7 million, or $29.4 per
boe, despite 9% lower Brent oil prices
- Net Profit increased by 5.7x to $31.5 million compared to $5.5
million
Industry-Leading Capital Investment Efficiency
- Every $1 invested in Capital Expenditures yielded $3.4 in
Adjusted EBITDA
- 1H2019 Adjusted EBITDA of $191.0 million more than covered the
full-year 2019 work program of $130-145 million
- Return on capital employed of 43%2 in the last twelve
months
- Net debt to Adjusted EBITDA ratio of 1.0x
Bigger, Deeper and Longer Project Inventory
- Colombia: Acquired three high-potential, low-risk, low-cost
exploration blocks in the Llanos basin in partnership with
Ecopetrol/Hocol, adjacent to prime acreage, adding 86-155 million
barrels3 of gross unrisked exploration resources
- Ecuador: Signed final contracts for the Espejo (GeoPark
operated, 50% WI) and Perico (GeoPark non-operated, 50% WI) blocks
in the Oriente basin
Performance Plus Value Back to Shareholders
- Invested $53 million in the share buyback program initiated in
December 2018, buying 3,300,000 shares (or 5% of outstanding
shares) while executing self-funded growth work programs
James F. Park, Chief Executive Officer of GeoPark, said: “Thanks
to the GeoPark team for continuing to execute and deliver. Our
quarterly metrics continue to improve - adding to an impressive
first half of the year that puts us on target for another full year
of growth and to extend our unique 16-year performance track record
of finding and producing oil and gas. Our underlying economics also
set us apart. We are self-funded from our own cash flow generation,
our low operating costs allow us to weather any oil price
volatility, and the low capital investment required to maintain and
grow our production beats most of our Latin American and North
American peers. Our excess cash flow also enables us to provide
more value directly to our shareholders by investing in and buying
back our own shares. Importantly, we continue to build out our rich
project inventory with strategic high-value, low-cost acquisitions
in targeted core hydrocarbon basins, giving us plenty of running
room - in the short, medium and long-term. In recognition of our
capabilities, we were honored to be chosen by the Colombian state
oil company as its operating partner in Colombia’s principal basin
in our successful joint bid round participation.”
CONSOLIDATED OPERATING PERFORMANCE
Key performance indicators:
Key Indicators
2Q2019
1Q2019
2Q2018
1H2019
1H2018
Oil productiona (bopd)
34,261
34,358
30,249
34,309
28,805
Gas production (mcfpd)
29,642
31,194
33,726
30,413
31,428
Average net production (boepd)
39,201
39,557
35,870
39,378
34,043
Brent oil price ($ per bbl)
68.4
63.7
74.9
66.2
71.1
Combined realized price ($ per boe)
50.5
44.6
51.7
47.5
48.4
⁻ Oil ($ per bbl)
56.0
48.7
57.2
52.3
53.1
⁻ Gas ($ per mcf)
4.5
5.0
5.1
4.7
5.3
Sale of crude oil ($ million)
158.8
137.6
145.7
296.4
256.7
Sale of gas ($ million)
10.7
12.5
13.7
23.3
26.5
Revenue ($ million)
169.5
150.1
159.3
319.6
283.2
Commodity risk management contracts ($
million)
0.8
-21.3
-11.4
-20.5
-15.2
Production & operating costsb ($
million)
-46.0
-38.9
-44.8
-84.9
-78.8
G&G, G&A and Selling expenses ($
million)
-22.9
-19.6
-17.5
-42.5
-32.7
Adjusted EBITDA ($ million)
98.7
92.3
83.3
191.0
146.6
Adjusted EBITDA ($ per boe)
29.4
27.4
27.0
28.4
25.0
Operating Netback ($ per boe)
35.2
32.3
32.5
33.4
30.6
Net Profit ($ million)
31.5
19.7
5.5
51.2
30.4
Capital expenditures ($ million)
28.8
37.3
36.3
66.1
57.7
Argentina acquisition ($ million)
-
-
-3.2c
-
48.8
Cash and cash equivalents ($ million)
68.9
146.6
105.2
68.9
105.2
Short-term financial debt ($ million)
18.0
11.4
7.6
18.0
7.6
Long-term financial debt ($ million)
424.6
429.2
418.9
424.6
418.9
Net debt ($ million)
373.7
294.0
321.3
373.7
321.3
a)
Includes government royalties paid in kind
in Colombia for approximately 1,196, 1,295 and 898 bopd in 2Q2019,
1Q2019 and 2Q2018 respectively. No royalties were paid in kind in
Chile, Brazil or Argentina.
b)
Production and operating costs include
operating costs, royalties paid in cash and share based
payments.
c)
Price adjustment that corresponds to net
cash flows generated by the assets acquired since the execution of
the asset purchase agreement, on December 18, 2017, until the date
of closing, on March 27, 2018.
Production: Oil and gas production grew by 9% to 39,201
boepd in 2Q2019 due to increased production in Colombia and Chile,
partially offset by lower production in Brazil and Argentina. Oil
represented 87% of total reported production compared to 84% in
2Q2018.
In June 2019, GeoPark completed the divestiture of the La Cuerva
and Yamu blocks, allowing the Company to reallocate resources to
its core Llanos 34 block and to the recently awarded exploration
acreage in the Llanos basin. The La Cuerva and Yamu blocks produced
approximately 640 boepd during 2Q2019 that were included as part of
GeoPark’s consolidated oil and gas production.
For further details, please refer to the 2Q2019 Operational
Update published on July 15, 2019.
Reference and Realized Oil Prices: Brent oil prices
averaged $68.4 per bbl in 2Q2019, 9% less than in 2Q2018. The
realized oil price, in contrast, was $55.6 per bbl, just 1% lower
than in 2Q2018. This improvement reflected both a lower Vasconia
discount, but more importantly, significant improvements in
commercial and transportation discounts beginning in January 2019.
Please also refer to selling expenses section below.
The tables below provide a breakdown of Brent oil and net
realized oil prices in Colombia, Chile and Argentina in 2Q2019 and
2Q2018:
2Q2019 - Realized Oil Prices
($ per bbl)
Colombia
Chile
Argentina
Brent oil price
68.4
68.4
68.4
Vasconia differential
(1.8)
-
-
Commercial and transportation
discounts
(11.0)
(8.3)
-
Other
-
-
(7.9)
Realized oil price
55.6
60.1
60.5
Weight on oil sales mix
94%
1%
5%
2Q2018 - Realized Oil Prices
($ per bbl)
Colombia
Chile
Argentina
Brent oil price
74.9
74.9
74.9
Vasconia differential
(4.1)
-
-
Commercial and transportation
discounts
(14.5)
(9.9)
Other
-
-
(8.2)
Realized oil price
56.3
65.0
66.7
Weight on oil sales mix
91%
3%
6%
Revenue: Consolidated revenues increased by 6% to $169.5
million in 2Q2019 versus $159.3 million in 2Q2018. Higher
deliveries and lower discounts led to increased revenues.
Sales of crude oil: Consolidated
oil revenues increased by 9% to $158.8 million in 2Q2019, driven by
a 12% increase in oil deliveries, partially offset by lower
realized oil prices. Oil revenues were 94% of total revenues
compared to 91% in 2Q2018.
- Colombia: In 2Q2019, oil revenues increased by 14% to $147.2
million following higher oil deliveries and lower realized oil
prices. Oil deliveries increased by 16% to 30,381 bopd. Realized
prices decreased by less than 1% to $55.6 despite 9% lower Brent
oil prices, resulting from a lower Vasconia differential and
improved commercial and transportation discounts. Colombian
earn-out payments increased to $6.5 million in 2Q2019, compared to
$5.2 million in 2Q2018, in line with higher oil revenues.
- Chile: In 2Q2019, oil revenues decreased by 49% to $2.5
million, due to lower volumes sold and lower realized oil prices.
Oil deliveries decreased by 45% to 454 bopd due to the natural
decline of the fields whereas realized oil prices decreased by 7%
to $60.1 per bbl, in line with lower Brent prices.
- Argentina: In 2Q2019, oil revenues decreased by 20% to $8.8
million, due to lower volumes sold and lower realized oil prices.
Oil deliveries decreased by 12% to 1,605 bopd due to the natural
decline of the fields whereas realized oil prices declined by 9% to
$60.5 per bbl, in line with lower Brent prices.
Sales of gas: Consolidated gas
revenues decreased by 21% to $10.7 million in 2Q2019 compared to
$13.7 million in 2Q2018. Gas revenues declined due to a 12%
decrease in gas prices and 11% lower gas deliveries.
- Chile: In 2Q2019, gas revenues increased by 17% to $5.2 million
reflecting higher gas deliveries, partially offset by lower gas
prices. The Jauke gas field contributed to increased gas deliveries
of 39% to 12,747 mcfpd (2,124 boepd). Gas prices were 16% lower, or
$4.4 per mcf ($26.6 per boe) in 2Q2019 due to lower methanol
prices.
- Brazil: In 2Q2019, gas revenues decreased by 44% to $4.0
million, due to both lower deliveries and gas prices. Planned
maintenance works in the Manati field (GeoPark non-operated, 10%
WI) and higher hydroelectric power availability reduced gas
deliveries by 42% to 9,125 mcfpd (1,521 boepd). Gas prices
decreased by 3% to $4.8 per mcf ($28.5 per boe), due to the impact
of the local currency devaluation of 8%, which was partially offset
by the annual price inflation adjustment of approximately 6%,
effective January 2019.
- Argentina: In 2Q2019, gas revenues decreased by 38% to $1.1
million from $1.8 million, resulting from both lower deliveries and
gas prices. Deliveries decreased by 5% to 3,673 mcfpd (612 boepd)
while gas prices fell by 35% to $3.4 per mcf ($20.4 per boe) due to
lower gas prices in the local market.
Commodity Risk Management Contracts: Consolidated
commodity risk management contracts contributed a $0.8 million gain
in 2Q2019 compared to an $11.4 million loss in 2Q2018. Commodity
risk management contracts have two different components, a realized
and an unrealized portion.
The realized gain of $0.7 million in 2Q2019 compared to a $13.3
million loss in 2Q2018 reflected Brent oil prices and commodity
risk management contracts effective during the respective
periods.
The unrealized gains were $0.1 million in 2Q2019 and $2.0
million in 2Q2018. Unrealized gains during 2Q2019 resulted from a
slight shift in the forward Brent oil price curve compared to March
2019.
The Company uses risk management contracts to minimize the
impact of oil price fluctuations on its work program. (Refer to the
“Commodity Risk Oil Management Contracts” section below for details
of the contracts in place.)
Production and Operating Costs4: Consolidated operating
costs per boe decreased by 5% to $8.1 per boe from $8.5 per boe.
Overall, consolidated production and operating costs increased by
3% to $46.0 million in 2Q2019 compared to $44.8 million in 2Q2018,
as a result of a 9% increase in deliveries, but benefited from
lower operating costs per boe.
The table below provides a breakdown of production and operating
costs in 2Q2019 and 2Q2018:
(In millions of $)
2Q2019
2Q2018
Operating costs
26.5
26.1
Royalties
19.5
18.5
Shared based payments
0.0
0.2
Production and operating costs
46.0
44.8
Consolidated operating costs increased by 1% or $0.4 million to
$26.5 million in 2Q2019 compared to $26.1 million in 2Q2018,
despite a 9% increase in deliveries. Consolidated operating costs
per boe decreased by 5% to $8.1 in 2Q2019 compared to $8.5 in
2Q2018.
The breakdown of operating costs is as follows:
- Colombia: Operating costs per boe decreased by 5% to $5.4 in
2Q2019 compared to $5.7 in 2Q2018 mainly due to the impact of fixed
costs over 16% higher deliveries. Total operating costs increased
by 8% to $14.7 million.
- Chile: Operating costs per boe decreased by 12% to $20.0 in
2Q2019 compared to $22.7 in 2Q2018, mainly due to the impact of
fixed costs over 9% higher deliveries and lower well intervention
activities. Total operating costs decreased by 4% to $4.7 million
in 2Q2019 from $4.9 million in 2Q2018.
- Brazil: Operating costs per boe decreased by 18% to $5.3 in
2Q2019 compared to $6.5 in 2Q2018, mainly due to the adoption of
IFRS 16 for approximately $0.5 million (or $3.7 per boe). IFRS 16
changes the treatment and valuation of operating leases, that are
now recorded in depreciation charges, which were originally treated
as operating costs. Total operating costs decreased by 53% to $0.7
million in 2Q2019 from $1.6 million in 2Q2018.
- Argentina: Operating costs per boe increased to $31.2 in 2Q2019
compared to $26.9 in 2Q2018, mainly due to the impact of fixed
costs over 10% lower deliveries. Total operating costs increased by
4% to $6.3 million in 2Q2019 from $6.0 million in 2Q2018.
Consolidated royalties increased by $1.0 million to $19.5
million in 2Q2019 compared to $18.5 million in 2Q2018, due to
higher revenues recorded in 2Q2019. Consolidated royalties were 12%
of revenue in 2Q2019 and 2Q2018.
Selling Expenses: Consolidated selling expenses increased
by $4.1 million to $5.3 million in 2Q2019 (of which $4.9 million,
or $1.8 per bbl, correspond to Colombia), compared to $1.2 million
in 2Q2018.
The $1.7 per bbl increase in selling expenses in Colombia
(reflecting the difference between $1.8 per bbl in 2Q2019 vs $0.1
per bbl in 2Q2018) reflects the difference in accounting for
different points of sale. Sales at the wellhead are deducted from
revenues whereas transportation costs for sales to other delivery
points are accounted for as selling expenses.
Commercial and transportation discounts in Colombia improved by
$3.5 per bbl during 2Q2019, positively impacting realized oil
prices. This was partially offset by $1.7 per bbl of higher selling
expenses, thus improving net margins by approximately $2 per
bbl.
Administrative Expenses5: Consolidated G&A
costs per boe remained slightly flat at $4.0 in 2Q2019 and 2Q2018.
Total consolidated G&A increased by 7% to $13.3 million in
2Q2019 compared to $12.5 million in 2Q2018 due to higher costs
related to new business efforts for the recently awarded blocks in
Colombia and Ecuador.
Geological & Geophysical Expenses6:
Consolidated G&G costs per boe remained flat at $1.3 in 2Q2019
and 2Q2018. Total consolidated G&G expenses increased by 11% to
$4.3 million in 2Q2019 compared to $3.9 million in 2Q2018 due to an
increased scale of operations and continuing investments to expand
GeoPark’s technical capabilities.
Adjusted EBITDA: Consolidated Adjusted EBITDA7 increased
by 18% to $98.7 million. The Adjusted EBITDA was $29.4 per boe in
2Q2019, compared to $83.3 million, or $27.0 per boe, in 2Q2018.
By country, 2Q2019 Adjusted EBITDA was:
- Colombia: Adjusted EBITDA of $100.1 million
- Chile: Adjusted EBITDA of $1.6 million
- Brazil: Adjusted EBITDA of $2.0 million
- Argentina: Adjusted EBITDA of $1.9 million
- Corporate and Peru: Adjusted EBITDA of negative $6.9
million
The table below shows production, volumes sold and the breakdown
of the most significant components of Adjusted EBITDA for 2Q2019
and 2Q2018, on a per country and per boe basis:
Adjusted EBITDA/boec
Colombia
Chile
Brazil
Argentina
Total
2Q19
2Q18
2Q19
2Q18
2Q19
2Q18
2Q19
2Q18
2Q19
2Q18
Production (boepd)
32,191
27,940
2,953
2,559
1,693
2,904
2,365
2,467
39,201
35,870
Stock variation /RIKa
(1,663)
(1,553)
(375)
(199)
(142)
(229)
(148)
3
(2,327)
(1,977)
Sales volume (boepd)
30,528
26,387
2,578
2,360
1,551
2,675
2,217
2,470
36,874
33,893
% Oil
99.5%
99.6%
18%
35%
1%
2%
72%
74%
88%
86%
($ per boe)
Realized oil price
55.6
56.3
60.1
65.0
83.0
79.9
60.5
66.7
56.0
57.2
Realized gas priceb
36.7
40.3
26.6
31.6
28.5
29.3
20.4
31.5
26.8
30.5
Earn-out
(2.4)
(2.2)
-
-
-
-
-
-
(1.9)
(2.0)
Combined Price
53.2
54.0
32.5
43.3
29.6
30.1
49.4
57.5
50.5
51.7
Realized commodity risk management
contracts
0.2
(5.6)
-
-
-
-
-
-
0.2
(4.3)
Operating costs
(5.4)
(5.7)
(20.0)
(22.7)
(8.9)
(6.5)
(31.7)
(26.9)
(8.1)
(8.5)
Royalties in cash
(6.3)
(6.6)
(1.2)
(1.8)
(2.4)
(2.9)
(7.0)
(6.8)
(5.8)
(6.0)
Selling & other expenses
(1.8)
(0.1)
(0.4)
(0.7)
-
-
(1.5)
(4.0)
(1.6)
(0.4)
Operating Netback/boe
40.0
36.2
11.0
18.1
18.4
20.7
9.2
19.9
35.2
32.5
G&A, G&G & other
(5.8)
(5.5)
Adjusted EBITDA/boe
29.4
27.0
a) RIK (Royalties in kind). Includes
royalties paid in kind in Colombia for approximately 1,196 and 898
bopd in 2Q2019 and 2Q2018 respectively. No royalties were paid in
kind in Chile, Brazil or Argentina.
b) Conversion rate of $mcf/$boe=1/6.
c) Adjusted EBITDA is calculated as if
IFRS 16 has not been adopted, so the figures included in the table
above for 2Q2019 figures are comparable to those of prior periods.
See the “Adoption of IFRS 16” and “Reconciliation of Adjusted
EBITDA to Profit (Loss) Before Income Tax” sections included in
this press release.
Depreciation8: Consolidated
depreciation charges increased slightly by 2% to $24.8 million in
2Q2019, compared to $24.3 million in 2Q2018. The 9% increase in
volumes delivered explained the change in addition to the adoption
of IFRS 16, partially offset by lower depreciation costs per
boe.
Write-off of Unsuccessful Exploration
Efforts: The consolidated write-off of unsuccessful exploration
efforts was $0.6 million in 2Q2019 compared to $9.2 million in
2Q2018. Comparative figures are related to non-commercial oil
accumulations found in Yaguasito exploration prospect in the Tiple
block in Colombia.
Other Income (Expenses): Other
operating income gained $0.7 million in 2Q2019, compared to a loss
of $0.1 million in 2Q2018.
CONSOLIDATED NON-OPERATING RESULTS AND PROFIT FOR THE
PERIOD
Financial Expenses: Net financial expenses increased
slightly to $9.1 million in 2Q2019, compared to $8.7 million in
2Q2018.
Foreign Exchange: Net foreign exchange charges were $2.4
million in 2Q2019 compared to $13.3 million in 2Q2018. The
comparative period was affected by the devaluation of the Brazilian
real and its impact on US dollar-denominated intercompany debt,
then cancelled in 4Q2018.
Income Tax: Income tax expenses were $33.6 million in
2Q2019 compared to $24.4 million in 2Q2018, in line with higher
taxable income in 2Q2019.
Profit: Profit of $31.5 million in 2Q2019 was 5.7x or
$26.0 million higher than the $5.5 million recorded in 2Q2018, and
reflected higher operating profits, adjusted by higher income
taxes.
BALANCE SHEET
Cash and Cash Equivalents: Cash and cash equivalents
totaled $68.9 million as of June 30, 2019 compared to $127.7
million as of December 31, 2018. Cash generated from operating
activities equaled $93.1 million and was partially offset by cash
used in investing activities of $66.1 million and in financing
activities of $85.8 million.
Cash generated from operating activities was $93.1 million after
income tax payments of $88.6 million. The tax payment included
$58.1 million related to tax gains of fiscal year 2018 and the
remaining $30.5 million are tax prepayments which will be deducted
against tax gains of fiscal year 2019 (to be paid in 2020). The
Company does not expect to pay additional cash income taxes during
2H2019. As a reminder, the Company pays its income tax obligations
in the first and second quarters of each year in Colombia.
Cash used in financing activities of $85.8 million included
$48.4 million from the buyback program, interest payments of $14.6
million on the $425 million Notes (“2024 Notes”), $15.0 million
related to the acquisition of the LGI’s non-controlling interest in
Colombia and Chile and $4.9 million related to principal payments
on short-term borrowings.
Financial Debt: Total financial debt, net of issuance
cost, was $442.6 million, including the 2024 Notes and other bank
loans totaling $15.2 million. Short-term financial debt was $18.0
million as of June 30, 2019.
For further details, please refer to Note 12 of GeoPark’s
consolidated financial statements as of June 30, 2019, available on
the Company’s website.
FINANCIAL RATIOSa
($ million)
Period-end
Financial Debt
Cash and Cash
Equivalents
Net Debt
Net Debt/LTM Adj.
EBITDAb
LTM Interest Coveragec
2Q2018
426.6
105.2
321.3
1.3x
8.5x
3Q2018
434.9
152.7
282.2
0.9x
10.5x
4Q2018
447.0
127.7
319.3
1.0x
11.4x
1Q2019
440.6
146.6
294.0
0.8x
12.2x
2Q2019
442.6
68.9
373.7
1.0x
12.9x
a)
Based on trailing last twelve-month
financial results.
Covenants in 2024 Notes: The 2024 Notes include
incurrence test covenants that require the net debt to Adjusted
EBITDA ratio to be lower than 3.5 times and the Adjusted EBITDA to
interest ratio higher than two times until September 2019. The
Company is well within both covenants.
COMMODITY RISK OIL MANAGEMENT CONTRACTS
The Company has the following commodity risk management
contracts (reference ICE Brent) in place as of the date of this
release:
Period
Type
Volume (bopd)
Contract Terms ($ per
bbl)
Purchased Put
Sold Put
Sold Call
3Q2019
Zero cost 3-way
Zero cost
8,000
5,000
55.0
65.0
45.0
-
79.0-81.5
92.3-92.5
4Q2019
Zero cost 3-way
8,000
55.0
45.0
79.0-81.5
1Q2020
Zero cost 3-way
8,000
55.0
45.0
79.0-81.5
For further details, please refer to Note 4 of GeoPark’s
consolidated financial statements for the period ended June 30,
2019, available on the Company’s website.
SELECTED INFORMATION BY BUSINESS SEGMENT
(UNAUDITED)
Colombia
2Q2019
2Q2018
Sale of crude oil ($ million)
147.2
129.4
Sale of gas ($ million)
0.5
0.4
Revenue ($ million)
147.7
129.8
Production and operating costsa ($
million)
-32.3
-29.6
Adjusted EBITDA ($ million)
100.1
79.6
Capital expendituresb ($ million)
18.0
28.0
Chile
2Q2019
2Q2018
Sale of crude oil ($ million)
2.5
4.9
Sale of gas ($ million)
5.2
4.4
Revenue ($ million)
7.6
9.3
Production and operating costsa ($
million)
-4.9
-5.3
Adjusted EBITDA ($ million)
1.6
2.0
Capital expendituresb ($ million)
1.8
1.1
Brazil
2Q2019
2Q2018
Sale of crude oil ($ million)
0.2
0.3
Sale of gas ($ million)
4.0
7.0
Revenue ($ million)
4.2
7.3
Production and operating costsa ($
million)
-1.1
-2.3
Adjusted EBITDA ($ million)
2.0
4.0
Capital expendituresb ($ million)
1.5
0.2
Argentina
2Q2019
2Q2018
Sale of crude oil ($ million)
8.8
11.1
Sale of gas ($ million)
1.1
1.8
Revenue ($ million)
10.0
12.9
Production and operating costsa ($
million)
-7.7
-7.6
Adjusted EBITDA ($ million)
1.9
2.6
Capital expendituresb ($ million)
3.2
3.9
a)
Production and operating costs = Operating
costs + Royalties + Share based payments.
b)
Capital expenditures in Peru explain the
difference with the reported figure in the Key performance
indicators table.
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(In millions of $)
2Q2019
2Q2018
2H2019
2H2018
REVENUE
Sale of crude oil
158.8
145.7
296.4
256.7
Sale of gas
10.7
13.7
23.2
26.5
TOTAL REVENUE
169.5
159.3
319.6
283.2
Commodity risk management contracts
0.8
-11.4
-20.5
-15.2
Production and operating costs
-46.0
-44.8
-84.9
-78.8
Geological and geophysical expenses
(G&G)
-4.3
-3.9
-8.6
-6.1
Administrative expenses (G&A)
-13.3
-12.5
-25.1
-25.1
Selling expenses
-5.3
-1.2
-8.9
-1.5
Depreciation
-24.8
-24.3
-50.3
-44.0
Write-off of unsuccessful exploration
efforts
-0.6
-9.2
-0.9
-11.0
Other operating
0.7
-0.1
2.0
0.7
OPERATING PROFIT
76.6
52.0
122.6
102.0
Financial costs, net
-9.1
-8.7
-17.9
-17.2
Foreign exchange gain (loss)
-2.4
-13.3
-1.4
-15.0
PROFIT BEFORE INCOME TAX
65.1
30.0
103.3
69.8
Income tax
-33.6
-24.4
-52.1
-39.4
PROFIT FOR THE PERIOD
31.5
5.5
51.2
30.4
Non‑controlling minority interest
-
6.2
-
12.6
ATTRIBUTABLE TO OWNERS OF
GEOPARK
31.5
-0.7
51.2
17.7
SUMMARIZED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION(QUARTERLY INFORMATION UNAUDITED)
(In millions of $)
Jun ‘19
Dec ‘18
Non-Current Assets
Property, plant and equipment
578.4
557.2
Other non-current assets
61.4
45.8
Total Non-Current Assets
639.8
603.0
Current Assets
Inventories
10.8
9.3
Trade receivables
29.2
16.2
Other current assets
66.3
106.5
Cash at bank and in hand
68.9
127.7
Total Current Assets
175.2
259.7
Total Assets
815.1
862.7
Equity
Equity attributable to owners of
GeoPark
147.2
143.1
Total Equity
147.2
143.1
Non-Current Liabilities
Borrowings
424.6
429.0
Other non-current liabilities
66.1
72.2
Total Non-Current Liabilities
490.7
501.2
Current Liabilities
Borrowings
18.0
18.0
Other current liabilities
159.2
200.4
Total Current Liabilities
177.2
218.4
Total Liabilities
667.8
719.6
Total Liabilities and Equity
815.1
862.7
SUMMARIZED CONSOLIDATED STATEMENT OF CASH FLOW
(UNAUDITED)
(In millions of $)
2Q2019
2Q2018
1H2019
1H2018
Cash flow from operating activities
11.8
22.3
93.1
98.6
Cash flow used in investing activities
-28.8
-33.1
-66.1
-106.5
Cash flow used in financing activities
-60.5
-4.7
-85.8
-21.9
RECONCILIATION OF ADJUSTED EBITDA TO
PROFIT BEFORE INCOME TAX (UNAUDITED)
1H2019 (In millions of $)
Colombia
Chile
Brazil
Argentina
Other(a)
Total
Adjusted EBITDA
189.1
4.5
4.8
4.6
-11.9
191.0
Depreciation
-22.9
-16.4
-3.2
-7.4
-0.4
-50.3
Unrealized commodity risk management
contracts
-22.9
-
-
-
-
-22.9
Write-off of unsuccessful exploration
efforts
-0.2
-
-
-0.7
-
-0.9
Share based payment
-0.4
-0.04
-0.05
-0.05
-0.5
-1.1
IFRS 16
0.9
0.1
1.1
0.5
0.3
2.8
Others
1.7
-0.2
0.5
0.5
1.5
4.0
OPERATING PROFIT (LOSS)
145.2
-12.1
3.1
-2.6
-11.1
122.6
Financial costs, net
-17.9
Foreign exchange charges, net
-1.4
PROFIT BEFORE INCOME TAX
103.2
1H2018 (In millions of $)
Colombia
Chile
Brazil
Argentina
Other(a)
Total
Adjusted EBITDA
141.4
3.7
9.0
1.4
-8.9
146.6
Depreciation
-22.5
-13.1
-5.4
-3.0
-0.1
-44.0
Unrealized commodity risk management
contracts
8.7
-
-
-
-
8.7
Write-off of unsuccessful exploration
efforts
-8.5
-0.4
-1.9
-0.3
-
-11.0
Share based payments
-0.2
-0.2
-0.03
-0.2
-1.2
-1.8
Other
2.0
0.3
-0.2
1.0
0.5
3.6
OPERATING PROFIT (LOSS)
120.9
-9.7
1.5
-1.0
-9.7
102.0
Financial costs, net
-17.2
Foreign exchange charges, net
-15.0
PROFIT BEFORE INCOME TAX
69.8
(a)
Includes Peru and Corporate.
RETURN ON CAPITAL EMPLOYED CALCULATION
(UNAUDITED)
(In millions of $)
1H2019
Last 12 months operating profit
277.1
Total assets less current liabilities -
June 30, 2019
637.9
Return on Capital Employed
43%
ADOPTION OF IFRS 16 (UNAUDITED)
GeoPark adopted IFRS 16 accounting rules in January 2019, but
did not restate comparative figures for 2018, as permitted by the
accounting standard. IFRS 16 requires the recognition of certain
charges related to operating leases as depreciation charges, that
in comparative periods were recorded in production and operating
costs, administrative and geophysical expenses. Please refer to
Note 1 of the Company’s consolidated financial statements for
further details.
Adjusted EBITDA is calculated as if IFRS 16 have not been
adopted, making the figures included in the table on page 6,
“Adjusted EBITDA per boe” comparable to those of prior periods.
The following adjustments have been made to production and
operating costs, administrative and geological and geophysical
expenses to calculate Adjusted EBITDA:
(In millions of $)
2Q2019
1H2019
Gain (Loss)
Production and operating costs
-0.8
-1.2
Administrative expenses
-0.6
-1.4
Geological and geophysical expenses
-0.1
-0.2
CONFERENCE CALL INFORMATION
GeoPark management will host a conference call on August 8, 2019
at 10:00 am (Eastern Time) to discuss these 2Q2019 financial
results. To listen to the call, participants can access the webcast
located in the Investor Support section of the Company’s website at
www.geo-park.com.
Interested parties may participate in the conference call by
dialing the numbers provided below:
United States Participants: 866-547-1509
International Participants: +1 920-663-6208 Passcode: 4273485
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
Investor Support section of the Company’s website at
www.geo-park.com after the conclusion of the live call.
GeoPark can be visited online at www.geo-park.com.
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
deliveries
Operating Netback per boe
Revenue, less production and operating
costs (net of depreciation charges and accrual of stock options and
stock awards), 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
Free Cash Flow
Operating cash flow less cash flow used in
investment activities
F&D costs
Finding and Development costs, calculated
as capital expenditures divided by the applicable net reserve
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
PRMS
Petroleum Resources Management System
WI
Working interest
NPV10
Present value of estimated future oil and
gas revenues, 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
“Investor Support” 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 expected 2019 or future production
growth and operating and financial performance, Operating Netback
per boe and 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 (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 for 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 it allows the Company to more
effectively evaluate our operating performance and compare the
results of our operations from period to period without regard to
our financing methods or capital structure. The Company’s
computation of Adjusted EBITDA, free cash flow, return on capital
employed 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.
Free cash flow: Free cash flow is a non-GAAP measure and
does not have a standardized meaning under GAAP. Free cash flow is
defined as cash provided by operating activities less cash used in
investing activities excluding Argentina acquisition and cash
advances from disposal of long-term assets.
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 our
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 computation 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 See the “Adoption of IFRS 16” section
included in this press release.
2 Return on capital employed defined as
operating profit divided by total assets minus current
liabilities.
3 Independently audited by Gaffney, Cline
and Associates.
4 See the “Adoption of IFRS 16” section
included in this press release.
5 See the “Adoption of IFRS 16” section
included in this press release.
6 See the “Adoption of IFRS 16” section
included in this press release.
7 See the “Reconciliation of Adjusted
EBITDA to Profit (Loss) Before Income Tax” section included in this
press release.
8 See the “Adoption of IFRS 16” section
included in this press release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190807005839/en/
INVESTORS: Stacy Steimel – Shareholder Value Director
ssteimel@geo-park.com Santiago, Chile T: +562 2242 9600
Miguel Bello – Market Access Director mbello@geo-park.com
Santiago, Chile T: +562 2242 9600
MEDIA: Jared Levy – Sard Verbinnen & Co
jlevy@sardverb.com New York, USA T: +1 (212) 687-8080
Kelsey Markovich – Sard Verbinnen & Co
kmarkovich@sardverb.com New York, USA T: +1 (212) 687-8080
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