Indicate by check mark whether the registrant
files or will file annual reports under cover of Form 20-F or Form 40-F:
Indicate by check mark if the registrant
is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant
is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
The above condensed consolidated statement of
income should be read in conjunction with the accompanying notes.
The above condensed consolidated statement of
comprehensive income should be read in conjunction with the accompanying notes.
The above condensed consolidated statement
of financial position should be read in conjunction with the accompanying notes.
The above condensed consolidated statement
of changes in equity should be read in conjunction with the accompanying notes.
The above condensed consolidated
statement of cash flow should be read in conjunction with the accompanying notes.
EXPLANATORY NOTES TO
THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1
General information
GeoPark Limited (the “Company” )
is a company incorporated under the law of Bermuda. The Registered Office address is Cumberland House, 9th Floor, 1 Victoria Street,
Hamilton HM11, Bermuda.
The principal activity of the Company and
its subsidiaries (the “Group” or “GeoPark”) is the exploration, development and production for oil and
gas reserves in Colombia, Chile, Brazil, Argentina, Peru and Ecuador.
This condensed consolidated interim financial
report was authorized for issue by the Board of Directors on 7 August 2019.
Basis of Preparation
The condensed consolidated interim financial
report of GeoPark Limited is presented in accordance with IAS 34 “Interim Financial Reporting”. It does not include
all of the information required for full annual financial statements, and should be read in conjunction with the annual financial
statements as at and for the years ended 31 December 2017 and 2018, which have been prepared in accordance with IFRS.
The condensed consolidated interim financial
report has been prepared in accordance with the accounting policies applied in the most recent annual financial statements, except
for the changes explained below within “Changes in accounting policies”.
Whenever necessary, certain comparative
amounts have been reclassified to conform to changes in presentation in the current period.
Taxes on income in the interim periods are
accrued using the tax rate that would be applicable to expected total annual profit or loss.
The activities of the Group are not subject
to significant seasonal changes.
Changes in accounting policies
The Group has adopted IFRS 16 following
the simplified approach, and has not restated comparative figures for previous reporting period, as permitted under the specific
transitional provisions in the standard. The reclassifications arising from the new leasing rules are therefore recognized in the
opening balance sheet on 1 January 2019.
On adoption of IFRS 16, the Group recognized
lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the principles
of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s
incremental borrowing rate as of 1 January 2019. The weighted average lessee’s incremental borrowing rate applied to the
lease liabilities on 1 January 2019 was 9.4%.
GEOPARK LIMITED
30 JUNE 2019
Note 1 (Continued)
Changes in accounting policies (Continued)
The table below summarizes the initial recognition
of assets and liabilities related to the adoption of IFRS 16:
Amounts in US$ '000
|
Total
|
Right-of-use assets at 1 January 2019
(a)
|
14,610
|
Additions
|
1,747
|
Depreciation during the period
|
(1,814)
|
Right-of-use assets at 30 June 2019
|
14,543
|
|
(a)
|
Recognized as “Lease liabilities” as of 1 January 2019.
|
(a) Impact on segment information
As a result of the change in the accounting
policy, segment assets as of 30 June 2019 increased for the amount of the Right-of-use assets. Nevertheless, there is no impact
on Adjusted EBITDA as a consequence of the adoption of this new standard, as specified in the indenture governing the 2024 Notes.
(b) Practical expedients applied
In applying IFRS 16 for the first time,
the Group has used the following practical expedients permitted by the standard:
|
·
|
the use of a single discount rate to a
portfolio of leases with reasonably similar characteristics,
|
|
·
|
reliance on previous assessments on whether
leases are onerous,
|
|
·
|
the accounting for operating leases with
a remaining lease term of less than 12 months as at 1 January 2019 as short-term leases,
|
|
·
|
the exclusion of initial direct costs for
the measurement of the right-of-use asset at the date of initial application, and
|
|
·
|
the use of hindsight in determining the
lease term where the contract contains options to extend or terminate the lease.
|
(c) Accounting for the Group’s
leasing activities
The Group leases various offices, facilities,
machinery and equipment. Rental contracts are typically made for fixed periods of 1 to 7 years but may have extension options.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements
do not impose any covenants, but leased assets may not be used as security for borrowing purposes.
Until the 2018 financial year, leases of
property, plant and equipment were classified as either finance or operating leases. Payments made under operating leases (net
of any incentives received from the lessor) were charged to profit or loss on a straight-line basis over the period of the lease.
GEOPARK LIMITED
30 JUNE 2019
Note 1 (Continued)
Changes in accounting policies (Continued)
(c) Accounting for the Group’s
leasing activities (Continued)
From 1 January 2019, leases are recognized
as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group.
Each lease payment is allocated between the liability and finance expenses. The finance expense is charged to the Condensed Consolidated
Statement of Income over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the
liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term
on a straight-line basis.
Assets and liabilities arising from a lease
are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:
|
·
|
fixed payments, less any lease incentives
receivable,
|
|
·
|
variable lease payments that are based
on an index or a rate,
|
|
·
|
amounts expected to be payable by the lessee
under residual value guarantees,
|
|
·
|
the exercise price of a purchase option
if the lessee is reasonably certain to exercise that option, and
|
|
·
|
payments of penalties for terminating the
lease, if the lease term reflects the lessee exercising that option.
|
The lease payments are discounted using
the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing rate is used,
being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar
economic environment with similar terms and conditions.
Right-of-use assets are measured at cost
comprising the following:
|
·
|
the amount of the initial measurement of
lease liability,
|
|
·
|
any lease payments made at or before the
commencement date less any lease incentives received,
|
|
·
|
any initial direct costs, and
|
Payments associated with short-term leases
and leases of low-value assets are recognized on a straight-line basis as an expense in the Condensed Consolidated Statement of
Income. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT-equipment and small items
of office furniture.
GEOPARK LIMITED
30 JUNE 2019
Note 1 (Continued)
Estimates
The preparation of interim financial information
requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process
of applying the Group’s accounting policies. Actual results may differ from these estimates.
In preparing these condensed consolidated
interim financial statements, the significant judgements made by management in applying the Group’s accounting policies and
the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the
year ended 31 December 2018.
Financial risk management
The Group’s activities expose it to
a variety of financial risks: currency risk, price risk, credit risk- concentration, funding and liquidity risk, interest risk
and capital risk. The condensed consolidated interim financial statements do not include all financial risk management information
and disclosures required in the annual financial statements, and should be read in conjunction with the Group’s annual financial
statements as at 31 December 2018.
There have been no changes in the risk management
since year end or in any risk management policies.
Subsidiary undertakings
The following chart illustrates the main
companies of the Group structure as of 30 June 2019:
During 2019, the subsidiary that used to
be named GeoPark Argentina Limited was re-domiciliated from Bermuda to Argentina.
GEOPARK LIMITED
30 JUNE 2019
Note 1 (Continued)
Subsidiary undertakings (Continued)
Details of the subsidiaries and joint operations
of the Group are set out below:
|
Name and registered office
|
|
|
Ownership interest
|
Subsidiaries
|
GeoPark Argentina S.A.U. (Argentina)
|
|
|
100%
|
|
GeoPark Latin America Limited (Bermuda)
|
|
|
100%
|
|
GeoPark Latin America Limited – Agencia en Chile (Chile)
|
|
|
100% (a)
|
|
GeoPark S.A. (Chile)
|
|
|
100% (a) (b)
|
|
GeoPark Brasil Exploração y Produção de Petróleo e Gás Ltda. (Brazil)
|
|
|
100% (a)
|
|
GeoPark Chile S.A. (Chile)
|
|
|
100% (a)
|
|
GeoPark Fell S.p.A. (Chile)
|
|
|
100% (a)
|
|
GeoPark Magallanes Limitada (Chile)
|
|
|
100% (a)
|
|
GeoPark TdF S.A. (Chile)
|
|
|
100% (a)
|
|
GeoPark Colombia S.A. (Chile)
|
|
|
100% (a) (b)
|
|
GeoPark Colombia S.A.S. (Colombia)
|
|
|
100% (a)
|
|
GeoPark Latin America S.L.U. (Spain)
|
|
|
100% (a)
|
|
GeoPark Colombia Coöperatie U.A. (The Netherlands)
|
|
|
100% (a)
|
|
GeoPark S.A.C. (Peru)
|
|
|
100% (a)
|
|
GeoPark Perú S.A.C. (Peru)
|
|
|
100% (a)
|
|
GeoPark Operadora del Perú S.A.C. (Peru)
|
|
|
100% (a)
|
|
GeoPark Peru S.L.U. (Spain)
|
|
|
100% (a)
|
|
GeoPark Brasil S.L.U. (Spain)
|
|
|
100% (a)
|
|
GeoPark Colombia E&P S.A. (Panama)
|
|
|
100% (a)
|
|
GeoPark Colombia E&P Sucursal Colombia (Colombia)
|
|
|
100% (a)
|
|
GeoPark Mexico S.A.P.I. de C.V. (Mexico)
|
|
|
100% (a) (b)
|
|
GeoPark E&P S.A.P.I. de C.V. (Mexico)
|
|
|
100% (a) (b)
|
|
GeoPark (UK) Limited (United Kingdom)
|
|
|
100%
|
|
GeoPark Perú S.A.C. Sucursal Ecuador (Ecuador)
|
|
|
100% (a)
|
Joint operations
|
Tranquilo Block (Chile)
|
|
|
50% (c) (d)
|
|
Flamenco Block (Chile)
|
|
|
50% (c)
|
|
Campanario Block (Chile)
|
|
|
50% (c)
|
|
Isla Norte Block (Chile)
|
|
|
60% (c)
|
|
Llanos 34 Block (Colombia)
|
|
|
45% (c)
|
|
Llanos 32 Block (Colombia)
|
|
|
12.5%
|
|
Puelen Block (Argentina)
|
|
|
18%
|
|
Sierra del Nevado Block (Argentina)
|
|
|
18%
|
|
CN-V Block (Argentina)
|
|
|
50%
|
|
Manati Field (Brazil)
|
|
|
10%
|
|
POT-T-747 Block (Brazil)
|
|
|
70% (c)
|
|
REC-T-128 Block (Brazil)
|
|
|
70% (c)
|
|
Espejo (Ecuador)
|
|
|
50% (c)
|
|
Perico (Ecuador
|
|
|
50%
|
|
(c)
|
GeoPark is the operator.
|
|
(d)
|
In December 2018, GeoPark increased its working interest to 100%.
Regulatory approval was obtained on 2 July 2019.
|
GEOPARK LIMITED
30 JUNE 2019
Note 2
Segment Information
Operating segments are reported in a manner
consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who
is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Executive
Committee. This committee is integrated by the CEO, COO, CFO and managers in charge of the Geoscience, Operations, Corporate Governance,
Finance and People departments. This committee reviews the Group’s internal reporting in order to assess performance and
allocate resources. Management has determined the operating segments based on these reports. The committee considers the business
from a geographic perspective.
The Executive Committee assesses the performance
of the operating segments based on a measure of Adjusted EBITDA. Adjusted EBITDA is defined as profit for the period (determined
as if IFRS 16
Leases
has not been adopted, as specified in the indenture governing the 2024 Notes), before net finance cost,
income tax, depreciation, amortization, certain non-cash items such as impairments and write-offs of unsuccessful exploration efforts,
accrual of share-based payment, unrealized result on commodity risk management contracts and other non recurring events. Operating
Netback is equivalent to Adjusted EBITDA before cash expenses included in Administrative, Geological and Geophysical and Other
operating expenses. Other information provided to the Executive Committee is measured in a manner consistent with that in the financial
statements.
Six-months
period ended 30 June 2019
Amounts
in US$ '000
|
Total
|
Colombia
|
Chile
|
Brazil
|
Argentina
|
Peru
|
Corporate
|
Revenue
|
319,649
|
274,321
|
16,391
|
9,634
|
19,303
|
-
|
-
|
Sale
of crude oil
|
296,389
|
273,397
|
5,785
|
421
|
16,786
|
-
|
-
|
Sale
of gas
|
23,260
|
924
|
10,606
|
9,213
|
2,517
|
-
|
-
|
Production
and operating costs
|
(84,932)
|
(58,622)
|
(9,843)
|
(2,543)
|
(13,924)
|
-
|
-
|
Royalties
|
(32,807)
|
(28,659)
|
(607)
|
(740)
|
(2,801)
|
-
|
-
|
Share-based
payment
|
(329)
|
(231)
|
(31)
|
(29)
|
(38)
|
-
|
-
|
Operating
costs
|
(51,796)
|
(29,732)
|
(9,205)
|
(1,774)
|
(11,085)
|
-
|
-
|
Depreciation
|
(50,272)
|
(22,909)
|
(16,409)
|
(3,179)
|
(7,413)
|
(286)
|
(76)
|
Operating
profit / (loss)
|
122,621
|
145,226
|
(12,079)
|
3,148
|
(2,604)
|
(2,550)
|
(8,520)
|
Operating
Netback
|
227,060
|
210,124
|
6,392
|
6,091
|
4,453
|
-
|
-
|
Adjusted
EBITDA
|
190,961
|
189,050
|
4,505
|
4,754
|
4,552
|
(3,540)
|
(8,360)
|
GEOPARK LIMITED
30 JUNE 2019
Note 2 (Continued)
Segment Information (Continued)
Six-months period ended 30
June 2018
Amounts
in US$ '000
|
Total
|
Colombia
|
Chile
|
Brazil
|
Argentina
|
Peru
|
Corporate
|
Revenue
|
283,208
|
236,538
|
18,341
|
15,272
|
13,057
|
-
|
-
|
Sale
of crude oil
|
256,713
|
235,873
|
9,139
|
570
|
11,131
|
-
|
-
|
Sale
of gas
|
26,495
|
665
|
9,202
|
14,702
|
1,926
|
-
|
-
|
Production
and operating costs
|
(78,846)
|
(54,946)
|
(11,054)
|
(4,622)
|
(8,224)
|
-
|
-
|
Royalties
|
(32,558)
|
(28,767)
|
(737)
|
(1,415)
|
(1,639)
|
-
|
-
|
Share-based
payment
|
(247)
|
(125)
|
(84)
|
(7)
|
(31)
|
-
|
-
|
Operating
costs
|
(46,041)
|
(26,054)
|
(10,233)
|
(3,200)
|
(6,554)
|
-
|
-
|
Depreciation
|
(44,011)
|
(22,467)
|
(13,090)
|
(5,352)
|
(2,966)
|
(124)
|
(12)
|
Operating
profit / (loss)
|
102,016
|
120,867
|
(9,709)
|
1,543
|
(969)
|
(2,678)
|
(7,038)
|
Operating
Netback
|
179,184
|
157,510
|
7,080
|
10,658
|
3,936
|
-
|
-
|
Adjusted
EBITDA
|
146,631
|
141,427
|
3,678
|
9,001
|
1,422
|
(3,322)
|
(5,575)
|
Total
Assets
|
Total
|
Colombia
|
Chile
|
Brazil
|
Argentina
|
Peru
|
Corporate
|
30
June 2019
|
815,052
|
321,096
|
260,565
|
73,748
|
94,065
|
54,289
|
11,289
|
31
December 2018
|
862,660
|
383,450
|
276,449
|
70,424
|
87,259
|
35,817
|
9,261
|
A reconciliation of total Operating Netback
to total profit before income tax is provided as follows:
|
Three-months
period ended
30 June 2019
|
Three-months
period ended
30 June 2018
|
Six-months
period ended
30 June 2019
|
Six-months
period ended
30 June 2018
|
Operating
Netback
|
118,073
|
100,230
|
227,060
|
179,184
|
Geological
and geophysical expenses
|
(5,256)
|
(5,210)
|
(10,541)
|
(8,848)
|
Administrative
expenses
|
(14,109)
|
(11,709)
|
(25,558)
|
(23,705)
|
Adjusted
EBITDA for reportable segments
|
98,708
|
83,311
|
190,961
|
146,631
|
Unrealized
gain (loss) on commodity risk management contracts
|
138
|
1,964
|
(22,940)
|
8,652
|
Depreciation
(a)
|
(24,822)
|
(24,348)
|
(50,272)
|
(44,011)
|
Write-off
of unsuccessful exploration efforts
|
(560)
|
(9,210)
|
(863)
|
(11,042)
|
Share-based
payment
|
138
|
(1,022)
|
(1,117)
|
(1,802)
|
Lease
accounting - IFRS 16
|
1,496
|
-
|
2,837
|
-
|
Others
(b)
|
1,543
|
1,272
|
4,015
|
3,588
|
Operating
profit
|
76,641
|
51,967
|
122,621
|
102,016
|
Financial
expenses
|
(9,660)
|
(9,568)
|
(19,349)
|
(18,641)
|
Financial
income
|
576
|
888
|
1,440
|
1,429
|
Foreign
exchange loss
|
(2,435)
|
(13,301)
|
(1,441)
|
(14,969)
|
Profit
before tax
|
65,122
|
29,986
|
103,271
|
69,835
|
|
(a)
|
Net of capitalized costs for oil stock included in Inventories. Depreciation
includes US$ 1,464,000 (US$ 1,109,000 in 2018) generated by assets not related to production activities. For the three-months period
ended 30 June 2019 the amount included in depreciation is US$ 763,000 (US$ 592,000 in 2018).
|
|
(b)
|
Includes allocation to capitalized projects.
|
GEOPARK LIMITED
30 JUNE 2019
Note 2 (Continued)
Segment Information (Continued)
The following table presents a reconciliation
of Adjusted EBITDA to operating profit (loss) for the six-month periods ended 30 June 2019 and 2018:
|
|
Six-months period ended 30 June 2019
|
|
Colombia
|
Chile
|
Brazil
|
Argentina
|
Other
(c)
|
Total
|
Adjusted EBITDA for reportable segments
|
189,050
|
4,505
|
4,754
|
4,552
|
(11,900)
|
190,961
|
Depreciation
|
(22,909)
|
(16,409)
|
(3,179)
|
(7,413)
|
(362)
|
(50,272)
|
Unrealized loss on commodity risk management contracts
|
(22,940)
|
-
|
-
|
-
|
-
|
(22,940)
|
Write-off of unsuccessful exploration efforts
|
(195)
|
-
|
-
|
(668)
|
-
|
(863)
|
Share-based payment
|
(433)
|
(46)
|
(51)
|
(50)
|
(537)
|
(1,117)
|
Lease accounting - IFRS 16
|
932
|
85
|
1,096
|
473
|
251
|
2,837
|
Others
|
1,721
|
(214)
|
528
|
502
|
1,478
|
4,015
|
Operating profit / (loss)
|
145,226
|
(12,079)
|
3,148
|
(2,604)
|
(11,070)
|
122,621
|
|
|
Six-months period ended 30 June 2018
|
|
Colombia
|
Chile
|
Brazil
|
Argentina
|
Other
(c)
|
Total
|
Adjusted EBITDA for reportable segments
|
141,427
|
3,678
|
9,001
|
1,422
|
(8,897)
|
146,631
|
Depreciation
|
(22,467)
|
(13,090)
|
(5,352)
|
(2,966)
|
(136)
|
(44,011)
|
Unrealized gain on commodity risk management contracts
|
8,652
|
-
|
-
|
-
|
-
|
8,652
|
Write-off of unsuccessful exploration efforts
|
(8,505)
|
(397)
|
(1,874)
|
(266)
|
-
|
(11,042)
|
Share-based payment
|
(231)
|
(151)
|
(28)
|
(185)
|
(1,207)
|
(1,802)
|
Others
|
1,991
|
251
|
(204)
|
1,026
|
524
|
3,588
|
Operating profit / (loss)
|
120,867
|
(9,709)
|
1,543
|
(969)
|
(9,716)
|
102,016
|
(c)
Includes Peru and Corporate.
Note 3
Revenue
Amounts in US$ '000
|
Three-months
period ended
30 June 2019
|
Three-months
period ended
30 June 2018
|
Six-months
period ended
30 June 2019
|
Six-months
period ended
30 June 2018
|
|
|
|
|
|
Sale of crude oil
|
158,781
|
145,678
|
296,389
|
256,713
|
Sale of gas
|
10,729
|
13,652
|
23,260
|
26,495
|
|
169,510
|
159,330
|
319,649
|
283,208
|
GEOPARK LIMITED
30 JUNE 2019
Note 4
Commodity risk management contracts
The Group entered into derivative financial
instruments to manage its exposure to oil price risk. These derivatives are zero-premium collars or zero-premium 3 ways (put spread
plus call), and were placed with major financial institutions and commodity traders. The Group entered into the derivatives under
ISDA Master Agreements and Credit Support Annexes, which provide credit lines for collateral posting thus alleviating possible
liquidity needs under the instruments and protect the Group from potential non-performance risk by its counterparties. The Group’s
derivatives are accounted for as non-hedge derivatives as of 30 June 2019 and therefore all changes in the fair values of its derivative
contracts are recognized as gains or losses in the results of the periods in which they occur.
The following table presents the Group’s
derivative contracts in force as of 30 June 2019:
Period
|
Reference
|
Type
|
Volume bbl/d
|
Price US$/bbl
|
1 October 2018 - 30 June 2019
|
ICE BRENT
|
Zero Premium 3 Way
|
3,700
|
55.00-65.00 Put 90.00 Call
|
1 October 2018 - 30 June 2019
|
ICE BRENT
|
Zero Premium 3 Way
|
1,000
|
55.00-65.00 Put 90.10 Call
|
1 October 2018 - 30 June 2019
|
ICE BRENT
|
Zero Premium 3 Way
|
1,300
|
55.00-65.00 Put 90.50 Call
|
1 January 2019 - 30 September 2019
|
ICE BRENT
|
Zero Premium Collar
|
2,000
|
65.00 Put 92.50 Call
|
1 January 2019 - 30 September 2019
|
ICE BRENT
|
Zero Premium Collar
|
3,000
|
65.00 Put 92.26 Call
|
1 April 2019 - 31 March 2020
|
ICE BRENT
|
Zero Premium 3 Way
|
2,000
|
45.00-55.00 Put 79.02 Call
|
1 April 2019 - 31 March 2020
|
ICE BRENT
|
Zero Premium 3 Way
|
2,000
|
45.00-55.00 Put 79.00 Call
|
1 July 2019 - 31 March 2020
|
ICE BRENT
|
Zero Premium 3 Way
|
4,000
|
45.00-55.00 Put 81.50 Call
|
The table below summarizes the gain (loss)
on the commodity risk management contracts:
Amounts in US$ '000
|
Three-months
period ended
30 June 2019
|
Three-months
period ended
30 June 2018
|
Six-months
period ended
30 June 2019
|
Six-months
period ended
30 June 2018
|
Realized gain (loss) on commodity risk management contracts
|
677
|
(13,332)
|
2,487
|
(23,900)
|
Unrealized gain (loss) on commodity risk management contracts
|
138
|
1,964
|
(22,940)
|
8,652
|
Total
|
815
|
(11,368)
|
(20,453)
|
(15,248)
|
GEOPARK LIMITED
30 JUNE 2019
Note 5
Production and operating costs
Amounts in US$ '000
|
Three-months
period ended
30 June 2019
|
Three-months
period ended
30 June 2018
|
Six-months
period ended
30 June 2019
|
Six-months
period ended
30 June 2018
|
Staff costs
|
2,289
|
4,979
|
7,150
|
8,358
|
Share-based payment
|
13
|
163
|
329
|
247
|
Royalties
|
19,543
|
18,465
|
32,807
|
32,558
|
Well and facilities maintenance
|
7,470
|
3,961
|
13,280
|
7,147
|
Operation and maintenance
|
2,265
|
2,127
|
4,296
|
3,406
|
Consumables
|
4,740
|
4,300
|
9,514
|
7,996
|
Equipment rental
|
2,455
|
2,635
|
4,714
|
4,576
|
Transportation costs
|
793
|
705
|
1,503
|
1,484
|
Gas plant costs
|
1,219
|
1,365
|
1,976
|
2,867
|
Safety and insurance costs
|
917
|
848
|
1,831
|
1,710
|
Field camp
|
694
|
810
|
1,450
|
1,590
|
Non operated blocks costs
|
247
|
363
|
602
|
689
|
Crude oil stock variation
|
92
|
1,927
|
(221)
|
1,576
|
Other costs
|
3,276
|
2,108
|
5,701
|
4,642
|
|
46,013
|
44,756
|
84,932
|
78,846
|
Note 6
Geological and geophysical expenses
Amounts in US$ '000
|
Three-months
period ended
30 June 2019
|
Three-months
period ended
30 June 2018
|
Six-months
period ended
30 June 2019
|
Six-months
period ended
30 June 2018
|
Staff costs
|
3,785
|
4,218
|
7,875
|
7,217
|
Share-based payment
|
(51)
|
95
|
136
|
144
|
Other services
|
1,435
|
992
|
2,594
|
1,631
|
Allocation to capitalized project
|
(860)
|
(1,410)
|
(2,000)
|
(2,938)
|
|
4,309
|
3,895
|
8,605
|
6,054
|
Note 7
Administrative expenses
Amounts in US$ '000
|
Three-months
period ended
30 June 2019
|
Three-months
period ended
30 June 2018
|
Six-months
period ended
30 June 2019
|
Six-months
period ended
30 June 2018
|
Staff costs
|
9,018
|
7,537
|
14,949
|
13,846
|
Share-based payment
|
(100)
|
764
|
652
|
1,411
|
Consultant fees
|
2,066
|
1,707
|
4,758
|
3,189
|
Travel expenses
|
1,432
|
1,083
|
2,515
|
2,338
|
Director fees and allowance
|
786
|
692
|
1,679
|
1,324
|
Communication and IT costs
|
616
|
449
|
1,517
|
921
|
Allocation to joint operations
|
(1,903)
|
(2,010)
|
(3,847)
|
(3,960)
|
Other administrative expenses
|
1,423
|
2,251
|
2,836
|
6,047
|
|
13,338
|
12,473
|
25,059
|
25,116
|
GEOPARK LIMITED
30 JUNE 2019
Note 8
Selling expenses
Amounts in US$ '000
|
Three-months
period ended
30 June 2019
|
Three-months
period ended
30 June 2018
|
Six-months
period
ended
30 June 2019
|
Six-months
period
ended
30 June 2018
|
Transportation
|
5,015
|
669
|
8,229
|
989
|
Selling taxes and other
|
310
|
506
|
630
|
536
|
|
5,325
|
1,175
|
8,859
|
1,525
|
Note 9
Financial results
Amounts in US$ '000
|
Three-months
period ended
30 June 2019
|
Three-months
period ended
30 June 2018
|
Six-months
period ended
30 June 2019
|
Six-months
period ended
30 June 2018
|
Financial expenses
|
|
|
|
|
Bank charges and other financial costs
|
(1,241)
|
(1,066)
|
(2,206)
|
(1,896)
|
Interest and amortization of debt issue costs
|
(7,612)
|
(7,147)
|
(15,177)
|
(14,267)
|
Interest with related parties
|
-
|
(447)
|
-
|
(894)
|
Unwinding of long-term liabilities
|
(993)
|
(920)
|
(2,233)
|
(1,603)
|
Less: amounts capitalized on qualifying assets
|
186
|
12
|
267
|
19
|
|
(9,660)
|
(9,568)
|
(19,349)
|
(18,641)
|
Financial income
|
|
|
|
|
Interest received
|
576
|
888
|
1,440
|
1,429
|
|
576
|
888
|
1,440
|
1,429
|
Foreign exchange gains and losses
|
|
|
|
|
Foreign exchange loss
|
(2,628)
|
(13,301)
|
(4,284)
|
(14,969)
|
Result on currency risk management contracts
(a)
|
193
|
-
|
2,843
|
-
|
|
(2,435)
|
(13,301)
|
(1,441)
|
(14,969)
|
Total financial results
|
(11,519)
|
(21,981)
|
(19,350)
|
(32,181)
|
|
(a)
|
In December 2018, GeoPark decided to manage its future exposure to
local currency fluctuation with respect to income tax balances in Colombia. Consequently, the Group entered into a derivative financial
instrument with a local bank in Colombia, for an amount equivalent to US$ 92,050,000, in order to anticipate any currency fluctuation
with respect to income taxes payable in February, April and June 2019.
|
GEOPARK LIMITED
30 JUNE 2019
Note 10
Property, plant and equipment
Amounts in US$'000
|
Oil & gas properties
|
Furniture, equipment
and vehicles
|
Production facilities and machinery
|
Buildings
and improve-ments
|
Construction in progress
|
Exploration and evaluation assets
|
TOTAL
|
Cost at 1 January 2018
|
776,504
|
15,398
|
157,396
|
10,361
|
37,990
|
64,368
|
1,062,017
|
Additions
|
(2,126)
(a)
|
794
|
-
|
-
|
34,392
|
25,242
|
58,302
|
Acquisitions
|
48,838
|
266
|
1,616
|
134
|
-
|
-
|
50,854
|
Disposals
|
(149)
|
-
|
-
|
-
|
-
|
-
|
(149)
|
Write-off of unsuccessful exploration efforts
|
-
|
-
|
-
|
-
|
-
|
(11,042)
(b)
|
(11,042)
|
Transfers
|
27,042
|
5
|
12,746
|
594
|
(31,614)
|
(8,773)
|
-
|
Currency translation differences
|
(10,976)
|
(126)
|
(858)
|
(29)
|
(10)
|
(1,078)
|
(13,077)
|
Cost at 30 June 2018
|
839,133
|
16,337
|
170,900
|
11,060
|
40,758
|
68,717
|
1,146,905
|
|
|
|
|
|
|
|
|
Cost at 1 January 2019
|
717,510
|
17,748
|
172,094
|
11,554
|
60,597
|
59,992
|
1,039,495
|
Additions
|
1,393
|
966
|
358
|
27
|
57,020
|
10,532
|
70,296
|
Disposals
|
-
|
(41)
|
-
|
-
|
-
|
-
|
(41)
|
Write-off of unsuccessful exploration efforts
|
-
|
-
|
-
|
-
|
-
|
(863)
|
(863)
|
Transfers
|
41,188
|
269
|
23,393
|
65
|
(57,302)
|
(7,613)
|
-
|
Currency translation differences
|
706
|
9
|
57
|
2
|
-
|
79
|
853
|
Cost at 30 June 2019
|
760,797
|
18,951
|
195,902
|
11,648
|
60,315
|
62,127
|
1,109,740
|
|
|
|
|
|
|
|
|
Depreciation and write-down at 1 January 2018
|
(441,534)
|
(11,916)
|
(86,232)
|
(4,932)
|
-
|
-
|
(544,614)
|
Depreciation
|
(34,703)
|
(725)
|
(8,562)
|
(384)
|
-
|
-
|
(44,374)
|
Currency translation differences
|
5,452
|
90
|
327
|
25
|
-
|
-
|
5,894
|
Depreciation and write-down at 30 June 2018
|
(470,785)
|
(12,551)
|
(94,467)
|
(5,291)
|
-
|
-
|
(583,094)
|
|
|
|
|
|
|
|
|
Depreciation and write-down at 1 January 2019
|
(359,358)
|
(13,361)
|
(103,704)
|
(5,902)
|
-
|
-
|
(482,325)
|
Depreciation
|
(38,392)
|
(991)
|
(8,714)
|
(473)
|
-
|
-
|
(48,570)
|
Disposals
|
-
|
34
|
-
|
-
|
-
|
-
|
34
|
Currency translation differences
|
(431)
|
(6)
|
(50)
|
(2)
|
-
|
-
|
(489)
|
Depreciation and write-down at 30 June 2019
|
(398,181)
|
(14,324)
|
(112,468)
|
(6,377)
|
-
|
-
|
(531,350)
|
|
|
|
|
|
|
|
|
Carrying amount at 30 June 2018
|
368,348
|
3,786
|
76,433
|
5,769
|
40,758
|
68,717
|
563,811
|
Carrying amount at 30 June 2019
|
362,616
|
4,627
|
83,434
|
5,271
|
60,315
|
62,127
|
578,390
|
|
(a)
|
Corresponds to the effect
of re-estimation of assets retirement obligation in Colombia.
|
|
(b)
|
Corresponds to four unsuccessful
exploratory wells drilled in Brazil (POT-T-747 and POT-T-619 Blocks), Colombia (Tiple Block) and Argentina (Puelen Block). The
change also includes the write off of other exploration costs incurred in the Fell Block in 2015 for which no additional work
would be performed.
|
GEOPARK LIMITED
30 JUNE 2019
Note 11
Share capital
Issued share capital
|
Six-months
period ended
30 June 2019
|
Year ended
31 December 2018
|
Common stock (US$ ´000)
|
59
|
60
|
The share capital is distributed as follows:
|
|
|
Common shares, of nominal US$ 0.001
|
58,994,177
|
60,483,447
|
Total common shares in issue
|
58,994,177
|
60,483,447
|
|
|
|
Authorized share capital
|
|
|
|
|
|
US$ per share
|
0.001
|
0.001
|
|
|
|
Number of common shares (US$ 0.001 each)
|
5,171,949,000
|
5,171,949,000
|
Amount in US$
|
5,171,949
|
5,171,949
|
GeoPark’s share capital only consists
of common shares. The authorized share capital consists of 5,171,949,000 common shares of par value US$ 0.001 per share. All of
the Company issued and outstanding common shares are fully paid and nonassessable.
Buyback program
On 20 December 2018, the Company approved
a program to repurchase up to 10% of its outstanding shares (approximately 6,063,000 shares). The repurchase program begun on 21
December 2018 and will expire on 31 December 2019.
The following table presents the quantity
of common shares purchased and the amounts paid:
Period
|
Purchased
common shares
|
Amounts paid
(US$ '000)
|
20 December 2018 - 31 December 2018
|
145,917
|
1,801
|
1 January 2019 - 31 March 2019
|
664,633
|
10,196
|
1 April 2019 - 30 June 2019
|
2,327,947
|
38,253
|
|
3,138,497
|
50,250
|
Note 12
Borrowings
The outstanding amounts are as follows:
Amounts in US$ '000
|
At
30 June 2019
|
Year ended
31 December 2018
|
2024 Notes (a)
|
427,409
|
426,993
|
Banco Santander (b)
|
15,182
|
20,006
|
Banco de Crédito e Inversiones (c)
|
-
|
3
|
|
442,591
|
447,002
|
Classified as follows:
Current
|
18,019
|
17,975
|
Non-Current
|
424,572
|
429,027
|
GEOPARK LIMITED
30 JUNE 2019
Note 12 (Continued)
Borrowings (Continued)
(a) During September 2017, the Company successfully
placed US$ 425,000,000 notes which were offered to qualified institutional buyers in accordance with Rule 144A under the United
States Securities Act, and outside the United States to non-U.S. persons in accordance with Regulation S under the United States
Securities Act.
The Notes carry a coupon of 6.50% per annum.
Final maturity of the notes will be 21 September 2024. The Notes are secured with a guarantee granted by GeoPark Colombia Coöperatie
U.A. and GeoPark Chile S.A.. The debt issuance cost for this transaction amounted to US$ 6,683,000 (debt issuance effective rate:
6.90%). The indenture governing the Notes due 2024 includes incurrence test covenants that provide, among other things, that during
the first two years from the issuance date, the Net Debt to Adjusted EBITDA ratio should not exceed 3.5 times and the Adjusted
EBITDA to Interest ratio should exceed 2 times. Failure to comply with the incurrence test covenants does not trigger an event
of default. However, this situation may limit the Company’s capacity to incur additional indebtedness, as specified in the
indenture governing the Notes. Incurrence covenants as opposed to maintenance covenants must be tested by the Company before incurring
additional debt or performing certain corporate actions including, but not limited to, dividend payments, restricted payments and
others. As of the date of these interim condensed consolidated financial statements, the Company is in compliance of all the indenture’s
provisions and covenants.
(b) During October 2018, GeoPark Brazil
Exploração y Produção de Petróleo e Gás Ltda. executed a loan agreement with Banco Santander
for Brazilian Real 77,640,000 (equivalent to US$ 20,000,000 at the moment of the loan execution) to repay an existing US$-denominated
intercompany loan to GeoPark Latin America Limited - Agencia en Chile. The interest rate applicable to this loan is CDI plus 2.25%
per annum. “CDI” (Interbank certificate of deposit) represents the average rate of all inter-bank overnight transactions
in Brazil. The principal and the interest are paid semi-annually, with final maturity in October 2020.
(c) During February 2016, GeoPark Fell S.p.A.
executed a loan agreement with Banco de Crédito e Inversiones for US$ 186,000 to finance the acquisition of vehicles for
the Chilean operation. The interest rate applicable to this loan was 4.14% per annum. The interest and the principal were fully
repaid in February 2019.
As of the date of these interim condensed
consolidated financial statements, the Group has available credit lines for over US$ 89,600,000.
GEOPARK LIMITED
30 JUNE 2019
Note 13
Provisions and
other long-term liabilities
The outstanding amounts are as follows:
Amounts in US$ '000
|
At
30 June 2019
|
Year ended
31 December 2018
|
Assets retirement obligation
|
42,320
|
40,317
|
Other
|
2,890
|
2,260
|
|
45,210
|
42,577
|
Note 14
Trade and other payables
The outstanding amounts are as follows:
Amounts in US$ '000
|
At
30 June 2019
|
Year ended
31 December 2018
|
Trade payables
|
74,776
|
69,142
|
To be paid to co-venturers
|
6,983
|
8,449
|
Payables to LGI
(a)
|
15,000
|
29,509
|
Customer advance payments
|
1,920
|
6,300
|
Other short-term advance payments
(b)
|
9,000
|
9,000
|
Staff costs to be paid
|
8,602
|
12,049
|
Royalties to be paid
|
6,882
|
6,238
|
V.A.T.
|
3,667
|
852
|
Taxes and other debts to be paid
|
5,411
|
4,670
|
|
132,241
|
146,209
|
Classified as follows:
|
Current
|
125,151
|
131,420
|
Non-Current
|
7,090
|
14,789
|
|
(a)
|
Payables related to the acquisition of non-controlling interest in
Colombia and Chile’s business from LG International in November 2018 (see Note 35.1 to the audited Consolidated Financial
Statements as of 31 December 2018). The first installment of US$ 15,000,000 was paid in June 2019.
|
|
(b)
|
Advance payment collected in relation with the sale of La Cuerva and
Yamu Blocks in November 2018 (see Note 35.2 to the audited Consolidated Financial Statements as of 31 December 2018).
|
GEOPARK LIMITED
30 JUNE 2019
Note 15
Fair value measurement of financial instruments
Fair value hierarchy
The following table presents the Group’s
financial assets and financial liabilities measured and recognized at fair value at 30 June 2019 and 31 December 2018 on a recurring
basis:
Amounts in US$ '000
|
Level 1
|
Level 2
|
At
30 June 2019
|
Assets
|
|
|
|
Cash and cash equivalents
|
|
|
|
Money market funds
|
25,936
|
-
|
25,936
|
Derivative financial instrument assets
|
|
|
|
Commodity risk management contracts
|
-
|
3,641
|
3,641
|
Total Assets
|
25,936
|
3,641
|
29,577
|
|
|
|
|
Amounts in US$ '000
|
Level 1
|
Level 2
|
Year ended
31 December 2018
|
Assets
|
|
|
|
Cash and cash equivalents
|
|
|
|
Money market funds
|
53,794
|
-
|
53,794
|
Derivative financial instrument assets
|
|
|
|
Commodity risk management contracts
|
-
|
27,539
|
27,539
|
Total Assets
|
53,794
|
27,539
|
81,333
|
There were no transfers between Level 2
and 3 during the period.
The Group did not measure any financial
assets or financial liabilities at fair value on a non-recurring basis as at 30 June 2019.
Fair values of other financial instruments
(unrecognized)
The Group also has a number of financial
instruments which are not measured at fair value in the balance sheet. For the majority of these instruments, the fair values are
not materially different to their carrying amounts, since the interest receivable/payable is either close to current market rates
or the instruments are short-term in nature.
Borrowings are comprised primarily of fixed
rate debt and variable rate debt with a short term portion where interest has already been fixed. They are classified under other
financial liabilities and measured at their amortized cost. The Group estimates that the fair value of its main financial liabilities
is approximately 99.6% of its carrying amount including interests accrued as of 30 June 2019. Fair values were calculated using
discounted cash flow analysis.
GEOPARK LIMITED
30 JUNE 2019
Note 16
Capital commitments
Capital commitments are detailed in Note
32.2 to the audited Consolidated Financial Statements as of 31 December 2018. The following updates have taken place during the
six-month period ended 30 June 2019:
Colombia
The Llanos 32 Block (12.5% working interest)
has committed to drill an exploratory well, which amounts to US$ 587,500 at GeoPark’s working interest, before 20 February
2020.
On 17 June 2019, the Colombian National
Hydrocarbons Agency (“ANH”) extended the first exploratory phase in the VIM 3 Block for an additional period ending
12 November 2019.
Chile
On 7 May 2019, the Chilean Ministry accepted
the GeoPark’s proposal to extend the second exploratory period in the Flamenco, Campanario and Isla Norte Blocks, ending
7 November 2020, 11 January 2021 and 7 November 2020, respectively.
Argentina
After the execution of certain committed
activities in the Sierra del Nevado Block during the year, the remaining commitment for the first exploratory period amounts to
US$ 300,000, at GeoPark’s working interest.
Note 17
Business transactions
Ecuador
On 22 May 2019, GeoPark signed final participation
contracts for the Espejo (GeoPark operated, 50% working interest) and Perico (GeoPark non-operated, 50% working interest) Blocks
in Ecuador, which were awarded to GeoPark in the Intracampos Bid Round held in Quito, Ecuador in March 2019. GeoPark assumed a
commitment of carrying out 3D seismic in the Espejo Block and drilling four exploration wells in each block, which amounts to US$
30,000,000 at GeoPark’s working interest, over the next four years.
GEOPARK LIMITED
30 JUNE 2019
Note 18
Subsequent events
Business transactions – Colombia
Llanos 86, Llanos 87 and Llanos 104 Blocks.
On 11 July 2019, GeoPark signed final contracts
for the 50% working interest and operationship in the Llanos 86, Llanos 87 and Llanos 104 Blocks, in partnership with Hocol (a
100% subsidiary of Ecopetrol). The blocks represent significant and attractive, low-risk, high potential exploration acreage in
the Llanos basin in proximity to the Llanos 34 Block. GeoPark assumed commitments to register 3D seismic and to drill six exploration
wells, for between US$ 40,000,000 and US$ 55,000,000, at GeoPark’s working interest, during the first exploration phase over
the next three years.
Sale of La Cuerva and Yamu Blocks
On 2 November 2018, GeoPark executed a purchase
and sale agreement to sell its 100% working interest in the La Cuerva and Yamu Blocks, in Colombia. The total consideration is
US$ 18,000,000, less a working capital adjustment of US$ 1,934,000, plus a contingent payment of US$ 2,000,000. Closing of the
transaction took place in July 2019, after the corresponding customary regulatory approvals.
As a consequence of this transaction, GeoPark
collected an advance payment of US$ 9,000,000 in November 2018 and the final payment (which includes the working capital adjustment)
of US$ 7,066,000 in July 2019.
Share-based payment
In July 2019, the Company issued 1,484,847
shares corresponding to the Stock Awards Programs granted to employees in 2016 and 2018, since the plans vested. See Note 30 to
the audited Consolidated Financial Statements as of 31 December 2018.