GeoPark, a leading independent Latin American oil and gas explorer, operator and consolidator, has reported its consolidated financial results for the three-month period ended September 30, 2023.
All figures are expressed in US Dollars and growth comparisons refer to the same period of the prior year, except when specified.
THIRD QUARTER 2023 HIGHLIGHTS
Oil and Gas Production and Operations
- 3Q2023 consolidated average oil and gas production of 34,778 boepd, below its potential mainly due to temporarily shut-in production in the CPO-5 Block (GeoPark non-operated, 30% WI) in Colombia and in the Fell Block (GeoPark operated, 100% WI) in Chile
- Full-year 2023 average production guidance is expected to be 36,000-37,000 boepd, lower than 38,000-40,000 boepd guidance previously announced mainly due to the delays in bringing back shut-in production
- In late September 2023, the CPO-5 Block operator received approval from the regulator (ANH) to resume production in the Indico 6 and Indico 7 wells, which are currently producing approximately 8,000 bopd gross in aggregate
- 12 rigs currently in operation (7 drilling rigs and 5 workover rigs), including 4 drilling rigs on exploration and appraisal wells
2023 Exploration Campaign Successes Open New Appraisal and Development Fairways
Llanos 123 Block (GeoPark operated, 50% WI) – Llanos Basin in Colombia:
- The Toritos 1 exploration well initiated testing in September and is currently producing 1,300 bopd
- GeoPark is adding a new appraisal well, the Toritos Norte 1, to be spudded before year-end (subject to joint venture approval)
- Based on these positive results, GeoPark will pursue multiple potential drilling opportunities to be tested in 2024 (1) (subject to joint venture approval)
Perico Block (GeoPark non-operated, 50% WI) – Oriente Basin in Ecuador:
- GeoPark is developing a complete structural and stratigraphic geological model for the U-sand formation after three successful wells, Yin-2, Perico Centro 1 and Perico Norte 4, currently producing more than 2,700 bopd
- The most recent appraisal well, the Perico Norte 4, initiated testing activities in early November and is currently producing approximately 1,230 bopd of 29 degrees API with a 6% water cut
- GeoPark is adding a new appraisal well, the Perico Norte 5, to be spudded before year-end (subject to joint venture approval)
- Based on these positive results, GeoPark will pursue multiple potential drilling opportunities to be tested in 2024 (subject to joint venture approval)
CPO-5 Block – Llanos Basin in Colombia:
- The Halcon 1 exploration well reached total depth in late October, and will test exploration potential in the northern part of the CPO-5 Block, close to the Llanos 34 Block
- Preliminary logging information indicates hydrocarbon potential in the Guadalupe formation and production tests are expected to initiate in late November
- The operator will spud the Perico 1 exploration well (adjacent to Halcon 1) before year-end to continue delineating the Guadalupe play in the northern part of the block
Llanos 87 Block (GeoPark operated, 50% WI) – Llanos Basin in Colombia:
- The Zorzal Este 1 exploration well reached total depth in early November
- Preliminary logging information indicates hydrocarbon potential in the Barco (Guadalupe) formation and production tests are expected to initiate in mid-November
- GeoPark plans to add a new appraisal well, the Zorzal Este 2, to be spudded before year-end (subject to joint venture approval)
- Based on these positive results, GeoPark will pursue multiple potential drilling opportunities to be tested in 2024 (subject to joint venture approval)
Llanos 34 Block (GeoPark operated, 45% WI) – Llanos Basin in Colombia:
- The first three horizontal wells are currently producing approximately 4,600 bopd combined
- The fourth horizontal development well initiated testing in early November 2023 and is currently producing approximately 3,450 bopd from the Mirador formation
- The fourth horizontal well was drilled faster, to a longer lateral length, and at a lower cost compared to the first three horizontal wells
Revenue, Adjusted EBITDA and Net Profit
- Revenue of $192.1 million
- Adjusted EBITDA of $115.2 million (60% Adjusted EBITDA margin)
- Operating profit of $80.5 million (42% operating profit margin)
- Cash flow from operations of $92.6 million
- Net profit of $24.8 million ($0.44 basic and diluted earnings per share)
Cost and Capital Efficiency as Key Differentiators
- Capital expenditures of $44.1 million
- 3Q2023 Adjusted EBITDA to capital expenditures ratio of 2.6x
- Last twelve-month return on capital employed (ROCE) of 42% (2)
Lower Financial Expenses and Strengthened Balance Sheet
- Cash in hand of $106.3 million (up from $86.4 million as of June 30, 2023)
- Financial expenses decreased to $12.5 million (from $14.1 million), after reducing gross debt by $275 million from April 2021 to December 2022
- Net leverage of 0.8x and no principal debt maturities until 2027
- $80 million committed credit facility in place, with no amounts drawn
Accelerated Shareholder Returns
- Quarterly dividend of $0.134 per share, or $7.5 million in the aggregate, payable on December 11, 2023
- Equivalent to an annualized dividend of approximately $30 million (or $0.535 per share), a 5% dividend yield (3)
- Completed share buyback program after acquiring 2.2 million shares (or 4% of total shares outstanding) for $23.6 million since November 2022
- Expected to return over $50 million in 2023 through dividends and buybacks, exceeding the 40-50% free cash flow target
- Renewed discretionary share buyback program for up to 10% of shares outstanding until December 2024
Upcoming Activities
- Drilling 10-12 gross wells in 4Q2023, targeting attractive conventional, short-cycle projects
- Key projects include:
- CPO-5 Block: Testing the Halcon 1 exploration well and spudding the Perico 1 exploration well before year-end
- Llanos 123 Block: Currently drilling the Bisbita Centro 1 exploration well, expected to reach total depth in mid-November, and spudding the Toritos Norte 1 appraisal well before year-end (subject to joint venture approval)
- Llanos 87 Block: Testing the Zorzal Este 1 exploration well and spudding the Zorzal Este 2 appraisal well before year-end (subject to joint venture approval)
- Llanos 34 Block: Currently drilling one additional horizontal development well and spudding an additional horizontal well before year-end
- Perico Block: Spudding the Perico Norte 5 appraisal well before year-end (subject to joint venture approval)
- Llanos 86 and Llanos 104 Blocks (GeoPark operated, 50% WI): Preliminary activities underway targeting the acquisition of over 650 square kilometers of 3D seismic to expand the inventory of exploration prospects
Andrés Ocampo, Chief Executive Officer of GeoPark, said: 'Our team and portfolio have again delivered with the opening up of multiple new exciting growth fairways for further development following our recent drilling successes. The 2024 self-funded and flexible work program, announced today, builds on these successes to pursue multiple potential drilling opportunities to be tested in 2024. We will continue delivering on our commitment to return value to shareholders while maintaining a strong balance sheet, reducing emissions, and strengthening our relationship with our neighbors.'
(1) Please refer to the 2024 Work Program and Shareholder Return Framework published on November 8th, 2023.
(2) ROCE is defined as last twelve-month operating profit divided by average total assets minus current liabilities.
(3) Based on GeoPark’s average market capitalization from October 1 to October 31, 2023.
Source: GeoPark
