Activity Step-Up Across Asset Base with New Record Production, New
Oilfield Discovery, New Acquisition and New Partnership
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 and Chile, today announced its operational update for
the three-month period ended June 30, 2018 (“2Q2018”).
All figures are expressed in US Dollars and growth comparisons refer to
the same period of the prior year, except when otherwise specified.
Second Quarter 2018 Highlights
37% Growth in Oil and Gas Production
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Consolidated oil and gas production up 37% to 35,870 boepd (up 11%
compared to 1Q2018)
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Oil production increased by 38% to 30,249 bopd (up 11% compared to
1Q2018)
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Colombian production increased by 33% to 27,940 boepd (up 6% compared
to 1Q2018)
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Gas production increased by 34% to 33.7 mmcfpd (up 16% compared to
1Q2018)
Colombia Operations
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Successful drilling and testing of Tigui 1 exploration well in the
Llanos 34 block (GeoPark operated, 45% WI) currently producing 1,100
bopd and representing a new oil field discovery, the second of 2018
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Successful drilling and testing of Tigana Norte 9 appraisal well,
located outside the certified 3P reserve area and expanding the size
of the Tigana oil field
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Successful drilling and testing of Tigana Sur Oeste 4, Tigana Sur
Oeste 5, Tigana Sur Oeste 8, Tigana Norte 8 and Jacana 21 development
wells
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Flowline construction underway to connect the Llanos 34 block to
regional pipeline infrastructure
Peru Operations
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Environmental Impact Assessment (EIA) to initiate operations in the
Situche Central oil field (tested oil with 200 mmbo upside potential)
in the Morona block (GeoPark operated, 75% WI) completed and submitted
to Peruvian authorities
Argentina Operations
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Operational takeover of newly acquired Aguada Baguales, El Porvenir
and Puesto Touquet blocks (GeoPark operated, 100% WI) in the Neuquen
basin with production of 2,400-2,500 boepd
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Spudding Rio Grande Este 1 exploration well in the CN-V block (GeoPark
operated, 50% WI), to test conventional potential in the Grupo Neuquen
and Grupo Mendoza formations, expected to reach total depth in 3Q2018
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Acquired new low-cost large exploration acreage, the Los Parlamentos
block (GeoPark non-operated, 50% WI), in the Neuquen basin, in
partnership with YPF
Brazil Operations
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Gas production up 9% from the Manati gas field
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New exploration well in the Reconcavo basin in 4Q2018
Chile Operations
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Spudding Jauke 1 exploration well in the Fell block (GeoPark operated,
100% WI) to test the Springhill and Tobifera formations and expected
to reach total depth in 3Q2018
Upcoming 3Q2018 Catalysts
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Testing four drilled wells and drilling ten new wells, including seven
development wells, two exploration wells and one appraisal well
(Colombia, Argentina and Chile)
Breakdown of Quarterly Production by Country
The following table shows production figures for 2Q2018, as compared to
2Q2017:
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2Q2018
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2Q2017
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Total (boepd)
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Oil (bopd)a
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Gas (mcfpd)
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Total (boepd)
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% Chg.
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Colombia
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27,940
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27,825
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690
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21,015
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33%
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Brazil
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2,904
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40
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17,184
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2,658
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9%
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Chile
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2,559
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786
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10,638
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2,450
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4%
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Argentina
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2,467
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1,598
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5,214
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-
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-
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Total
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35,870
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30,249
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33,726
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26,123
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37%
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a) Includes royalties paid in kind in Colombia for approximately 898
bopd in 2Q2018. No royalties were paid in kind in Brazil, Chile or
Argentina.
Quarterly Production Evolution
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(boepd)
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2Q2017
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3Q2017
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4Q2017
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1Q2018
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2Q2018
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Colombia
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21,015
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22,367
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24,378
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26,405
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27,940
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Brazil
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2,658
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3,141
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3,328
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2,775
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2,904
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Chile
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2,450
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2,817
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2,932
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2,873
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2,559
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Argentina
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-
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-
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16
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142
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2,467
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Total
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26,123
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28,325
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30,654
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32,195
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35,870
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Oil
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21,930
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23,237
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25,341
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27,345
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30,249
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Gas
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4,193
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5,088
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5,313
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4,850
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5,621
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Oil and Gas Production Update
Consolidated:
Overall oil and gas production grew by 37% to 35,870 boepd in 2Q2018
from 26,123 boepd in 2Q2017, due to increased Colombian production, new
production from the recent Argentina acquisition and increased
production in Brazil and Chile.
Oil represented 85% of total reported production compared to 84% in
2Q2017.
Colombia:
Average net production in Colombia grew 33% to 27,940 boepd in 2Q2018
compared to 21,015 boepd in 2Q2017, primarily attributed to successful
appraisal and development drilling in the Tigana and Jacana oil fields
in the Llanos 34 block, which represented 95% of Colombian production in
2Q2018.
Llanos 34 block 2Q2018 drilling results:
Exploration and appraisal drilling:
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Tigui 1 exploration well, located south-east of the main delineating
fault line of the Jacana oil field, was drilled to a total depth of
11,696 feet. A production test conducted in early July 2018 with an
electric submersible pump in the Guadalupe formation resulted in a
production rate of 1,100 bopd of 17.0 degrees API, with approximately
1% water cut. Additional production history and drilling will be
needed to delineate the potential of this new oil field discovery.
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Tigui Sur 1 exploration well, located south of Tigui 1, was drilled to
a total depth of 13,277 feet. The well is expected to be tested during
3Q2018.
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Chachalaca Sur 1 exploration well, located on a fault trend to the
west of the Tigana and Jacana oil fields, was drilled in 1Q2018 and
tested in the Mirador formation during 2Q2018. The well is currently
producing 170 bopd from the Mirador formation. Chachalaca Sur also
showed potential in the Guadalupe formation, where short-term tests
were carried out during 1Q2018 with production rates of 350 bopd.
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Tigana Norte 9 appraisal well was drilled in 1Q2018 to a total depth
of 11,581 feet and tested during 2Q2018. A production test conducted
with an electric submersible pump in the Guadalupe formation resulted
in a production rate of 1,150 bopd. The Tigana Norte 9 well was
drilled outside the 3P outline defined in the 2017 D&M reserve
certification.
Development drilling:
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Five new wells were tested and put on production, including the Tigana
Sur Oeste 4, Tigana Sur Oeste 5, Tigana Sur Oeste 8, Tigana Norte 8
and Jacana 21 development wells, which tested approximately 5,100 bopd
gross.
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Two additional wells were drilled, Tigana Sur Oeste 6 and Jacana 22
development wells, expected to be tested during 3Q2018.
Facilities update:
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During 2Q2018 the Company continued with engineering and construction
of the flowline to connect the Llanos 34 block to the ODL pipeline,
which is expected to be operational by early 2019. Net capital
expenditures for GeoPark for this project – which will support future
production growth and reduce transportation and operating costs – are
$15-20 million.
Tiple acreage (GeoPark operated) farm-in drilling results in 2Q2018:
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Yaguasito 1 exploration well, was drilled to a total depth of 9,196
feet. According to petrophysical logging interpretation, the well
encountered non-commercial oil accumulations and, following these
results, a decision was made to plug and abandon the well.
For a summary of upcoming drilling and testing activities, please refer
to the 3Q2018 drilling schedule below.
Peru:
GeoPark completed the EIA to initiate operations in the Situche Central
oil field in the Morona block.
The EIA was submitted for approval to the Servicio Nacional de
Certificacion Ambiental (SENACE) on July 2, 2018 after more than a year
of collecting data, and in which local communities were also involved.
The Morona block covers an area of 1.9 million acres on the western side
of the Marañon basin, one of the most prolific hydrocarbon basins in
Peru, where more than 1 billion barrels of oil have been produced from
the surrounding blocks. The Morona block contains the Situche Central
oil field, which has been delineated by two wells that tested combined
production rates of 7,500 bopd of light oil with upside potential of 200
mmbo. D&M has certified gross proven and probable (2P) reserves of 42.1
million barrels of oil (mmbo) and 3P reserves of 83.0 mmbo for the
Situche Central oil field. The Morona block also includes a large
exploration potential with high impact prospects and plays – including
unrisked exploration resources ranging from 300 to 500 mmbo, as audited
by Gaffney, Cline & Associates.
Argentina:
Average net production in Argentina totaled 2,467 boepd in 2Q2018 (65%
oil, 35% gas), corresponding to the recent acquisition of the Aguada
Baguales, El Porvenir and Puesto Touquet blocks (GeoPark operated, 100%
WI) in the Neuquen basin.
GeoPark closed the acquisition and initiated operational takeover at the
end of 1Q2018 of the Aguada Baguales, El Porvenir and Puesto Touquet
blocks, which have multiple attractive development and exploration
projects, with the potential to significantly increase production and
reserves from cash flow generated from existing production.
The Company will carry out the following activities in the above-
mentioned blocks during 3Q2018:
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Initiate a low-cost well intervention campaign aimed at enhancing base
production levels.
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Test a new tight gas play in the El Porvenir block, through a low-cost
well intervention (approximately $0.3-0.4 million) of an existing well
(drilled by the previous owner of the block) to evaluate reservoir
conditions, potential well productivity and field size delineation.
Exploration drilling in the CN-V block:
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Rio Grande Este exploration well, located adjacent to the Rio Grande
Oeste light oil field discovered by GeoPark in 2017, is currently
being drilled, targeting conventional potential in the Grupo Neuquen
and Grupo Mendoza formations.
New exploration acreage in the Neuquen basin and YPF partnership:
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The Los Parlamentos block was awarded to YPF in the Mendoza bidding
round on May 31, 2018.
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The block covers an area of 366,000 acres with seismic coverage and is
located near other producing fields.
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GeoPark will receive a 50% non-operating WI in exchange for a net
financial commitment of $6 million over the next three years.
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Customary regulatory approvals are still pending as of the date of
this release.
For further details related to the Los Parlamentos block, please refer
to the release published on June 11, 2018.
Brazil:
Average net production in the Manati gas field (GeoPark non-operated,
10% WI) improved by 9% to 2,904 boepd in 2Q2018, compared to 2,658 boepd
in 2Q2017. The increase in 2Q2018 resulted from increased industrial
consumption and decreased hydroelectric power availability.
The Company is currently carrying out preliminary activities related to
a new exploration well in the REC-T-128 block (GeoPark operated, 70% WI)
in the Reconcavo basin, where it plans to spud the well during October
2018.
Chile:
Average net oil and gas production in Chile increased by 4% to 2,559
boepd in 2Q2018 compared to 2,450 boepd in 2Q2017. Gas production
figures in 2Q2017 were partially affected by a temporary interruption in
gas purchases from the buyer. The production mix during 2Q2018 was 69%
gas and 31% oil (vs. 62% gas and 38% oil in 2Q2017). The Fell block
(GeoPark operated, 100% WI) represented 99% of Chilean production.
Exploration drilling in the Fell block:
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Jauke 1 exploration gas well is currently being drilled, targeting the
Springhill and Tobifera formations.
3Q2018 Drilling Schedule
The following is a summary of expected drilling activities scheduled for
3Q2018:
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Prospect/Wella
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Country
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Block
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WI
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Type
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1
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Tigana 5
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Colombia
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Llanos 34
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45%
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Development
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2
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Tigana Sur Oeste 6 b
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Colombia
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Llanos 34
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45%
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Development
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3
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Tigana Norte 10
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Colombia
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Llanos 34
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45%
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Development
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4
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Tigana Norte 11
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Colombia
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Llanos 34
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45%
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Development
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5
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Tigana Norte 14
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Colombia
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Llanos 34
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45%
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Development
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6
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Chiricoca 2
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Colombia
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Llanos 34
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45%
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Appraisal
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7
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Jacana 22 b
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Colombia
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Llanos 34
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45%
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Development
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8
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Jacana 14
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Colombia
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Llanos 34
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45%
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Development
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9
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Jacana 24
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Colombia
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Llanos 34
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45%
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Development
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10
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Jacana 25
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Colombia
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Llanos 34
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45%
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Development
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11
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Buco 1
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Colombia
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Llanos 34
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45%
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Exploration
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12
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Tigui Sur 1 b
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Colombia
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Llanos 34
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45%
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Exploration
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13
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Rio Grande Este 1 b
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Argentina
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CN-V
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50%
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Exploration
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14
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Jauke 1
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Chile
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Fell
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100%
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Exploration
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a)
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Information included in the table above is subject to change and may
also be subject to partner or regulatory approval
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b)
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Drilling initiated in 2Q2018 with testing expected in 3Q2018
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OTHER NEWS / RECENT EVENTS
Reporting dates for 2Q2018 results release and conference call
GeoPark will report its 2Q2018 financial results on August 8, 2018,
after the market close. In conjunction with the 2Q2018 results press
release, GeoPark’s management will host a conference call on August 9,
2018 at 10:00 am (Eastern Daylight Time) to discuss 2Q2018 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: 3166854
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.
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.
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 2018 production growth, expected schedule, economic
recovery, payback timing, IRR, drilling activities, demand for oil and
gas, capital expenditures plan, regulatory approvals, reserves and
exploration resources. 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. Oil and gas production figures included in this release are
stated before the effect of royalties paid in kind, consumption and
losses, except when specified.
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.
Readers are cautioned that the exploration resources disclosed in this
press release are not necessarily indicative of long term performance or
of ultimate recovery. Unrisked prospective resources are not risked for
change of development or chance of discovery. If a discovery is made,
there is no certainty that it will be developed or, if it is developed,
there is no certainty as to the timing of such development. There is no
certainty that any portion of the Prospective Resources will be
discovered. If discovered, there is no certainty that it will be
commercially viable to produce any portion of the resources. Prospective
Resource volumes are presented as unrisked.
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