Production up 23% YOY – conventional plays

By Richard Rostad, analyst, Oil & Gas 360

GeoPark (ticker: GPRK) announced preliminary first quarter metrics today, providing an international counterpoint to the chorus of U.S. shale.

GeoPark reports it produced a record net 39.6 MBOEPD, up 23% year-over-year. The vast majority of this volume is oil, as gas only accounts for 14% of company output. GeoPark’s Colombian assets have shown the strongest production growth over the past year, adding 22%, or 5.7 MBOEPD.

Colombia is the focus of much of GeoPark’s drilling program, as the company’s Llanos 34 block saw five new wells come online in Q1. The company plans to drill six Llanos development wells in Q2, with more in future quarters. The company also connected a new line transporting oil from the Llanos block to a regional pipeline in Q1, which will improve the company’s transportation outlook.

New Ecuador position will see drilling, 3D seismic work

GeoPark also entered its sixth country in Q1, acquiring a 50% interest in two blocks in Ecuador.

These blocks are part of the same petroleum system that the company is developing in Colombia and Peru, allowing relatively low-risk drilling. GeoPark has committed to invest $30 million in Ecuador over the next four years, drilling eight wells and acquiring 55 square kilometers of 3D seismic data.

The company is also working to prove new fields in several countries, and it plans to test appraisal and exploration wells in Argentina and Brazil in Q2. GeoPark is delivering on its share buyback program, spending $12 million to repurchase shares in the quarter.

International operations are often overlooked by domestic investors, as it is easy to be consumed by all the publicity driven to the shale plays. Oil and gas stretches far beyond North America, though, and if investors only think about the U.S. and Canada many opportunities can be missed.

Oil & Gas 360® recently spoke to Jim Hansen, the head of investment banking for Opportune Partners LLC, an independent investment banking and financial advisory affiliate of Opportune LLP. Hansen is a key part of an upcoming Oil & Gas 360® Special Report about public and private capital in energy finance.

Hansen and his team talk to a lot of E&P companies, review hundreds of proposals and analyze E&P company financial metrics on a non-stop basis.

“One of the attributes in some of the discussions we are having, something you start to hear about, are operations that are focused more on the mature, conventional-type assets which have a relatively lower decline curve than some of the shale plays–as being an important fundamental part of a company’s legacy asset base.

“I haven’t heard anybody talk about conventional assets in quite a while. They were certainly out of favor for many years after the shale revolution started, so people that have conventional assets is an interesting new addition to the conversation.”

EnerCom’s most recent Monthly Industry Trends Report outlines the major differences seen in international oil and gas when compared to unconventional development. Specific advantages and disadvantages vary, but on balance international oil and gas can be very competitive with U.S. shale. For more detail, download the newest report here.


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