Subsurface and Operational Results Drive Financial Performance:
Higher
Oil and Gas Production, Record EBITDA, Cost Efficiency Improvements,
Stronger Balance Sheet
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 reports its consolidated financial results
for the three-month period ended June 30, 2018 (“Second Quarter” or
“2Q2018”).
A conference call to discuss 2Q2018 Financial Results will be held on
Thursday August 9, 2018 at 10:00 am Eastern Daylight 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. As a result, this release should be read in conjunction
with consolidated financial statements and the notes to those statements
for the period ended June 30, 2018, available on the Company’s website.
SECOND QUARTER 2018 HIGHLIGHTS
Record Oil and Gas Production
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Consolidated oil and gas production up 37% to 35,870 boepd (up 11%
compared to 1Q2018)
-
Oil production increased by 38% to 30,249 bopd (up 11% compared to
1Q2018)
-
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)
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Five drilling rigs currently being operated by GeoPark (three in
Colombia, one in Argentina and one in Chile)
Growing Cash Generation
-
Revenues more than doubled to $159.3 million
-
Adjusted EBITDA increased by 125% to $83.3 million, a new record high
-
Operating profit increased more than three times to $52.0 million
-
Net Income increased to $5.5 million gain from $1.1 million loss
Continuing Cost Advantages
-
Operating costs in the Llanos 34 block (GeoPark operated, 45% WI) of
$3.9 per barrel
-
Consolidated operating costs of $8.5 per boe and Colombia $5.9 per boe
Stronger Balance Sheet
-
Net debt to Adjusted EBITDA ratio improved to 1.3x from 2.2x
-
Cash position of $105.2 million
Improving Market Liquidity
-
Average daily stock trading volume climbed to $8.7 million in June,
$6.5 million in the past three months
Community Award
-
GeoPark Colombia team received the “Good Neighbor” award from the ANH
for its excellent social practices in Colombia. GeoPark was selected
from among 107 different initiatives by a panel consisting of the
United Nations, Ministry of Mines and Energy and the ANH
James F. Park, Chief Executive Officer of GeoPark said: “Half way into
the year - and our better-than-expected performance again is fueling an
acceleration and expansion of our original work program. This means we
can invest more in the second half of the year to produce more oil and
gas and to make more money and build a better company for our
shareholders.
All the work GeoPark has done over the last fifteen years to build the
strongest platform across Latin America continues to pay off. Our deep
foundation keeps us going and growing - both in tough times and now with
stronger prices providing a wind-at-our-back. And all begins with our
committed team that knows how to find oil and get it out of the ground
and to market safely and profitably. The same team that discovered and
operates the Tigana-Jacana oil fields in Colombia - one of the most
attractive onshore plays in Latin America today.”
CONSOLIDATED OPERATING PERFORMANCE
Key performance indicators:
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Key Indicators
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2Q2018
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1Q2018
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2Q2017
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1H2018
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1H2017
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Oil productiona (bopd)
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30,249
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27,345
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21,930
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28,805
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21,213
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Gas production (mcfpd)
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33,726
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29,101
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25,158
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31,428
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26,646
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Average net production (boepd)
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35,870
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32,195
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26,123
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34,043
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25,654
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Brent oil price ($ per bbl)
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74.9
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67.3
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51.0
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71.1
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52.8
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Combined price ($ per boe)
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51.7
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44.7
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32.2
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48.4
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32.4
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⁻ Oil ($ per bbl)
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57.2
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48.6
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33.4
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53.1
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33.8
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⁻ Gas ($ per mcf)
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5.1
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5.4
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5.5
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5.3
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5.3
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Sale of crude oil ($ million)
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145.7
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111.0
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64.1
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256.7
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118.6
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Sale of gas ($ million)
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13.7
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12.8
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11.1
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26.5
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23.3
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Revenue ($ million)
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159.3
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123.9
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75.2
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283.2
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141.9
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Commodity risk management contracts ($ million)
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-11.4
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-3.9
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5.9
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-15.2
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11.3
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Production & operating costsb ($ million)
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-44.8
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-34.1
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-25.3
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-78.8
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-42.9
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G&G, G&Ac and Selling expenses ($ million)
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-17.5
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-15.2
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-13.9
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-32.7
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-24.1
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Adjusted EBITDA ($ million)
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83.3
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63.3
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37.1
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146.6
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75.9
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Adjusted EBITDA ($ per boe)
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27.0
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22.9
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15.9
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25.0
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17.3
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Operating netback ($ per boe)
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32.5
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28.5
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22.2
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30.6
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23.0
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Profit (loss) ($ million)
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5.5
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24.9
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-1.1
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30.4
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4.7
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Capital expenditures ($ million)
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36.3
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21.4
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25.9
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57.7
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49.4
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Argentina acquisition ($ million)
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-3.2d
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52.0
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-
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48.8
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-
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Cash and cash equivalents ($ million)
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105.2
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120.4
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77.0
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105.2
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77.0
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Short-term financial debt ($ million)
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7.6
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0.8
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31.7
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7.6
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31.7
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Long-term financial debt ($ million)
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418.9
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418.7
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314.6
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418.9
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314.6
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Net debt ($ million)
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321.3
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299.1
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269.3
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321.3
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269.3
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a)
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Includes government royalties paid in kind in Colombia for
approximately 898, 930 and 781 bopd in 2Q2018, 1Q2018 and 2Q2017
respectively. No royalties were paid in kind in Chile, Brazil and
Argentina.
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b)
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Production and operating costs include operating costs and
royalties paid in cash.
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c)
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G&A expenses include $0.8 million, $0.6 million and $0.8 million for
2Q2018, 1Q2018 and 2Q2017, respectively, of (non-cash) share-based
payments that are excluded from the Adjusted EBITDA calculation.
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d)
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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.
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Production: 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.
For further details, please refer to the 2Q2018 Operational Update
published on July 11, 2018.
Reference and Realized Oil Prices: Brent crude oil price averaged
$74.9 per bbl during 2Q2018, and the consolidated realized oil sales
price averaged $57.2 per bbl in 2Q2018, an 18% increase from $48.6 per
bbl in 1Q2018 and a 71% increase from $33.4 per bbl in 2Q2017.
Differences between reference and realized prices reflect commercial and
transportation discounts as well as the Vasconia price differential in
Colombia, which averaged $4.1 per bbl in both 2Q2018 and 1Q2018,
compared to a $3.6 per bbl discount in 2Q2017. Commercial and
transportation discounts in Colombia were reduced by 50 cents per bbl to
$14.5 in 2Q2018, compared to $15.0 per bbl in 1Q2018 and $15.1 per bbl
in 2Q2017.
In Colombia, construction is underway of a flowline in the Llanos 34
block targeted for completion in January 2019 and is expected to improve
current commercial and transportation discounts even further.
The table below provides a breakdown of reference and net realized oil
prices in Colombia, Chile and Argentina in 2Q2018:
2Q2018 - Realized Oil Prices
($ per bbl)
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Colombia
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Chile
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Argentina
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Brent oil price
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74.9
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74.9
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74.9
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Vasconia differential
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(4.1)
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-
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Commercial and transportation discounts
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(14.5)
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(9.9)
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-
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Other*
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-
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(8.2)
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Realized oil price
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56.3
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65.0
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66.7
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Weight on oil sales mix
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91%
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3%
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6%
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*Price stability agreement between the government and the oil sector
in Argentina, effective May 2018, temporarily froze oil prices at
$66-67/bbl for an initial period of three months. This agreement
could be extended beyond July 2018, depending on prevailing market
conditions.
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Revenue: Consolidated revenues increased by 112% to $159.3
million in 2Q2018, compared to $75.2 million in 2Q2017. Higher realized
prices and higher deliveries pushed revenues higher.
Sale of crude oil: Consolidated oil
revenues increased by 127% to $145.7 million in 2Q2018, driven by a 71%
increase in realized oil prices and a 32% increase in oil deliveries
(compared to 2Q2017). Oil revenues were 91% of total revenues compared
to 85% in 2Q2017.
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Colombia: In 2Q2018, oil revenues increased by 130% to $129.4 million
as realized prices increased by 74% to $56.3 per bbl and oil
deliveries increased by 32% to 26,289 bopd.
Colombian
earn-out payments (deducted from Colombian oil revenues) increased to
$5.2 million in 2Q2018, compared to $2.5 million in 2Q2017, in line
with higher oil revenues and increased production.
-
Chile: In 2Q2018, oil revenues decreased by 36% to $4.9 million, due
to lower volumes sold which were partially offset by higher oil
prices. Oil deliveries were compared against 2Q2017 which included oil
deliveries for the first and second quarters given negotiations with
ENAP. Realized oil prices increased by 51% to $65.0 per bbl, in line
with higher Brent prices. Oil revenues increased by 15% compared to
1Q2018.
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Argentina: In 2Q2018, oil revenues were $11.1 million, resulting from
$66.7 realized oil prices and deliveries of 1,824 bopd, all from the
recently acquired Aguada Baguales, El Porvenir and Puesto Touquet
blocks (GeoPark operated, 100% WI).
Sale of gas: Consolidated gas revenues
increased by 22% to $13.7 million in 2Q2018 compared to $11.1 million in
2Q2017, driven by a 30% increase in gas deliveries even though gas
prices declined by 6%.
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Chile: In 2Q2018, gas revenues increased by 28% to $4.4 million
reflecting higher gas prices and deliveries. Gas prices were 6%
higher, or $5.3 per mcf ($31.6 per boe) in 2Q2018, in line with
increased methanol prices. Gas deliveries increased by 20% to 9,200
mcfpd (1,533 boepd).
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Brazil: In 2Q2018, gas revenues decreased by 7% to $7.0 million,
mainly due to lower gas prices, partially offset by increased
deliveries. Gas prices decreased by 15% to $4.9 per mcf ($29.3 per
boe), in line with a 16% devaluation of the local currency. Gas
deliveries increased by 9% to 15,808 mcfpd (2,635 boepd), resulting
from increased industrial consumption and decreased hydroelectric
power availability.
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Argentina: In 2Q2018, gas revenues were $1.8 million, resulting from
$5.2 per mcf ($31.5 per boe) realized gas prices and deliveries of
3,876 mcfpd (646 boepd), all corresponding to the recently acquired
blocks in Argentina.
Commodity Risk Management Contracts: GeoPark uses hedge contracts
to manage risks and limit the impact of oil price volatility on the work
program.
For the three-month period ending June 30, 2018, GeoPark realized $13.3
million in lower net revenues from certain hedge contracts in place that
had a floor of $52-55/bbl and a ceiling of $58-78/bbl Brent. In
accordance with accounting rules, these reduced revenues are adjusted by
the change in the value of future contracts and recorded as a $1.9
million gain.
For details regarding current contracts in place, please refer to
commodity risk management contracts below, or see Note 4 of GeoPark’s
consolidated financial statements for the period ended June 30, 2018,
available on the Company’s website.
Production and Operating Costs1: Consolidated
operating costs per boe were $8.5 in 2Q2018, slightly higher than the
$8.3 per boe in 2Q2017 due to the recently acquired blocks in Argentina,
which have higher costs per boe.
Consolidated operating costs increased by $6.8 million to $26.3 million
in 2Q2018 compared to 2Q2017, as follows:
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Colombia: Operating costs per boe decreased by 3% to $5.7 per boe in
2Q2018 compared to $5.9 per boe in 2Q2017. Total operating costs
increased by 28% to $13.6 million, in line with a 32% increase in
volumes delivered. Operating costs per boe in the Llanos 34 block
continue to be among the very lowest in the industry at $3.9 per bbl.
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Chile: Operating costs decreased by 24% to $4.9 million in 2Q2018 from
$6.4 million in 2Q2017. Operating costs in 2Q2017 were temporarily
affected by a higher share of oil in the sales mix, which had been
deferred from 1Q2017. Compared to 1Q2018, operating costs decreased by
10% or by $0.5 million to $4.9 million. Operating costs per boe were
$22.7.
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Brazil: Operating costs decreased by 30% to $1.6 million in 2Q2018
from $2.3 million in 2Q2017, because of one-time maintenance costs in
the Manati block (GeoPark non-operated, 10% WI) in 2Q2017, which was
offset by 9% higher volumes delivered. Operating costs per boe
decreased by 36% to $6.5 per boe from $10.1 in 2Q2017.
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Argentina: Operating costs were $6.0 million in 2Q2018, related to
production from Aguada Baguales, El Porvenir and Puesto Touquet
blocks. Operating costs per boe were $26.9.
In 2Q2018 the Company carried out the takeover of the Aguada Baguales,
El Porvenir and Puesto Touquet blocks and immediately began evaluating
and implementing operational efficiencies and synergies, which together
with ongoing renegotiations of existing contracts and a low-cost well
intervention campaign initiated in early August 2018, are expected to
improve overall profitability of the project. In addition, the Company
is currently evaluating different alternatives to initiate drilling
activity in these blocks, which is expected to start before year-end.
Increased volumes and prices increased consolidated royalties by $12.6
million to $18.5 million in 2Q2018.
Selling Expenses: Consolidated selling expenses increased by $1.1
million to $1.2 million in 2Q2018 compared to $0.1 million in 2Q2017.
The increase of $0.9 million in 2Q2018 represented transportation costs
in the Aguada Baguales, El Porvenir and Puesto Touquet blocks in
Argentina.
Administrative Expenses: Consolidated G&A costs per boe decreased
by 21% to $4.0 per boe in 2Q2018 (vs $5.1 per boe in 2Q2017). Total
consolidated G&A slightly increased to $12.5 million in 2Q2018, compared
to $12.0 million in 2Q2017.
Geological & Geophysical Expenses: Consolidated G&G costs per
boe increased to $1.3 per boe in 2Q2018 (vs $0.8 per boe in 2Q2017).
Total consolidated G&G expenses increased to $3.9 million in 2Q2018,
compared to $1.9 million in 2Q2017, due to an increased scale of
operations.
Adjusted EBITDA: Consolidated Adjusted EBITDA2 surged
by 125% to $83.3 million, or $27.0 per boe, in 2Q2018 compared to $37.1
million, or $15.9 per boe, in 2Q2017.
-
Colombia: Adjusted EBITDA of $79.6 million in 2Q2018
-
Chile: Adjusted EBITDA of $2.0 million in 2Q2018
-
Brazil: Adjusted EBITDA of $4.0 million in 2Q2018
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Argentina: Adjusted EBITDA of $2.6 million in 2Q2018
-
Corporate and Peru: Adjusted EBITDA of negative $4.9 million in 2Q2018
The table below shows production, volumes sold and the breakdown of the
most significant components of Adjusted EBITDA for 2Q2018 and 2Q2017, on
a per country and per boe basis:
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Adjusted EBITDA/boe
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Colombia
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Chile
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Brazil
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Argentina
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Total
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2Q18
|
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2Q17
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2Q18
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2Q17
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2Q18
|
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2Q17
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2Q18
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2Q17
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2Q18
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2Q17
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Production (boepd)
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27,940
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|
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21,015
|
|
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2,559
|
|
|
2,450
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2,904
|
|
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2,658
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|
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2,467
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-
|
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35,870
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26,123
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Stock variation /RIKa
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(1,553)
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(1,047)
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(199)
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782
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(229)
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(209)
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3
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-
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(1,977)
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(474)
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Sales volume (boepd)
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26,387
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19,968
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2,360
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3,232
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|
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2,675
|
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2,449
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2,470
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-
|
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33,893
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25,649
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% Oil
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99.6%
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99.8%
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35%
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61%
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2%
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2%
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74%
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-
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86%
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85%
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($ per boe)
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|
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|
|
|
|
|
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Realized oil price
|
|
|
56.3
|
|
|
32.3
|
|
|
65.0
|
|
|
43.0
|
|
|
79.9
|
|
|
54.9
|
|
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66.7
|
|
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-
|
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57.2
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|
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33.4
|
Realized gas priceb
|
|
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40.3
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|
|
-
|
|
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31.6
|
|
|
29.7
|
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29.3
|
|
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34.3
|
|
|
31.5
|
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-
|
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30.5
|
|
|
32.8
|
Earn-out
|
|
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(2.2)
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|
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(1.3)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
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(2.0)
|
|
|
(1.3)
|
Combined Price
|
|
|
54.0
|
|
|
31.0
|
|
|
43.3
|
|
|
37.8
|
|
|
30.1
|
|
|
34.7
|
|
|
57.5
|
|
|
-
|
|
|
51.7
|
|
|
32.2
|
Realized commodity risk management contracts
|
|
|
(5.6)
|
|
|
1.1
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(4.3)
|
|
|
0.8
|
Operating costs
|
|
|
(5.7)
|
|
|
(5.9)
|
|
|
(22.7)
|
|
|
(21.7)
|
|
|
(6.5)
|
|
|
(10.1)
|
|
|
(26.9)
|
|
|
-
|
|
|
(8.5)
|
|
|
(8.3)
|
Royalties in cash
|
|
|
(6.6)
|
|
|
(2.6)
|
|
|
(1.8)
|
|
|
(1.7)
|
|
|
(2.9)
|
|
|
(3.1)
|
|
|
(6.8)
|
|
|
-
|
|
|
(6.0)
|
|
|
(2.5)
|
Selling & other expenses
|
|
|
(0.1)
|
|
|
0.0
|
|
|
(0.7)
|
|
|
(0.5)
|
|
|
-
|
|
|
-
|
|
|
(4.0)
|
|
|
-
|
|
|
(0.4)
|
|
|
(0.0)
|
Operating Netback/boe
|
|
|
36.2
|
|
|
23.6
|
|
|
18.1
|
|
|
13.9
|
|
|
20.7
|
|
|
21.4
|
|
|
19.9
|
|
|
-
|
|
|
32.5
|
|
|
22.2
|
G&A, G&G, & other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5.5)
|
|
|
(6.3)
|
Adjusted EBITDA/boe
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27.0
|
|
|
15.9
|
a)
|
|
RIK (Royalties in kind). Includes royalties paid in kind in Colombia
for approximately 898 and 781 bopd in 2Q2018 and 2Q2017
respectively. No royalties were paid in kind in Chile, Brazil or
Argentina.
|
b)
|
|
Conversion rate of $mcf/$boe=1/6.
|
Depreciation: Consolidated depreciation charges increased by 22%
to $24.3 million in 2Q2018, compared to $20.0 million in 2Q2017, on
increased volumes. On a per bbl basis, however, depreciation costs
decreased by 8% to $7.9 per boe due to drilling successes and increased
reserves.
Write-off of Unsuccessful Exploration Efforts: Consolidated
write-off of unsuccessful exploration efforts were $9.2 million in
2Q2018 compared to $4.6 million in 2Q2017, mostly due to non-commercial
oil accumulations found in Yaguasito (Tiple block in Colombia).
Other Income (Expenses): Other operating losses amounted to $0.1
million in 2Q2018, compared to $1.5 million in 2Q2017.
CONSOLIDATED NON-OPERATING RESULTS AND PROFIT FOR THE PERIOD
Financial Expenses: Net financial costs increased to $8.7 million
in 2Q2018, compared to $7.4 million in 2Q2017, due to higher interest
costs.
Foreign Exchange: Net foreign exchange losses amounted to a $13.3
million loss in 2Q2018 compared to a $4.7 million loss in 2Q2017,
including non-cash foreign exchange differences generated from Brazil
due to the devaluation of the real and its impact on US
dollar-denominated intercompany debt.
Income Tax: Income tax expenses were $24.4 million in 2Q2018
compared to $4.8 million in 2Q2017, in line with higher operating
profits.
Net Income: Net income increased by $6.6 million to a gain of
$5.5 million in 2Q2018 compared to a $1.1 million loss in 2Q2017.
BALANCE SHEET
Cash and Cash Equivalents: Cash and cash equivalents totaled
$105.2 million as of June 30, 2018. Year- end 2017 cash and cash
equivalents were $134.8 million. The difference reflects cash used in
investing activities of $106.5 million, cash used in financing
activities of $21.9 million, and cash generated from operating
activities of $98.6 million.
Cash used in investing activities of $106.5 million includes capital
expenditures related to development, appraisal and exploration
activities of $57.7 million, allocated predominantly to Colombia, and
$48.9 million for the acquisition of the Aguada Baguales, El Porvenir
and Puesto Touquet blocks in Argentina.
Cash used in financing activities of $21.9 million was the sum of $13.8
million for interest payments and $8.1 million for the dividend
distribution by our Colombian business to LGI, related to their
non-controlling minority interest.
The agreement with LG International Corp (LGI) in Colombia allows
GeoPark to earn back up to 12% equity participation at the Colombian
subsidiary level in accordance with the performance of the project.
During 1H2018 GeoPark paid an $8.1 million dividend to LGI. GeoPark and
LGI are diligently working on the implementation of the dilution
mechanism, which will be triggered with the next dividend payment.
Cash flows from operating activities of $98.6 million is net of $67.7
million in cash income taxes paid during 2Q2018, predominantly in
Colombia ($45.5 million of which are related to tax gains of fiscal year
2017 plus tax prepayments of $21.0 million, which will be deducted
against tax gains of fiscal year 2018, to be paid in 2019). The company
does not expect to pay additional cash income taxes during 2H2018.
Financial Debt: Total financial debt (net of issuance costs) was
$426.6 million, including the $425 million 2024 notes (“2024 Notes”)
issued in September 2017. Short-term debt was $7.6 million.
FINANCIAL RATIOSa
($ million)
|
At period- end
|
|
|
Financial Debt
|
|
|
Cash and Cash Equivalents
|
|
|
Net Debt
|
|
|
Net Debt/LTM Adj. EBITDAb
|
|
|
LTM Interest Coveragec
|
|
|
|
|
|
|
|
|
|
|
2Q2017
|
|
|
346.3
|
|
|
77.0
|
|
|
269.3
|
|
|
2.2x
|
|
|
4.1x
|
3Q2017
|
|
|
420.4
|
|
|
135.2
|
|
|
285.2
|
|
|
1.9x
|
|
|
5.3x
|
4Q2017
|
|
|
426.2
|
|
|
134.8
|
|
|
291.4
|
|
|
1.7x
|
|
|
6.3x
|
1Q2018
|
|
|
419.5
|
|
|
120.4
|
|
|
299.1
|
|
|
1.5x
|
|
|
7.2x
|
2Q2018
|
|
|
426.6
|
|
|
105.2
|
|
|
321.3
|
|
|
1.3x
|
|
|
8.5x
|
a)
|
|
Based on trailing LTM financial results.
|
b)
|
|
LTM adj. EBITDA was $246.4 million as of June 30, 2018.
|
c)
|
|
LTM interest expense was $28.9 million as of June 30, 2018
|
Covenants in 2024 Notes: The 2024 Notes include incurrence test
covenants that require the net debt to adjusted EBITDA ratio be lower
than 3.5 times and the adjusted EBITDA to interest ratio higher than 2
times until September 2019. Failure to comply with the incurrence test
covenants would not trigger an event of default. As of the date of this
release, the Company is compliant with all provisions and covenants.
COMMODITY RISK OIL MANAGEMENT CONTRACTS
The Company has the following commodity risk management contracts
(reference ICE Brent) in place as of the date of this release:
|
|
|
|
|
|
|
|
|
|
Period
|
|
|
Type
|
|
|
Volume (bopd)
|
|
|
Contract terms ($ per bbl)
|
|
|
|
|
|
|
Purchased Put
|
|
|
Sold Put
|
|
|
Sold Call
|
3Q2018
|
|
|
Zero cost 3-way
Zero cost 3-way Zero cost 3 way
|
|
|
5,000
4,000 4,000
Total: 13,000
|
|
|
53.0 55.0
60.0
|
|
|
43.0 45.0
50.0
|
|
|
69.0
77.2-77.5
97.0-97.1
|
4Q2018
|
|
|
Zero cost 3-way
Zero cost 3-way
Zero cost 3 way
|
|
|
4,000
4,000 3,000
Total: 11,000
|
|
|
55.0
60.0 65.0
|
|
|
45.0
50.0
55.0
|
|
|
77.2-77.5
97.0-97.1
90.0-90.1
|
1Q2019
|
|
|
Zero cost 3-way Zero cost 3-way
|
|
|
4,000 3,000 Total: 7,000
|
|
|
60.0 65.0
|
|
|
50.0 55.0
|
|
|
97.0-97.1 90.0-90.1
|
2Q2019
|
|
|
Zero cost 3-way
|
|
|
3,000 Total: 3,000
|
|
|
65.0
|
|
|
55.0
|
|
|
90.0-90.1
|
For further details, please refer to Note 4 of GeoPark’s consolidated
financial statements for the period ended June 30, 2018, available on
the Company’s website.
|
|
|
|
|
|
|
SELECTED INFORMATION BY BUSINESS SEGMENT
(UNAUDITED)
|
|
|
|
|
|
|
|
Colombia
|
|
|
2Q2018
|
|
|
2Q2017
|
Sale of crude oil ($ million)
|
|
|
129.4
|
|
|
56.2
|
Sale of gas ($ million)
|
|
|
0.4
|
|
|
0.2
|
Revenue ($ million)
|
|
|
129.8
|
|
|
56.4
|
Production and operating costsa ($ million)
|
|
|
-29.6
|
|
|
-15.4
|
Adjusted EBITDA ($ million)
|
|
|
79.6
|
|
|
37.0
|
Capital expendituresb ($ million)
|
|
|
28.0
|
|
|
18.9
|
|
|
|
|
|
|
|
Chile
|
|
|
2Q2018
|
|
|
2Q2017
|
Sale of crude oil ($ million)
|
|
|
4.9
|
|
|
7.7
|
Sale of gas ($ million)
|
|
|
4.4
|
|
|
3.4
|
Revenue ($ million)
|
|
|
9.3
|
|
|
11.1
|
Production and operating costsa ($ million)
|
|
|
-5.3
|
|
|
-6.9
|
Adjusted EBITDA ($ million)
|
|
|
2.0
|
|
|
1.9
|
Capital expendituresb ($ million)
|
|
|
1.1
|
|
|
2.7
|
|
|
|
|
|
|
|
Brazil
|
|
|
2Q2018
|
|
|
2Q2017
|
Sale of crude oil ($ million)
|
|
|
0.3
|
|
|
0.2
|
Sale of gas ($ million)
|
|
|
7.0
|
|
|
7.5
|
Revenue ($ million)
|
|
|
7.3
|
|
|
7.7
|
Production and operating costsa ($ million)
|
|
|
-2.3
|
|
|
-2.9
|
Adjusted EBITDA ($ million)
|
|
|
4.0
|
|
|
3.8
|
Capital expendituresb ($ million)
|
|
|
0.2
|
|
|
1.0
|
|
|
|
|
|
|
|
Argentina
|
|
|
2Q2018
|
|
|
2Q2017
|
Sale of crude oil ($ million)
|
|
|
11.1
|
|
|
-
|
Sale of gas ($ million)
|
|
|
1.8
|
|
|
-
|
Revenue ($ million)
|
|
|
12.9
|
|
|
-
|
Production and operating costsa ($ million)
|
|
|
-7.6
|
|
|
-
|
Adjusted EBITDA ($ million)
|
|
|
2.6
|
|
|
-1.4
|
Capital expendituresb ($ million)
|
|
|
3.9
|
|
|
3.3
|
a)
|
|
Production and operating = Operating costs + Royalties.
|
b)
|
|
The difference with the reported figure in Key performance
indicators table corresponds mainly to capital expenditures in
Peru.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions of $)
|
|
|
2Q2018
|
|
|
2Q2017
|
|
|
1H2018
|
|
|
1H2017
|
REVENUE
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of crude oil
|
|
|
145.7
|
|
|
64.1
|
|
|
256.7
|
|
|
118.6
|
Sale of gas
|
|
|
13.7
|
|
|
11.1
|
|
|
26.5
|
|
|
23.3
|
TOTAL REVENUE
|
|
|
159.3
|
|
|
75.2
|
|
|
283.2
|
|
|
141.9
|
Commodity risk management contracts
|
|
|
-11.4
|
|
|
5.9
|
|
|
-15.2
|
|
|
11.3
|
Production and operating costs
|
|
|
-44.8
|
|
|
-25.3
|
|
|
-78.8
|
|
|
-42.9
|
Geological and geophysical expenses (G&G)
|
|
|
-3.9
|
|
|
-1.9
|
|
|
-6.1
|
|
|
-3.1
|
Administrative expenses (G&A)
|
|
|
-12.5
|
|
|
-12.0
|
|
|
-25.1
|
|
|
-20.5
|
Selling expenses
|
|
|
-1.2
|
|
|
-0.1
|
|
|
-1.5
|
|
|
-0.5
|
Depreciation
|
|
|
-24.3
|
|
|
-20.0
|
|
|
-44.0
|
|
|
-35.7
|
Write-off of unsuccessful exploration efforts
|
|
|
-9.2
|
|
|
-4.6
|
|
|
-11.0
|
|
|
-4.6
|
Other operating
|
|
|
-0.1
|
|
|
-1.5
|
|
|
0.7
|
|
|
-2.0
|
OPERATING PROFIT
|
|
|
52.0
|
|
|
15.8
|
|
|
102.0
|
|
|
44.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial costs, net
|
|
|
-8.7
|
|
|
-7.4
|
|
|
-17.2
|
|
|
-16.7
|
Foreign exchange loss
|
|
|
-13.3
|
|
|
-4.7
|
|
|
-15.0
|
|
|
-1.8
|
PROFIT BEFORE INCOME TAX
|
|
|
30.0
|
|
|
3.7
|
|
|
69.8
|
|
|
25.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
|
|
|
-24.4
|
|
|
-4.8
|
|
|
-39.4
|
|
|
-20.8
|
PROFIT (LOSS) FOR THE PERIOD
|
|
|
5.5
|
|
|
-1.1
|
|
|
30.4
|
|
|
4.7
|
Non-controlling interest
|
|
|
6.2
|
|
|
2.3
|
|
|
12.6
|
|
|
4.5
|
ATTRIBUTABLE TO OWNERS OF GEOPARK
|
|
|
-0.7
|
|
|
-3.4
|
|
|
17.8
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUMMARIZED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
|
|
|
|
|
|
|
|
(In millions of $)
|
|
|
Jun '18
|
|
|
Dec '17
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
Non-Current Assets
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
563.8
|
|
|
517.4
|
Other non-current assets
|
|
|
50.0
|
|
|
53.8
|
Total Non-Current Assets
|
|
|
613.8
|
|
|
571.2
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
Inventories
|
|
|
10.1
|
|
|
5.7
|
Trade receivables
|
|
|
19.4
|
|
|
19.5
|
Other current assets
|
|
|
44.5
|
|
|
54.9
|
Cash at bank and in hand
|
|
|
105.2
|
|
|
134.8
|
Total Current Assets
|
|
|
179.2
|
|
|
215.0
|
|
|
|
|
|
|
|
Total Assets
|
|
|
793.0
|
|
|
786.2
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
Equity attributable to owners of GeoPark
|
|
|
101.6
|
|
|
84.9
|
Non-controlling interest
|
|
|
46.5
|
|
|
41.9
|
Total Equity
|
|
|
148.2
|
|
|
126.8
|
|
|
|
|
|
|
|
Non-Current Liabilities
|
|
|
|
|
|
|
Borrowings
|
|
|
418.9
|
|
|
418.5
|
Other non-current liabilities
|
|
|
78.5
|
|
|
74.5
|
Total Non-Current Liabilities
|
|
|
497.4
|
|
|
493.0
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
Borrowings
|
|
|
7.6
|
|
|
7.7
|
Other current liabilities
|
|
|
139.8
|
|
|
158.6
|
Total Current Liabilities
|
|
|
147.4
|
|
|
166.3
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
644.8
|
|
|
659.3
|
|
|
|
|
|
|
|
Total Liabilities and Equity
|
|
|
793.0
|
|
|
786.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUMMARIZED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions of $)
|
|
|
2Q2018
|
|
|
2Q2017
|
|
|
1H2018
|
|
|
1H2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
22.3
|
|
|
33.9
|
|
|
98.6
|
|
|
79.1
|
Cash flows used in investing activities
|
|
|
-33.1
|
|
|
-25.9
|
|
|
-106.5
|
|
|
-49.4
|
Cash flows used in financing activities
|
|
|
-4.7
|
|
|
-1.2
|
|
|
-21.9
|
|
|
-25.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF ADJUSTED EBITDA TO PROFIT (LOSS) BEFORE
INCOME TAX
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 and other
|
|
|
1.8
|
|
|
0.1
|
|
|
-0.2
|
|
|
0.8
|
|
|
-0.7
|
|
|
1.8
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1H2017 (In millions of $)
|
|
|
Colombia
|
|
|
Chile
|
|
|
Brazil
|
|
|
Argentina
|
|
|
Other(a)
|
|
|
Total
|
|
Adjusted EBITDA
|
|
|
75.0
|
|
|
2.2
|
|
|
7.5
|
|
|
-1.7
|
|
|
-7.1
|
|
|
75.9
|
|
Depreciation
|
|
|
-19.0
|
|
|
-11.9
|
|
|
-4.6
|
|
|
-0.1
|
|
|
-0.1
|
|
|
-35.7
|
|
Unrealized commodity risk management contracts
|
|
|
9.1
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
9.1
|
|
Write-off of unsuccessful exploration efforts
|
|
|
-1.6
|
|
|
-
|
|
|
-3.0
|
|
|
-
|
|
|
-
|
|
|
-4.6
|
|
Share based payments and other
|
|
|
1.7
|
|
|
-
|
|
|
-0.6
|
|
|
-0.2
|
|
|
-1.6
|
|
|
-0.6
|
|
OPERATING PROFIT (LOSS)
|
|
|
65.2
|
|
|
-9.7
|
|
|
-0.7
|
|
|
-2.0
|
|
|
-8.8
|
|
|
44.0
|
|
Financial costs, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-16.7
|
|
Foreign exchange charges, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-1.8
|
|
PROFIT BEFORE INCOME TAX
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Includes Peru and Corporate.
|
CONFERENCE CALL INFORMATION
GeoPark will host its Second Quarter 2018 Financial Results conference
call and webcast on Thursday, August 9, 2018, at 10:00 a.m. Eastern
Daylight Time.
Chief Executive Officer, James F. Park, Chief Financial Officer, Andres
Ocampo, Chief Operating Officer, Augusto Zubillaga and Shareholder Value
Director, Stacy Steimel will discuss GeoPark's financial results for
2Q2018, with a question and answer session immediately following.
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.
ANNUAL GENERAL MEETING
GeoPark’s 2018 Annual General Meeting was held on July 27, 2018, at
which (i) all candidates were elected or re-elected as members of the
Board of Directors; (ii) Price Waterhouse & Co SRL was re-appointed as
auditors of the Company; (iii) the Audit Committee was authorized to fix
the remuneration of the Auditors; and (iv) the Annual Report and the
audited consolidated Financial Statements for the fiscal year ended
December 31, 2017 have been duly informed and presented.
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, 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) and selling
expenses, 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
|
|
CEOP
|
|
Contrato Especial de Operacion Petrolera (Special Petroleum
Operations Contract)
|
|
D&M
|
|
DeGolyer and MacNaughton
|
|
F&D costs
|
|
Finding and development costs, calculated as capital expenditures
divided by the applicable net reserves additions before changes in
Future Development Capital
|
|
LTM
|
|
Last twelve months
|
|
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
|
|
SPE
|
|
Society of Petroleum Engineers
|
|
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 2018 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.
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 flows 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.
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 flows as determined by IFRS. The Company
believes Adjusted EBITDA is useful because it allows us 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 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 flows 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. The company’s computation of Adjusted
EBITDA may not be comparable to other similarly titled measures of other
companies. For a reconciliation of Adjusted EBITDA to the IFRS financial
measure of profit for the year or corresponding period, see the
accompanying financial tables.
Operating netback per boe should not be considered as an alternative to,
or more meaningful than, profit for the period or cash flows 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.
1 Production and operating costs = Operating costs +
Royalties
|
2 See “Reconciliation of Adjusted EBITDA to Profit (Loss)
Before Income Tax and Adjusted EBITDA per boe” included in this
press release.
|
|
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