Record Results: Oil & Gas and Cash Flow
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 September 30, 2018 (“Third Quarter” or
“3Q2018”).
A conference call to discuss 3Q2018 Financial Results will be held on
Wednesday November 7, 2018 at 10:00 am Eastern Standard 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 September 30, 2018, available on the Company’s
website.
THIRD QUARTER 2018 HIGHLIGHTS
Record Oil and Gas Production
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Consolidated oil and gas production up 31% to 37,214 boepd (up 4%
compared to 2Q2018)
-
Oil production increased by 35% to 31,266 bopd (up 3% compared to
2Q2018)
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Gross operated production in Colombia surpassed the 65,000 boepd
milestone
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Gas production increased by 17% to 35.7 mmcfpd (up 6% compared to
2Q2018)
Record Top and Bottom Lines
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Revenues more than doubled to $166.8 million
-
Adjusted EBITDA more than doubled to $98.2 million
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Operating profit increased more than four times to $71.0 million
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Profit increased to $29.7 million gain from $19.1 million loss
Differentiating Cost Advantages
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Consolidated operating costs of $8.4 per boe
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Adjusted EBITDA three times higher than capital expenditures
Strong Balance Sheet
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Net debt to Adjusted EBITDA ratio decreased below 1.0x to 0.9x from
1.9x
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Interest coverage ratio increased to 10.5x from 5.3x
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Cash position of $152.7 million
Portfolio Construction
-
Divested high-cost, non-core La Cuerva and Yamu Colombian assets for
up to $20 million
4Q2018 Catalysts
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Testing 5 drilled wells and drilling 10 new wells, including
development, exploration and appraisal wells in Colombia, Argentina
and Brazil
James F. Park, Chief Executive Officer of GeoPark said: “Explorer,
Operator, Consolidator. Congratulations to our team for achieving
another performance record. Quarter-after-quarter, year-after-year,
GeoPark continues to consistently deliver on its promised results:
growth in oil and gas production and reserves, operational and cost
efficiency improvements, and a strengthening of our unique business
platform across Latin America - and all conducted within an
industry-leading safety, community and environmental management
approach.”
CONSOLIDATED OPERATING PERFORMANCE
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Key performance indicators:
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Key Indicators
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3Q2018
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2Q2018
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3Q2017
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9M2018
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9M2017
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Oil productiona (bopd)
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31,266
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30,249
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23,237
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29,634
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21,895
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Gas production (mcfpd)
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35,690
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33,726
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30,528
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32,862
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27,954
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Average net production (boepd)
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37,214
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35,870
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28,325
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35,111
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26,554
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Brent oil price ($ per bbl)
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76.0
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74.9
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52.1
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72.7
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52.6
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Combined price ($ per boe)
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51.4
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51.7
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33.0
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49.5
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32.6
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⁻ Oil ($ per bbl)
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57.0
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57.2
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34.6
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54.5
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34.1
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⁻ Gas ($ per mcf)
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5.1
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5.1
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5.3
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5.2
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5.3
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Sale of crude oil ($ million)
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152.2
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145.7
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68.4
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408.9
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187.0
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Sale of gas ($ million)
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14.6
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13.7
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13.6
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41.1
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36.9
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Revenue ($ million)
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166.8
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159.3
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81.9
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450.0
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223.8
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Commodity risk management contracts ($ million)
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-0.6
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-11.4
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-8.3
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-15.8
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3.0
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Production & operating costsb ($ million)
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-48.7
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-44.8
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-25.7
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-127.6
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-68.5
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G&G, G&Ac and Selling expenses ($ million)
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-17.5
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-17.5
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-12.0
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-50.2
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-36.1
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Adjusted EBITDA ($ million)
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98.2
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83.3
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44.6
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244.8
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120.5
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Adjusted EBITDA ($ per boe)
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30.3
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27.0
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18.0
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26.9
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17.6
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Operating netback ($ per boe)
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35.1
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32.5
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23.2
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32.2
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23.1
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Profit (loss) ($ million)
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29.7
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5.5
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-19.1
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60.1
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-14.4
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Capital expenditures ($ million)
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33.2
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36.3
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30.9
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90.9
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80.3
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Argentina acquisition ($ million)
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-
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-3.2d
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48.8
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Cash and cash equivalents ($ million)
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152.7
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105.2
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135.2
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152.7
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135.2
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Short-term financial debt ($ million)
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15.8
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7.6
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1.9
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15.8
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1.9
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Long-term financial debt ($ million)
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419.1
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418.9
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418.5
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419.1
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418.5
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Net debt ($ million)
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282.2
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321.3
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285.2
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282.2
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285.2
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a)
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Includes government royalties paid in kind in Colombia for
approximately 1,175, 898 and 774 bopd in 3Q2018, 2Q2018 and 3Q2017
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 $1.3 million, $0.8 million and $0.8 million for
3Q2018, 2Q2018 and 3Q2017, 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 31% to 37,214
boepd in 3Q2018 from 28,325 boepd in 3Q2017, due to increased production
in Colombia and the inclusion of new production from the recent
acquisition in Argentina. Oil represented 84% of total reported
production compared to 82% in 3Q2017.
For further details, please refer to the 3Q2018 Operational Update
published on October 18, 2018.
Reference and Realized Oil Prices: Brent crude oil prices
averaged $76.0 per bbl during 3Q2018, and the consolidated realized oil
sales price averaged $57.0 per bbl in 3Q2018, in line with 2Q2018 but a
65% increase from $34.6 per bbl in 3Q2017. Differences between reference
and realized prices reflect commercial and transportation discounts as
well as the Vasconia price differential in Colombia. The Vasconia marker
differential averaged $5.8 per bbl in 3Q2018, compared to $4.1 per bbl
in 2Q2018 and $2.8 in 3Q2017. Commercial and transportation discounts in
Colombia continue to be reduced, down by 50 cents per bbl to $14.0 in
3Q2018, compared to $14.5 per bbl in 2Q2018 and $15.2 per bbl in 3Q2017.
In Colombia, construction of a flowline connecting the Llanos 34 block
to the Oleoducto de los Llanos (ODL), one of Colombia’s principal
pipelines is on budget and on schedule. Construction is expected to be
completed by January 2019 and, following customary approvals, is
expected to be operational in 1Q2019. The project will support future
production growth (with a capacity of up to 100,000 bopd) and will
reduce transportation and operating costs.
The table below provides a breakdown of reference and net realized oil
prices in Colombia, Chile and Argentina in 3Q2018:
3Q2018 - Realized Oil Prices
($ 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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76.0
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76.0
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76.0
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Vasconia differential
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(5.8)
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-
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-
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Commercial and transportation discounts
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(14.0)
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(9.1)
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-
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Other*
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-
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(9.5)
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Realized oil price
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56.2
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66.9
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66.5
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Weight on oil sales mix
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92%
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2%
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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 $64-67/bbl during the period May-October 2018. This
agreement could be temporarily extended, and oil prices may be
adjusted up or down, depending on prevailing market conditions.
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Revenue: Consolidated revenues increased by 104% to $166.8
million in 3Q2018, compared to $81.9 million in 3Q2017. Both higher
realized prices and deliveries pushed revenues higher.
Sale of crude oil: Consolidated oil
revenues increased by 123% to $152.2 million in 3Q2018, driven by a 65%
increase in realized oil prices and a 34% increase in oil deliveries
(compared to 3Q2017). Oil revenues were 91% of total revenues compared
to 83% in 3Q2017.
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Colombia: In 3Q2018, oil revenues increased by 113% to $142.9 million
as realized prices increased by 65% to $56.2 per bbl and oil
deliveries increased by 29% to 27,644 bopd.
Colombian
earn-out payments (deducted from Colombian oil revenues) increased to
$5.5 million in 3Q2018, compared to $2.8 million in 3Q2017, in line
with higher oil revenues and increased production.
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Chile: In 3Q2018, oil revenues increased by 15% to $4.3 million, due
to higher oil prices which were partially offset by lower volumes
sold. Oil prices increased by 51% to $66.9 per bbl, in line with
higher Brent prices while oil deliveries decreased by 24% to 709 bopd
due to the natural decline of the fields.
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Argentina: In 3Q2018, oil revenues were $10.1 million, resulting from
$66.5 realized oil prices and deliveries of 1,660 bopd, all from the
Aguada Baguales, El Porvenir and Puesto Touquet blocks (GeoPark
operated, 100% WI).
Sale of gas: Consolidated gas revenues
increased by 8% to $14.6 million in 3Q2018 compared to $13.6 million in
3Q2017, driven by a 12% increase in gas deliveries even though gas
prices declined by 4%.
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Chile: In 3Q2018, gas revenues increased by 20% to $5.0 million
reflecting higher gas prices, partially offset by lower deliveries.
Gas prices were 28% higher, or $5.6 per mcf ($33.4 per boe) in 3Q2018,
in line with increased methanol prices. Gas deliveries slightly
decreased by 6% to 9,716 mcfpd (1,619 boepd).
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Brazil: In 3Q2018, gas revenues decreased by 22% to $7.2 million, due
to lower gas prices. Gas prices decreased by 21% to $4.6 per mcf
($27.7 per boe), in line with a 25% average devaluation of the local
currency. Gas deliveries remained stable at 17,011 mcfpd (2,835 boepd).
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Argentina: In 3Q2018, gas revenues were $2.0 million, resulting from
$5.7 per mcf ($34.2 per boe) realized gas prices and deliveries of
3,814 mcfpd (636 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 September 30, 2018, GeoPark realized
$3.4 million in lower net revenues from hedge contracts in place that
had a floor of $53-60/bbl and a ceiling of $69-97/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 $2.9
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 September 30,
2018, available on the Company’s website.
Production and Operating Costs1: Consolidated
operating costs per boe were $8.4 in 3Q2018, slightly lower than the
$8.5 per boe in 2Q2018, but higher than the $7.3 in 3Q2017 due to the
recently acquired blocks in Argentina, which have higher costs per boe.
Consolidated operating costs increased by $9.1 million to $27.3 million
in 3Q2018 compared to 3Q2017, as follows:
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Colombia: Operating costs per boe increased to $6.2 per boe in 3Q2018
compared to $5.5 per boe in 3Q2017. Total operating costs increased by
48% to $15.9 million, due to a 29% increase in volumes delivered and
one-time charges for $1.7 million (or $0.7 per boe) associated with
road and well maintenance costs due to excessive and unseasonal rain
in the Llanos 34 block.
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Chile: Operating costs decreased by 29% to $3.7 million in 3Q2018 from
$5.3 million in 3Q2017. Compared to 2Q2018, operating costs decreased
by 23% or by $1.1 million from $4.9 million. Cost reductions in 3Q2018
were due to temporarily lower well maintenance activities ($0.2
million in 3Q2017 vs $1.1 million in 3Q2017), and are expected to
return to previous levels in 4Q2018. Operating costs per boe decreased
by 19% to $17.5 per boe in 3Q2018 from $21.5 in 3Q2017.
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Brazil: Operating costs decreased by 40% to $1.3 million in 3Q2018
from $2.2 million in 3Q2017, due to a 25% devaluation of the local
currency and one-time maintenance costs in the Manati gas field
(GeoPark non-operated, 10% WI). Operating costs per boe decreased by
40% to $4.9 per boe from $8.2 in 3Q2017.
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Argentina: Operating costs were $6.3 million in 3Q2018, related to
production from the Aguada Baguales, El Porvenir and Puesto Touquet
blocks. Operating costs per boe were $30.0, an 11% increase compared
to $26.9 in 2Q2018, resulting from costs associated with a secondary
recovery optimization project initiated during 3Q2018 to enhance
production. The increase was partially offset by a 36% devaluation of
the local currency.
Consolidated royalties increased by $13.7 million to $21.1 million in
3Q2018 compared to 3Q2017, resulting from increased volumes and prices.
Selling Expenses: Consolidated selling expenses increased by $0.9
million to $1.3 million in 3Q2018 compared to $0.3 million in 3Q2017.
The increase in 3Q2018 mainly corresponds to transportation costs and
sales taxes in the Aguada Baguales, El Porvenir and Puesto Touquet
blocks in Argentina.
Administrative Expenses: Consolidated G&A costs per boe decreased
by 14% to $3.8 per boe in 3Q2018 (vs $4.4 per boe in 3Q2017). Total
consolidated G&A was $12.3 million in 3Q2018, compared to $10.9 million
in 3Q2017.
Geological & Geophysical Expenses: Consolidated G&G costs per
boe increased to $1.2 per boe in 3Q2018 (vs $0.3 per boe in 3Q2017).
Total consolidated G&G expenses increased to $3.9 million in 3Q2018,
compared to $0.7 million in 3Q2017, due to the increased scale of
operations.
Adjusted EBITDA: Consolidated Adjusted EBITDA2 surged
by 120% to $98.2 million, or $30.3 per boe, in 3Q2018 compared to $44.6
million, or $18.0 per boe, in 3Q2017.
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Colombia: Adjusted EBITDA of $92.4 million in 3Q2018
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Chile: Adjusted EBITDA of $3.6 million in 3Q2018
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Brazil: Adjusted EBITDA of $4.6 million in 3Q2018
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Argentina: Adjusted EBITDA of $2.4 million in 3Q2018
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Corporate and Peru: Adjusted EBITDA of negative $4.9 million in 3Q2018
The table below shows production, volumes sold and the breakdown of the
most significant components of Adjusted EBITDA for 3Q2018 and 3Q2017, 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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3Q18
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3Q17
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3Q18
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3Q17
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3Q18
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3Q17
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3Q18
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3Q17
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3Q18
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3Q17
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Production (boepd)
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29,139
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22,367
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2,632
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2,817
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3,124
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3,141
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2,319
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-
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37,214
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28,325
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Stock variation /RIKa
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(1,383)
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(935)
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(304)
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(158)
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(245)
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(254)
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(23)
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-
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(1,955)
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(1,347)
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Sales volume (boepd)
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27,756
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21,432
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2,328
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2,659
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2,879
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2,887
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2,296
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-
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35,259
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26,978
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% Oil
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99.6%
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99.7%
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30%
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35%
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2%
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2%
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72%
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-
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85%
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83%
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($ per boe)
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Realized oil price
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56.2
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34.1
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66.9
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44.3
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83.7
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59.4
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66.5
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-
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57.0
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34.6
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Realized gas priceb
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38.8
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37.5
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33.4
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26.1
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27.7
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35.2
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34.2
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-
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30.5
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31.8
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Earn-out
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(2.2)
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(1.3)
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-
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-
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-
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-
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-
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-
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(2.0)
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(0.9)
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Combined Price
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53.9
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32.7
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43.6
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32.4
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28.6
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35.6
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57.5
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-
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51.4
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33.0
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Realized commodity risk management contracts
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(1.3)
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0.8
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-
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-
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-
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-
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-
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-
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(1.1)
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0.6
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Operating costs
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(6.2)
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(5.5)
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(17.5)
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(21.5)
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(4.9)
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(8.2)
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(30.0)
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-
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(8.4)
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(7.3)
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Royalties in cash
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(7.2)
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(3.1)
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(1.7)
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(1.3)
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(2.7)
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(3.4)
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(7.9)
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-
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(6.5)
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(3.0)
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Selling & other expenses
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(0.1)
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(0.1)
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(0.6)
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(0.6)
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-
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-
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(3.9)
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-
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(0.4)
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(0.1)
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Operating Netback/boe
|
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39.1
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24.9
|
|
23.8
|
|
9.0
|
|
21.0
|
|
24.0
|
|
15.7
|
|
-
|
|
35.1
|
|
23.2
|
G&A, G&G, & other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4.8)
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|
(5.2)
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Adjusted EBITDA/boe
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30.3
|
|
18.0
|
a)
|
|
RIK (Royalties in kind). Includes royalties paid in kind in Colombia
for approximately 1,175 and 774 bopd in 3Q2018 and 3Q2017
respectively. No royalties were paid in kind in Chile, Brazil or
Argentina.
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b)
|
|
Conversion rate of $mcf/$boe=1/6.
|
Depreciation: Consolidated depreciation charges increased by 25%
to $24.3 million in 3Q2018, compared to $19.4 million in 3Q2017, due to
increased volumes. On a per barrel basis, however, depreciation costs
decreased by 4% to $7.5 per boe due to drilling successes and increased
reserves.
Write-off of Unsuccessful Exploration Efforts: Consolidated
write-off of unsuccessful exploration efforts were $3.5 million in
3Q2018 compared to $0.2 million in 3Q2017, due to the drilling of
non-commercial oil accumulations in Colombia.
Other Income (Expenses): Other operating expenses amounted to
$1.2 million in 3Q2018, compared to $0.4 million in 3Q2017.
CONSOLIDATED NON-OPERATING RESULTS AND PROFIT FOR THE PERIOD
Financial Expenses: Net financial expenses decreased to $8.7
million in 3Q2018, compared to $26.6 million in 3Q2017. Amounts recorded
in 3Q2017 include $17.6 million related to one-time costs on the
cancellation of 2020 Notes. Excluding these costs, 3Q2017 financial
expenses amounted to $9.0 million.
Foreign Exchange: Net foreign exchange losses amounted to a $2.9
million loss in 3Q2018 compared to a $3.2 million gain in 3Q2017,
including non-cash foreign exchange differences generated from GeoPark’s
Brazilian subsidiary due to the devaluation of the real and its
impact on US dollar-denominated intercompany debt.
During October 2018, GeoPark’s Brazilian subsidiary cancelled the
existing US dollar-denominated intercompany debt, thus significantly
reducing its exposure to foreign exchange currency fluctuations.
Income Tax: Income tax expenses were $29.7 million in 3Q2018
compared to $11.6 million in 3Q2017, in line with higher operating
profits.
Profit: Profit increased by $49.8 million to a gain of $29.7
million in 3Q2018 compared to a $19.1 million loss in 3Q2017.
BALANCE SHEET
Cash and Cash Equivalents: Cash and cash equivalents totaled
$152.7 million as of September 30, 2018. Year-end 2017 cash and cash
equivalents were $134.8 million. The difference reflects cash generated
from operating activities of $178.5 million, partially offset by cash
used in investing activities of $139.8 million, and cash used in
financing activities of $20.8 million.
Cash flows from operating activities of $178.5 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 4Q2018.
Cash used in investing activities of $139.8 million includes capital
expenditures related to development, appraisal and exploration
activities of $90.9 million, allocated predominantly to Colombia and the
$48.9 million for the acquisition of the Aguada Baguales, El Porvenir
and Puesto Touquet blocks in Argentina.
Cash used in financing activities of $20.8 million was the sum of $27.6
million for interest payments and $8.1 million for the dividend
distribution by the Colombian business to LGI, related to their
non-controlling minority interest, partially offset by $15.0 million
corresponding to a short-term loan maturing in November 2018.
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 currently implementing the dilution mechanism, which is expected
to be triggered during 4Q2018 following the next dividend payment.
Subsequent to the dividend payment, GeoPark would increase its equity
interest in its Colombian business from 80% to 84%.
Financial Debt: Total financial debt (net of issuance costs) was
$434.9 million, including the $425 million 2024 notes (“2024 Notes”)
issued in September 2017 and short-term debt of $15.8 million.
FINANCIAL RATIOSa
|
|
($ 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
|
3Q2018
|
|
434.9
|
|
152.7
|
|
282.2
|
|
0.9x
|
|
10.5x
|
a)
|
|
Based on trailing LTM financial results.
|
b)
|
|
LTM adj. EBITDA was $300.1 million as of September 30, 2018.
|
c)
|
|
LTM interest expense was $28.7 million as of September 30, 2018
|
Covenants in 2024 Notes: The 2024 Notes include incurrence test
covenants that require the net debt to adjusted EBITDA ratio be lower
than 3.5 times and the adjusted EBITDA to interest ratio higher than 2
times until September 2019. The Company is compliant with all provisions
and covenants.
COMMODITY RISK OIL MANAGEMENT CONTRACTS
The Company has the following commodity risk management contracts
(reference ICE Brent) in place as of the date of this release:
Period
|
|
Type
|
|
Volume (bopd)
|
|
Contract terms ($ per bbl)
|
|
|
|
Purchased Put
|
|
Sold Put
|
|
Sold Call
|
4Q2018
|
|
Zero cost 3-way
|
|
4,000
|
|
55.0
|
|
45.0
|
|
77.2-77.5
|
|
Zero cost 3-way
|
|
4,000
|
|
60.0
|
|
50.0
|
|
97.0-97.1
|
|
Zero cost 3 way
|
|
6,000
|
|
65.0
|
|
55.0
|
|
90.0-90.5
|
|
|
|
Total: 14,000
|
|
|
|
|
|
|
1Q2019
|
|
Zero cost 3-way
|
|
4,000
|
|
60.0
|
|
50.0
|
|
97.0-97.1
|
|
Zero cost 3-way
|
|
6,000
|
|
65.0
|
|
55.0
|
|
90.0-90.5
|
|
Zero cost
|
|
5,000
|
|
65.0
|
|
-
|
|
92.3-92.5
|
|
|
|
Total: 15,000
|
|
|
|
|
|
|
2Q2019
|
|
Zero cost 3-way
|
|
6,000
|
|
65.0
|
|
55.0
|
|
90.0-90.5
|
|
Zero cost
|
|
5,000
|
|
65.0
|
|
-
|
|
92.3-92.5
|
|
|
|
Total: 11,000
|
|
|
|
|
|
|
3Q2019
|
|
Zero cost
|
|
5,000
|
|
65.0
|
|
-
|
|
92.3-92.5
|
|
|
|
Total: 5,000
|
|
|
|
|
|
|
For further details, please refer to Note 4 of GeoPark’s consolidated
financial statements for the period ended September 30, 2018, available
on the Company’s website.
SELECTED INFORMATION BY BUSINESS SEGMENT
|
(UNAUDITED)
|
|
|
|
|
|
Colombia
|
|
3Q2018
|
|
3Q2017
|
Sale of crude oil ($ million)
|
|
137.3
|
|
64.3
|
Sale of gas ($ million)
|
|
0.4
|
|
0.2
|
Revenue ($ million)
|
|
137.7
|
|
64.5
|
Production and operating costsa ($ million)
|
|
-34.4
|
|
-17.0
|
Adjusted EBITDA ($ million)
|
|
92.4
|
|
41.6
|
Capital expendituresb ($ million)
|
|
23.2
|
|
22.5
|
|
|
|
|
|
Chile
|
|
3Q2018
|
|
3Q2017
|
Sale of crude oil ($ million)
|
|
4.3
|
|
3.8
|
Sale of gas ($ million)
|
|
5.0
|
|
4.2
|
Revenue ($ million)
|
|
9.3
|
|
7.9
|
Production and operating costsa ($ million)
|
|
-4.2
|
|
-5.6
|
Adjusted EBITDA ($ million)
|
|
3.6
|
|
0.8
|
Capital expendituresb ($ million)
|
|
5.6
|
|
4.6
|
|
|
|
|
|
Brazil
|
|
3Q2018
|
|
3Q2017
|
Sale of crude oil ($ million)
|
|
0.4
|
|
0.2
|
Sale of gas ($ million)
|
|
7.2
|
|
9.2
|
Revenue ($ million)
|
|
7.6
|
|
9.4
|
Production and operating costsa ($ million)
|
|
-2.0
|
|
-3.1
|
Adjusted EBITDA ($ million)
|
|
4.6
|
|
5.4
|
Capital expendituresb ($ million)
|
|
0.0
|
|
0.0
|
|
|
|
|
|
Argentina
|
|
3Q2018
|
|
3Q2017
|
Sale of crude oil ($ million)
|
|
10.1
|
|
-
|
Sale of gas ($ million)
|
|
2.0
|
|
-
|
Revenue ($ million)
|
|
12.1
|
|
-
|
Production and operating costsa ($ million)
|
|
-8.1
|
|
-
|
Adjusted EBITDA ($ million)
|
|
2.4
|
|
0.4
|
Capital expendituresb ($ million)
|
|
3.2
|
|
2.9
|
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 $)
|
|
3Q2018
|
|
3Q2017
|
|
9M2018
|
|
9M2017
|
|
|
|
|
|
|
|
|
|
REVENUE
|
|
|
|
|
|
|
|
|
Sale of crude oil
|
|
152.2
|
|
68.3
|
|
408.9
|
|
186.9
|
Sale of gas
|
|
14.6
|
|
13.6
|
|
41.1
|
|
36.9
|
TOTAL REVENUE
|
|
166.8
|
|
81.9
|
|
450.0
|
|
223.8
|
Commodity risk management contracts
|
|
-0.6
|
|
-8.3
|
|
-15.8
|
|
3.0
|
Production and operating costs
|
|
-48.7
|
|
-25.7
|
|
-127.6
|
|
-68.5
|
Geological and geophysical expenses (G&G)
|
|
-3.9
|
|
-0.7
|
|
-9.9
|
|
-3.8
|
Administrative expenses (G&A)
|
|
-12.3
|
|
-10.9
|
|
-37.4
|
|
-31.4
|
Selling expenses
|
|
-1.3
|
|
-0.3
|
|
-2.8
|
|
-0.9
|
Depreciation
|
|
-24.3
|
|
-19.4
|
|
-68.3
|
|
-55.1
|
Write-off of unsuccessful exploration efforts
|
|
-3.5
|
|
-0.2
|
|
-14.5
|
|
-4.8
|
Other operating
|
|
-1.2
|
|
-0.4
|
|
-0.6
|
|
-2.4
|
OPERATING PROFIT
|
|
71.0
|
|
15.9
|
|
173.0
|
|
59.9
|
|
|
|
|
|
|
|
|
|
Financial costs, net
|
|
-8.7
|
|
-26.6
|
|
-25.9
|
|
-43.3
|
Foreign exchange loss
|
|
-2.9
|
|
3.2
|
|
-17.9
|
|
1.4
|
PROFIT BEFORE INCOME TAX
|
|
59.3
|
|
-7.5
|
|
129.2
|
|
18.0
|
|
|
|
|
|
|
|
|
|
Income tax
|
|
-29.7
|
|
-11.6
|
|
-69.1
|
|
-32.4
|
PROFIT (LOSS) FOR THE PERIOD
|
|
29.7
|
|
-19.1
|
|
60.1
|
|
-14.4
|
Non-controlling minority interest
|
|
8.3
|
|
0.8
|
|
20.9
|
|
5.4
|
ATTRIBUTABLE TO OWNERS OF GEOPARK
|
|
21.4
|
|
-19.9
|
|
39.2
|
|
-19.8
|
SUMMARIZED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
|
|
|
|
|
|
(In millions of $)
|
|
Sept 2018
|
|
Dec 2017
|
|
|
(Unaudited)
|
|
(Audited)
|
Non-Current Assets
|
|
|
|
|
Property, plant and equipment
|
|
572.4
|
|
517.4
|
Other non-current assets
|
|
46.3
|
|
53.8
|
Total Non-Current Assets
|
|
618.7
|
|
571.2
|
|
|
|
|
|
Current Assets
|
|
|
|
|
Inventories
|
|
12.4
|
|
5.7
|
Trade receivables
|
|
37.6
|
|
19.5
|
Other current assets
|
|
45.5
|
|
54.9
|
Cash at bank and in hand
|
|
152.7
|
|
134.8
|
Total Current Assets
|
|
248.2
|
|
215.0
|
|
|
|
|
|
Total Assets
|
|
866.8
|
|
786.2
|
|
|
|
|
|
Equity
|
|
|
|
|
Equity attributable to owners of GeoPark
|
|
124.2
|
|
84.9
|
Non-controlling interest
|
|
54.9
|
|
41.9
|
Total Equity
|
|
179.1
|
|
126.8
|
|
|
|
|
|
Non-Current Liabilities
|
|
|
|
|
Borrowings
|
|
419.1
|
|
418.5
|
Other non-current liabilities
|
|
81.1
|
|
74.5
|
Total Non-Current Liabilities
|
|
500.2
|
|
493.0
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
Borrowings
|
|
15.8
|
|
7.7
|
Other current liabilities
|
|
171.8
|
|
158.6
|
Total Current Liabilities
|
|
187.6
|
|
166.3
|
|
|
|
|
|
Total Liabilities
|
|
687.7
|
|
659.3
|
|
|
|
|
|
Total Liabilities and Equity
|
|
866.8
|
|
786.2
|
SUMMARIZED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
(In millions of $)
|
|
3Q2018
|
|
3Q2017
|
|
9M2018
|
|
9M2017
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
79.9
|
|
38.2
|
|
178.5
|
|
117.4
|
Cash flows used in investing activities
|
|
-33.3
|
|
-30.9
|
|
-139.8
|
|
-80.3
|
Cash flows from (used in) financing activities
|
|
1.2
|
|
51.4
|
|
-20.8
|
|
26.4
|
RECONCILIATION OF ADJUSTED EBITDA TO PROFIT (LOSS) BEFORE
INCOME TAX
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9M2018 (In millions of $)
|
|
Colombia
|
|
Chile
|
|
Brazil
|
|
Argentina
|
|
Other(a)
|
|
Total
|
Adjusted EBITDA
|
|
233.8
|
|
7.3
|
|
13.6
|
|
3.9
|
|
-13.8
|
|
244.8
|
Depreciation
|
|
-32.8
|
|
-20.4
|
|
-7.9
|
|
-7.0
|
|
-0.2
|
|
-68.3
|
Unrealized commodity risk management contracts
|
|
11.5
|
|
-
|
|
-
|
|
-
|
|
-
|
|
11.5
|
Write-off of unsuccessful exploration efforts
|
|
-11.9
|
|
-0.4
|
|
-1.9
|
|
-0.4
|
|
-
|
|
-14.5
|
Share based payments
|
|
-0.5
|
|
-0.3
|
|
-0.1
|
|
-0.5
|
|
-2.3
|
|
-3.6
|
Others
|
|
-1.2
|
|
3.0
|
|
-0.3
|
|
1.0
|
|
0.7
|
|
3.2
|
OPERATING PROFIT (LOSS)
|
|
198.8
|
|
-10.8
|
|
3.5
|
|
-2.9
|
|
-15.6
|
|
173.0
|
Financial costs, net
|
|
|
|
|
|
|
|
|
|
|
|
-25.9
|
Foreign exchange charges, net
|
|
|
|
|
|
|
|
|
|
|
|
-17.9
|
PROFIT BEFORE INCOME TAX
|
|
|
|
|
|
|
|
|
|
|
|
129.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9M2017 (In millions of $)
|
|
Colombia
|
|
Chile
|
|
Brazil
|
|
Argentina
|
|
Other(a)
|
|
Total
|
Adjusted EBITDA
|
|
116.7
|
|
3.0
|
|
13.0
|
|
-1.3
|
|
-10.8
|
|
120.5
|
Depreciation
|
|
-29.2
|
|
-18.0
|
|
-7.7
|
|
-0.1
|
|
-0.1
|
|
-55.1
|
Unrealized commodity risk management contracts
|
|
-0.7
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-0.7
|
Write-off of unsuccessful exploration efforts
|
|
-1.6
|
|
-
|
|
-3.0
|
|
-0.2
|
|
-
|
|
-4.8
|
Share based payments and other
|
|
-0.4
|
|
-0.3
|
|
-0.1
|
|
-0.3
|
|
-2.0
|
|
-3.1
|
Others
|
|
4.1
|
|
0.6
|
|
-0.5
|
|
-
|
|
-1.1
|
|
3.1
|
OPERATING PROFIT (LOSS)
|
|
88.8
|
|
-14.7
|
|
1.7
|
|
-1.9
|
|
-14.0
|
|
59.9
|
Financial costs, net
|
|
|
|
|
|
|
|
|
|
|
|
-43.3
|
Foreign exchange charges, net
|
|
|
|
|
|
|
|
|
|
|
|
1.4
|
PROFIT BEFORE INCOME TAX
|
|
|
|
|
|
|
|
|
|
|
|
18.0
|
(a) Includes Peru and Corporate.
|
OTHER NEWS / SUBSEQUENT EVENTS
SALE OF NON-CORE ASSETS IN COLOMBIA
On November 2, 2018, GeoPark and Perenco Oil and Gas (Perenco) executed
a purchase and sale agreement in which Perenco agreed to purchase
GeoPark's 100% working interest in the La Cuerva and Yamu blocks in
Colombia for a total consideration of $18 million plus a contingent
payment of $2 million based on future oil prices. Closing of the
transaction is subject to customary regulatory approvals and is expected
in the first quarter of 2019. GeoPark will continue operating the La
Cuerva and Yamu blocks until the completion of the divestiture process.
The sale of these blocks will allow GeoPark to reallocate resources to
its core Llanos 34 block (GeoPark operated, 45% WI). During the first
nine months of 2018, the La Cuerva and Yamu blocks produced
approximately 1,000 bopd, representing 3% of GeoPark's net consolidated
oil and gas production during that period.
CONFERENCE CALL INFORMATION
GeoPark will host its Third Quarter 2018 Financial Results conference
call and webcast on November 7, 2018, at 10:00 a.m. Eastern Standard
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
3Q2018 and the work program and investment guidelines for 2019, 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: 5769205
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.
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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