Delivering on Production Growth
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,
Chile, Brazil, Argentina, and Peru, today announced its operational
update for the three-month period ended March 31, 2017
(“1Q2017”).
(All figures are expressed in US Dollars and growth comparisons
refer to the same period of the prior year, except when
specified).
Quarterly Highlights
Oil and Gas Production Up
- Consolidated oil and gas production up
12% to 25,180 boepd (up 6% compared to 4Q2016)
- Oil production up 25% to 20,487
bopd
- Gas production down 24% to 28.2
mmcfpd
- 1Q2017 exit production of approximately
26,100 boepd
- 2017 exit production target of 30,000+
boepd
Exploration, Appraisal and Development Well Drilling
Success
- In Colombia in the Llanos 34 Block
(GeoPark operated with 45% WI):
- Discovery of new Chiricoca oil field
with Chiricoca 1 exploration well currently producing 950 bopd
gross
- Further appraisal and development of
the Jacana oil field with:
- Appraisal well Jacana 11 extending
south-west limits of field and currently producing 2,200 bopd
gross
- Appraisal well Jacana Sur 2 and
development wells Jacana 7 and Jacana 8 were drilled and are
waiting for completion/testing expected during April/May
- Further development of Tigana oil field
with:
- Tigana Sur 6 development well found
thicker Guadalupe pay and is currently producing 1,700 bopd
gross
Long Term Gas Marketing Agreement
- Advanced negotiations with Methanex to
extend gas supply agreement in Chile to December 2026
Deleveraging Balance Sheet
- Repayment of $10 million on Itau term
loan with $40 million in principal remaining
Upcoming 2Q2017 Operational Catalysts
- Four drilling rigs operational (2 in
Colombia, 1 in Argentina, and 1 in Chile) targeting drilling 10
wells, including:
- Colombia: Explore four new prospects
including third major fault trend adjacent and parallel to existing
Llanos 34 producing trends
- Argentina: Explore new prospect in
Neuquen Basin CN-V Block (GeoPark operated with 50% WI)
- Chile: Explore new shallow gas play
prospect in Fell Block (GeoPark operated with 100% WI)
Breakdown of Quarterly Production by Country
The following table shows production figures for 1Q2017, as
compared with 1Q2016:
1Q2017
1Q2016
Total(boepd)
Oil
(bopd)a
Gas
(mcfpd)
Total(boepd)
% Chg. Colombia 19,330 19,267 378
14,871 30% Chile 3,351 1,182 13,008 4,061 -18% Brazil
2,499
38 14,766 3,586 -30%
Total
25,180 20,487 28,152
22,518 12% a) Includes royalties paid
in kind in Colombia for 608 bopd approximately in 1Q2017. No
royalties were paid in kind in Chile and Brazil operations.
Quarterly Production Evolution
(boepd) 1Q2016
2Q2016 3Q2016 4Q2016
1Q2017 Colombia 14,871 14,084 15,678
17,535 19,330 Chile 4,061 4,118 3,756 3,523 3,351
Brazil 3,586 2,941 2,636 2,535
2,499
Total 22,518 21,143
22,070 23,593 25,180 Oil 16,347
15,530 16,942 18,798 20,487 Gas 6,171 5,613 5,128
4,795
4,693
Oil and Gas Production Update
Consolidated:
Higher production in Colombia pushed up average consolidated oil
and gas production to 25,180 boepd in 1Q2017 from 22,518 boepd in
1Q2016. The increase was mainly attributed to new production from
the Jacana and Tigana oil fields - with three new wells drilled and
put into production during 1Q2017. On a consolidated basis, it was
offset by lower production in Chile due to the natural decline of
the fields and Brazil which is still being impacted by limited gas
consumption in northeast Brazil. Brazilian Finance Minister
Meirelles recently pointed to the beginning of an economic recovery
in Brazil, which could potentially lead to higher gas demand later
this year.
Oil increased in the production mix to 81% of the total reported
production in 1Q2017 (vs. 80% in 4Q2016 and 73% in 1Q2016) –
resulting from the successful drilling campaign in Llanos 34
Block.
Colombia:
Average net production in Colombia increased by 30% to 19,330
boepd in 1Q2017 compared to 14,871 boepd in 1Q2016, primarily
attributed to the Jacana and Tigana oil fields in Llanos 34 Block.
The Llanos 34 Block represented 95% of GeoPark’s Colombian
production in 1Q2017.
The 1Q2017 drilling campaign in the Llanos 34 Block continued to
provide positive results, as follows:
- Chiricoca 1 exploration well was
successfully completed and put on production in 1Q2017. The well is
currently producing approximately 950 bopd gross, with less than 1%
water cut
- Tigana Sur 6 development well was
drilled, completed and showed a net pay of approximately 57 feet,
which represents a significant thickening (~60%) of the average net
pay of the lower Guadalupe formation compared to other producing
wells in the Tigana oil field. The well is currently producing
approximately 1,700 bopd gross
- Jacana 11 appraisal well was drilled
approximately 2,500 meters south-west of Jacana 6, extending the
Tigana/Jacana oil play towards the southern limits of the Llanos.
The well is currently producing approximately 2,200 bopd with a 1%
water cut
- Jacana 7 and Jacana 8 development wells
and Jacana Sur 2 appraisal well were drilled with testing expected
during April/May
During 2Q2017, the campaign will be focused on testing four
exploration prospects, two located in the west and two in the east
fault trend parallel to the Tigana/Jacana fault trend in Llanos 34
Block. In addition, it will include two wells to continue
developing the Jacana oil field. For a summary of the drilling
activities in the next quarter, please refer to the table Expected
Drilling Schedule for 2Q2017, included below.
Chile:
Average net oil and gas production in Chile decreased by 18% to
3,351 boepd in 1Q2017 compared to 4,061 boepd in 1Q2016 due to the
natural decline of the fields with limited drilling activity since
2014. There was no drilling activity in Chile during 1Q2017. The
production mix during 1Q2017 was 65% gas and 35% oil, unchanged
from 1Q2016. The Fell Block (GeoPark operated with a 100% WI)
represented 98% of GeoPark’s Chilean production.
GeoPark is in advanced negotiations with Methanex to extend the
gas supply agreement in Chile to December 2026. In addition, the
Company is currently negotiating a new agreement with ENAP which
will allow sales to be interrupted if pricing conditions in the
export market are more competitive. As a result of these
negotiations, 1Q2017 oil production has been kept in storage and is
expected to be sold during 2Q2017, with no significant impact on
1Q2017 results. Chilean oil production represented 6% of The
Company´s consolidated net oil production during this period.
During 2Q2017, GeoPark will be targeting three different gas
opportunities through the drilling of one exploration and two
development wells in the Fell Block. Please refer to the table
Expected Drilling Schedule for 2Q2017, included below.
Brazil:
Average net oil and gas production in Brazil decreased 30% to
2,499 boepd in 1Q2017 compared to 3,586 boepd in 1Q2016, primarily
attributed to lower gas consumption by Brazilian industrial
users.
Manati Field production capacity remained unaffected and net
production could increase to approximately 3,500 boepd average
levels in the event gas consumption increases. The Manati Field
contractual take-or-pay provisions restrict volumes going below
current levels. The Manati Field (GeoPark non-operated with a 10%
WI) represented 100% of GeoPark’s Brazilian production.
Praia do Espelho exploration prospect in Reconcavo Basin was
drilled to a total depth of 2,333 meters. Main targets, Sergi and
Agua Grande formations, were found water bearing with reservoir
thicknesses of 36 ft and 46 ft, respectively. In addition, 47 ft of
reservoir with oil traces were encountered in a secondary target,
in the Gomo formation. As of the date of this release, and
following an in-depth G&G analysis, a decision was made to plug
and abandon the well. Drilling costs amounted to $2.3 million.
Argentina:
Exploration drilling of Rio Grande Oeste 1 well in CN-V Block
(GeoPark operated with a 50% WI), in the Neuquén Basin, is expected
to start in late April, in partnership with Wintershall (subsidiary
of BASF).
Expected Drilling Schedule for 2Q2017
The following is a summary of the expected drilling activities
scheduled for 2Q2017 with estimated total net capital expenditures
of $35-40 million (drilling and completion costs of $25-28 million
plus facilities of $10-12 million). All wells are operated by
GeoPark.
Prospect/Wella Country
Block
WorkingInterest
Type 1. Sinsonte 1 Colombia Llanos 34
45% Exploration 2. Guaco 1 Colombia Llanos 34 45%
Exploration 3. Jacamar 1 Colombia Llanos 34 45% Exploration 4.
Currucucu 1 Colombia Llanos 34 45% Exploration
5. Jacana 9
Colombia Llanos 34 45% Development 6. Jacana Sur 1 Colombia Llanos
34 45% Development
7. Kimiri Aike 4
Chile Fell 100% Development 8. Uaken 1 Chile Fell 100% Exploration
9. Ache 3 Chile Fell 100% Development 10. Rio Grande Oeste 1
Argentina CN-V 50% Exploration a) Information included in
the table above is subject to change and may also be subject to
partner or regulatory approval
NOTICE
Additional information about GeoPark can be found in the
“Investor Support” section on the website at www.geo-park.com.
Rounding amounts and percentages: Certain amounts and
percentages included in this press release have been rounded for
ease of presentation. Percentage figures included in this press
release have not in all cases been calculated on the basis of such
rounded figures, but on the basis of such amounts prior to
rounding. For this reason, certain percentage amounts in this press
release may vary from those obtained by performing the same
calculations using the figures in the financial statements. In
addition, certain other amounts that appear in this press release
may not sum due to rounding.
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING
INFORMATION
This press release contains statements that constitute
forward-looking statements. Many of the forward looking statements
contained in this press release can be identified by the use of
forward-looking words such as ‘‘anticipate,’’ ‘‘believe,’’
‘‘could,’’ ‘‘expect,’’ ‘‘should,’’ ‘‘plan,’’ ‘‘intend,’’ ‘‘will,’’
‘‘estimate’’ and ‘‘potential,’’ among others.
Forward-looking statements that appear in a number of places in
this press release include, but are not limited to, statements
regarding the intent, belief or current expectations, regarding
various matters, including expected 2017 production growth,
expected drilling schedule, economic recovery, payback timing, IRR,
drilling activities, demand for oil and gas 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, except when specified.
Readers are cautioned that the exploration resources disclosed
in this press release are not necessarily indicative of long term
performance or of ultimate recovery. Unrisked prospective resources
are not risked for change of development or chance of discovery. If
a discovery is made, there is no certainty that it will be
developed or, if it is developed, there is no certainty as to the
timing of such development. There is no certainty that any portion
of the Prospective Resources will be discovered. If discovered,
there is no certainty that it will be commercially viable to
produce any portion of the resources. Prospective Resource volumes
are presented as unrisked.
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version on businesswire.com: http://www.businesswire.com/news/home/20170410005413/en/
INVESTORS:GeoPark LimitedSantiago, ChileStacy Steimel,
+562 2242 9600Shareholder Value
Directorssteimel@geo-park.comorGeoPark LimitedBuenos Aires,
ArgentinaDolores Santamarina, +5411 4312 9400Investor
Managerdsantamarina@geo-park.comorMEDIA:Sard Verbinnen &
CoNew York, USAJared Levy, +1 212-687-8080jlevy@sardverb.comorSard
Verbinnen & CoNew York, USAKelsey Markovich, +1
212-687-8080kmarkovich@sardverb.com
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