Operational Success Drives Financial
Success
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 reports its consolidated
financial results for the three-month period ended June 30, 2017
(“Second Quarter” or “2Q2017”).
A conference call to discuss 2Q2017 Financial Results will be
held on August 17, 2017 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 GeoPark’s consolidated financial
statements and the notes to those statements for the period ended
June 30, 2017, available on the Company’s website.
SECOND QUARTER 2017 HIGHLIGHTS
Operational Results:
Record consolidated oil and gas production
- Consolidated oil and gas production
increased by 24% to a record 26,123 boepd
- Oil production increased by 41% to
21,930 bopd, representing 84% of total production
- Colombian oil production continued
climbing by 49% to 20,951 bopd
- Gas production decreased by 25% to 25.2
mmcfpd
- Current consolidated production of over
28,000 boepd
- 2017 exit production targeted to exceed
30,000 boepd
GeoPark Colombia surpasses 40 million barrel gross production
milestone
At Llanos 34 block (GeoPark operated with a 45% WI):
- Exploration: Jacamar 1 well discovered
a new oil field, currently producing 300 bopd gross, and Curucucu 1
well drilled and currently being completed for testing
- Appraisal: Jacana Sur 2 and Jacana 8
wells drilled, completed and currently producing 1,800 bopd gross.
Jacana 9 appraisal well drilled and under testing. Jacana 10
appraisal well drilled and producing over 800 bopd
- Development: Jacana 7, Jacana Sur 1 and
Tigana Sur 5 wells drilled, completed and currently producing 2,800
bopd gross
- Gross GeoPark operated production
exceeds 51,000 barrels per day
New oil field discovery in Argentina
- Discovery of the Rio Grande Oeste oil
field in CN-V block (GeoPark 50% WI) in the Neuquen Basin. Rio
Grande Oeste 1 exploration well showed potential net pay of 400
feet and successfully tested 300 bopd gross
Financial Results:
Adjusted EBITDA margin increased to 49%
- Revenues increased 64% to $75.2
million
- Operating netbacks of $22.2 per boe, a
$4.5 per boe or a 25% increase
- Second quarter Adjusted EBITDA
increased by 81% to $37.1 million and last twelve months Adjusted
EBITDA reached $122.2 million
- Adjusted EBITDA per boe increased by
39% to $15.9 per boe
- Cash flow from operations of $33.9
million, exceeded capital expenditures by 1.3x
- Net loss of $1.1 million impacted by
write-offs of $4.6 million
Continued balance sheet improvement
- Gross debt to Adjusted EBITDA decreased
from 3.2x to 2.8x
- Net debt to Adjusted EBITDA decreased
from 2.6x to 2.2x
- Interest coverage ratio at 4.1x now
above 2020 Bond incurrence test ratio of 3.5x
- 40-50% of oil production hedged in
2H2017 with Brent price floor of $50-$54/bbl
- Increased cash and cash equivalents to
$77.0 million
Strategic Results:
Intense exploration and appraisal drilling program in
3Q2017
- Four drilling rigs operating, targeting
12-13 oil and gas wells in Colombia, Chile and Argentina
- In Colombia, drilling seven wells,
mostly appraisal, to further delineate the southern Jacana and
northern Tigana oil fields in the Llanos 34 block
- In Chile, targeting one new shallow gas
prospect in Fell block (GeoPark operated with a 100% WI)
- In Argentina, targeting four oil wells
in the Sierra del Nevado and Puelen blocks (GeoPark non-operated
with a 18% WI)
Improved market visibility
- Increased stock trading volume to
approximately $1 million per day during the last twelve months and
over $1.7 million during the last three months
James F. Park, Chief Executive Officer of GeoPark, said: “Our
team’s repeated operational success on the ground continues to lead
our successful financial performance. Our risk-managed high
potential asset portfolio consistently delivers results. Colombia
is driving us forward with a proven, low-cost, big-scale project.
Argentina represents an exciting new country entry with room to
grow. Brazil and Chile provide stability and new opportunity. Peru
is targeted as the next big leg of growth. And, all built to work
in today's low oil price world. GeoPark has the team, the assets,
the capital, the position and the plan to endure, grow and prosper
for the long-term in the evolving energy markets. All underpinned
by a unique fifteen-year established platform across Latin America
– the most dynamic and promising hydrocarbon region today.”
CONSOLIDATED OPERATING PERFORMANCE
Key performance indicators:
Key Indicators 2Q2017
1Q2017 2Q2016 1H2017
1H2016 Oil productiona (bopd) 21,930 20,487
15,530 21,213 15,939 Gas production (mcfpd)
25,158 28,152 33,678 26,646 35,357 Average net production (boepd)
26,123 25,180 21,143 25,654
21,831 Brent oil price ($ per bbl) 51.0 54.7 47.0 52.8 41.1
Combined price ($ per boe) 32.2 32.6 25.6 32.4 22.3 ⁻ Oil ($ per
bbl) 33.4 34.3 26.4 33.8 21.4 ⁻ Gas ($ per mcf) 5.5 5.2 4.3 5.3 4.4
Sale of crude oil ($ million) 64.1 54.5 34.3 118.6 57.5 Sale of gas
($ million) 11.1 12.2 11.6 23.3 25.0 Revenue ($ million) 75.2 66.7
45.9 141.9 82.5 Commodity Risk Management Contracts ($ million) 5.9
5.4 - 11.3 - Production & Operating Costsb ($ million) -25.3
-17.6 -13.8 -42.9 -26.8 G&G, G&Ac and Selling Expenses ($
million) -13.9 -10.2 -11.6 -24.1 -24.2 Adjusted EBITDA ($ million)
37.1 38.8 20.5 75.9 32.0 Adjusted EBITDA ($ per boe) 15.9 19.0 11.4
17.3 8.6 Operating Netback ($ per boe) 22.2 24.0 17.7 23.0 14.2
Profit (loss) ($ million) -1.1 5.8 -1.6
4.7 -13.7 Capital Expenditures ($ million) 25.9
23.5 5.7 49.4 14.1 Cash and cash
equivalents ($ million) 77.0 70.3 79.2 77.0 79.2 Short-term
financial debt ($ million) 31.7 32.2 38.5 31.7 38.5 Long-term
financial debt ($ million) 314.6 309.5 331.4
314.6 331.4 a) Includes government royalties
paid in-kind in Colombia for approximately 781, 608 and 729 bopd in
2Q2017, 1Q2017 and 2Q2016 respectively. No royalties were paid in
kind in Chile and Brazil. b) Production and Operating costs include
operating costs and royalties paid in cash. c) G&A expenses
include $0.8, $0.8 and $0.1 million for 2Q2017, 1Q2017 and 2Q2016,
respectively, of (non-cash) share-based payments that are excluded
from the Adjusted EBITDA calculation.
Production: Consolidated oil and gas production grew by
24% to a record 26,123 boepd in 2Q2017 compared to 21,143 boepd in
2Q2016. The increase was driven by Colombian oil production,
partially offset by lower gas production in Chile and Brazil.
- Colombia: Average net oil and gas
production increased by 49% to 21,015 bopd in 2Q2017 compared to
14,084 bopd in 2Q2016 due to continued successful exploration and
development drilling in the Llanos 34 block.
- Chile: Average net oil and gas
production decreased by 41% to 2,450 boepd in 2Q2017 compared to
4,118 boepd in 2Q2016, mainly due to a temporary interruption in
gas purchases during May and June of 2017. As of the date of this
release, gas sales have been restored and current Chilean
production is approximately 2,900 boepd.
- Brazil: Average net oil and gas
production decreased by 10% to 2,658 boepd in 2Q2017 compared to
2,941 boepd in 2Q2016, due to lower gas consumption by Brazilian
industrial users. As of the date of this release, gas demand has
rebounded and current production is approximately 3,200 boepd.
The weight of crude oil in the production mix increased to 84%
in 2Q2017 (vs. 73% in 2Q2016) due to the successful drilling
campaign in Llanos 34 block and lower gas production in Chile and
Brazil.
Recent Operational Activity:
- Jacana 9 appraisal well was drilled and
completed to a total depth of 11,545 feet, approximately 75 feet
down dip of Jacana 5. Preliminary logging information indicated the
presence of hydrocarbons in the lower, middle and upper levels of
the Guadalupe formation. A test conducted with an electric
submersible pump in the lower section of the formation resulted in
a production rate of approximately 80 barrels of oil per day (bopd)
with a 90% water cut. Testing of the middle and upper Guadalupe
zones will be performed over the course of the next few weeks.
Formation depths and preliminary results from the Jacana 9 and 10
wells, taken together, could indicate that Jacana 9 is in a
separate reservoir compartment with a shallower oil water
transition zone than elsewhere in this large oil accumulation. As a
result, following completion of Jacana 10, a workover rig will be
moved to Jacana 9 well to test the middle and upper sections of the
Guadalupe formation.
- Jacana 10 appraisal well, located
between Jacana 9 and Tigana Sur 1 wells, was drilled to a total
depth of 11,847 feet and completed during July to test the northern
limits of the Jacana oil field and how it may relate to the Tigana
oil field. A production test conducted with an electric submersible
pump in the Guadalupe formation resulted in a production rate of
approximately 1,000 bopd of 16.0 degrees API, with less than 1%
water cut, through a choke of 38/64 mm and wellhead pressure of 37
pounds per square inch. Additional production history is required
to determine stabilized flow rates of the well. Surface facilities
are in place and the well is already in production.
- Drilling activity during 3Q2017 will
continue with four appraisal and one development wells to further
delineate the southern Jacana and northern Tigana oil fields in the
Llanos 34 block and to define field boundaries and geography.
Reference and Realized Oil Prices: Brent crude oil price
averaged $51.0 per bbl during 2Q2017, and the consolidated realized
oil sales price averaged $33.4 per bbl in 2Q2017, representing a 3%
decrease from $34.3 per bbl in 1Q2017 and a 27% increase from $26.4
per bbl in 2Q2016. Differences between reference and realized
prices are a result of commercial and transportation discounts as
well as the Vasconia price differential in Colombia, which narrowed
to $3.6 per bbl in 2Q2017 versus $6.0 per bbl in 2Q2016.
The following table provides a breakdown of reference and net
realized oil prices in Colombia and Chile in 2Q2017:
2Q2017 - Realized Oil Prices
($ per bbl)
Colombia Chile Brent oil price
51.0 51.0 Vasconia differential (3.6) - Commercial and
transportation discounts (15.1) (8.0) Realized oil
price 32.3 43.0 Weight on Oil Sales Mix 91%
9%
Commodity Risk Management Contracts - Brent Oil Price: In
2Q2017 the Company recorded the following amounts related to
commodity hedges to mitigate the risk exposure to changes in the
Brent oil price. Realized gains reflect cash settled transactions
and unrealized gains reflect non-cash changes between the contract
values and the forward Brent oil curve.
2Q2017 – Commodity Risk Management
Contracts ($ million) Realized cash gain
2.0 Non-cash unrealized gain 3.9 Net gain
5.9
The Company has the following commodity risk management
contracts in place as of the date of this release:
- For the three-month period ending
September 30, 2017, GeoPark guaranteed a minimum Brent price of
$51.0 per bbl for 12,000 bopd through a zero-cost collar structure
that includes a maximum price of $61.1 per bbl.
- For the three-month period ending
December 31, 2017, GeoPark secured a minimum Brent price of $50.0
per bbl for 12,000 bopd through a zero-cost collar structure that
includes a maximum price of $57.5 per bbl.
- For the three-month period ending March
31, 2018, GeoPark secured a minimum Brent price of $50.0 per bbl
for 6,000 bopd through a zero-cost collar structure that includes a
maximum price of $55 per bbl.
Revenue: Consolidated revenues increased by 64% to $75.2
million in 2Q2017, compared to $45.9 million in 2Q2016, mainly
driven by higher oil revenues.
Sales of crude oil: Consolidated
oil revenues increased by 87% to $64.1 million in 2Q2017, driven
mainly by a 48% increase in oil sales volumes and a 27% increase in
realized oil prices. Oil revenues represented 85% of total revenues
compared to 75% in 2Q2016.
- Colombia: In 2Q2017, oil revenues
increased by 97% to $58.7 million mainly due to increased sales
volumes and higher realized prices. Oil sales volumes increased by
51% to 19,917 bopd. Realized oil prices increased by 30% to $32.3
per bbl, in line with higher Brent prices and a lower differential
to the Vasconia marker. Colombian earn-out payments (deducted from
Colombian oil revenues) increased to $2.5 million in 2Q2017,
compared to $1.2 million in 2Q2016, in line with higher oil
revenues and increased production.
- Chile: In 2Q2017, oil revenues
increased by 40% to $7.7 million due to higher realized prices and
increased sales volumes. (Oil production for the period
January-March 2017 was recorded as Inventories at 1Q2017 period
end, and delivered during 2Q2017, as the Company was negotiating a
new sales agreement with ENAP that was signed in May 2017.) Oil
sales volumes increased by 28% to 1,956 bopd. Realized oil prices
increased by 9% to $43.0 per bbl, in line with higher Brent
prices.
Sale of gas: Consolidated gas
revenues decreased by 4% to $11.1 million in 2Q2017 compared to
$11.6 million in 2Q2016 due to lower gas sales volumes, partially
offset by higher realized gas prices.
- Chile: In 2Q2017, gas revenues
decreased by 20% to $3.4 million mainly due to lower gas sales
volumes resulting from a temporary interruption in gas purchases
during May and June of 2017, partially offset by higher realized
gas prices. Gas sales volumes decreased by 43% to 7,651 mcfpd
(1,275 boepd). Gas prices increased by 41% to $5.0 per mcf ($29.7
per boe) in 2Q2017.
- Brazil: In 2Q2017, gas revenues
slightly increased by 3% to $7.5 million, mainly due to higher
realized prices, partially offset by lower gas sales volumes. Gas
prices, net of taxes, increased by 14% to $5.7 per mcf ($34.3 per
boe) due to a 9% appreciation of the local currency and the annual
gas price inflation adjustment that this time was of approximately
7%, effective January 2017. Gas sales volumes decreased by 10% to
14,459 mcfpd (2,410 boepd), primarily due to lower gas consumption
by Brazilian industrial users.
Production and operating costs[1]:
Consolidated operating costs per barrel increased to $8.3 per boe
in 2Q2017 from $6.2 per boe a year earlier mainly as a result of
more production from previously shut in fields, road maintenance
and well intervention costs. Following the 48% increase in oil
sales, total production and operating costs increased to $25.3
million in 2Q2017, compared to $13.8 million in 2Q2016. The Jacana
oil field accumulated more than 5 mmbbl which triggered Colombia’s
“high price” royalty scheme. Thus, cash royalties as a percentage
of revenues were 7.8% compared to 5.6% in 2Q2016.
By country, production and operating costs were as follows:
- Colombia: Operating costs per boe
increased to $5.9 per boe in 2Q2017 from $4.0 per boe in 2Q2016 due
to:
- Significantly higher volumes sold, 51%
compared to a year earlier, increased overall operating costs to
$10.7 million in 2Q2017 from $4.8 million in 2Q2016;
- Incremental costs related to the
reopening of La Cuerva and Yamu mature oil fields also impacted
operating costs since these fields had been temporarily closed in
2Q2016 and have significantly higher operating costs per barrel
compared to Llanos 34 block; and
- $1.7 million (or $0.9 per bbl) related
to road maintenance works, pulling and other well intervention
activities in Jacana, Tigana, Tua and Tarotaro oil fields in Llanos
34 block.
- Chile: Operating costs increased by 25%
to $6.4 million in 2Q2017, mainly due to a higher share of oil in
the sales mix (61% vs 40% in 2Q2016), which had been deferred from
the first quarter. The deferred oil sales have higher operating
costs than gas. Operating costs per boe increased by 47% to $21.7
per boe.
- Brazil: Operating costs increased to
$2.3 million in 2Q2017 from $1.3 million in 2Q2016, mainly
resulting from non-recurring maintenance costs in Manati ($1.1
million during 2Q2017) and, to a lesser extent, the appreciation of
the Brazilian real (+9%). Operating costs per boe increased to
$10.1 per boe from $5.1 in 2Q2016.
Royalties: Consolidated royalties paid in cash (reported in
Production and Operating Costs) increased to $5.9 million in
2Q2017, compared to $2.6 million in 2Q2016, mainly resulting from
increased production, higher oil prices and the “higher price”
royalty for the Jacana oil field in Llanos 34 block beginning in
2Q2017. Thus, consolidated royalties increased to 7.8% of revenue
vs. 5.6% in 2Q2016.
Selling expenses: Consolidated selling expenses decreased
to $0.1 million in 2Q2017 compared to $0.5 million in 2Q2016 mainly
as a result of lower selling expenses in Colombia and Chile.
Administrative, Geological and Geophysical expenses:
Consolidated G&A and G&G costs per boe remained flat at
$6.3 per boe in 2Q2017 (vs. 2Q2016). Consolidated G&A and
G&G expenses increased by 24% to $13.8 million in 2Q2017
compared to $11.1 million in 2Q2016. The Company expects that full
year 2017 G&G and G&A expenses will be lower than figures
reported in 2Q2017, at approximately $5-5.5 per boe.
Adjusted EBITDA: Consolidated Adjusted EBITDA1 continued
growing by 81% to $37.1 million or $15.9 per boe in 2Q2017 compared
to $20.5 million or $11.4 per boe in 2Q2016, mainly driven by the
combination of increased production levels and higher realized oil
and gas prices.
- Colombia: Adjusted EBITDA of $37.0
million in 2Q2017
- Chile: Adjusted EBITDA of $1.9 million
in 2Q2017
- Brazil: Adjusted EBITDA of $3.7 million
in 2Q2017
- Corporate, Argentina and Peru: Adjusted
EBITDA of negative $5.5 million in 2Q2017
__________________________
[1]
Production and Operating Costs = Operating
Costs plus Royalties
__________________________
1 See “Reconciliation of Adjusted EBITDA to Profit (Loss) Before
Income Tax and Adjusted EBITDA per Boe” included in this press
release.
The table below shows production, volumes sold and breakdown of
the most significant components of Adjusted EBITDA for 2Q2017 and
2Q2016, on a per country and per barrel basis:
Adjusted EBITDA/boe Colombia
Chile Brazil Total
2Q17 2Q16 2Q17
2Q16 2Q17 2Q16
2Q17 2Q16 Production (boepd) 21,015
14,084 2,450 4,118 2,658 2,941
26,123 21,143 Stock variation /RIKa (1,047)
(876) 782 (338) (209) (227)
(474) (1,441) Sales volume (boepd) 19,968 13,208
3,232 3,780 2,449 2,714 25,649 19,702 % Oil 100% 100%
61% 40% 2% 2% 85% 75%
($ per boe) Realized oil price 32.3 24.8 43.0 39.5 54.9 48.0
33.4 26.4 Realized gas priceb - - 29.7 21.1 34.3 30.0 32.8 25.9
Earn-out (1.3) (1.0) - - -
- (1.3) (0.7)
Combined Price
31.0 23.8 37.8
28.5 34.7 30.3
32.2 25.6 Commodity Risk Management Contracts
1.1 - - - - - 0.8
- Operating costs (5.9) (4.0) (21.7) (14.8) (10.1) (5.1)
(8.3) (6.2) Royalties in cash (2.6) (1.1) (1.7) (1.2) (3.1) (2.8)
(2.5) (1.4) Selling & other expenses 0.0 (0.1)
(0.5) (0.7) - - (0.0)
(0.3)
Operating Netback/boe 23.6
18.7 13.9 11.8
21.4 22.4 22.2
17.7 G&A, G&G
(6.3)
(6.3)
Adjusted EBITDA/boe
15.9 11.4 a) RIK (Royalties in Kind).
Includes royalties paid in kind in Colombia for approximately 781
and 729 bopd in 2Q2017 and 2Q2016 respectively. No royalties were
paid in kind in Chile and Brazil. b) Conversion rate of
$mcf/$boe=1/6.
Depreciation: Consolidated depreciation charges increased
by 20% to $20.0 million in 2Q2017, compared to $16.6 million in
2Q2016, mainly due to increased sales volumes, partially offset by
lower consolidated depreciation costs per boe. Depreciation costs
per boe declined by 8% to $8.6 per boe.
Write-off of unsuccessful exploration efforts:
Consolidated write-off of unsuccessful efforts amounted to $4.6
million in 2Q2017, compared to $0.4 million in 2Q2016. Amounts
recorded in 2Q2017 mainly correspond to unsuccessful exploration
efforts in Brazil and Colombia with two exploration wells, Praia do
Espelho and Sinsonte, expensed during 2Q2017.
Other expenses: Other operating expenses amounted to $1.5
million in 2Q2017, compared to $0.6 million in 2Q2016.
CONSOLIDATED NON-OPERATING RESULTS AND PROFIT FOR THE
PERIOD
Net financial expenses: Net financial costs slightly
decreased to $7.4 million in 2Q2017, compared to $7.6 million in
2Q2016.
Foreign exchange: Net foreign exchange charges amounted
to a $4.7 million loss in 2Q2017 compared to a $9.6 million gain in
2Q2016, mainly due to the depreciation and appreciation of the
Brazilian Real in 2Q2017 and 2Q2016, respectively. Foreign exchange
differences are mainly generated from changes in the value of the
Brazilian Real over the US Dollar-denominated debt incurred at the
local subsidiary level, where the functional currency is the
Brazilian Real.
Income tax: Income tax expenses amounted to $4.8 million
in 2Q2017, as compared to $6.3 million in 2Q2016, in line with
lower profits before income tax in 2Q2017.
Net income: Net loss amounted to $1.1 million in 2Q2017
compared to a $1.6 million loss in 2Q2016.
BALANCE SHEET
Cash and cash equivalents: Cash and cash equivalents
totaled $77.0 million as of June 30, 2017. Year-end 2016 cash and
cash equivalents amounted to $73.6 million. The difference reflects
cash used in investing activities of $49.4 million, cash used in
financing activities of $25.0 million (made up of principal
payments of $12.4 million primarily related to the Itau loan plus
interest payments), and cash generated from operating activities of
$79.1 million.
Prepayment facility and credit lines available: As of
June 30, 2017, the Company had in place an offtake and prepayment
agreement with Trafigura of up to $100 million (with $20.0 million
drawn in 2016, of which $5.0 million were cancelled in 1H2017) and
approximately $40 million in uncommitted credit lines.
Financial debt: Total financial debt (net of issuance
costs) amounted to $346.3 million, including the $300 million 2020
bond and the Itau loan (originally incurred for the acquisition of
an interest in the Brazilian Manati Field) of $39.9 million.
FINANCIAL RATIOSa
($ million)
At period-end
Financial Debt Cash and Cash
Equivalents Gross Debt / LTM Adj. EBITDA
Net Debtb/ LTM Adj. EBITDA LTM
Interest
Coverage
2Q2016 369.9 79.2 6.1x 4.8x 2.0x
3Q2016 352.9 63.6 5.7x 4.7x 2.0x 4Q2016 358.7 73.6 4.6x 3.6x 2.7x
1Q2017 341.7 70.3 3.2x 2.6x 3.4x 2Q2017 346.3 77.0
2.8x 2.2x 4.1x a) Based on trailing
12-month financial results. b) Included for informational purposes
only. Not included in the 2020 Bond Indenture.
GeoPark’s consolidated financial incurrence test covenants
included in the 2020 Bond Indenture are:
- A leverage ratio, defined as gross debt
to Adjusted EBITDA, lower than 2.5x from 2015 onwards; and
- An interest coverage ratio, defined as
Adjusted EBITDA divided by interest expenses, above 3.5x
As shown in the table above, as of June 30, 2017 the Company’s
leverage ratio was above the 2.5x threshold included in the 2020
Bond Indenture, though the interest coverage ratio was above the
3.5x threshold included in the 2020 Bond Indenture. These ratios
were impacted by lower oil prices since 2H2014. Failure to comply
with the incurrence test ratios does not trigger an event of
default. However, this situation may limit the Company’s capacity
to incur additional indebtedness, other than permitted debt, as
specified in the indenture governing the Notes. As opposed to
maintenance covenants, incurrence covenants must be tested by the
Company before incurring additional debt or performing other
specific corporate actions including but not limited to dividend
payments and restricted payments.
IN MEMORIAM
GeoPark deeply laments the passing of Peter Ryalls on July 25,
2017, a valued colleague and friend, who served on GeoPark's Board
of Directors since 2006. Peter was a huge contributor to building
the operational capabilities and strengths of GeoPark - and to
making 'health and safety' a fundamental pillar of our long-term
success. The GeoPark team is immensely thankful for Peter's very
significant contributions.
SELECTED INFORMATION BY BUSINESS
SEGMENT
(UNAUDITED)
Colombia
2Q2017 2Q2016 Revenue ($ million) 56.4
28.6 Production and Operating Costsa ($ million) -15.4 -6.3
Adjusted EBITDA ($ million) 37.0 16.4 Capital Expendituresb ($
million) 18.9 4.9
Chile
2Q2017 2Q2016 Sale of crude oil ($
million) 7.7 5.5 Sale of gas ($ million) 3.4 4.3
Revenue ($ million) 11.1 9.8 Production and Operating Costsa ($
million) -6.9 -5.5 Adjusted EBITDA ($ million) 1.9 2.2 Capital
Expendituresb ($ million) 2.7 0.3
Brazil 2Q2017 2Q2016 Sale
of crude oil ($ million) 0.2 0.2 Sale of gas ($
million) 7.5 7.3 Revenue ($ million) 7.7 7.5 Production and
Operating Costsa ($ million) -2.9 -2.0 Adjusted EBITDA ($ million)
3.7 4.4 Capital Expendituresb ($ million) 1.0 0.9 a)
Production and Operating = Operating Costs + Royalties. b) The
difference with the reported figure in Key Indicators table
corresponds mainly to capital expenditures in Argentina.
CONSOLIDATED STATEMENT OF
INCOME
(UNAUDITED)
(In millions of $)
2Q2017
2Q2016 1H2017 1H2016
REVENUE
Sale of crude oil 64.1 34.3 118.6 57.5 Sale of gas 11.1 11.6 23.3
25.0
TOTAL REVENUE 75.2 45.9 141.9
82.5 Commodity risk management contracts 5.9 - 11.3 -
Production and operating costs -25.3 -13.8 -42.9 -26.8 Geological
and geophysical expenses (G&G) -1.9 -2.9 -3.1 -5.3
Administrative expenses (G&A) -12.0 -8.2 -20.5 -15.7 Selling
expenses -0.1 -0.5 -0.5 -3.2 Depreciation -20.0 -16.6 -35.7 -38.1
Write-off of unsuccessful efforts -4.6 -0.4 -4.6 -0.4 Impairment
for non-financial assets - - - - Other operating -1.5 -0.6 -2.0
-1.4
OPERATING PROFIT (LOSS) 15.8 2.8
44.0 -8.4 Financial costs, net -7.4 -7.6 -16.7
-16.6 Foreign exchange gain (loss) -4.7 9.6 -1.8 17.0
PROFIT
(LOSS) BEFORE INCOME TAX 3.7 4.7 25.5
-8.0 Income tax -4.8 -6.3 -20.8 -5.6
PROFIT (LOSS)
FOR THE PERIOD -1.1 -1.6 4.7 -13.7
Non-controlling interest 2.3 -0.3 4.5 -3.1
ATTRIBUTABLE TO
OWNERS OF GEOPARK -3.4 -1.3 0.2
-10.6
SUMMARIZED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
(In millions of $)
Jun '17
Dec '16 (Unaudited) (Audited)
Non-Current Assets Property, plant and equipment 487.8 473.6
Other non-current assets 45.0 45.7
Total Non-Current Assets
532.8 519.3 Current Assets Inventories
4.7 3.5 Trade receivables 10.3 18.4 Other current assets 37.3 25.7
Cash at bank and in hand 77.0 73.6
Total Current Assets
129.3 121.2 Total Assets 662.0
640.5 Equity Equity attributable to owners of
GeoPark 107.7 105.8 Non-controlling interest 40.4 35.8
Total
Equity 148.1 141.6 Non-Current
Liabilities Borrowings 314.6 319.4 Other non-current
liabilities 80.5 80.0
Total Non-Current Liabilities
395.1 399.4 Current Liabilities
Borrowings 31.7 39.3 Other current liabilities 87.1 60.2
Total
Current Liabilities 118.9 99.5
Total Liabilities
513.9 498.9 Total Liabilities and
Equity 662.0 640.5
SUMMARIZED CONSOLIDATED STATEMENT OF
CASH FLOWS
(UNAUDITED)
(In millions of $)
2Q2017
2Q2016 1H2017 1H2016 Cash
flows from operating activities 33.9 8.5 79.1 28.4 Cash flows used
in investing activities -25.9 -5.7 -49.4 -14.1 Cash flows (used)
from in financing activities -1.2 4.5 -25.0 -18.2
RECONCILIATION OF ADJUSTED EBITDA TO
PROFIT (LOSS) BEFORE INCOME TAX
(UNAUDITED)
1H2017 (In millions of $)
Colombia Chile Brazil
Other Total Adjusted EBITDA 75.0 2.2
7.5 -8.8
75.9 Depreciation -19.0 -11.9 -4.6 -0.1 -35.7
Commodity Risk Management Contracts 9.1 - - - 9.1 Write-offs
unsuccessful efforts -1.6 - -3.0 - -4.6 Share Based Payments -0.3
-0.2 -0.1 -1.5 -2.0 Others 1.9 0.2 -0.5
-0.4 1.3
OPERATING PROFIT (LOSS) 65.2
-9.7 -0.7 -10.8
44.0 Financial costs,
net -16.7 Foreign Exchange charges, net
-1.8
PROFIT (LOSS) BEFORE
INCOME TAX 25.5 1H2016 (In millions of $)
Colombia Chile Brazil
Other Total Adjusted EBITDA 23.1 3.5
9.8 -4.4
32.0 Depreciation -14.3 -16.5 -7.2 -0.2 -38.1
Commodity Risk Management Contracts - - - - - Write-offs
unsuccessful efforts - -0.4 - - -0.4 Share Based Payments -0.3 -0.2
-0.0 -0.3 -0.7 Others -0.3 0.4 -0.2
-1.1 -1.2
OPERATING PROFIT (LOSS) 8.2
-13.2 2.4 -5.9
-8.4 Financial costs,
net -16.6 Foreign Exchange charges, net
17.0
PROFIT (LOSS) BEFORE
INCOME TAX -8.0
RECONCILIATION OF ADJUSTED LTM EBITDA
TO PROFIT (LOSS) BEFORE INCOME TAX
(UNAUDITED)
Last 12 Months - LTM (In millions of $) Total
Adjusted EBITDA 122.2 Depreciation -73.3 Commodity
Risk Management Contracts 6.0 Write-offs unsuccessful efforts -35.6
Impairment 5.7 Share Based Payments/Other -1.2
OPERATING PROFIT
(LOSS) 23.8 Financial costs, net -34.2 Foreign
Exchange charges, net -4.9
PROFIT (LOSS) BEFORE INCOME
TAX -15.3
CONFERENCE CALL INFORMATION
GeoPark will host its Second Quarter 2017 Financial Results
conference call and webcast on Thursday, August 17, 2017, at 10:00
a.m. Eastern Daylight Time.
Chief Executive Officer, James F. Park, Chief Financial Officer,
Andres Ocampo, and Chief Operating Officer, Augusto Zubillaga will
discuss GeoPark's financial results for 2Q2017, 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: 48671134
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
sales volumes
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 sales volumes. 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 in 2016 divided by the applicable net reserves
additions before changes in Future Development Capital
“High price” royalty
An additional royalty incurred in Colombia
when each oil field exceeds 5 mmbbl of cumulative production and is
determined by a combination of API gravity and WTI oil prices
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 2017 production growth and
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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170816006099/en/
INVESTORS:GeoPark LimitedSantiago, ChileStacy Steimel,
+56 (2) 2242-9600Shareholder Value
Directorssteimel@geo-park.comorBuenos Aires, ArgentinaDolores
Santamarina, +54 (11) 4312-9400Investor
Managerdsantamarina@geo-park.comorMEDIA:Sard Verbinnen &
CoNew York, USAJared Levy,
+1-212-687-8080jlevy@sardverb.comorKelsey Markovich,
+1-212-687-8080kmarkovich@sardverb.com
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