Another Quarter of Record Oil and Gas
Production, Drilling Success Across the Portfolio and
Important New Country Entry
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, Chile and Ecuador, today announced its
operational update for the three-month period ended March 31, 2019
(“1Q2019”).
All figures are expressed in US Dollars and growth comparisons
refer to the same period of the prior year, except when otherwise
specified.
First Quarter 2019 Highlights
Record Oil and Gas Production
- Consolidated oil and gas production up
23% to 39,557 boepd
- Gross operated production in Colombia,
Chile and Argentina surpassed 75,000 boepd
- Oil production increased by 26% to
34,358 bopd (up 5% compared to 4Q2018)
- Gas production increased by 7% to 34.4
mmcfpd
Drill Bit Success
- In Colombia: five new wells were tested
and put on production in the Llanos 34 block (GeoPark operated, 45%
WI), adding 5,600 bopd gross
- In Argentina, the Challaco Bajo 1001
well, targeting a new tight gas play in the El Porvenir block
(GeoPark operated, 100% WI) was successfully tested and put on
production
New Infrastructure in Colombia
- Flowline construction to connect the
Llanos 34 block to regional pipeline on budget and completed
New Country Entry: Ecuador
- Acquired low-cost, low-risk exploration
acreage with the Espejo and Perico blocks (GeoPark, 50% WI), in the
prolific Oriente basin in Ecuador
Adding Value for Shareholders
- Invested $12 million in the share
buyback program initiated in December 2018, buying 810,500 shares
while executing self-funded growth work programs
Catalysts: 2Q2019
- Testing three wells and drilling six
new wells, including development, appraisal and exploration wells
across GeoPark’s pan-regional portfolio in Colombia, Argentina,
Brazil and Chile
Breakdown of Quarterly Production by Country
The following table shows production figures for 1Q2019, as
compared to 1Q2018:
1Q2019 1Q2018 Total
Oil Gas Total
(boepd)
(bopd)(a) (mcfpd) (boepd)
% Chg.
Colombia 32,131 31,970 966 26,405 +22% Brazil 1,960 30 11,580 2,775
-29% Chile 2,961 685 13,656 2,873 +3% Argentina
2,505 1,673 4,992
142 -
Total
39,557 34,358
31,194
32,195 +23% a) Includes
royalties paid in kind in Colombia for approximately 1,295 bopd in
1Q2019. No royalties were paid in kind in Brazil, Chile or
Argentina.
Quarterly Production Evolution
(boepd)
1Q2019 4Q2018
3Q2018 2Q2018
1Q2018 Colombia 32,131
30,641 29,139
27,940 26,405 Brazil 1,960 2,894
3,124 2,904 2,775 Chile 2,961 2,823 2,632 2,559 2,873 Argentina
2,505 2,383
2,319 2,467 142
Total 39,557
38,741 37,214
35,870 32,195 Oil
34,358 32,859 31,266 30,249 27,345 Gas 5,199 5,882 5,948 5,621
4,850
Oil and Gas Production Update
Consolidated:
Overall oil and gas production grew by 23% to 39,557 boepd in
1Q2019 from 32,195 boepd in 1Q2018, due to increased production in
Colombia and Chile, and new production from the Argentina
acquisition, partially offset by lower production in Brazil.
Oil represented 87% of total reported production compared to 85%
in 1Q2018.
Colombia:
Average net production in Colombia grew 22% to 32,131 boepd in
1Q2019 compared to 26,405 boepd in 1Q2018, reflecting continued
successful exploration, appraisal and development drilling in the
Llanos 34 block, which represented 96% of Colombian production in
1Q2019.
The Llanos 34 block 1Q2019 operational results were:
Development and appraisal drilling:
- Five new wells were tested and put on
production, including Tigana Sur Oeste 10, Aruco 2, Tigui 2, Jacana
23 and Jacana 31, which are currently producing 5,600 bopd
gross.
Infrastructure update:
- The flowline to connect the Llanos 34
block to the Oleoducto de los Llanos (ODL) was completed and is
ready to operate. Oil is expected to start flowing from
the Jacana oil field to the ODL during April 2019, following
a site visit and final consent from the Colombian
regulatory body, Agencia Nacional de Hidrocarburos (ANH). Net
capital expenditures totaled approximately $16 million, within the
guidance of $15-20 million. This flowline will support future
production growth and will reduce transportation and operating
costs.
Peru:
During 1Q2019, as part of the approval process, GeoPark received
input and feedback on its Environmental Impact Assessment (EIA) to
initiate development activities in the Situche Central oil field in
the Morona block (GeoPark operated, 75% WI). Comments received
include observations by all stakeholders in the area of influence
of the Morona project, including local communities, governmental
agencies and non-governmental organizations. The Company is
currently working to provide in-depth answers to local authorities
during April 2019. Following the final review by SENACE, EIA final
approval is expected during 2Q2019. The EIA approval process
represents the final step before initiating development activities
in the Situche Central oil field.
Equipment to be used in early production facilities has been
delivered and engineering works are proceeding on the dock at
Morona base camp. Seasonal weather conditions and the final timing
of EIA approval could impact logistics and commissioning of early
production facilities. Consequently, a significant portion of the
Peru 2019 capital expenditures may be deferred to 2020. First oil
is expected by year-end 2020.
The Morona block contains the Situche Central light oil field,
which has been delineated by two wells that tested combined
production rates of 7,500 bopd. As of December 2018, D&M
certified gross 3P reserves of 198.3 mmbo for the Situche Central
oil field, with an associated NPV10 of over $2 billion.
Argentina:
Average net production in Argentina totaled 2,505 boepd in
1Q2019 (67% oil, 33% gas) corresponding to the acquisition of the
Aguada Baguales, El Porvenir and Puesto Touquet blocks in the
Neuquen basin. Both oil and gas production levels increased by
approximately 5% compared to 4Q2018, due to an ongoing secondary
recovery optimization project and a successful test of a new tight
gas play, in the Challaco Bajo field, in the El Porvenir block
(GeoPark operated, 100% WI):
Testing and drilling activities in the El Porvenir block:
- Challaco Bajo 1001 well targeting a
tight gas play was successfully tested during 1Q2019. The well
tested 726 mcfpd (or 120 boepd) due to initial calibration and
start-up constraints in early production facilities. The production
potential from this well could reach 2,400-3,600 mcfpd (or 480-600
boepd).
- Challaco Bajo 2002 well was drilled to
a total depth of 8,856 feet. Initial test results were 565 mcfpd of
gas and 60 bopd of light oil (or 160 boepd). The well is currently
being tested.
- Challaco bajo 2005 well was drilled to
a total depth of 8,964 feet. Testing activities are expected to
begin in April 2019.
Brazil:
Planned maintenance activities in the Manati field (GeoPark
non-operated, 10% WI) temporarily reduced net production by 29% to
1,960 boepd in 1Q2019, compared to 2,775 boepd in 1Q2018. The
maintenance activities were finished in early April and the Manati
field is currently producing 2,600 boepd.
Exploration drilling in the REC-T-128 block (GeoPark operated,
70% WI):
- Testing activities in the Praia dos
Castelhanos 1 exploration well are expected to begin in 2Q2019,
following regulatory approvals.
Chile:
Average net oil and gas production in Chile increased by 3% to
2,961 boepd in 1Q2019 compared to 2,873 boepd in 1Q2018 and
increased by 5% compared to 4Q2018 due to increased production from
the Jauke gas field. The production mix during 1Q2019 was 77% gas
and 23% light oil (compared to 69% gas and 31% light oil in
1Q2018). The Fell block (GeoPark operated, 100% WI) represented
100% of Chilean production in 1Q2019.
Development drilling in the Fell block:
- Jauke 2 gas well was drilled to a total
depth of 9,686 feet. Testing activities are expected to begin in
May 2019.
Ecuador:
On March 12, 2019, GeoPark was awarded the Espejo and Perico
blocks in the Intracampos bid round in Quito, Ecuador.
The Espejo and Perico blocks are attractive, low-risk
exploration blocks located in Sucumbíos Province in the
north-eastern part of Ecuador in the Oriente basin. Both blocks are
covered with 3D seismic and are adjacent to multiple producing
fields and existing infrastructure. More than five multilayer and
ready-to-drill light oil prospects and leads have been identified
on these blocks. Geoscience evaluation is ongoing and field
operations are expected to start in late 2019 or early 2020.
The winning bid consisted of a minimum investment program
including 55 sq km of 3D seismic in the Espejo block and drilling
four exploration wells in each block, with a total estimated
investment commitment of $60 million ($30 million net to GeoPark)
over the next four years. Frontera Energy has a 50% working
interest in the consortium.
Final award of the blocks is contingent upon regulatory
approvals and the execution of the contracts, expected in the
2Q2019.
2Q2019 Drilling Schedule
The following is a summary of expected drilling and testing
activities scheduled for 2Q2019:
Prospect/Wella
Country Block
WI Type 1
Tigana Sur Oeste 9 Colombia
Llanos 34 45%
Development 2 Tua 12 Colombia Llanos 34 45% Development 3 Tigana
Norte 15 Colombia Llanos 34 45% Development 4 Tigana Norte 18
Colombia Llanos 34 45% Development 5 Jacana 15 Colombia Llanos 34
45% Development 6 Jacana 16 Colombia Llanos 34 45% Development 7
Challaco Bajo -2005
b Argentina El Porvenir 100% Appraisal 8
Jauke 2
b Chile Fell 100% Development 9 Praia dos
Castelhanos 1
b Brazil REC-T-128 70% Exploration a)
Information included in the table above is subject to change and
may also be subject to partner or regulatory approval b) Drilling
initiated or completed with testing activities expected in 2Q2019
OTHER NEWS / RECENT EVENTS
Reporting dates for 1Q2019 results release and conference
call
GeoPark will report its 1Q2019 financial results on May 8, 2019,
after the market close. In conjunction with the 1Q2019 results
press release, GeoPark management will host a conference call on
May 9, 2019 at 11:00 am (Eastern Time) to discuss 1Q2019 financial
results.
To listen to the call, participants can access the webcast
located in the Investor Support section of the Company’s website at
www.geo-park.com.
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: 7551936
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.
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
NPV10 Present value of estimated future oil and gas
revenues, net of estimated direct expenses, discounted at an annual
rate of 10%
PRMS Petroleum Resources Management
System
SENACE Servicio Nacional de Certificacion
Ambiental Para Las Inversiones Sostenibles
SPE
Society of Petroleum Engineers
Sqkm Square Kilometer
WI Working Interest
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 production growth, expected
schedule, economic recovery, payback timing, IRR, drilling
activities, demand for oil and gas, capital expenditures plan,
regulatory approvals, reserves and exploration resources.
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.
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.
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.
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190411005192/en/
INVESTORS:Stacy Steimel – Shareholder Value
DirectorSantiago, Chilessteimel@geo-park.comT: +562 2242 9600
Miguel Bello – Market Access DirectorSantiago, ChileT: +562 2242
9600mbello@geo-park.com
MEDIA:Jared Levy – Sard Verbinnen &
Cojlevy@sardverb.comNew York, USAT: +1 (212) 687-8080
Kelsey Markovich – Sard Verbinnen & CoNew York, USAT: +1
(212) 687-8080kmarkovich@sardverb.com
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