Under Securities and Exchange
Commission rules, you are receiving this notice that the proxy materials for the Annual General Meeting are available on the Internet.
Follow the instructions below to view the materials and vote online or request a copy. The items to be voted on and location of
the annual meeting are on the reverse side. Your vote is important!
To facilitate timely delivery,
all requests for a paper copy of the proxy materials must be received by July 17, 2018.
Instead of mailing your proxy, you may choose
one of the voting methods outlined below to vote your proxy.
• Call toll free 1-800-652-VOTE
(8683) within the USA, US territories & Canada on a touch tone telephone
IF YOU HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
A
Proposals — The
Board of Directors recommends a vote
FOR
Proposals 1 – 10.
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Against
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Abstain
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For
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Against
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Abstain
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1.
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To re-elect Gerald Eugene O´Shaughnessy as
Director of the Company.
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2.
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To re-elect James Franklin Park as Director of the
Company.
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To re-elect Juan Cristobal Pavez as Director of the Company.
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To re-elect Carlos Alberto Gulisano as Director of the Company.
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5.
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To re-elect Pedro Enrique Aylwin Chiorrini as Director of the Company.
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To re-elect Robert Bedingfield as Director of the Company.
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7.
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To re-elect Jamie B. Coulter as Director of the Company.
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8.
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To elect Constantin Papadimitriou as Director of the Company.
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9.
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To re-appoint Price Waterhouse & Co SRL as auditors of the Company.
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10
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To authorize the Audit Committee to fix the remuneration of the Auditors.
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11.
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To inform the annual report and the audited consolidated financial statements for the fiscal year ended December 31, 2017.
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B
Non-Voting Items
Change of Address
— Please print new address below.
C
Authorized Signatures — This section must be completed
for your vote to be counted. — Date and Sign Below
Please sign exactly as name(s) appears hereon.
Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian,
please give full title.
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Date
(mm/dd/yyyy) — Please print date below.
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Signature 1 — Please keep signature within the box.
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Signature
2 — Please keep signature within the box.
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IF YOU HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
Notice of 2018 Annual
Meeting of Shareholders
NUESTRA SEÑORA DE LOS ÁNGELES,
179, LAS CONDES, SANTIAGO, CHILE
Proxy Solicited by Board of Directors for Annual Meeting — 27 JULY 2018
MR. JUAN CRISTOBAL PAVEZ
and MR. PEDRO ENRIQUE AYLWIN CHIORRINI, or any of them, each with the power of substitution, are hereby authorized to represent
and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual
Meeting of Shareholders of GeoPark Limited to be held on 27 JULY 2018 or at any postponement or adjournment thereof.
Shares represented by this proxy
will be voted by the shareholder. If no such directions are indicated, the Proxies will have authority to vote FOR the
election of the nominees for directors and FOR Proposals 9 and 10.
In their discretion,
the Proxies are authorized to vote upon such other business as may properly come before the meeting.
(Items to be voted appear
on reverse side.)
ITEM
3
ANNUAL
GENERAL MEETING
Santiago,
Chile, 27 July 2018
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GEOPARK
LIMITED
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This
document is important and requires
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your
immediate attention
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GEOPARK LIMITED
(Registered in Bermuda number
EC 33273)
ANNUAL GENERAL MEETING
Please be advised that the Annual General Meeting
(“the AGM”) of the Company will be held at 10 a.m. GMT-4 on July 27, 2018 at Nuestra Señora de Los Ángeles,
179, Las Condes, Santiago, Chile.
GEOPARK LIMITED
(Incorporated in Bermuda
with registered number EC 33273)
Directors:
Gerald E. O’Shaughnessy
(Chairman)
James F. Park
Juan Cristóbal Pavez
Carlos A. Gulisano
Pedro E. Aylwin Chiorrini
Robert Bedingfield
Jamie B. Coulter
Constantin Papadimitriou
Registered
office:
Cumberland House
9th Floor
1 Victoria Street
Hamilton
HM11
Bermuda
27 July 2018
Annual
General Meeting of GeoPark Limited (“the Company”)
Dear Shareholder:
Please be advised that
the Annual General Meeting (“the AGM”) of the Company will be held at 10 a.m. GMT-4 on July 27, 2018 at Nuestra Señora
de Los Ángeles, 179, Las Condes, Santiago, Chile.
Ordinary
Business
Election and Re-appointment
of Directors (Resolutions 1 to 8)
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1.
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Gerald Eugene O’Shaughnessy who was re-appointed to the Board at
the 2017 AGM of the Company to serve until the 2018 AGM, retires in accordance with the Company’s Bye-Laws and offers himself
for re-election as Executive Director to serve until the next AGM.
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2.
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James Franklin Park who was re-appointed to the Board at the 2017 AGM of
the Company to serve until the 2018 AGM, retires in accordance with the Company’s Bye-Laws and offers himself for re-election
as Executive Director to serve until the next AGM.
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3.
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Juan Cristóbal Pavez, who was re-appointed to the Board at the 2017
AGM of the Company to serve until the 2018 AGM, retires in accordance with the Company’s Bye-Laws and offers himself for
re-election as Non-Executive Director to serve until the next AGM.
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4.
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Carlos Alberto Gulisano, who was re-appointed to the Board at the 2017 AGM
of the Company to serve until the 2018 AGM, retires in accordance with the Company’s Bye-Laws and offers himself for re-election
as Non-Executive Director to serve until the next AGM.
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5.
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Pedro Enrique Aylwin,Chiorrini who was re-appointed to the Board at the
2017 AGM of the Company to serve until the 2018 AGM, retires in accordance with the Company’s Bye-Laws and offers himself
for election as Executive Director to serve until the next AGM.
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6.
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Robert Bedingfield, who was re-appointed to the Board at the 2017 AGM of
the Company to serve until the 2018 AGM, retires in accordance with the Company’s Bye-Laws and offers himself for re-election
as Non-Executive Director to serve until the next AGM.
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7.
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Jamie Bennett Coulter, who was appointed to the Board at the 2017 AGM of
the Company to serve until the 2018 AGM, retires in accordance with the Company’s Bye-Laws and offers himself for re-election
as Non-Executive Director to serve until the next AGM.
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8.
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Constantin Papadimitriou,
who was appointed to fill a vacancy in the Board by Resolution of the Directors dated May 7, 2018 to serve until the 2018 AGM,
is a candidate for election as Non-Executive Director to serve until the next AGM.
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All retiring Directors are
entitled, in accordance with the Company’s Bye-Laws, to offer themselves for re-election and they have all indicated their
willingness to be re-elected. Accordingly, Resolutions 1 to 7 propose the re-appointment of all the retiring Directors. Resolution
8 proposes the appointment of a new candidate to the Board.
Please see below brief
biographical details of each of the Directors standing for election and re-election pursuant to Resolutions 1 to 8.
1
Your Board of Directors values the individual contributions of each of the Directors referred to above and is keen to retain their
services. Accordingly, your Board recommends that you vote in favour of each of the Resolutions 1 to 8 electing and re-electing
each of the Directors.
_________________
1
Director´s share ownership is as of March 15, 2018, except for Mr.
Constantin Papadimitriou whose share ownership as of May 7, 2018. For further details, please refer to the Company´s Annual
Report.
Gerald Eugene
O’Shaughnessy
Age: 69
Wichita,Kansas,
USA
Director Since:
May 2002
Gerald E. O’Shaughnessy
has been our Chairman and a member of our board of directors since he co-founded the company in 2002. Following his graduation
from the University of Notre Dame with degrees in government (1970) and law (1973), Mr. O’Shaughnessy was engaged in the
practice of law in Minnesota. Mr. O’Shaughnessy has been active in the oil and gas business over his entire business career,
starting in 1976 with Lario Oil and Gas Company, where he served as Senior Vice President and General Counsel. He later formed
The Globe Resources Group, a private venture firm whose subsidiaries provided seismic acquisition and processing, well rehabilitation
services, sophisticated logistical operations and submersible pump works for Lukoil and other companies active in Russia during
the 1990s. Mr. O’Shaughnessy is also founder and owner of BOE Midstream, LLC, which owns and operates the Bakken Oil
Express, a crude by rail transloading and storage terminal in North Dakota, serving oil producers and marketing companies in the
Bakken Shale Oil play. Over the past 25 years, Mr. O’Shaughnessy has also founded and operated companies engaged in banking,
wealth management products and services, investment desktop software, computer and network security, and green clean technology,
as well as other venture investments, Mr. O’Shaughnessy has also served on a number of non-profit boards of directors, including
the Board of Economic Advisors to the Governor of Kansas, the I.A. O’Shaughnessy Family Foundation, the Wichita Collegiate
School, the Institute for Humane Studies, The East West Institute and The Bill of Rights Institute, the Timothy P. O’Shaughnessy
Foundation and is a member of the Intercontinental Chapter of Young Presidents Organization and World Presidents’ Organization.
Committee Memberships
Nomination Committee - Member
Technical Commitee – Member
Shares and Share
Equivalents Held
Common
Shares 7,213,316
James F.
Park
Age: 62
Buenos Aires,
Argentina
Director Since:
May 2002
James F. Park has served
as our Chief Executive Officer and as a member of our board of directors since co-founding the Company in 2002. He has extensive
experience in all phases of the upstream oil and gas business, with a strong background in the acquisition, implementation and
management of international joint ventures in North America, South America, Asia, Europe and the Middle East. He holds a degree
in geophysics from the University of California at Berkeley and has worked as a research scientist in earthquake and tectonic at
the University of Texas. In 1978, Mr. Park joined Basic Resources International Limited, an oil and gas exploration company, which
pioneered the development of commercial oil and gas production in Central America. As a senior executive of Basic Resources International
Limited, Mr. Park was closely involved in the development of grass-roots exploration activities, drilling and production operations,
surface and pipeline construction and crude oil marketing and transportation, and with legal and regulatory issues, and raising
substantial investment funds. He remained a member of the board of directors of Basic Resources International Limited until the
company was sold in 1997. Mr. Park is also a member of the board of directors of Energy Holdings and has also been involved in
oil and gas projects in California, Louisiana, Argentina, Yemen and China. Mr. Park is a member of the AAPG and SPE and has lived
in Latin America since 2002.
Committee Memberships
Nomination Committee
- Member
Technical Committee - Member
Disclosure Committee – Member
Shares and Share Equivalents Held
Common
Shares 7,891,269
Juan Cristóbal
Pavez
Age: 48
Santiago de Chile,
Chile
Director Since:
August 2008
Juan Cristóbal Pavez
has been a member of our board of directors since August 2008. He holds a degree in commercial engineering from the Pontifical
Catholic University of Chile and an MBA from the Massachusetts Institute of Technology. He has worked as a research analyst at
Grupo CB and later as a portfolio analyst at Moneda Asset Management. In 1998, he joined Santana, an investment company, as Chief
Executive Officer, where he focused mainly on investments in capital markets and real estate. While at Santana, he was appointed
Chief Executive Officer of Laboratorios Andrómaco, one of Santana’s main assets. In 1999, Mr. Pavez co-founded Eventures,
an internet company. Since 2001, he has served as Chief Executive Officer at Centinela, a company with a diversified global portfolio
of investments, with a special focus in the energy industry, through the development of wind parks and run-of-the-river hydropower
plants. Mr. Pavez is also a board member of Grupo Security, Vida Security and Hidroelétrica Totoral. Over the last few years
he has been a board member of several companies, including Quintec, Enaex, CTI and Frimetal.
Committee Memberships
Compensation Committee - Chairman
Audit Committee
- Member
Shares and Share Equivalents Held
Common
Shares 2,964,162
Carlos A.
Gulisano
Age: 67
Buenos Aires,
Argentina
Director Since:
July 2010
Carlos Alberto
Gulisano has been a member of our board of directors since June 2010. Dr. Gulisano holds a bachelor’s degree in geology,
a post-graduate degree in petroleum engineering and a PhD in geology from the University of Buenos Aires and has authored or co-authored
over 40 technical papers. He is a former adjunct professor at the Universidad del Sur, a former thesis director at the University
of La Plata, and a former scholarship director at the national technology research council in Argentina. Dr. Gulisano is a respected
leader in the fields of petroleum geology and geophysics in South America and has over 40 years of successful exploration, development
and management experience in the oil and gas industry. In addition to serving as an advisor to GeoPark since 2002 and as Managing
Director from February 2008 until June 2010, Dr. Gulisano has worked for YPF, Petrolera Argentina San Jorge S.A. and Chevron San
Jorge S.A. and has led teams credited with significant oil and gas discoveries, including those in the Trapial field in Argentina.
He has worked in Argentina, Bolivia, Peru, Ecuador, Colombia, Venezuela, Brazil, Chile and the United States.
Committee
Memberships
Technical Committee - Chairman Compensation
Committee - Member
Shares and Share Equivalents Held
Common
Shares 193,327
Pedro E. Aylwin
Chiorrini
Age: 58
Santiago de Chile,
Chile
Director Since:
July
2013
Pedro Enrique Aylwin Chiorrini
has served as a member of our board of directors since July 2013 and as our Director of Legal and Governance since April 2011.
From 2003 to 2006, Mr. Aylwin worked for us as an advisor on governance and legal matters. Mr. Aylwin holds a degree in law from
the Universidad de Chile and an LLM from the University of Notre Dame. Mr. Aylwin has extensive experience in the natural resources
sector. Mr. Aylwin is also a partner at the law firm Aylwin, Mendoza, Luksic, Valencia Abogados in Santiago, Chile, where he represented
mining, chemical and oil and gas companies in numerous transactions. From 2006 until 2011, he served as Lead Manager and General
Counsel at BHP Billiton, Base Metals, where he was in charge of legal and corporate governance matters on BHP Billiton’s
projects, operations and natural resource assets in South America, North America, Asia, Africa and Australia.
Committee Memberships
Nomination Committee - Chairman
Shares and Share Equivalents Held
Common Shares 220,859
Robert
Bedingfield
Age: 70
Potomac, Maryland,
USA
Director Since:
March
2015
Robert
Bedingfield has been a member of our board of directors since March 2015. He holds a degree in Accounting from the University of
Maryland and is a Certified Public Accountant. Until his retirement in June 2013, he was one of Ernst & Young’s most
senior Global Lead Partners with more than 40 years of experience, including 32 years as a partner in Ernst & Young’s
accounting and auditing practices, as well as serving on Ernst & Young’s Senior Governing Board. He has extensive experience
serving Fortune 500 companies; including acting as Lead Audit Partner or Senior Advisory Partner for Lockheed Martin, AES, Gannett,
General Dynamics, Booz Allen Hamilton, Marriott and the US Postal Service. Since 2000, Mr. Bedingfield has been a Trustee, and
at times an Executive Committee Member, and the Audit Committee Chair of the University of Maryland at College Park Board of Trustees.
Mr. Bedingfield served on the National Executive Board (1995 to 2003) and National Advisory Council (since 2003) of the Boy Scouts
of America. Since 2013, Mr. Bedingfield has also served as Board Member and Chairman of the Audit Committee of NYSE-listed Science
Applications International Corp (SAIC).
Committee Memberships
Audit Committee - Chairman
Nomination Committee - Member
Shares and Share
Equivalents Held
Common Shares 82,495
Jamie B.
Coulter
Age: 77
Wichita, Kansas,
USA
Director Since:
May 2017
Jamie
B.Coulter is a well-respected businessman, renown for spearheading the growth of a variety of businesses in diverse sectors. Mr.
Coulter currently serves as Chairman and CEO of Coulter Enterprises Inc., a private investment firm. Mr. Coulter has been an investor
in and strong supporter of GeoPark since 2006. Mr. Coulter was a leader in the food retail and restaurant business for more than
46 years. He built and became the Chief Executive Officer of Lone Star Steakhouse & Saloon, a company that was awarded IPO
of the year and Forbes Magazine #1 Best Small Company in America for 3 consecutive years. In addition to Lone Star, he developed
and operated Pizza Hut and Kentucky Fried Chicken restaurants and became the largest Pizza Hut franchisee, was inducted to the
Pizza Hut Hall of Fame, and was named the Restaurants & Institutions CEO of the year. Mr. Coulter has both operating and investment
experience in the oil and gas business, including, the founding of Sunburst Exploration, a US upstream oil and gas company that
he built throughout the 1980s and sold in 1994. Mr. Coulter also has a successful track record as an oil and gas investor and has
been an active participant in the North American shale plays during the last ten years.
Mr. Coulter currently serves
as a Director of the Federal Law Enforcement Foundation; Director of Jimmy Johns, LLC; Director of Realm Cellars; Director of Cirq
Estates, LLC; Director of KB Wines, LLC; Member of the Board of Trustee for HCA Wesley Medical Center and Member of the Texas Heart
Institute Foundation Board. Mr. Coulter has previously served as Chairman of the Board of Directors of the Young Presidents’
Organization; Director of Empower America; Chairman of the Venice International University of Leadership; Chairman of the Board
of the International Pizza Hut Franchise Holders’ Association; Chairman of the Board of Trustees of Friends University; Member
of the Board of Advisors of The Wichita State University Center for Entrepreneurship; Member of the Board of Trustees for the University
of Kansas School of Business; Director of Intrust Bank, N.A. and Chairman of the Board of Fox & Hound Restaurant Group.
Committee Memberships
Compensation
Committee - Member
Shares and Share
Equivalents Held
Common
Shares 1,817,587
Constantin
Papadimitriou
Age: 57
Switzerland
Director Since:
May 2018
Mr.
Papadimitriou has been a member of our board of directors since May 2018. Mr. Papadimitriou holds an Economics and Finance degree
from Geneva University and post graduate Diploma in European Studies also from Geneva University. Mr. Papadimitriou is a respected
and successful international investor and businessman, with more than 30 years of investment experience in global capital markets
and in resource and industrial projects. Mr. Papadimitriou was one of the original “friends and family” investors in
GeoPark in its early days in 2004. Mr. Papadimitriou is currently CEO of General Oriental Investments S.A., the Investment Manager
of the Cavenham Group of Funds. Previously he was CEO of Cavamont Geneva. During his tenure at the Cavamont group, Mr. Papadimitriou
was responsible for Treasury Management, the Private Equity Portfolio as well as representing the group on the Boards of associated
companies including investments in the oil and gas, mining, real estate and gaming sectors (including Basic Petroleum, a Nasdaq-listed
Guatemalan oil and gas company). Mr. Papadimitriou is also the founding partner of Diorasis International, a company focusing on
investments in Greece and the broader Balkans and he also chairs the Greek language school of Geneva and Lausanne.
Shares and Share
Equivalents Held
Common
Shares 20,000
Auditors (Resolution
9)
The Company, at each general
meeting at which accounts are presented, appoints auditors to hold office until the close of the next such meeting. Price Waterhouse
& Co S.R.L. has been invited to act as Auditors and they have accepted the appointment. Accordingly, it is proposed by Resolution
9 to re-appoint Price Waterhouse & Co SRL as auditors to the Company to hold office until the close of the next such meeting.
Auditors Remuneration
(Resolution 10)
Resolution 10 authorizes
the Audit Committee to fix the remuneration of Price Waterhouse & Co S.R.L.
Annual Report and Accounts
The Directors will present
to Shareholders at the AGM the Annual Report and Accounts for the year ended 31 December 2017, together with the Auditors’
report on the 2017 Financial Statements.
Recommendation
Your Directors consider
that the proposals described in this letter are in the best interests of the Company and therefore of the Shareholders as a whole
and unanimously recommend Shareholders to vote in favour of all the resolutions to be proposed at the AGM, as they intend to do
in respect of their beneficial holdings representing, in aggregate, 33.63%
2
of the issued share capital of the Company.
Yours sincerely,
_________________
2
As of March 15, 2018. Does not include Mr. Papadimitriou’s
participation, equivalent to 0,03% as of May 7, 2018.
ANNUAL GENERAL
MEETING
Santiago,
Chile, 27 July 2018
WWW.GEO-PARK.COM
ITEM 4
Dear Fellow
Shareholders:
We are pleased to report that
our GeoPark team again outperformed in 2017 – making us a better, stronger, more capable, and more valuable Company than
ever before.
The international investment community
began taking increased notice of our enduring growth track record and GeoPark was the best performing upstream oil and gas company
on the New York Stock Exchange in 2017 with a 130% share price increase.
A continuous theme of GeoPark
is ‘
Vamos por Mas
’ (‘Let’s Go for More’) and our 2017 performance delivered
mas
(more)
in all key fundamentals of our business:
Mas
Oil
and Gas
Success in our industry begins
by being able to consistently find, develop and produce oil and gas. Last year, GeoPark extended its exceptional 15 year growth
track record and increased production by 23% to a record 27,586 boepd with an exit production of 31,977 boepd. In Colombia, production
grew by 39% to 21,787 boepd. After producing over 10 million boe during the year, we replaced and grew our certified oil and gas
reserves with proven (1P) reserves increasing by 24% to 97 million boe and total proven and probable (2P) reserves increasing
by 11% to 159 million boe. In Colombia, 2P reserves increased by 31% from the continuing extension of the large Tigana and Jacana
oil fields.
Mas
Efficiencies / Lower Costs
Being the safest lowest-cost driller
and producer of oil and gas are the critical factors in achieving long term industry leadership and economic success - with an
even greater emphasis in today’s world of oil price volatility. GeoPark’s operational strength has allowed us to relentlessly
drive down capital and operating costs to
achieve top-performing metrics,
with 2P finding and development costs of $4.0 per boe (consolidated) and $2.8 per boe (Colombia), and operating costs of $7.3
per boe (consolidated) and $4.3 per bbl (Colombia Llanos 34). Our passion for cost efficiency has resulted in 90% of GeoPark’s
production being cash flow positive at oil prices of just $25-30 per barrel.
Mas
Cash
/ Capital Strength
Differentiating us from most of
our industry peers, GeoPark is a self-funding growing cash-generating company - meaning our own cash flows are sufficient to pay
for and expand our business. Cash flows from operating activities were up 72% to $142 million and Adjusted EBITDA more than doubled
to $176 million. We also successfully lowered borrowing costs and extended debt maturities by issuing a new bond for $425 million,
at 6.5% due in 2024, and which was substantially oversubscribed by top tier international investors. We closed 2017 with $135
million in cash.
Mas
Value
With our new oil and gas discoveries
in 2017 and increasingly-efficient cost structure, the independently-certified net present value (NPV) of GeoPark’s 2P oil
and gas reserves increased by 21% to a value of $2.3 billion (despite using lower price decks compared to 2016). Last year we
invested $106 million and increased our NPV by $404 million. On a ‘per share’ basis and deducting outstanding net
debt and minority interests, our net debt adjusted 2P NPV per share increased by 24% to $29.2 per share (or $15.8 per share for
Colombia alone). This means our market share price is still significantly below the underlying value of our oil and gas assets.
Mas
Acreage
/ Upside
GeoPark has steadily and economically
built an extensive land position across Latin America – with more than five million acres in 29 blocks in 9 proven hydrocarbon
basins in 5 countries, consisting
of a risk-balanced mix of production, development, exploration and unconventional resource projects. This large acreage platform
is one of our most powerful assets – one that does not show up on a balance sheet – but which provides the foundation
for long term growth. On our acreage, GeoPark has identified new geological plays and prospects – that is, new potential
oil and gas fields – with audited exploration resources of 700 million to 1.3 billion boe.
Mas
Opportunity
One of the pillars of GeoPark’s
business plan is our success in identifying and acquiring new high quality projects on attractive terms. Our continuous efforts
to uncover new business opportunities over the last 10+ years in targeted hydrocarbon basins has built a $2+ billion new project
inventory in Colombia, Brazil, Argentina, Peru, Ecuador and Mexico – with an active focus on initiatives with Latin American
national oil companies. In early 2018, GeoPark entered into a new acquisition partnership with ONGC, the national oil company
of India, to support and join our efforts to expand our upstream portfolio across Latin America.
Mas
Capabilities
Our big ambitions require us to
prepare for our future by continuously investing in our capacities and know-how and to become the best at every component of our
business. Last year we continued to invest in our technical, financial and management excellence and strengthen our country business
unit teams, including new leadership in Peru and Argentina. This includes dynamically structuring our organizational and leadership
framework to more effectively manage our growing enterprise and capture the future.
Mas
Safe,
Clean and Neighborly Operations
Our in-house-designed value system
called SPEED is GeoPark’s competitive advantage. SPEED represents our character, guides our behavior and defines our
success. It creates positive interdependence
with the communities where we operate and ensures safe and environmentally-clean operational performance – with the goal
to be the partner-of-choice, employer-of-choice and neighbor-of-choice. From 2015 to date, GeoPark is the only major operator
in Colombia with zero work interruptions. In 2017, GeoPark was awarded the ISO 14001 environmental management certification in
Colombia.
Vision and
Alignment
As described in our Business Guidelines
which accompany every Annual Report, GeoPark’s long term value proposition is to build the leading oil and gas independent
company in Latin America – a region of unlimited hydrocarbon resources, a welcoming business environment, and little competition.
An advantage in creating our Company has been a consistent long term vision and conservative business plan that are supported
and shared by our shareholders, Board of Directors, management and employee team.
It is our steady focus on this
bigger prize that has allowed us to build the foundation and tools needed for the long term and to push forward regardless any
short term cycles or sentiment. We believe our strength and unique position across the region today results from this alignment
and gives us even more advantages in achieving our ambitious goals.
People
As our history has proved, great
people create great results. We are pleased to recognize and thank the women and men who have built and are continuing to build
GeoPark. They are our heart and engine, and have faced and met every challenge with a professionalism, creativity and agility
that keeps propelling us forward.
As an entrepreneurial and battle-tested
company that has grown from scratch into one of Latin America’s leading independents, we attribute our success to a proud
culture based on trust – and which is the catalyst for our continuous record of safe, clean, neighborly, transparent and
successful operations.
Our gratitude extends to the persistently
supportive families of all our team members who have contributed immensely to where we have been and where we are going. We were
fortunate to join with all employees and spouses this year for GeoPark’s Fifteenth Anniversary to express our thanks personally
and to celebrate together our powerful culture, impressive accomplishments and big expectations for each other.
A special thanks also to our hard-working
Board of Directors. We are saddened by the unfortunate passing of Peter Ryalls and Michael Dingman and sincerely grateful for
their important and valuable contribution to our Company.
Business Platform
GeoPark’s business plan
follows a technical approach to identify high value under-exploited proven hydrocarbon basins – based on geological, infrastructure
and regulatory factors. We then work to establish strategic positions in the targeted regions. Our systematic expansion to date
has resulted in building stable and growing businesses in Colombia, Chile, Brazil, Argentina and Peru. Each country is managed
by reputable and professional local teams, with supporting production and cash flows, attractive underlying reserves and resources,
and inventories of new project opportunities.
Our independent country businesses
are further enhanced by being supported by an overall corporate organization, which improves efficiencies, reduces costs through
operational and financial synergies, controls quality, drives performance,
and more effectively grows our
overall company by allocating capital to the best shareholder value-adding projects.
Briefly looking at each of our
businesses:
Colombia Business
GeoPark is leading the strongest
upstream project in Colombia and one of the most attractive onshore projects in Latin America today. In less than five years we
grew from zero to be the third largest oil operator in the country – and are currently proving up what is being called the
largest oil field discovery in Colombia in the last 20 years.
Our key asset is the Llanos 34
Block (GeoPark operated), which we have grown from 0 to 50,000+ bopd gross production. During 2017, following successful appraisal
drilling in the Tigana and Jacana oil fields and new oilfield discoveries – Curucucu, Chiricoca, and Jacamar – we
materially increased our Colombian certified 1P and 2P reserves by 64% and 31% to 66 million boe and 88 million boe respectively.
Our 2P reserve life index reached 11 years and the reserve replacement ratio was 360%. Our 1P NPV and 2P NPV in Colombia increased
to $1.1 billion and $1.4 billion respectively.
Llanos 34 is a highly-attractive,
low risk, low cost and high netback block which provides a large scale profitable production base even in low oil price environments.
Due to the expertise of our local teams, net finding and development costs (F&D costs) for 2017 were just $2.4 per boe (1P).
We have a big inventory of well sites (75+) to continue growing production, with IRRs exceeding 500% and six-month paybacks (assuming
a $50 per barrel Brent oil price). Our economics and return on capital in Llanos 34 are highly profitable and beat almost any
North American conventional or unconventional play.
In a constant effort to reduce
transportation costs and improve netbacks, we are constructing a new 30 km flow line to connect Llanos 34 to the main Colombian
pipeline infrastructure.
During 2017, GeoPark also acquired
attractive exploration acreage (Tiple and Zamuro), adjacent to Llanos 34, by farming-in with a commitment to drill two exploration
wells in 2018.
Argentina Business
Our team is continuing to strengthen
our position in Argentina, where it has a proven history of exploration success.
In August 2017, we made a successful
new light oil field discovery with the Rio Grande Oeste exploration well in the CN-V Block in the Neuquen Basin. An adjacent prospect
will be drilled in 2018.
In December 2017, GeoPark acquired
a 100% working interest in and operatorship of three new blocks (Aguada Baguales, El Porvenir and Puerto Touquet) in the heart
of the Neuquen Basin with production, development, exploration and unconventional resource potential. The blocks are currently
producing 2,400-2,500 boepd and were acquired at a value of $4 per boe 2P reserves. In addition to its attractive upside potential,
this acqusition represents a good fit with our existing platform in Argentina with cost savings and operational synergies.
Peru
Business
GeoPark continues working to prepare
for the development of the Morona Block. This project has become emblematic for Peru and represents PetroPeru’s return to
upstream activity. GeoPark was selected as the partner-of-choice and awarded the operatorship with a 75% working interest. We
recently signed a cooperation
agreement with the local indigenous
communities to work together to complete the Environmental Impact Assessment which is expected to be submitted in 2018.
Morona is a large block in the
proven Maranon Basin with a large upside potential (approximately 320-500 million boe) with several high impact plays and prospects.
The block’s key asset is the Situche Central oil field, which was discovered and proven up by two wells (which tested at
a combined rate of 7,500 bopd), and which has certified gross 3P reserves of 83 million barrels, a big 200 million barrel potential,
and the opportunity for near term cash flow. Morona represents an important acquisition for GeoPark that significantly increases
our overall inventory of reserves and exploration resources and can contribute to our long term durable growth. GeoPark has designed
a phased work program that is expected to put the Situche Central field into production initially through a long-term test to
begin generating cash flow – with ‘first oil’ targeted for 2019.
Brazil Business
Our Brazil business represents
a strategic base with a fully-developed, secure, cash flow-producing asset (a non-operated interest in the Manati field, one of
Brazil’s largest producing gas fields, operated by Petrobras) and 8 exploration blocks in onshore mature proven hydrocarbon
basins (Potiguar, Reconcavo, and Sergipe Alagoas). GeoPark will drill 2-3 exploration wells in 2018 to continue testing this potential.
GeoPark also has identified attractive
onshore hydrocarbon opportunities in Brazil and is working with Petrobras in its divestment efforts with the objective of expanding
our asset base.
Chile Business
We are Chile’s first private
oil and gas producer. We built the business from a flat-footed start-up in 2006 to a solid business with current production of
approximately
2,900 boepd (66% gas, 34% oil),
2P reserves of 34 million boe and 5 blocks with 0.8 million acres, consisting of approximately 375-700 million boe of exploration
and unconventional resources. Over 20 million boe have already been produced by GeoPark in Chile and we divested 20% of our project
in 2011 for approximately $150 million.
Our Chilean team has done an excellent
job improving efficiencies and maintaining production stability with very little new investment. Production and reserves decreased
in 2017 due the natural decline of the fields and limited drilling activity since the end of 2014. In early 2017, GeoPark extended
its gas off-take contract with Methanex to 2026 to supply its large methanol plant in Punta Arenas.
In early 2018, GeoPark drilled
and tested a new shallow El Salto formation prospect and discovered the Uaken gas field; which creates a new low cost gas play
across the Fell Block.
New
Projects and Countries
With our focus on achieving scale,
GeoPark is always in the hunt to acquire attractively-valued new oil and gas upstream opportunities across Latin America and we
have built an impressive inventory of new projects over the last ten years. Following the lower oil price environment, national
oil companies, which control the biggest and best hydrocarbon acreage, are reevaluating their portfolios and initiating divestment
programs. Our regional platform, expertise and reputation give us first mover advantage in potentially acquiring these attractive
projects.
We are also working towards establishing
new platforms in Mexico and Ecuador, where regulatory reforms have opened the door for private companies to access highly attractive
hydrocarbon assets – many of which are an excellent fit for GeoPark’s skill set.
As a result of our existing large
and diversified organic asset portfolio, GeoPark has the advantage of being a patient asset acquirer, and can wait for the right
market opportunities to acquire the right projects at the right prices. To enhance our position as the preferred buyer in the
region, we also have created strategic acqusition partnerships with strong players, such as ONGC from India.
Outlook
As a Company, GeoPark is built
to prosper in a $40-45 oil price world. The current increased price environment allows us to further expand our programs and achieve
greater returns – while maintaining our inherent discipline and focus on cost and value.
Our 2018 work and investment program
targets a $140-150 million capital investment program (considering Brent oil prices of $60 per barrel), and is fully funded by
operating cash flow.
The work program provides for
a 40+ well drilling program targeting production growth of 25-30% (including the new Argentine assets) and an exit production
of 38,000-39,000 boepd, and includes:
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29-31
gross well development, appraisal and exploration drilling program and new flowline construction
in the Llanos 34 and adjacent blocks in the Llanos Basin in Colombia
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6-7
gross well exploration drilling program in the Neuquen Basin in Argentina
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Environmental
impact assessment and preliminary engineering and facility work on the Morona Block in
the Maranon Basin in Peru
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2-3
gross well exploration drilling program in the onshore Reconcavo and Potiguar Basins
in Brazil
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1-2
gross well exploration and development drilling program on the Fell Block in the Magallanes
Basin in Chile
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Letter to Shareholders
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GeoPark has developed and proven-up
a highly-effective capital allocation methodology to manage its five country portfolio. This system enables us to review and select
from a wide range of projects generated by each business unit team with different returns, potentials, risks, sizes, timelines
and geographies. It ensures that capital is always directed to our top value-adding projects after ranking them on technical,
strategic and economic criteria. It creates a healthy competition between our different business units which further helps drive
performance. It also provides greater security in volatile markets by allowing us to easily add or remove projects depending on
oil prices and project performance – and to fine-tune our desired risk exposure.
Thank You
Our sincere thanks and appreciation
to our shareholders – old and new alike – who have partnered with us, believe in our project, and support our efforts.
In 2017, we continued our campaign to reach out to new investors and better align our market value with the underlying asset value
we have unlocked in the field. As a result, we were the leading E&P stock performer last year and our stock trading volumes
have begun to accelerate (now at levels exceeding $5 million per day) which has opened up shareholder participation to the wider
investment community.
As always, your comments and recommendations
are welcomed and appreciated. We please invite you to visit us in the field or at any of our offices to get to know us better
and learn first-hand how we work.
We look forward to delivering
and reporting to you on our results in 2018.
Sincerely,
Letter to Shareholders
11