UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT
OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16
OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2017
Commission File Number: 001-36298
GeoPark Limited
(Exact name of registrant as specified
in its charter)
Nuestra Señora de los Ángeles
179
Las Condes, Santiago, Chile
(Address of principal executive office)
Indicate by check mark whether the registrant
files or will file annual reports under cover of Form 20-F or Form 40-F:
Indicate by check mark if the registrant
is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant
is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
GEOPARK LIMITED
TABLE OF CONTENTS
ITEM
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1.
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Press Release dated November 15, 2017 titled “GeoPark Reports Third Quarter 2017 Results”
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Item
1
FOR IMMEDIATE DISTRIBUTION
GEOPARK REPORTS THIRD QUARTER 2017 RESULTS
HIGHER PRODUCTION DOUBLES EBITDA,
NEW FUNDING RAISED AND NEW ASSETS ACQUIRED
Bogota, Colombia – November 15, 2017
- 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 September 30, 2017 (“3Q2017”).
A conference call to discuss 3Q2017 Financial
Results will be held on November 16, 2017 at 10:00 am Eastern Standard Time.
All figures are expressed in US Dollars
and growth comparisons refer to the same period of the prior year, except when specified. Definitions and terms used herein are
provided in the Glossary at the end of this document. This release does not contain all of the Company’s financial information.
As a result, this release should be read in conjunction with GeoPark’s consolidated financial statements and the notes to
those statements for the period ended September 30, 2017, available on the Company’s website.
THIRD QUARTER 2017 HIGHLIGHTS
Operational Results:
Oil and gas production up 28%
|
·
|
Consolidated oil and gas production up
28% to 28,325 boepd (up 8% compared to 2Q2017)
|
|
·
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Current total production of 30,000+ boepd
(exceeds year-end exit target)
|
|
·
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Oil production increased by 37% to 23,237
bopd (up 6% compared to 2Q2017)
|
|
·
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Colombian oil production increased by 43%
to 22,301 bopd (up 6% compared to 2Q2017). Total gross Colombian production is over 51,000 bopd – making GeoPark the third
largest Colombian oil and gas operator
|
Successful drilling results in Colombia
In Llanos 34 block (GeoPark operated, 45%
WI)
|
·
|
Tigana Norte 2 appraisal well was drilled
to delineate the northeastern boundary of the Tigana/Jacana complex and is currently producing 2,700 bopd
|
|
·
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Tigana Norte 3 appraisal well recently
drilled outside the 3P outline defined in the 2016 D&M reserves certification and approximately 50 feet down dip of the Tigana
Norte 1 well and did not encounter the oil-water contact. The well is currently producing 1,700 bopd
|
|
·
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Tigana Norte 4 appraisal well currently
being drilled further down dip of Tigana Norte 3 well to continue delineating the northeastern boundaries of the Tigana/Jacana
complex
|
|
·
|
Jacana 10 appraisal well was drilled to
test the northern limits of the Jacana oil field and is currently producing 900 bopd
|
|
·
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Jacana 12 appraisal well was drilled to
test the southeastern boundary of Jacana and is currently producing 2,800 bopd
|
|
·
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Curucucu 1 exploration well was drilled
exploring a new fault trend to the east of Tigana/Jacana fault trend and is currently producing 1,100 bopd
|
Financial Results:
Adjusted EBITDA up by 131%
|
·
|
Revenues increased 64% to $81.9 million
(up 9% compared to 2Q2017)
|
|
·
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Operating netbacks increased by 47% ($7.4
per boe) to $23.2 per boe (up 5% compared to 2Q2017)
|
|
·
|
Consolidated operating expenses per boe
down by 14% from $8.5 per boe to $7.3 per boe
|
|
·
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Adjusted EBITDA increased by 131% to $44.6
million, last twelve months adjusted EBITDA reached $147.5 million
|
|
·
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Adjusted EBITDA per boe increased by 76%
to $18.0 per boe (up 13% compared to 2Q2017)
|
|
·
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Net loss of $19.1 million impacted by one-time
costs related to early cancellation of 2020 Notes of $17.6 million
|
|
·
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Net debt to adjusted EBITDA ratio decreased
from 4.7x to 1.9x (down by 14% from 2Q2017)
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|
·
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Cash and cash equivalents increased by
$71.6 million to $135.2 million as of September 30, 2017
|
Successful 2024 Notes transaction
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·
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Successful placing of $425 million 2024
Notes, maturing in September 2024 with a 6.5% coupon, strengthened balance sheet by increasing funds, extending maturity and lowering
debt cost
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|
·
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Proceeds used to repay substantially all
existing financial debt, for capital expenditures and for general corporate purposes
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·
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Transaction oversubscribed by more than
six times with top tier and high-quality investors
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Strategic Results:
New high potential exploration acreage
acquired adjacent to Llanos 34 block
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·
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85% WI and operatorship of Tiple Exploration
Acreage acquired in Colombia from CEPSA Colombia SA
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|
·
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One exploration well scheduled to be drilled
in 1H2018, for a total investment of $7-8 million
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Brazil low cost high potential acreage
added
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·
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Awarded new block in the proven mature
onshore Potiguar Basin, nearby other GeoPark blocks
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|
·
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Total commitment (bonus plus work program)
of less than $500,000
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James F. Park, Chief Executive Officer of
GeoPark, said: “It was another powerful quarter – with important operational, financial and strategic wins –
that continue building momentum for a successful completion of 2017 and an exciting outlook for 2018. Our team did its job by growing
every component of our business plan. Production continues to increase as our drilling keeps finding oil and pushing out the boundaries
of our key oil fields. Our cost reduction efforts and innovations continue to decrease operating and capital costs.
Our cash flow more than doubled and key financial metrics showed improvement. We added new highly-prospective acreage to our
expanding project portfolio by acquisitions in Colombia and Brazil and successfully closed a new bond transaction
providing more funds, longer maturities, more flexibility and lower costs.”
CONSOLIDATED OPERATING
PERFORMANCE
Key performance indicators:
Key Indicators
|
3Q2017
|
2Q2017
|
3Q2016
|
9M2017
|
9M2016
|
Oil production
a
(bopd)
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23,237
|
21,930
|
16,942
|
21,895
|
16,277
|
Gas production (mcfpd)
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30,528
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25,158
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30,774
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27,954
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33,810
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Average net production (boepd)
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28,325
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26,123
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22,070
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26,554
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21,913
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Brent oil price ($ per bbl)
|
52.1
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51.0
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46.9
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52.6
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43.1
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Combined price ($ per boe)
|
33.0
|
32.2
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26.3
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32.6
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23.6
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⁻ Oil ($ per bbl)
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34.6
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33.4
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26.9
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34.1
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23.3
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⁻ Gas ($ per mcf)
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5.3
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5.5
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4.5
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5.3
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4.5
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Sale of crude oil ($ million)
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68.4
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64.1
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38.4
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187.0
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95.9
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Sale of gas ($ million)
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13.6
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11.1
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11.5
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36.9
|
36.5
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Revenue ($ million)
|
81.9
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75.2
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49.9
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223.8
|
132.3
|
Commodity Risk Management Contracts ($ million)
|
-8.3
|
5.9
|
-
|
3.0
|
-
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Production & Operating Costs
b
($ million)
|
-25.7
|
-25.3
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-19.6
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-68.5
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-46.4
|
G&G, G&A
c
and Selling Expenses ($ million)
|
-12.0
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-13.9
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-11.3
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-36.1
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-35.5
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Adjusted EBITDA ($ million)
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44.6
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37.1
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19.4
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120.5
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51.4
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Adjusted EBITDA ($ per boe)
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18.0
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15.9
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10.2
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17.6
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9.2
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Operating Netback ($ per boe)
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23.2
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22.2
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15.8
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23.1
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14.7
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Profit (loss) ($ million)
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-19.1
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-1.1
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-21.0
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-14.4
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-34.7
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Capital Expenditures ($ million)
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30.9
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25.9
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10.1
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80.3
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24.2
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Cash and cash equivalents ($ million)
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135.2
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77.0
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63.6
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135.2
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63.6
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Short-term financial debt ($ million)
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1.9
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31.7
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32.5
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1.9
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32.5
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Long-term financial debt ($ million)
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418.5
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314.6
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320.4
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418.5
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320.4
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Net debt ($ million)
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285.2
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269.3
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289.3
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285.2
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289.3
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a)
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Includes government royalties paid in-kind in Colombia for approximately
774, 781 and 690 bopd in 3Q2017, 2Q2017 and 3Q2016 respectively. No royalties were paid in kind in Chile and Brazil.
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b)
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Production and Operating costs include operating costs and royalties paid
in cash.
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c)
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G&A expenses include $0.8, $0.8 and $0.9 million for 3Q2017, 2Q2017
and 3Q2016, respectively, of (non-cash) share-based payments that are excluded from the adjusted EBITDA calculation.
|
Production:
Consolidated oil and gas production grew by 28% to a record 28,325 boepd in 3Q2017 compared to 22,070 boepd in 3Q2016. The increase
was mainly attributed to new production from the Tigana/Jacana oil fields with four new wells put into production during the quarter.
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·
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Colombia: Average net oil and gas production
increased by 43% to 22,367 boepd in 3Q2017 compared to 15,678 boepd in 3Q2016 due to continued successful exploration and development
drilling in the Llanos 34 block.
|
|
·
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Chile: Average net oil and gas production
decreased by 25% to 2,817 boepd in 3Q2017 compared to 3,756 boepd in 3Q2016, due to natural decline of the fields.
|
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·
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Brazil: Average net gas production increased
by 19% to 3,141 boepd in 3Q2017 compared to 2,636 boepd in 3Q2016. Industrial demand for gas in Brazil recovered in the third quarter.
|
The weight of crude oil in the production
mix represented 82% in 3Q2017 (vs. 77% in 3Q2016) due to the successful drilling campaign in Llanos 34 block.
Recent Activity:
Colombia
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·
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Acquired 85% WI and operatorship of Tiple
Exploration Acreage (adjacent to Llanos 34 block) from CEPSA Colombia SA
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In Llanos 34 block:
|
·
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Tigana Norte 3 appraisal well successfully
drilled outside the 3P outline defined in the 2016 D&M reserves certification and approximately 50 feet down dip of the Tigana
Norte 1 well (previous lowest known oil) and did not encounter the oil-water contact. The well is currently producing 1,700 bopd.
|
|
·
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Tigana Norte 4 appraisal well currently
being drilled to continue delineating the northeastern boundaries of the Tigana/Jacana complex. The Tigana Norte 4 well is being
drilled outside the 3P outline defined in the 2016 D&M reserves certification and further down dip of the recent Tigana Norte
3 well (now the lowest known oil). Currently testing 3 wells, including Tigana Sur Oeste 7, Jacana 13 and 17.
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Brazil
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·
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Awarded new block in the proven mature
onshore Potiguar Basin, nearby other GeoPark blocks
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Catalysts in 4Q2017
Colombia
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·
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Continued delineation of Tigana/Jacana
complex, drilling six wells in 4Q that focus on northern Tigana, the area between Tigana and Jacana in Llanos 34 block and the
southernmost part of Jacana
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Argentina
|
·
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Production start-up with long-term testing
in Rio Grande Oeste oil field in CN-V block (GeoPark operated, 50% WI)
|
|
·
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Exploration drilling start-up in Sierra
del Nevado block (GeoPark non-operated, 18% WI) in Neuquen Basin
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Brazil
|
·
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Exploration drilling in POT-T-747 block
(GeoPark operated, 70% WI) in the Potiguar Basin
|
Reference
and Realized Oil Prices:
Brent crude oil price averaged $52.1 per bbl during 3Q2017, and the consolidated realized oil
sales price averaged $34.6 per bbl in 3Q2017, representing a 4% increase from $33.4 per bbl in 2Q2017 and a 29% increase from $26.9
per bbl in 3Q2016. 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 $2.8 per bbl in 3Q2017 from $5.7 per bbl in 3Q2016.
The following table provides a breakdown
of reference and net realized oil prices in Colombia and Chile in 3Q2017:
3Q2017 - Realized Oil
Prices
($ per bbl)
|
Colombia
|
Chile
|
Brent oil price
|
52.1
|
52.1
|
Vasconia differential
|
(2.8)
|
-
|
Commercial and transportation discounts
|
(15.2)
|
(7.8)
|
Realized oil price
|
34.1
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44.3
|
Weight on Oil Sales Mix
|
96%
|
4%
|
Commodity
Risk Management Contracts - Brent Oil Price:
In 3Q2017 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/losses reflect non-cash changes between the contract values and the forward Brent oil curve.
3Q2017 – Commodity Risk Management Contracts
|
($ million)
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Realized cash gain
|
1.5
|
Non-cash unrealized losses
|
-9.8
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Net effect
|
-8.3
|
The Company has the following commodity
risk management contracts (reference ICE Brent), in place as of the date of this release:
Period
|
Type
|
Volume
|
Contract terms ($ per bbl)
|
Hedged
|
|
(bopd)
|
Purchased Put
|
Sold Put
|
Sold Call
|
4Q2017
|
Zero premium collar
|
12,000
|
50.0-51.0
|
-
|
54.9-57.5
|
1Q2018
|
Zero premium collar
Zero premium 3-way
|
9,000
2,000
2,000
|
50.0-52.0
42.0
43.0
|
-
52.0
53.0
|
54.9-60.0
59.5-59.6
59.5-59.6
|
|
Total: 13,000
|
|
|
|
2Q2018
|
Zero premium collar
Zero premium 3-way
Zero premium 3-way
|
4,000
4,000
2,000
|
52.0
42.0
43.0
|
-
52.0
53.0
|
58.3-60.0
58.4-64.6
58.4-64.6
|
|
Total: 10,000
|
|
|
|
For further details, please refer to Note
4 of GeoPark’s consolidated financial statements for the period ended September 30, 2017, available on the Company’s
website.
Revenue:
Consolidated revenues increased by 64% to $81.9 million in 3Q2017, compared to $49.9 million in 3Q2016, mainly driven
by higher oil and gas revenues.
Sales of crude oil
: Consolidated
oil revenues increased by 78% to $68.4 million in 3Q2017, driven by a 39% increase in oil sales volumes and a 28% increase in realized
oil prices. Oil revenues represented 83% of total revenues compared to 77% in 3Q2016.
|
·
|
Colombia: In 3Q2017, oil revenues increased
by 90% to $64.3 million mainly due to increased sales volumes and higher realized prices. Oil sales volumes increased by 45% to
21,378 bopd. Realized oil prices increased by 31% to $34.1 per bbl, in line with higher Brent prices and a lower Vasconia discount.
Colombia earn-out payments (deducted from Colombia oil revenues) increased to $2.8 million in 3Q2017, compared to $1.3 million
in 3Q2016, in line with increased production and higher oil revenues.
|
|
·
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Chile: In 3Q2017, oil revenues decreased
by 14% to $3.8 million due to lower sales volumes partially offset by higher realized prices. Oil sales volumes decreased by 26%
to 928 bopd and realized oil prices increased by 17% to $44.3 per barrel, in line with higher Brent prices.
|
Sales of gas
: Consolidated gas revenues
increased by 18% to $13.6 million in 3Q2017 compared to $11.5 million in 3Q2016 due to 17% higher realized gas prices and 1% higher
gas sales volumes.
|
·
|
Chile: In 3Q2017, gas revenues decreased
by 1% to $4.2 million mainly due to lower gas sales volumes, partially offset by higher realized gas prices. Gas sales volumes
decreased by 21% to 10,383 mcfpd (1,730 boepd). Gas prices increased by 25% to $4.35 per mcf ($26.1 per boe) in 3Q2017, due to
increased methanol prices.
|
|
·
|
Brazil: In 3Q2017, gas revenues increased
by 33% to $9.2 million, due to both higher realized prices and sales volumes. Gas prices, net of taxes, increased by 12% to $5.9
per mcf ($35.2 per boe) due to the annual gas price inflation adjustment of approximately 7%, effective January 2017, and a slight
3% appreciation of the local currency. Gas sales volumes increased by 18% to 17,056 mcfpd (2,842 boepd), primarily due to higher
gas consumption by Brazilian industrial users.
|
Production
and operating costs
1
:
Consolidated production and operating costs increased by 31% to $25.7 million in
3Q2017, compared to $19.6 million in 3Q2016, mainly due to high price royalties that increased the total by $4.1 million, and to
a lesser extent, higher operating costs of $2.0 million, due to a 39% increase in oil sales volumes. The Jacana oil field in Llanos
34 block in Colombia accumulated more than five million barrels of production which triggered Colombia’s “high price”
royalty scheme beginning in mid-2Q2017. Thus, cash royalties as a percentage of revenues were 9% compared to 7% in 3Q2016.
Adjusting for increased production, consolidated
operating costs per barrel actually decreased to $7.3 per boe in 3Q2017 from $8.5 per boe a year earlier. Apart from lower road
maintenance and well-intervention costs, the improvement reflects the company´s continuous efforts to reduce operating costs.
By country, production and operating costs
were as follows:
|
·
|
Colombia: Operating costs increased by
11% to $10.8 million in 3Q2017 from $9.8 million in 3Q2016, mainly resulting from a 45% increase in sales volumes. Compared to
3Q2016, there were lower road maintenance works, pulling and other well intervention activities. Operating costs per boe decreased
to $5.5 per boe in 3Q2017 from $7.1 per boe in 3Q2016.
|
|
·
|
Chile: Operating costs increased by 4%
to $5.3 million in 3Q2017 from $5.0 million in 3Q2016 mainly due to higher pulling, well intervention activities and consumables,
and to a lesser extent to the appreciation of the Chilean peso (+3%). Operating costs per boe increased by 36% to $21.5 per boe
due to the impact of lower absorption of fixed costs from lower sales volumes.
|
|
·
|
Brazil: Operating costs increased to $2.2
million in 3Q2017 from $1.5 million in 3Q2016, mainly due to increased volumes (+18%) and higher maintenance costs in Manati ($0.7
million higher in 3Q2017 vs 3Q2016) and, to a lesser extent, the appreciation of the Brazilian real (+3%). Operating costs per
boe increased to $8.2 per boe from $6.6 in 3Q2016.
|
Royalties: Consolidated royalties paid in
cash (reported in Production and Operating Costs) increased by $4.1 million to $7.4 million in 3Q2017, compared to $3.3 million
in 3Q2016, mainly resulting from increased production, higher oil prices and the “high price” royalty for the Jacana
oil field in Llanos 34 block beginning in 3Q2017. Thus, consolidated royalties increased to 9% of revenue versus 7% in 3Q2016.
Selling
expenses:
Consolidated selling expenses decreased to $0.3 million in 3Q2017 compared to $0.5 million in 3Q2016.
Administrative,
Geological and Geophysical expenses:
Consolidated G&A and G&G expenses increased by 7% to $11.6 million in 3Q2017
compared to $10.8 million in 3Q2016. Consolidated G&A and G&G costs per boe decreased by 7% to $5.2 per boe in 3Q2017 (vs.
$5.6 per boe in 3Q2016).
Adjusted
EBITDA:
Consolidated adjusted EBITDA
2
strongly grew by 131% to $44.6 million or $18.0 per boe in 3Q2017
compared to $19.4 million or $10.2 per boe in 3Q2016, mainly driven by the combination of increased production levels and higher
realized oil and gas prices.
|
·
|
Colombia: Adjusted EBITDA of $41.6 million
in 3Q2017
|
|
·
|
Chile: Adjusted EBITDA of $0.8 million
in 3Q2017
|
|
·
|
Brazil: Adjusted EBITDA of $5.4 million
in 3Q2017
|
|
·
|
Corporate, Argentina and Peru: Adjusted
EBITDA of negative $3.2 million in 3Q2017
|
1
Production and Operating Costs = Operating Costs
plus Royalties
2
See “Reconciliation of
adjusted EBITDA to Profit (Loss) before income tax and adjusted EBITDA per boe” included in this press release.
The table below shows production, volumes sold and breakdown
of the most significant components of adjusted EBITDA for 3Q2017 and 3Q2016, on a per country and per barrel basis:
Adjusted EBITDA/boe
|
Colombia
|
Chile
|
Brazil
|
Total
|
|
3Q17
|
3Q16
|
3Q17
|
3Q16
|
3Q17
|
3Q16
|
3Q17
|
3Q16
|
Production (boepd)
|
22,367
|
15,678
|
2,817
|
3,756
|
3,141
|
2,636
|
28,325
|
22,070
|
Stock variation /RIK
a
|
(935)
|
(944)
|
(158)
|
(301)
|
(254)
|
(199)
|
(1,347)
|
(1,444)
|
Sales volume (boepd)
|
21,432
|
14,734
|
2,659
|
3,455
|
2,887
|
2,437
|
26,978
|
20,626
|
% Oil
|
100%
|
100%
|
35%
|
36%
|
2%
|
2%
|
83%
|
78%
|
($ per boe)
|
|
|
|
|
|
|
|
|
Realized oil price
|
34.1
|
25.9
|
44.3
|
37.8
|
59.4
|
48.3
|
34.6
|
26.9
|
Realized gas price
b
|
-
|
-
|
26.1
|
20.8
|
35.2
|
31.5
|
31.8
|
27.1
|
Earn-out
|
(1.3)
|
(0.9)
|
-
|
-
|
-
|
-
|
(0.9)
|
(0.6)
|
Combined Price
|
32.7
|
25.0
|
32.4
|
27.0
|
35.6
|
31.7
|
33.0
|
26.3
|
Commodity Risk Management Contracts
|
0.8
|
-
|
-
|
-
|
-
|
-
|
0.6
|
-
|
Operating costs
|
(5.5)
|
(7.1)
|
(21.5)
|
(15.9)
|
(8.2)
|
(6.6)
|
(7.3)
|
(8.5)
|
Royalties in cash
|
(3.1)
|
(1.7)
|
(1.3)
|
(1.1)
|
(3.4)
|
(3.1)
|
(3.0)
|
(1.7)
|
Selling & other expenses
|
0.0
|
(0.1)
|
(0.6)
|
(0.7)
|
-
|
-
|
(0.1)
|
(0.3)
|
Operating Netback/boe
|
24.9
|
16.3
|
9.0
|
9.4
|
24.0
|
22.1
|
23.2
|
15.8
|
G&A, G&G
|
|
|
|
|
|
|
(5.2)
|
(5.6)
|
Adjusted EBITDA/boe
|
|
|
|
|
|
|
18.0
|
10.2
|
|
a)
|
RIK (Royalties in Kind). Includes royalties paid in kind in Colombia for
approximately 774 and 690 bopd in 3Q2017 and 3Q2016, respectively. No royalties were paid in kind in Chile and Brazil.
|
|
b)
|
Conversion rate of mcf/boe=1/6
|
Depreciation:
Consolidated depreciation decreased by 6% to $19.4 million in 3Q2017, compared to $20.8 million in 3Q2016, due to lower depreciation
costs per boe as a consequence of drilling successes and increased reserves, partially offset by higher volumes sold. Depreciation
costs per boe declined by 28% to $7.8 per boe.
Write-off
of unsuccessful exploration efforts:
Consolidated write-off of unsuccessful exploration efforts amounted to $0.2 million
in 3Q2017, compared to $13.3 million in 3Q2016. Amounts recorded in 3Q2016 correspond to non-cash charges from seismic and exploration
activities associated to the relinquishment of blocks with no production and no reserves in Colombia and Brazil, plus unsuccessful
exploratory efforts in Chile.
Other expenses:
Other operating expenses amounted to $0.4 million in 3Q2017, compared to $1.0 million gain in 3Q2016.
CONSOLIDATED NON-OPERATING
RESULTS AND PROFIT FOR THE PERIOD
Net financial
expenses:
Net financial costs increased to $26.6 million in 3Q2017, compared to $8.6 million in 3Q2016. Amounts recorded
in 3Q2017 include $17.6 million related to one-time costs on the cancellation of 2020 Notes (see “Financial Ratios”
section below for further details). Excluding these costs, net financial expenses amounted to $9.0 million in 3Q2017.
Foreign
exchange:
Net foreign exchange charges amounted to a $3.2 million gain in 3Q2017 compared to a $1.8 million loss in
3Q2016, mainly due to the appreciation of the Brazilian real in 3Q2017 versus the depreciation in 3Q2016. Foreign exchange differences
resulted from differences in the US Dollar-denominated debt incurred at the local subsidiary level and the underlying functional
currency, the Brazilian real.
Income tax:
Income taxes amounted to an $11.6 million loss in 3Q2017, as compared to a $3.5 million gain in 3Q2016, in line with operating
profits recorded in 3Q2017 versus operating losses recorded in 3Q2016.
Net income:
Net losses amounted to $19.1 million in 3Q2017 compared to $21.0 million in 3Q2016. The net loss in 3Q2017 mainly relates to one-time
costs from the cancellation of 2020 Notes.
BALANCE SHEET
Cash and
cash equivalents:
Cash and cash equivalents totaled $135.2 million as of September 30, 2017. Year-end 2016 cash and
cash equivalents amounted to $73.6 million. The difference reflects cash generated from operating activities of $117.4 million
and cash from financing activities of $26.4 million, partially offset by cash used in investing activities of $80.3 million.
Cash from financing activities of $26.4
million includes net proceeds from the issuance of 2024 Notes of $420.8 million, offset by: (i) principal paid of $353.9 million
related to the payment of 2020 Notes and the prepayment of the Itau loan, (ii) cancellation costs of $17.6, and (iii) interest
payments of $22.4 million.
Prepayment
facility and credit lines available
: As of September 30, 2017, the Company had in place an offtake and prepayment agreement
with Trafigura of up to $100 million ($12.5 million outstanding as of September 30, 2017) and approximately $28 million in uncommitted
credit lines.
Financial
debt:
Total financial debt (net of issuance costs) amounted to $420.4 million, including the $425 million 2024 Notes
issued in September 2017. Short-term debt amounted to $1.9 million as of September 30, 2017.
FINANCIAL RATIOS
a
At period-end
|
Financial Debt
|
Cash and Cash Equivalents
|
Net Debt
|
Net Debt/ LTM Adj. EBITDA
|
LTM Interest
Coverage
|
3Q2016
|
352.9
|
63.6
|
289.3
|
4.7x
|
2.0x
|
4Q2016
|
358.7
|
73.6
|
285.1
|
3.6x
|
2.7x
|
1Q2017
|
341.7
|
70.3
|
271.4
|
2.6x
|
3.4x
|
2Q2017
|
346.3
|
77.0
|
269.3
|
2.2x
|
4.1x
|
3Q2017
|
420.4
|
135.2
|
285.2
|
1.9x
|
5.3x
|
|
a)
|
Based on trailing 12-month financial results.
|
Issuance
of 2024 Notes:
During September 2017, the Company successfully placed $425 million notes (“2024 Notes”)
in accordance with Rule 144A under the United States Securities Act, and outside the United States to non-U.S. persons in accordance
with Regulation S under the United States Securities Act. The 2024 Notes carry a coupon of 6.50% per annum. Funds were used to
repay financial debt, to provide financial flexibility and for general corporate purposes.
The indenture governing the 2024 Notes includes
incurrence test covenants that provides among other things, that, during the first two years from the issuance date, the net Debt
to adjusted EBITDA ratio should not exceed 3.5 times and the adjusted EBITDA to interest ratio should exceed 2 times. Failure to
comply with the incurrence test covenants would not trigger an event of default. As of the date of this release the Company is
in compliance with all provisions and covenants.
IN MEMORIAM
GeoPark deeply laments the passing of Michael
Dingman on October 3, 2017, a special friend, valued colleague, and a giant in international industry and finance, who served on
GeoPark's Board of Directors and passionately supported and advised GeoPark’s management team. Michael´s extensive
Board knowledge and experience on the boards of major listed companies greatly benefited the GeoPark Board of Directors.
SELECTED INFORMATION
BY BUSINESS SEGMENT
(UNAUDITED)
Colombia
|
3Q2017
|
3Q2016
|
|
Revenue ($ million)
|
64.5
|
34.2
|
|
Production and Operating Costs
a
($ million)
|
-17.0
|
-12.0
|
|
Adjusted EBITDA ($ million)
|
41.6
|
17.4
|
|
Capital Expenditures
b
($ million)
|
22.5
|
8.2
|
|
Chile
|
3Q2017
|
3Q2016
|
|
Sale of crude oil ($ million)
|
3.8
|
4.4
|
|
Sale of gas ($ million)
|
4.2
|
4.2
|
|
Revenue ($ million)
|
7.9
|
8.6
|
|
Production and Operating Costs
a
($ million)
|
-5.6
|
-5.4
|
|
Adjusted EBITDA ($ million)
|
0.8
|
1.0
|
|
Capital Expenditures
b
($ million)
|
4.6
|
0.0
|
|
Brazil
|
3Q2017
|
3Q2016
|
|
Sale of crude oil ($ million)
|
0.2
|
0.2
|
|
Sale of gas ($ million)
|
9.2
|
6.9
|
|
Revenue ($ million)
|
9.4
|
7.1
|
|
Production and Operating Costs
a
($ million)
|
-3.1
|
-2.2
|
|
Adjusted EBITDA ($ million)
|
5.4
|
4.4
|
|
Capital Expenditures
b
($ million)
|
0.0
|
0.6
|
|
|
|
|
|
|
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 and to a lesser extent in Peru.
|
CONSOLIDATED STATEMENT
OF INCOME
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
(In millions of $)
|
3Q2017
|
3Q2016
|
9M2017
|
9M2016
|
|
|
|
|
|
REVENUE
|
|
|
|
|
Sale of crude oil
|
68.4
|
38.4
|
187.0
|
95.9
|
Sale of gas
|
13.6
|
11.5
|
36.9
|
36.5
|
TOTAL REVENUE
|
81.9
|
49.9
|
223.8
|
132.3
|
Commodity risk management contracts
|
-8.3
|
-
|
3.0
|
-
|
Production and operating costs
|
-25.7
|
-19.6
|
-68.5
|
-46.4
|
Geological and geophysical expenses (G&G)
|
-0.7
|
-2.3
|
-3.8
|
-7.6
|
Administrative expenses (G&A)
|
-10.9
|
-8.5
|
-31.4
|
-24.2
|
Selling expenses
|
-0.3
|
-0.5
|
-0.9
|
-3.6
|
Depreciation
|
-19.4
|
-20.8
|
-55.1
|
-58.9
|
Write-off of unsuccessful exploration efforts
|
-0.2
|
-13.3
|
-4.8
|
-13.7
|
Impairment for non-financial assets
|
-
|
-
|
-
|
-
|
Other operating
|
-0.4
|
1.0
|
-2.4
|
-0.4
|
OPERATING PROFIT (LOSS)
|
15.9
|
-14.1
|
59.9
|
-22.6
|
|
|
|
|
|
Financial costs, net
|
-26.6
|
-8.6
|
-43.3
|
-25.2
|
Foreign exchange gain (loss)
|
3.2
|
-1.8
|
1.4
|
15.3
|
PROFIT (LOSS) BEFORE INCOME TAX
|
-7.5
|
-24.5
|
18.0
|
-32.5
|
|
|
|
|
|
Income tax
|
-11.6
|
3.5
|
-32.4
|
-2.1
|
PROFIT (LOSS) FOR THE PERIOD
|
-19.1
|
-21.0
|
-14.4
|
-34.7
|
Non-controlling interest
|
0.8
|
-2.9
|
5.4
|
-6.0
|
ATTRIBUTABLE TO OWNERS OF GEOPARK
|
-19.9
|
-18.1
|
-19.8
|
-28.7
|
SUMMARIZED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
(In millions of $)
|
Sep '17
|
Dec '16
|
|
(Unaudited)
|
(Audited)
|
Non-Current Assets
|
|
|
Property, plant and equipment
|
497.9
|
473.6
|
Other non-current assets
|
46.9
|
45.7
|
Total Non-Current Assets
|
544.8
|
519.3
|
|
|
|
Current Assets
|
|
|
Inventories
|
4.7
|
3.5
|
Trade receivables
|
14.4
|
18.4
|
Other current assets
|
34.0
|
25.7
|
Cash at bank and in hand
|
135.2
|
73.6
|
Total Current Assets
|
188.3
|
121.2
|
|
|
|
Total Assets
|
733.1
|
640.5
|
|
|
|
Equity
|
|
|
Equity attributable to owners of GeoPark
|
90.0
|
105.8
|
Non-controlling interest
|
40.9
|
35.8
|
Total Equity
|
130.9
|
141.6
|
|
|
|
Non-Current Liabilities
|
|
|
Borrowings
|
418.5
|
319.4
|
Other non-current liabilities
|
78.8
|
80.0
|
Total Non-Current Liabilities
|
497.3
|
399.4
|
|
|
|
Current Liabilities
|
|
|
Borrowings
|
1.9
|
39.3
|
Other current liabilities
|
103.0
|
60.2
|
Total Current Liabilities
|
104.9
|
99.5
|
Total Liabilities
|
602.2
|
498.9
|
Total Liabilities and Equity
|
733.1
|
640.5
|
SUMMARIZED CONSOLIDATED STATEMENT OF CASH
FLOWS
(UNAUDITED)
(In millions of $)
|
3Q2017
|
3Q2016
|
9M2017
|
9M2016
|
|
|
|
|
|
Cash flows from operating activities
|
38.2
|
26.4
|
117.4
|
54.9
|
Cash flows used in investing activities
|
-30.9
|
-10.1
|
-80.3
|
-24.2
|
Cash flows from (used) in financing activities
|
51.4
|
-31.3
|
26.4
|
-49.4
|
RECONCILIATION OF ADJUSTED
EBITDA TO PROFIT (LOSS) BEFORE INCOME TAX
(UNAUDITED)
9M2017 (In millions of $)
|
Colombia
|
Chile
|
Brazil
|
Other
|
Total
|
Adjusted EBITDA
|
116.7
|
2.9
|
13.0
|
-12.0
|
120.5
|
Depreciation
|
-29.2
|
-18.0
|
-7.7
|
-0.2
|
-55.1
|
Commodity Risk Management Contracts
|
-0.7
|
-
|
-
|
-
|
-0.7
|
Write-offs unsuccessful exploration efforts
|
-1.6
|
-
|
-3.0
|
-0.2
|
-4.8
|
Share Based Payments
|
-0.4
|
-0.3
|
-0.1
|
-2.3
|
-3.1
|
Others
|
4.1
|
0.6
|
-0.5
|
-1.1
|
3.1
|
OPERATING PROFIT (LOSS)
|
88.8
|
-14.7
|
1.7
|
-15.9
|
59.9
|
Financial costs, net
|
|
|
|
|
-43.3
|
Foreign Exchange charges, net
|
|
|
|
|
1.4
|
PROFIT (LOSS) BEFORE INCOME TAX
|
|
|
|
|
18.0
|
|
|
|
|
|
|
9M2016 (In millions of $)
|
Colombia
|
Chile
|
Brazil
|
Other
|
Total
|
Adjusted EBITDA
|
40.5
|
4.5
|
14.1
|
-7.7
|
51.4
|
Depreciation
|
-24.5
|
-24.1
|
-10.1
|
-0.2
|
-58.9
|
Commodity Risk Management Contracts
|
-
|
-
|
-
|
-
|
-
|
Write-offs unsuccessful exploration efforts
|
-7.4
|
-1.7
|
-4.6
|
-
|
-13.7
|
Share Based Payments
|
-0.5
|
-0.3
|
-0.0
|
-1.1
|
-1.9
|
Others
|
0.3
|
0.9
|
1.0
|
-1.6
|
0.6
|
OPERATING PROFIT (LOSS)
|
8.3
|
-20.6
|
0.4
|
-10.7
|
-22.6
|
Financial costs, net
|
|
|
|
|
-25.2
|
Foreign Exchange charges, net
|
|
|
|
|
15.3
|
PROFIT (LOSS) BEFORE INCOME TAX
|
|
|
|
|
-32.5
|
RECONCILIATION OF LAST
TWELVE MONTHS ADJUSTED EBITDA TO PROFIT (LOSS) BEFORE INCOME TAX
(UNAUDITED)
Last Twelve Months - LTM (In millions of $)
|
Total
|
|
|
|
|
Adjusted EBITDA
|
147.5
|
|
|
|
|
Depreciation
|
-72.0
|
|
|
|
|
Commodity Risk Management Contracts
|
-3.8
|
|
|
|
|
Write-offs unsuccessful exploration efforts/impairment
|
-16.8
|
|
|
|
|
Share Based Payments/Other
|
-1.2
|
|
|
|
|
OPERATING PROFIT
|
53.7
|
|
|
|
|
Financial costs, net
|
-52.2
|
|
|
|
|
Foreign Exchange charges, net
|
0.1
|
|
|
|
|
PROFIT BEFORE INCOME TAX
|
1.6
|
|
|
|
|
CONFERENCE
CALL INFORMATION
GeoPark
will host its Third Quarter 2017 Financial Results conference call and webcast on Thursday, November 16, 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 3Q2017 and work program and investment guidelines for 2018, 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: 99494005
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.
For further information, please contact:
INVESTORS:
|
|
Stacy Steimel – Shareholder Value Director
|
ssteimel@geo-park.com
|
Santiago, Chile
|
|
|
|
Jared Levy – Sard Verbinnen & Co
|
jlevy@sardverb.com
|
New York, USA
|
|
T: +1 (212) 687-8080
Kelsey Markovich – Sard Verbinnen & Co
New York, USA
T: +1 (212) 687-8080
|
kmarkovich@sardverb.com
|
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 exploration 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
|
|
|
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
|
Mm
3
/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%
|
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
|
PRMS
|
Petroleum Resources Management
System
|
SPE
|
Society of Petroleum Engineers
|
SQ KM
|
Square kilometers
|
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.
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.
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
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GeoPark Limited
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By:
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/s/ Andrés Ocampo
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Name:
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Andrés Ocampo
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Title:
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Chief FinancialOfficer
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Date: November 16, 2017
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