Subsurface and Operational Results Drive
Financial Performance: Higher Oil and Gas Production, Record
EBITDA, Cost Efficiency Improvements, Stronger Balance
Sheet
GeoPark Limited (“GeoPark” or the “Company”) (NYSE: GPRK), a
leading independent Latin American oil and gas explorer, operator
and consolidator with operations and growth platforms in Colombia,
Peru, Argentina, Brazil, and Chile reports its consolidated
financial results for the three-month period ended June 30, 2018
(“Second Quarter” or “2Q2018”).
A conference call to discuss 2Q2018 Financial Results will be
held on Thursday August 9, 2018 at 10:00 am Eastern Daylight
Time.
All figures are expressed in US Dollars and growth comparisons
refer to the same period of the prior year, except when specified.
Definitions and terms used herein are provided in the Glossary at
the end of this document. This release does not contain all of the
Company’s financial information. As a result, this release should
be read in conjunction with consolidated financial statements and
the notes to those statements for the period ended June 30, 2018,
available on the Company’s website.
SECOND QUARTER 2018 HIGHLIGHTS
Record Oil and Gas Production
- Consolidated oil and gas production up
37% to 35,870 boepd (up 11% compared to 1Q2018)
- Oil production increased by 38% to
30,249 bopd (up 11% compared to 1Q2018)
- Colombian production increased by 33%
to 27,940 boepd (up 6% compared to 1Q2018)
- Gas production increased by 34% to 33.7
mmcfpd (up 16% compared to 1Q2018)
- Five drilling rigs currently being
operated by GeoPark (three in Colombia, one in Argentina and one in
Chile)
Growing Cash Generation
- Revenues more than doubled to $159.3
million
- Adjusted EBITDA increased by 125% to
$83.3 million, a new record high
- Operating profit increased more than
three times to $52.0 million
- Net Income increased to $5.5 million
gain from $1.1 million loss
Continuing Cost Advantages
- Operating costs in the Llanos 34 block
(GeoPark operated, 45% WI) of $3.9 per barrel
- Consolidated operating costs of $8.5
per boe and Colombia $5.9 per boe
Stronger Balance Sheet
- Net debt to Adjusted EBITDA ratio
improved to 1.3x from 2.2x
- Cash position of $105.2 million
Improving Market Liquidity
- Average daily stock trading volume
climbed to $8.7 million in June, $6.5 million in the past three
months
Community Award
- GeoPark Colombia team received the
“Good Neighbor” award from the ANH for its excellent social
practices in Colombia. GeoPark was selected from among 107
different initiatives by a panel consisting of the United Nations,
Ministry of Mines and Energy and the ANH
James F. Park, Chief Executive Officer of GeoPark said: “Half
way into the year - and our better-than-expected performance again
is fueling an acceleration and expansion of our original work
program. This means we can invest more in the second half of the
year to produce more oil and gas and to make more money and build a
better company for our shareholders.
All the work GeoPark has done over the last fifteen years to
build the strongest platform across Latin America continues to pay
off. Our deep foundation keeps us going and growing - both in tough
times and now with stronger prices providing a wind-at-our-back.
And all begins with our committed team that knows how to find oil
and get it out of the ground and to market safely and profitably.
The same team that discovered and operates the Tigana-Jacana oil
fields in Colombia - one of the most attractive onshore plays in
Latin America today.”
CONSOLIDATED OPERATING PERFORMANCE
Key performance indicators:
Key Indicators 2Q2018
1Q2018 2Q2017
1H2018 1H2017 Oil productiona (bopd)
30,249 27,345 21,930 28,805 21,213 Gas production (mcfpd) 33,726
29,101 25,158 31,428 26,646 Average net production (boepd)
35,870 32,195 26,123
34,043 25,654 Brent oil price ($ per bbl) 74.9
67.3 51.0 71.1 52.8 Combined price ($ per boe) 51.7 44.7 32.2 48.4
32.4 ⁻ Oil ($ per bbl) 57.2 48.6 33.4 53.1 33.8 ⁻ Gas ($ per mcf)
5.1 5.4 5.5 5.3 5.3 Sale of crude oil ($ million) 145.7 111.0 64.1
256.7 118.6 Sale of gas ($ million) 13.7 12.8 11.1 26.5 23.3
Revenue ($ million) 159.3 123.9 75.2 283.2 141.9 Commodity risk
management contracts ($ million) -11.4 -3.9 5.9 -15.2 11.3
Production & operating costsb ($ million) -44.8 -34.1 -25.3
-78.8 -42.9 G&G, G&Ac and Selling expenses ($ million)
-17.5 -15.2 -13.9 -32.7 -24.1 Adjusted EBITDA ($ million) 83.3 63.3
37.1 146.6 75.9 Adjusted EBITDA ($ per boe) 27.0 22.9 15.9 25.0
17.3 Operating netback ($ per boe) 32.5 28.5 22.2 30.6 23.0 Profit
(loss) ($ million) 5.5 24.9
-1.1 30.4 4.7 Capital
expenditures ($ million) 36.3 21.4 25.9 57.7 49.4 Argentina
acquisition ($ million) -3.2d 52.0
- 48.8 - Cash and cash
equivalents ($ million) 105.2 120.4 77.0 105.2 77.0 Short-term
financial debt ($ million) 7.6 0.8 31.7 7.6 31.7 Long-term
financial debt ($ million) 418.9 418.7 314.6 418.9 314.6 Net debt
($ million) 321.3 299.1
269.3 321.3 269.3
a)
Includes government royalties paid in kind
in Colombia for approximately 898, 930 and 781 bopd in 2Q2018,
1Q2018 and 2Q2017 respectively. No royalties were paid in kind in
Chile, Brazil and Argentina.
b)
Production and operating costs include
operating costs and royalties paid in cash.
c)
G&A expenses include $0.8 million, $0.6 million and $0.8
million for 2Q2018, 1Q2018 and 2Q2017, respectively, of (non-cash)
share-based payments that are excluded from the Adjusted EBITDA
calculation. d) Price adjustment that corresponds to net cash flows
generated by the assets acquired since the execution of the asset
purchase agreement, on December 18, 2017, until the date of
closing, on March 27, 2018.
Production: Overall oil and gas production grew by 37% to
35,870 boepd in 2Q2018 from 26,123 boepd in 2Q2017, due to
increased Colombian production, new production from the recent
Argentina acquisition and increased production in Brazil and Chile.
Oil represented 85% of total reported production compared to 84% in
2Q2017.
For further details, please refer to the 2Q2018 Operational
Update published on July 11, 2018.
Reference and Realized Oil Prices: Brent crude oil price
averaged $74.9 per bbl during 2Q2018, and the consolidated realized
oil sales price averaged $57.2 per bbl in 2Q2018, an 18% increase
from $48.6 per bbl in 1Q2018 and a 71% increase from $33.4 per bbl
in 2Q2017. Differences between reference and realized prices
reflect commercial and transportation discounts as well as the
Vasconia price differential in Colombia, which averaged $4.1 per
bbl in both 2Q2018 and 1Q2018, compared to a $3.6 per bbl discount
in 2Q2017. Commercial and transportation discounts in Colombia were
reduced by 50 cents per bbl to $14.5 in 2Q2018, compared to $15.0
per bbl in 1Q2018 and $15.1 per bbl in 2Q2017.
In Colombia, construction is underway of a flowline in the
Llanos 34 block targeted for completion in January 2019 and is
expected to improve current commercial and transportation discounts
even further.
The table below provides a breakdown of reference and net
realized oil prices in Colombia, Chile and Argentina in 2Q2018:
2Q2018 - Realized Oil Prices
($ per bbl)
Colombia
Chile
Argentina
Brent oil price 74.9 74.9
74.9 Vasconia differential (4.1) - - Commercial and transportation
discounts (14.5) (9.9) - Other* - -
(8.2) Realized oil price 56.3
65.0 66.7 Weight on oil sales mix
91% 3% 6% *Price stability
agreement between the government and the oil sector in Argentina,
effective May 2018, temporarily froze oil prices at $66-67/bbl for
an initial period of three months. This agreement could be extended
beyond July 2018, depending on prevailing market conditions.
Revenue: Consolidated revenues increased by 112% to
$159.3 million in 2Q2018, compared to $75.2 million in 2Q2017.
Higher realized prices and higher deliveries pushed revenues
higher.
Sale of crude oil: Consolidated oil
revenues increased by 127% to $145.7 million in 2Q2018, driven by a
71% increase in realized oil prices and a 32% increase in oil
deliveries (compared to 2Q2017). Oil revenues were 91% of total
revenues compared to 85% in 2Q2017.
- Colombia: In 2Q2018, oil revenues
increased by 130% to $129.4 million as realized prices increased by
74% to $56.3 per bbl and oil deliveries increased by 32% to 26,289
bopd.Colombian earn-out payments (deducted from Colombian oil
revenues) increased to $5.2 million in 2Q2018, compared to $2.5
million in 2Q2017, in line with higher oil revenues and increased
production.
- Chile: In 2Q2018, oil revenues
decreased by 36% to $4.9 million, due to lower volumes sold which
were partially offset by higher oil prices. Oil deliveries were
compared against 2Q2017 which included oil deliveries for the first
and second quarters given negotiations with ENAP. Realized oil
prices increased by 51% to $65.0 per bbl, in line with higher Brent
prices. Oil revenues increased by 15% compared to 1Q2018.
- Argentina: In 2Q2018, oil revenues were
$11.1 million, resulting from $66.7 realized oil prices and
deliveries of 1,824 bopd, all from the recently acquired Aguada
Baguales, El Porvenir and Puesto Touquet blocks (GeoPark operated,
100% WI).
Sale of gas: Consolidated gas
revenues increased by 22% to $13.7 million in 2Q2018 compared to
$11.1 million in 2Q2017, driven by a 30% increase in gas deliveries
even though gas prices declined by 6%.
- Chile: In 2Q2018, gas revenues
increased by 28% to $4.4 million reflecting higher gas prices and
deliveries. Gas prices were 6% higher, or $5.3 per mcf ($31.6 per
boe) in 2Q2018, in line with increased methanol prices. Gas
deliveries increased by 20% to 9,200 mcfpd (1,533 boepd).
- Brazil: In 2Q2018, gas revenues
decreased by 7% to $7.0 million, mainly due to lower gas prices,
partially offset by increased deliveries. Gas prices decreased by
15% to $4.9 per mcf ($29.3 per boe), in line with a 16% devaluation
of the local currency. Gas deliveries increased by 9% to 15,808
mcfpd (2,635 boepd), resulting from increased industrial
consumption and decreased hydroelectric power availability.
- Argentina: In 2Q2018, gas revenues were
$1.8 million, resulting from $5.2 per mcf ($31.5 per boe) realized
gas prices and deliveries of 3,876 mcfpd (646 boepd), all
corresponding to the recently acquired blocks in Argentina.
Commodity Risk Management Contracts: GeoPark uses hedge
contracts to manage risks and limit the impact of oil price
volatility on the work program.
For the three-month period ending June 30, 2018, GeoPark
realized $13.3 million in lower net revenues from certain hedge
contracts in place that had a floor of $52-55/bbl and a ceiling of
$58-78/bbl Brent. In accordance with accounting rules, these
reduced revenues are adjusted by the change in the value of future
contracts and recorded as a $1.9 million gain.
For details regarding current contracts in place, please refer
to commodity risk management contracts below, or see Note 4 of
GeoPark’s consolidated financial statements for the period ended
June 30, 2018, available on the Company’s website.
Production and Operating Costs1:
Consolidated operating costs per boe were $8.5 in 2Q2018, slightly
higher than the $8.3 per boe in 2Q2017 due to the recently acquired
blocks in Argentina, which have higher costs per boe.
Consolidated operating costs increased by $6.8 million to $26.3
million in 2Q2018 compared to 2Q2017, as follows:
- Colombia: Operating costs per boe
decreased by 3% to $5.7 per boe in 2Q2018 compared to $5.9 per boe
in 2Q2017. Total operating costs increased by 28% to $13.6 million,
in line with a 32% increase in volumes delivered. Operating costs
per boe in the Llanos 34 block continue to be among the very lowest
in the industry at $3.9 per bbl.
- Chile: Operating costs decreased by 24%
to $4.9 million in 2Q2018 from $6.4 million in 2Q2017. Operating
costs in 2Q2017 were temporarily affected by a higher share of oil
in the sales mix, which had been deferred from 1Q2017. Compared to
1Q2018, operating costs decreased by 10% or by $0.5 million to $4.9
million. Operating costs per boe were $22.7.
- Brazil: Operating costs decreased by
30% to $1.6 million in 2Q2018 from $2.3 million in 2Q2017, because
of one-time maintenance costs in the Manati block (GeoPark
non-operated, 10% WI) in 2Q2017, which was offset by 9% higher
volumes delivered. Operating costs per boe decreased by 36% to $6.5
per boe from $10.1 in 2Q2017.
- Argentina: Operating costs were $6.0
million in 2Q2018, related to production from Aguada Baguales, El
Porvenir and Puesto Touquet blocks. Operating costs per boe were
$26.9.
In 2Q2018 the Company carried out the takeover of the Aguada
Baguales, El Porvenir and Puesto Touquet blocks and immediately
began evaluating and implementing operational efficiencies and
synergies, which together with ongoing renegotiations of existing
contracts and a low-cost well intervention campaign initiated in
early August 2018, are expected to improve overall profitability of
the project. In addition, the Company is currently evaluating
different alternatives to initiate drilling activity in these
blocks, which is expected to start before year-end.
Increased volumes and prices increased consolidated royalties by
$12.6 million to $18.5 million in 2Q2018.
Selling Expenses: Consolidated selling expenses increased
by $1.1 million to $1.2 million in 2Q2018 compared to $0.1 million
in 2Q2017. The increase of $0.9 million in 2Q2018 represented
transportation costs in the Aguada Baguales, El Porvenir and Puesto
Touquet blocks in Argentina.
Administrative Expenses: Consolidated G&A costs per
boe decreased by 21% to $4.0 per boe in 2Q2018 (vs $5.1 per boe in
2Q2017). Total consolidated G&A slightly increased to $12.5
million in 2Q2018, compared to $12.0 million in 2Q2017.
Geological & Geophysical Expenses: Consolidated
G&G costs per boe increased to $1.3 per boe in 2Q2018 (vs $0.8
per boe in 2Q2017). Total consolidated G&G expenses increased
to $3.9 million in 2Q2018, compared to $1.9 million in 2Q2017, due
to an increased scale of operations.
Adjusted EBITDA: Consolidated Adjusted EBITDA2 surged by
125% to $83.3 million, or $27.0 per boe, in 2Q2018 compared to
$37.1 million, or $15.9 per boe, in 2Q2017.
- Colombia: Adjusted EBITDA of $79.6
million in 2Q2018
- Chile: Adjusted EBITDA of $2.0 million
in 2Q2018
- Brazil: Adjusted EBITDA of $4.0 million
in 2Q2018
- Argentina: Adjusted EBITDA of $2.6
million in 2Q2018
- Corporate and Peru: Adjusted EBITDA of
negative $4.9 million in 2Q2018
The table below shows production, volumes sold and the breakdown
of the most significant components of Adjusted EBITDA for 2Q2018
and 2Q2017, on a per country and per boe basis:
Adjusted
EBITDA/boe Colombia
Chile Brazil Argentina
Total 2Q18
2Q17 2Q18 2Q17
2Q18 2Q17
2Q18 2Q17 2Q18
2Q17 Production (boepd) 27,940
21,015 2,559 2,450 2,904 2,658
2,467 - 35,870 26,123 Stock
variation /RIKa (1,553) (1,047)
(199) 782 (229)
(209) 3 - (1,977)
(474) Sales volume (boepd) 26,387 19,968 2,360 3,232 2,675
2,449 2,470 - 33,893 25,649 % Oil 99.6%
99.8% 35% 61% 2%
2% 74% - 86%
85%
($ per boe) Realized oil price 56.3 32.3
65.0 43.0 79.9 54.9 66.7 - 57.2 33.4 Realized gas priceb 40.3 -
31.6 29.7 29.3 34.3 31.5 - 30.5 32.8 Earn-out (2.2)
(1.3) - - -
- - - (2.0)
(1.3)
Combined Price 54.0
31.0 43.3
37.8 30.1 34.7
57.5 -
51.7 32.2
Realized commodity riskmanagement
contracts
(5.6) 1.1 -
- - - - -
(4.3) 0.8 Operating costs (5.7) (5.9)
(22.7) (21.7) (6.5) (10.1) (26.9) - (8.5) (8.3) Royalties in cash
(6.6) (2.6) (1.8) (1.7) (2.9) (3.1) (6.8) - (6.0) (2.5) Selling
& other expenses (0.1) 0.0
(0.7) (0.5) - -
(4.0) - (0.4)
(0.0)
Operating Netback/boe 36.2
23.6 18.1
13.9 20.7 21.4
19.9 -
32.5 22.2 G&A, G&G, & other
(5.5)
(6.3)
Adjusted EBITDA/boe
27.0
15.9 a) RIK (Royalties in kind). Includes royalties
paid in kind in Colombia for approximately 898 and 781 bopd in
2Q2018 and 2Q2017 respectively. No royalties were paid in kind in
Chile, Brazil or Argentina. b) Conversion rate of $mcf/$boe=1/6.
Depreciation: Consolidated depreciation charges increased
by 22% to $24.3 million in 2Q2018, compared to $20.0 million in
2Q2017, on increased volumes. On a per bbl basis, however,
depreciation costs decreased by 8% to $7.9 per boe due to drilling
successes and increased reserves.
Write-off of Unsuccessful Exploration Efforts:
Consolidated write-off of unsuccessful exploration efforts were
$9.2 million in 2Q2018 compared to $4.6 million in 2Q2017, mostly
due to non-commercial oil accumulations found in Yaguasito (Tiple
block in Colombia).
Other Income (Expenses): Other operating losses amounted
to $0.1 million in 2Q2018, compared to $1.5 million in 2Q2017.
CONSOLIDATED NON-OPERATING RESULTS AND PROFIT FOR THE
PERIOD
Financial Expenses: Net financial costs increased to $8.7
million in 2Q2018, compared to $7.4 million in 2Q2017, due to
higher interest costs.
Foreign Exchange: Net foreign exchange losses amounted to
a $13.3 million loss in 2Q2018 compared to a $4.7 million loss in
2Q2017, including non-cash foreign exchange differences generated
from Brazil due to the devaluation of the real and its impact on US
dollar-denominated intercompany debt.
Income Tax: Income tax expenses were $24.4 million in
2Q2018 compared to $4.8 million in 2Q2017, in line with higher
operating profits.
Net Income: Net income increased by $6.6 million to a
gain of $5.5 million in 2Q2018 compared to a $1.1 million loss in
2Q2017.
BALANCE SHEET
Cash and Cash Equivalents: Cash and cash equivalents
totaled $105.2 million as of June 30, 2018. Year- end 2017 cash and
cash equivalents were $134.8 million. The difference reflects cash
used in investing activities of $106.5 million, cash used in
financing activities of $21.9 million, and cash generated from
operating activities of $98.6 million.
Cash used in investing activities of $106.5 million includes
capital expenditures related to development, appraisal and
exploration activities of $57.7 million, allocated predominantly to
Colombia, and $48.9 million for the acquisition of the Aguada
Baguales, El Porvenir and Puesto Touquet blocks in Argentina.
Cash used in financing activities of $21.9 million was the sum
of $13.8 million for interest payments and $8.1 million for the
dividend distribution by our Colombian business to LGI, related to
their non-controlling minority interest.
The agreement with LG International Corp (LGI) in Colombia
allows GeoPark to earn back up to 12% equity participation at the
Colombian subsidiary level in accordance with the performance of
the project. During 1H2018 GeoPark paid an $8.1 million dividend to
LGI. GeoPark and LGI are diligently working on the implementation
of the dilution mechanism, which will be triggered with the next
dividend payment.
Cash flows from operating activities of $98.6 million is net of
$67.7 million in cash income taxes paid during 2Q2018,
predominantly in Colombia ($45.5 million of which are related to
tax gains of fiscal year 2017 plus tax prepayments of $21.0
million, which will be deducted against tax gains of fiscal year
2018, to be paid in 2019). The company does not expect to pay
additional cash income taxes during 2H2018.
Financial Debt: Total financial debt (net of issuance
costs) was $426.6 million, including the $425 million 2024 notes
(“2024 Notes”) issued in September 2017. Short-term debt was $7.6
million.
FINANCIAL RATIOSa
($ million)
At period-end
FinancialDebt
Cash and CashEquivalents
Net Debt
Net Debt/LTMAdj.
EBITDAb
LTM
InterestCoveragec
2Q2017 346.3 77.0 269.3 2.2x 4.1x 3Q2017 420.4 135.2 285.2
1.9x 5.3x 4Q2017 426.2 134.8 291.4 1.7x 6.3x 1Q2018 419.5 120.4
299.1 1.5x 7.2x 2Q2018 426.6 105.2
321.3 1.3x 8.5x a)
Based on trailing LTM financial
results.
b) LTM adj. EBITDA was $246.4 million as of June 30, 2018.
c)
LTM interest expense was $28.9 million as of June 30, 2018
Covenants in 2024 Notes: The 2024 Notes include
incurrence test covenants that require the net debt to adjusted
EBITDA ratio be lower than 3.5 times and the adjusted EBITDA to
interest ratio higher than 2 times until September 2019. Failure to
comply with the incurrence test covenants would not trigger an
event of default. As of the date of this release, the Company is
compliant with all provisions and covenants.
COMMODITY RISK OIL MANAGEMENT CONTRACTS
The Company has the following commodity risk management
contracts (reference ICE Brent) in place as of the date of this
release:
Period Type
Volume (bopd) Contract terms ($ per bbl)
Purchased Put
Sold Put Sold Call 3Q2018
Zero cost 3-way
Zero cost 3-wayZero cost 3 way
5,000
4,0004,000
Total: 13,000
53.055.0
60.0
43.045.0
50.0
69.0
77.2-77.5
97.0-97.1
4Q2018 Zero cost 3-way
Zero cost 3-way
Zero cost 3 way
4,000
4,0003,000
Total: 11,000
55.0
60.065.0
45.0
50.0
55.0
77.2-77.5
97.0-97.1
90.0-90.1
1Q2019 Zero cost 3-wayZero cost 3-way
4,0003,000Total: 7,000 60.065.0
50.055.0
97.0-97.190.0-90.1
2Q2019 Zero cost 3-way 3,000Total:
3,000 65.0 55.0 90.0-90.1
For further details, please refer to Note 4 of GeoPark’s
consolidated financial statements for the period ended June 30,
2018, available on the Company’s website.
SELECTED INFORMATION BY BUSINESS
SEGMENT
(UNAUDITED)
Colombia 2Q2018
2Q2017 Sale of crude oil ($ million) 129.4 56.2 Sale of gas
($ million) 0.4 0.2 Revenue ($ million) 129.8 56.4 Production and
operating costsa ($ million) -29.6 -15.4 Adjusted EBITDA ($
million) 79.6 37.0 Capital expendituresb ($ million)
28.0 18.9
Chile
2Q2018 2Q2017 Sale of crude oil ($
million) 4.9 7.7 Sale of gas ($ million) 4.4 3.4 Revenue ($
million) 9.3 11.1 Production and operating costsa ($ million) -5.3
-6.9 Adjusted EBITDA ($ million) 2.0 1.9 Capital expendituresb ($
million) 1.1 2.7
Brazil
2Q2018 2Q2017 Sale of
crude oil ($ million) 0.3 0.2 Sale of gas ($ million) 7.0 7.5
Revenue ($ million) 7.3 7.7 Production and operating costsa ($
million) -2.3 -2.9 Adjusted EBITDA ($ million) 4.0 3.8 Capital
expendituresb ($ million) 0.2 1.0
Argentina 2Q2018
2Q2017 Sale of crude oil ($ million) 11.1 - Sale of gas ($
million) 1.8 - Revenue ($ million) 12.9 - Production and operating
costsa ($ million) -7.6 - Adjusted EBITDA ($ million) 2.6 -1.4
Capital expendituresb ($ million) 3.9
3.3 a)
Production and operating = Operating costs
+ Royalties.
b)
The difference with the reported figure in
Key performance indicators table corresponds mainly to capital
expenditures in Peru.
CONSOLIDATED STATEMENT OF
INCOME
(UNAUDITED)
(In millions of $)
2Q2018 2Q2017
1H2018 1H2017
REVENUE
Sale of crude oil 145.7 64.1 256.7 118.6 Sale of gas 13.7 11.1 26.5
23.3
TOTAL REVENUE 159.3 75.2 283.2
141.9 Commodity risk management contracts -11.4 5.9 -15.2
11.3 Production and operating costs -44.8 -25.3 -78.8 -42.9
Geological and geophysical expenses (G&G) -3.9 -1.9 -6.1 -3.1
Administrative expenses (G&A) -12.5 -12.0 -25.1 -20.5 Selling
expenses -1.2 -0.1 -1.5 -0.5 Depreciation -24.3 -20.0 -44.0 -35.7
Write-off of unsuccessful exploration efforts -9.2 -4.6 -11.0 -4.6
Other operating -0.1 -1.5 0.7 -2.0
OPERATING PROFIT
52.0 15.8 102.0 44.0 Financial
costs, net -8.7 -7.4 -17.2 -16.7 Foreign exchange loss -13.3 -4.7
-15.0 -1.8
PROFIT BEFORE INCOME TAX 30.0 3.7
69.8 25.5 Income tax -24.4 -4.8 -39.4 -20.8
PROFIT (LOSS) FOR THE PERIOD 5.5 -1.1
30.4 4.7 Non-controlling interest 6.2 2.3 12.6 4.5
ATTRIBUTABLE TO OWNERS OF GEOPARK -0.7 -3.4
17.8 0.2
SUMMARIZED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
(In millions of $)
Jun '18 Dec
'17 (Unaudited) (Audited) Non-Current
Assets Property, plant and equipment 563.8 517.4 Other
non-current assets 50.0 53.8
Total Non-Current Assets
613.8 571.2 Current Assets Inventories
10.1 5.7 Trade receivables 19.4 19.5 Other current assets 44.5 54.9
Cash at bank and in hand 105.2 134.8
Total Current Assets
179.2 215.0 Total Assets 793.0
786.2 Equity Equity attributable to owners of
GeoPark 101.6 84.9 Non-controlling interest 46.5 41.9
Total
Equity 148.2 126.8 Non-Current
Liabilities Borrowings 418.9 418.5 Other non-current
liabilities 78.5 74.5
Total Non-Current Liabilities
497.4 493.0 Current Liabilities
Borrowings 7.6 7.7 Other current liabilities 139.8 158.6
Total
Current Liabilities 147.4 166.3
Total Liabilities
644.8 659.3 Total Liabilities and
Equity 793.0 786.2
SUMMARIZED CONSOLIDATED STATEMENT OF
CASH FLOWS
(UNAUDITED)
(In millions of $)
2Q2018 2Q2017
1H2018 1H2017 Cash
flows from operating activities 22.3 33.9 98.6 79.1 Cash flows used
in investing activities -33.1 -25.9 -106.5 -49.4 Cash flows used in
financing activities -4.7 -1.2 -21.9 -25.0
RECONCILIATION OF ADJUSTED EBITDA TO
PROFIT (LOSS) BEFORE INCOME TAX
(UNAUDITED)
1H2018 (In millions of $) Colombia
Chile Brazil
Argentina Other(a)
Total Adjusted EBITDA 141.4 3.7 9.0 1.4 -8.9
146.6 Depreciation -22.5 -13.1 -5.4 -3.0 -0.1 -44.0
Unrealized commodity risk management contracts 8.7 - - - - 8.7
Write-off of unsuccessful exploration efforts -8.5 -0.4 -1.9 -0.3 -
-11.0 Share based payments and other 1.8
0.1 -0.2 0.8 -0.7
1.8
OPERATING PROFIT (LOSS)
120.9 -9.7 1.5 -1.0
-9.7
102.0 Financial costs, net
-17.2 Foreign exchange charges, net
-15.0
PROFIT BEFORE INCOME TAX
69.8 1H2017 (In millions of $) Colombia
Chile Brazil
Argentina Other(a)
Total Adjusted EBITDA 75.0 2.2 7.5 -1.7 -7.1
75.9 Depreciation -19.0 -11.9 -4.6 -0.1 -0.1 -35.7
Unrealized commodity risk management contracts 9.1 - - - - 9.1
Write-off of unsuccessful exploration efforts -1.6 - -3.0 - - -4.6
Share based payments and other 1.7 -
-0.6 -0.2 -1.6
-0.6
OPERATING PROFIT (LOSS) 65.2
-9.7 -0.7 -2.0
-8.8
44.0 Financial costs, net -16.7
Foreign exchange charges, net
-1.8
PROFIT BEFORE INCOME TAX
25.5 (a) Includes Peru and Corporate.
CONFERENCE CALL INFORMATION
GeoPark will host its Second Quarter 2018 Financial Results
conference call and webcast on Thursday, August 9, 2018, at 10:00
a.m. Eastern Daylight Time.
Chief Executive Officer, James F. Park, Chief Financial Officer,
Andres Ocampo, Chief Operating Officer, Augusto Zubillaga and
Shareholder Value Director, Stacy Steimel will discuss GeoPark's
financial results for 2Q2018, 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: 3166854
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.
ANNUAL GENERAL MEETING
GeoPark’s 2018 Annual General Meeting was held on July 27, 2018,
at which (i) all candidates were elected or re-elected as members
of the Board of Directors; (ii) Price Waterhouse & Co SRL was
re-appointed as auditors of the Company; (iii) the Audit Committee
was authorized to fix the remuneration of the Auditors; and (iv)
the Annual Report and the audited consolidated Financial Statements
for the fiscal year ended December 31, 2017 have been duly informed
and presented.
GeoPark can be visited online at www.geo-park.com.
GLOSSARY
Adjusted EBITDA Adjusted EBITDA is defined as profit
for the period before net finance costs, income tax, depreciation,
amortization, certain non-cash items such as impairments and
write-offs of unsuccessful efforts, accrual of share-based
payments, unrealized results on commodity risk management contracts
and other non-recurring events
Adjusted EBITDA per boe
Adjusted EBITDA divided by total boe deliveries
Operating
netback per boe Revenue, less production and operating costs
(net of depreciation charges and accrual of stock options and stock
awards) and selling expenses, divided by total boe deliveries.
Operating netback is equivalent to Adjusted EBITDA net of cash
expenses included in Administrative, Geological and Geophysical and
Other operating costs
Bbl Barrel
Boe Barrels of oil
equivalent
Boepd Barrels of oil equivalent per day
Bopd Barrels of oil per day
CEOP Contrato Especial de
Operacion Petrolera (Special Petroleum Operations Contract)
D&M DeGolyer and MacNaughton
F&D costs
Finding and development costs, calculated
as capital expenditures divided by the applicable net reserves
additions before changes in Future Development Capital
LTM
Last twelve months
Mboe Thousand barrels of oil equivalent
Mmbo Million
barrels of oil
Mmboe Million barrels of oil equivalent
Mcfpd Thousand cubic feet per day
Mmcfpd Million
cubic feet per day
Mm3/day Thousand cubic
meters per day
PRMS Petroleum Resources Management System
SPE Society of Petroleum Engineers
WI Working
interest
NPV10 Present value of estimated future oil and gas
revenues, net of estimated direct expenses, discounted at an annual
rate of 10%
Sqkm Square kilometers
NOTICE
Additional information about GeoPark can be found in the
“Investor Support” section on the website at www.geo-park.com.
Rounding amounts and percentages: Certain amounts and
percentages included in this press release have been rounded for
ease of presentation. Percentage figures included in this press
release have not in all cases been calculated on the basis of such
rounded figures, but on the basis of such amounts prior to
rounding. For this reason, certain percentage amounts in this press
release may vary from those obtained by performing the same
calculations using the figures in the financial statements. In
addition, certain other amounts that appear in this press release
may not sum due to rounding.
This press release contains certain oil and gas metrics,
including information per share, operating netback, reserve life
index, and others, which do not have standardized meanings or
standard methods of calculation and therefore such measures may not
be comparable to similar measures used by other companies. Such
metrics have been included herein to provide readers with
additional measures to evaluate the Company's performance; however,
such measures are not reliable indicators of the future performance
of the Company and future performance may not compare to the
performance in previous periods.
CAUTIONARY STATEMENTS RELEVANT TO
FORWARD-LOOKING INFORMATION
This press release contains statements that constitute
forward-looking statements. Many of the forward looking statements
contained in this press release can be identified by the use of
forward-looking words such as ‘‘anticipate,’’ ‘‘believe,’’
‘‘could,’’ ‘‘expect,’’ ‘‘should,’’ ‘‘plan,’’ ‘‘intend,’’ ‘‘will,’’
‘‘estimate’’ and ‘‘potential,’’ among others.
Forward-looking statements that appear in a number of places in
this press release include, but are not limited to, statements
regarding the intent, belief or current expectations, regarding
various matters, including expected 2018 production growth and
operating and financial 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.
1 Production and operating costs =
Operating costs + Royalties
2 See “Reconciliation of Adjusted EBITDA to Profit (Loss) Before
Income Tax and Adjusted EBITDA per boe” included in this press
release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180808005787/en/
INVESTORS:GeoPark LimitedStacy Steimel, +562 2242
9600Shareholder Value DirectorSantiago,
Chilessteimel@geo-park.comorGeoPark LimitedMiguel Bello, +562 2242
9600Market Access DirectorSantiago,
Chilembello@geo-park.comorMEDIA:Sard Verbinnen & CoJared
Levy, +1 212-687-8080New York, USAjlevy@sardverb.comorSard
Verbinnen & CoKelsey Markovich, +1 212-687-8080New York,
USAkmarkovich@sardverb.com
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