Higher Production Doubles EBITDA, New
Funding Raised and New Assets Acquired
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)
- Current total production of 30,000+
boepd (exceeds year-end exit target)
- Oil production increased by 37% to
23,237 bopd (up 6% compared to 2Q2017)
- 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
- 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
- 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
- Jacana 12 appraisal well was drilled to
test the southeastern boundary of Jacana and is currently producing
2,800 bopd
- 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)
- 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
- Adjusted EBITDA increased by 131% to
$44.6 million, last twelve months adjusted EBITDA reached $147.5
million
- Adjusted EBITDA per boe increased by
76% to $18.0 per boe (up 13% compared to 2Q2017)
- Net loss of $19.1 million impacted by
one-time costs related to early cancellation of 2020 Notes of $17.6
million
- Net debt to adjusted EBITDA ratio
decreased from 4.7x to 1.9x (down by 14% from 2Q2017)
- Cash and cash equivalents increased by
$71.6 million to $135.2 million as of September 30, 2017
Successful 2024 Notes transaction
- 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
- Proceeds used to repay substantially
all existing financial debt, for capital expenditures and for
general corporate purposes
- Transaction oversubscribed by more than
six times with top tier and high-quality investors
Strategic Results:
New high potential exploration acreage acquired adjacent to
Llanos 34 block
- 85% WI and operatorship of Tiple
Exploration Acreage acquired in Colombia from CEPSA Colombia
SA
- One exploration well scheduled to be
drilled in 1H2018, for a total investment of $7-8 million
Brazil low cost high potential acreage added
- Awarded new block in the proven mature
onshore Potiguar Basin, nearby other GeoPark blocks
- Total commitment (bonus plus work
program) of less than $500,000
James F. Park, Chief Executive Officer of GeoPark, said: “It was
another powerful quarter – with important operational,
financial and strategic wins – that continue building momentum for
a successful completion of 2017 and an exciting outlook for 2018.
Our team did its job by growing every component of our business
plan. Production continues to increase as our drilling keeps
finding oil and pushing out the boundaries of our key oil fields.
Our cost reduction efforts and innovations continue
to decrease operating and capital costs. Our cash flow more than
doubled and key financial metrics showed improvement. We added
new highly-prospective acreage to our expanding project portfolio
by acquisitions in Colombia and
Brazil and successfully closed a new bond
transaction providing more funds, longer maturities, more
flexibility and lower costs.”
CONSOLIDATED OPERATING PERFORMANCE
Key performance indicators:
Key Indicators 3Q2017
2Q2017 3Q2016 9M2017
9M2016 Oil productiona (bopd) 23,237 21,930
16,942 21,895 16,277 Gas production (mcfpd)
30,528 25,158 30,774 27,954 33,810 Average net production (boepd)
28,325 26,123 22,070 26,554
21,913 Brent oil price ($ per bbl) 52.1 51.0 46.9 52.6 43.1
Combined price ($ per boe) 33.0 32.2 26.3 32.6 23.6 ⁻ Oil ($ per
bbl) 34.6 33.4 26.9 34.1 23.3 ⁻ Gas ($ per mcf) 5.3 5.5 4.5 5.3 4.5
Sale of crude oil ($ million) 68.4 64.1 38.4 187.0 95.9 Sale of gas
($ million) 13.6 11.1 11.5 36.9 36.5 Revenue ($ million) 81.9 75.2
49.9 223.8 132.3 Commodity Risk Management Contracts ($ million)
-8.3 5.9 - 3.0 - Production & Operating Costsb ($ million)
-25.7 -25.3 -19.6 -68.5 -46.4 G&G, G&Ac and Selling
Expenses ($ million) -12.0 -13.9 -11.3 -36.1 -35.5 Adjusted EBITDA
($ million) 44.6 37.1 19.4 120.5 51.4 Adjusted EBITDA ($ per boe)
18.0 15.9 10.2 17.6 9.2 Operating Netback ($ per boe) 23.2 22.2
15.8 23.1 14.7 Profit (loss) ($ million) -19.1 -1.1
-21.0 -14.4 -34.7 Capital Expenditures ($
million) 30.9 25.9 10.1 80.3
24.2 Cash and cash equivalents ($ million) 135.2 77.0 63.6 135.2
63.6 Short-term financial debt ($ million) 1.9 31.7 32.5 1.9 32.5
Long-term financial debt ($ million) 418.5 314.6 320.4 418.5 320.4
Net debt ($ million) 285.2 269.3 289.3
285.2 289.3 a) 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. b) Production and Operating costs include
operating costs and royalties paid in cash. c) 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.
- 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.
- 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.
- 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
- Acquired 85% WI and operatorship of
Tiple Exploration Acreage (adjacent to Llanos 34 block) from CEPSA
Colombia SA
In Llanos 34 block:
- 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.
- 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.
Brazil
- Awarded new block in the proven mature
onshore Potiguar Basin, nearby other GeoPark blocks
Catalysts in 4Q2017
Colombia
- 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
Argentina
- Production start-up with long-term
testing in Rio Grande Oeste oil field in CN-V block (GeoPark
operated, 50% WI)
- Exploration drilling start-up in Sierra
del Nevado block (GeoPark non-operated, 18% WI) in Neuquen
Basin
Brazil
- 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 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) Realized cash gain 1.5
Non-cash unrealized losses -9.8 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
Hedged Type Volume bopd
Contract details ($ per bbl)
Purchased Put Sold Put Sold Call
4Q2017 Zero premium collar 12,000
50.0-51.0
-
54.9-57.5
1Q2018 Zero premium collarZero premium 3 way 9,0002,0002,000
50.0-52.042.043.0
-52.053.0
54.9-60.059.5-59.659.5-59.6
Total: 13,000
2Q2018 Zero premium collarZero premium 3 wayZero
premium 3 way 4,0004,0002,000
52.042.043.0
-52.053.0
58.3-60.058.4-64.658.4-64.6
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.
- 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 EBITDA1 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 $3.2 million in 3Q2017
_______________
[1] Production and Operating Costs = Operating Costs plus
Royalties 1 See “Reconciliation of adjusted EBITDA to Profit (Loss)
before income tax and adjusted EBITDA per boe” included in this
press release.
The table below shows production, volumes sold and breakdown of
the most significant components of adjusted EBITDA for 3Q2017 and
3Q2016, on a per country and per barrel basis:
Adjusted EBITDA/boe Colombia
Chile Brazil Total
3Q17 3Q16 3Q17
3Q16 3Q17 3Q16
3Q17 3Q16 Production (boepd) 22,367
15,678 2,817 3,756 3,141 2,636
28,325 22,070 Stock variation /RIKa (935)
(944) (158) (301) (254) (199)
(1,347) (1,444) Sales volume (boepd) 21,432 14,734
2,659 3,455 2,887 2,437 26,978 20,626 % Oil 100% 100%
35% 36% 2% 2% 83% 78%
($ per boe) Realized oil price 34.1 25.9 44.3 37.8 59.4 48.3
34.6 26.9 Realized gas priceb - - 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 $1.9
million as of September 30, 2017.
FINANCIAL RATIOSa
($ million)
At period-end
FinancialDebt
Cash and CashEquivalents
Net Debt
Net Debt/ LTMAdj. EBITDA
LTM InterestCoverage
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 Costsa ($
million) -17.0 -12.0 Adjusted EBITDA ($ million) 41.6 17.4 Capital
Expendituresb ($ 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 Costsa ($ million) -5.6 -5.4 Adjusted EBITDA ($ million)
0.8 1.0 Capital Expendituresb ($ 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 Costsa ($ million) -3.1 -2.2 Adjusted
EBITDA ($ million) 5.4 4.4 Capital Expendituresb ($ 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:
866-547-1509International Participants: +1 920-663-6208Passcode:
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.
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
Mm3/day
Thousand cubic meters per day
NPV10 Present value of
estimated future oil and gas revenues, net of estimated direct
expenses, discounted at an annual rate of 10%
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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171115006500/en/
INVESTORS:GeoPark LimitedSantiago, ChileStacy
SteimelShareholder Value
Directorssteimel@geo-park.comorMEDIA:Sard Verbinnen &
CoNew York, USAJared Levy, +1
212-687-8080jlevy@sardverb.comorKelsey Markovich, +1
212-687-8080kmarkovich@sardverb.com
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