EXPLANATORY NOTES TO
THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1
General information
GeoPark Limited (the Company) is a company
incorporated under the law of Bermuda. The Registered Office address is Cumberland House, 9th Floor, 1 Victoria Street, Hamilton
HM11, Bermuda.
The principal activity of the Company and
its subsidiaries (“the Group”) is the exploration, development and production for oil and gas reserves in Chile, Colombia,
Brazil, Peru and Argentina.
This condensed consolidated interim financial
report was authorised for issue by the Board of Directors on 14 November 2017.
Basis of Preparation
The condensed consolidated interim financial
report of GeoPark Limited is presented in accordance with IAS 34 “Interim Financial Reporting”. It does not include
all of the information required for full annual financial statements, and should be read in conjunction with the annual financial
statements as at and for the years ended 31 December 2015 and 2016, which have been prepared in accordance with IFRS.
The condensed consolidated interim financial
report has been prepared in accordance with the accounting policies applied in the most recent annual financial statements. For
further information please refer to GeoPark Limited's consolidated financial statements for the year ended 31 December 2016.
Whenever necessary, certain comparative
amounts have been reclassified to conform to changes in presentation in the current period.
Taxes on income in the interim periods are
accrued using the tax rate that would be applicable to expected total annual profit or loss.
The activities of the Company are not subject
to significant seasonal changes.
Estimates
The preparation of interim financial information
requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process
of applying the Group’s accounting policies. Actual results may differ from these estimates.
In preparing these condensed consolidated
interim financial statements, the significant judgements made by management in applying the Group’s accounting policies and
the key sources of estimation uncertainty were the same as those that applied to the condensed consolidated financial statements
for the year ended 31 December 2016.
GEOPARK LIMITED
30 SEPTEMBER 2017
Note 1 (Continued)
Financial risk management
The Company’s activities expose it
to a variety of financial risks: currency risk, price risk, credit risk- concentration, funding and liquidity risk, interest risk
and capital risk. The condensed consolidated interim financial statements do not include all financial risk management information
and disclosures required in the annual financial statements, and should be read in conjunction with the Company’s annual
financial statements as at 31 December 2016.
There have been no changes in the risk management
since year end or in any risk management policies.
Subsidiary undertakings
The following chart illustrates the Group
structure as of 30 September 2017 (a):
(a) LG International is not a subsidiary, it
is Non-controlling interest.
There have been no changes in the Group structure
since December 2016.
GEOPARK LIMITED
30 SEPTEMBER 2017
Note 1 (Continued)
Subsidiary undertakings (Continued)
Details of the subsidiaries and joint operations
of the Company are set out below:
|
Name
and registered office
|
|
|
Ownership
interest
|
Subsidiaries
|
GeoPark
Argentina Limited – Bermuda
|
|
|
100%
|
|
GeoPark
Argentina Limited – Argentinean Branch
|
|
|
100%
(a)
|
|
GeoPark
Latin America Limited
|
|
|
100%
|
|
GeoPark
Latin America Limited – Agencia en Chile
|
|
|
100%
(a)
|
|
GeoPark
S.A. (Chile)
|
|
|
100%
(a) (b)
|
|
GeoPark
Brazil Exploração y Produção de Petróleo e Gás Ltda. (Brazil)
|
|
|
100%
(a)
|
|
GeoPark
Chile S.A. (Chile)
|
|
|
80%
(a) (c)
|
|
GeoPark
Fell S.p.A. (Chile)
|
|
|
80%
(a) (c)
|
|
GeoPark
Magallanes Limitada (Chile)
|
|
|
80%
(a) (c)
|
|
GeoPark
TdF S.A. (Chile)
|
|
|
68.8%
(a) (d)
|
|
GeoPark
Colombia S.A. (Chile)
|
|
|
100%
(a) (b)
|
|
GeoPark
Colombia SAS (Colombia)
|
|
|
80%
(a) (c)
|
|
GeoPark
Latin America Coöperatie U.A. (The Netherlands)
|
|
|
100%
|
|
GeoPark
Colombia Coöperatie U.A. (The Netherlands)
|
|
|
80%
(a) (c)
|
|
GeoPark
S.A.C. (Peru)
|
|
|
100%
(a)
|
|
GeoPark
Perú S.A.C. (Peru)
|
|
|
100%
(a)
|
|
GeoPark
Operadora del Perú S.A.C. (Peru)
|
|
|
100%
(a)
|
|
GeoPark
Peru Coöperatie U.A. (The Netherlands)
|
|
|
100%
|
|
GeoPark
Brazil Coöperatie U.A. (The Netherlands)
|
|
|
100%
|
|
GeoPark
Colombia E&P S.A.(Panama)
|
|
|
100%
(a) (b)
|
|
GeoPark
Colombia E&P Sucursal Colombia (Colombia)
|
|
|
100%
(a) (b)
|
|
GeoPark
Mexico S.A.P.I. de C.V. (Mexico)
|
|
|
100%
(b) (f)
|
|
Ogarrio
E&P S.A.P.I. de C.V. (Mexico)
|
|
|
51%
(a) (b) (f)
|
Joint operations
|
Tranquilo
Block (Chile)
|
|
|
50%
(e)
|
|
Flamenco
Block (Chile)
|
|
|
50%
(e)
|
|
Campanario
Block (Chile)
|
|
|
50%
(e)
|
|
Isla
Norte Block (Chile)
|
|
|
60%
(e)
|
|
Yamu/Carupana
Block (Colombia)
|
|
|
89.5%/100%
(e)
|
|
Llanos
34 Block (Colombia)
|
|
|
45%
(e)
|
|
Llanos
32 Block (Colombia)
|
|
|
12.5%
|
|
CPO-4
Block (Colombia)
|
|
|
50%
(e)
|
|
Puelen
Block (Argentina)
|
|
|
18%
|
|
Sierra
del Nevado Block (Argentina)
|
|
|
18%
|
|
CN-V
Block (Argentina)
|
|
|
50%
(e)
|
|
Manati
Field (Brazil)
|
|
|
10%
|
|
(c)
|
LG International has 20% interest.
|
|
(d)
|
LG International has 20%
interest through GeoPark Chile S.A. and a 14% direct interest, totaling 31.2%.
|
|
(e)
|
GeoPark is the operator.
|
|
(f)
|
Incorporated in 2017.
|
GEOPARK LIMITED
30 SEPTEMBER 2017
Note 2
Revenue
Amounts in US$ '000
|
Three-months period ended 30 September 2017
|
Three-months period ended 30 September 2016
|
Nine-months period ended 30 September 2017
|
Nine-months period ended 30 September 2016
|
|
|
|
|
|
Sale of crude oil
|
68,358
|
38,382
|
186,953
|
95,854
|
Sale of gas
|
13,551
|
11,478
|
36,891
|
36,493
|
|
81,909
|
49,860
|
223,844
|
132,347
|
Note 3
Segment Information
Operating segments are reported in a manner
consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who
is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Executive
Committee. This committee is integrated by the CEO, COO, CFO and managers in charge of the Geoscience, Operations, Corporate Governance,
Finance and People departments. This committee reviews the Group’s internal reporting in order to assess performance and
allocate resources. Management has determined the operating segments based on these reports. The committee considers the business
from a geographic perspective.
The Executive Committee assesses the performance
of the operating segments based on a measure of Adjusted EBITDA. Adjusted EBITDA is defined as profit for the period before net
finance cost, income tax, depreciation, amortization, certain non-cash items such as impairments and write-offs of unsuccessful
exploration efforts, accrual of share-based payment, unrealized result on commodity risk management contracts and other non recurring
events. Operating Netback is equivalent to Adjusted EBITDA before cash expenses included in Administrative, Geological and Geophysical
and other operating expenses. Other information provided to the Executive Committee is measured in a manner consistent with that
in the financial statements.
GEOPARK LIMITED
30 SEPTEMBER 2017
Note 3 (Continued)
Segment Information (Continued)
Nine-months period ended 30
September 2017
Amounts
in US$ '000
|
Total
|
Colombia
|
Chile
|
Brazil
|
Argentina
|
Peru
|
Corporate
|
Revenue
|
223,844
|
175,353
|
23,912
|
24,579
|
-
|
-
|
-
|
|
Sale
of crude oil
|
186,953
|
174,845
|
11,470
|
638
|
-
|
-
|
-
|
|
Sale
of gas
|
36,891
|
508
|
12,442
|
23,941
|
-
|
-
|
-
|
|
Production
and operating costs
|
(68,533)
|
(44,316)
|
(15,354)
|
(8,863)
|
-
|
-
|
-
|
|
Royalties
|
(17,960)
|
(14,777)
|
(958)
|
(2,225)
|
-
|
-
|
-
|
|
Transportation
costs
|
(2,008)
|
(1,127)
|
(881)
|
-
|
-
|
-
|
-
|
|
Share-based
payment
|
(343)
|
(185)
|
(129)
|
(29)
|
-
|
-
|
-
|
|
Other
costs
|
(48,222)
|
(28,227)
|
(13,386)
|
(6,609)
|
-
|
-
|
-
|
|
Depreciation
|
(55,132)
|
(29,247)
|
(18,003)
|
(7,656)
|
(104)
|
(94)
|
(28)
|
|
Operating
profit / (loss)
|
59,901
|
88,784
|
(14,667)
|
1,680
|
(1,934)
|
(3,045)
|
(10,917)
|
|
Operating
netback
|
158,472
|
134,697
|
8,170
|
15,745
|
(140)
|
-
|
-
|
|
Adjusted
EBITDA
|
120,540
|
116,676
|
2,992
|
12,969
|
(1,346)
|
(2,776)
|
(7,975)
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine-months period ended 30
September 2016
Amounts
in US$ '000
|
Total
|
Colombia
|
Chile
|
Brazil
|
Argentina
|
Peru
|
Corporate
|
Revenue
|
132,347
|
81,825
|
27,590
|
22,932
|
-
|
-
|
-
|
Sale
of crude oil
|
95,854
|
81,505
|
13,820
|
529
|
-
|
-
|
-
|
Sale
of gas
|
36,493
|
320
|
13,770
|
22,403
|
-
|
-
|
-
|
Production
and operating costs
|
(46,409)
|
(24,141)
|
(16,153)
|
(6,115)
|
-
|
-
|
-
|
Royalties
|
(7,606)
|
(4,320)
|
(1,117)
|
(2,169)
|
-
|
-
|
-
|
Transportation
costs
|
(1,704)
|
(817)
|
(887)
|
-
|
-
|
-
|
-
|
Share-based
payment
|
(305)
|
(217)
|
(87)
|
(1)
|
-
|
-
|
-
|
Other
costs
|
(36,794)
|
(18,787)
|
(14,062)
|
(3,945)
|
-
|
-
|
-
|
Depreciation
|
(58,921)
|
(24,539)
|
(24,064)
|
(10,104)
|
(117)
|
(97)
|
-
|
Operating
(loss) / profit
|
(22,557)
|
8,317
|
(20,632)
|
408
|
341
|
(2,239)
|
(8,752)
|
Operating
netback
|
82,615
|
55,115
|
10,852
|
16,846
|
(234)
|
27
|
9
|
Adjusted
EBITDA
|
51,367
|
40,460
|
4,533
|
14,141
|
1,916
|
(2,017)
|
(7,666)
|
Total
Assets
|
Total
|
Colombia
|
Chile
|
Brazil
|
Argentina
|
Peru
|
Corporate
|
30
September 2017
|
733,095
|
223,726
|
303,258
|
92,815
|
13,523
|
9,254
|
90,519
|
31
December 2016
|
640,540
|
182,784
|
317,969
|
99,904
|
6,071
|
5,020
|
28,792
|
GEOPARK LIMITED
30 SEPTEMBER 2017
Note 3 (Continued)
Segment Information (Continued)
A reconciliation of total Operating netback
to total profit (loss) before income tax is provided as follows:
|
Three-months period ended 30 September 2017
|
Three-months period ended 30 September 2016
|
Nine-months period ended 30 September 2017
|
Nine-months period ended 30 September 2016
|
Operating netback
|
57,530
|
29,902
|
158,472
|
82,615
|
Geological and geophysical expenses
|
(2,830)
|
(2,914)
|
(8,903)
|
(8,352)
|
Administrative expenses
|
(10,096)
|
(7,638)
|
(29,029)
|
(22,896)
|
Adjusted EBITDA for reportable segments
|
44,604
|
19,350
|
120,540
|
51,367
|
Unrealized loss on commodity risk management contracts
|
(9,785)
|
-
|
(687)
|
-
|
Depreciation
(a)
|
(19,450)
|
(20,785)
|
(55,132)
|
(58,921)
|
Write-off of unsuccessful exploration efforts
|
(180)
|
(13,268)
|
(4,782)
|
(13,715)
|
Share-based payment
|
(1,061)
|
(1,144)
|
(3,097)
|
(1,867)
|
Others
(b)
|
1,800
|
1,736
|
3,059
|
579
|
Operating profit / (loss)
|
15,928
|
(14,111)
|
59,901
|
(22,557)
|
Financial expenses
|
(27,093)
|
(9,146)
|
(44,723)
|
(26,809)
|
Financial income
|
472
|
505
|
1,424
|
1,567
|
Foreign exchange gain (loss)
|
3,185
|
(1,765)
|
1,392
|
15,250
|
(Loss) Profit before tax
|
(7,508)
|
(24,517)
|
17,994
|
(32,549)
|
|
(a)
|
Net of capitalised costs for oil stock included in Inventories. Depreciation
includes US$ 2,236,000 (US$ 2,756,000 in 2016) generated by assets not related to production activities. For the three months period
ended 30 September 2017 the amount included in depreciation is US$ 648,000 (US$ 895,000 in 2016).
|
|
(b)
|
Includes allocation to capitalised projects.
|
The following table presents a reconciliation
of Adjusted EBITDA to operating profit for the nine-month periods ended 30 September 2017 and 2016:
|
Nine-months period ended 30 September 2017
|
|
Colombia
|
Chile
|
Brazil
|
Other
(a)
|
Total
|
Adjusted EBITDA for reportable segments
|
116,676
|
2,992
|
12,969
|
(12,097)
|
120,540
|
Depreciation
|
(29,247)
|
(18,003)
|
(7,656)
|
(226)
|
(55,132)
|
Unrealized loss on commodity risk management contracts
|
(687)
|
-
|
-
|
-
|
(687)
|
Write-off of unsuccessful exploration efforts
|
(1,625)
|
-
|
(2,978)
|
(179)
|
(4,782)
|
Share-based payment
|
(391)
|
(264)
|
(139)
|
(2,303)
|
(3,097)
|
Others
|
4,058
|
608
|
(516)
|
(1,091)
|
3,059
|
Operating profit / (loss)
|
88,784
|
(14,667)
|
1,680
|
(15,896)
|
59,901
|
GEOPARK LIMITED
30 SEPTEMBER 2017
Note 3 (Continued)
Segment Information (Continued)
|
Nine-months period ended 30 September 2016
|
|
Colombia
|
Chile
|
Brazil
|
Other
(a)
|
Total
|
Adjusted EBITDA for reportable segments
|
40,460
|
4,533
|
14,141
|
(7,767)
|
51,367
|
Depreciation
|
(24,539)
|
(24,064)
|
(10,104)
|
(214)
|
(58,921)
|
Write-off of unsuccessful exploration efforts
|
(7,394)
|
(1,738)
|
(4,583)
|
-
|
(13,715)
|
Share-based payment
|
(472)
|
(294)
|
(45)
|
(1,056)
|
(1,867)
|
Others
|
262
|
931
|
999
|
(1,613)
|
579
|
Operating profit / (loss)
|
8,317
|
(20,632)
|
408
|
(10,650)
|
(22,557)
|
(a)
Includes Argentina, Peru and
Corporate.
Note 4
Commodity risk management contracts
During 2016 and 2017, the Group entered
into derivative financial instruments to manage its exposure to oil price risk. These derivatives were zero-premium collars or
zero-premium 3 ways (put spread plus call), and were placed with major financial institutions and commodity traders. The Group
entered into the derivatives under ISDA Master Agreements and Credit Support Annexes, which provide credit lines for collateral
posting thus alleviating possible liquidity needs under the instruments and protect the Group from potential non-performance risk
by its counterparties. The Group’s derivatives are accounted for as non-hedge derivatives as of 30 September 2017 and therefore
all changes in the fair values of its derivative contracts are recognized as gains or losses in the results of the periods in which
they occur.
The following table presents the Group’s
derivative contracts in force as of 30 September 2017:
Period
|
Reference
|
Type
|
Volume bbl/d
|
Price US$/bbl
|
|
|
|
|
|
1 January 2017 - 30 September 2017
|
ICE BRENT
|
Zero Premium Collar
|
3,000
|
54.00 Put 61.05 Call
|
1 January 2017 - 30 September 2017
|
ICE BRENT
|
Zero Premium Collar
|
1,000
|
54.00 Put 61.00 Call
|
1 January 2017 - 30 September 2017
|
ICE BRENT
|
Zero Premium Collar
|
2,000
|
53.00 Put 60.05 Call
|
1 July 2017 - 31 December 2017
|
ICE BRENT
|
Zero Premium Collar
|
2,000
|
51.00 Put 57.50 Call
|
1 July 2017 - 31 December 2017
|
ICE BRENT
|
Zero Premium Collar
|
3,000
|
51.00 Put 57.50 Call
|
1 July 2017 - 31 December 2017
|
ICE BRENT
|
Zero Premium Collar
|
1,000
|
51.00 Put 57.50 Call
|
1 October 2017 - 31 March 2018
|
ICE BRENT
|
Zero Premium Collar
|
4,000
|
50.00 Put 54.90 Call
|
1 October 2017 - 31 March 2018
|
ICE BRENT
|
Zero Premium Collar
|
2,000
|
50.00 Put 54.95 Call
|
1 January 2018 - 30 June 2018
|
ICE BRENT
|
Zero Premium Collar
|
2,000
|
52.00 Put 60.00 Call
|
1 January 2018 - 30 June 2018
|
ICE BRENT
|
Zero Premium Collar
|
1,000
|
52.00 Put 58.40 Call
|
1 April 2018 - 30 June 2018
|
ICE BRENT
|
Zero Premium Collar
|
2,000
|
52.00 Put 58.25 Call
|
1 January 2018 - 30 June 2018
|
ICE BRENT
|
Zero Premium 3 Way
|
1,000
|
42.00-52.00 Put 59.55 Call
|
1 January 2018 - 30 June 2018
|
ICE BRENT
|
Zero Premium 3 Way
|
1,000
|
42.00-52.00 Put 59.50 Call
|
1 April 2018 - 30 June 2018
|
ICE BRENT
|
Zero Premium 3 Way
|
1,000
|
42.00-52.00 Put 59.60 Call
|
GEOPARK LIMITED
30 SEPTEMBER 2017
Note 4 (Continued)
Commodity risk management contracts (Continued)
The table below summarizes the gain on the
commodity risk management contracts:
|
Three-months
period ended 30
September 2017
|
Three-months
period ended 30
September 2016
|
Nine-months
period ended 30
September 2017
|
Nine-months
period ended 30
September 2016
|
Realized gain on commodity risk management contracts
|
1,514
|
-
|
3,684
|
-
|
Unrealized loss on commodity risk management contracts
|
(9,785)
|
-
|
(687)
|
-
|
Total
|
(8,271)
|
-
|
2,997
|
-
|
Note 5
Production and operating costs
Amounts
in US$ '000
|
Three-months
period ended 30
September 2017
|
Three-months
period ended 30
September 2016
|
Nine-months
period ended 30
September 2017
|
Nine-months
period ended 30
September 2016
|
Staff costs
|
3,532
|
2,683
|
10,491
|
8,107
|
Well and facilities maintenance
|
4,202
|
4,100
|
11,476
|
8,525
|
Royalties
|
7,380
|
3,279
|
17,960
|
7,606
|
Gas plant costs
|
1,553
|
1,472
|
4,605
|
4,721
|
Consumables
|
3,159
|
2,513
|
8,558
|
5,706
|
Equipment rental
|
1,562
|
1,014
|
3,922
|
2,743
|
Transportation costs
|
812
|
442
|
2,008
|
1,704
|
Field camp
|
611
|
467
|
1,735
|
1,142
|
Non operated blocks costs
|
393
|
326
|
998
|
839
|
Crude oil stock variation
|
12
|
(106)
|
(88)
|
202
|
Share-based payment
|
115
|
155
|
343
|
305
|
Other costs
|
2,347
|
3,262
|
6,525
|
4,809
|
|
25,678
|
19,607
|
68,533
|
46,409
|
Note 6
Geological and geophysical expenses
Amounts
in US$ '000
|
Three-months
period ended 30
September 2017
|
Three-months
period ended 30
September 2016
|
Nine-months
period ended 30
September 2017
|
Nine-months
period
ended 30
September 2016
|
Staff costs
|
2,452
|
2,750
|
7,341
|
7,084
|
Share-based payment
|
121
|
135
|
375
|
244
|
Other services
|
378
|
164
|
1,562
|
1,268
|
Allocation to capitalised project
|
(2,239)
|
(708)
|
(5,488)
|
(970)
|
|
712
|
2,341
|
3,790
|
7,626
|
GEOPARK LIMITED
30 SEPTEMBER 2017
Note 7
Administrative expenses
Amounts
in US$ '000
|
Three-months
period ended 30
September 2017
|
Three-months
period ended 30
September 2016
|
Nine-months
period ended 30
September 2017
|
Nine-months
period ended 30
September 2016
|
Staff
costs
|
5,969
|
4,927
|
18,644
|
14,417
|
Consultant
fees
|
1,434
|
760
|
3,364
|
2,395
|
Office
expenses
|
721
|
498
|
1,955
|
1,603
|
Director
fees and allowance
|
802
|
648
|
2,832
|
1,406
|
Travel
expenses
|
559
|
510
|
1,871
|
1,142
|
Share-based
payment
|
825
|
854
|
2,379
|
1,318
|
New
projects
|
302
|
136
|
743
|
397
|
Overhead
|
(1,792)
|
(1,087)
|
(5,713)
|
(2,918)
|
Other
administrative expenses
|
2,101
|
1,246
|
5,333
|
4,454
|
|
10,921
|
8,492
|
31,408
|
24,214
|
Note 8
Selling expenses
Amounts
in US$ '000
|
Three-months
period ended 30
September 2017
|
Three-months
period ended 30
September 2016
|
Nine-months
period
ended 30
September 2017
|
Nine-months
period
ended 30
September
2016
|
Transportation
|
256
|
343
|
671
|
3,218
|
Selling
taxes and other
|
73
|
110
|
195
|
399
|
|
329
|
453
|
866
|
3,617
|
Note 9
Financial expenses
Amounts
in US$ '000
|
Three-months
period ended 30
September 2017
|
Three-months
period ended 30
September 2016
|
Nine-months
period
ended 30
September 2017
|
Nine-months
period
ended 30
September 2016
|
Bank
charges and other financial costs
|
1,069
|
789
|
3,123
|
2,166
|
Interest
and amortisation of debt issue costs
|
7,465
|
7,628
|
20,643
|
22,038
|
Interest
with related parties
|
505
|
399
|
1,712
|
1,188
|
Borrowings
cancellation costs
|
17,575
|
-
|
17,575
|
-
|
Unwinding
of long-term liabilities
|
671
|
376
|
2,018
|
1,618
|
Less:
amounts capitalised on qualifying assets
|
(192)
|
(46)
|
(348)
|
(201)
|
|
27,093
|
9,146
|
44,723
|
26,809
|
GEOPARK LIMITED
30 SEPTEMBER 2017
Note 10
Property, plant and equipment
Amounts
in US$'000
|
Oil
& gas properties
|
Furniture,
equipment
and
vehicles
|
Production
facilities and machinery
|
Buildings
and
improve-ments
|
Construction
in progress
|
Exploration
and evaluation assets
|
TOTAL
|
Cost
at 1 January 2016
|
648,992
|
13,745
|
124,832
|
10,518
|
29,823
|
87,000
|
914,910
|
Additions
|
(2,537)
(a)
|
305
|
466
|
-
|
12,037
|
11,379
|
21,650
|
Write-off
of unsuccessful exploration efforts
|
-
|
-
|
-
|
-
|
-
|
(13,715)
(b)
|
(13,715)
|
Transfers
|
20,600
|
33
|
2,198
|
-
|
(11,722)
|
(11,109)
|
-
|
Currency
translation differences
|
15,317
|
128
|
1,622
|
36
|
73
|
1,344
|
18,520
|
Cost
at 30 September 2016
|
682,372
|
14,211
|
129,118
|
10,554
|
30,211
|
74,899
|
941,365
|
|
|
|
|
|
|
|
|
Cost
at 1 January 2017
|
692,241
|
14,357
|
132,413
|
10,553
|
32,926
|
61,773
|
944,263
|
Additions
|
1,442
|
340
|
-
|
-
|
38,172
|
42,502
|
82,456
|
Disposals
|
-
|
(40)
|
-
|
(188)
|
-
|
-
|
(228)
|
Write-off
of unsuccessful exploration efforts
|
-
|
-
|
-
|
-
|
-
|
(4,782)
(c)
|
(4,782)
|
Transfers
|
53,571
|
-
|
20,828
|
-
|
(47,614)
|
(26,785)
|
-
|
Currency
translation differences
|
2,326
|
23
|
569
|
6
|
-
|
430
|
3,354
|
Cost
at 30 September 2017
|
749,580
|
14,680
|
153,810
|
10,371
|
23,484
|
73,138
|
1,025,063
|
|
|
|
|
|
|
|
|
Depreciation
and write-down at 1 January 2016
|
(321,173)
|
(7,317)
|
(60,614)
|
(3,195)
|
-
|
-
|
(392,299)
|
Depreciation
|
(47,437)
|
(2,076)
|
(8,445)
|
(680)
|
-
|
-
|
(58,638)
|
Currency
translation differences
|
(2,564)
|
(45)
|
(337)
|
(18)
|
-
|
-
|
(2,964)
|
Depreciation
and write-down At 30 September 2016
|
(371,174)
|
(9,438)
|
(69,396)
|
(3,893)
|
-
|
-
|
(453,901)
|
|
|
|
|
|
|
|
|
Depreciation
and write-down at 1 January 2017
|
(384,739)
|
(10,049)
|
(71,698)
|
(4,131)
|
-
|
-
|
(470,617)
|
Depreciation
|
(42,507)
|
(1,577)
|
(10,493)
|
(659)
|
-
|
-
|
(55,236)
|
Currency
translation differences
|
(1,213)
|
(29)
|
(103)
|
(3)
|
-
|
-
|
(1,348)
|
Disposals
|
-
|
-
|
-
|
37
|
-
|
-
|
37
|
Depreciation
and write-down at 30 September 2017
|
(428,459)
|
(11,655)
|
(82,294)
|
(4,756)
|
-
|
-
|
(527,164)
|
|
|
|
|
|
|
|
|
Carrying
amount at 30 September 2016
|
311,198
|
4,773
|
59,722
|
6,661
|
30,211
|
74,899
|
487,464
|
Carrying
amount at 30 September 2017
|
321,121
|
3,025
|
71,516
|
5,615
|
23,484
|
73,138
|
497,899
|
(a)
Corresponds mainly to the
effect of restimation of assets retirement obligations in Colombia.
(b)
Corresponds to write-off of
seismic and other exploration costs as a result of the relinquishment of Llanos 62 Block in Colombia for US$ 7,394,000 and US$
4,583,000 in Brazil (POT-T-620 Block, POT-T-663 Block, POT-T-664 Block, POT-T-665 Block and REC-T-85 Block). The charge also includes
the write off of one well drilled in previous years in the Fell Block for which no additional work would be performed.
(c)
Corresponds to three unsuccessful
exploratory wells drilled in Colombia (Llanos 34 Block), Brazil (REC-T-94 Block) and Argentina (Puelen Block) in 2017.
GEOPARK LIMITED
30 SEPTEMBER 2017
Note 11
Share capital
Issued share capital
|
Nine-months period ended 30 September 2017
|
Year ended 31 December 2016
|
Common stock (US$ ´000)
|
60
|
60
|
The share capital is distributed as follows:
|
|
|
Common shares, of nominal US$ 0.001
|
60,096,386
|
59,940,881
|
Total common shares in issue
|
60,096,386
|
59,940,881
|
|
|
|
Authorised share capital
|
|
|
|
|
|
US$ per share
|
0.001
|
0.001
|
|
|
|
Number of common shares (US$ 0.001 each)
|
5,171,949,000
|
5,171,949,000
|
Amount in US$
|
5,171,949
|
5,171,949
|
GeoPark’s share capital only consists
of common shares. The authorized share capital consists of 5,171,949,000 common shares of par value US$ 0.001 per share. All of
the Company issued and outstanding common shares are fully paid and nonassessable.
Note 12
Borrowings
The outstanding amounts are as follows:
Amounts in US$ '000
|
At
30 September 2017
|
Year ended
31 December
2016
|
2024 Notes (a)
|
419,137
|
-
|
Notes GeoPark Latin America Agencia en Chile (b)
|
-
|
304,059
|
Banco Itaú (c)
|
-
|
49,763
|
Banco de Chile (d)
|
1,165
|
4,709
|
Banco de Crédito e Inversiones (e)
|
95
|
141
|
|
420,397
|
358,672
|
Classified as follows:
Current
|
|
1,903
|
39,283
|
Non-Current
|
|
418,494
|
319,389
|
GEOPARK LIMITED
30 SEPTEMBER 2017
Note 12 (Continued)
Borrowings (Continued)
(a) During September 2017, the Company successfully
placed US$ 425 million notes which were offered to qualified institutional buyers 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 Notes carry a coupon of 6.50% per annum.
Final maturity of the notes will be 21 September 2024. The Notes are secured with a pledge of all of the equity interests of the
Company, directly or indirectly, in GeoPark Colombia Coöperatie U.A. and GeoPark Chile S.A.. The indenture governing our Notes
due 2024 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 does not trigger an event of default. However, this situation may
limit the Company’s capacity to incur additional indebtedness, as specified in the indenture governing the Notes. Incurrence
covenants as opposed to maintenance covenants must be tested by the Company before incurring additional debt or performing certain
corporate actions including but not limited to dividend payments, restricted payments and others, (other than in each case, certain
specific exceptions). As of the date of these interim condensed consolidated financial statements, the Company is in compliance
of all the indenture’s provisions and covenants.
The net proceeds from the Notes were used
by the Company (i) to make a capital contribution to its wholly-owned subsidiary, GeoPark Latin America Limited Agencia en Chile
(“GeoPark LA Agencia”), providing it with sufficient funds to fully repay the 7.50% senior secured notes due 2020 and
to pay any related fees and expenses, including call premium, and (ii) for general corporate purposes, including capital expenditures
and to repay existing indebtedness.
(b) During February 2013, the Company successfully
placed US$ 300 million notes which were offered under Rule 144A and Regulation S exemptions of the United States Securities laws.
The Notes carried a coupon of 7.50% per annum and mature on 11 February 2020. These Notes were fully repaid in September 2017.
(c) During March 2014, GeoPark executed
a loan agreement with Itaú BBA International for US$ 70,450,000 to finance the acquisition of a 10% working interest
in the Manatí field in Brazil. In March 2016 and 2017 and September 2016 and 2017, the Company paid US$ 10,000,000 corresponding
to principal payments under the principal amortization schedule. The loan was fully repaid in September 2017.
(d)
During
December 2015, GeoPark executed a loan agreement with Banco de Chile for US$ 7,028,000 to finance the start-up of new Ache
gas field in GeoPark-operated Fell Block. The interest rate applicable to this loan is LIBOR plus 2.35% per annum. The interest
and the principal will be paid on monthly basis; with a six months grace period, with final maturity on December 2017.
GEOPARK LIMITED
30 SEPTEMBER 2017
Note 12 (Continued)
Borrowings (Continued)
(e) During February 2016, GeoPark executed
a loan agreement with Banco de Crédito e Inversiones for US$ 186,000 to finance the acquisition of vehicles for the
Chilean operation. The interest rate applicable to this loan is 4.14% per annum. The interest and the principal will be paid on
monthly basis, with final maturity on February 2019.
As of the date of this interim condensed
consolidated report, the Group has available credit lines for over US$ 28,000,000.
Note 13
Provisions and other long-term liabilities
The outstanding amounts are as follows:
Amounts in US$ '000
|
At
30 September 2017
|
Year ended
31 December
2016
|
Assets retirement obligation
|
32,907
|
29,862
|
Deferred income
|
3,038
|
3,484
|
Other
|
9,193
|
9,163
|
|
45,138
|
42,509
|
GEOPARK LIMITED
30 SEPTEMBER 2017
Note 14
Trade and other payables
The outstanding amounts are as follows:
Amounts in US$ '000
|
At
30 September 2017
|
Year ended
31 December
2016
|
Trade payables
|
45,473
|
23,650
|
Payables to related parties
(a)
|
29,532
|
27,801
|
Customer advance payments
(b)
|
12,500
|
20,000
|
Taxes and other debts to be paid
|
3,135
|
3,355
|
Staff costs to be paid
|
7,503
|
7,749
|
V.A.T.
|
543
|
1,102
|
To be paid to co-venturers
|
3,361
|
1,614
|
Royalties to be paid
|
2,312
|
1,503
|
|
104,359
|
86,774
|
Classified as follows:
Current
|
77,093
|
52,008
|
Non-Current
|
27,266
|
34,766
|
|
(a)
|
The outstanding amount
corresponds to advanced cash call payments granted by LGI to GeoPark Chile S.A. for financing Chilean operations in TdF’s
blocks. The expected maturity of these balances is July 2020 and the applicable interest rate is 8% per annum.
|
|
(b)
|
In December 2015, the
Company entered into a prepayment agreement with Trafigura under which the Company sells and deliver a portion of its Colombian
crude oil production. Funds committed are available upon request and will be repaid by the Company on a monthly basis through
future oil deliveries over the period of the contract.
|
Note 15
Capital commitments
Capital commitments are detailed in Note
31 (b) to the audited Consolidated Financial Statements as of 31 December 2016. The following updates have taken place during the
nine-month period ended 30 September 2017:
Colombia
As of the date of these interim condensed
consolidated financial statements, GeoPark is awaiting the ANH’s approval of the wells already drilled in Llanos 34 Block,
that were presented as fulfilment of the commitments to be performed before 15 March 2017 and 14 September 2019.
On 21 June 2017, ANH approved GeoPark’s
relinquishment of 79.15% of the VIM 3 Block area. The remaining area will cover 46,881 acres and the commitments are not affected
by this resolution. There is no impact in the Condensed Consolidated Statement of Income since there are no investments associated
with the relinquished area.
GEOPARK LIMITED
30 SEPTEMBER 2017
Note 15 (Continued)
Capital commitments (Continued)
Argentina
One exploratory well was drilled in the
CN-V Block, with long-term test being performed during the fourth quarter of the year. On 10 July 2017, the Ministry of Mendoza
notified the extension of the second exploratory period to fulfil the commitments in the block until 27 November 2017.
Chile
On 30 June 2017, the Chilean Ministry accepted
the Company’s proposal to extend the second exploratory phase in the Flamenco Block for an additional period of 18 months,
ending on 7 May 2019. The remaining commitment amounts to US$ 2,100,000.
On 29 May 2017, the Chilean Ministry accepted
the Company’s proposal to update the value of the commitments in both the Campanario and Isla Norte Blocks as well as the
guarantees related to those commitments. Consequently, the investment commitments assumed by GeoPark are:
|
·
|
Campanario
Block: 3 exploratory wells before 10 July 2019 (US$ 4,758,000)
|
|
·
|
Isla
Norte Block: 2 exploratory wells before 7 May 2019 (US$ 2,855,000)
|
As of the date of these interim condensed
consolidated financial statements, the Company has established guarantees for its total commitments.
Brazil
On 12 May 2017, the Brazilian
National
Agency of Petroleum, Natural Gas and Biofuels (“ANP”) notified the suspension of the exploratory period to fulfill
the commitments in the SEAL-T-268 Block.
In the REC-T-94 Block, an exploratory well
was drilled and completed in April 2017. On 12 July 2017, the
ANP notified the suspension of the exploratory
period to fulfill the commitments in the block.
Note 16
Fair value measurement of financial instruments
Accounting policies for financial instruments
have been applied to classify as either: loans and receivables, held-to-maturity, available-for-sale, or fair value through profit
and loss. For financial instruments that are measured in the statement of financial position at fair value, IFRS 13 requires a
disclosure of fair value measurements by level according to the following fair value measurement hierarchy:
Level 1 - Quoted prices
(unadjusted) in active markets for identical assets or liabilities.
Level 2 - Inputs other
than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices)
or indirectly (that is, derived from prices).
Level 3 - Inputs for
the asset or liability that are not based on observable market data (that is, unobservable inputs).
GEOPARK LIMITED
30 SEPTEMBER 2017
Note 16 (Continued)
Fair value measurement of financial instruments
(Continued)
This note provides an update on the judgements
and estimates made by the Group in determining the fair values of the financial instruments since the last annual financial report.
(a) Fair value hierarchy
The following table presents the Group’s
financial assets and financial liabilities measured and recognised at fair value at 30 September 2017 and 31 December 2016 on a
recurring basis:
Amounts in US$ '000
|
Level 2
|
At 30 September 2017
|
Assets
|
|
|
Derivative financial instrument assets
|
|
|
Commodity risk management contracts
|
9
|
9
|
Total Assets
|
9
|
9
|
Liabilities
|
|
|
Derivative financial instrument liabilities
|
|
|
Commodity risk management contracts
|
3,764
|
3,764
|
Total Liabilities
|
3,764
|
3,764
|
Amounts in US$ '000
|
Level 2
|
Year ended 31 December
2016
|
Liabilities
|
|
|
Derivative financial instrument liabilities
|
|
|
Commodity risk management contracts
|
3,067
|
3,067
|
Total Liabilities
|
3,067
|
3,067
|
There were no transfers between Level 2
and 3 during the period.
The Group did not measure any financial
assets or financial liabilities at fair value on a non-recurring basis as at 30 September 2017.
(b) Valuation techniques used to determine
fair values
Specific valuation techniques used to value
financial instruments include:
|
·
|
The use of quoted market prices or dealer
quotes for similar instruments.
|
|
·
|
The market-to-market fair value of the
Company's outstanding derivative instruments is based on independently provided market rates and determined using standard valuation
techniques, including the impact of counterparty credit risk and are within level 2 of the fair value hierarchy.
|
|
·
|
The fair value of the remaining financial
instruments is determined using discounted cash flow analysis. All of the resulting fair value estimates are included in level
2.
|
GEOPARK LIMITED
30 SEPTEMBER 2017
Note 16 (Continued)
Fair value measurement of financial instruments
(Continued)
(c) Fair values of other financial instruments
(unrecognised)
The Group also has a number of financial
instruments which are not measured at fair value in the balance sheet. For the majority of these instruments, the fair values are
not materially different to their carrying amounts, since the interest receivable/payable is either close to current market rates
or the instruments are short-term in nature.
Borrowings are comprised primarily of fixed
rate debt and variable rate debt with a short term portion where interest has already been fixed. They are classified under other
financial liabilities and measured at their amortized cost. The Group estimates that the fair value of its main financial liabilities
is approximately 99.7% of its carrying amount including interests accrued as of 30 September 2017. Fair values were calculated
using discounted cash flow analysis.
Note 17
Business transactions
(a) Colombia
·
Tiple Block
GeoPark executed a joint venture agreement
related to certain exploration activities in a new high-potential exploration acreage (“Tiple Block Acreage”) in the
Llanos Basin in Colombia, through a partnership with CEPSA Colombia S.A. (a subsidiary of CEPSA SAU, the Spanish integrated energy
and petrochemical company).
The Tiple Block Acreage is located adjacent
to GeoPark’s Llanos 34 Block (GeoPark operated, 45% WI). This exploration area covers approximately 21,000 acres and has
full 3D seismic coverage.
The agreement provides for GeoPark to drill
one exploration well, which is scheduled to be drilled in the first half of 2018. The total estimated investment amounts to between
US$ 7,000,000 and US$ 8,000,000 (including drilling, completion, civil works and other facilities).
·
Llanos 32 Block
On 22 August 2017, GeoPark acquired an additional
2.5% interest in the Llanos 32 Block. No gain or loss has been generated by this transaction.
(b) Brazil
·
POT-T-785 Block
On 27 September 2017, GeoPark was awarded
POT-T-785 Block, an exploration block in the Potiguar Basin. The Company has committed to a minimum investment of approximately
US$ 500,000 (bonus plus work program) during the first three years from the date of signature of the agreement, which is expected
for January 2018.