UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of May 2018

 

 

Commission File Number: 001-36298

 

GeoPark Limited

(Exact name of registrant as specified in its charter)

 

Nuestra Señora de los Ángeles 179

Las Condes, Santiago, Chile

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

 

Form 20-F

X

  Form 40-F  

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

 

Yes     No

X

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

 

Yes     No

X

 

 

 

 

 

 

GEOPARK LIMITED

 

TABLE OF CONTENTS

 

ITEM  
   
1. Press Release dated May 7, 2018 “GeoPark Reports First Quarter 2018 Results”
   
2. GeoPark Limited Interim Condensed Consolidated Financial Statements and Explanatory Notes For the three-months period ended 31 March 2017 and 2018

 

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

    GeoPark Limited
     
     
      By: /s/ Andrés Ocampo
        Name: Andrés Ocampo
        Title: Chief Financial Officer

 

Date: May 7, 2018

 

 

 

 

 

 

 

 

FOR IMMEDIATE DISTRIBUTION

 

GEOPARK REPORTS FIRST QUARTER 2018 RESULTS

 

MORE OIL AND GAS, MORE CASH INCOME, MORE ACREAGE, AND HIGHER 2018 TARGETS

 

London – May 7, 2018 - 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 March 31, 2018 (“First Quarter” or “1Q2018”).

 

A conference call to discuss 1Q2018 Financial Results will be held on Tuesday May 8, 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 GeoPark’s consolidated financial statements and the notes to those statements for the period ended March 31, 2018, available on the Company’s website.

 

FIRST QUARTER 2018 HIGHLIGHTS

 

Stronger Oil and Gas Production Growth

· Consolidated oil and gas production up 28% to 32,195 boepd (up 5% compared to 4Q2017)

· Oil production increased by 33% to 27,345 bopd (up 8% compared to 4Q2017)

· Colombian oil production increased by 37% to 26,303 bopd (up 8% compared to 4Q2017)

· Gas production increased by 3% to 29.1 mmcfpd (down 9% compared to 4Q2017)

· Current production of 35,000 boepd, including new production from Argentina acquisition

· Operating three drilling rigs in the Llanos 34 block (GeoPark operated, 45% WI), and during May drilling Tigui 1, testing Chachalaca Sur 1 and drilling Yaguasito (GeoPark operated, Tiple acreage, 85% WI) exploration wells

 

Stronger Revenues, Adjusted EBITDA, Cash Flow and Net Income

· Revenues increased by 86% to $123.9 million

· Adjusted EBITDA increased by 63% to $63.3 million

· Cash flow from operating activities of $60.7 million

· Net Income increased more than four times to $24.9 million

 

Stronger Capital and Cost Efficiencies

· Operating costs of $7.2 per boe /Colombia $5.4 per boe /Llanos 34 $4.1 per boe

· Operating netback/capital expenditure ratio of 3.7x

 

Stronger Balance Sheet and Credit Rating

· Cash in hand of $120.4 million, and following payment of Argentina acquisition, interest payments and work program capital expenditures

· Net debt to Adjusted EBITDA ratio decreased from 2.6x to 1.5x

· Interest coverage ratio increased to 7.2x from 3.4x

· Second credit upgrade to B+ from Fitch, following previous upgrade from S&P

 

Stronger Latin American Asset Platform

· Announced a strategic Latin American acquisition partnership with ONGC – India’s national oil company

· Closing of low-cost, cash flow producing acquisition with development and exploration potential in the prolific Neuquen basin

 

 

 

Stronger Market Liquidity

· Increased average daily stock trading volume to approximately $2.8 million in the past three months and $4.7 million per day in the past month.

 

Stronger 2018 Work Program

· 2018 work program increased to $140-150 million, targeting increased organic production growth of 20-25%, in line with the November 2017 guidance under Brent oil prices above $60/bbl

· Adding in production from the new acquisition in Argentina, 2018 consolidated production is expected to further increase to an average 35,500-36,500 boepd, representing approximately 25-30% production growth, and targeting exit production of 38,000-39,000 boepd

 

James F. Park, Chief Executive Officer of GeoPark said: “Our Company is flying into 2018 with continued record growth in the first quarter backed by climbing oil and gas production, multiplying cash generation and a big bottom line. We also added new attractive acreage and a powerful new long-term partner. With our increased performance and stronger oil price environment, GeoPark set our performance targets higher for 2018 with an accelerated work program, which is still funded from our own cash flow.”

 

CONSOLIDATED OPERATING PERFORMANCE

 

The table below sets forth key performance indicators for 1Q2018 compared to 4Q2017 and 1Q2017:

 

Key Indicators 1Q2018 4Q2017 1Q2017
Oil production a (bopd) 27,345 25,341 20,487
Gas production (mcfpd) 29,101 31,876 28,152
Average net production (boepd) 32,195 30,654 25,180
Brent oil price ($ per bbl) 67.3 61.5 54.7
Combined price ($ per boe) 44.7 39.7 32.6
⁻     Oil ($ per bbl) 48.6 43.0 34.3
⁻     Gas ($ per mcf) 5.4 5.2 5.2
Sale of crude oil ($ million) 111.0 92.2 54.5
Sale of gas ($ million) 12.8 14.1 12.2
Revenue ($ million) 123.9 106.3 66.7
Commodity Risk Management Contracts ($ million) -3.9 -18.4 5.4
Production & Operating Costs b ($ million) -34.1 -30.5 -17.6
G&G, G&A c and Selling Expenses ($ million) -15.2 -14.8 -10.2
Adjusted EBITDA ($ million) 63.3 55.2 38.8
Adjusted EBITDA ($ per boe) 22.9 20.6 19.0
Operating Netback ($ per boe) 28.5 26.1 24.0
Profit (loss) ($ million) 24.9 -3.4 5.8
Capital Expenditures ($ million) 21.4 25.3 23.5
Acquisition of Argentina ($ million) 36.4 15.6 -
Cash and cash equivalents ($ million) 120.4 134.8 70.3
Short-term financial debt ($ million) 0.8 7.7 32.2
Long-term financial debt ($ million) 418.7 418.5 309.5
Net debt ($ million) 299.1 291.4 271.4
a) Includes government royalties paid in kind in Colombia for approximately 930, 881 and 608 bopd in 1Q2018, 4Q2017 and 1Q2017 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 $0.6 million, $0.7 million and $0.8 million for 1Q2018, 4Q2017 and 1Q2017, respectively, of (non-cash) share-based payments that are excluded from the Adjusted EBITDA calculation.

 

2  

 

Production: Colombian oil contributed significantly to overall oil and gas production which grew by 28% to a record of 32,195 boepd in 1Q2018 from 25,180 boepd in 1Q2017. New production from successful appraisal and development drilling in both Tigana North, and the southern part of Jacana, contributed most to the increase. On a consolidated basis, gas production increased by 3% compared to 1Q2017.

 

For further detail, please refer to 1Q2018 Operational Update published on April 11, 2018.

 

Reference and Realized Oil Prices: Brent crude oil price averaged $67.3 per bbl during 1Q2018, and the consolidated realized oil sales price averaged $48.6 per bbl in 1Q2018, representing a 13% increase from $43.0 per bbl in 4Q2017 and a 41% increase from $34.3 per bbl in 1Q2017. Differences between reference and realized prices are a result of commercial and transportation discounts as well as the Vasconia price differential in Colombia, which averaged $4.1 per bbl in 1Q2018, $4.0 in 4Q2017 and $5.2 per bbl in 1Q2017. Commercial and transportation discounts in Colombia averaged $15.0 per bbl in 1Q2018, $14.9 per bbl in 4Q2017 and $15.2 per bbl in 1Q2017.

 

The Company is continuously working to improve realized oil prices, including the ongoing negotiation of existing conditions with off-takers. In Colombia, the construction of a flowline and related facilities in the Llanos 34 block is already underway and is expected to continue improving current commercial and transportation discounts.

 

The table below provides a breakdown of reference and net realized oil prices in Colombia and Chile in 1Q2018:

 

1Q2018 - Realized Oil Prices

($ per bbl) 

Colombia

Chile
Brent oil price 67.3 67.3
Vasconia differential (4.1) (9.8)
Commercial and transportation discounts (15.0) -

Realized oil price

48.2

57.5

Weight on oil sales mix 97% 3%

 

Revenue: Consolidated revenues increased by 86% to $123.9 million in 1Q2018, compared to $66.7 million in 1Q2017. The increase was mainly due to the combination of higher realized prices and higher deliveries.

 

Sale of crude oil : Consolidated oil revenues increased by 104% to $111.0 million in 1Q2018, driven mainly by a 41% increase in realized oil prices and a 43% in oil deliveries (compared to 1Q2017). Oil revenues represented 90% of total revenues compared to 82% in 1Q2017.

 

· Colombia: In 1Q2018, oil revenues increased by 96% to $106.5 million mainly due to higher realized prices and increased deliveries. Realized oil prices increased by 41% to $48.2 per bbl, in line with higher Brent prices and to a lesser extent, to a smaller discount for the Vasconia marker. Oil deliveries increased by 39% to 25,523 bopd.

 

Colombian earn-out payments (deducted from Colombian oil revenues) increased to $4.3 million in 1Q2018, compared to $2.4 million in 1Q2017, in line with higher oil revenues and increased production.

 

· Chile: In 1Q2018, oil revenues amounted to $4.2 million, resulting from a $57.5 per bbl realized prices and oil deliveries of 820 bopd. In 1Q2017, no oil revenues were recorded due to negotiations with ENAP. As a result, Chilean oil production was recorded as inventories at March 31, 2017, and subsequently delivered to ENAP in May 2017.

 

Sale of gas : Consolidated gas revenues increased by 5% to $12.8 million in 1Q2018 compared to $12.2 million in 1Q2017, following a 3% increase in gas prices and a 2% increase in gas deliveries.

 

· Chile: In 1Q2018, gas revenues remained flat at $4.8 million reflecting higher gas prices, offset by lower gas deliveries. Gas prices increased by 15% to $5.1 per mcf ($30.6 per boe) in 1Q2018, in line with increased methanol prices. Gas deliveries decreased by 14% to 10,437 mcfpd (1,740 boepd).

 

3  

 

· Brazil: In 1Q2018, gas revenues increased by 7% to $7.7 million, mainly due to higher gas deliveries as gas prices were lower. Gas deliveries increased by 11% to 15,100 mcfpd (2,517 boepd), due to a recovery in industrial demand in the northeast of the country. Gas prices decreased by 4% to $5.7 per mcf ($33.9 per boe), in line with a 4% devaluation of the local currency.

 

Commodity risk management contracts: GeoPark uses hedge contracts to manage risks and reduce its exposure to oil price volatility and protect the base case work program.

 

For the period ending March 31, 2018, GeoPark realized $10.6 million in lower net revenues from certain hedge contracts in place that had a floor of $50-53/bbl and a ceiling of $55-65/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 $3.9 million loss.

 

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 March 31, 2018, available on the Company’s website.

 

Production and Operating Costs 1 : Consolidated operating costs per barrel were $7.2 in 1Q2018, lower than the $7.3 per bbl in 4Q2017, but higher than the $6.2 per bbl in 1Q2017. The operating costs in 1Q2017 were approximately $1 lower than normal because Chilean oil production was recorded as inventory while negotiations with ENAP were completed.

 

Consolidated operating costs increased by $7.2 million to $19.9 million in 1Q2018 compared to 1Q2017, reflecting higher Colombian sales volumes and the reopening of mature oil fields with higher operating costs.

 

The following is a breakdown of operating costs by country:

 

· Colombia: Operating costs per boe increased by 12% to $5.4 per boe in 1Q2018 compared to $4.8 per boe in 1Q2017. The increase was due to the marginal costs of reopening mature oil fields which have higher operating costs per barrel compared to the rest of the Llanos 34 block (of approximately $4.1 per boe). The latter, in conjunction with a 39% increase in volumes sold, raised overall operating costs by $4.5 million to $12.4 million in 1Q2018 compared to $7.9 million in 1Q2017. However, relative to the 4Q2017, operating costs per boe decreased by 13%.

 

· Chile: Operating costs increased by $2.7 million to $5.4 million in 1Q2018 from $2.6 million in 1Q2017. Increased operating costs in 1Q2018 resulted from increased sales volumes and a higher share of oil in the sales mix. Compared to 4Q2017, operating costs increased by only 2% or $0.2 million from $5.2 million in 4Q2017. Operating costs per boe were $23.3.

 

· Brazil: Operating costs decreased by 26% to $1.6 million in 1Q2018 from $2.2 million in 1Q2017, mainly due to one-time maintenance costs in Manati that negatively impacted 1Q2017 figures. Operating costs per boe decreased to $7.0 per boe from $10.5 in 1Q2017.

 

Consolidated royalties increased by $9.4 million to $14.1 million in 1Q2018, mainly due to a combination of increased volumes, realized prices and the “high price” royalty in the Jacana oil field as production passed the 5 million-barrel mark in the second quarter of 2017.

 

Selling Expenses: Consolidated selling expenses decreased to $0.3 million in 1Q2018 compared to $0.4 million in 1Q2017.

 

Administrative, Geological & Geophysical Expenses: Consolidated G&A and G&G expenses increased to $14.8 million in 1Q2018, compared to $9.7 million in 1Q2017, due to an increased scale of operations and the continuous investment in human capital. Consolidated G&A and G&G costs per boe increased to $5.6 per boe in 1Q2018 (vs $5.0 per boe in 1Q2017). Additionally, G&A and G&G costs per boe remained slightly flat compared to $5.5 per boe in 4Q2017.

 

 

 

1 Production and Operating Costs = Operating Costs plus Royalties

4  

 

Adjusted EBITDA: Consolidated Adjusted EBITDA 2 surged by 63% to $63.3 million, or $22.9 per boe, in 1Q2018 compared to $38.8 million, or $19.0 per boe, in 1Q2017, mainly driven by the combination of increased production levels and higher realized oil prices.

 

· Colombia: Adjusted EBITDA of $61.9 million in 1Q2018

 

· Chile: Adjusted EBITDA of $1.7 million in 1Q2018

 

· Brazil: Adjusted EBITDA of $5.0 million in 1Q2018

 

· Corporate, Argentina and Peru: Adjusted EBITDA of negative $5.2 million in 1Q2018

 

The table below shows production, volumes sold and the breakdown of the most significant components of Adjusted EBITDA for 1Q2018 and 1Q2017, on a per country and per boe basis:

 

Adjusted EBITDA/boe Colombia Chile Brazil Total
  1Q18 1Q17 1Q18 1Q17 1Q18 1Q17 1Q18 1Q17
Production (boepd) 26,405 19,330 2,873 3,351 2,775 2,499 32,195 25,180
Stock variation /RIK a (783) (955) (313) (1,314) (217) (204) (1,411) (2,473)
Sales volume (boepd) 25,622 18,375 2,560 2,037 2,558 2,295 30,784 22,707
% Oil 99.6% 100% 32% 0% 2% 2% 86% 81%
($ per boe)                
Realized oil price 48.2 34.3 57.5 - 74.6 59.5 48.6 34.3
Realized gas price b 34.6 - 30.6 26.5 33.9 35.4 32.5 31.6
Earn-out (2.0) (1.4) - - - - (1.6) (1.1)
Combined Price 46.3 32.9 39.2 26.5 34.5 35.8 44.7 32.6
Realized Commodity Risk Management Contracts (4.6) 0.1 - - - - (3.8) 0.1
Operating costs (5.4) (4.8) (23.3) (14.3) (7.0) (10.5) (7.2) (6.2)
Royalties in cash (5.6) (2.4) (1.6) (0.8) (3.1) (3.1) (5.1) (2.3)
Selling & other expenses (0.1) 0.1 (0.6) (1.1) - - (0.1) (0.1)
Operating Netback/boe 30.7 25.8 13.8 10.4 24.4 22.2 28.5 24.0
G&A, G&G             (5.6) (5.0)
Adjusted EBITDA/boe             22.9 19.0
a) RIK (Royalties in kind). Includes royalties paid in kind in Colombia for approximately 930 and 608 bopd in 1Q2018 and 1Q2017 respectively. No royalties were paid in kind in Chile and Brazil.

b) Conversion rate of $mcf/$boe=1/6.

 

Depreciation: Consolidated depreciation charges increased by 25% to $19.7 million in 1Q2018, compared to $15.7 million in 1Q2017, due to higher volumes sold. On a per barrel basis, however, depreciation costs decreased by 8% to $7.1 per boe due to drilling successes and increased reserves.

 

Write-off of unsuccessful exploration efforts: Consolidated write-off of unsuccessful exploration efforts was $1.8 million in 1Q2018. Amounts recorded in 1Q2018 mainly correspond to unsuccessful exploration efforts in the Potiguar basin in Brazil.

 

Other Income (Expenses): Other operating charges amounted to an $0.8 million gain in 1Q2018, compared to $0.5 million loss in 1Q2017.

 

 

 

2 See “Reconciliation of Adjusted EBITDA to Profit (Loss) Before Income Tax and Adjusted EBITDA per boe” included in this press release.

5  

 

CONSOLIDATED NON-OPERATING RESULTS AND PROFIT FOR THE PERIOD

 

Financial Expenses: Net financial costs decreased to $8.5 million in 1Q2018, compared to $9.2 million in 1Q2017, due to lower bank charges and interest costs.

 

Foreign Exchange: Net foreign exchange charges amounted to a $1.7 million loss in 1Q2018 compared to a $2.9 million gain in 1Q2017, due to the devaluation of the Brazilian real and its impact on US dollar denominated net intercompany debt. In addition, the Colombian peso appreciated by 5% impacting net local currency liabilities.

 

Income Tax: Income tax expenses were $15.0 million in 1Q2018 as compared to a $16.0 million in 1Q2017.

 

Net Income: Net income increased by 4.3x $24.9 million in 1Q2018 compared to $5.8 million in 1Q2017.

 

BALANCE SHEET

 

Cash and Cash Equivalents: Cash and cash equivalents totaled $120.4 million as of March 31, 2018. Year-end 2017 cash and cash equivalents were $134.8 million. The difference reflects cash used in investing activities of $57.8 million, cash used in financing activities of $17.2 million, and cash generated from operating activities of $60.7 million.

 

Cash used in investing activities of $57.8 million includes capital expenditures related to development, appraisal and exploration activities of $21.4 million, allocated predominantly to Colombia, and $36.4 million related to payment of outstanding amounts for the acquisition of Aguada Baguales, El Porvenir and Puesto Touquet blocks in the Neuquen basin in Argentina.

 

Cash used in financing activities of $17.2 million was composed of $13.8 million in interest payments and $3.4 million for the dividend distribution to the non-controlling interest, LGI.

 

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. GeoPark expects to pay an additional $4-5 million dividend to LGI, which would allow the Company to earn back an initial 4%, after which the LGI non-controlling interest in Colombia would be reduced from the initial 20% to 16%.

 

Financial Debt: Total financial debt (net of issuance costs) was $419.5 million, including the $425 million 2024 notes (“2024 Notes”) issued in September 2017. Short-term debt was $0.8 million.

 

FINANCIAL RATIOS a

 

($ million)

At period-end Financial Debt Cash and Cash Equivalents Net Debt Net Debt/LTM Adj. EBITDA b

LTM Interest

Coverage c

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
4Q2017 426.2 134.8 291.4 1.7x 6.3x
1Q2018 419.5 120.4 299.1 1.5x 7.2x

a) Based on trailing last twelve months financial results.

b) LTM adj. EBITDA was $200.3 million as of March 31, 2018.

c) LTM interest expense was $27.6 million as of March 31, 2018

 

Covenants on 2024 Notes: The indenture governing the 2024 Notes includes 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 two 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 in compliance with all provisions and covenants.

 

6  

 

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
2Q2018

Zero cost collar
Zero cost 3-way
Zero cost 3-way

Zero cost 3-way 

5,000
3,000
2,000

4,000

52.0
52.0
53.0

55.0

-
42.0
43.0

45.0

58.3-60.0
59.5-59.6
64.6

77.2-77.5

    Total: 14,000      
3Q2018

Zero cost 3-way

Zero cost 3-way

5,000

4,000
Total: 9,000

53.0
55.0 		   43.0
45.0

69.0

77.2-77.5

4Q2018 Zero cost 3-way
  		4,000
Total: 4,000 		55.0
  		   45.0
   		77.2-77.5

 

For further details, please refer to Note 4 of GeoPark’s consolidated financial statements for the period ended March 31, 2018, available on the Company’s website.

 

7  

 

SELECTED INFORMATION BY BUSINESS SEGMENT

(UNAUDITED)

 

Colombia 1Q2018        1Q2017  
Sale of crude oil ($ million) 106.5 54.3  
Sale of gas ($ million) 0.3 0.2  
Revenue ($ million) 106.8 54.4  
Production and Operating Costs a ($ million) -25.4 -11.9  
Adjusted EBITDA ($ million) 61.9 38.1  
Capital Expenditures b ($ million) 17.9 19.2  

 

Chile 1Q2018        1Q2017  
Sale of crude oil ($ million) 4.2 0.0  
Sale of gas ($ million) 4.8 4.8  
Revenue ($ million) 9.0 4.8  
Production and Operating Costs a ($ million) -5.8 -2.8  
Adjusted EBITDA ($ million)   1.7 0.3  
Capital Expenditures b ($ million) 0.0 1.5  
       
Brazil 1Q2018     1Q2017  
Sale of crude oil ($ million) 0.3 0.2  
Sale of gas ($ million) 7.7 7.2  
Revenue ($ million) 8.0 7.4  
Production and Operating Costs a ($ million) -2.3 -2.8  
Adjusted EBITDA ($ million) 5.0 3.8  
Capital Expenditures b ($ million) 1.3 2.1  
 
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 Peru.

 

8  

 

CONSOLIDATED STATEMENT OF INCOME

(UNAUDITED)

 

     
     
(In millions of $) 1Q2018 1Q2017
     

REVENUE

   
Sale of crude oil 111.0 54.5
Sale of gas 12.8 12.2
TOTAL REVENUE 123.9 66.7
Commodity risk management contracts -3.9 5.4
Production and operating costs -34.1 -17.6
Geological and geophysical expenses (G&G) -2.2 -1.2
Administrative expenses (G&A) -12.6 -8.5
Selling expenses -0.4 -0.4
Depreciation -19.7 -15.7
Write-off of unsuccessful efforts -1.8 -
Other operating 0.8 -0.5
OPERATING PROFIT 50.0 28.1
     
Financial costs, net -8.5 -9.2
Foreign exchange (loss) gain -1.7 2.9
PROFIT BEFORE INCOME TAX 39.8 21.8
     
Income tax -15.0 -16.0
PROFIT FOR THE PERIOD 24.9 5.8
Non-controlling interest 6.4 2.2
ATTRIBUTABLE TO OWNERS OF GEOPARK 18.4 3.6

9  

 

SUMMARIZED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

(In millions of $) Mar '18 Dec '17
  (Unaudited)  (Audited) 
Non-Current Assets    
Property, plant and equipment 570.4 517.4
Other non-current assets 57.3 53.8
Total Non-Current Assets 627.8 571.2
     
Current Assets    
Inventories 9.7 5.7
Trade receivables 14.5 19.5
Other current assets 47.6 54.9
Cash at bank and in hand 120.4         134.8
Total Current Assets 192.2 215.0
     
Total Assets 820.0 786.2
     
Equity    
Equity attributable to owners of GeoPark 104.0 84.9
Non-controlling interest 45.0 41.9
Total Equity 149.0 126.8
     
Non-Current Liabilities    
Borrowings 418.7 418.5
Other non-current liabilities 78.8 74.5
Total Non-Current Liabilities 497.5 493.0
     
Current Liabilities    
Borrowings 0.8 7.7
Other current liabilities 172.7 158.6
Total Current Liabilities 173.5 166.3

Total Liabilities

 

671.0   659.3
Total Liabilities and Equity 820.0 786.2

 

SUMMARIZED CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

 

(In millions of $) 1Q2018 1Q2017
     
Cash flows from operating activities 60.7 45.2
Cash flows used in investing activities -57.8 -23.5
Cash flows used in financing activities -17.2 -23.8
     

10  

 

RECONCILIATION OF ADJUSTED EBITDA TO PROFIT (LOSS) BEFORE INCOME TAX

(UNAUDITED)

 

1Q2018 (In millions of $) Colombia Chile Brazil Other (a) Total
Adjusted EBITDA 61.9 1.7 5.0 -5.2 63.3
Depreciation -11.0 -5.8 -2.8 -0.1 -19.7
Unrealized Commodity Risk Management Contracts 6.7 - - - 6.7
Write-off of unsuccessful exploration efforts - - -1.8 - -1.8
Share based payments and other 1.0 - -0.1 0.6 1.5
OPERATING PROFIT (LOSS) 58.6 -4.1 0.3 -4.7 50.0
Financial costs, net         -8.5
Foreign exchange charges, net         -1.7
PROFIT BEFORE INCOME TAX         39.8
           
1Q2017 (In millions of $) Colombia Chile Brazil Other (a) Total
Adjusted EBITDA 38.1 0.3 3.8 -3.3 38.8
Depreciation -8.6 -4.7 -2.3 -0.1 -15.7
Unrealized Commodity Risk Management Contracts 5.2 - - - 5.2
Write-off of unsuccessful exploration efforts - - - - -
Share based payments and other 1.2        -0.1        -0.5 -0.8 -0.2
OPERATING PROFIT (LOSS) 35.9 -4.5 1.0 -4.2 28.1
Financial costs, net         -9.2
Foreign exchange charges, net         2.9
PROFIT BEFORE INCOME TAX         21.8

 

(a) Includes Argentina, Peru and Corporate.

 

11  

 

CONFERENCE CALL INFORMATION

 

GeoPark will host its First Quarter 2018 Financial Results conference call and webcast on Tuesday, May 8, 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 1Q2018, 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: 9397328

 

Please allow extra time prior to the call to visit the website and download any streaming media software that might be required to listen to the webcast.

 

An archive of the webcast replay will be made available in the Investor Support section of the Company’s website at www.geo-park.com after the conclusion of the live call.

 

For further information, please contact:

 

INVESTORS:

 

 
Stacy Steimel – Shareholder Value Director ssteimel@geo-park.com
Santiago, Chile  

T: +56 (2) 2242-9600

   
MEDIA:  
   

Jared Levy – Sard Verbinnen & Co

New York, USA 

T: +1 (212) 687-8080

jlevy@sardverb.com
   

Kelsey Markovich – Sard Verbinnen & Co

New York, USA 

T: +1 (212) 687-8080

kmarkovich@sardverb.com
   

GeoPark can be visited online at www.geo-park.com .

 

12  

 

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

 

LTM

 

Finding and development costs, calculated as capital expenditures divided by the applicable net reserves additions before changes in Future Development Capital

 

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

Mm 3 /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

13  

 

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 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

 

14  

 

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.

 

15  

 

 

 

 

 

 

 

GEOPARK LIMITED

 

 

 

 

 

 

 

Interim condensed consolidated

financial statements

and explanatory notes

 

 

For the three-months period ended 31 March 2017 and 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GEOPARK LIMITED

31 MARCH 2018

 

 

CONTENTS

 

Page  
   
3 Condensed Consolidated Statement of Income
4 Condensed Consolidated Statement of Comprehensive Income
5 Condensed Consolidated Statement of Financial Position
6 Condensed Consolidated Statement of Changes in Equity
7 Condensed Consolidated Statement of Cash Flow
8 Explanatory Notes

 

2  

GEOPARK LIMITED

31 MARCH 2018

 

CONDENSED CONSOLIDATED STATEMENT OF INCOME

 

       
Amounts in US$ ´000 Note Three-months period ended 31 March 2018 (Unaudited) Three-months period ended 31 March 2017 (Unaudited)
REVENUE 3 123,878 66,708
Commodity risk management contracts 4 (3,880) 5,387
Production and operating costs 5 (34,090) (17,552)
Geological and geophysical expenses 6 (2,159) (1,208)
Administrative expenses 7 (12,643) (8,519)
Selling expenses 8 (350) (448)
Depreciation   (19,663) (15,716)
Write-off of unsuccessful exploration efforts 10 (1,832) -
Other income (expenses)   788 (521)
OPERATING PROFIT   50,049 28,131
Financial expenses 9 (9,073) (9,532)
Financial income 9 541 289
Foreign exchange (loss) gain 9 (1,668) 2,909
PROFIT BEFORE INCOME TAX   39,849 21,797
Income tax expense   (14,985) (15,990)
PROFIT FOR THE PERIOD   24,864 5,807
Attributable to:      
Owners of the Company   18,438 3,634
Non-controlling interest   6,426 2,173

Profits per share (in US$) for profit attributable to owners of the Company. Basic

  0.30 0.06

Profits per share (in US$) for profit attributable to owners of the Company. Diluted

  0.28 0.05

 

The above condensed consolidated statement of income should be read in conjunction with the accompanying notes.

 

3  

GEOPARK LIMITED

31 MARCH 2018

 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

Amounts in US$ ´000   Three-months period ended 31 March 2018 (Unaudited) Three-months period ended 31 March 2017 (Unaudited)
Profit for the period   24,864 5,807
Other comprehensive income      
Items that may be subsequently reclassified to profit or loss:      
Currency translation differences   (108) 532
Total comprehensive income for the period   24,756 6,339
Attributable to:      
Owners of the Company   18,330 4,166
Non-controlling interest   6,426 2,173

 

The above condensed consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

 

4  

GEOPARK LIMITED

31 MARCH 2018

 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

Amounts in US$ ´000 Note

At 31 March
 2018

(Unaudited)

Year ended

31 December

2017

ASSETS      
NON CURRENT ASSETS      
Property, plant and equipment 10 570,422 517,403
Prepaid taxes   3,018 3,823
Other financial assets   22,379 22,110
Deferred income tax asset   31,455 27,636
Prepayments and other receivables   488 235
TOTAL NON CURRENT ASSETS   627,762 571,207
CURRENT ASSETS      
Inventories   9,714 5,738
Trade receivables   14,477 19,519
Prepayments and other receivables   6,751 7,518
Prepaid taxes   35,013 26,048
Other financial assets   5,868 21,378
Cash and cash equivalents   120,400 134,755
TOTAL CURRENT ASSETS   192,223 214,956
TOTAL ASSETS   819,985 786,163
EQUITY      
Equity attributable to owners of the Company      
Share capital 11 61 61
Share premium   239,290 239,191
Reserves   129,498 129,606
Accumulated losses   (264,841) (283,933)
Attributable to owners of the Company   104,008 84,925
Non-controlling interest   44,959 41,915
TOTAL EQUITY   148,967 126,840
LIABILITIES      
NON CURRENT LIABILITIES      
Borrowings 12 418,718 418,540
Provisions and other long-term liabilities 13 51,394 46,284
Deferred income tax liability   1,497 2,286
Trade and other payables 14 25,921 25,921
TOTAL NON CURRENT LIABILITIES   497,530 493,031
CURRENT LIABILITIES      
Borrowings 12 753 7,664
Derivative financial instrument liabilities 16 13,112 19,289
Current income tax liability   62,288 42,942
Trade and other payables 14 97,335 96,397
TOTAL CURRENT LIABILITIES   173,488 166,292
TOTAL LIABILITIES   671,018 659,323
TOTAL EQUITY AND LIABILITIES   819,985 786,163

 

The above condensed consolidated statement of financial position should be read in conjunction with the accompanying notes.

 

5  

GEOPARK LIMITED

31 MARCH 2018

 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

  Attributable to owners of the Company    
Amount in US$ '000 Share Capital Share Premium Other Reserve Translation Reserve Accumulated Losses

Non - controlling

Interest

Total
Equity at 1 January 2017 60 236,046 127,527 2,591 (260,459) 35,828 141,593
Comprehensive income:              
Profit for the three-months period - - - - 3,634 2,173 5,807
Currency translation differences - - - 532 - - 532
Total comprehensive profit for the period ended 31 March 2017 - - - 532 3,634 2,173 6,339
Transactions with owners:              
Share-based payment - 432 - - 534 43 1,009
Total transactions with owners for the period ended 31 March 2017 - 432 - - 534 43 1,009
Balance at 31 March 2017 (Unaudited) 60 236,478 127,527 3,123 (256,291) 38,044 148,941
               
Balance at 31 December 2017 61 239,191 127,527 2,079 (283,933) 41,915 126,840
Comprehensive income:              
Profit for the three-months period - - - - 18,438 6,426 24,864
Currency translation differences - - - (108) - - (108)
Total comprehensive (loss) profit for the period ended 31 March 2018 - - - (108) 18,438 6,426 24,756
Transactions with owners:              
Share-based payment - 100 - - 653 27 780
Dividends distribution to Non-controlling interest - - - - - (3,409) (3,409)
Total transactions with owners for the period ended 31 March 2018 - 100 - - 653 (3,382) (2,629)
Balance at 31 March 2018 (Unaudited) 61 239,291 127,527 1,971 (264,842) 44,959 148,967

 

The above condensed consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

 

6  

GEOPARK LIMITED

31 MARCH 2018

 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW

 

Amounts in US$ ’000

Three-months

period ended

31 March 2018

(Unaudited)

Three-months

period ended

31 March 2017

(Unaudited)

Cash flows from operating activities    
Profit for the period 24,864 5,807
Adjustments for:    
Income tax expense 14,985 15,990
Depreciation 19,663 15,716
Loss on disposal of property, plant and equipment - 423
Write-off of unsuccessful exploration efforts 1,832 -
Amortisation of other long-term liabilities (99) (125)
Accrual of borrowing interests 7,545 6,801
Unwinding of long-term liabilities 683 605
Accrual of share-based payment 780 1,009
Foreign exchange loss (gain) 1,668 (2,909)
Unrealized gain on commodity risk management contracts (6,688) (5,183)
Income tax paid - (433)
Change in working capital (4,557) 7,513
Cash flows from operating activities – net 60,676 45,214
Cash flows from investing activities    
Purchase of property, plant and equipment (21,382) (23,484)
Acquisition of business (Note 18) (36,400) -
Cash flows used in investing activities – net (57,782) (23,484)
Cash flows from financing activities    
Principal paid (19) (11,253)
Interest paid (13,813) (12,559)
Dividends distribution to Non-controlling interest (3,409) -
Cash flows used in financing activities - net (17,241) (23,812)
Net decrease in cash and cash equivalents (14,347) (2,082)
Cash and cash equivalents at 1 January 134,755 73,563
Currency translation differences (8) (1,223)
Cash and cash equivalents at the end of the period 120,400 70,258
Ending Cash and cash equivalents are specified as follows:    
Cash at bank and bank deposits 120,376 70,242
Cash in hand 24 16
Cash and cash equivalents 120,400 70,258

 

The above condensed consolidated statement of cash flow should be read in conjunction with the accompanying notes.

 

7  

GEOPARK LIMITED

31 MARCH 2018

 

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” or “GeoPark”) is the exploration, development and production for oil and gas reserves in Colombia, Chile, Brazil, Argentina and Peru.

 

This condensed consolidated interim financial report was authorised for issue by the Board of Directors on 7 May 2018.

 

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 2016 and 2017, 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, except for the changes explained in Note 15. For further information please refer to GeoPark Limited's consolidated financial statements for the year ended 31 December 2017.

 

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 Group 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 consolidated financial statements for the year ended 31 December 2017.

 

8  

GEOPARK LIMITED

31 MARCH 2018

 

Note 1 (Continued)

 

Financial risk management

 

The Group’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 Group’s annual financial statements as at 31 December 2017.

 

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 main companies of the Group structure as of 31 March 2018 (a):

 

 

(a) LG International is not a subsidiary, it is Non-controlling interest.

 

There have been no changes in the Group structure since 31 December 2017.

 

9  

GEOPARK LIMITED

31 MARCH 2018

 

Note 1 (Continued)

 

Subsidiary undertakings (Continued)

 

Details of the subsidiaries and joint operations of the Group are set out below:

 

  Name and registered office   Ownership interest
Subsidiaries GeoPark Argentina Limited (Bermuda)   100%
  GeoPark Argentina Limited – Argentinean Branch (Argentina)   100% (a)
  GeoPark Latin America Limited (Bermuda)   100%
  GeoPark Latin America Limited – Agencia en Chile (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 S.A.S. (Colombia)   80% (a) (c)
  GeoPark Latin America S.L.U. (Spain)   100% (a)
  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 S.L.U. (Spain)   100% (a)
  GeoPark Brazil S.L.U. (Spain)   100% (a)
  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)
  Ogarrio E&P S.A.P.I. de C.V. (Mexico)   51% (a) (b)
  GeoPark (UK) Limited (United Kingdom)   100%
Joint operations Tranquilo Block (Chile)   50% (e)
  Flamenco Block (Chile)   50% (e)
  Campanario Block (Chile)   50% (e)
  Isla Norte Block (Chile)   60% (e)
  Llanos 34 Block (Colombia)   45% (e)
  Llanos 32 Block (Colombia)   12.5%
  Puelen Block (Argentina)   18%
  Sierra del Nevado Block (Argentina)   18%
  CN-V Block (Argentina)    50% (e)
  Manati Field (Brazil)   10%
  POT-T-747 Block (Brazil)   70% (e)
  REC-T-128 Block (Brazil)   70% (e)

 

(a) Indirectly owned.

 

(b) Dormant companies.

 

(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.

 

10  

GEOPARK LIMITED

31 MARCH 2018

 

Note 2

 

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.

 

Three-months period ended 31 March 2018

 

Amounts in US$ '000 Total Colombia Chile Brazil Argentina Peru Corporate
Revenue 123,878 106,761 9,036 7,949 132 - -
Sale of crude oil 111,035 106,455 4,247 277 56 - -
Sale of gas 12,843 306 4,789 7,672 76 - -
Production and operating costs (34,090) (25,369) (5,754) (2,333) (634) - -
Royalties (14,093) (12,899) (359) (715) (120) - -
Transportation costs (779) (425) (327) - (27) - -
Share-based payment (84) (41) (36) (1) (6) - -
Other operating costs (19,134) (12,004) (5,032) (1,617) (481) - -
Depreciation (19,663) (10,965) (5,837) (2,752) (57) (46) (6)
Operating profit / (loss) 50,049 58,624 (4,116) 264 (279) (1,138) (3,306)
Operating netback 78,954 70,682 3,188 5,617 (533) - -
Adjusted EBITDA 63,320 61,871 1,685 4,970 (1,183) (1,431) (2,592)

 

11  

GEOPARK LIMITED

31 MARCH 2018

 

 

Note 2 (Continued)

 

Segment Information (Continued)

 

Three-months period ended 31 March 2017

 

Amounts in US$ '000 Total Colombia Chile Brazil Argentina Peru Corporate
Revenue 66,708 54,441 4,863 7,404 - - -
Sale of crude oil 54,513 54,287 23 203 - - -
Sale of gas 12,195 154 4,840 7,201 - - -
Production and operating costs (17,552) (11,924) (2,808) (2,820) - - -
Royalties (4,718) (3,933) (151) (634) - - -
Transportation costs (538) (279) (259) - - - -
Share-based payment (112) (60) (43) (9) - - -
Other operating costs (12,184) (7,652) (2,355) (2,177) - - -
Depreciation (15,716) (8,650) (4,688) (2,305) (32) (31) (10)
Operating profit / (loss) 28,131 35,865 (4,523) 979 (489) (914) (2,787)
Operating netback 49,021 42,690 1,898 4,594 (161) - -
Adjusted EBITDA 38,844 38,087 288 3,753 (351) (833) (2,100)

 

 

Total Assets Total Colombia Chile Brazil Argentina Peru Corporate
31 March 2018 819,985 324,903 296,865 86,619 76,497 24,796 10,305
31 December 2017 786,163 288,429 301,931 91,604 30,924 22,099 51,176

 

A reconciliation of total Operating netback to total profit before income tax is provided as follows:

 

Three-months period ended 31 March 2018 Three-months period ended 31 March 2017
Operating netback 78,954 49,021
Geological and geophysical expenses (3,638) (2,429)
Administrative expenses (11,996) (7,748)
Adjusted EBITDA for reportable segments 63,320 38,844
Unrealized gain on commodity risk management contracts 6,688 5,183
Depreciation (a) (19,663) (15,716)
Write-off of unsuccessful exploration efforts (1,832) -
Share-based payment (780) (1,009)
Others (b) 2,316 829
Operating profit 50,049 28,131
Financial expenses (9,073) (9,532)
Financial income 541 289
Foreign exchange (loss) gain (1,668) 2,909
Profit before tax 39,849 21,797

 

(a) Net of capitalised costs for oil stock included in Inventories. Depreciation includes US$ 517,000 (US$ 829,000 in 2017) generated by assets not related to production activities.

 

(b) Includes allocation to capitalised projects.

 

12  

GEOPARK LIMITED

31 MARCH 2018

 

Note 2 (Continued)

 

Segment Information (Continued)

 

The following table presents a reconciliation of Adjusted EBITDA to operating profit (loss) for the three-month periods ended 31 March 2018 and 2017:

 

  Three-months period ended 31 March 2018
  Colombia Chile Brazil Other (a) Total
Adjusted EBITDA for reportable segments 61,871 1,685 4,970 (5,206) 63,320
Depreciation (10,965) (5,837) (2,752) (109) (19,663)
Unrealized gain on commodity risk management contracts 6,688 - - - 6,688
Write-off of unsuccessful exploration efforts - - (1,832) - (1,832)
Share-based payment (76) (63) (10) (631) (780)
Others 1,106 99 (112) 1,223 2,316
Operating profit / (loss) 58,624 (4,116) 264 (4,723) 50,049

 

 

  Three-months period ended 31 March 2017
  Colombia Chile Brazil Other (a) Total
Adjusted EBITDA for reportable segments 38,087 288 3,753 (3,284) 38,844
Depreciation (8,650) (4,688) (2,305) (73) (15,716)
Unrealized gain on commodity risk management contracts 5,183 - - - 5,183
Share-based payment (129) (89) (46) (745) (1,009)
Others 1,374 (34) (423) (88) 829
Operating profit / (loss) 35,865 (4,523) 979 (4,190) 28,131

 

(a) Includes Argentina, Peru and Corporate.

 

Note 3

 

Revenue

 

Amounts in US$ '000 Three-months period ended 31 March 2018 Three-months period ended 31 March 2017
     
Sale of crude oil 111,035 54,513
Sale of gas 12,843 12,195
  123,878 66,708

 

13  

GEOPARK LIMITED

31 MARCH 2018

 

Note 4

 

Commodity risk management contracts

 

The Group entered into derivative financial instruments to manage its exposure to oil price risk. These derivatives are 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 31 March 2018 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 31 March 2018:

 

Period Reference Type Volume bbl/d Price US$/bbl
         
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
1 January 2018 - 30 June 2018 ICE BRENT Zero Premium 3 Way 2,000 43.00-53.00 Put 64.55 Call
1 July 2018 - 30 September 2018 ICE BRENT Zero Premium 3 Way 5,000 43.00-53.00 Put 69.00 Call
1 April 2018 - 31 December 2018 ICE BRENT Zero Premium 3 Way 3,000 45.00-55.00 Put 77.15 Call
1 April 2018 - 31 December 2018 ICE BRENT Zero Premium 3 Way 1,000 45.00-55.00 Put 77.50 Call

 

The table below summarizes the (loss) / gain on the commodity risk management contracts:

 

  Three-months period ended 31 March 2018 Three-months period ended 31 March 2017
Realized (loss) gain on commodity risk management contracts (10,568) 204
Unrealized gain on commodity risk management contracts 6,688 5,183
Total (3,880) 5,387

 

14  

GEOPARK LIMITED

31 MARCH 2018

 

Note 5

 

Production and operating costs

 

Amounts in US$ '000 Three-months period ended 31 March 2018 Three-months period ended 31 March 2017
Staff costs 4,658 3,360
Share-based payment 84 112
Royalties 14,093 4,718
Well and facilities maintenance 3,186 2,661
Consumables 3,696 2,601
Equipment rental 1,941 1,079
Transportation costs 779 538
Gas plant costs 1,502 1,538
Safety and insurance costs 862 555
Field camp 780 539
Non operated blocks costs 326 281
Crude oil stock variation (351)  (1,946)
Other costs 2,534 1,516
  34,090 17,552

 

Note 6

 

Geological and geophysical expenses

 

Amounts in US$ '000

Three-months

period ended

31 March 2018

Three-months

period ended

31 March 2017

Staff costs 2,999 2,041
Share-based payment 49 126
Other services 639 388
Allocation to capitalised project (1,528) (1,347)
  2,159 1,208

 

Note 7

 

Administrative expenses

 

Amounts in US$ '000

Three-months

period ended

31 March 2018

Three-months

period ended

31 March 2017  

Staff costs 6,309 5,348
Share-based payment 647 771
Consultant fees 1,482 851
Travel expenses 1,255 486
Director fees and allowance 632 646
Communication and IT costs 472 422
Allocation to joint operations (1,950) (1,936)
Other administrative expenses 3,796 1,931
  12,643 8,519

 

15  

GEOPARK LIMITED

31 MARCH 2018

 

Note 8

 

Selling expenses

 

Amounts in US$ '000 Three-months period ended 31 March 2018 Three-months period ended 31 March 2017
Transportation 320 254
Selling taxes and other 30 194
  350 448

 

Note 9

 

Financial results

 

Amounts in US$ '000 Three-months period ended 31 March 2018 Three-months period ended 31 March 2017
Financial expenses    
Bank charges and other financial costs (830) (978)
Interest and amortisation of debt issue costs (7,120) (7,316)
Interest with related parties (447) (713)
Unwinding of long-term liabilities (683) (605)
Less: amounts capitalised on qualifying assets 7 80
  (9,073) (9,532)
Financial income    
Interest received 541 289
  541 289
Foreign exchange gains and losses    
Foreign exchange (loss) gain (1,668) 2,909
  (1,668) 2,909
Total financial results (10,200) (6,334)

 

16  

GEOPARK LIMITED

31 MARCH 2018

 

Note 10

 

Property, plant and equipment

 

Amounts in US$'000 Oil & gas properties

Furniture, equipment

and vehicles

Production facilities and machinery

Buildings

and improvements

Construction in progress Exploration and evaluation assets TOTAL
Cost at 1 January 2017 692,241 14,357 132,413 10,553 32,926 61,773 944,263
Additions (209) (a) 169 - - 11,711 11,604 23,275
Disposals - (24) - - - (399) (423)
Transfers 9,876 - 10,144 - (13,887) (6,133) -
Currency translation differences 4,316 (175) 434 6 70 169 4,820
Cost at 31 March 2017 706,224 14,327 142,991 10,559 30,820 67,014 971,935
               
Cost at 1 January 2018 776,504 15,398 157,396 10,361 37,990 64,368 1,062,017
Additions 20 300 - - 13,539 7,543 21,402
Acquisitions 51,888 266 1,218 134 - - 53,506
Write-off of unsuccessful exploration efforts - - - - - (1,832) (b) (1,832)
Transfers 10,590 (4) 2,821 585 (8,727) (5,265) -
Currency translation differences (525) (7) (80) (1) (16) (27) (656)
Cost at 31 March 2018 838,477 15,953 161,355 11,079 42,786 64,787 1,134,437
               
Depreciation and write-down at 1 January 2017 (384,739) (10,049) (71,698) (4,131) - - (470,617)
Depreciation (14,148) (588) (2,902) (241) - - (17,879)
Currency translation differences (2,907) (19) (146) (4) - - (3,076)
Depreciation and write-down at 31 March 2017 (401,794) (10,656) (74,746) (4,376) - - (491,572)
               
Depreciation and write-down at 1 January 2018 (441,534) (11,916) (86,232) (4,932) - - (544,614)
Depreciation (15,214) (338) (4,062) (179) - - (19,793)
Currency translation differences 317 2 71 2 - - 392
Depreciation and write-down at 31 March 2018 (456,431) (12,252) (90,223) (5,109) - - (564,015)
               
Carrying amount at 31 March 2017 304,430 3,671 68,245 6,183 30,820 67,014 480,363
Carrying amount at 31 March 2018 382,046 3,701 71,132 5,970 42,786 64,787 570,422

 

(a) Corresponds mainly to the effect of restimation of assets retirement obligations in Colombia.

 

(b) Corresponds to two unsuccessful exploratory wells drilled in Brazil (POT-T-747 and POT-T-619 Blocks).

 

17  

GEOPARK LIMITED

31 MARCH 2018

 

Note 11

 

Share capital

 

Issued share capital

At

31 March 2018

Year ended

31 December 2017

Common stock (US$ ´000) 61 61
The share capital is distributed as follows:    
Common shares, of nominal US$ 0.001 60,606,787 60,596,219
Total common shares in issue 60,606,787 60,596,219
     
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. The Company also has an employee incentive program, pursuant to which it has granted share awards to its senior management and certain key employees (see Notes 26 and 30 to the audited Consolidated Financial Statements as of 31 December 2017).

 

Note 12

 

Borrowings

 

The outstanding amounts are as follows:

 

Amounts in US$ '000

At

31 March 2018

Year ended

31 December 2017

2024 Notes (a) 419,408 426,124
Banco de Crédito e Inversiones (b) 63 80
  419,471 426,204

Classified as follows:

 

Current 753 7,664
Non-Current 418,718 418,540

 

18  

GEOPARK LIMITED

31 MARCH 2018

 

Note 12 (Continued)

 

Borrowings (Continued)

 

(a) During September 2017, the Company successfully placed US$ 425,000,000 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 debt issuance cost for this transaction amounted to US$ 6,683,000 (debt issuance effective rate: 6.90%). The indenture governing the 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. As of the date of these interim condensed consolidated financial statements, the Company is in compliance of all the indenture’s provisions and covenants.

 

(b) 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 are paid on a monthly basis, with final maturity on February 2019.

 

As of the date of these interim condensed consolidated financial statements, the Group has available credit lines for over US$ 58,800,000.

 

Note 13

 

Provisions and other long-term liabilities

 

The outstanding amounts are as follows:

 

Amounts in US$ '000

At

31 March 2018

Year ended

31 December 2017

Assets retirement obligation 43,265 38,075
Deferred income 1,353 1,452
Other 6,776 6,757
  51,394 46,284

 

19  

GEOPARK LIMITED

31 MARCH 2018

 

Note 14

 

Trade and other payables

 

The outstanding amounts are as follows:

 

Amounts in US$ '000

At

31 March 2018

Year ended

31 December 2017

Trade payables 54,378 52,557
Payables to related parties (a) 31,623 31,184
Customer advance payments (b) 7,500 10,000
Taxes and other debts to be paid 3,171 4,191
Staff costs to be paid 11,439 9,143
V.A.T. 942 1,118
To be paid to co-venturers 11,823 10,015
Royalties to be paid 2,380 4,110
  123,256 122,318

Classified as follows:

 

Current 97,335 96,397
Non-Current 25,921 25,921

 

(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 6.9% per annum.

 

(b) In December 2015, the Colombian subsidiary entered into a prepayment agreement with Trafigura under which GeoPark sells and deliver a portion of its Colombian crude oil production. Funds committed were available upon request until September 2017 and will be repaid by the Group on a monthly basis through future oil deliveries until December 2018.

 

Note 15

 

Changes in accounting policies

 

This note explains the impact of the adoption of IFRS 9 Financial Instruments and IFRS 15 Revenue form Contracts with Customers on the Group’s Consolidated Financial Statements and also discloses the new accounting policies that have been applied from 1 January 2018, where they are different to those applied in prior periods.

 

(a) IFRS 9 Financial Instruments

 

IFRS 9 replaces the provisions of IAS 39 related to the recognition, classification and measurement of financial assets and financial liabilities, derecognition of financial instruments, impairment of financial assets and hedge accounting.

 

The adoption of IFRS 9 from 1 January 2018 resulted in changes in accounting policies but no adjustments to the amounts recognised in the Consolidated Financial Statements.

 

20  

GEOPARK LIMITED

31 MARCH 2018

 

Note 15 (Continued)

 

Changes in accounting policies (Continued)

 

From 1 January 2018, the Group applies the following accounting policy in relation to its financial assets.

 

Financial assets are divided into the following categories: amortised cost; financial assets at fair value through profit or loss and fair value through other comprehensive income. The classification depends on the Group’s business model for managing the financial assets and the contractual terms of the cash flows. The Group reclassifies debt investments when and only when its business model for managing those assets changes.

 

All financial assets not at fair value through profit or loss are initially recognised at fair value, plus transaction costs. Transaction costs of financial assets carried at fair value through profit or loss, if any, are expensed to profit or loss.

 

Derecognition of financial assets occurs when the rights to receive cash flows from the investments expire or are transferred and substantially all of the risks and rewards of ownership have been transferred. An assessment for impairment is undertaken at each balance sheet date.

 

Interest and other cash flows resulting from holding financial assets are recognised in the Consolidated Statement of Income when receivable, regardless of how the related carrying amount of financial assets is measured.

 

Amortised cost are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than twelve months after the balance sheet date. These are classified as non-current assets. These financial assets comprise trade receivables, prepayments and other receivables and cash and cash equivalents in the Consolidated Statement of Financial Position. They arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivables. These financial assets are subsequently measured at amortised cost using the effective interest method, less provision for impairment, if applicable. Any change in their value through impairment or reversal of impairment is recognised in the Consolidated Statement of Income. All of the Group’s financial assets are classified as amortised cost.

 

The Group assesses on a forward looking basis the expected credit losses associated with its debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

 

(b) IFRS 15 Revenue from Contracts with Customers

 

The Group has adopted IFRS 15 from 1 January 2018, which resulted in no changes in accounting policies or adjustments to the amounts recognised in the consolidated financial statements.

 

21  

GEOPARK LIMITED

31 MARCH 2018

 

Note 16

 

Fair value measurement of financial instruments

 

Accounting policies for financial instruments have been applied to classify as either: amortised cost, fair value through other comprehensive income, 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).

 

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 31 March 2018 and 31 December 2017 on a recurring basis:

 

Amounts in US$ '000 Level 2 At 31 March 2018
Liabilities    
Derivative financial instrument liabilities    
Commodity risk management contracts 13,112 13,112
Total Liabilities 13,112 13,112

 

 

Amounts in US$ '000 Level 2

Year ended

31 December 2017

Liabilities    
Derivative financial instrument liabilities    
Commodity risk management contracts 19,289 19,289
Total Liabilities 19,289 19,289

 

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 31 March 2018.

 

22  

GEOPARK LIMITED

31 MARCH 2018

 

Note 16 (Continued)

 

Fair value measurement of financial instruments (Continued)

 

(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 Group'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.

 

(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 99.9 % of its carrying amount including interests accrued as of 31 March 2018. Fair values were calculated using discounted cash flow analysis.

 

Note 17

 

Capital commitments

 

Capital commitments are detailed in Note 32 (b) to the audited Consolidated Financial Statements as of 31 December 2017. The following updates have taken place during the three-month period ended 31 March 2018:

 

Brazil

 

The Brazilian National Agency of Petroleum, Natural Gas and Biofuels (“ANP”) extended the first exploratory period to fulfill our commitments in the SEAL-T-268 y REC-T-94 Blocks until 7 February 2020. The remaining commitments in the blocks amounts to US$ 160,000 and US$ 970,000, respectively.

 

GeoPark was awarded one exploratory block, POT-T-785, in the Potiguar Basin. The assumed commitment is equivalent to acquiring 3D Seismic and performing geochemical analysis for a total amount of approximately US$ 400,000, during the first exploratory period ending 29 January 2023.

 

As of the date of these interim condensed consolidated financial statements, the Group has already fulfilled its commitments in the POT-T-619 Block.

 

23  

GEOPARK LIMITED

31 MARCH 2018

 


Note 18

 

Business transactions

 

On 27 March 2018, GeoPark acquired a 100% working interest and operatorship of the Aguada Baguales, El Porvenir and Puesto Touquet blocks, which are located in the Neuquen Basin, for a total consideration of US$ 52,000,000, to be adjusted for working capital.

 

In accordance with the acquisition method of accounting, the acquisition cost was allocated to the underlying assets acquired and liabilities assumed based primarily upon their estimated fair values at the date of acquisition. An income approach (being the net present value of expected future cash flows) was adopted to determine the fair values of the mineral interest. Estimates of expected future cash flows reflect estimates of projected future revenues, production costs and capital expenditures based on our business model. The excess of acquisition cost, if any, over the net identifiable assets acquired represents goodwill.

 

The purchase price allocation performed is preliminary, since the valuation process is ongoing. This process will be completed during 2018.

 

The following table summarises the combined consideration paid for the acquired blocks, the preliminary allocation of fair value of the assets acquired and liabilities assumed for these transactions:

 

Amounts in US$ '000 Total
Cash (a) 52,000
Total consideration 52,000
Property, plant and equipment (including mineral interest) 53,506
Inventories 3,794
Provision for other long-term liabilities (5,300)
Total identifiable net assets 52,000

 

(a) On December 2017, GeoPark granted a security deposit of US$ 15,600,000. On March 2018, the Group completed the total consideration with an additional payment of US$ 36,400,000. As of the date of issuance of these interim condensed consolidated financial statements, the determination of the adjustment for working capital is in process. The preliminary calculation of this adjustment is around US$ 3,000,000 to be collected by GeoPark.

 

As a consequence of this transaction, the Group considers that there is sufficient evidence of future taxable profits to offset tax losses and recognise a deferred tax asset for US$ 1,346,000 in respect of tax losses from previous years which can be utilised against future taxable profit.

 

 

24  

 

 

 

 

 

 

 

 

 

 

 

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