Improved Volume Delivery in 4Q2023 Underpins
Sustained Cash Returns
Quarterly Cash Dividend of $0.136 Per
Share
Tender Offer for up to $50 Million
Shares
MSCI ESG Rating Upgraded to ‘AA’: ESG
Leader
GeoPark Limited (“GeoPark” or the “Company”) (NYSE: GPRK), a
leading independent Latin American oil and gas explorer, operator,
and consolidator, reports its consolidated financial results for
the three-month period ended December 31, 2023 (“Fourth Quarter” or
“4Q2023”) and for the year ended December 31, 2023 (“Full Year” or
“FY2023”). A conference call to discuss these financial results
will be held on March 7, 2024, at 10:00 am (Eastern Standard
Time).
FOURTH QUARTER AND FULL-YEAR 2023 SUMMARY
In 2023, GeoPark delivered $451.9 million Adjusted EBITDA, an
EBITDA margin of 60%, and $111.1 million of net profit. These
results were leveraged by the success of new exploration and
development campaigns and ongoing efficiencies in our operated
assets. Results were achieved despite i) lower realization prices
compared to 2022, ii) lower volumes due to the effects of a partial
shut-in at the CPO-5 Block (GeoPark non-operated, 30% WI) during
the first 9 months of 2023; and iii) a higher effective tax
rate.
During 2023, GeoPark invested $199.0 million in capital
expenditures to drill 48 gross wells, which resulted in a 110% 2P
Replacement Ratio and annual average production of 36,563 boepd.
4Q2023 quarterly average oil and gas production reached 38,315
boepd, up 10% compared to 3Q2023, supported by exploration
successes in the Llanos 123 and 87 blocks (GeoPark operated, 50%
WI), CPO-5 Block and Perico Block (GeoPark non-operated, 50% WI) in
Ecuador, and the resumption of shut-in production in the CPO-5
Block.
Improved operating results during 4Q2023 translated into $117.8
million Adjusted EBITDA for 4Q2023, the highest of 2023. Despite
lower annual production and realization prices, GeoPark reported a
solid and resilient cash generation with an Adjusted EBITDA of
$451.9 million, underpinned by lower production and operating
costs, lower hedge losses and lower administrative costs.
Capital efficiency was once again a key feature of the year.
Each dollar invested in capital expenditures yielded $2.3 in
Adjusted EBITDA and the return on average capital employed reached
35%.
Annual net profit in 2023 reached $111.1 million (approximately
$2 per share), 51% lower than in 2022, mainly impacted by one-off
costs and impairments associated with Chile’s divestment, the
appreciation of the Colombian peso and a higher total effective tax
rate1. Nonetheless, GeoPark ended 2023 with a stronger balance
sheet illustrating its sustained commitment to financial
discipline. The cash position continued to strengthen and reached
$133.0 million at year-end, net leverage stood at 0.8 times, and
the debt profile remained robust with no principal maturities until
2027.
These financial achievements and discipline allowed GeoPark to
reward its shareholders with a 13% capital return yield2 or $61.2
million balanced between buybacks and dividends. The 2023 buyback
program allowed GeoPark to reduce its outstanding shares by 4% to
55.3 million.
In 2024 and in acknowledgement of GeoPark’s long-standing
commitment to its SPEED value system, MSCI recognized GeoPark as an
ESG ‘leader’ by further upgrading its rating to “AA” (GeoPark was
rated as “B” in 2018, “BB” in 2019, “BBB” in 2021 and “A” in both
2022 and 2023). GeoPark also received a rating upgrade by Carbon
Disclosure Project (CDP) Climate and reached a “B” rating (up from
a “C” rating).
Colombia’s licensing authority recently granted the
environmental license for the Putumayo-8 Block (GeoPark operated3,
50% WI). It was the result of several years of working closely with
local leaders and communities, as well as a rigorous stakeholder
participation process in coordination with local and national
authorities, opening a very attractive exploration target in the
Putumayo Basin in Colombia and targeting to drill by the end of
2024.
Looking forward to 2024, GeoPark’s organic activities will be
focused on continuing the development of its core operations in the
Llanos 34 (GeoPark operated, 45% WI) and CPO-5 blocks, delineating
the new plays opened in 2023 and preparing new blocks for future
exploration, while continuing to evaluate inorganic options that
are consistent with long-term value accretion.
Reinforcing its commitment to continue returning value to its
shareholders, GeoPark has the intention to commence a modified
“Dutch Auction” tender offer (“the tender offer”) to purchase for
cash up to $50 million of GeoPark common shares at a price per
share of not less than $9.00 and not greater than $10.00, which
could represent approximately 10% of outstanding shares. GeoPark
intends to commence the tender offer before the end of March and to
fund it using cash on hand. If commenced, the tender offer will
remain open for at least twenty (20) business days. Further
details, including the terms and conditions of the tender offer,
will be provided in the offer to purchase and other documents to be
filed with the U.S. Securities and Exchange Commission (SEC) in
connection with the tender offer. The tender offer is in addition
to the previously approved share repurchase program in November
2023.
Andrés Ocampo, Chief Executive Officer of GeoPark, said: “The
fourth quarter marked a strong finish to a challenging year on the
production front. Despite a lower price environment compared to
2022, GeoPark ended the year with replenished 2P reserves,
sustained cash returns to shareholders, and a stronger balance
sheet. We are proud to announce our upgrade by MSCI to ‘AA’ status,
placing us in the ESG ‘Leader’ bracket for the first time. The
intention to execute an extraordinary buyback announced today
reflects the financial health of the company and our confidence in
our assets, which makes share buybacks rank very high in our
capital allocation contest. Further, we continue to be committed to
step-changing our growth trajectory by improving our underlying
base business performance as well as by expanding our portfolio of
assets. This will translate into more energy, more value, and more
shared prosperity. We are working decidedly in this direction.”
Supplementary information is available at the following link:
https://ir.geopark.com/files/doc_downloads/test.pdf
__________________________ 1 Starting in fiscal year 2023, Colombia
introduced an income surtax whose amount depends on Brent oil
prices. For 2023 the income tax surtax was 10%, bringing Colombia’s
corporate tax rate to 45%.
2 Based on GeoPark’s average market
capitalization from December 1, 2023 to January 1, 2024.
3 Through its affiliate Amerisur
Exploration Colombia Limitada.
FOURTH QUARTER AND FULL-YEAR 2023 HIGHLIGHTS
Oil and Gas Production and Operations
- Quarterly average oil and gas production of 38,315 boepd, up
10% vs 3Q2023, due to recent exploration successes and the
resumption of shut-in production in the CPO-5 Block
- Annual average production of 36,563 boepd / 2023 exit
production of over 38,000 boepd
- 2023 exploration drilling added 5,500+ gross bopd with 48 gross
wells4 drilled and a 75% success rate5
- GeoPark’s 2024 drilling campaign will continue delineating the
new plays opened in 2023
Revenue, Adjusted EBITDA and Net Profit
- Revenue of $199.7 million / Full-year revenue of $756.6
million
- Adjusted EBITDA of $117.8 million / Full-year Adjusted EBITDA
of $451.9 million
- Operating Profit of $44.3 million / Full-year operating profit
of $270.9 million
- Cash flow from operations of $110.6 million / Full-year cash
flow from operations of $300.9 million
- Net profit of $26.3 million / Full-year net profit of $111.1
million ($2 basic earnings per share)
Cost and Capital Efficiency
- Despite inflationary pressures, full-year cash G&A
decreased by 6% to $37.9 million
- Capital expenditures of $66.6 million / Full-year capital
expenditures of $199.0 million
- 2023 Adjusted EBITDA to capital expenditures ratio of 2.3x
- 2023 annual return on capital employed of 35%6
Balance Sheet Reflects Financial Quality
- Full-year interest payments decreased to $27.5 million (from
$36.5 million)
- Net leverage of 0.8x and no principal debt maturities until
2027
- Cash in hand of $133.0 million
Exceeded Shareholder Return Targets
- Returned $61.2 million to shareholders in full-year 2023
through dividends and buybacks, a 13% capital return yield7,
significantly exceeding the 40-50% free cash flow return
target
- Shareholder returns included $30.0 million in dividends, a 6%
dividend yield8, and $31.2 million in buybacks (retiring 3.1
million shares, or 5.5% of total shares outstanding)
- Renewed share buyback program for up to 10% of shares
outstanding until December 2024
- Quarterly cash dividend of $0.136 per share, or approximately
$7.5 million, payable on March 28, 2024
Portfolio Management
- Seeking scale and sustainability, divested Chilean operations
(transaction closed in January 2024)
GeoPark Rated as ESG Leader
- Colombia’s licensing authority approved the environmental
license for the Putumayo-8 Block
- ESG ratings upgrade by MSCI to “AA” from “A”, making GeoPark an
ESG ‘Leader’
- Ratings upgrade by Carbon Disclosure Project (CDP) Climate
change to “B” from “C”
- Finalized a Human Rights risk assessment for operations in
Colombia and Ecuador
- Completed a double materiality exercise to strengthen the
sustainability strategy
__________________________
4 Including operated and non-operated
wells.
5 Including development, appraisal, and
exploration wells. Does not include injector wells and wells that
are currently under evaluation.
6 ROCE is defined as last twelve-month
operating profit divided by average total assets minus current
liabilities.
7 Based on GeoPark’s average market
capitalization from December 1 to December 29, 2023.
8 Based on GeoPark’s average market
capitalization from December 1 to December 29, 2023.
CONSOLIDATED OPERATING PERFORMANCE
Key performance indicators:
Key Indicators
4Q2023
3Q2023
4Q2022
FY2023
FY2022
Oil productiona (bopd)
35,842
32,510
35,451
33,958
35,029
Gas production (mcfpd)
14,841
13,610
17,886
15,632
21,546
Average net production (boepd)
38,315
34,778
38,433
36,563
38,620
Brent oil price ($ per bbl)
82.9
86.0
88.8
82.2
98.6
Combined realized price ($ per boe)
67.1
68.3
68.5
64.0
78.1
⁻ Oil ($ per bbl)
73.0
74.6
73.7
69.5
85.6
⁻ Gas ($ per mcf)
4.4
4.4
5.0
4.6
4.8
Sale of crude oil ($ million)
192.5
184.7
220.7
726.1
1,004.8
Sale of purchased crude oil ($
million)
1.3
2.2
3.1
5.5
9.5
Sale of gas ($ million)
5.9
5.3
7.1
25.0
35.3
Revenue ($ million)
199.7
192.1
231.0
756.6
1,049.6
Commodity risk management contracts ($
million)
0.0
0.0
0.5
0.0
(70.2)
Production & operating costsb ($
million)
(60.9)
(58.2)
(77.0)
(232.3)
(359.8)
G&G, G&Ac ($ million)
(15.3)
(14.1)
(17.4)
(55.2)
(60.6)
Selling expenses ($ million)
(4.8)
(3.8)
(2.8)
(13.1)
(8.0)
Operating profit ($ million)
44.3
80.5
81.7
270.9
429.1
Adjusted EBITDA ($ million)
117.8
115.2
132.1
451.9
540.8
Adjusted EBITDA ($ per boe)
39.6
41.0
39.2
38.2
40.2
Net profit ($ million)
26.3
24.8
52.2
111.1
224.4
Capital expenditures ($ million)
66.6
44.1
53.6
199.0
168.8
Cash and cash equivalents ($ million)
133.0
106.3
128.8
133.0
128.8
Short-term financial debt ($ million)
12.5
5.7
12.5
12.5
12.5
Long-term financial debt ($ million)
488.5
487.6
485.1
488.5
485.1
Net debt ($ million)
368.0
387.0
368.8
368.0
368.8
Dividends paid ($ per share)
0.134
0.132
0.127
0.526
0.418
Shares repurchased (million shares)
0.850
0.500
0.942
3.074
2.743
Basic shares – at period end (million
shares)
55.328
56.118
57.622
55.328
57.622
Weighted average basic shares (million
shares)
55.892
56.513
58.261
56.837
59.330
a)
Includes royalties and other economic
rights paid in kind in Colombia for approximately 4,923 bopd, 5,045
bopd, and 759 bopd in 4Q2023, 3Q2023 and 4Q2022, respectively. No
royalties were paid in kind in other countries. Production in
Ecuador is reported before the Government’s production share.
b)
Production and operating costs include
operating costs, royalties and economic rights paid in cash,
share-based payments and purchased crude oil.
c)
G&A and G&G expenses include
non-cash, share-based payments for $1.8 million, $1.7 million, and
$3.3 million in 4Q2023, 3Q2023 and 4Q2022, respectively. These
expenses are excluded from the Adjusted EBITDA calculation.
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 press release and its supplementary
information do not contain all of the Company’s financial
information and the Company’s consolidated financial statements and
corresponding notes for the period ended December 31, 2023, will be
included in the Company’s annual report on Form 20-F.
RECONCILIATION OF ADJUSTED EBITDA TO PROFIT BEFORE INCOME
TAX
FY2023 (In millions of $)
Colombia
Chile
Brazil
Ecuador
Other(a)
Total
Adjusted EBITDA
446.8
5.0
6.4
5.2
(11.5)
451.9
Depreciation
(101.7)
(9.8)
(2.3)
(7.1)
(0.0)
(120.9)
Write-off of unsuccessful exploration
efforts
(29.6)
-
-
-
-
(29.6)
Impairment
-
(13.3)
-
-
-
(13.3)
Share based payment
(1.4)
(0.1)
(0.0)
(0.0)
(5.8)
(7.3)
Lease Accounting - IFRS 16
8.4
0.9
0.9
0.0
-
10.3
Others
(1.1)
(4.5)
(0.4)
0.0
(14.1)
(20.1)
OPERATING PROFIT (LOSS)
321.5
(21.9)
4.5
(1.9)
(31.3)
270.9
Financial costs, net
(39.6)
Foreign exchange charges, net
(16.8)
PROFIT BEFORE INCOME TAX
214.5
FY2022 (In millions of $)
Colombia
Chile
Brazil
Ecuador
Other(a)
Total
Adjusted EBITDA
525.6
11.8
11.7
4.2
(12.5)
540.8
Depreciation
(78.8)
(14.1)
(2.8)
(0.8)
(0.2)
(96.7)
Unrealized commodity risk management
contracts
13.0
-
-
-
-
13.0
Write-off of unsuccessful exploration
efforts
(21.3)
-
-
(4.5)
-
(25.8)
Share based payment
(1.5)
(0.2)
-
(0.0)
(9.3)
(11.0)
Lease Accounting - IFRS 16
5.2
1.1
1.4
0.0
0.1
7.9
Others
1.4
0.7
0.3
0.0
(1.5)
0.9
OPERATING PROFIT (LOSS)
443.6
(0.7)
10.5
(1.0)
(23.3)
429.1
Financial costs, net
(53.9)
Foreign exchange charges, net
19.7
PROFIT BEFORE INCOME TAX
394.9
(a) Includes Argentina and Corporate.
CONFERENCE CALL INFORMATION
Reporting Date for 4Q2023 Results Release, Conference Call
and Webcast
GeoPark will report its 4Q2023 and Annual 2023 financial results
on Wednesday, March 6, 2024, after the market close.
In conjunction with the 4Q2023 results press release, GeoPark
management will host a conference call on March 7, 2024, at 10:00
am (Eastern Standard Time) to discuss the 4Q2023 financial
results.
To listen to the call, participants can access the webcast
located in the Invest with Us section of the Company’s website at
www.geo-park.com, or by clicking below:
https://events.q4inc.com/attendee/179784519
Interested parties may participate in the conference call by
dialing the numbers provided below:
United States Participants: 404-975-4839
Global Dial-In Numbers: Click here
Passcode: 998063
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
Invest with Us section of the Company’s website at www.geo-park.com
after the conclusion of the live call.
GLOSSARY
2027 Notes
5.500% Senior Notes due 2027
Adjusted EBITDA
Adjusted EBITDA is defined as profit for
the period before net finance costs, income tax, depreciation,
amortization, the effect of IFRS 16, 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, the effect of IFRS 16), selling expenses, and
realized results on commodity risk management contracts, 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
G&A
Administrative Expenses
G&G
Geological & Geophysical Expenses
Mcfpd
Thousand cubic feet per day
Net Debt
Current and non-current borrowings less
cash and cash equivalents
WI
Working interest
NOTICE
Additional information about GeoPark can be found in the Invest
with Us section of the website at www.geo-park.com.
Rounding amounts and percentages: Certain amounts and
percentages included in this press release and its supplementary
information have been rounded for ease of presentation. Percentage
figures included in this press release and its supplementary
information have not in all cases been calculated on the basis of
such rounded figures, but on the basis of such amounts prior to
rounding. In addition, certain other amounts that appear in this
press release and its supplementary information may not sum due to
rounding.
This press release and its supplementary information contain
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.
ADDITIONAL INFORMATION REGARDING THE CONTEMPLATED TENDER
OFFER
This press release and its supplementary information is for
informational purposes only, is not a recommendation to buy or sell
any securities of the Company and does not constitute an offer to
buy or the solicitation of an offer to sell any securities of the
Company. The tender offer described in this press release has not
yet commenced, and there can be no assurances that the Company will
commence the tender offer on the terms described in this press
release or at all. The tender offer will be made only pursuant to
an offer to purchase and related materials that the Company expects
to distribute to its shareholders and file with the SEC upon
commencement of the expected tender offer. If the tender offer is
commenced as expected, shareholders should read carefully the
Tender Offer Statement on Schedule TO, the offer to purchase and
related materials because they will contain important information,
including the various terms of, and conditions to, the tender
offer. If the tender offer is commenced as expected, shareholders
and investors will be able to obtain a free copy of the tender
offer statement on Schedule TO, the offer to purchase and other
documents that the Company expects to file with the SEC at the
SEC’s website at www.sec.gov or by calling the information agent
for the contemplated tender offer, which will be identified in the
materials filed with the SEC at the commencement of the expected
tender offer.
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING
INFORMATION
This press release and its supplementary information contain
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, the intended commencement of the tender
offer, drilling campaign and share buyback program. 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 (SEC).
Oil and gas production figures included in this press release
and its supplementary information are stated before the effect of
royalties paid in kind, consumption and losses. Annual production
per day is obtained by dividing total production by 365 days.
Non-GAAP Measures: The Company believes Adjusted EBITDA,
free cash flow and operating netback per boe, which are each
non-GAAP measures, are useful because they allow the Company to
more effectively evaluate its operating performance and compare the
results of its operations from period to period without regard to
its financing methods or capital structure. The Company’s
calculation of Adjusted EBITDA, free cash flow, and operating
netback per boe may not be comparable to other similarly titled
measures of other companies.
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 and stock awards,
unrealized results on commodity risk management contracts and other
non-recurring events. Adjusted EBITDA is not a measure of profit or
cash flow as determined by IFRS. 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 flow 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. For a
reconciliation of Adjusted EBITDA to the IFRS financial measure of
profit, see the accompanying financial tables and the supplementary
information.
Operating Netback per boe: Operating netback per boe
should not be considered as an alternative to, or more meaningful
than, profit for the period or cash flow from operating activities
as determined in accordance with IFRS or as an indicator of the
Company’s 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 calculation of operating
netback per boe may not be comparable to other similarly titled
measures of other companies.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240306236301/en/
INVESTORS:
Stacy Steimel ssteimel@geo-park.com Shareholder Value Director
T: +562 2242 9600
Miguel Bello mbello@geo-park.com Market Access Director T: +562
2242 9600
Diego Gully dgully@geo-park.com Investor Relations Director T:
+55 21 99636 9658
MEDIA:
Communications Department communications@geo-park.com
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