GeoPark Announces 2P Reserve Replacement of 110%
- GeoPark achieved a 110% 2P Reserve Replacement Ratio in 2023.
- Colombia accounted for 93% of GeoPark's 2P reserves.
- The company added 36 new drilling locations from exploration discoveries in 2023.
- D&M certified 1P reserves of 68.8 mmboe and 2P reserves of 115.1 mmboe.
- Future development capital required for 1P and 2P reserves is $126 million and $310 million, respectively.
- GeoPark's 2024 expected Adjusted EBITDA is $420-550 million at $80-90/bbl Brent.
- The company aims to return approximately 40-50% of free cash flow to shareholders.
- GeoPark will report its 4Q2023 and Annual 2023 financial results on March 6, 2024.
- None.
Insights
GeoPark Limited's announcement of its year-end reserves and net present value is a significant disclosure with direct implications for its financial health and future revenue streams. The reported 2P Reserve Replacement Ratio (RRR) of 110% indicates that the company is effectively replacing the reserves it is extracting, which is a positive indicator of its ability to sustain production levels. The Net Present Value (NPV10) of $1.8 billion for 2P reserves, when adjusted for net debt, translates to a substantial $26.0 per share, providing a clear picture of the intrinsic value of the company's reserves to shareholders. Furthermore, the projected Adjusted EBITDA of $420-550 million for 2024, in conjunction with the capital expenditure program, suggests that GeoPark is well-positioned to fund its development plans and potentially generate significant free cash flow. This financial framework indicates a robust balance sheet capable of delivering shareholder returns while pursuing growth opportunities.
The strategic focus on the Llanos 34 Block and successful exploration in Colombia and Ecuador has yielded a substantial addition of 14.0 mmboe to GeoPark's 2P reserves, emphasizing the company's operational success. The diversification of reserves across multiple plays and the emphasis on horizontal drilling and waterflooding projects are indicative of GeoPark's technical proficiency and commitment to enhancing recovery rates. The company's ability to grow its reserve base through a combination of exploration and technological advancements is a strong indicator of its competitive position within the Latin American oil and gas sector. The Reserve Life Index (RLI) of 9.1 years for 2P reserves provides insight into the longevity of GeoPark's production capabilities, which is crucial for long-term planning and valuation.
The oil and gas sector is highly sensitive to changes in commodity prices and GeoPark's projections are based on a Brent crude price of $80-90 per barrel. This price assumption is critical as it underpins the company's financial forecasts and strategic decisions. The divestment of Chilean assets and the subsequent adjustment of production guidance reflect GeoPark's agility in optimizing its portfolio in response to market conditions. The company's intent to return 40-50% of free cash flow after taxes to shareholders is an attractive proposition that may influence investor sentiment and stock performance. However, investors should be aware that fluctuations in oil prices could impact the actual financial outcomes relative to the company's forecasts.
Net Present Value (After Tax) of
2P Value Per Share (Net Debt-Adjusted) of
All reserves included in this release refer to GeoPark working interest before royalties paid in kind, except when specified. All figures are expressed in US Dollars. Definitions of terms are provided in the Glossary on page 4.
The Company’s 2023 year-end reserves, related net present values and other information included in this press release exclude
2023 Year-End D&M Certified Oil and Gas Reserves and Highlights
During 2023, GeoPark added 14.0 mmboe of net 2P reserves, which after producing 12.7 mmboe resulted in 2P reserves of 115.1 mmboe, representing a
These new exploration discoveries have an associated 2P NPV10 After Tax of approximately
The new discoveries were added in the second half of 2023 and targeted exploration prospects that include combined structural/stratigraphic traps in
As of December 31, 2023, D&M certified consolidated 1P reserves of 68.8 mmboe with a 1P NPV10 After Tax of
D&M estimated future development capital required to develop 1P reserves at
Consolidated Reserves Summary
- 1P reserves of 68.8 mmboe, with a Reserve Life Index (RLI) of 5.4 years
- 2P reserves of 115.1 mmboe, with a RLI of 9.1 years
- 3P reserves of 167.0 mmboe, with a RLI of 13.1 years
-
Future development capital to develop 1P, 2P and 3P reserves of
$1.8 $2.7 $2.8
Net Present Value and Value Per Share
-
1P NPV10 After Tax of
$1.1 billion -
Net debt-adjusted 1P NPV10 After Tax of
$14.1 -
2P NPV10 After Tax of
$1.8 billion -
Net debt-adjusted 2P NPV10 After Tax of
$26.0
2024 Work Program: Growing Production, Delineating New Plays and Returning Value
-
To reflect the divestment of assets in
Chile , the 2024 consolidated production guidance was adjusted to 35,500-39,000 boepd from the previous 37,000-40,000 boepd announced on November 8, 2023 -
This guidance represents 2
-12% production growth versus full-year 2023 adjusted production of 34,8433 boepd -
Self-funded 2024 capital expenditures program of
$150 -200 million -
At
$80 -90$420 -550 million$90 -160 millionChile -
Financial framework enables cash optionality to fund accretive growth opportunities while targeting to return approximately 40
-50% of free cash flow after taxes to shareholders
Andrés Ocampo, Chief Executive Officer of GeoPark, said: “2023 marked an inflection point in the delivery of our reserves replacement goals. The certified reserves that we are announcing today demonstrate the successes of our 2023 drilling campaign that added eight new discoveries and the successful results of the horizontal drilling program in our core asset. We added new reserves in multiple plays in
2022 Year-End to 2023 Year-End Reserves Evolution
Total (mmboe) |
PD |
1P |
2P |
3P |
2022 Year-End Reserves |
56.0 |
76.1 |
128.4 |
196.3 |
Chile Divestment |
-3.4 |
-4.1 |
-14.6 |
-27.0 |
Pro forma (excluding |
52.6 |
72.0 |
113.8 |
169.3 |
2023 Production |
-12.7 |
-12.7 |
-12.7 |
-12.7 |
Discoveries and Extensions |
7.7 |
7.9 |
16.0 |
27.0 |
Technical Revisions |
3.1 |
2.6 |
-0.2 |
-14.3 |
Economic Factors & Other |
-1.0 |
-1.0 |
-1.8 |
-2.4 |
2023 Year-End Reserves |
49.7 |
68.8 |
115.1 |
167.0 |
2023 Reserve Life (years) |
3.9 |
5.4 |
9.1 |
13.1 |
For more information on GeoPark's reserves, please refer to the following link:
https://ir.geo-park.com/files/doc_downloads/reserves_info_docs/2024/annex-certified-reserves-evaluation-year-end-2023.pdf
| __________________________________ |
1 The Company is unable to present a quantitative reconciliation of the 2024 Adjusted EBITDA which is a forward-looking non-GAAP measure, because the Company cannot reliably predict certain of the necessary components, such as write-off of unsuccessful exploration efforts or impairment loss on non-financial assets, etc. Since free cash flow is calculated based on Adjusted EBITDA, for similar reasons, the Company does not provide a quantitative reconciliation of the 2024 free cash flow forecast. |
2 Free cash flow is used here as Adjusted EBITDA less capital expenditures, mandatory interest payments and cash taxes. |
3 Calculated as full-year 2023 average consolidated production of 36,563 boepd, less 1,720 boepd of full-year 2023 production in |
OTHER NEWS
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
1P |
Proven Reserves |
2P |
Proven plus Probable Reserves |
3P |
Proven plus Probable plus Possible Reserves |
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 |
boe |
Barrels of oil equivalent (6,000 cf marketable gas per bbl of oil equivalent). Marketable gas is defined as the total gas produced from the reservoir after reduction for shrinkage resulting from field separation; processing, including removal of nonhydrocarbon gas to meet pipeline specifications; and flare and other losses but not from fuel usage |
boepd |
Barrels of oil equivalent per day |
bopd |
Barrels of oil per day |
Certified Reserves |
Refers to GeoPark working interest reserves before royalties paid in kind, independently evaluated by the petroleum consulting firm, DeGolyer and MacNaughton Corp. (D&M) |
mboed |
Thousands of barrels of oil equivalent per day |
mmboe |
Millions of barrels of oil equivalent |
NPV10 After Tax |
Net Present Value after tax discounted at |
PD |
Proven Developed Reserves |
PRMS |
Petroleum Resources Management System |
RLI |
Reserve Life Index |
RRR |
Reserve Replacement Ratio |
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
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.
Gas quantities estimated herein are reserves to be produced from the reservoirs, available to be delivered to the gas pipeline after field separation prior to compression. Gas reserves estimated herein include fuel gas.
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.
Oil and gas production figures included in this release are stated before the effect of royalties paid in kind, consumption and losses.
All evaluations of future net revenue contained in the D&M Reports are after the deduction of cash royalties, development costs, operating expenses, production and profit taxes, fees, earn out payments, well abandonment costs, and country income taxes from the future gross revenue. It should not be assumed that the estimates of future net revenues presented in the tables represent the fair market value of the reserves. The actual production, revenues, taxes and development, and operating expenditures with respect to the reserves associated with the Company's properties may vary from the information presented herein, and such variations could be material. In addition, there is no assurance that the forecast price and cost assumptions contained in the D&M Report will be attained, and variances could be material.
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 NPV10 After Tax, our reserves, the estimated future revenues, capital expenditures, Adjusted EBITDA, free cash flows, expected production guidance and shareholder returns. 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 the Company’s filings with the
This press release contains a number of oil and gas metrics, including NPV after tax per share, reserve life index, net debt-adjusted NPV per share, etc., 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 and should not be used to make comparisons. 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.
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 SEC definitions for such terms. GeoPark uses certain terms in this press release, such as "PRMS Reserves" that SEC 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 after tax 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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240219121435/en/
For further information, please contact:
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
Capital Markets Director
T: +55 21 99636 9658
MEDIA:
Communications Department communications@geo-park.com
Source: GeoPark Limited
FAQ
What is GeoPark Limited's ticker symbol?
What is the 2P Reserve Replacement Ratio achieved by GeoPark in 2023?
How much did GeoPark add in net 2P reserves in 2023?
What percentage of GeoPark's 2P reserves is represented by Colombia?
What is the 2P NPV10 After Tax announced by GeoPark for 2023?
What is GeoPark's expected Adjusted EBITDA for 2024?
When will GeoPark report its 4Q2023 and Annual 2023 financial results?
