GeoPark Reports First Quarter 2021 Results

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05/05/2021 - 06:53 PM

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, Ecuador, Chile, Brazil and Argentina reports its consolidated financial results for the three-month period (“First Quarter” or “1Q2021”). A conference call to discuss 1Q2021 financial results will be held on May 6, 2021 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 and should be read in conjunction with GeoPark’s consolidated financial statements and the notes to those statements for the period ended March 31, 2021, available on the Company’s website.

FIRST QUARTER 2021 HIGHLIGHTS

Strong Free Cash Flow from Profitable Low-Breakeven Production

Consolidated oil and gas production of 38,131 boepd
Revenue of $146.6 million
Operating Profit of $15.9 million / Net Loss of $10.3 million
Operating Netback of $79.4 million / Adjusted EBITDA of $66.5 million (both including protective cash hedge losses of $20.6 million)
Capital expenditures of $20.3 million
Every $1 invested yielded $3.9 in Operating Netback

Successful Debt Reduction

$187.6 million of cash & cash equivalents as of March 31, 2021
$75 million oil prepayment facility, with $50 million committed and no amounts drawn
$106.2 million in uncommitted credit lines
Strategic deleveraging executed in April 2021 resulted in significant debt reduction with extended maturities and lower cost of debt

Self-Funded, Expanded 2021 Work Program

Full-year 2021 work program of $130-150 million, targeting 41,000-43,000¹ boepd average production and operating netbacks of $330-370 million assuming Brent at $50-55 per bbl²
Flexible to quickly adapt to any oil price scenario

Shareholder Value Returns

Quarterly Dividend of $0.0205 per share ($1.25 million), paid on April 13, 2021
Quarterly Dividend of $0.0205 per share ($1.25 million), to be paid on May 28, 2021
Resumed discretionary share buyback program, having acquired 119,289 shares for $1.2 million since November 6, 2020, while executing self-funded and flexible work programs, and paying down debt

James F. Park, Chief Executive Officer of GeoPark, said: “Thanks again to the GeoPark team for its relentless discipline and for delivering another period of important achievements, driving forward our performance and improving our Company overall. Our powerful cash generation was again demonstrated by being able to simultaneously carry out three key initiatives: expand our exploration and development investment program; pay down debt, extend maturities and strengthen our balance sheet; and return cash to our shareholders. We appreciate the support of the investment community which has backed our plan and efforts over many years – including just awarding us the lowest yield ever for any B-rated issue in Latin America. With our foundational low-cost, low-risk, big-upside asset inventory, our strong and consistently successful oil and gas operating team, and our ahead-of-the-game SPEED (ESG+) strategy, we are looking forward to the remainder of 2021 and the abundant opportunities ahead.”

CONSOLIDATED OPERATING PERFORMANCE

Key performance indicators:

Key Indicators	1Q2021	4Q2020	1Q2020
Oil production^a (bopd)	32,877	33,238	40,861
Gas production (mcfpd)	31,522	36,390	29,206
Average net production (boepd)	38,131	39,304	45,731
Brent oil price ($ per bbl)	61.1	46.0	50.8
Combined realized price ($ per boe)	44.7	31.7	34.4
⁻ Oil ($ per bbl)	49.8	35.5	37.0
⁻ Gas ($ per mcf)	3.6	3.0	3.9
Sale of crude oil ($ million)	137.3	97.5	123.8
Sale of gas ($ million)	9.3	9.2	9.4
Revenue ($ million)	146.6	106.7	133.2
Commodity risk management contracts^b ($ million)	-47.3	-17.5	32.0
Production & operating costs^c ($ million)	-44.3	-34.9	-41.1
G&G, G&A^d and selling expenses ($ million)	-14.8	-21.7	-19.1
Adjusted EBITDA ($ million)	66.5	56.0	77.7
Adjusted EBITDA ($ per boe)	20.3	16.6	20.1
Operating Netback ($ per boe)	24.2	22.2	24.1
Net Profit (loss) ($ million)	-10.3	-119.2	-89.5
Capital expenditures ($ million)	20.3	26.1	33.7
Amerisur acquisition^e ($ million)	-	-	272.3
Cash and cash equivalents ($ million)	187.6	201.9	165.5
Short-term financial debt ($ million)	5.9	17.7	12.3
Long-term financial debt ($ million)	767.1	766.9	763.1
Net debt ($ million)	585.4	582.7	609.9

a)		Includes royalties paid in kind in Colombia for approximately 1,101, 986 and 1,807 bopd in 1Q2021, 4Q2020 and 1Q2020, respectively. No royalties were paid in kind in other countries.
b)		Please refer to the Commodity Risk Management section included below.
c)		Production and operating costs include operating costs and royalties paid in cash.
d)		G&A and G&G expenses include non-cash, share-based payments for $2.0 million, $2.3 million and $1.9 million in 1Q2021, 4Q2020 and 1Q2020, respectively. These expenses are excluded from the Adjusted EBITDA calculation.
e)		The Amerisur acquisition is shown net of cash acquired.

STRATEGIC DELEVERAGING (APRIL 2021)

In April 2021 GeoPark executed a series of transactions³ that included a successful tender to purchase $255 million of the 2024 Notes that was funded with a combination of cash in hand and a $150 million new issuance from the reopening of the 2027 Notes. The tender also included a consent solicitation to align covenants of the 2024 Notes to those of the 2027 Notes. The new notes offering and the tender offer closed on April 23 and April 26, respectively.

The reopening of the 2027 Notes was priced above par at 101.875%, representing a yield to maturity of 5.117%. This yield reflects a negative concession of 2.3 basis points relative to the yield to maturity of the day before pricing. Total demand reached over $780 million at its peak and ended at over $540 million. The transaction was oversubscribed by more than 3.5 times from diversified, top tier institutional investors.

Rationale and Benefits

Reduced total financial debt by $105 million
Annual interest savings of approximately $9 million
Improved financial profile by extending debt maturities by 2.3 years
Flexible debt structure with 25% of outstanding financial debt maturing in September 2024 (callable from September 2021) and the remaining 75% of financial debt maturing in January 2027 (callable from January 2024)
Alignment of covenants

For further details, please refer to the press release published on April 22, 2021.

Production: Oil and gas production in 1Q2021 decreased by 17% to 38,131 boepd from 45,731 boepd in 1Q2020, due to limited drilling and maintenance activities during 2020 in Colombia, Chile and Argentina, as part of the Company’s risk-managed response to preserve shareholder value and to minimize contractor and employee activity in the fields due to the lower oil price environment and the pandemic. Oil represented 86% and 89% of total reported production in 1Q2021 and 1Q2020, respectively.

For further details, please refer to the 1Q2021 Operational Update published on April 13, 2021.

Reference and Realized Oil Prices: Brent crude oil prices averaged $61.1 per bbl during 1Q2021, $10.3 per bbl higher than 1Q2020 levels. However, the consolidated realized oil sales price averaged $49.8 per bbl in 1Q2021, $12.8 per bbl higher than the $37.0 per bbl in 1Q2020, reflecting a lower local marker differential in Colombia and improved commercial and transportation discounts.

The tables below provide a breakdown of reference and net realized oil prices in Colombia, Chile and Argentina in 1Q2021 and 1Q2020:

1Q2021 - Realized Oil Prices

($ per bbl)

Colombia

Chile

Argentina

Brent oil price (*)

61.1

60.5

61.1