GeoPark Reports Fourth Quarter and Full-Year 2023 Results
- GeoPark delivered $451.9 million Adjusted EBITDA and $111.1 million net profit in FY2023.
- The company invested $199.0 million in capital expenditures and achieved a 110% 2P Replacement Ratio.
- GeoPark reported a 10% increase in quarterly average oil and gas production in 4Q2023.
- MSCI upgraded GeoPark's ESG rating to 'AA', recognizing the company as an ESG 'leader'.
- GeoPark plans to commence a tender offer for up to $50 million shares.
- None.
Insights
GeoPark Limited's financial results for 4Q2023 and FY2023 demonstrate a robust financial performance despite market headwinds. The company reported an Adjusted EBITDA of $451.9 million with a high EBITDA margin of 60%, indicating strong operational efficiency. Notably, the Adjusted EBITDA to capital expenditures ratio of 2.3x reflects capital discipline and efficient resource allocation. Furthermore, the return on average capital employed at 35% is impressive, especially when considering the one-off costs from Chile's divestment and the impact of a higher effective tax rate due to Colombia's new income surtax. The company's strategy to balance shareholder returns through dividends and buybacks, achieving a 13% capital return yield, is commendable and suggests confidence in its financial health and asset quality.
GeoPark's operational highlights, such as the 10% increase in quarterly average oil and gas production in 4Q2023 compared to 3Q2023, are significant in the context of the broader energy sector. The success of exploration efforts in the Llanos 123 and 87 blocks, as well as the resumption of production in the CPO-5 Block, contributed to this growth. The 110% 2P Replacement Ratio indicates that the company is successfully replenishing its reserves, which is crucial for long-term sustainability. GeoPark's ESG rating upgrade to 'AA' by MSCI reflects its commitment to environmental and social governance, which is increasingly important to investors and may enhance its reputation and investor appeal in a market that values sustainable practices.
GeoPark's tender offer to purchase up to $50 million of its common shares represents a strategic move to enhance shareholder value and reflects management's confidence in the company's intrinsic value. This buyback, at a price range of $9.00 to $10.00 per share, could affect the stock's liquidity and potentially its market price. The company's strong cash position and low net leverage ratio of 0.8 times provide it with the financial flexibility to pursue such capital return initiatives. However, investors should consider the potential dilution effects and the opportunity cost of not investing this capital into further exploration and development activities, which might drive future growth.
Improved Volume Delivery in 4Q2023 Underpins Sustained Cash Returns
Quarterly Cash Dividend of
Tender Offer for up to
MSCI ESG Rating Upgraded to ‘AA’: ESG Leader
FOURTH QUARTER AND FULL-YEAR 2023 SUMMARY
In 2023, GeoPark delivered
During 2023, GeoPark invested
Improved operating results during 4Q2023 translated into
Capital efficiency was once again a key feature of the year. Each dollar invested in capital expenditures yielded
Annual net profit in 2023 reached
These financial achievements and discipline allowed GeoPark to reward its shareholders with a
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,
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,
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
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, |
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 $756.6 million -
Adjusted EBITDA of
$117.8 million $451.9 million -
Operating Profit of
$44.3 million $270.9 million -
Cash flow from operations of
$110.6 million $300.9 million -
Net profit of
$26.3 million $111.1 million $2
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 $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 $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 13% capital return yield7, significantly exceeding the 40-50% free cash flow return target -
Shareholder returns included
$30.0 million 6% dividend yield8, and$31.2 million 5.5% of total shares outstanding) -
Renewed share buyback program for up to
10% of shares outstanding until December 2024 -
Quarterly cash dividend of
$0.13 6$7.5 million
Portfolio Management
- Seeking scale and sustainability, divested Chilean operations (transaction closed in January 2024)
GeoPark Rated as ESG Leader
- Colombia’s licensing authority approved the environmental license for the Putumayo-8 Block
- ESG ratings upgrade by MSCI to “AA” from “A”, making GeoPark an ESG ‘Leader’
- Ratings upgrade by Carbon Disclosure Project (CDP) Climate change to “B” from “C”
-
Finalized a Human Rights risk assessment for operations in
Colombia andEcuador - Completed a double materiality exercise to strengthen the sustainability strategy
| __________________________ |
4 Including operated and non-operated wells. |
5 Including development, appraisal, and exploration wells. Does not include injector wells and wells that are currently under evaluation. |
6 ROCE is defined as last twelve-month operating profit divided by average total assets minus current liabilities. |
7 Based on GeoPark’s average market capitalization from December 1 to December 29, 2023. |
8 Based on GeoPark’s average market capitalization from December 1 to December 29, 2023. |
CONSOLIDATED OPERATING PERFORMANCE
Key performance indicators:
Key Indicators |
4Q2023 |
3Q2023 |
4Q2022 |
FY2023 |
FY2022 |
Oil productiona (bopd) |
35,842 |
32,510 |
35,451 |
33,958 |
35,029 |
Gas production (mcfpd) |
14,841 |
13,610 |
17,886 |
15,632 |
21,546 |
Average net production (boepd) |
38,315 |
34,778 |
38,433 |
36,563 |
38,620 |
Brent oil price ($ 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 |
|
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 |
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 $) |
|
|
|
|
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 $) |
|
|
|
|
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 |
|
|
|
|
|
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
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
Source: GeoPark Limited
FAQ
What was GeoPark's Adjusted EBITDA in FY2023?
How much did GeoPark invest in capital expenditures in FY2023?
What was the percentage increase in quarterly average oil and gas production in 4Q2023?
What was GeoPark's MSCI ESG rating upgraded to?
What is GeoPark's plan regarding a tender offer?
