GeoPark Limited (GPRK) Q4 2024 Earnings Call March 06, 2025 10:00 AM ET Company Participants Andrés Ocampo - CEO & Member of the Board of DirectorsJaime Caballero Uribe - Chief Financial OfficerMartín Terrado - Chief Operating OfficerRodrigo Fiore - Chief Exploration & Development Officer Conference Call Participants None - Analyst Operator Good morning, and welcome to the GeoPark Limited Conference Call following the Results Announcement for the Fourth Quarter Ended 12/31/2024. After the speakers' remarks, ...

Company Overview - GeoPark Limited (GPRK) is currently experiencing significant attention in the options market, particularly with the Mar 21, 2025 $5.00 Call option showing high implied volatility, indicating potential for a major price movement [1][3] Implied Volatility Insights - Implied volatility reflects market expectations for future price movements, suggesting that investors anticipate a significant change in GeoPark's stock price, possibly due to an upcoming event [2][4] Analyst Sentiment - GeoPark holds a Zacks Rank of 5 (Strong Sell) within the Oil and Gas - Exploration and Production - United States industry, which is in the top 35% of the Zacks Industry Rank. Over the past 60 days, no analysts have raised their earnings estimates for the current quarter, while one has lowered the estimate, resulting in a decrease in the Zacks Consensus Estimate from 73 cents to 64 cents per share [3]

Core Viewpoint - GeoPark Limited has announced the results of its tender offer to purchase its outstanding 5.500% Senior Notes due 2027, with a significant amount of notes tendered by the expiration date [1][2]. Group 1: Tender Offer Details - The tender offer was set to expire at 5:00 p.m. New York City time on January 27, 2025, with a total of U.S.$412,753,000 in aggregate principal amount of the notes validly tendered [2]. - Settlement of the tender offer is expected to occur on or about January 31, 2025 [2]. - The total outstanding principal amount of the 5.500% Senior Notes due 2027 was U.S.$500,000,000, leaving U.S.$87,247,000 outstanding after the tender offer [3]. Group 2: Payment Terms - Holders of the validly tendered notes will receive the consideration plus accrued and unpaid interest from the last interest payment date up to, but not including, the settlement date [5]. - The aggregate principal amount validly tendered includes U.S.$12,420,000 of notes tendered through guaranteed delivery procedures [4]. - Payment for notes tendered and accepted is expected to occur on the settlement date, contingent upon the satisfaction of certain conditions [6].

Core Viewpoint - GeoPark Limited (GPRK) has announced its 2025 guidance, focusing on enhancing shareholder value through disciplined capital allocation, operational excellence, and sustainable growth, aligning with its "North Star" strategy [1] Production Targets - GPRK aims for a mid-term production target of 70,000 barrels of oil equivalent per day (boepd) by 2028 and 100,000 boepd by 2030, with a 2025 target of 35,000 boepd supported by capital expenditure (Capex) of $275-$310 million [2] - The production mix is expected to be 97% oil and 3% natural gas, with a focus on unconventional (22%) and conventional (78%) resources, primarily from Colombia (26,000 boepd) and the Vaca Muerta shale formation in Argentina (7,400 boepd) [2] Drilling Targets - GPRK plans to drill 23-32 wells in the coming years, including 10-15 gross exploration wells, with significant drilling in Colombia's Llanos 34 and CPO-5 blocks and Argentina's Mata Mora Norte and Confluencia Sur blocks [3] - The Capex allocation for Colombia is estimated at $80-$90 million, while for Argentina, it is about $195-$220 million [3] Financial Targets - For 2025, GPRK projects an adjusted EBITDA of $350 million to $430 million, assuming a Brent crude price of $70 to $80 per barrel [4] - The company expects to maintain a net debt to EBITDA ratio of 1.5-2.1, with ending cash projected at $120-$180 million, funding its targets through internal cash generation and debt [4] - Approximately 50% of the estimated average production for 2025 is hedged to mitigate downside price risk [4] Shareholder Returns - GPRK anticipates returning about $30 million to shareholders via dividend payments in 2025, representing a yield of 6-7% based on current market prices [5] Sustainability Strategy - The company aims for a 35-40% reduction in carbon intensity by 2025 compared to 2020 levels, focusing on operational excellence and best health, safety, and environmental practices [6]

Acquisition Decision - GeoPark Limited has decided not to proceed with the acquisition of oil and gas properties in Colombia from Repsol S.A. due to the exercise of pre-emptive rights by Repsol's partner, SierraCol Energia Arauca LLC [1][2] - The acquisition included a 25% interest in SierraCol Energia Arauca and Repsol's oil and gas extraction operations in central Colombia, which was initially announced in November 2024 [1][2] Pre-emptive Rights - SierraCol Energia Arauca LLC exercised its pre-emptive rights to purchase the 25% stake in the Llanos Norte project located in Colombia's Arauca Department [2] - Additionally, Ecopetrol also exercised its pre-emptive rights to acquire Repsol's 45% working interest in the CPO-9 block in Colombia [2] Company Rankings - GeoPark currently holds a Zacks Rank of 4 (Sell), while Repsol has a Zacks Rank of 3 (Hold) [3] - Other energy sector stocks with better rankings include Sunoco LP with a Zacks Rank of 1 (Strong Buy) and TechnipFMC plc with a Zacks Rank of 2 (Buy) [3] Company Profiles - Sunoco LP is a major distributor of motor fuel in the United States, providing consistent returns to unitholders with a distribution yield greater than the industry's composite stocks [4] - TechnipFMC is a leading manufacturer and supplier of products and services for the energy industry, with a total backlog of $14.7 million in Q3 2024, reflecting an 11.1% increase from the previous year [5]

Core Viewpoint - The article emphasizes the importance of identifying and sustaining trends in short-term investing, highlighting that sound fundamentals and positive earnings estimates are crucial for maintaining momentum in stock prices [1]. Group 1: Trend Analysis - The "Recent Price Strength" screen is a useful tool for investors to identify stocks that are currently trending upwards, supported by strong fundamentals and trading near their 52-week high [2]. - Geopark (GPRK) is identified as a strong candidate for trend investors, having experienced a price increase of 37.8% over the past 12 weeks, indicating investor confidence in its potential upside [3]. - A recent price increase of 0.8% over the last four weeks suggests that GPRK's upward trend is still intact, and it is currently trading at 84.8% of its 52-week high-low range, indicating a potential breakout [4]. Group 2: Fundamental Strength - GPRK holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, which are critical for short-term price movements [5]. - The Zacks Rank system has a strong historical performance, with Rank 1 stocks averaging an annual return of +25% since 1988, reinforcing the potential for GPRK's continued success [6]. - The average broker recommendation for GPRK is also 1 (Strong Buy), reflecting high optimism from the brokerage community regarding its near-term price performance [6]. Group 3: Additional Opportunities - Besides GPRK, there are other stocks that meet the criteria of the "Recent Price Strength" screen, suggesting a broader opportunity for investors to explore [7]. - The article encourages investors to utilize various Zacks Premium Screens tailored to different investing styles to identify potential winning stocks [7].

Core Viewpoint - GeoPark Limited (GPRK) has announced an agreement to acquire upstream oil and gas assets from Repsol in Colombia, which aligns with its growth strategy and aims to enhance its production and cash flow [1][5]. Group 1: Acquisition Details - GPRK is set to acquire Repsol Colombia O&G Limited, which holds a 45% working interest in the CPO-9 Block and a 25% working interest in SierraCol Energy Arauca LLC [3]. - The CPO-9 Block, operated by Ecopetrol S.A., produced approximately 16,000 barrels of oil equivalent per day for Repsol as of September 2024 [3]. Group 2: Strategic Alignment - The acquisition supports GPRK's "North Star" strategy, focusing on high-valued assets in the Llanos Basin to create a profitable and sustainable portfolio across Latin America [5]. - This new portfolio is expected to increase GPRK's production levels, reserves, and cash flow while requiring low capital investment [5]. Group 3: Financial Structure - The total deal value is $530 million, which will be financed through cash and a $345 million non-recourse debt facility arranged by Macquarie Bank Limited [6]. - A strong hedging strategy is in place to ensure price protection and reliable debt servicing for the acquisition [6].

Company Overview - GeoPark Limited (NYSE: GPRK) is an oil and gas exploration and production company operating in various LATAM countries, focusing on Ecuador, Colombia, Brazil, and recently Argentina [1] - The company is headquartered in Bogotá, Colombia, and has onshore basins in Colombia and Ecuador [1] Investment Focus - The company targets value opportunities in the commodities sector, particularly in oil and gas, metals, and mining [1] - It emphasizes companies with sustained free cash flows, low leverage, and sustainable debt levels, especially those in distress with high recovery potential [1] - The focus is on emerging markets that exhibit high margins and present good medium to long-term investment opportunities [1] Shareholder Value - The company maintains a solid pro-shareholder attitude, with ongoing buyback programs and dividend distributions [1]

Financial Data and Key Metrics Changes - The company's net revenue for Q3 2024 was $159 million, a decrease of 16% from Q2, primarily due to lower realized oil prices and production [6] - Adjusted EBITDA for the quarter was close to $100 million, representing a strong 63% margin, while adjusted EBITDA for the first nine months of 2024 amounted to $339 million, reflecting a 2% increase compared to the same period in 2023 [7] - Net profits for the quarter were $25 million, exceeding the same period last year, with significant cash flow generation leading to a cash build from $66 million on June 30 to $123 million in September and $140 million in October [8] - The net leverage ratio remains low at 0.8 times, with no principal debt maturities until 2027, providing financial flexibility [8] - The company maintained quarterly dividends of $7.5 million, totaling $73 million for the year, representing an 18% capital return yield [9] Business Line Data and Key Metrics Changes - In Colombia, the company focused on development and appraisal activities in the Llanos 34 Block, advancing water flooding campaigns and expanding facilities to enhance production [10] - In the CPO-5 Block, two wells were drilled, contributing to exploration and development goals, with the entire complex currently producing approximately 4,000 barrels per day gross [11] - The Vaca Muerta unconventional oil play acquisition marked a significant milestone, with the Pad-4 achieving a gross average production of 12,600 barrels of oil per day during the quarter [13] Market Data and Key Metrics Changes - The company is looking forward to starting its first exploration well in the Putumayo Basin later in November 2024 [11] - The operator is currently drilling four wells in Pad-9, expected to finish in December, while production and cash flow from Vaca Muerta will not be consolidated into financial statements until the transaction closes [15] Company Strategy and Development Direction - The company plans to release its 2025 work program and investment guidelines before year-end, outlining strategic priorities for sustainable growth and capital allocation [17] - There is a focus on optimizing core operations while capitalizing on new assets in Vaca Muerta to maximize long-term value [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the financial position and flexibility to manage through market volatility while continuing to invest in high-value projects [8] - The company anticipates increased production as new wells come online and existing wells stabilize, projecting output in Mata Mora Norte to be around 13,500 to 14,500 barrels of oil equivalent by year-end [24] Other Important Information - The company has secured local capital market approvals in Argentina, including an AA+ credit rating and authorization to issue up to $500 million in local debt securities [16] - The estimated surcharge for the year is 10%, with no changes to the treatment of royalties [70][72] Q&A Session Summary Question: Update on Confluencia results and Mata Mora Norte production expectations - Management indicated that results from Confluencia are encouraging and production results will be communicated before December, with expectations for Mata Mora Norte to stabilize around 14,000 barrels of oil equivalent per day [19][20][24] Question: Expected initial production rates for Confluencia and CapEx for Llanos 34 - Initial production rates for Confluencia are expected to be between 750 to 1,500 barrels of oil per day, with a slight decline in Llanos 34 production anticipated due to field maturity [27][32] Question: Update on operational costs and plans to address rising OpEx - Management acknowledged rising OpEx per barrel, primarily driven by energy costs, and outlined plans to lock in energy prices and optimize operations to reduce costs [35][39][41] Question: Status of operations in Brazil and expectations - Operations in Brazil are expected to restart in early March 2025, following delays due to maintenance [46] Question: Progress on the DUPLICAR project and evacuation capacity - The DUPLICAR project is expected to come online around March 2025, adding 9,000 barrels per day of evacuation capacity, with current evacuation capacity at approximately 15,000 barrels per day [51][52]

Geopark (GPRK) came out with quarterly earnings of $0.48 per share, missing the Zacks Consensus Estimate of $0.59 per share. This compares to earnings of $0.44 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -18.64%. A quarter ago, it was expected that this oil and gas company would post earnings of $0.78 per share when it actually produced earnings of $0.48, delivering a surprise of -38.46%.Over the last four quarters, the co ...