GeoPark(GPRK) - 2024 Q3 - Earnings Call Transcript

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]