GeoPark(GPRK) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - GeoPark's total oil and gas production for 2024 averaged almost 34,000 barrels per day equivalent, which is a 7% decrease compared to 2023 due to temporary production disruptions and natural declines in main fields in Colombia [6] - Full-year 2024 adjusted EBITDA reached $416 million, representing an 8% decrease compared to 2023, primarily due to lower production and one-off financial expenses [10] - Net income for the year stood at $96.4 million, a 13% decline from 2023, mainly due to lower production, lower revenues, and a higher effective tax rate [10] - The company concluded the year with $276.8 million in cash, including a $152 million withdrawal of a prepayment facility for the Vaca Muerta acquisition [11] Business Line Data and Key Metrics Changes - The Vaca Muerta assets delivered an average production of over 15,000 barrels per day gross in Q4 2024, which is 19% higher than Q3 2024 and almost 50% higher than when the transaction was announced [6] - The Vaca Muerta assets generated approximately $25 million of EBITDA net to GeoPark in Q4 2024, and approximately $100 million net on a full-year pro forma basis [6] Market Data and Key Metrics Changes - Pro forma 2P reserves reached over 160 million barrels, driven by the addition of 74.6 million barrels from the Vaca Muerta assets, marking a 41% year-on-year increase [9] - The reserve life index extended to 13 years on a 2P basis, while 1P reserves of 102 million barrels extended the 1P reserve life index to 8.2 years [9] Company Strategy and Development Direction - The company aims to maximize the potential of its expanded asset base, focusing on operational efficiency and production optimization in Colombia and Vaca Muerta [14][15] - GeoPark is committed to maintaining a strong balance sheet and evaluating new growth opportunities that enhance scale and long-term value [17] - The company is actively monitoring M&A opportunities, particularly in Argentina, as part of its strategy for long-term sustainable profits [46][48] Management's Comments on Operating Environment and Future Outlook - Management acknowledged operational challenges and a lower oil price environment but emphasized the company's cash generation capacity and disciplined financial management [5] - The company expects continued progress in its water flooding project and pilot project for polymer flooding in Colombia, which will enhance recovery and field productivity [15] - Management expressed confidence in the production trajectory in Vaca Muerta, anticipating growth to 20,000 barrels per day by mid-2025 and a plateau of approximately 40,000 barrels per day by early 2026 [32][56] Other Important Information - The company declared a quarterly cash dividend of almost $0.15 per share, reinforcing its commitment to long-term value return [13] - GeoPark was included in the S&P Sustainability Yearbook for the first time and maintained its AA rating in the MSC Index, highlighting its commitment to sustainability [14] Q&A Session Summary Question: Can you provide details on the $152 million recorded as customer advanced payments? - The $152 million relates to a withdrawal made for funding the closing of the Argentina transaction and is characterized as a prepayment of oil proceeds [19][20] Question: Why is the closing of the acquisition in Argentina taking longer than expected? - There is no specific pushback; the delays are due to normal regulatory processes, and the financial impact is neutral as the effective date was fixed at July 1, 2024 [25][28] Question: What is the expected trajectory of the production of the Vaca Muerta assets in 2025? - The company expects to reach 20,000 barrels of oil per day by mid-2025 and aims for a gross plateau of approximately 40,000 barrels per day by early 2026 [32][56] Question: At which price of Brent would you consider revising downward the expected CapEx to deploy in Vaca Muerta? - Capital allocation is tested at $60 per barrel to ensure project profitability and resilience to oil price volatility; the company has a mature hedging program in place [35][39] Question: How many drilling locations are considered in the reserves reported at the Vaca Muerta assets? - Currently, there are 33 wells in Mata Mora and three in Confluencia, with 148 more wells to drill in Mata Mora, representing significant future reserves [42][43] Question: How can we think about output evolving in Argentina throughout 2025? - The company anticipates growth in output, with some months of natural decline expected due to operational plans, but overall results are aligning with expectations [56][60]