GeoPark(GPRK) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $88 million, up 13% from the previous quarter, with operating costs decreasing to $12.3 per barrel, aligning with full-year guidance [7][8] - Net income reached $13 million despite one-time costs related to debt refinancing, which extended the average debt maturity to almost five years [7][8] - The company closed the quarter with over $308 million in cash and a net leverage ratio of 0.9 times, preserving financial flexibility [8] Business Line Data and Key Metrics Changes - Pro forma consolidated production averaged 36,000 barrels per day, exceeding the base case guidance of 35,000 barrels per day, driven by stable output in Colombia and Ecuador, and record production from new Argentina assets [4][5] - In Colombia, the Curucutu-one well encountered approximately 70 feet of net pay and tested production of around 1,300 barrels per day gross, boosting block output to nearly 5,000 barrels per day [7] - The Vaca Muerta blocks in Argentina achieved gross production of over 17,000 barrels per day in February, with plans to target 40,000 barrels per day gross capacity by mid-2026 [5][6] Market Data and Key Metrics Changes - The company has hedged approximately 70% of its 2025 production with floors of $68 to $70 per barrel, providing protection against market volatility [8][25] - Average Brent realizations for the hedged volumes are currently benign, while the unhedged 30% is subject to spot market prices [25] Company Strategy and Development Direction - The company remains committed to executing its 2025 work program, with plans for seven wells in Colombia and four in Argentina during the second quarter [10] - A strategic focus on high-impact material assets led to the divestment of interests in the Zanos 32 Block and the Manatee Gas Field [9] - The company aims to build a more valuable and sustainable GeoPark, focusing on significant assets in major basins with the right partners [10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the persistent market volatility and Brent fluctuations but emphasized the company's solid results and financial robustness [4] - The company is actively working to close the Vaca Muerta transaction, with an outside date of May 13, 2025, for either party to withdraw from the agreement without penalties [19][36] - Management expressed confidence in maintaining capital allocation priorities and operational efficiency despite current market uncertainties [38][40] Other Important Information - The company declared a quarterly dividend of $0.15 per share, reinforcing its commitment to shareholder returns, targeting an annualized $30 million dividend [10] - The company is focused on cost reductions and efficiency improvements, achieving a 25% reduction in well costs through new drilling techniques [9][40] Q&A Session Summary Question: How is the company viewing CapEx and production growth in the current oil price environment? - Management stated that the capital allocation plan is designed to be economic value accretive and cash positive at $60 per barrel, and they do not see a need to change it [25][26] Question: Can you provide updates on the Argentina deal and cash flow? - Management confirmed that the transaction is still pending regulatory approval and emphasized their commitment to closing it [17][19] Question: What is the company's outlook on hedging for 2026? - Management indicated that they intend to maintain a robust hedging policy and will monitor market conditions to determine appropriate hedging levels [48][49] Question: What is the company's target cash position and leverage comfort level? - Management stated that they are comfortable with a leverage ratio of 0.9 times and aim to maintain a long-term leverage ratio around 1.5 [50][51] Question: Are there any operational disruptions affecting production levels in Colombia? - Management reported that production levels are within expectations, with minor disruptions accounted for in their planning [95][96]