GeoPark Reports Third Quarter 2022 Results - GeoPark
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GeoPark Reports Third Quarter 2022 Results

November 9, 2022

GROWING PRODUCTION AND FREE CASH FLOW

FUNDS DELEVERAGING & ACCELERATED SHAREHOLDER RETURNS

Bogota, Colombia – GeoPark Limited (“GeoPark” or the “Company”) (NYSE: GPRK), a leading independent Latin American oil and gas explorer, operator and consolidator reports its consolidated financial results for the three-month period ended September 30, 2022 (“Third Quarter” or “3Q2022”). A conference call to discuss 3Q2022 financial results and the 2023 work program and shareholder return framework will be held on November 10, 2022 at 10:00 am (Eastern Daylight Time).

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 release does not contain all of the Company’s financial information and should be read in conjunction with GeoPark’s consolidated financial statements and the notes to those statements for the period ended September 30, 2022, available on the Company’s website.

THIRD QUARTER 2022 HIGHLIGHTS

Accelerating Production Growth

  • Consolidated oil and gas production up 8% to 38,396 boepd1
  • 13 rigs operating in November 2022 (compared to 8 rigs in November 2021)
  • On track to reach 2022 full-year guidance of 38,500-40,500 boepd

Growing Revenue, Adjusted EBITDA & Cash Flow Driving Record Net Profit

  • Revenue up 48% to $258.2 million
  • Adjusted EBITDA up 63% to $141.3 million (including $13.8 million of realized cash hedge losses)
  • Operating Profit up 79% to $145.4 million
  • Cash flow from operations up 183% to $141.1 million
  • Record Net Profit of $73.4 million (or $1.24 earnings per share)
  • 2022 full-year capital expenditures program of $200-220 million, generating free cash of $250-280 million2 assuming $90-100 per bbl Brent3 , equivalent to a 33-37% free cash flow yield4
  • Capital expenditures of $43.4 million
  • Every dollar invested in capital expenditures yielded 2x in Adjusted EBITDA

Returning More Value To Shareholders

  • Quarterly Dividend of $0.127 per share, or $7.5 million, payable on December 7, 2022
  • Equivalent to an annualized dividend of approximately $30 million (or $0.508 per share), a 4% dividend yield5
  • Completed share buyback program after acquiring 2 million shares (or over 3% of total shares outstanding) for $29.3 million since November 2021
  • Renewed discretionary share buyback program for up to 10% of shares outstanding until December 2023

Deleveraging and Balance Sheet Strengthening

  • Fully redeemed the remaining $67.1 million principal of the 2024 Notes in September 2022
  • Reduced gross debt by $170 million since January 1, 2022, or $275 million since April 2021
  • Net leverage of 8x
  • Cash in hand of $93.0 million

2023 Work Program: Strong Cash Generation with Increased Shareholder Returns

  • 2023 production guidance of 39,500-41,500 boepd (assuming no production from the exploration drilling program)
  • Self-funded 2023 capital expenditures program of $200-220 million to drill 50-55 gross wells
  • At $80-90 per bbl Brent, GeoPark expects to generate an Adjusted EBITDA of $510-580 million and targeting to return approximately 40-50% of free cash flows after taxes6 to shareholders

Recent Events And Upcoming Catalysts

  • Indico 6 development well, completed in October 2022 is currently producing 4,100 bopd (on a restricted 32/64 inch choke), of 35 degrees API with 0.1% water cut
  • Drilling 15-18 gross wells in 4Q2022, targeting development, appraisal, and exploration projects in the Llanos and Putumayo basins in Colombia and in the Oriente basin in Ecuador
  • Exploration drilling includes 3-4 wells in new blocks in the Llanos basin, 1 well in the Putumayo basin and 1 well in the Oriente basin in Ecuador

 

Andrés Ocampo, Chief Executive Officer of GeoPark, said: “The third quarter financial results reflect the hard work of GeoPark’s most important asset, our people. Once again, in 2022, that hard work has paid off with a busy drilling schedule that produced record financial results from the top line to the bottom line. We have just completed our 2023 capital allocation process and anticipate another active year drilling between 50-55 wells across our portfolio. This will translate into significant free cash flow in 2023 to self-fund our high-impact exploration and development program and increase shareholder returns while maintaining a strong balance sheet, reducing emissions and strengthening the ties to our neighbors.”

 

→ Read the full press release.

 

1 Percentages are calculated adjusting for divestments in Argentina in 3Q2021.

2 Free cash flow is used here as Adjusted EBITDA less capital expenditures, mandatory interest payments and cash taxes.

3 Brent oil price assumption corresponds to October to December 2022.

4 Calculated using GeoPark’s average market capitalization from July 1 to October 31, 2022.

5 Annualized and calculated using GeoPark’s market capitalization from July 1 to October 31, 2022.

6 Free cash flow is used here as Adjusted EBITDA less capital expenditures, mandatory interest payments and cash taxes. 2023 cash taxes include GeoPark’s preliminary estimates of the full impact of the new tax reform in Colombia, irrespective of the timing of its cash impact, expected in 2023 or early 2024. The Company is unable to present a quantitative reconciliation of the 2023 Adjusted EBITDA which is a forward-looking non-GAAP measure, because the Company cannot reliably predict certain of the necessary components, such as write-off of unsuccessful exploration efforts or impairment loss on non-financial assets, etc. Since free cash flow is calculated based on Adjusted EBITDA, for similar reasons, the Company does not provide a quantitative reconciliation of the 2023 free cash flow forecast.