UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of August, 2014
Commission File Number: 001-36298
GeoPark Limited
(Exact name of registrant as specified in its charter)
Nuestra Señora de los Ángeles 179
Las Condes, Santiago, Chile
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
| Form 20-F | X | Form 40-F |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
| Yes | No | X |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
| Yes | No | X |
GEOPARK LIMITED
TABLE OF CONTENTS
| ITEM | |
| 1. | Interim Condensed Consolidated Financial Statements for the six-months period ended 30 June 2013 and 2014 |
Item 1
GEOPARK LIMITED
INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
For the six-months period ended 30 June 2013 and 2014
GEOPARK LIMITED
30 JUNE 2014
CONTENTS
| Page | |
| 3 | Consolidated Statement of Income and Statement of Comprehensive Income |
| 4 | Consolidated Statement of Financial Position |
| 5 | Consolidated Statement of Changes in Equity |
| 6 | Consolidated Statement of Cash Flow |
| 7 | Selected explanatory notes |
GEOPARK LIMITED
30 JUNE 2014
CONSOLIDATED STATEMENT OF INCOME
| Amounts in US$ ´000 | Note | Three-months period ended 30 June 2014 (Unaudited) | Three-months period ended 30 June 2013 (Unaudited) | Six-months period ended 30 June 2014 (Unaudited) | Six-months period ended 30 June 2013 (Unaudited) | |||||||||||||||
| NET REVENUE | 2 | 131,449 | 72,871 | 216,180 | 160,806 | |||||||||||||||
| Production costs | 4 | (64,327 | ) | (42,834 | ) | (102,001 | ) | (81,147 | ) | |||||||||||
| GROSS PROFIT | 67,122 | 30,037 | 114,179 | 79,659 | ||||||||||||||||
| Selling expenses | (5,999 | ) | (1,591 | ) | (12,317 | ) | (7,658 | ) | ||||||||||||
| Exploration costs | 5 | (7,437 | ) | (6,282 | ) | (14,243 | ) | (13,587 | ) | |||||||||||
| Administrative costs | 6 | (11,833 | ) | (11,124 | ) | (22,962 | ) | (20,730 | ) | |||||||||||
| Other operating income | 361 | 4,359 | 974 | 4,205 | ||||||||||||||||
| OPERATING PROFIT | 42,214 | 15,399 | 65,631 | 41,889 | ||||||||||||||||
| Financial income | 7 | 5,019 | 298 | 5,767 | 604 | |||||||||||||||
| Financial expenses | 8 | (8,566 | ) | (8,248 | ) | (16,896 | ) | (21,166 | ) | |||||||||||
| PROFIT BEFORE TAX | 38,667 | 7,449 | 54,502 | 21,327 | ||||||||||||||||
| Income tax | (11,321 | ) | (2,659 | ) | (16,832 | ) | (7,092 | ) | ||||||||||||
| PROFIT FOR THE PERIOD | 27,346 | 4,790 | 37,670 | 14,235 | ||||||||||||||||
| Attributable to: | ||||||||||||||||||||
| Owners of the parent | 21,756 | 2,136 | 28,458 | 8,616 | ||||||||||||||||
| Non-controlling interest | 5,590 | 2,654 | 9,212 | 5,619 | ||||||||||||||||
Earnings per share (in US$) for profit attributable to owners of the Company. Basic | 0.39 | 0.05 | 0.52 | 0.20 | ||||||||||||||||
Earnings per share (in US$) for profit attributable to owners of the Company. Diluted | 0.35 | 0.05 | 0.45 | 0.19 | ||||||||||||||||
STATEMENT OF COMPREHENSIVE INCOME
| Amounts in US$ ´000 | Three-months period ended 30 June 2014 (Unaudited) | Three-months period ended 30 June 2013 (Unaudited) | Six-months period ended 30 June 2014 (Unaudited) | Six-months period ended 30 June 2013 (Unaudited) | ||||||||||||
| Profit for the period | 27,346 | 4,790 | 37,670 | 14,235 | ||||||||||||
| Other comprehensive income | ||||||||||||||||
| Currency translation differences | 1,413 | - | 2,344 | (363 | ) | |||||||||||
| Total comprehensive Income for the period | 28,759 | 4,790 | 40,014 | 13,872 | ||||||||||||
| Attributable to: | ||||||||||||||||
| Owners of the parent | 23,169 | 2,136 | 30,802 | 8,253 | ||||||||||||
| Non-controlling interest | 5,590 | 2,654 | 9,212 | 5,619 | ||||||||||||
3
GEOPARK LIMITED
30 JUNE 2014
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| Amounts in US$ ´000 | Note | At 30 June 2014 (Unaudited) | Year ended 31 December 2013 | |||||||||
| ASSETS | ||||||||||||
| NON CURRENT ASSETS | ||||||||||||
| Property, plant and equipment | 9 | 785,388 | 595,446 | |||||||||
| Prepaid taxes | 13,934 | 11,454 | ||||||||||
| Other financial assets | 6,857 | 5,168 | ||||||||||
| Deferred income tax | 18,371 | 13,358 | ||||||||||
| Prepayments and other receivables | 465 | 6,361 | ||||||||||
| TOTAL NON CURRENT ASSETS | 825,015 | 631,787 | ||||||||||
| CURRENT ASSETS | ||||||||||||
| Inventories | 16,373 | 8,122 | ||||||||||
| Trade receivables | 61,336 | 42,628 | ||||||||||
| Prepayments and other receivables | 37,717 | 35,764 | ||||||||||
| Prepaid taxes | 13,722 | 6,979 | ||||||||||
| Cash at bank and in hand | 125,297 | 121,135 | ||||||||||
| TOTAL CURRENT ASSETS | 254,445 | 214,628 | ||||||||||
| TOTAL ASSETS | 1,079,460 | 846,415 | ||||||||||
| EQUITY | ||||||||||||
| Equity attributable to owners of the Company | ||||||||||||
| Share capital | 10 | 58 | 44 | |||||||||
| Share premium | 211,274 | 120,426 | ||||||||||
| Reserves | 128,809 | 126,465 | ||||||||||
| Retained earnings | 57,201 | 23,906 | ||||||||||
| Attributable to owners of the Company | 397,342 | 270,841 | ||||||||||
| Non-controlling interest | 104,328 | 95,116 | ||||||||||
| TOTAL EQUITY | 501,670 | 365,957 | ||||||||||
| LIABILITIES | ||||||||||||
| NON CURRENT LIABILITIES | ||||||||||||
| Borrowings | 11 | 349,921 | 290,457 | |||||||||
| Provisions for other long-term liabilities | 12 | 42,372 | 33,076 | |||||||||
| Deferred income tax | 45,563 | 23,087 | ||||||||||
| Trade and other payables | 13 | 7,011 | 8,344 | |||||||||
| TOTAL NON CURRENT LIABILITIES | 444,867 | 354,964 | ||||||||||
| CURRENT LIABILITIES | ||||||||||||
| Borrowings | 11 | 18,723 | 26,630 | |||||||||
| Current income tax | 4,299 | 7,231 | ||||||||||
| Trade and other payables | 13 | 109,901 | 91,633 | |||||||||
| TOTAL CURRENT LIABILITIES | 132,923 | 125,494 | ||||||||||
| TOTAL LIABILITIES | 577,790 | 480,458 | ||||||||||
| TOTAL EQUITY AND LIABILITIES | 1,079,460 | 846,415 | ||||||||||
4
GEOPARK LIMITED
30 JUNE 2014
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| Attributable to owners of the Company | ||||||||||||||||||||||||||||
| Amount in US$ '000 | Share Capital | Share Premium | Other Reserve | Translation Reserve | Retained earnings (accumulated losses) | Non - controlling Interest | Total | |||||||||||||||||||||
| Equity at 1 January 2013 | 43 | 116,817 | 127,527 | 894 | (5,860 | ) | 72,665 | 312,086 | ||||||||||||||||||||
| Profit for the first half of the year | - | - | - | - | 8,616 | 5,619 | 14,235 | |||||||||||||||||||||
| Currency translation differences | - | - | - | (363 | ) | - | - | (363 | ) | |||||||||||||||||||
| Total comprehensive income for the period ended 30 June 2013 | - | - | - | (363 | ) | 8,616 | 5,619 | 13,872 | ||||||||||||||||||||
| Proceeds from transaction with Non-controlling interest | - | - | - | - | - | 5,175 | 5,175 | |||||||||||||||||||||
| Shared-based payment | - | 60 | - | - | 3,486 | - | 3,546 | |||||||||||||||||||||
| - | 60 | - | - | 3,486 | 5,175 | 8,721 | ||||||||||||||||||||||
Balance at 30 June 2013 (Unaudited) | 43 | 116,877 | 127,527 | 531 | 6,242 | 83,459 | 334,679 | |||||||||||||||||||||
| Balance at 31 December 2013 | 44 | 120,426 | 127,527 | (1,062 | ) | 23,906 | 95,116 | 365,957 | ||||||||||||||||||||
| Profit for the first half of the year | - | - | - | - | 28,458 | 9,212 | 37,670 | |||||||||||||||||||||
| Currency translation differences | - | - | - | 2,344 | - | - | 2,344 | |||||||||||||||||||||
| Total comprehensive income for the period ended 30 June 2014 | - | - | - | 2,344 | 28,458 | 9,212 | 40,014 | |||||||||||||||||||||
| Proceeds from issue of shares | 14 | 90,848 | - | - | - | - | 90,862 | |||||||||||||||||||||
| Shared-based payment | - | - | - | - | 4,837 | - | 4,837 | |||||||||||||||||||||
| 14 | 90,848 | - | - | 4,837 | - | 95,699 | ||||||||||||||||||||||
| Balance at 30 June 2014 (Unaudited) | 58 | 211,274 | 127,527 | 1,282 | 57,201 | 104,328 | 501,670 | |||||||||||||||||||||
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GEOPARK LIMITED
30 JUNE 2014
CONSOLIDATED STATEMENT OF CASH FLOW
| Amounts in US$ ’000 | Six-months period ended 30 June 2014 (Unaudited) | Six-months period ended 30 June 2013 (Unaudited) | ||||||
| Cash flows from operating activities | ||||||||
| Profit for the period | 37,670 | 14,235 | ||||||
| Adjustments for: | ||||||||
| Income tax | 16,832 | 7,092 | ||||||
| Depreciation | 48,070 | 32,605 | ||||||
| Loss on disposal of property, plant and equipment | 68 | 568 | ||||||
| Write-off of unsuccessful exploration and evaluation assets | 8,637 | 11,788 | ||||||
| Amortisation of other long-term liabilities | (291 | ) | (1,359 | ) | ||||
| Accrual of borrowing’s interests | 12,841 | 11,881 | ||||||
| Unwinding of long-term liabilities | 706 | 505 | ||||||
| Accrual of share-based payment | 5,597 | 3,486 | ||||||
| Income tax paid | (1,306 | ) | (4,040 | ) | ||||
| Changes in operating assets and liabilities | (23,843 | ) | (9,655 | ) | ||||
| Cash flows from operating activities – net | 104,981 | 67,106 | ||||||
| Cash flows from investing activities | ||||||||
| Purchase of property, plant and equipment | (118,161 | ) | (113,952 | ) | ||||
| Acquisitions of companies, net of cash acquired | (114,967 | ) | - | |||||
| Collections related to financial leases | 3,391 | 6,489 | ||||||
| Cash flows used in investing activities – net | (229,737 | ) | (107,463 | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of shares | 90,862 | - | ||||||
| Proceeds from borrowings | 67,155 | 292,363 | ||||||
| Proceeds from transaction with non-controlling interest | - | 36,313 | ||||||
| Proceeds from loans from related parties | - | 8,344 | ||||||
| Principal paid | (18,550 | ) | (179,343 | ) | ||||
| Interest paid | (11,311 | ) | (6,175 | ) | ||||
| Cash flows from financing activities - net | 128,156 | 151,502 | ||||||
| Net increase in cash and cash equivalents | 3,400 | 111,145 | ||||||
| Cash and cash equivalents at 1 January | 121,135 | 38,292 | ||||||
| Currency translation differences | 753 | - | ||||||
| Cash and cash equivalents at the end of the period | 125,288 | 149,437 | ||||||
| Ending Cash and cash equivalents are specified as follows: | ||||||||
| Cash in banks | 125,276 | 149,413 | ||||||
| Cash in hand | 21 | 24 | ||||||
| Bank overdrafts | (9 | ) | - | |||||
| Cash and cash equivalents | 125,288 | 149,437 | ||||||
6
GEOPARK LIMITED
30 JUNE 2014
SELECTED EXPLANATORY NOTES
Note 1
General information
GeoPark Limited (the Company) is a company incorporated under the law of Bermuda. The Registered Office address is Cumberland House, 9th Floor, 1 Victoria Street, Hamilton HM11, Bermuda.
The principal activity of the Company and its subsidiaries (“the Group”) are exploration, development and production for oil and gas reserves in Chile, Colombia, Brazil and Argentina. The Group has working interests and/or economic interests in 29 hydrocarbon blocks.
On 7 February 2014, the Securities and Exchange Commission (“SEC”) declared effective the Company’s registration statement upon which 13,999,700 shares were issued, including over-allotment option, at a price of US$ 7 per share. Gross proceeds from the offering totalled US$ 98 million. As a result, the Company commenced trading on the New York Stock Exchange (“NYSE”) under the ticker symbol GPRK. Also its shares are authorized for trading on the Santiago Off-Shore Stock Exchange.
Subsequently, the Company listing cancellation on the AIM London Stock Exchange became effective on 19 February 2014.
This consolidated interim financial report was authorised for issue by the Board of Directors on
21 August, 2014.
Basis of Preparation
The consolidated interim financial report of GeoPark Limited is presented in accordance with IAS 34 “Interim Financial Reporting”. It does not include all of the information required for full annual financial statements, and should be read in conjunction with the annual financial statements as at and for the years ended 31 December 2012 and 2013, which have been prepared in accordance with IFRS.
The consolidated interim financial report has been prepared in accordance with the accounting policies applied in the most recent annual financial statements. For further information please refer to GeoPark Limited's consolidated financial statements for the year ended 31 December 2013.
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss.
The activities of the Company are not subject to significant seasonal changes.
7
GEOPARK LIMITED
30 JUNE 2014
Note 1 (Continued)
Estimates
The preparation of interim financial information requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. Actual results may differ from these estimates.
In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2013.
Financial risk management
The Company’s activities expose it to a variety of financial risks: currency risk, price risk, credit risk- concentration, funding and liquidity risk, interest risk and capital risk. The interim condensed consolidated financial statements do not include all financial risk management information and disclosures required in the annual financial statements, and should be read in conjunction with the Company’s annual financial statements as at 31 December 2013.
There have been no changes in the risk management since year end or in any risk management policies.
Subsidiary undertakings
The following chart illustrates the Group structure as of 30 June 2014 (*):
(*) LG International is not a subsidiary, it is Non-controlling interest.
During 2013 and 2014, with the purpose of conducting its multilocation activities and for allowing future business structures, the Company has incorporated certain wholly owned subsidiaries, that are dormant companies at the date of the issuance of these interim financial statements.
8
GEOPARK LIMITED
30 JUNE 2014
Note 1 (Continued)
Subsidiary undertakings (Continued)
Details of the subsidiaries and joint operations of the Company are set out below:
| Name and registered office | Ownership interest | |||
| Subsidiaries | GeoPark Argentina Ltd. – Bermuda | 100% | ||
| GeoPark Argentina Ltd. – Argentinean Branch | 100% (a) (k) | |||
| GeoPark Latin America Limited | 100% (g) | |||
| GeoPark Latin America Limited – Agencia en Chile | 100% (a) (g) | |||
| GeoPark S.A. (Chile) | 100% (a) (b) | |||
| GeoPark Brazil Exploração y Produção de Petróleo e Gas Ltda. (Brazil) | 100% (a) | |||
| Rio das Contas Produtora de Petróleo Ltda (Brazil) | 100% (a) (j) | |||
| GeoPark Chile S.A. (Chile) | 80% (a) (c) | |||
| GeoPark Fell S.p.A. (Chile) | 80% (a) (c) | |||
| GeoPark Magallanes Limitada (Chile) | 80% (a) (c) | |||
| GeoPark TdF S.A. (Chile) | 68.8% (a) (d) | |||
| GeoPark Colombia S.A. (Chile) | 80% (a) | |||
| GeoPark Colombia SAS (Colombia) | 100% (a) (h) | |||
| GeoPark Brazil S.p.A. (Chile) | 100% (a) (b) | |||
| GeoPark Latin America Cooperatie U.A. (The Netherlands) | 100% | |||
| GeoPark Colombia Cooperatie U.A. (The Netherlands) | 100% (a) (c) | |||
| GeoPark Perú Cooperatie U.A. (The Netherlands) | 100%(b) | |||
| GeoPark Brazil Cooperatie U.A. (The Netherlands) | 100% | |||
| Associates | Raven Pipeline Company LLC (United States) | 23.5% (b) | ||
| Joint operations | Tranquilo Block (Chile) | 29% (i) (f) | ||
| Otway Block (Chile) | 25% (e) (f) | |||
| Flamenco Block (Chile) | 50% (f) | |||
| Campanario Block (Chile) | 50% (f) | |||
| Isla Norte Block (Chile) | 60% (f) | |||
| Llanos 17 Block (Colombia) | 36.84% | |||
| Yamu/Carupana Block (Colombia) | 75%/54.5% (f) (l) | |||
| Llanos 34 Block (Colombia) | 45% (f) | |||
| Llanos 32 Block (Colombia) | 10% | |||
| Manati Field (Brazil) | 10% (j) |
| (a) | Indirectly owned. |
| (b) | Dormant companies. |
| (c) | LG International has 20% interest. |
| (d) | LG International has 20% interest through GeoPark Chile S.A. and a 14% direct interest, totalling 31.2%. |
| (e) | In April 2013, the Group voluntarily relinquished to the Chilean Government all of our acreage in the Otway Block, except for 49,421 acres. In May 2013, our partners under the joint operating agreement governing the Otway Block decided to withdraw from such joint operating agreement and to apply to withdraw from the Otway Block CEOP, such that, subject to the Chilean Ministry of Energy’s approval, the Group will be the sole participant, and have a working interest of 100%, in the remaining areas in the Otway Block. |
| (f) | GeoPark is the operator in all blocks. |
| (g) | Formerly named GeoPark Chile Limited. |
| (h) | During 2013, the Company has finalized a merger process by which GeoPark Colombia SAS will continue the operations related to GeoPark Luna SAS (Colombia), GeoPark Llanos SAS (Colombia), La Luna Oil Co. Ltd. (Panama), Winchester Oil and Gas S.A. (Panama), GeoPark Cuerva LLC (United States), Sucursal La Luna Oil Co. Ltd. (Colombia), Sucursal Winchester Oil and Gas S.A. (Colombia) and Sucursal GeoPark Cuerva LLC (Colombia). |
| (i) | At 31 December 2013, the Consortium members and interest were: GeoPark 29%, Pluspetrol 29%, Wintershall 25% and Methanex 17%. During 2014, Methanex and Wintershall announced their decision to abandon the Consortium. The new ownership is being negotiated among GeoPark and Pluspetrol. |
| (j) | See Note 14. |
| (k) | In April 2014, the Company informed the Secretary of Infrastructure and Energy of the province of Mendoza of its decision to relinquish 100% of the Cerro Doña Juana and Loma Cortaderal Concessions to the Mendoza Province. |
| (l) | See Note 15. |
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GEOPARK LIMITED
30 JUNE 2014
Note 2
Net Revenue
| Amounts in US$ '000 | Three-months period ended 30 June 2014 | Three-months period ended 30 June 2013 | Six-months period ended 30 June 2014 | Six-months period ended 30 June 2013 | ||||||||||||
| Sale of crude oil | 112,022 | 67,946 | 187,256 | 149,817 | ||||||||||||
| Sale of gas | 19,427 | 4,925 | 28,924 | 10,989 | ||||||||||||
| 131,449 | 72,871 | 216,180 | 160,806 | |||||||||||||
Note 3
Segment Information
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the strategic steering committee. This committee is integrated by the CEO, COO, CFO and managers in charge of the Geoscience, Drilling, Operations and SPEED departments. This committee reviews the Group’s internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on these reports.
The committee considers the business from a geographic perspective.
The strategic steering committee assesses the performance of the operating segments based on a measure of Adjusted EBITDA. Adjusted EBITDA is defined as profit for the period before net finance cost, income tax, depreciation, amortization and certain non-cash items such as impairments and write-offs of unsuccessful exploration and evaluation assets, accrual of stock options and stock awards. Other information provided, except as noted below, to the strategic steering committee is measured in a manner consistent with that in the financial statements.
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GEOPARK LIMITED
30 JUNE 2014
Note 3 (Continued)
Segment Information (Continued)
Six-months period ended 30 June 2014
| Amounts in US$ '000 | Total | Argentina | Chile | Brazil | Colombia | Corporate | ||||||||||||||||||
| Net Revenue | 216,180 | 853 | 86,368 | 12,287 | 116,672 | - | ||||||||||||||||||
| Gross Profit | 114,179 | 713 | 47,962 | 5,106 | 60,398 | - | ||||||||||||||||||
| Operating Profit / (Loss) | 65,631 | (3,181 | ) | 27,283 | 3,015 | 42,380 | (3,866 | ) | ||||||||||||||||
| Adjusted EBITDA | 124,780 | (1,223 | ) | 53,218 | 7,066 | 67,520 | (1,801 | ) | ||||||||||||||||
Six-months period ended 30 June 2013
| Amounts in US$ '000 | Total | Argentina | Chile | Brazil | Colombia | Corporate | ||||||||||||||||||
| Net Revenue | 160,806 | 733 | 82,855 | - | 77,218 | - | ||||||||||||||||||
| Gross Profit | 79,659 | 19 | 49,167 | - | 30,473 | - | ||||||||||||||||||
| Operating Profit / (Loss) | 41,889 | (1,822 | ) | 33,239 | (1,365 | ) | 17,801 | (5,964 | ) | |||||||||||||||
| Adjusted EBITDA | 84,014 | (1,284 | ) | 52,267 | (1,341 | ) | 38,296 | (3,924 | ) | |||||||||||||||
| Total Assets | Total | Argentina | Chile | Brazil | Colombia | Corporate | ||||||||||||||||||
| 30 June 2014 | 1,079,460 | 5,221 | 538,603 | 168,689 | 305,348 | 61,599 | ||||||||||||||||||
| 31 December 2013 | 846,415 | 7,977 | 477,263 | 29,222 | 259,421 | 72,532 | ||||||||||||||||||
A reconciliation of total Adjusted EBITDA to total profit before income tax is provided as follows:
| Three-months period ended 30 June 2014 | Three-months period ended 30 June 2013 | Six-months period ended 30 June 2014 | Six-months period ended 30 June 2013 | |||||||||||||
| Adjusted EBITDA for reportable segments | 76,401 | 34,362 | 124,780 | 84,014 | ||||||||||||
Depreciation (a) | (27,570 | ) | (16,836 | ) | (45,678 | ) | (32,605 | ) | ||||||||
| Share-based payment | (2,635 | ) | (1,679 | ) | (5,597 | ) | (3,486 | ) | ||||||||
| Impairment and write-off of unsuccessful efforts | (4,550 | ) | (5,871 | ) | (8,637 | ) | (11,788 | ) | ||||||||
Others (b) | 569 | 5,423 | 763 | 5,754 | ||||||||||||
| Operating profit | 42,215 | 15,399 | 65,631 | 41,889 | ||||||||||||
| Financial results | (3,547 | ) | (7,950 | ) | (11,129 | ) | (20,562 | ) | ||||||||
| Profit before tax | 38,668 | 7,449 | 54,502 | 21,327 | ||||||||||||
| (a) | Net of capitalised costs for oil stock included in Inventories. |
| (b) | Includes internally capitalised costs. |
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GEOPARK LIMITED
30 JUNE 2014
Note 4
Production costs
| Amounts in US$ '000 | Three-months period ended 30 June 2014 | Three-months period ended 30 June 2013 | Six-months period ended 30 June 2014 | Six-months period ended 30 June 2013 | ||||||||||||
| Depreciation | 25,775 | 16,447 | 46,980 | 31,898 | ||||||||||||
| Well and facilities maintenance | 5,777 | 4,733 | 10,243 | 9,003 | ||||||||||||
| Royalties | 6,378 | 4,086 | 10,795 | 8,650 | ||||||||||||
| Consumables | 4,803 | 3,049 | 9,220 | 6,610 | ||||||||||||
| Transportation costs | 3,491 | 2,691 | 7,075 | 4,946 | ||||||||||||
| Staff costs | 3,769 | 5,518 | 6,866 | 7,518 | ||||||||||||
| Equipment rental | 2,194 | 782 | 4,074 | 2,360 | ||||||||||||
| Field camp | 1,533 | 846 | 2,856 | 1,844 | ||||||||||||
| Gas plant costs | 804 | 776 | 1,639 | 1,587 | ||||||||||||
| Non operated blocks costs | 1,587 | 1,544 | 2,834 | 2,110 | ||||||||||||
| Other costs | 4,811 | 4,564 | 7,336 | 5,794 | ||||||||||||
| Crude oil stock variation | 3,405 | (2,202 | ) | (7,917 | ) | (1,173 | ) | |||||||||
| 64,327 | 42,834 | 102,001 | 81,147 | |||||||||||||
Note 5
Exploration costs
| Amounts in US$ '000 | Three-months period ended 30 June 2014 | Three-months period ended 30 June 2013 | Six-months period ended 30 June 2014 | Six-months period ended 30 June 2013 | ||||||||||||
| Write-off of unsuccessful exploration and evaluation assets | 4,550 | 5,871 | 8,637 | 11,788 | ||||||||||||
| Staff costs | 2,823 | 1,889 | 5,721 | 4,084 | ||||||||||||
| Other services | 634 | 146 | 1,065 | 219 | ||||||||||||
| Allocation to capitalised project | (570 | ) | (265 | ) | (1,180 | ) | (1,145 | ) | ||||||||
| Amortisation of other long-term liabilities related to unsuccessful efforts | - | (600 | ) | - | (600 | ) | ||||||||||
| Recovery of abandonments costs | - | (759 | ) | - | (759 | ) | ||||||||||
| 7,437 | 6,282 | 14,243 | 13,587 | |||||||||||||
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GEOPARK LIMITED
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Note 6
Administrative costs
| Amounts in US$ '000 | Three-months period ended 30 June 2014 | Three-months period ended 30 June 2013 | Six-months period ended 30 June 2014 | Six-months period ended 30 June 2013 | ||||||||||||
| Staff costs | 5,252 | 4,801 | 10,810 | 9,976 | ||||||||||||
| Consultant fees | �� | 1,528 | 1,946 | 2,791 | 3,082 | |||||||||||
| Office expenses | 1,037 | 439 | 1,806 | 781 | ||||||||||||
| New projects | 880 | 485 | 1,311 | 661 | ||||||||||||
| Depreciation | 571 | 389 | 1,090 | 707 | ||||||||||||
| Travel expenses | 463 | 671 | 967 | 1,190 | ||||||||||||
| Director fees and allowance | 326 | 726 | 612 | 992 | ||||||||||||
| Other administrative expenses | 1,776 | 1,667 | 3,575 | 3,341 | ||||||||||||
| 11,833 | 11,124 | 22,962 | 20,730 | |||||||||||||
Note 7
Financial income
| Amounts in US$ '000 | Three-months period ended 30 June 2014 | Three-months period ended 30 June 2013 | Six-months period ended 30 June 2014 | Six-months period ended 30 June 2013 | ||||||||||||
| Exchange difference | 3,173 | (36 | ) | 3,404 | 2 | |||||||||||
| Interest received | 1,846 | 334 | 2,363 | 602 | ||||||||||||
| 5,019 | 298 | 5,767 | 604 | |||||||||||||
Note 8
Financial expenses
| Amounts in US$ '000 | Three-months period ended 30 June 2014 | Three-months period ended 30 June 2013 | Six-months period ended 30 June 2014 | Six-months period ended 30 June 2013 | ||||||||||||
| Bank charges and other financial costs | 708 | 1,303 | 1,015 | 1,568 | ||||||||||||
| Bond GeoPark Fell SpA cancellation costs | - | - | - | 8,603 | ||||||||||||
| Exchange difference | 498 | 931 | 2,012 | 1,483 | ||||||||||||
| Unwinding of long-term liabilities | 651 | 289 | 706 | 505 | ||||||||||||
| Interest and amortisation of debt issue costs | 7,544 | 6,227 | 14,380 | 9,931 | ||||||||||||
| Less: amounts capitalised on qualifying assets | (835 | ) | (502 | ) | (1,217 | ) | (924 | ) | ||||||||
| 8,566 | 8,248 | 16,896 | 21,166 | |||||||||||||
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GEOPARK LIMITED
30 JUNE 2014
Note 9
Property, plant and equipment
| Amounts in US$'000 | Oil & gas properties | Furniture, equipment and vehicles | Production facilities and machinery | Buildings and improve-ments | Construction in progress | Exploration and evaluation assets | TOTAL | |||||||||||||||||||||
| Cost at 1 January 2013 | 344,371 | 3,576 | 86,949 | 3,198 | 54,025 | 93,106 | 585,225 | |||||||||||||||||||||
| Additions | 2,502 | 1,128 | 10 | 47 | 59,479 | 83,979 | 147,145 | |||||||||||||||||||||
| Disposals | (546 | ) | (22 | ) | (15,870 | ) | - | - | - | (16,438 | ) | |||||||||||||||||
Write-off and impairment (1) | - | - | - | - | - | (11,788 | ) | (11,788 | ) | |||||||||||||||||||
| Transfers | 77,166 | - | 14,963 | 927 | (61,433 | ) | (31,623 | ) | - | |||||||||||||||||||
| Cost At 30 June 2013 | 423,493 | 4,682 | 86,052 | 4,172 | 52,071 | 133,674 | 704,144 | |||||||||||||||||||||
| Cost at 1 January 2014 | 493,260 | 5,731 | 98,837 | 7,018 | 40,429 | 147,759 | 793,034 | |||||||||||||||||||||
| Additions | 1,592 | 1,460 | - | - | 53,365 | 71,517 | 127,934 | |||||||||||||||||||||
| Acquisition of subsidiaries | 115,345 | 270 | - | - | - | - | 115,615 | |||||||||||||||||||||
| Currency translation differences | 3,168 | - | - | - | - | - | 3,168 | |||||||||||||||||||||
| Disposals | - | (319 | ) | - | - | - | - | (319 | ) | |||||||||||||||||||
Write-off and impairment (1) | - | - | - | - | - | (8,637 | ) | (8,637 | ) | |||||||||||||||||||
| Transfers | 91,219 | - | 7,568 | 95 | (48,798 | ) | (50,084 | ) | - | |||||||||||||||||||
| Cost At 30 June 2014 | 704,584 | 7,142 | 106,405 | 7,113 | 44,996 | 160,555 | 1,030,795 | |||||||||||||||||||||
| Depreciation and write-down at 1 January 2013 | (98,156 | ) | (1,836 | ) | (26,336 | ) | (1,060 | ) | - | - | (127,388 | ) | ||||||||||||||||
| Depreciation | (27,418 | ) | (427 | ) | (4,480 | ) | (280 | ) | - | - | (32,605 | ) | ||||||||||||||||
| Depreciation and write-down At 30 June 2013 | (125,574 | ) | (2,263 | ) | (30,816 | ) | (1,340 | ) | - | - | (159,993 | ) | ||||||||||||||||
| Depreciation and write-down at 1 January 2014 | (157,390 | ) | (2,800 | ) | (35,677 | ) | (1,721 | ) | - | - | (197,588 | ) | ||||||||||||||||
| Depreciation | (41,356 | ) | (702 | ) | (5,623 | ) | (389 | ) | - | - | (48,070 | ) | ||||||||||||||||
| Disposals | - | 251 | - | - | - | - | 251 | |||||||||||||||||||||
| Depreciation and write-down at 30 June 2014 | (198,746 | ) | (3,251 | ) | (41,300 | ) | (2,110 | ) | - | - | (245,407 | ) | ||||||||||||||||
| Carrying amount at 30 June 2013 | 297,919 | 2,419 | 55,236 | 2,832 | 52,071 | 133,674 | 544,151 | |||||||||||||||||||||
| Carrying amount at 30 June 2014 | 505,838 | 3,891 | 65,105 | 5,003 | 44,996 | 160,555 | 785,388 | |||||||||||||||||||||
| (1) | Corresponds to write-off of Exploration and evaluation assets in Chile for US$ 6,865,000 (US$ 8,753,000 in 2013) and US$ 1,772,000 in Colombia (US$ 3,035,000 in 2013). During the second quarter of 2014 the Company has written off all of its assets related to Otway Block in Chile for US$ 2,778,000 and two wells in the Non operated Arrendajo Block in Colombia. |
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GEOPARK LIMITED
30 JUNE 2014
Note 10
Share capital
| Issued share capital | Six-months period ended 30 June 2014 | Year ended 31 December 2013 | ||||||
| Common stock (US$ ´000) | 58 | 44 | ||||||
| The share capital is distributed as follows: | ||||||||
| Common shares, of nominal US$ 0.001 | 57,863,615 | 43,861,614 | ||||||
| Total common shares in issue | 57,863,615 | 43,861,614 | ||||||
| Authorised share capital | ||||||||
| US$ per share | 0.001 | 0.001 | ||||||
| Number of common shares (US$ 0.001 each) | 5,171,949,000 | 5,171,949,000 | ||||||
| Amount in US$ | 5,171,949 | 5,171,949 | ||||||
GeoPark’s share capital only consists of common shares. The authorized share capital consists of 5,171,949,000 common shares of par value US$0.001 per share. As of the date of this interim condensed consolidated report, there are 57,863,615 common shares outstanding (see Note 1). All of the Company issued and outstanding common shares are fully paid and nonassessable. The Company also has an employee incentive program, pursuant to which it has granted share awards to its senior management and certain key employees (see Notes 25 and 29 to the audited Consolidated Financial Statements as of 31 December 2013).
Note 11
Borrowings
The outstanding amounts are as follows:
| Amounts in US$ '000 | At 30 June 2014 | Year ended 31 December 2013 | ||||||
| Bond GeoPark Latin America Agencia en Chile (a) | 300,427 | 299,912 | ||||||
| Banco de Chile (b) | - | 15,002 | ||||||
| Banco de Crédito e Inversiones (c) | 152 | 2,143 | ||||||
| Banco Itaú (d) | 68,056 | - | ||||||
| Overdrafts (e) | 9 | 30 | ||||||
| 368,644 | 317,087 | |||||||
Classified as follows:
| Current | 18,723 | 26,630 | ||||||
| Non-Current | 349,921 | 290,457 |
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GEOPARK LIMITED
30 JUNE 2014
Note 11 (Continued)
Borrowings (Continued)
(a) During February 2013, the Company successfully placed US$ 300 million notes which were offered under Rule 144A and Regulation S exemptions of the United States Securities laws.
The Notes, issued by the Company's wholly-owned subsidiary GeoPark Latin America Limited Agencia en Chile ("the Issuer"), were priced at 99.332% and carry a coupon of 7.50% per annum (yield 7.625% per annum). Final maturity of the notes will be 11 February 2020. The Notes are guaranteed by GeoPark Limited and GeoPark Latin America Cooperatie U.A. and are secured with a pledge of all of the equity interests of the Issuer in GeoPark Chile S.A. and GeoPark Colombia Cooperatie U.A. and a pledge of certain intercompany loans. Notes were rated single B by both Standard & Poor's and Fitch Ratings. The debt issuance cost for this transaction amounted to US$ 7,637,000. The Notes include covenants restricting dividend payments and new indebtedness. As of the date of these interim condensed consolidated financial statements, the Company has complied with these covenants.
(b) Short term financing obtained in December 2013 and fully repaid in January 2014. The interest rate applicable to this loan was 0.71% per annum.
(c) Facility to establish the operational base in the Fell Block. This facility was acquired through a mortgage loan granted by the Banco de Crédito e Inversiones (BCI), a Chilean private bank. The loan was granted in Chilean pesos and is repayable over a period of 8 years. The interest rate applicable to this loan is 6.6%. The outstanding amount at 30 June 2014 is US$ 152,000 (US$ 212,000 in 2013).
In addition, during 2011, GeoPark TdF obtained financing from BCI to start the operations in the newly acquired blocks. The outstanding amount at 31 December 2013 was US$ 1,931,000. This financing was structured as letter of credit and was fully repaid in February 2014.
(d) During March 2014, GeoPark executed a loan agreement with Itaú BBA International for
US$ 70,450,000 to finance the acquisition of a 10% working interest in the Manatí field in Brazil (see Note 14). The interest rate applicable to this loan is LIBOR plus 3.9% per annum. The interest will be paid semi-annually; principal will be cancelled semi-annually with a year grace period. The debt issuance cost for this transaction amounted to US$ 3,295,000. This loan includes covenants restricting dividend payments and new indebtedness. As of the date of these interim condensed consolidated financial statements, the Company has complied with these covenants.
(e) The Group has been granted with credit lines for over US$ 85,000,000.
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GEOPARK LIMITED
30 JUNE 2014
Note 12
Provision for other long-term liabilities
The outstanding amounts are as follows:
| Amounts in US$ '000 | At 30 June 2014 | Year ended 31 December 2013 | ||||||
| Assets retirement obligation and other environmental liabilities | 31,909 | 24,166 | ||||||
| Deferred income | 5,912 | 6,204 | ||||||
| Other | 4,551 | 2,706 | ||||||
| 42,372 | 33,076 | |||||||
Note 13
Trade and other payables
The outstanding amounts are as follows:
| Amounts in US$ '000 | At 30 June 2014 | Year ended 31 December 2013 | ||||||
| Trade payables | 76,807 | 61,130 | ||||||
| V.A.T. | 8,049 | 8,074 | ||||||
| Taxes and other debts to be paid | 7,263 | 9,190 | ||||||
| Staff costs to be paid | 7,066 | 8,551 | ||||||
Payables to related parties (1) | 7,011 | 8,456 | ||||||
| To be paid to co-venturers | 6,118 | 1,201 | ||||||
| Royalties to be paid | 4,598 | 3,375 | ||||||
| 116,912 | 99,977 | |||||||
Classified as follows:
| Current | 109,901 | 91,633 | ||||||
| Non-Current | 7,011 | 8,344 |
| (1) | Corresponds to related parties loans granted by LGI. The maturity of these loans is December 2015 and the applicable interest rate is 8% per annum. |
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GEOPARK LIMITED
30 JUNE 2014
Note 14
Entry in Brazil
Acquisition in Brazil
GeoPark entered into Brazil with the acquisition of a 10% working interest in the offshore Manati gas field ("Manati Field"), the largest natural gas producing field in Brazil. On May 14, 2013, GeoPark executed a stock purchase agreement ("SPA") with Panoro Energy do Brazil Ltda., the subsidiary of Panoro Energy ASA, ("Panoro"), a Norwegian listed company with assets in Brazil and Africa, to acquire all of the issued and outstanding shares of its wholly-owned Brazilian subsidiary, Rio das Contas Produtora de Petróleo Ltda ("Rio das Contas"), the direct owner of 10% of the BCAM-40 block (the "Block"), which includes the shallow-depth offshore Manati Field in the Camamu-Almada basin.
GeoPark has paid a cash consideration of US$ 140 million at 31 March 2014 or the closing date, which was adjusted for working capital with an effective date of 30 April 2013. The agreement also provides for possible future contingent payments by GeoPark over the next five years, depending on the economic performance and cash generation of the Block (see Note 34 to the audited Consolidated Financial Statements as of 31 December 2013).
The Manati Field is a strategically important, profitable upstream asset in Brazil and currently provides approximately 50% of the gas supplied to the northeastern region of Brazil and more than 75% of the gas supplied to Salvador, the largest city and capital of the northeastern state of Bahia. The field is largely developed with existing producing wells and an extensive pipeline, treatment and delivery infrastructure and is not expected to require significant future capital expenditures to meet current production estimates. Additional reserve development may be possible.
The Manati Field is operated by Petrobras (35% working interest), the Brazilian national company, largest oil and gas operator in Brazil and internationally-respected offshore operator. Other partners in the block include Queiroz Galvao Exploracao e Producao (45% working interest) and Brasoil Manati Exploracao Petrolifera S.A. (10% working interest).
In accordance with the acquisition method of accounting, the acquisition cost was allocated to the underlying assets acquired and liabilities assumed based primarily upon their estimated fair values at the date of acquisition. An income approach (being the net present value of expected future cash flows) was adopted to determine the fair values of the mineral interest. Estimates of expected future cash flows reflect estimates of projected future revenues, production costs and capital expenditures based on our business model. The purchase price allocation performed is preliminary, since the valuation process is ongoing. This process will be completed during 2014.
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GEOPARK LIMITED
30 JUNE 2014
Note 14 (Continued)
Entry in Brazil (Continued)
The following table summarises the consideration paid, the preliminary fair value of assets acquired and liabilities assumed for the abovementioned transaction:
| Amounts in US$ '000 | Total | |||
| Cash (including working capital adjustments) | 140,100 | |||
| Total consideration | 140,100 | |||
| Cash and cash equivalents | 25,133 | |||
| Property, plant and equipment (including mineral interest) | 115,615 | |||
| Trade receivables | 9,757 | |||
| Prepayments and other receivables | 3,177 | |||
| Other financial assets | 950 | |||
| Deferred income tax liabilities | (3,132 | ) | ||
| Trade and other payables | (4,538 | ) | ||
| Provision for other long-term liabilities | (6,862 | ) | ||
| Total identifiable net assets | 140,100 | |||
Round 12 in Brazil
On 28 November 2013, the ANP awarded GeoPark with two new concessions in a new international bidding round, Round 12 (see Note 34 to the audited Consolidated Financial Statements as of 31 December 2013).
In Brazil, GeoPark Brazil is currently a party to a legal proceeding related to the concession agreement of Block PN-T-597 that the ANP initially awarded to GeoPark Brazil in the 12th oil and gas bidding round. As a result of a class action filed by the Federal Prosecutor’s Office, an injunction was issued by a Brazilian Federal Court against the ANP, the Federal Government and GeoPark Brazil on 13 December 2013. Due to the injunction GeoPark Brazil could not proceed to execute the concession agreement, and cannot do so until the injunction is lifted. According to the terms of the Court’s injunction, the ANP will first need to take certain actions, such as conducting studies that prove that drilling unconventional resources will not contaminate the dams and aquifers in the region. On 21 February 2014, GeoPark Brazil requested that the board of the ANP suspend the execution of the concession agreement (which entails delivery of the financial guarantee and performance guarantee and payment of the signing bonus) for six months with a possible extension of an additional six months, or until a firm court decision is reached that does not prevent GeoPark Brazil from entering into the concession agreement. On 16 April 2014, the ANP’s Board enacted a resolution stating that all proceedings related to the award of the concession of Block PN-T-597 to GeoPark Brazil were suspended.
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GEOPARK LIMITED
30 JUNE 2014
Note 15
Subsequent events
New exploratory license in Colombia
GeoPark continued its expansion in Colombia through the award of a new exploratory license during the 2014 Colombia Bidding Round, carried out by the Agencia Nacional de Hidrocarburos (“ANH”) on 23 July 2014 in Cartagena, Colombia.
GeoPark was awarded the VIM-3 Block in the Lower Magdalena Basin, covering an area of approximately 225,000 acres. The block has an attractive oil and gas exploration potential in a large area within a proven hydrocarbon system, surrounded by existing oil and gas fields and with sparse exploration activity carried out to date.
GeoPark’s winning bid consisted of committing to a minimum investment program of 200 sq km of 2D seismic and drilling one exploration well, with a total estimated investment of US$ 22.2 million during the initial three year exploratory period and a Royalty X Factor of 3%. GeoPark will operate and have a 100% working interest in the block. The winning bid is subject to final signature of the contracts with the ANH, which is currently scheduled for third quarter of 2014.
Swap operation in Colombia
On 29 July 2014, GeoPark’s Colombian subsidiary agreed to exchange its 10% non-operating economic interest in Arrendajo Block for additional interests held by the seller in the Yamú Block (GeoPark operated) that includes a 15% economic interest in all of the Yamú fields except for the Carupana field, where the seller had a 25% economic interest. According to the terms of the exchange, GeoPark will also receive US$3.2 million in cash from the exchange, adjusted by working capital. Following this transaction, GeoPark will continue to be the operator and have a 79.5% interest in the Carupana Field and 90% in Yamú and Potrillo Fields, all fields located in the Yamú Block.
20
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| GeoPark Limited | ||||||
| By: | /s/ Andrés Ocampo | |||||
| Name: | Andrés Ocampo | |||||
| Title: | Chief FinancialOfficer | |||||
Date: August 25, 2014