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 November 2015
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 nine-months period ended 30 September 2014 and 2015 |
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 Financial Officer | |||||
Date: November 10, 2015
Item 1
GEOPARK LIMITED
Interim condensed consolidated
financial statements
For the nine-months period ended 30 September 2014 and 2015
GEOPARK LIMITED
30, SEPTEMBER 2015
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 |
2
GEOPARK LIMITED 30 SEPTEMBER 2015 |
CONSOLIDATED STATEMENT OF INCOME
| Amounts in US$ ´000 | Note | Three-months period ended 30 September 2015 (Unaudited) | Three-months period ended 30 September 2014 (Unaudited) | Nine-months period ended 30 September 2015 (Unaudited) | Nine-months period ended 30 September 2014 (Unaudited) |
| NET REVENUE | 2 | 47,820 | 131,803 | 164,290 | 347,983 |
| Production and operating costs | 4 | (18,217) | (41,017) | (64,584) | (98,430) |
| Geological and geophysical expenses | 5 | (3,284) | (3,417) | (9,576) | (9,023) |
| Administrative expenses | 6 | (9,088) | (13,013) | (27,306) | (34,886) |
| Selling expenses | 7 | (394) | (9,331) | (3,814) | (21,647) |
| Depreciation | (24,492) | (27,130) | (74,343) | (72,808) | |
| Write-off of unsuccessful efforts | 9 | (3,704) | (8) | (3,704) | (8,645) |
| Other (expenses) income | (3,880) | 782 | (12,643) | 1,754 | |
| OPERATING (LOSS) PROFIT | (15,239) | 38,669 | (31,680) | 104,298 | |
| Financial costs | 8 | (8,968) | (7,510) | (26,093) | (20,031) |
| Foreign exchange loss | (28,411) | (13,040) | (44,429) | (11,648) | |
| (LOSS) PROFIT BEFORE TAX | (52,618) | 18,119 | (102,202) | 72,619 | |
| Income tax benefit (expense) | 14,964 | (6,190) | 19,101 | (23,022) | |
| (LOSS) PROFIT FOR THE PERIOD | (37,654) | 11,929 | (83,101) | 49,597 | |
| Attributable to: | |||||
| Owners of the parent | (36,178) | 8,476 | (76,402) | 36,934 | |
| Non-controlling interest | (1,476) | 3,453 | (6,699) | 12,663 | |
(Losses) Earnings per share (in US$) for (loss) profit attributable to owners of the Company. Basic | (0.63) | 0.14 | (1.33) | 0.66 | |
(Losses) Earnings per share (in US$) for (loss) profit attributable to owners of the Company. Diluted | (0.63) | 0.14 | (1.33) | 0.59 |
STATEMENT OF COMPREHENSIVE INCOME
| Amounts in US$ ´000 | Three-months period ended 30 September 2015 (Unaudited) | Three-months period ended 30 September 2014 (Unaudited) | Nine-months period ended 30 September 2015 (Unaudited) | Nine-months period ended 30 September 2014 (Unaudited) | |
| (Loss) Profit for the period | (37,654) | 11,929 | (83,101) | 49,597 | |
| Other comprehensive income | |||||
| Currency translation differences | 2,693 | (2,985) | (1,193) | (641) | |
| Total comprehensive income for the period | (34,961) | 8,944 | (84,294) | 48,956 | |
| Attributable to: | |||||
| Owners of the parent | (33,485) | 5,491 | (77,595) | 36,293 | |
| Non-controlling interest | (1,476) | 3,453 | (6,699) | 12,663 |
3
GEOPARK LIMITED 30 SEPTEMBER 2015 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| Amounts in US$ ´000 | Note | At 30 September | Year ended 31
|
| ASSETS | |||
| NON CURRENT ASSETS | |||
| Property, plant and equipment | 9 | 725,425 | 790,767 |
| Prepaid taxes | 1,777 | 1,253 | |
| Other financial assets | 12,593 | 12,979 | |
| Deferred income tax | 46,002 | 33,195 | |
| Prepayments and other receivables | 232 | 349 | |
| TOTAL NON CURRENT ASSETS | 786,029 | 838,543 | |
| CURRENT ASSETS | |||
| Inventories | 4,736 | 8,532 | |
| Trade receivables | 11,570 | 36,917 | |
| Prepayments and other receivables | 7,903 | 13,993 | |
| Prepaid taxes | 18,482 | 13,459 | |
| Cash at bank and in hand | 90,380 | 127,672 | |
| TOTAL CURRENT ASSETS | 133,071 | 200,573 | |
| TOTAL ASSETS | 919,100 | 1,039,116 | |
| EQUITY | |||
| Equity attributable to owners of the Company | |||
| Share capital | 10 | 58 | 58 |
| Share premium | 209,667 | 210,886 | |
| Reserves | 122,824 | 124,017 | |
| Retained earnings (accumulated losses) | (31,747) | 40,596 | |
| Attributable to owners of the Company | 300,802 | 375,557 | |
| Non-controlling interest | 96,954 | 103,569 | |
| TOTAL EQUITY | 397,756 | 479,126 | |
| LIABILITIES | |||
| NON CURRENT LIABILITIES | |||
| Borrowings | 11 | 338,343 | 342,440 |
| Provisions for other long-term liabilities | 12 | 45,259 | 46,910 |
| Deferred income tax | 28,243 | 30,065 | |
| Trade and other payables | 13 | 19,555 | 16,583 |
| TOTAL NON CURRENT LIABILITIES | 431,400 | 435,998 | |
| CURRENT LIABILITIES | |||
| Borrowings | 11 | 26,242 | 27,153 |
| Current income tax | 662 | 7,935 | |
| Trade and other payables | 13 | 63,040 | 88,904 |
| TOTAL CURRENT LIABILITIES | 89,944 | 123,992 | |
| TOTAL LIABILITIES | 521,344 | 559,990 | |
| TOTAL EQUITY AND LIABILITIES | 919,100 | 1,039,116 |
4
GEOPARK LIMITED 30 SEPTEMBER 2015 |
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 2014 | 44 | 120,426 | 127,527 | (1,062) | 23,906 | 95,116 | 365,957 |
| Profit for the nine – months period | - | - | - | - | 36,934 | 12,663 | 49,597 |
| Currency translation differences | - | - | - | (641) | - | - | (641) |
| Total comprehensive income for the period ended 30 September 2014 | - | - | - | (641) | 36,934 | 12,663 | 48,956 |
| Proceeds from issuance of shares | 14 | 90,848 | - | - | - | - | 90,862 |
| Share-based payment | - | - | - | - | 6,853 | - | 6,853 |
| 14 | 90,848 | - | - | 6,853 | - | 97,715 | |
| Balance at 30 September 2014 (Unaudited) | 58 | 211,274 | 127,527 | (1,703) | 67,693 | 107,779 | 512,628 |
| Balance at 31 December 2014 | 58 | 210,886 | 127,527 | (3,510) | 40,596 | 103,569 | 479,126 |
| Loss for the nine – months period | - | - | - | - | (76,402) | (6,699) | (83,101) |
| Currency translation differences | - | - | - | (1,193) | - | - | (1,193) |
| Total comprehensive income for the period ended 30 September 2015 | - | - | - | (1,193) | (76,402) | (6,699) | (84,294) |
| Repurchase of shares | - | (1,615) | - | - | - | - | (1,615) |
| Share-based payment | - | 396 | - | - | 4,059 | 84 | 4,539 |
| - | (1,219) | - | - | 4,059 | 84 | 2,924 | |
| Balance at 30 September 2015 (Unaudited) | 58 | 209,667 | 127,527 | (4,703) | (31,747) | 96,954 | 397,756 |
5
GEOPARK LIMITED 30 SEPTEMBER 2015 |
CONSOLIDATED STATEMENT OF CASH FLOW
| Amounts in US$ ’000 | Nine-months period ended 30 September 2015 (Unaudited) | Nine-months period ended 30 September 2014 (Unaudited) |
| Cash flows from operating activities | ||
| (Loss) Profit for the period | (83,101) | 49,597 |
| Adjustments for: | ||
| Income tax (benefit) expense | (19,101) | 23,022 |
| Depreciation | 74,343 | 72,808 |
| Loss on disposal of property, plant and equipment | 314 | 583 |
| Write-off of unsuccessful efforts | 3,704 | 8,645 |
| Amortisation of other long-term liabilities | (468) | (381) |
| Accrual of borrowing’s interests | 19,812 | 19,495 |
| Unwinding of long-term liabilities | 2,141 | 1,167 |
| Accrual of share-based payment | 4,539 | 7,988 |
| Income tax paid | (7,625) | (1,306) |
| Foreign exchange loss | 44,429 | 11,648 |
| Change in working capital | (6,106) | (29,076) |
| Cash flows from operating activities – net | 32,881 | 164,190 |
| Cash flows from investing activities | ||
| Purchase of property, plant and equipment | (42,280) | (169,154) |
| Acquisitions of companies, net of cash acquired | - | (114,967) |
| Collections related to financial leases | - | 4,460 |
| Cash flows used in investing activities – net | (42,280) | (279,661) |
| Cash flows from financing activities | ||
| Proceeds from issuance of shares | - | 90,862 |
| Proceeds from borrowings | - | 67,155 |
| Proceeds from loans received from related parties | 2,400 | 8,107 |
| Principal paid | (79) | (16,965) |
| Repurchase of shares | (1,615) | - |
| Interest paid | (25,809) | (23,972) |
| Cash flows (used in) / from financing activities - net | (25,103) | 125,187 |
| Net (decrease) / increase in cash and cash equivalents | (34,502) | 9,716 |
| Cash and cash equivalents at 1 January | 127,672 | 121,105 |
| Currency translation differences | (2,790) | (2,100) |
| Cash and cash equivalents at the end of the period | 90,380 | 128,721 |
| Ending Cash and cash equivalents are specified as follows: | ||
| Cash in banks | 90,369 | 128,780 |
| Cash in hand | 11 | 22 |
| Bank overdrafts | - | (81) |
| Cash and cash equivalents | 90,380 | 128,721 |
6
GEOPARK LIMITED 30 SEPTEMBER 2015 |
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, Peru and Argentina. The Group has working interests and/or economic interests in 35 hydrocarbon blocks.
This consolidated interim financial report was authorised for issue by the Board of Directors on 9 November 2015.
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 2013 and 2014, 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 2014.
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.
The Management of the Company has changed the presentation of the Consolidated Statement of Income re-ordering the profit and loss line items and showing the depreciation and write off of unsuccessful efforts lines separately for a better explanation of the elements of performance.
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 2014.
7
GEOPARK LIMITED 30 SEPTEMBER 2015 |
Note 1 (Continued)
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 2014.
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 September 2015 (*):
(*) LG International is not a subsidiary, it is Non-controlling interest.
8
GEOPARK LIMITED 30 SEPTEMBER 2015 |
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 Limited – Bermuda | 100% | ||
| GeoPark Argentina Limited – Argentinean Branch | 100% (a) | |||
| GeoPark Latin America Limited | 100% | |||
| GeoPark Latin America Limited – Agencia en Chile | 100% (a) | |||
| GeoPark S.A. (Chile) | 100% (a) (b) | |||
| GeoPark Brazil Exploração y Produção de Petróleo e Gás Ltda. (Brazil) | 100% (a) (f) | |||
| 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) | 100% (a) (b) | |||
| GeoPark Colombia SAS (Colombia) | 100% (a) | |||
| GeoPark Brazil S.p.A. (Chile) | 100% (a) (b) | |||
| GeoPark Latin America Coöperatie U.A. (The Netherlands) | 100% | |||
| GeoPark Colombia Coöperatie U.A. (The Netherlands) | 100% (a) (c) | |||
| GeoPark S.A.C. (Perú) | 100% (a) | |||
| GeoPark Perú S.A.C. (Perú) | 100% (a) | |||
| GeoPark Operadora del Perú S.A.C. (Perú) | 100% (a) | |||
| GeoPark Perú Coöperatie U.A. (The Netherlands) | 100% | |||
| GeoPark Brazil Coöperatie U.A. (The Netherlands) | 100% | |||
| Joint operations | Tranquilo Block (Chile) | 50% (e) | ||
| Flamenco Block (Chile) | 50% (e) | |||
| Campanario Block (Chile) | 50% (e) | |||
| Isla Norte Block (Chile) | 60% (e) | |||
| Llanos 17 Block (Colombia) | 36.84% | |||
| Yamu/Carupana Block (Colombia) | 79.5%/90% (e) | |||
| Llanos 34 Block (Colombia) | 45% (e) | |||
| Llanos 32 Block (Colombia) | 10% | |||
| CPO-4 Block (Colombia) | 50% (e) | |||
| Puelen (Argentina) | 18% | |||
| Sierra del Nevado (Argentina) | 18% | |||
| Manati Field (Brazil) | 10% | |||
| CN-V (Argentina) | 50% |
| (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, totaling 31.2%. |
| (e) | GeoPark is the operator in all blocks. |
| (f) | On 17 December 2014, the ANP approved the transfer of cession of rights of the Block from Rio das Contas to GeoPark Brazil. On 31 January 2015, both companies, Rio das Contas and GeoPark Brazil were merged into GeoPark Brazil (see Note 34.c to the audited Consolidated Financial Statements as of 31 December 2014). |
9
GEOPARK LIMITED 30 SEPTEMBER 2015 |
Note 2
Net Revenue
| Amounts in US$ '000 | Three-months period ended 30 September 2015 | Three-months period ended 30 September 2014 | Nine-months period ended 30 September 2015 | Nine-months period ended 30 September 2014 |
| Sale of crude oil | 38,568 | 111,575 | 129,568 | 298,830 |
| Sale of gas | 9,252 | 20,228 | 34,722 | 49,153 |
| 47,820 | 131,803 | 164,290 | 347,983 |
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 Executive Committee. This committee is integrated by the CEO, COO, CFO and managers in charge of the Geoscience, Operations, Legal and Governance, Finance and People 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. As from 2015, the committee has changed the disclosure of certain elements of performance to be more comparable with other companies in the market and also to better follow up the performance of the business. This change impacts the segment information because gross profit or loss is no longer shown but no impact is generated in the measure of segment profit and loss.
The Executive 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, certain non-cash items such as impairments and write-offs of unsuccessful efforts, accrual of share-based payment and other non recurring events. Operating Netback is equivalent to Adjusted EBITDA before cash expenses included in Administrative, Geological and Geophysical and Other operating expenses. Other information provided, except as noted below, to the Executive Committee is measured in a manner consistent with that in the financial statements.
10
GEOPARK LIMITED 30 SEPTEMBER 2015 |
Note 3 (Continued)
Segment Information (Continued)
Nine-months period ended 30 September 2015
| Amounts in US$ '000 | Total | Argentina | Chile | Brazil | Peru | Colombia | Corporate |
| Net Revenue | 164,290 | 597 | 34,639 | 24,862 | - | 104,192 | - |
| Sale of crude oil | 129,568 | 597 | 24,035 | 744 | - | 104,192 | - |
| Sale of gas | 34,722 | - | 10,604 | 24,118 | - | - | - |
| Production and operating costs | (64,584) | (1,456) | (22,365) | (5,595) | - | (35,168) | - |
| Royalties | (10,460) | (35) | (1,559) | (2,244) | - | (6,622) | - |
| Transportation costs | (3,550) | (2) | (1,855) | - | - | (1,693) | - |
| Share-based payment | (342) | (143) | (83) | - | - | (116) | - |
| Other costs | (50,232) | (1,276) | (18,868) | (3,351) | - | (26,737) | - |
| Depreciation | (74,343) | (149) | (27,877) | (10,081) | (97) | (36,139) | - |
| Operating (Loss) / Profit | (31,680) | (4,497) | (38,490) | 6,141 | (3,342) | 14,214 | (5,706) |
| Adjusted EBITDA | 63,171 | (2,609) | (1,159) | 16,366 | (3,255) | 57,571 | (3,743) |
Nine-months period ended 30 September 2014
| Amounts in US$ '000 | Total | Argentina | Chile | Brazil | Peru | Colombia | Corporate |
| Net Revenue | 347,983 | 1,300 | 124,102 | 27,615 | - | 194,966 | - |
| Sale of crude oil | 298,830 | 1,296 | 101,420 | 1,148 | - | 194,966 | - |
| Sale of gas | 49,153 | 4 | 22,682 | 26,467 | - | - | - |
| Production and operating costs | (98,430) | (523) | (32,822) | (5,768) | - | (59,317) | - |
| Royalties | (17,541) | (179) | (5,775) | (1,950) | - | (9,637) | - |
| Transportation costs | (9,700) | (6) | (5,406) | - | - | (4,288) | - |
| Share-based payment | (2,208) | (343) | (1,260) | - | - | (605) | - |
| Other costs | (68,981) | 5 | (20,381) | (3,818) | - | (44,787) | - |
| Depreciation | (72,808) | (179) | (27,452) | (8,038) | - | (37,054) | (85) |
| Operating Profit / (Loss) | 104,298 | (3,515) | 38,408 | 7,219 | - | 70,265 | (8,079) |
| Adjusted EBITDA | 192,669 | (1,050) | 73,415 | 15,321 | - | 109,489 | (4,506) |
| Total Assets | Total | Argentina | Chile | Brazil | Peru | Colombia | Corporate |
| 30 September 2015 | 919,100 | 4,254 | 520,894 | 99,328 | 4,487 | 244,627 | 45,510 |
| 31 December 2014 | 1,039,116 | 3,839 | 541,481 | 151,770 | 4,813 | 263,070 | 74,143 |
11
GEOPARK LIMITED 30 SEPTEMBER 2015 |
Note 3 (Continued)
Segment Information (Continued)
A reconciliation of total Operating netback to total profit before income tax is provided as follows:
Three–months | Three–months | Nine-months | Nine-months | |
| Operating netback | 29,792 | 83,148 | 96,454 | 232,482 |
| Geological and geophysical expenses | (3,524) | (3,713) | (9,613) | (9,629) |
| Administrative expenses | (8,056) | (11,546) | (23,670) | (30,184) |
| Adjusted EBITDA for reportable segments | 18,212 | 67,889 | 63,171 | 192,669 |
| Depreciation (a) | (24,492) | (27,130) | (74,343) | (72,808) |
| Share-based payment | (1,423) | (2,391) | (4,539) | (7,988) |
| Impairment and write-off of unsuccessful efforts | (3,704) | (8) | (3,704) | (8,645) |
| Others (b) | (3,832) | 309 | (12,265) | 1,070 |
| Operating (Loss) / Profit | (15,239) | 38,669 | (31,680) | 104,298 |
| Financial costs | (8,968) | (7,510) | (26,093) | (20,031) |
| Foreign exchange loss | (28,411) | (13,040) | (44,429) | (11,648) |
| (Loss) / Profit before tax | (52,618) | 18,119 | (102,202) | 72,619 |
| (a) | Net of capitalised costs for oil stock included in Inventories. Depreciation includes US$ 2,770,000 (US$ 1,760,000 in 2014) generated by assets not related to production activities. For the three months period ended 30 September 2015 the amount included in depreciation is US$ 921,000 (US$ 669,000 in 2014). |
| (b) | In 2015 includes termination costs (see Note 14). Also includes internally capitalised costs. |
The following table presents a reconciliation of Adjusted EBITDA to operating profit for the nine-month periods ended 30 September 2015 and 2014:
| Nine-months period ended 30 September 2015 | |||||
| Colombia | Chile | Brazil | Other (*) | Total | |
| Adjusted EBITDA for reportable segments | 57,571 | (1,159) | 16,366 | (9,607) | 63,171 |
| Depreciation | (36,139) | (27,877) | (10,081) | (246) | (74,343) |
| Share-based payment | (330) | (286) | (66) | (3,857) | (4,539) |
| Impairment and write-off of unsuccessful efforts | (3,704) | - | - | - | (3,704) |
| Others (**) | (1,159) | (9,168) | (78) | (1,860) | (12,265) |
| Operating Profit / (Loss) | 16,239 | (38,490) | 6,141 | (15,570) | (31,680) |
12
GEOPARK LIMITED 30 SEPTEMBER 2015 |
Note 3 (Continued)
Segment Information (Continued)
| Nine-months period ended 30 September 2014 | |||||
| Colombia | Chile | Brazil | Other (*) | Total | |
| Adjusted EBITDA for reportable segments | 109,489 | 73,415 | 15,321 | (5,556) | 192,669 |
| Depreciation | (37,054) | (27,452) | (8,038) | (264) | (72,808) |
| Share-based payment | (605) | (2,191) | (65) | (5,127) | (7,988) |
| Impairment and write-off of unsuccessful efforts | (1,565) | (7,050) | - | (30) | (8,645) |
| Others | - | 1,686 | - | (616) | 1,070 |
| Operating Profit / (Loss) | 70,265 | 38,408 | 7,218 | (11,593) | 104,298 |
(*)Includes Argentina, Perú and Corporate.
(**)Includes termination costs (see Note 14).
Note 4
Production and operating costs
| Amounts in US$ '000 | Three-months
| Three-months
|
|
|
| Well and facilities maintenance | 2,522 | 7,457 | 13,664 | 17,700 |
| Staff costs | 3,487 | 3,898 | 13,797 | 9,270 |
| Royalties | 4,356 | 5,544 | 10,460 | 17,541 |
| Consumables | 1,853 | 4,867 | 6,154 | 14,087 |
| Transportation costs | 924 | 2,625 | 3,550 | 9,700 |
| Equipment rental | 854 | 1,336 | 2,571 | 5,410 |
| Field camp | 581 | 1,287 | 2,116 | 4,143 |
| Gas plant costs | 361 | 833 | 1,246 | 2,472 |
| Non operated blocks costs | 841 | 4,575 | 1,810 | 7,409 |
| Share-based payment | 190 | 714 | 342 | 2,208 |
| Other costs | 1,895 | 5,198 | 6,105 | 11,332 |
| Crude oil stock variation | 353 | 2,683 | 2,769 | (2,842) |
| 18,217 | 41,017 | 64,584 | 98,430 |
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GEOPARK LIMITED 30 SEPTEMBER 2015 |
Note 5
Geological and geophysical expenses
| Amounts in US$ '000 | Three-months
| Three-months
| Nine-months
| Nine-months
|
| Staff costs | 2,858 | 3,173 | 7,592 | 8,024 |
| Share-based payment | 201 | 209 | 561 | 1,079 |
| Other services | 666 | 541 | 2,021 | 1,606 |
| Allocation to capitalised project | (441) | (506) | (598) | (1,686) |
| 3,284 | 3,417 | 9,576 | 9,023 |
Note 6
Administrative expenses
| Amounts in US$ '000 | Three-months
| Three-months
| Nine-months
period ended | Nine-months
|
| Staff costs | 4,794 | 4,309 | 14,776 | 11,886 |
| Share-based payment | 1,032 | 1,468 | 3,636 | 4,701 |
| Consultant fees | 1,079 | 1,381 | 2,821 | 4,172 |
| Office expenses | 496 | 778 | 1,935 | 2,584 |
| New projects | 472 | 910 | 678 | 2,221 |
| Travel expenses | 444 | 828 | 973 | 1,795 |
| Director fees and allowance | 285 | 705 | 818 | 1,317 |
| Other administrative expenses | 486 | 2,634 | 1,669 | 6,210 |
| 9,088 | 13,013 | 27,306 | 34,886 |
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GEOPARK LIMITED 30 SEPTEMBER 2015 |
Note 7
Selling expenses
| Amounts in US$ '000 | Three-months
| Three-months
| Nine-months
| Nine-months
|
| Transportation | 266 | 6,416 | 3,375 | 18,317 |
| Selling taxes and other | 128 | 2,915 | 439 | 3,330 |
| 394 | 9,331 | 3,814 | 21,647 |
Note 8
Financial costs
| Amounts in US$ '000 | Three-months
| Three-months
| Nine-months
| Nine-months
|
| Financial expenses | ||||
| Bank charges and other financial costs | 752 | 1,132 | 2,415 | 2,147 |
| Unwinding of long-term liabilities | 694 | 461 | 2,141 | 1,167 |
| Interest and amortisation of debt issue costs | 7,942 | 7,423 | 23,061 | 21,803 |
| Less: amounts capitalised on qualifying assets | (105) | (601) | (264) | (1,818) |
| Financial income | ||||
| Interest received | (315) | (905) | (1,260) | (3,268) |
| 8,968 | 7,510 | 26,093 | 20,031 |
15
GEOPARK LIMITED 30 SEPTEMBER 2015 |
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 2014 | 493,260 | 5,731 | 98,837 | 7,018 | 40,429 | 147,759 | 793,034 |
| Additions | 3,370 | 2,010 | 12 | - | 93,520 | 79,978 | 178,890 |
| Acquisition of subsidiaries | 112,646 | 273 | - | - | - | - | 112,919 |
| Currency translation differences | (7,837) | (8) | - | - | - | (193) | (8,038) |
| Disposals | - | (319) | (666) | - | - | - | (985) |
| Write-off / Impairment loss (1) | - | - | - | - | - | (8,645) | (8,645) |
| Transfers | 140,325 | 886 | 10,483 | 1,890 | (82,062) | (71,522) | - |
| Cost At 30 September 2014 | 741,764 | 8,573 | 108,666 | 8,908 | 51,887 | 147,377 | 1,067,175 |
| Cost at 1 January 2015 | 749,947 | 12,057 | 111,646 | 9,527 | 59,425 | 140,444 | 1,083,046 |
| Additions | (799) (2) | 658 | - | 28 | 26,295 | 14,138 | 40,320 |
| Disposals | - | (13) | - | (84) | - | - | (97) |
| Write-off / Impairment loss (1) | - | - | - | - | - | (3,704) | (3,704) |
| Transfers | 38,680 | 410 | 17,091 | 572 | (42,389) | (14,364) | - |
| Currency translation differences | (28,698) | (190) | - | 149 | (2,685) | (1,580) | (33,004) |
| Cost At 30 September 2015 | 759,130 | 12,922 | 128,737 | 10,192 | 40,646 | 134,934 | 1,086,561 |
| Depreciation and write-down at 1 January 2014 | (157,390) | (2,800) | (35,677) | (1,721) | - | - | (197,588) |
| Depreciation | (65,684) | (1,163) | (7,192) | (597) | - | - | (74,636) |
| Disposals | - | 251 | 151 | - | - | - | 402 |
| Depreciation and write-down At 30 September 2014 | (223,074) | (3,712) | (42,718) | (2,318) | - | - | (271,822) |
| Depreciation and write-down at 1 January 2015 | (240,439) | (4,449) | (45,147) | (2,244) | - | - | (292,279) |
| Depreciation | (59,665) | (2,091) | (10,485) | (679) | - | - | (72,920) |
| Currency translation differences | 4,164 | (33) | - | (92) | - | - | 4,039 |
| Disposals | - | 8 | - | 16 | - | - | 24 |
| Depreciation and write-down at 30 September 2015 | (295,940) | (6,565) | (55,632) | (2,999) | - | - | (361,136) |
| Carrying amount at 30 September 2014 | 518,690 | 4,861 | 65,948 | 6,590 | 51,887 | 147,377 | 795,353 |
| Carrying amount at 30 September 2015 | 463,190 | 6,357 | 73,105 | 7,193 | 40,646 | 134,934 | 725,425 |
| (1) | Corresponds to write-off of Exploration and evaluation assets in Colombia for US$ 3,704,000 mainly in CPO-4 (US$ 6,865,000 in Chile and US$ 1,772,000 in Colombia in 2014). |
| (2) | Corresponds to the effect of restimation of assets retirement obligations in Colombia. |
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GEOPARK LIMITED 30 SEPTEMBER 2015 |
Note 10
Share capital
| Issued share capital | Nine-months
| Year ended
|
| Common stock (US$ ´000) | 58 | 58 |
| The share capital is distributed as follows: | ||
| Common shares, of nominal US$ 0.001 | 57,495,159 | 57,790,533 |
| Total common shares in issue | 57,495,159 | 57,790,533 |
| 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 30 September 2015 there are 57,495,159 common shares outstanding. 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 2014).
Note 11
Borrowings
The outstanding amounts are as follows:
| Amounts in US$ '000 | At
| Year ended
|
| Notes GeoPark Latin America Agencia en Chile (a) | 296,445 | 300,963 |
| Banco Itaú (b) | 68,130 | 68,540 |
| Banco de Crédito e Inversiones (c) | 10 | 90 |
| 364,585 | 369,593 |
Classified as follows:
| Current | 26,242 | 27,153 |
| Non-Current | 338,343 | 342,440 |
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GEOPARK LIMITED 30 SEPTEMBER 2015 |
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 S.A. and a pledge of certain intercompany loans. The debt issuance cost for this transaction amounted to US$ 7,637,000. The indenture governing our Notes due 2020 includes incurrence test covenants that provides among other things, that, the Debt to EBITDA ratio should not exceed 2.5 times and the EBITDA to Interest ratio should exceed 3.5 times. As of the date of these interim condensed consolidated financial statements, the Company’s Debt to EBITDA ratio was 4.0 times and the EBITDA to Interest ratio was 2.7 times, primarily due to the lower oil prices that impacted the Company’s EBITDA generation. Failure to comply with the incurrence test covenants does not trigger an event of default. However, this situation may limit the Company’s capacity to incur additional indebtedness, as specified in the indenture governing the Notes. Incurrence covenants as opposed to maintenance covenants must be tested by the Company before incurring additional debt or performing certain corporate actions including but not limited to dividend payments, restricted payments and others, (other than in each case, certain specific exceptions). As of the date of these interim condensed consolidated financial statements, the Company is in compliance of all the indenture’s provisions.
(b) 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. 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.
In March 2015, the Company reached an agreement to: (i) extend the principal payments that were due in 2015 (amounting to approximately US$ 15,000,000), which will be divided pro-rata during the remaining principal installments, starting in March 2016 and (ii) to increase the variable interest rate to six-month LIBOR + 4.0%.
(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%.
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GEOPARK LIMITED 30 SEPTEMBER 2015 |
Note 11 (Continued)
Borrowings (Continued)
As of the date of this interim condensed consolidated report, the Group has been granted with credit lines for over US$ 47,000,000.
Note 12
Provision for other long-term liabilities
The outstanding amounts are as follows:
| Amounts in US$ '000 | At
| Year ended
|
| Assets retirement obligation and other environmental liabilities | 33,707 | 33,286 |
| Deferred income | 5,268 | 5,736 |
| Other | 6,284 | 7,888 |
| 45,259 | 46,910 |
Note 13
Trade and other payables
The outstanding amounts are as follows:
| Amounts in US$ '000 | At
| Year ended
|
| Trade payables | 38,827 | 64,457 |
| Payables to related parties (1) | 20,715 | 16,591 |
| Taxes and other debts to be paid | 4,827 | 10,031 |
| Staff costs to be paid | 7,439 | 7,226 |
| V.A.T. | 376 | 3,449 |
| To be paid to co-venturers | 8,036 | 1,335 |
| Royalties to be paid | 2,375 | 2,398 |
| 82,595 | 105,487 |
Classified as follows:
| Current | 63,040 | 88,904 |
| Non-Current | 19,555 | 16,583 |
| (1) | Corresponds to related parties loans granted by LGI. The maturity of these loans is July 2020 and the applicable interest rate is 8% per annum. |
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GEOPARK LIMITED 30 SEPTEMBER 2015 |
Note 14
Oil industry situation and the impact on GeoPark’s operations
As a consequence of oil price crisis which started in the second half of 2014 (WTI and Brent, the main international oil price markers, fell more than 40% between September 2014 and February 2015), the Company has undertaken a decisive cost cutting program to ensure its ability to both maximize the work program and preserve its liquidity. The main decisions within the mentioned program for 2015 include:
| - | Reduction of its capital investment taking advantage of the discretionary work program. |
| - | Deferment of capital projects by regulatory authority and partner agreement. |
| - | Renegotiation and reduction of oil and gas service contracts, including drilling and civil work contractors, as well as transportation trucking and pipeline costs. |
| - | Operating cost improved efficiencies and temporary suspension of certain marginal producing oil and gas fields. In addition, further cost reductions resulted from a general depreciation of Latin American currencies (Colombian peso, Brazilian real, Chilean peso, Argentine peso and Peruvian sol), in connection with operating and structure costs established in local currencies and also related to a voluntary salary reduction by GeoPark’s senior management team and Board of Directors. |
During February 2015, the Company reduced its workforce significantly. This reduction streamlined certain internal functions and departments for creating a more efficient workforce in the current economic environment. As a result, the Company expects cost savings associated with the reduction of full-time and temporary employees, excluding one-time termination costs. Continuous efforts and actions to reduce costs and preserve liquidity have continued throughout the year and will continue in the future.
In addition, actions taken by the Company to maximize ongoing work projects and to reduce expenses, including renegotiations and reduction of oil and gas service contracts and other initiatives included in the cost cutting program adopted may expose the Company to claims and contingencies from interested parties that may have a negative impact on its business, financial condition, results of operations and cash flows. As of the date of this interim condensed consolidated report, according to internal estimates, the Company has recognized approximately US$ 4,100,000 for future contingent payments in connection with claims of third parties. The mentioned costs are allocated under the other (expenses) income line, included in the Consolidated Statement of Income.
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GEOPARK LIMITED 30 SEPTEMBER 2015 |
Note 15
Capital commitments in Chile
On 18 August 2015 the Chilean Ministry accepted the Company’s proposal to extend the first exploratory period in the Campanario Block and Isla Norte Block for an additional period of 18 months. The only remaining commitments in Chile are related to these Tierra del Fuego blocks. The future investment commitments assumed by GeoPark outstanding are up to:
| · | Campanario Block: 3 exploratory wells before 11 July 2017 (US$ 11,880,000) |
| · | Isla Norte Block: 2 exploratory wells before 7 May 2017 (US$ 6,480,000) |
Note 16
Subsequent events
New blocks awarded in the Brazil Bid Round 13
In October 2015, the Company was awarded four new exploratory blocks (covering 30,200 acres) in the Brazil Bid Round 13, complementing the Company’s existing exploration portfolio in the Reconcavo and Potiguar basins. GeoPark has committed to invest for the new blocks, a minimum of approximately US$ 3,500,000 (including bonus and work program commitments) during the first exploratory period ending 2019. The bidding round was organized by the ANP and all proceedings and bids have been made public. The winning bids are subject to confirmation of qualification requirements.
The awarded blocks were:
| Block (Basin) | Working Interest (WI) | Operator |
| POT-T-747 (Potiguar) | 70% (*) | GeoPark |
| POT-T-882 (Potiguar) | 70% (*) | GeoPark |
| REC-T-93 (Reconcavo) | 70% (*) | GeoPark |
| REC-T-128 (Reconcavo) | 70% | GeoPark |
(*) 30% WI of proposed partners is subject to ANP approval.
21
GEOPARK LIMITED 30 SEPTEMBER 2015 |
Note 16 (Continued)
Subsequent events (Continued)
Dissolution of the PN-T-597 block concession agreement
On 28 November 2013, the ANP awarded GeoPark two concessions in the ANP´s 12th Bid Round. One of these two concessions was the Block PN-T-597. 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 to which GeoPark Brazil had interpreted that it could not proceed to execution of the concession agreement, GeoPark filed a request to the ANP to suspend the execution of the Concession Agreement. In April 2015, GeoPark was called to have the contract signed, which occurred on 17 July 2015. Notwithstanding all GeoPark efforts to seek for clarification to whether or not the Concession Agreement could be executed according to ANP´s understanding, the judge issued an interlocutory decision on 13 August 2015, with a clear position that the Concession Agreement should not be executed. GeoPark immediately filed a Request towards ANP to annul the signature of the contract and all its effects and revert to thestatus quo ante,which maintains Geopark´s right to the Block. On 9 October 2015, ANP´s Board issued the Resolution 828/2015 which approved the annulment of the signature of the Contract and revoked the previous Decision that called GeoPark for the signature.
22