GPRK - Earnings call transcript Q3 2020

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Operator

Good morning, and welcome to the GeoPark Limited conference call following the results announcement for the third quarter ended September 30, 2020 and the 2021 work program and investment guideline. [Operator Instructions] If you do not have a copy of the press release, it is available at the Investor Support section on the Company's corporate website at www.geo-park.com. A replay of today's call may be accessed through this webcast in the Investor Support section of the GeoPark corporate website.

Before we continue, please note that certain statements contained in the results press release and on this conference call are forward-looking statements rather than historical facts and are subject to risks and uncertainties that could cause actual results to differ materially from those described. With respect to such forward-looking statements, the Company seeks protections afforded by the Private Securities Litigation Reform Act of 1995. variety from including the time reports public a risk developments Company's include and listed factors to releases. risks of competitive factors, and SEC These time in could identify those business. from in the represent the are principal to a differ but described intended statements intended are results to lists factors Those Company's that not cause forward-looking complete actual materially of certain to list included U.S. the figures financial IFRS herein in are stated in with All were accordance and prepared unless otherwise dollars, noted. standards. PRMS to Reserves correspond figures

On GeoPark Financial Executive Martin and the from the Officer; to James Andres Director. Torrado, Operations; call Chief call James Park, turn Mr. Value Park. today is of now Shareholder Ocampo, Officer; Stacy begin. Mr. I'll over may And Park, Chief Steimel, Director you

James Park

welcome, everyone. and you, Thank

effective morning that express and be the executive and company Bogota, in our to joining our We build today we long who onshore introduce a growth. start team quarter our quarter fighting, is in XXth present, set for despite most the term XX. this a a company men one XXXX has long-term it region. which to the the GeoPark this record prize energy what are the out capture growth quietly to acquisition oil powerful, significantly incredibly, the fairway. to effort, risk, are Llanos independent a to and world's advanced landholders is would to this monster positioned return Colombia unparalleled great of straight acres us value secured for We this us founded big in work year leading shareholders. XXXX now storm our record, basin you opportunity prime American of an for highlight This XXXX, and one our in the our hydrocarbon made expansion with we premier Amerisur, program target third When surrounding in results, track had million want track this past and created on I year attractive we our with low and has us the report gratitude to medium GeoPark of gas steps with first more X.X investment always reunited Latin and and Llanos and of which women of have on short, made Basin that with

quarter, then line third investment of reengage moved all production. to the then cost each stable During nearly keep XX% team our decisively turbulent and hard smoothly first, and agility in dropping our savings. during rigs and pulling capital meaning opening on and us horns temporarily fronts: quarter, back wild and to significantly every work teams a and achieve to putting future million work second and our our healthy more and allowed attacking and get $XXX and by safe to to quickness back up This cost shut-in program

costs with low EBITDA which in generated and third declines during XX% $XX the of XX% relentless big over efforts, unique to base, operating million. resulted G&A quarter again production second costs of coupled in doubling breakeven Our our G&G in and our a cost-cutting quarter

which the CPO-X the with. Operationally, is cash Llanos year resumed $XXX forceful maintained began cash on preservation drilling the block than started on the appraise oilfield. to significantly of healthy what and efforts XX Our balance more block a million, we even we Indico cash drilling

advantage approach, country very or which growth development even we a We allowed story. restructuring of exploration portfolio an asset-focused opportunities major included and and of expectations capture its efficiency. improved through the from This perspective an see our with our into project to better as large synergies and combination downturn, GeoPark us Basin company. large a continuing high savings of of of block transform to it worked the component have a Taking multiplay prospects CPO-X to and key stronger regional Llanos

choice, As in-house and neighboring teams partner the of employer ESG+ safe success of assisting value always, This our we healthy a our has for SPEED. economic neighbor was to pushing of founding with of keeping communities call evident This us medical one the choice. element and performance especially our the our be integrated and accomplishments, our program GeoPark's program is pandemic company foundation and during choice aid. been of with in our underlying and always prime

been attractive an So opportunity finishing our have cash into are another year confidence program throughout today, and Turbulence zone an able history, of company optimism. XXXX successful and a for been shareholders. build return us we grow for to heading and we work our are from has with and XXXX to our strength, position to

to XX% conference in funded exploration XX% did $XX to we year, every time XX history. netback $XX face value." back have Brent. development projected not our pleased during model built flow continue find volatile that generating below of to to $XX, prevail, positive enduring XX% Overall, yield of cash to cash $XXX wells, can to $XXX can company that all is own call, assumption every collapse the these approximately the provide invest, million there's secure over to production shareholders, is durability November to all low world, using is on true by grow and for we Our funded to work million and program run company's of a that deliver And today. Thank lowest-risk know case $XX barrels average with able $XX and Brent powerful fully we its funded that our annual base fronts of test ability have. and back program, $XX this to of our oil, its may resilience cash consistently about on our ago, But XXXX our questions is you case being believe execute, XX,XXX operating return flow the a $XXX million in an said, and high a focusing at time a measure industry to at case a with of value that XX,XXX In a "we a any Brent answer maintain for flexibility a XX be you, and day we're its production $XXX the value. would shareholders returns. GeoPark's and financial One industry's to in and growing, drill we in year biggest between our an at attractive projects fully per Brent provides to million. position strong and

Operator

first Securities. Our Alejandro question Instructions] Demichelis line from [Operator of the comes of Nau

Alejandro Demichelis

please. quarter afternoon, Good on Yes. Congratulations the of questions, gentlemen. the A couple returns. cash on

on capex. $XXX The $XXX first next year, from million guidance your which today effectively one for flat million, is where in you is production you spending despite are

of think you some kind be second kind release, of the parts come. could to your in us you please are give And So moving then efficiencies indicate that question, production keep the indications of more some to that what could press cost I of flat? kind there

from those trying be? So where are this large could understand cost and efficiencies coming how to

Andres Ocampo

Good thank your questions. Alejandro, morning, Hi. for you

bit a with into a average projecting first, I respect around question lower bit would the that little than we're fact consideration, of for the little which to take budget -- On $XX XXXX. the production still our the is first outlook XXXX, Brent,

in -- activities additionally, able able core are And finally So two asset we in being CPO-X. were are we rigs in full-time we XX. actually, resume also to in keep we release, mentioned to Llanos our as the

So to having two full-time we'll rates XX, less probably moderate flat a growth. in production the keep or Llanos more there

at having full-time will for area. rigs If at to least to three end [indiscernible] drilling remember, in you we 'XX, the but of targeting the we were XXXX, XX%, X% between grow program and

moderate So, I this growth. with between are would flat the activity, that to level of it's keeping production say reasonable we a

that, Additionally, be the -- would highlight top significant. flow that be very I'm to but sorry going generated of is Llanos the cash to on is that by going fact I

something think operating And $XXX $XX at Brent, $XX, we're $XX development would if in -- a million Llanos of million probably to Brent of CapEx. the XX, $XX between something million generating So, you $XXX worth to be netback. allocating million asset like $XX

budget in from is exploration CapEx consolidated million, exploration weight to $XXX on it is million there bigger guidance of $XXX or basically there the those the CapEx consolidated couple coming was XX% of associated the production this on XX% our Additionally, budget and years. that is the of no CapEx. around so in from

that combining coampining a is portfolio, don't [indiscernible]. start there anything, total. development allocated half little see roughly know, And one no seismic is is effectively capital the I the you point of of is was half is I the that of get XX% exploration of rest ready on five have on per is us the licensing, the four missed being it XD the second. not CapEx them. I'm very leaving So, wells a to the exploration There of and that that production aggressive third last will to the to if to associated to associated other for expenditures XXXX the CapEx assets maybe more

investment. some to about completely XX% production during cost operations of And be reshaped CPO-X offices, We're the able a the we during XXXX to are We're are XXXX also the respect our in we able double went something we costs. We around offices. that growth activity a little XX,XXX the the continue made going CPO-X, significant a are XXXX. day and and with to and production big then other growth of we to [indiscernible] the with shutting targeting XX And XXXX barrels a a some question along experience we organization from the changes efficiencies, that should way your to that day pretty targeting being XXXX. level next estimating, in with very our we year. then to are XXXX reduced are barrels restructuring is through to we And We reducing expectation production on ourselves. plus our some keep in almost we

of -- been transportation -- to able we cost bring So and -- have has on also well in as top it our as been down. that,

So those continuous us ongoing effort. are for an of all

year making or a So than our for expectation in us. [indiscernible] is [indiscernible] to keep single next combine

Operator

the comes Auctus. question Stephane Foucaud from next of Your of line

Stephane Foucaud

I've Good guys. the three. for Yes. morning, Thanks questions. taking got

special is around The dividend. one the first

to the quarter what to dividend tax. the of question cash logic this cash tax one-off, the dividend behind -- But That's second is the the quarter my the strategy the understand the was question. Colombia, of return the return in show logic and to given My shareholders the top first specifically I around So extra quarterly? on buyback. behind

question that tax guidance would back is around the cash XXXX? in in now would the see would Given discussion or production question. you had the you last repayment expect Where And you see you previous tax XXXX? from Could the you for XXXX. Colombia, It's come where on CPO-X. CPO-X the and the back my bidding in repayment to

a working today, think day Thank XX,XXX XX,XXX to the at interest. I you. But barrels what parts the down? If it's if are then goes probably moving are moment? what per the we case, goes where of it's compared up, CPO-X

Andres Ocampo

Thank you. questions. Great. your Stephane. you Thank for

every one-off in -- the would the hitting quarter. X% million dividend, then we question something less late basic behind million $X.X started yield paying the were -- the at We We I ordinary and the a paid if a a dividend XXXX. back more were we our payment year On was logic to I whole. something dividend as like should or around dividend for $XX the Company beginning of represented sorry, maybe continue step dividend, to That XXXX. have it back you the that quarter. and

dropping on that first quarter, with X% $X.X and at that. little prices market year, million oil which we for more gives yield million above the in dividend respects So or $X.X though quarter, paid with if top post dividend another that today, less $X the dropped the in we COVID or even bit our line, million same up a this

quarters because reason [indiscernible] dividend, going and the the the forward. obviously, well is reiterate it not is why after it's obviously and So split, ordinary one

that and the million we or over give So of to decide one course $X maintain it. if would were to you -- less more year

With net amounts. we that's less of question be reductions, around impact on of a is in tax $XX Part cash of deferral tax were to decided to $XX in cash and in -- XXXX. about more the taxes, XXXX payments million So XXXX. to tax the A million. tax Roughly to was a deferred there on your reimbursements. tax combination was deferrals those or logic why we -- XXXX, respect the going of to $XX million that

going estimation is $XX be somewhere part around our deal. million. that XXXX to million of to estimation, is tax tax And So $XX also then tax the cash XXXX

in $XX total, or was something be guidance? tax cash to CPO-X the then payment production -- in around So XX million last to $XX question should more and And the XXXX your million about sorry, XX less.

Stephane Foucaud

Yes.

Andres Ocampo

year So the the next obviously XX,XXX last -- numbers is to or seen X,XXX I XX gross less -- this working interest. gave, X,XXX, production at year. more But

our production. on and small fairly down other Argentinian, growth, less lesser and of XX from production X% some a [indiscernible] breaks the Brazilian base and then extent, to more CPO-X into comes that or a growing how to zero So at Chilean the flat to growth, decline assets, mainly is our

Operator

Your the next question comes of JPMorgan. from of Ricardo Rezende line

Ricardo Rezende

me? hear you Can

James Park

hear we Ricardo. you, can Yes,

Ricardo Rezende

my taking couple for questions. side. questions Thanks on my A

a and just on specifically XXXX like your work follow The CPO-X, about mentioned. first up related to one you almost program what is more

sell curious the then group year start that that second part you there? they to of the the in this block stake what synergy question deploy to point partner CPO-X a some the XX% morning, this that been how were discussions I'm see curious much given is If XXXX? already see is they're block witnessed CPO-X? already your three that of intention in earlier And just year. first had Just could the their controlling the have in [indiscernible], the practice selling had on at that petro, And on with that stakes that their our which plans to XX on mentioned you've partner are that's given partners there you on best Brazil. and you their to how there, announced of

Andres Ocampo

I about far, Thank so you, so Ricardo. question CPO-X, your good. Good morning. With respect to think,

a the long with in area. have We have ONGC with working relationship them and been

at and in opportunities been Basin. looking in Latin the America particularly We working have jointly before CPO-X Llanos in

welcoming have open joining are very CPO-X partnership them. they and our good and So a with

finally in we drilling we that finishing happy got a we're site are very rig on just well. two are We -- Indico. And Indico

the perforate We coming in days. to expecting are and well this test

So And agreed has we two that a campaign between that's the two good looking great news. drilling been following partners. to Indico are also

then keeping welcome of back been And we They all had I move respect drilling for rig relationship drilling the to and would the development the to prospect called after continue say experience our going that area has is back considerations two, probably in and Llanos So rig after continue the XX. we've Indico an in more exploration is excellent. going to are and coming [indiscernible] of ideas input on that to with hopefully drilling, Indico to the fact wells.

we is be Brazil. would that It field so know it but times, we the attractive that we're that could and Manati, It And and announcement, in divestiture comes around that of Manati. we've of any limited assets. positive, the analyzed So and read going will idea would gas very is -- long update does be attractive question front. and then with for the this one will it reality, if part the in initiative the very announcements optimistic a one -- has our we many considered. anything this our is portfolio about on make us of It market Manati so is a we PetroRio appropriate experience really, quite advances on assets of is upside, have And and be to about respect position. far very answer, been your acreage to

it that say consider. I about So happy there's we're is that, a lot idea not an can but much that to

Operator

Stifel. comes line Haworth question next of from Robin the of Our

Robin Haworth

Andres. Hi,

would cash at on cash think flow balance buyback -- sheet flow, you free free guidance is cash using spending of the estimates XXXX? consider your looking in of Or on Just given don't capped today. by excess in just flow? cash free tons there's your So buybacks, my I the

you then then that barrels stock how XX to exit that good XXXX? just versus you CPO-X about on is was I either think here. doing rates, Or or stock So average. think balance a essentially back you'd just more I And be production make effort drilling spend rate day another buying if an follow a back on quite mentioned, cash And wondering CPO-X? XX,XXX sheet do about up buying for Llanos you XXXX would

be clear up, could you If that that good. would

Martin Terrado

Martin Good with CPO-X Torrado. start the is I'll exit morning. This related second the rate. to That is question production.

and are So in additional that today, production production to we two one have from adding in Indico Mariposa addition one and wells Indico development in XXXX. we two the

barrels year. so XX,XXX And in of at the the be of close we order XX,XXX to end the to expect

James Park

have in no that prospects are campaign exploration associated included not the three production in that guidance. there's And that

Martin Terrado

three drilling future. Agila that those in the the start Neither nor to we're Correct. about future-near

Andres Ocampo

cash more question neutral some cash. Robin. more I at The this your everything. asset cash on our mean, use and debt or the less or guidance would we asset using we service, for our So about gave taxes after of buybacks, Yes, -- is less morning

we that prices, any items. cash. So definitely investment well. other dividends and our not as that, and use have At believe And or could we non-asset inside we buybacks company-related know we a it's these for great

us the our management into have also to maintain sheet. to take help also sheet strong We a and consideration keeping balance balance cash

get So buying in our will part. we position, of to in cash we believe back But and a inflow XXXX much we so of pretty we that solid our position from given use yes, that shares. cash pretty cash have will and eye solid definitely and not healthy a invest some financial our

Robin Haworth

you. Thank Great.

opportunistic than sort up to Or on to back that? Are you of buy that. committing is more the use just, ability full XX% to So guess, I stock? it follow

Andres Ocampo

that's we but the allowance more generally. market and the the we're so full that maximum really opportunistic We'd have approved, But conditions will we it use amount. depend use on be No, not up to commit not will XX%. -- full to committing

Robin Haworth

Right. Thank you much. very

Operator

next from [Operator Itau. line Instructions] comes the of Your question Johanna Castro of

Johanna Castro

my one have-give one probably I you I the you that see that strategic more question had is capex on for think changes. Hi questions. the are quarter, time thank you about on because more your quarter-over-quarter how companies taking the beginning of of rationale every guidance next what

good So of -- I first on that in and quarter I what that Rapid understand you is rationale your with to but was the market negotiation willing give thinking insight, it your XXXX. actually is the was

little the bit that disclose results results you relevant negative more looking the accounting the you. in question a the into year. continue If end how market of is that That the an third is scenario to most doesn't in Colombia? for of of it you can the really to If on overview fourth at the presentation? to equity. planning matter to group. run you're issue for quarter, And be this for Are the you Or similar will matter quarter avoid just second

Andres Ocampo

Johanna, good your repeat understood Hi, not morning, please. I I'm please could first you sure question, the question?

Johanna Castro

that yes, we will sales in for have anticipate times quarter I the figures if It's you understood commercial the in net on in several past Trafigura I in of are know don't order work as with that -- But some scenario that of have you the XXXX. need used of first anticipated and liquidities. to case

in scenario quarter that for using is a of are anticipate of a to you the XXXX. production, If the I first was if order that sales wondering just kind some strategy

Andres Ocampo

Okay.

facility. we what exchange to with agreement is basically, of that, with an an negotiated And prepaid So have implement uptake another in contract year this them. happened Trafigura

taking following they production year and part next our be will during year. the So of

making. we that if to and would in being keep result the we expanded I you will to confirm available I to of $XX to that liquidity you the million million. is of also it in the still is Potiguar are has of sold to diverse So expect line amounts to year. the we that for next place, no. our committed that is addresses the be us XXXX, commitment been so require that $XX agreement that, then that know Trafigura don't point question if to that we none as withdrawn, a see from place have And these volumes part have have in And of unused.

Johanna Castro

Perfect. Yes.

Andres Ocampo

Thank question next you. And your the... then on

Johanna Castro

But on the second -- yes.

Andres Ocampo

your quarter. that rule results it there an as a negative as becomes main really quarter. To you our if is fourth happens, that see accounting a equity the fourth during point, concern. is But And that explanation purely in we'll matter. net the That's like We a chance see the for Yes? in Llanos said, value investments is that need follows you rule that that can booked see we our following depreciation XX consideration follow, the And our book production. sheet on of simply taking balance very to that accounting important assets minus $XXX big asset past is booking million. a at which and don't into

a So what do mean XX the result that Llanos the value those believe XX months. the rules book the of much the accounting value not next fairly real I is which of as really is we of generate reflect equity underlying in to assets. going

reason, So concern. as we see for that don't this a

We very solid a position. have cash

robust work have going is for generate of to that cash preterm and a flow company. just our a announced program and lot We budget

an on lot really we negative in companies, companies, E&P not real that issue. is So there's think with not mean been sectors only unusual but this the experienced also, sector, of a it issue. an event. there has I other And don't is many no

with not our is reflects us business. for respect anything an that this to So issue

Operator

next is Our of Alejandro Nau Securities. Demichelis a question from follow-up

Alejandro Demichelis

you CPO-X. release, just are see your Yes. your because into taking up indications follow comment said on And press something I for kind Guys, Indico on to kind early that of you production? that Can confirm on Indico any two. two of Martin on can

reservoir. So us there already in seeing can maybe you're you tell the progress maybe how the

Andres Ocampo

Yes.

And of both is we And a Une we the same that formation those the that's one. September. shortly, well. two communicating we speak, will completing is Indico formation We're and in be the excited. operator partner. started Indecipherable results. The producing in We're Mariposa been as GC was rig the Indico excited. aligned operating our well got there. very with we're So targeting

Une to Indico rig two moving that targeting and formation. completion, the Agila, the also the is is that Following

to expect results we So share shortly. to with have you

Alejandro Demichelis

well, But surely, a it's if you completing discovery, have because you're a yes?

Andres Ocampo

look So the well, good. we they and are results, casing the

We again, -- will will information. more with the share we world once have we

Martin Terrado

Yes, just It's well well Alejandro. is two field. inside Indico Indico an for And just exploration not appraisal remember, clarity. the an

a So well. It's it wouldn't qualify development as a discovery.

we And starting to be well. the development/operation Our in will test well weeks. hopefully, coming

looking So forward that. to

Operator

was the That final would to James for comments. question our Mr. for any now today. like or return to call I additional Park closing

James Park

for and Thank interest your support continued of you, everybody, in company. our GeoPark your

As the world's quarters begin country. to open again, we our encourage you to in operations please visit us each at

Our to shareholder available direct team value any has is than team with and actions you, conferences healthy. clock here or video and our as been to has the stay questions accelerated Thank please and their ever webinars, listen calls and your answer is comments. around management

Operator

GeoPark quarter earnings conference and Thank XXXX the does webcast. you. conclude third That call

have You may a day. wonderful lines now disconnect and your

GeoPark Limited (GPRK) 7 Nov 202020 Q3 Earnings call transcript