GPRK - Earnings call transcript Q2 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to the GeoPark Limited Conference Call following the Results Announcement for the Second Quarter Ended June 30, 2021. After the speakers’ remarks, there will be a question-and-answer session. [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.

and note and statements are cause on rather historical please results in forward-looking actual continue, risks than release to materially press this facts described. results we to that that from contained certain the statements and differ Before uncertainties subject those could are conference call the Litigation Reform Act With respect the statements, Securities forward-looking company seeks XXXX. Private to such protections afforded by of to factors time variety a factors, competitive listed of reports from risk public time the These risks include and in developments including SEC company's and releases. identify Those intended those principal are statements cause the to lists could the complete business. actual in to to but from certain materially a factors intended not of represent differ that are forward-looking results list described company's in prepared accordance were herein with in IFRS are included figures financial and U.S. stated the All otherwise noted. unless dollars to figures correspond Reserves PRMS the standards. call the James on today from is GeoPark F. And Operating Augusto Officer; Director. Stacy Officer; Executive Martin Chief Director Zubillaga, Steimel, of Terrado, Financial Park, Andrés and Operations; Chief Ocampo, Chief Value Shareholder Officer; the Mr. I'll now over turn And call to Park. James Mr. Park, you may begin.

James Park

you, welcome, everyone. Thank and

We executive the team results this are the our on second in with and during achievements year. our morning to report and quarter U.S. Colombia of you this joining financial

successful, backbone of wish spirit volatility recent in the and value thank we and for and and drivers Colombia. Since through track steady women in our professionalism delivery. continuous years unrest Firstly, efforts this their are such XX and managing men ago, including to business, record the our of GeoPark any as founding of growth our key

to we especially the and had to Meeting. them shareholders support prior for Annual General also their constructive thank for our our want conversations important with many We

that positive the continuous see messages changes and votes pushing carrying further and improvements we been for all as have and were for momentum out. and Your this we clear,

work of new in it sometimes future in better continuous today. opportunities, a to source the hypercompetitive embrace get One day evolution. history exciting our a infinite energy challenging as is changing and are to every see we and reflects world and and fundamental We principles of GeoPark's the particularly transition

full effectively has shown that track in value This has exceptional and to our fairway. growth with shareholders. manage asset reputation in that oil E&P chain based base industry generation give consistently operational company with four, price And surrounding compatible built short-, sets built our at the be locate, the covering impact to: medium- long-term XX-year and on explore can are fields; three, have for GeoPark. business we our skill our gas; and and and invested right have deliver our technical our X different our business a produce team the build of on low-cost and current These and continuously and work; created where and powerful allows efficiently cash environments an performance. oil and is we new the acquire us self-fund prospective safely, and This key gas repeatedly one, our environment. inherent know-how and Our cost new two, and record minimize on to find to pursue any reserves in any enduring assets price the its volatility we oil natural back simultaneously growth, within ability that following communities

share X more further strong reducing a to cost allowed and operator; through million, in a netback an now new value more buyback execute a organic and ample tangible million; our debt cash our than structure, flexibility $XX and us example, portfolio. our with million, expenditures; $X cost while capital for our paying to interest constantly by structure which represented debt keeping by more total operating cash performance lower provides cost our XXXX, our working years back maturities sheet to For our operations, us second delivered generation $XXX efficient the which reduce Xx financial profitable and continuing of of $XX flow and an operation million, reduce by balance than making quarter review which and a significant shareholders asset extending annual with dividends; to deleveraging; ongoing our

GeoPark's As SPEED. our always, the system, foundation for in-house performance integrated value is we call

and also continuous of initiative, our honored on continue was team, We by successful our than Investor highlighted communities most SPEED having efforts and companies lingering of our kindest disclosure. goal to financial named us operations the push ESG the This and in comprehensive forward cleanest and COVID recently to achieve includes predates ESG GeoPark which our is helping in is and safeguard one our in its and a XXXX crisis from our America community, and more management international team the Latin the the Institutional of COVID region. voted Survey hydrocarbons. which

of The half of second business. we moving XXXX forward and aspects is our are in all underway,

work. at rigs X have We

our continues and and and out land base is in to getting difficulty]. the oil cleanly team in of of attractive [technical big ground engaged molecule new leads safely, every identify prospects Our fully profitably gas and

such We block execution. develop CPO-X work working and to on all also with options are alternatives to our program of as our partners, accelerate the

XX,XXX year, half and key to off We improve have next we approximately production our targeting per will to wells to drilling of to footprint. Energy a in carbon the the costs, And the which XX connect lower operational XX are are and during to more barrels end Colombia by day. National kicked Grid growth project risks just XX,XXX second

for the while technical, strategic, also shareholders. team capital value-adding spending on discipline social and forward critical capital our conducting shareholder value to selecting this ensure our our to based build time for projects and Our to our and economic We asset exercise look initiated has allocation flexibility annual difficulty] biggest parameters. budget management with exercise program [technical environmental and teams work our XXXX,

CPO-X highly and as well projects in exploration partnering our attractive Our including Llanos our and where huge to of set, our block XX Llanos base abundant prospects acreage potential as rich exploration opportunity Llanos our we are organic land core with an inorganic inventory adjacent new block, XX Ecopetrol. provides exciting

back cash to Today, be you, have. will further dividend our Board allocated and we be of to quarterly Thank the to would answer process, to the company. give use doubling to that this we shareholders. questions our may approved our delever pleased a and/or also During you shareholders any determined

Operator

Instructions]. [Operator JPMorgan. from Rezende Ricardo

Ricardo Rezende

of questions couple A side. on my

think throughout half the think do active guess is So second when think second And how the the to you here quarter? production production then think per I what to XXXX management. the in And production? this about day, I'm to portfolio question XX,XXX see XX,XXX about should on barrels production, your resuming we you the trying how is, about on the year

seen about So looking Argentina, Chile. for that alternatives you're some anything you have assets in I at haven't but mentioned your

what So your for Chilean plans your are blocks?

Andrés Ocampo

half much go very then your second into respect and a the assets, release and asked. Martin the we difficulty] Argentina that to thanks Ricardo, is the We've hope well. question you process our and that for [Technical on with mentioned other will process doing you well. are as production initiated going well day that

releases. are have -- continue when the update offers. through will And and press information, we more nonbinding We management presentations to middle we whenever we investors have in of

difficulty]. you the expectation and Chile, is to be least but something more basically hopefully also performing or we've the think has country more past is outside less But the company some as the have have company is not private the Usually, to Chile mentioned updating our in been more -- that to We at respect to to with coming. times to Chile -- assets only the year. spoken end close, many effectively of signed [technical we and limited up, company country. I difficult in subject in we Colombia before Our With close will comment your market. in are -- the be of information because situation tied particular or oil are able the the that subject assets about upside and a historically are

for going effectively our We to developing of nothing upside different working strategic long-term then I some road back of the is to that limits to rather yet part have it has be. likely But the second alternatives what a to of to been for don't assess asset And Martin to can on that because production So the But your question communicate. going us half, are Chile we subject its will option. be options team today, down define definitive it's than respond limited company. that that the -- be on be to let portfolio about the that.

Martin Terrado

of so Ricardo, XX,XXX and second to for expecting production day. equivalent barrels total Andrés. of half the year, oil per be the XX,XXX between Thanks, we're

on our that the XX% Colombia going to would exit barrels increase on. XX,XXX production XX,XXX that is in based be that point already of of we Our and production, is have oil equivalent. activity Roughly between

drilling drill X block the moving mentioning, block. of a in to this rigs Llanos the our wells, we're end in also operations a we year. As last expecting of Jim drilling by and CPO-X -- was have XX quarter by Platanillo the rig start X in We're

Operator

Demichelis question next Alejandro comes from Our Securities. Nau from

Alejandro Demichelis

that at up on Latin mentioned you what or question going And Is as the in previous rest follow-up now from -- terms in Colombia? one think is inwards we Brazil, done as your a of have. How have strategy. of you the portfolio the this with also that being Argentina thinking Just to follow America? say about divested, you of more pipeline with into should kind GeoPark there, inorganic your

So bit, a maybe on too. can comment you little that

Andrés Ocampo

the start quality we here. the and your question and say than first the and our we and upside of view rest Alejandro, think is with really, you subsurface is thing, of rest basins. the located. asset respect approach look at as at it borders. more I same And you, know, where With We region Andrés rather asset the no and and of LATAM, Thank look the nature LATAM to from the Sure. about always

of within that within around have hands So have a of would we today Colombia, portfolio say Colombia. probably incredible even to with Llanos opportunities really And currently that portfolio full with XX% massive organically, I is we our drill. XX. the

around CPO-X rest So exploration that's Llanos the the acreage and XX, all it. of

So that we can today, asset portfolio that we things consolidated huge have after inventory go have a Colombia. with we the in of

asset beautiful So asset Brazil, a should the even and doesn't that encounters if such if is location mean difficulty] I Llanos That like portfolio, an that's or in Colombian-focused organic think limit that discovers a borders the team XX then find yes, -- to be [technical us we think look happens we that. I our for CPO-X incredible don't -- like strategy. when you our or and country or located at

way countries some quality to need open be So would deliver are things at a any Latin do And our located additions limits years would the look in But the that it. business, that view subsurface portfolio that's countries lot America. right? I incredible There point for we of on to the asset obviously, and are we we to done of put company. really the way is organic in have case, it the in And that last are from it of of to where off the us for assets. we've to couple of that have, given

So great to those of in we very be did year to we some able drilling we busy a that land in expect starting throughout grab to XXXX. that were prospects the XXXX famous company that incorporate and tapping

or answer, on versus we region about less but or clear whether thinking long that's I we the for focus at sorry are more not. hope still Colombian way the look the the So

Alejandro Demichelis

GeoPark, the more of to the optimal kind in develop production should XXXX? That's what's leverage, shareholders, that of into into to very and increase the the leverage for the talking clear. you're framework And a cash about of assets in about year, how we second about, kind and a particularly then to just you're those free CapEx of between with talking think flow put here half return growth what bit

Andrés Ocampo

Sure.

defined. to that and So last look we've the fully That's execute after basically for mainly capital today liability buybacks. a to on we this combination debt of within couple element our second programs then our XXX% a transaction be our And we did that to earlier top of CapEx shareholder at us our is prioritized which returns. work year, management basic to We our dividends, also our are doubled if and that's you value own element continue the X things. But programs and allocate announced priority funded of work -- accomplish to flows. the reduction years, cash we

debt down one right bringing size was in the reduce than optionality that difficulty] have size our way to or total first we optionality of our a to that, the have of excess type anytime the debt, but approximately debt can of cost now. by The the million debt the more structure have reduce that $XXX of total also we we [technical continue the cash

in amounts So in that the X total and today, bond our million XXXX's remaining is instruments, $XXX separated debt on XXXX. the matures the

So we XXXX's basically then as fraction of the of that a course you keeping next the go the less earlier debt that's less gradually course that comfort And the terms in maybe, don't away But over will million more of should of think something know, are gives that over couple that. of repaid the the the the years is $XXX more next, will be or years. you where XXXX, -- zone. hopefully or that I than

us terms below put levels that next in With for of of net should that leverage. year, EBITDA estimating we're Xx the debt-to-EBITDA the this somewhere year,

more So our comfort or that's would that call less zone. -- I

on our debt. We size will total always the of reduce work trying to

Operator

[Operator Instructions].

Our from Stephane Foucaud Auctus. coming is from next question

Stephane Foucaud

from few me. questions A

when a first a to I go rate, would for a is that quarter working with or more this capital there the The historical positively wondering just, down? was start base that's whether, a next run whether would barrel. Second reverse we to wondering positive expect I one, Colombia that I regards you situation? is was again, for a the quarter an your on question, or whether cash correction view this the new quarter saw drilling flow. of row, second $X And you is expect think, I impacted And rate difficulty] think, should a [Technical of in Ecuador? run north to OpEx movement I of that big, update it's

Andrés Ocampo

there your respect Colombia, the OpEx thank time. about for small quarter, other between $X his initiatives, less of had we Martin of period any because And Stephane, we're was in In on have there you to the barrel consolidated. in a a $X.XX shut question. those With was Platanillo more are number basically, your increase less for that question push continuously the number Colombia, for is is a the working. per is the the in to initiatives OpEx. $X.XX in case, for But different numbers reduction that connection the less for initiatives rate to and or inventories increase grid for the the team between like difficulty] -- in reasonable between is year $X.XX, of a $X.XX that full now, that more [technical or something team generated seeing. That we're Colombia and per barrel or run and down less the average this something for some or $X But to consolidated. like barrel more more to expecting per working

At some of taxes correct. the paid months assets, $XX Your question are other facing cash for at were cash of planning for and did the debt. about couple Basically, time, you capital, same paid facing in operations, in what working On basically we of generating things. we payments, we we where had in were $XXX million core disruptions is the Colombia, the we same our time, disruptions million. our flow top down

and the our protect to cash we we contracts our minimum basically, to option expand positions, anticipate in cash triggered collections. an that So sales have to

So improvement that there. working or more $XX or is in capital that is you see million basically coming from less increasing

you, see should [technical that few about the then Thank difficulty] you operations would reverting answer Martin course the have I comment months, over And the to normalized of your and now Stephane. Ecuador, leave the the next well. So as that. as

Martin Terrado

Ecuador, we're the are for has in pushing government as you they know, activity. Stephane, encouraged, and so changed,

the environmental study X we Espejo waiting have block, were the blocks on there, approval. we So

November. company. the be And by seismic ready to awarded We already have we expect that

ahead expect So next we block, with operated partner, timing seismic will the be late to it's Perico first on the acquiring the and block. be then operate. move to year, of we around well, in other And that environmental same the that level quarter we the that year this on which first for the the our by November, in study drilling block is well approved block,

frames are we time those about have mind. that in encouraged the we're that, So and

Stephane Foucaud

if So well? talking along move first QX well about, in you're XXXX, everything lines, those something what,

Martin Terrado

Yes.

Andrés Ocampo

Correct, Stephane.

Operator

Pactual. comes Our Daniel from BTG question next Guardiola from

Daniel Guardiola

My I And to to related again, we the saw question year? Q. And once for you couple could not losses first hedging related And realized this a Andrés, planning questions. I or to on what hedging strategy. a of is modify of wanted have to if your significant in some your half hedging strategy of know you're provide the it, amount price. expect color second the to if

planning And second if some is How know first my us on in CPO-X. to been campaign provide like And my CPO-X related color are relationship capital feel And much this last you question to that's and with the your evolving this the do So drilling couple that to can the how operator I'd next? year you field. you allocate question. of in months? of this has field in

Andrés Ocampo

you, The hedging, losses Thank realized unfortunately, question with result, depending to prices. your are hedging the the the -- respect realized Daniel. on always

to on it it's realized prices. always and hard depends forecast, So

commented on started fact difficulty], from that from hedged we or And the higher first X the is lower. half. than X production start percentage occur of on. to As ceilings -- [technical to there's the the be then to that started also occur July One effects was total

production the ceilings nearly with So had XX% $XX, of per hedged of half $XX we of first the our barrel. year,

through I worst went would part, the we So say. just

have recorded. already been So biggest losses the

of XX% generate over $XX half the prices the like going on Brent year, more fourth if of something less losses, of that Brent the half XX% million the $XX, more quarter the our of the for million But production. $XX could $XX And we you second year. to and third a to roughly is half hedged course $XX of less. which what and third or an so then realized additional on the the quarter fourth -- it the you give quarter hedged ceilings $XX production, losses idea, flat, To be. estimate cash For the second depends quarter are flat, on realized on is $XX the or are that's and have

why through most done a have were the the or part then more expecting we price of difficult what half And gives targets. lot the were low, this And the we hedging to of hedging, losses. barrel year. hedged. we second difficulty] it quarters. the the losses these less for But there strategy, [technical going with we any that's because a the more those is comment about when your added With of $XX are that per were I barrels of are cycle above following suffering that hedged the that where you should which expected we we're don't have that on we we ceilings as expect levels, the is below prices be hedges oil the portions hedged our respect is for have where probably So on said, part today idea are

discipline. still believe months up is So oil targeting more keeping we have those we times hedged We're that ahead. to are these the our XX our at to implemented. this XX% less hedges high where prices roughly should be levels, are And production or where XX%, of

every barrels more we related on good are the a our That's more window, find daily the to [technical of we're it the to making. And executing way protect We're not doing to We're just layer-by-layer thousand trying those the strategy. conservatively monitoring less on basis. or we a time couple difficulty] continue a that shareholders speculative. expect this for market investments basis, We return a hedges. slowly, to on

color returns don't expecting to to I'll our we We have and triple-digit to achieve Martin that double, And -- make we prices we that high luxury on that need why investments on significant those CPO-X. returns, that's the answer the way. and can continue -- then, more Martin leave are

Martin Terrado

Indico drilling of has than X. Indico quarter about the kilometer we be a X, CPO-X, still sorry. well [technical X.X difficulty]. from fourth barrels. first X, cumulative million -- so Indico X.X This the Daniel, XXXX, It development more will it's on producing XXXX well, in of is

to continue asset. this about we So very be excited

Following and the drilling to X of will exploratory wells into campaign continuously drill the that well, move XXXX. will X we

very we're X continue of So And drilling forward. will minimize blockages barrels relationship, that to give the jointly rigs producing of managed we and tough you both to were our amount the ramp XX,XXX with nurturing per we we the to were together happening. we from up around quarter oil one expect a to example. about work activity trucks continue of it. when between And to down. so oil available concerning this last the the partners, stabilize had We will I have shut year month day. question Currently,

right that. on difficulty] we now, that alternative work the So as we're Jim And program. can accelerate mentioned, [technical so working where

Daniel Guardiola

share how Thank you, capital much us year? to Martin. very follow-ups. with this brief just allocate may, you If I Can CPO-X in you planning are

Martin Terrado

Certainly.

have $XX And the in So our year-to-date, of working to by $X million. we expect order interest. $XX million end the to we the of million be year,

Daniel Guardiola

of to Thank Andrés, collars. I you a spreads on Great. I and know you a like would you to table? have have now your have are strategy. or zero-cost strategy hedging put your But a in to portion generation. in the wanted mean understand bit I your And if basically future QX of brief future just that hedging where production, your that little or I strategy Martin. very something Okay. modify -- the is a follow-up Is cash you, to out considering flow considering order right lock you're

Andrés Ocampo

nothing is No. different and is different table. the and past. Thank the structures Nothing of The off options, table. you, options different the executed the Daniel. and different in we've And structures out

we everything. are -- work internally. We consider We

our experts We we help continuously best us company. look advisers for what's the and and outside that internal have for

the today, and current fix and limit number. much to would the far, secure we that higher we minimum these oil we're of lower approached mean way is Basically, keep to if a to these the the whatever -- that fix try is to would upside prices to to upside, floors prices. so limiting So, prices we've were try trying some at

selected around preferred for spread. options or difficulty] more [technical that said, find consider any to a what of I $XX far, and So and again, all But as we we're And willing we're may looking reminder, mark when in sheet XXX we and losses are the for billion more But only. balance $XX than read I a these, recognize worth as somewhere I losses the hedging painful there in we've everybody. option wide bankruptcies were, spread better different U.S. we for. just of think,

not companies hedging alone, in of through but succeeded we're basically was and had So some that downturn the that that place. survived have those strategies appropriate

Operator

Our next question comes Bradesco from from Gustavo BBI. Sadka

Gustavo Sadka

have production. I one question quick on

per at in have barrels something to -- you XX,XXX XXXX. like you average second half XX,XXX of Looking your the guidance, day

my necessary are what goal? to question where milestones stands the this And is, production now? achieve So

Martin Terrado

to is have Gustavo, have drilled. with XX,XXX Llanos the of also we're And we oil as activity from have beginning, increase is going production in order the so stay Platanillo wells we that mentioned as in the X right in rigs our the at be equivalent block increased now production to barrels that will of day. the we XX, drilling coming that X the per

drilling have Daniel. mentioning finally, before the as well And X were CPO-X there. Indico of the working We we interest block, XXX% with

Operator

use is, Group. proceeds of asset I in his So is "Use Ospina final from asset Our And question of Brazil?" sales about sale just Miguel from from in from question the think Brazil. asking proceeds Compass comes Miguel

Andrés Ocampo

in course. you. real-denominated. We're end -- -- The We're expecting there going are to before those further around Great. the they should from Well, close due the those are somewhere that transactions of proceeds be expecting delays. the Okay. year, if no hopefully are thank

expectation in our normal follow. flow cash our between include million, those follow capital and that somewhere our should $XX And it So and we be or to million. position priorities cash for -- allocations $XX follow is position the

priorities first, the program the of follow would second, work that is would return. they debt of our And and be effectively, all then same first. rest coming a to assets day. of flow reduction fund every That our combination Our base shareholder -- that value cash pursue

Operator

further hand back management questions, We conclude. team the currently have will no I so to to

Andrés Ocampo

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

As we open you again, to visit encourage the begin to borders in America. at our us world's Latin operations please

with any comments. and than calls as questions is value answer has the accelerated or interactions listen management available is Our around shareholder team is your video ever and webinars, our and team their to busier direct conference to clock,

and thank strong. So please stay healthy and you,

Operator

This for concludes joining, and everyone, now your you, Thank may today's you disconnect call. lines.

James Park	Chief Executive Officer
Augusto Zubillaga	Chief Operating Officer
Andrés Ocampo	Chief Financial Officer
Martin Terrado	Director of Operations
Stacy Steimel	Shareholder Value Director
Ricardo Rezende	JPMorgan
Alejandro Demichelis	Nau Securities
Stephane Foucaud	Auctus Advisors
Daniel Guardiola	BTG Pactual
Gustavo Sadka	Bradesco BBI

GeoPark Limited (GPRK) 7 Aug 212021 Q2 Earnings call transcript