Production Growth Delivered Record Revenue, Net Profit and Cash Flows to Fund Debt Reduction and Accelerate Shareholder Returns

GeoPark Limited, a leading independent Latin American oil and gas explorer, operator and consolidator reports its consolidated financial results for the three-month period ended December 31, 2022 (“Fourth Quarter” or “4Q2022”). 

FOURTH QUARTER AND FULL-YEAR 2022 HIGHLIGHTS

Production Growth in Core and Most Profitable Assets

• Average production of 38,433 boepd / Full-year 2022 average production of 38,620 boepd, within guidance
• Llanos 34 block (GeoPark operated, 45% WI) annual average gross production up 2% to 57,016 bopd
• CPO-5 block (GeoPark non-operated, 30% WI) annual average gross production up 50% to 18,600 bopd

Record Revenue, Adjusted EBITDA, Cash Flow & Net Profit

• Revenue of $231.0 million / Full-year revenue of $1.05 billion
• Adjusted EBITDA of $132.1 million / Full-year adjusted EBITDA of $540.8 million
• Operating Profit of $81.7 million / Full-year operating profit of $429.1 million
• Cash flow from operations of $113.4 million / Full-year cash flow from operations of $467.5 million
• Net profit of $52.2 million / Full-year net profit of $224.4 million ($3.8 basic earnings per share)

Cost and Capital Efficiency as Key Differentiators

• Despite inflationary pressures, maintained costs in line: full-year operating costs and cash G&A decreased by 1% to $98.6 million and $40.3 million, respectively
• Capital expenditures of $53.6 million / Full-year capital expenditures of $168.8 million
• 2022 adjusted EBITDA to capital expenditures ratio of 3.2x
• 2022 annual return on capital employed of 60%

Sustained Debt Reduction and a Stronger Balance Sheet

• Paid down $170 million of gross debt in 2022 ($275 million since April 2021)
• Full-year interest payments decreased to $36.5 million (from $42.6 million), expected to be further reduced to $27-30 million in 2023
• Net leverage of 0.7x and no principal debt maturities until 2027
• Cash in hand of $128.8 million

Tripled Shareholder Returns

• 2022 cash dividends increased by 236% to $24.3 million
• 2022 share buybacks increased by 206% to $36.3 million
• Renewed discretionary share buyback program for up to 10% of shares outstanding until December 2023
• Quarterly cash dividend of $0.13 per share, or approximately $7.5 million, payable on March 31, 2023

Enhanced ESG Performance, Ratings & Recognition

• Interconnected the Llanos 34 block to Colombia’s national power grid and installed a solar park in 2022, key drivers to continue improving the Llanos 34 block’s industry-leading carbon footprint
• 2022 preliminary emissions intensity expected to decrease by 30-35% to 12-13 kg CO2e per boe
• MSCI ESG Ratings upgraded GeoPark rating to “A”, a multi-year rating improvement (“B” in 2018, “BB” in 2019 and “BBB” in 2021)
• GeoPark was included for a second consecutive year in the Bloomberg Gender-Equality Index, covering companies with best-in-class gender-related practices and policies

2023 Work Program: Strong Cash Generation with More Shareholder Returns

• 2023 production guidance of 39,500-41,500 boepd (excluding potential production from exploration drilling)
• Self-funded 2023 capital expenditures program of $200-220 million to drill 50-55 gross wells
• At $80-90 per bbl Brent, GeoPark expects to generate an Adjusted EBITDA of $510-580 million and a free cash flow of $120-140 million, targeting to return 40-50% of free cash flow after taxes to shareholders

Andrés Ocampo, Chief Executive Officer of GeoPark, said:
“In 2022 GeoPark posted record-setting results, the best financial performance of the Company in its 20-year history, a solid team achievement. Our high-quality asset base and streamlined cost structure allowed us to capture the advantages of a higher oil price environment and combined with our disciplined capital allocation resulted in record net profit and free cash flow to significantly reduce our debt and triple our dividends and buybacks at the same time. We look forward to continue executing our 2023 work program which was designed to grow our production while pursuing an ambitious exploration drilling program focused on low-risk, high-return opportunities, uniquely positioning GeoPark to continue generating and returning value.”

1Q2023 PRODUCTION UPDATE

GeoPark’s 2023 average consolidated production in January and February was approximately 37,000 boepd, below its production potential of 39,400-40,300 boepd mainly due to temporary shut-in production of the Indico 6 and Indico 7 wells in the CPO-5 block in Colombia for approximately 2,400-3,300 bopd net to GeoPark.

The Indico 6 and Indico 7 wells were drilled in late 2022 and together tested over 11,000 bopd gross (or 3,300 bopd net to GeoPark). After initial production tests, these two wells were shut in (Indico 6 in December 2022 and Indico 7 in early January 2023) after the regulator (ANH) requested that the CPO-5 block operator temporarily suspend production from these wells until definitive surface facilities are completed. The operator of the CPO-5 block is executing all required activities and expects to resume production in these wells in early 2Q2023.

In addition, since February 28, 2023, temporary localized blockades have been affecting overall production and operations in the CPO-5 block, which are expected to be normalized within the next few days.

GeoPark’s 1Q2023 production is expected to be below the Company’s potential. However, assuming the CPO-5 block operator puts the Indico 6 and Indico 7 wells back on production in early 2Q2023, GeoPark would still expect to meet its 2023 full-year average production guidance of 39,500-41,500 boepd, most likely towards the lower end of the range and not including potential production from exploration drilling.