GeoPark Limited, a leading independent Latin American oil and gas explorer, operator and consolidator with operations and growth platforms in Colombia, Peru, Argentina, Brazil and Chile, today announced its work program and investment guidelines for 2019. (All figures are expressed in US Dollars).

2019 Work Program: Principles and Approach

Technical 

• Maximum efficient development of the Llanos 34 block (GeoPark operated, 45% WI)
• Increase average oil and gas production by 15%
• Initiate Morona block project (GeoPark operated, 75% WI), with production in 1Q 2020
• Delineate new plays, leads and prospects on existing assets

Economic 

• Operate and grow within cash flow
• Grow adjusted EBITDA and operating cash flow
• Reduce costs
• Achieve maximum net present value for existing assets

Strategic 

• Achieve scale
• Improve and add to core capabilities
• Strengthen SPEED and compliance culture
• Promote innovation

 
Work Program Detail ($70 Brent) 

• Production target: 15% increase over 2018 average production (with 2019 not including approximately 1,000 bopd from the La Cuerva and Yamu blocks, which were sold in November 2018)

Capital expenditure program: $220-240 million fully-funded by cash flows to be allocated as follows: 

Colombia - $85-95 million: Continue to develop and appraise the Tigana and Jacana oil fields and target new exploration prospects in the Llanos basin. The work program in Colombia includes:  

• 22-24 development and appraisal wells and 2-3 exploration wells in the Llanos 34 block
• Two exploration wells in the Llanos 32 block (GeoPark non-operated, 12.5% WI) 
• Construction of additional facilities to support future production growth and to optimize operating and transportation costs

Peru - $95-105 million: Construction of early production facilities in the Morona block with the goal of putting the Situche Central light oil field into production by early 2020, subject to approval of the EIA (Environmental Impact Assessment) in 1Q2019. The work program in Peru includes: 

• Base camp revamping, installation of a flexible pipeline from an existing well to the base camp, civil works, access road, treatment facilities and wireline intervention activities

Argentina - $20-25 million: Develop and explore oil and gas targets in the Neuquen basin. The work program in Argentina includes:   

• Two exploration wells, two tight gas development wells and waterflooding project in the Aguada Baguales, El Porvenir and Puesto Touquet blocks (GeoPark operated, 100% WI)
• Seismic studies in Los Parlamentos block (GeoPark non-operated, 50% WI)

Chile - $17-20 million: Develop and explore oil and gas targets, both conventional and unconventional, in the Fell and Tierra del Fuego blocks. The work program in Chile includes: 

• One development well and one exploration well to continue developing and exploring gas opportunities in the Jauke/Dicky large geological structure in the Fell block (GeoPark operated, 100% WI)
• One exploration oil well in Isla Norte block (GeoPark operated, 60% WI) in Tierra del Fuego
• Testing high-potential unconventional projects including a tight gas play in the Tranquilo block and in a large shale oil formation in the Estratos con Favrella in the Fell block (220-600 mmboe potential)

Brazil - $3-4 million: Exploration drilling in the Reconcavo and Potiguar onshore blocks (GeoPark operated, 70-100% WI). The work program in Brazil includes drilling 1-2 shallow exploration wells, plus minor maintenance activities in the Manati gas field (GeoPark non-operated, 10% WI).

Flexible to Different Oil Price Scenarios

The 2019 work program is fully funded with operating cash flows and can be adapted to provide production growth under different oil price scenarios:

• Above $70/bbl Brent oil price: Capital expenditures can be expanded to $240-270 million – by adding incremental projects, targeting production growth of 15-20%.
• Below $60/bbl Brent oil price: Capital expenditures can be reduced to $120-140 million – focusing on the lowest-risk projects that produce the fastest cash flow, still targeting production growth of 15%.

GeoPark currently has commodity risk management contracts in place covering 35-50% of its production for 2019 with floors of $60-65/bbl and ceilings of $90-97/bbl Brent. GeoPark monitors market conditions on a continuing basis and may enter into new commodity risk management contracts to secure minimum oil prices for its 2019 production and beyond.

Estimated Operating Netbacks

Consolidated operating netback per boe: Defined as net revenue minus operating costs, royalties and selling expenses, it is estimated to be approximately $31-34 per boe with a $70-75 Brent oil price, and approximately $28-31 per boe with a $65-70 Brent oil price.