GeoPark Limited, a leading independent Latin American oil and gas explorer, operator and consolidator with operations and growth platforms in Colombia, Peru, Argentina, Brazil, Chile and Ecuador, announces its work program and investment guidelines for 2020. (All figures are expressed in US Dollars).

2020 Work Program: Main Principles and Approach

Technical 

• Increase oil and gas production and reserves
• Effective development and production growth in the Llanos 34 block (GeoPark operated, 45% WI)
• Define new plays, leads and prospects
• Initiate exploration studies in the recently acquired exploration acreage adjacent and nearby to GeoPark’s core Llanos 34 block, targeting to start drilling in 2021
• Initiate exploration drilling in the prolific Oriente basin in Ecuador
• Test oil prospects in the Tierra del Fuego blocks in Chile

Economic

• Allocate investment capital to best shareholder value-adding projects
• Capital expenditure program fully funded within cashflow
• Grow adjusted EBITDA and operating cashflow
• Develop and add new projects with break evens below $40-50/bbl oil price
• Ongoing cost reduction efforts to become lowest cost operator
• Maximize net present value per share for existing assets
• Continue returning value to shareholders through dividends and buybacks

Strategic

• Proven flexible program, adaptable to lower oil price scenarios
• Achieve scale
• Continue developing long-term strategy in the Marañon-Oriente-Putumayo petroleum system
• Testing high-potential unconventional projects
• Develop and grow strategic partnerships with Ecopetrol/Hocol and ONGC
• Continue strengthening ESG metrics with GeoPark’s proven internal SPEED program
• Promote innovation and the adoption of best practices across the portfolio

2020 Guidance ($60-65/bbl Brent)

The 2020 production guidance reflects 5-10% growth over 2019 average production and excludes potential production from the 2020 exploration drilling program.
 
The 2020 work program of $130-145 million includes drilling of 36+ gross wells, with approximately 75% of the total amount expected to be allocated to development capital and 25% to exploration activities.
 
Using the base case price assumption of $60-65/bbl Brent, GeoPark can execute a risk-balanced work program to continue growing its business by producing, developing and exploring its portfolio of assets, fully funded within cashflow, and maintaining a strong balance sheet.

2020 Work Program Details

Production target: 5-10% increase over 2019 average production

Capital expenditure program: $130-145 million fully funded by cashflow, to be allocated as follows:

Colombia - $110-115 million: Continue developing the Llanos 34 block and delineating new leads and prospects in the recently acquired blocks in the Llanos basin. The work program in Colombia includes:

• 30-32 development and appraisal wells and 1-2 exploration wells in the Llanos 34 block
• One exploration well in the Llanos 32 block (GeoPark non-operated, 12.5% WI)
• Seismic reprocessing and other preliminary activities in the Llanos 86, Llanos 87 and Llanos 104 blocks (GeoPark operated, 50% WI)
• Construction of additional facilities to support production growth and to continue optimizing operating and transportation costs. These activities include investments to evacuate production from the Tigana oil field using existing infrastructure connecting the Llanos 34 block to the Oleoducto de los Llanos (ODL) pipeline

Chile - $10-15 million: Focus on exploration drilling in the Flamenco (GeoPark operated, 100% WI), Isla Norte (GeoPark operated, 60% WI) and Campanario (GeoPark operated, 50% WI) blocks in Tierra del Fuego. The work program in Chile includes:

• Four exploration wells with a focus on oil prospects
• Continue testing high-potential unconventional projects including a large shale oil project in the Estratos con Favrella formation in the Fell block (220-600 mmboe potential)

Ecuador - $7-10 million: Initiate exploration activities in the Oriente basin. The work program in Ecuador includes:

• One exploration well in the Perico block (GeoPark non-operated, 50% WI)
• Seismic and other preliminary studies in the Espejo block (GeoPark operated, 50% WI)

Argentina - $2-5 million: Well intervention activities and facilities revamping in the Aguada Baguales, El Porvenir and Puesto Touquet blocks (GeoPark operated, 100% WI) in the Neuquen basin. Explore strategic opportunities within existing acreage position in the Vaca Muerta formation in the Aguada Baguales block

Brazil - $0.5-1.5 million: Maintenance works in the Manati gas field (GeoPark non-operated, 10% WI) plus testing activities for the recent Praia dos Castelhanos oil field discovery in the REC-T-128 block (GeoPark operated, 70% WI)

Peru - $0.5-1.5 million: Social and environmental activities in the Morona block (GeoPark operated, 75% WI)

Work Program Flexible at Different Oil Price Scenarios

Consistent with the Company’s approach in prior years, GeoPark’s 2020 work program can be rapidly adapted to different oil price scenarios, which illustrates the high quality of its assets and strong financial performance in lower or volatile oil price environments.

• Above $70/bbl Brent oil price: Capital expenditures can be expanded to $170-200 million – by adding incremental projects, targeting production growth of 10+%
• Below $50/bbl Brent oil price: Capital expenditures can be reduced to $80-95 million – focusing on the lowest-risk projects that produce the fastest cashflow, and targeting 0-5% production growth compared to 2019

GeoPark currently has commodity risk management contracts in place covering a portion of its production for 2020 with floors of $55/bbl Brent. GeoPark monitors market conditions on a continuous basis and may enter into new commodity risk management contracts to secure minimum oil prices for its 2020 production and beyond.

Link to GeoPark Colombia country profile