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, announced its operational update for the three-month period ended September 30, 2020 (“3Q2020”).
- Increasing Production and Re-engaging Work Program
-Consolidated oil and gas production of 38,845 boepd in 3Q2020, up 5% compared to 2Q2020
- Reopening temporary shut-ins and resuming drilling campaign with three new wells put on production in the Llanos 34 block (GeoPark operated, 45% WI)
- Producing approximately 40,000 boepd by the end of 3Q2020
- Full-year 2020 work program of $65-75 million ($25-35 million during 2H2020) targeting 40,000-42,000 boepd annual average production and operating netbacks of $230-260 million assuming Brent of $35-40 per bbl1
- Fully funded and flexible work programs, quickly adaptable to any oil price scenario
Capital Strength and Risk Management Levers
- Combination of cost and investment reductions exceed $290 million across regional platform
- $163 million of cash and cash equivalents as of September 30, 20202
- $75 million oil prepayment facility, with $50 million committed and no amounts drawn
- $140.3 million in uncommitted credit lines3
- Long-term financial debt maturity profile with no principal payments until September 2024
- Continuously adding new hedges for the next 15 months
Health and Safety Actions and Results
- Protocols, preventive measures and crisis response plans in place across six-country regional platform
- Field teams sharply reduced to a minimum with back-up teams and contingencies in place to keep people working safely and production flowing
- First company in the E&P sector to obtain Bureau Veritas certification on biosecurity protocols to mitigate and manage the impact of Covid-19 in GeoPark Colombia operations
- GeoPark closely engaged with local communities implementing an extraordinary range of measures to fight Covid-19 with efforts coordinated at local, regional and federal levels to support and compensate for limited local resources
Improving Overall Business
- Streamlining business across portfolio to improve overall cost structure and take advantage of available synergies and new innovative technologies
- Top to bottom review in all departments and capabilities – with reorganization of asset management team and offices across region
- Released GeoPark's Environmental, Social and Governance ("ESG") report for 2019 prepared under the Global Reporting Initiative (GRI), available on the Company's website
CPO-5 block (GeoPark non-operated, 30% WI): Currently drilling the Indico 2 appraisal well to be followed by the Aguila 1 exploration well
Llanos 94 block (GeoPark non-operated, 50% WI): Re-entry into the Grulla 1 well
2021 Capital Allocation: GeoPark capital allocation process currently underway and 2021 work program and investment guidelines to be released in November with 3Q2020 results
Oil and Gas Production Update
Overall oil and gas production decreased by 2% to 38,845 boepd in 3Q2020 from 39,619 boepd in 3Q2019, due to reopened shut-in production and limited drilling and maintenance activities during the quarter, partially offset by the addition of production from the recent Amerisur Resources Plc (“Amerisur”) acquisition in Colombia. Oil represented 85% of total reported production in 3Q2020 and 3Q2019.
Average net oil and gas production in Colombia remained steady at 31,297 boepd in 3Q2020 compared to 31,578 boepd in 3Q2019, reflecting the gradual reopening of temporary shut-ins, and limited drilling and maintenance activities, partially offset by the recent acquisition of Amerisur.
The Llanos 34 block averaged net production of 27,026 bopd (or 60,058 bopd gross) in 3Q2020, 86% of GeoPark’s net production in Colombia.
Development drilling in the Llanos 34 block:
- Three new development wells were drilled and put on production in the Llanos 34 block during 3Q2020.
Appraisal and exploration drilling in the CPO-5 block:
In late September 2020, the operator spudded the Indico 2 appraisal well targeting the Une-LS3 formation. The Indico 2 well is located approximately 0.8 km northwest of the Indico 1 well.
The Indico oil field was discovered in December 2018 and, to date, continues showing strong reservoir performance from one single well, Indico 1, that in September 2020 achieved an average production of 5,169 bopd of light oil, with a cumulative production of over 2.9 million barrels of oil.
Civil works and other preliminary activities were carried out by the operator during 3Q2020 related to the Aguila exploration prospect, where drilling is expected to start in 4Q2020. The Aguila exploration prospect is located approximately 4.9 km southeast of the Indico 1 well.
Average net production in Chile increased by 8% to 3,610 boepd, representing the highest quarterly average since 3Q2016. Higher production in 3Q2020 resulted from the successful development and strong reservoir performance of the Jauke gas field and the discovery of the Jauke Oeste gas field in the Fell block (GeoPark operated, 100% WI) in early 2020. The production mix during 3Q2020 was 90% gas and 10% light oil (compared to 79% gas and 21% light oil in 3Q2019).
Average net production in Brazil decreased by 31% to 1,581 boepd in 3Q2020 compared to 2,299 boepd in 3Q2019. However, compared to 2Q2020, Brazilian production increased by 133% due to higher demand in the Manati gas field (GeoPark non-operated, 10% WI). The production mix during 3Q2020 was 99% natural gas and 1% condensate (compared to 98% natural gas and 2% condensate in 3Q2019).
Average net production in Argentina remained flat and averaged 2,357 boepd in 3Q2020 (59% oil, 41% gas) compared to 2,384 boepd in 3Q2019 (66% oil, 34% gas), but increased by 14% compared to 2Q2020. During 3Q2020, the Company reopened temporary shut-ins affecting oil production in the El Porvenir block (GeoPark operated, 100% WI) and maintained stable production levels in the Aguada Baguales and Puesto Touquet blocks (GeoPark operated, 100% WI).
OTHER NEWS / RECENT EVENTS
COMMODITY RISK OIL MANAGEMENT CONTRACTS
GeoPark recently added new oil hedges further increasing its price risk protection over the next 15 months, now reaching 25,500 bopd in 4Q2020, 15,500 bopd in 1Q2021, 13,000 bopd in 2Q2021, and 4,500 bopd in 2H2021. Hedges include a portion providing protection to the Vasconia local marker in Colombia.