Geopark Share Discussion Threads

[sailing john] 17/7/2014 14:09

Q2 update out - looks very positive - too long to post - see website

[thegreatgeraldo] 11/7/2014 22:27

Maybe the yanks noticed PXT & put 2&2 together? PXT have other Colombian licences where GPK isn't involved, but PXT more likely to pop up on the radar, given its m/cap, than GPK? Not much reaction from GPK yesterday when they announced the Tigana update.

PS Not getting too excited, we've only cracked £6!

[sailing john] 11/7/2014 21:33

Thought we would struggle to get through $10 but has now hit $10,50 on 74k traded more than double the average volume.

Not obvious from the charts above (intraday appears to be on UK time!)

[thegreatgeraldo] 11/7/2014 16:44

Update from PXT(TSX) after hours yesterday,

Tigana (Non-Operated, Block LLA-34, WI 55%): Tigana-1, Tigana-2, Tigana-3 and Tigana Sur-1 are currently producing approximately 8,500 (gross) bopd in aggregate. We expect Tigana Norte-1, which was drilled approximately 1,300 meters northeast of the Tigana-1 discovery well, to begin production during Q3 2014. Tigana Sur Oeste-1 successfully delineated the Tigana structure along trend approximately 2.4 kilometers from Tigana Sur-1, and this result was included in the GLJ Report for June 30, 2014.

Parex and its partner expect to drill additional Tigana field appraisal wells during 2014 and after constructing additional drilling pads in early 2015, we expect to continue appraising the pool in the north and south directions followed by a multi-year development plan.

Tua (Non-Operated, Block LLA-34, WI 55%): Tua-7 and Tua-8 have been approved by partners as the next delineation wells to be drilled in the Tua field during Q3 2014.

[thegreatgeraldo] 10/7/2014 13:32

Ahem!! See my post 1060. Should be an interesting afternoon.

[sailing john] 10/7/2014 13:23

GEOPARK ANNOUNCES NEW TIGANA NORTE 1 OIL DISCOVERY AND TIGANA FIELD EXTENSION IN BLOCK LLANOS 34 IN COLOMBIA

Santiago, Chile -- July 10, 2014 -- GeoPark Limited ("GeoPark") (NYSE: GPRK), the Latin American oil and gas explorer, operator and consolidator with operations and producing properties in Chile, Colombia, Brazil and Argentina, today announces the discovery of the Tigana Norte 1 oil well on its Llanos 34 Block in Colombia. GeoPark is the Operator of and has a 45% working interest in the Llanos 34 Block.

GeoPark drilled and completed the Tigana Norte 1 well to a total depth of 12,141 feet. A test conducted with an electrical submersible pump in the Guadalupe formation, at approximately 11,557 feet, resulted in a production rate of approximately 1,061 barrels of oil per day ("bopd") of 14.6 ° API, with a 0.49% water cut, through a choke of 24/64 inches and well head pressure of 235 pounds per square inch. Further production history will be required to determine stabilized flow rates of the well.

Production and reservoir analyses from the Tigana 1, 2 and 3, Tigana Sur 1 and Tigana Norte 1 wells on the Llanos 34 Block now indicate that three previously delineated fields and prospects form part of a single larger combined (structural and stratigraphic) trap and field, productive from the Cretaceous Guadalupe and Tertiary Mirador formations. The field is currently producing over 8,500 bopd gross from the 5 wells drilled and completed to date. The Company is carrying out further development and appraisal drilling this year on the Tigana Field complex, including the Tigana Sur Oeste 1 well that is currently being completed. Preliminary results suggest that the stratigraphic component of the trap could enhance the exploration potential of the Llanos 34 Block area.

Since taking over the Llanos 34 Block with no production and no reserves in Colombia two years ago, GeoPark has grown production on this block to approximately 20,000 bopd gross. In 2014, GeoPark is carrying out a 10 well drilling program on Llanos 34 Block, as part of an overall 18-23 well drilling program in Colombia.

James F. Park, CEO of GeoPark, said, "The extension of the Tigana Field is encouraging and we salute our team in successfully discovering, developing, building the necessary infrastructure and putting into production this field in record time. The Tigana Field production has grown from zero to 8,500 bopd gross in less than 7 months. We also believe the new larger combined Tigana Field interpretation will positively impact the field's reserves and development potential."

[tyler90] 04/7/2014 16:27

From Seeking Alpha


Summary

GeoPark has trended higher by 31% since listing on positive production trends and the upside is likely to continue.
A high impact capital expenditure program is lined up for 2014 and this will ensure strong production and reserves growth.
The Brazilian asset acquisition diversifies revenue source and further supports the production upside.

Thesis Summary

GeoPark (GPRK) is engaged in the exploration, development, and production of oil and gas reserves in Chile, Colombia, Brazil, and Argentina. On February 6, 2014, the company issued 13,500,000 of its common shares at a price of $7 per share to become listed on the New York Stock Exchange.

Since then, the company's stock has trended higher by 31% to $9.20. This coverage discusses the reasons for believing that the company is an attractive investment option with a 12-18 month investment horizon. A strong reserve and production profile, high impact exploration and the potential upside impact of a recent acquisition support the buy thesis.
Company Overview

GeoPark is an independent oil and natural gas exploration and production, or E&P, company with operations in Latin America. As of March 2014, the company's assets include 27 hydrocarbon blocks, 26 of which are onshore blocks, including eleven currently in production.

As of December 2013, the company's hydrocarbon blocks in Chile, Colombia and Argentina had 20.1mmboe of net proved reserves, with 10.7mmboe, or 53%, and 9.4mmboe, or 47%, of such net proved reserves located in Chile and Colombia, respectively. For the same period, the company's 2P reserves were 70.1mmboe with 45.1mmboe of proved reserves in Chile. I must mention here that GeoPark is the largest private sector oil producer in Chile.

Further, considering the acquisition of Rio das Contas (Brazil), the company's proved reserves were 28.4mmboe as of December 2013 with Chile, Colombia and Brazil representing 38%, 33% and 29% of net proved reserves, respectively.

In terms of production, the total production for the year ended December 2013 was 17,098 boepd with Chile, Colombia and Brazil representing 41%, 38% and 21% of the production, respectively, and with oil representing 65% of the total production.
Positive Production Mix

Before discussing the growth triggers I would like to focus on the positive change in the company's production mix over the years. This, in turn, has resulted in higher EBITDA per barrel of oil equivalent.

GeoPark's production mix has increased from 12% oil as a percentage of total production in 2007 to 82.2% oil as a percentage of total production in 2013. Including the gas production from the Brazilian acquisition, the production mix still remains at 65% oil as a percentage of total production.

In terms of revenue contribution, oil sales have contributed to 82% of FY13 revenue as compared to 66% in FY11. The importance of this point is clear on considering the fact that the company's adjusted EBITDA per barrel of oil equivalent has increased from $22.90 in 2011 to $33.90 in 2013. The increase in EBITDA per barrel is primarily due to higher percentage of oil in the total production composition.

With the acquisition of Brazilian gas assets, the percentage of oil in total production has declined for pro-forma 2013 results. However, the average sales price of natural gas from the Brazilian asset is much higher at $6.40/mcf as compared to $5.00/mcf in Chile.

I must also mention here that Colombia's production is 100% oil and this contributes meaningfully to the overall production. More importantly, Chile, which is a key asset, has a positively changing production profile with higher oil production.

The company's average sales price in Chile has increased from $31 per barrel of oil equivalent in 2010 to $62 per barrel of oil equivalent in 2013; this has combined with high oil production from the asset.

It was important to discuss the production mix before getting into the growth drivers as natural gas prices have been relatively depressed and a higher proportion of natural gas in the total production can be a potential risk.
Production Upside From High Impact Exploration

GeoPark has a track record of strong drilling success. In the period 2006-2013, the company drilled 152 wells with 106 wells turning out to be productive. A success rate of 70% over a period of eight years is commendable.

Going forward, high impact drilling and exploration will continue to drive the company's production and proved reserves higher. For 2014, the company expects to incur a capital expenditure of $220-$250 million. This is excluding the purchase price of Rio das Contas.

These capital expenditures will include the drilling of 50 to 60 new wells (approximately 40% of exploratory wells), as well as workovers, seismic surveys and new facility construction. GeoPark expects to incur 62% of the capital expenditure in Chile, 32% in Colombia and 5% in Brazil.

The key conclusion is that the company's near-term focus is to ramp-up production from the existing assets in Chile and Colombia. I mentioned earlier that Chile is the company's key asset holding significant 2P reserves. It is not surprising to see a high percentage of capital expenditure for 2014 allocated to Chile.

From the company's capital expenditure program, there are two key points to note. First, high capital expenditure allocation for Chile and Colombia implies a continued high percentage of oil production. The second point is the likely production growth in 2014 coming from the high impact drilling and exploration program.

With the company not providing any production guidance, I would investigate the second point to conclude the likely production growth in 2014.

In 2013, GeoPark incurred a capital expenditure of $228 million, which is not very different from 2014E. Further, in 2013, the company allocated 64% of the capital expenditure to Chile and 36% to Colombia. Again, this is not very different from 2013 actual capital expenditure allocation.

The key difference in these two years is the number of wells drilled. For 2013, the company drilled 39 wells while the company expects to drill 50-60 new wells in 2014. Therefore, the impact of the exploration program is likely to be marginally higher in 2014 than 2013 in terms of production upside or reserves growth.

In 2013, the $228 million capital expenditure program translated into production growth of 20% to 13,517boepd from 11,292boepd in 2012. Just considering the Chile and Colombia asset, 20%-25% production growth is likely in 2014. Historically, GeoPark has recorded production growth at a CAGR of 21% from 2009-13.

I must mention here that in a recent news release on new gas discovery in Chile, the company has stated that production in Chile for 1Q14 has already increased to over 7,400boepd as compared to 6,962boepd in FY13. With a 6.3% production growth in 1Q14 and a significant capital expenditure program ongoing, it is additionally likely that the annual production growth will surpass 20%.
Revenue And EBITDA Outlook For 2014

There are several considerations for the revenue and EBITDA outlook for 2014. I will discuss the production and revenue upside from assets separately for a clear outlook.

The company's Colombian asset, which has 100% oil, recorded an average production of 6,491boepd in 2013. However, the company's production for 4Q13 was 19% higher at 7,725boepd than the average production for FY13. The production estimate for FY14 is therefore likely to be more robust than just 20% production upside compared to FY13. GeoPark also estimates that the company's production in Colombia will peak out in 2015.

For my estimates, I have assumed a production level of 7,725boepd for the first half of 2014. This is conservative as the company exited 2013 with this production level. For the second half of 2014, I have assumed another 10% increase in production to 8,500boepd. With 32% of the total capital expenditure allocated to Colombia, the production upside is conservative.

I must also mention here that the company has ramped up production by 400% since the acquisition of the Colombian asset in 1Q12. Further, six new oil fields have been discovered. The objective of mentioning this is to underscore the fact that operational progress has been excellent in the asset.

In terms of the selling price of oil, the average sales price in Colombia in the last two years has been $86.50 per barrel with FY13 sales price being $76 per barrel. With oil prices higher in FY14 (on an average) as compared to FY13, it can be assumed that the average sale price will be around $85 per barrel, which is close to the average for the last two years.

These estimates translate into annual revenues of $248 million from the Colombian asset. EBITDA margin for FY13 from Colombia was 46%. I have considered an EBITDA margin expansion of 400 basis points to 50% considering a higher per barrel sale price coupled with higher production. Thus, EBITDA from the asset comes to $124 million at a 50% EBITDA margin.

For the company's asset in Chile, the production for 1Q14 is already at over 7,400boepd as mentioned earlier. It is therefore safe to assume production of 7,400boepd for 1Q14 and a marginally higher production of 7,650boepd in 2Q14. As discussed in the capital expenditure outlay, the given capital expenditure is likely to result in a production bump-up of 20%-25%. For 2Q14, I have assumed a 10% production increase as compared to FY13. For 3Q14, the production is estimated at 8,000boepd, a 15% increase as compared to FY13 and for 4Q14, the production is estimated at 8,400boepd, a 20% increase over FY13. On a consolidated basis, the average production for FY14 works out to 7,750boepd, which implies an 11% production increase as compared to FY13. The overall estimates are therefore conservative considering the high impact capital expenditure program for FY14. This however serves as a good base case estimate.

Another important factor to consider for the Chilean assets is the average price per barrel of oil equivalent. While the company has provided no guidance on the percentage of oil and gas, the trend over the last four years has been an increasing share of oil. As a result, the average selling price per barrel of oil equivalent has increased from $31 in 2010 to $62 in 2013 with EBITDA margins remaining in the range of 61%-65% over the last four years.

Considering the same mix as FY13, resulting in an average price per barrel of oil equivalent of $62, total revenue for FY14 from the Chile asset works out to $175 million with an EBITDA of $106 million considering the same margin as FY13. I must mention that the company's product mix trend has been a gradual increase in oil production. However, in absence of any guidance, I have assumed the same production mix as FY13.

For FY14, only 5% of the capital expenditure is allocated to the Brazilian acquisition. The conclusion is that the company's focus for the current year is on Colombia and Chile. The production ramp-up from these two assets will drive growth in FY14. I believe that the 5% capital expenditure on the Brazilian asset will be to maintain the production levels of FY13 along with 2D and 3D seismic activity. It will therefore be safe to assume that the production, revenue and EBITDA levels from the Brazilian asset remain largely the same as FY13. For FY13, the Rio das Contas asset had revenue of $48.6 million and an EBITDA of $30.8 million.

On a consolidated basis, the revenue from all assets works out to $472 million, representing a robust 22% increase as compared to FY13 revenue of $387 million. EBITDA for FY14 works out to $261 million, representing a stronger 32% increase as compared to FY13 EBITDA of $198 million. GeoPark is therefore well positioned to grow at a robust pace in FY14.

While it might be early to talk about 2015E in the absence of any capital expenditure guidance, the growth is likely to be robust in 2015 as well. The 50-60 well exploration program benefits will spill over to 2015 and production growth is likely to remain on the robust side. For the same reason, I have suggested an initial investment horizon of 12-18 months as it would test the production upside for 2015 as well.
Risk Factors

GeoPark expects peak production from Colombia in FY15 and a gradual production decline from FY16. The company also expects peak production from some wells in Chile in FY16. The key point here is that the company needs to continue adding producing wells or assets to keep growth going. While I have mentioned this, the probability of this risk playing out is low considering the company's high intensity exploration program.

The company's acquisition strategy is also likely to keep production levels growing. In 2011-12, the company acquired the Chile assets, in 2012, the Colombian asset was acquired and in 2013, the Brazilian asset was acquired. Therefore, there is continued inorganic production growth and it is very likely that the company will continue with attractive acquisitions.

Any potential decline in oil & gas prices is also a risk for any company in the industry. I would like to mention here that the current global geo-political scenario is likely to ensure that oil prices remain firm in the investment horizon of 12-18 months.
Conclusion

GeoPark has grown its reserves and production at a robust pace in the past. The company has a high drilling success ratio and the intensive capital expenditure program will help the company sustain its growth.

Since the company's IPO in the NYSE, the stock has trended higher by 31% and I believe that this is just the beginning of a sustained rally. The rally will be fuelled by strong production growth, resulting in higher revenue and EBITDA.

Further, GeoPark has high financial flexibility to pursue more acquisitions and further acquisitions are also likely, which will provide additional stock upside trigger.

While the coverage discusses the outlook for 2014, the potential outlook for 2015 will be equally robust considering the fact that GeoPark's high impact capital expenditure will reap production increase rewards not just for 2014. I am bullish on the stock with a 12-18 month time horizon and I consider the company as a good buy at current levels.

[thegreatgeraldo] 23/6/2014 22:13

News from Tigana next? Any time in the next few weeks?

[bbluesky] 20/6/2014 21:25

t90 I think you will find that institutions screen stocks for value, so if it is there it will be found. Zengas always made the point of critical size, the bigger the more attractive, getting there. Markets are not hugely efficient, but oil and gas is a simple numbers game, no questions as to will this tech grow at x% etc. So if you can buy a barrel at a discount someone will. As SJ intimates patience, believe in the management.

[sailing john] 20/6/2014 12:07

I agree T90

But if they hadn't diluted shareholders in the placing the equivalent price would be slightly North of £7.50 but still a long way below the £11+ that LGI paid for 20% of Chile assets.

Somebody has priced this wrong but I guess Mr Market has the final word!

Have to confess to not really following the detail anymore - happy to leave them tucked away and trust management who have a massive amount of skin in the game. Will probably get taken out in the next 5 years if market undervalues. I have moved significantly to cash this year and I'm really struggling to find stocks I'm comfortable with so very happy to just leave this one ticking over.

[tyler90] 20/6/2014 09:58

SJ, still around £5.60 after yesterday's news. This is around the same when it was announced to move the listing to NYSE. Since then all the good news and the extra capital raised for further investment in exploration has had no impact on the share price.Will keep saying this..the management need to look at proactively marketing the stock. There are too many good stocks out there and investors will not just appear. They need to be attracted!Absolutely no reason why the growth funds should not be fans of GPRK.

[thegreatgeraldo] 19/6/2014 21:57

I've had a nose around & can't find any mention of the pre-drill guesstimate for Arche.... anybody?

[sailing john] 19/6/2014 21:01

I think that's about 1600 barrels of oil equivalent - nice find

+25% on Chile production if volume maintained from just a single well at high pressure

Only up about 4% on cracking news!

Perhaps my Maths is wrong!

[tyler90] 19/6/2014 19:06

Why are the Americans not realising how undervalued this stock is? One afternoon, I will be pleasantly surprised but don't know when.

[bbluesky] 19/6/2014 17:46

Another win in the Fell block - gas. RNS out in New York

[tyler90] 12/6/2014 11:05

Expanding the international portfolio is the operational part of the business. There is also an element ensuring this information reaches the investor community, particularly institutional investors. This stock is basically a capital growth stock with very little prospect of a dividend in the near future and I have to say that the capital growth is not showing over a five year period. The management cannot keep on blaming the markets in which they operate. NYSE is the largest market in the world and they should make the effort to take advantage of this and soon.

[bbluesky] 11/6/2014 21:21

The stags should be out and the short term traders. Schmoosing during the world cup? I am confident they know how to market, look at the history of the company, in fact, I think they are very sophisticated at this, see expanding international portfolio...setting up base camp...

[tyler90] 11/6/2014 10:57

Not a chartist and trend looks good but still feel this should be a lot higher and maybe the IR side of the company needs to be reviewed by the management. They are solid O & G people but marketing does not seem to be one of their strengths.

[sailing john] 10/6/2014 13:41

T90 - no idea about insti interest but average volume now 44k/day which at a guess is about 10*+ greater than it was on AIM

SJ

[tyler90] 10/6/2014 13:25

Does anybody know if institutions over the pond are building a position in this stock or if it has had any good press. If not then the PR team need to get working...the whole idea of moving the listing was to get liquidity, more exposure and ultimately a higher share price. Was it not?

[bbluesky] 13/5/2014 22:30

What caught my eye, was, as far as I can recollect, the first oil out of Tierra del Fuego and poistive sounding notes of the other wells. This has been a Big project and many wells to be drilled. Siesmic studies completed covering a very large area. All systems go?

[sailing john] 13/5/2014 14:08

T90 - Only a quick scan and all looks OK and moving in the right direction

I'm being a rather lazy investor with these!

SJ

[loafingchard] 13/5/2014 13:53

Yes the release reads very well . Would imagine it will be received favourably by the market , assuming the main indices can maintain their composure whilst navigating these all time highs .GLA , NAI .

[tyler90] 13/5/2014 13:51

SJ, I had a quick glance since have to attend a meeting at work. What is your take on the update? Anything that sticks out to you which is not going according to plan?