Q1 2020 Earnings Call
And after session. If he would like to ask a question at this time press star one on your telephone keypad, if he would like to withdraw your question press the pound key.
If you do not have a copy of the press release, please call sorry for being in a company in New York add one to one to fixing seven 808 zero and we will have one sent to you.
Alternatively, you may obtain a copy of the released at the Investor support section on the company's corporate website at Www Dot deals Dash Park Dot Com a replay of today's call may be accessed through this webcast in the investor support section of the Geopark corporate web site.
Before we continue please note that certain statements contained in the results press release and on this conference call. Our forward looking statements rather than historical facts and are subject to risk and uncertainties that could cause actual results to differ materially from those described with respect to such forward looking statements. The company's seeks protection.
Afforded by the private Securities Litigation Reform Act of 1995.
These risks and food a variety of factors, including competitive developments and risk factors listed from time to time and the company's FCC reports and public releases.
List are intended to identify certain principal factors that could cause actual results to differ materially from those described in the forward looking statements, but are not intended to represent a complete list of the company's business.
All financial figures include if you're in were prepared in accordance with the I.S. part is understated in U.S. dollars unless otherwise noted.
Reserves figures correspond to PR emission standards.
On the call today from Geopark is James F. Park, Chief Executive Officer, I guess show.
<unk> Chief operating officer.
Yes, Okay sample Chief financial Officer, and Stacy Simon shareholder value director and now I'll turn the call over to Mr. James Park. Mr Park, you may begin.
Thank you and welcome everyone.
We are joining you this morning with our executive team.
United has ever in our efforts, it's currently physically separated and calling in from our respective homes and location and well good luck.
Yeah, I go and boy deciding.
At the outset.
But first like to express our profile gratitude and admiration for the Geopark women and men, who are working day and night pushing us through this downturn and continuously making our company for form.
Checking our shareholders and positioning us for the new World all the other side.
Across six countries are cheap moved with quickness and agility to protect the health and safety of our employees.
Contractors and communities and ensure that our hydrocarbons keep flowing through the market.
With greater logistical support our office that could be moved to work from home.
But our field operations require men and women to be onsite and has her hands on the iron.
Our field teams again proved why they are the backbone of our company.
Before opening up the question.
Please look at four elements of our business during this first quarter.
Fortunately our teams continue to drive performance was solid resolved.
Floating record production of 45700 barrels per day, representing 16% growth compared to last year.
Strong cash generation with an adjusted EBITDA of $78 million.
And ladies capital efficiency with 2.3 dollars generated for every one dollar invested.
On certain higher cost mature projects within our portfolio.
Noncash accounting at Paramount 97.5 million, which made US recorded a net loss of 89.5 million for the quarter.
Secondly, Archie move lightning fast into battle mode for the arrival of the global and.
Collapse in the world economy, and the flooding the oil markets with our neither the non wanted barrels.
In addition to quickly protecting the health and safety of our teams and contractors, we worked with our neighbors and community to keep them informed of operations and risks and provide them with safety medical and food supplies, particularly for the most vulnerable.
Following our test that business model and track record.
Our seasoned team simultaneously attack every component of dimension of our business.
So far more than $280 million a capital one cost savings have been implemented across the board with more common.
This included reducing our self funded work program by 75% for $45 million to $50 million focusing on our most strategic assets like the Janow 34 cents CPL five blocks in Colombia.
Another say, they such as voluntary salary and bonus coal fired C and board.
We also temporarily shut in 6500 7500 barrels per day of higher cost reduction to preserve cash and shareholder value.
Bolting in higher cash flow with less capex.
There's also helped us minimize activity and the potential spread or the virus in the field and then our surround the community.
It is expected that this production can be readily brought back on stream without suffering mechanical delays or reservoir damage.
Thirdly, the underlying strength of our assets and key characteristics of our company provides a foundation to protect against an enduring through this and other crises.
Additional tools at hand include a strong balance sheet with $165.5 million of cash and safety nets funding alternatives, such as a $75 million oil prepayments with 50 dollarss million dollars committed and $130 million.
Uncommitted credit line.
Biting us with financial flexibility and liquidity if needed.
Do parks long term debt profile has no principal payments until September 2024.
And standard and Poor's in fish, most recently reaffirmed our long term corporate credit rating at B plus.
We're also aggressively protecting our base oil price by effectively using hedges.
Approximately 26000 barrels per day, nearly 70% of world production hedged in the second quarter and so far approximately 17500 barrels per day and 11000 barrels per day in the third and fourth quarters respectfully.
Fortunately.
As a long term opportunity driven company working in the most attractive hydrocarbon region today.
We are looking ahead with excitement to the recovery and taking this opportunity to streamline and a green bar overall business and more strongly position Geopark for continued economic growth and success.
As always we're protecting critical people tools and capabilities for the short medium and long term and our flexible work programs operational agility and they inventory of organic projects allow us to quickly expand our judgment plan as prices begin.
There were caliber.
The first step up at $35 plus Brett.
We got a head start in this recovery effort by already closing on and integrating into Geopark, Yeah Mirror show resources acquisition during January.
This gave us additional important low cost reduction.
Third and high potential acreage adjacent to an on trend with the youngest 34 blocks and a new entry into the food to my a basin with production reserves, a pipeline attractive exploration acreage and a new partnership with Wuxi.
In addition, we went to the capital markets in January and raised to $350 million bond, which was oversubscribed more than six times five top tier investors and achieve the lowest interest rate ever for a single B rated company in Latin America.
Thank you and we would be pleased to answer any questions you may have.
And place pretty patient as we try to coordinate our question answering with our team located across the continent today.
At this time I would like to remind everyone that if he would like to asking question to press star one on your telephone keypad now again that star one for any questions. We'll pause for just a moment to compile DQSA roster.
The first question will come from Robinho works with Stifel. Please go ahead.
I like that Ah. Thank you very much for taking my question.
I was just.
A couple of questions. If I may just on the Capex budget, what I should be interested to know what was the last thing that came out with the capital budget I used to say yeah well is the.
Hi, just returning opportunity in your portfolio that you're not able to do I'm in the current environment.
Secondly on the.
I guess from the kept the capital budget implied Scott.
You see just kind of pretty much all drilling programs from now on a given that you spend a large portion of the 2020 budget.
Say when when should we start expecting to see underlying declines in the portfolio.
Ignoring the shots in our own seriously.
And then thirdly, and finally in a bit more strategically.
Intensive or taking advantage of this downtime.
Yes, you do have a white footprint.
We should be expecting to use this time turn to add to the footprint or would you be expecting to use it to kind of slim down to you cool Columbia asset base. Thank you.
Thanks, very much Robyn thanks for the questions can you hear me okay.
Did you some but.
I can hear you fine yeah. Thanks, Thanks, Yeah.
So the first question about off topic.
Not sure if I got it right, but so we are estimating what do you have a topic now for the year to be more or less 45 $50 million.
Thank you so not really most of that aren't you pointed out most of that has already been invested so really what is remaining.
He is very limited you are around $5 million per quarter, maybe some quarters when they go up to $80000, but didn't piece going thats still high volatility or in some cases weren't or we are not eating even lifting or some wells that are that goes down because all sites.
From a year or things like that which are a pretty common in day to day.
So I would say on topics have been done has been.
Compression down to be know, what we called it might in a topic.
We're not so what we just Ah that's just one work on a recurring downside report a working too they are putting buck one well once dream I will release that league even up it was a that jovi.
I think lovely or mainly because of the hybrid TV jihad prices I mean, Brent was brought into 20, no. That's something they used to go to lease up 30, so let's bring some pretty significant.
So.
You need on certain Oh, possibly or how will we couldn't do youve any we've done some on any of those investments.
So.
When we could be thinking are starting to embed again.
Secondly, we don't meet level, you know over 40 or anything like that we I think you mentioned I think introduction.
We don't pricing firmly about.
35, or higher we're ready to go back to work, so hopefully a sooner than happen.
There are some clarity into market that will be hot but nothing will happen a movie thing. A then we're ready to start putting more writing bucking bettman seem to change one portfolio.
I don't know he thought answers your question about Cox.
Yeah. It does just.
I guess.
Clarified and I was also asking a bad.
The difference between your old Capex guidance is 79 sort of 45 50 that 20 million of 25 million what was it that's called <unk> <unk>.
Well the first thing that you do written isn't as a slightly higher.
So those were.
TV keys doesn't.
Like up.
I see the team building facilities.
Or someone called works, we have planned would help I've, often a six or seven workovers that.
We have found or delayed.
There were or seismic.
Works at worst feet on the budget.
We also hot or some other activities for a licensing.
Things like Dot no well I mean, the previous or the bring his budget or was it doesn't need as much as already having nobody should I won't tell me I'm only maybe one or two wells in cblbfive.
Okay, we're just having no new well.
Oh I know some activity team in two months those other type of thing most of them with the exception of the Workovers most of them no immediate production associated to them.
Okay. Thanks.
With respect to that decline.
As you pointed out I mean, we have shut in production, we expect that starting production or to counter to counter by last thing, but still substantial decline so really.
The production, we're seeing we're seeing more on that flat throughout the year, but it will depend on oil prices. So if you assume a 30 $30 Brent for the year.
The production will remain with the exception of the second quarter will remain more on that seemed a little so 40000 boss is eight per quarter.
So you shouldn't be seeing declines because the shutting wells would compensate for that.
In the second quarter in particular, what we'd have to they would have more or less by 6500 to 7500 Boes a day shopping.
The guidance, we gave me not really we're estimating that don't have put back on.
In July.
The beginning of two line so that means that those bonds her out for the fourth quarter.
No I didn't know what we expect.
Hopefully, we will give them to bring those low coupon actually.
Activate pricing or made it very accustomed to put those low spot.
And I thought I mean, the 30 brand with a $6 differential them of Kornya that means you know 24, though not affecting pricing, Colombia or most of those bonds that are shopping.
Generate.
Quite some touched me one dose level mode on a.
Almost $10 for Barack will be generated from those so a piece I think we took on fewer bringing them Buck.
Why don't you probably know is not so easy to put I mean, you cannot be shutting in shutting down well every day, we wouldn't need some more clarity on how sustainable. These buckets are are you comfortable that both will remain a be sure that will bring those bonds buck or on on production.
So did you have June.
I'm not that those bonds or not but on stream until the end of June.
Dan production for the second quarter will being the level. So for 35 36000 Boes a day.
If you assume that they have to buck on production at the beginning of June it wouldn't be more closer to 38.
And then for the rest of the year would be around 40000 Boes a day Oh.
Turning to slide.
I had a nice right you've got actually bestsellers, you're going to decline going up and then that's likely well the strategic.
These you got sick or obviously.
Most spoken doubled on the most of.
The biggest capital generation for the company.
But because our names market.
Eat, Colombia, where concentrating our oh, oh, the real activity in Philadelphia.
He comes on being done a 19 dollarsforty four on T. feels like.
And we expect that to be the Kate.
Oh were significantly reducing or or basically, noting besting through what you're starting to impairments in this environment is not economic.
The but he conducted in Chile, and Argentina. We also did some information relating to the only losses or because of the so because of the scenario.
We.
HM we feel the need because the right thing to be looking for opportunities. So.
You know, we keep we'll keep our eyes open on when you've got Oh.
The market.
The racing gotten done in these markets.
Very tough as well. So you know we will probably be concentrating more in Colombia in peacetime or the middle to close the door to any opportunities that may show up.
In such an attractive market for us.
So.
I had a nice that's a that's the point youre referring to.
Yes, that's right.
Thank you very much.
Thanks, very much Robyn.
[laughter] once again, if he would like to ask a question. Please press star one not on your telephone keypad now again, ladies and gentlemen that star one for any questions well pause for just a moment.
Okay and the next question will come from Stephanie flu said with Optus Advisors. Please go ahead.
Hi, guys are two questions for me I wanted to circle concentration. So from what you said you have to say hold price. We made the says he do now about into the end of the yeah.
They won't be Vivian additional exploration wells is a in Colombia to secure and my second question. He was a round I was surprised I didnt get back which is basically youre, putting make back she thinks he can put it shouldn't be low while the till putting it back.
Basically unchanged always then beat up.
So my question is when he's where what has changed the Gionee I was going down it's probably not think reveal placing it back so easy that youre forecasting the well packs lower transport cost or is it simply because you see here.
That's a differential thank you.
Hi, good morning stuff on could you. Please repeat the first question I I'm just become clear, but can you repeat the first one I did not on the stands at 90 Selene Oh.
<unk>.
It was just to college education that I've said to do an hour bowels, we should not expect and you said the exploration drilling which I think it's a question for me just trying to go back to normal exposure from doing a $50 out into the end of the yeah. He's a click.
Yes, that's correct.
We know where 30 circular.
Okay, we're not anticipating any exploration reading.
Or maybe something in KBR five bodies any wouldn't be a significant amount of God bless you feel five we're keeping maybe one up rates held well one disposal wells to increase collection, and maybe one exploration well, but.
Although two then I wouldn't call account for more than $3 million a net to do your book I'm feeling some likely that we would do that so I wouldn't I wouldn't consider those.
Fortunately.
At least until the end of the.
And then through your clinical LNG here like when it's not like.
Sorry, yeah than they thought.
No appointees right.
Basically even a scenario where we're shutting in production out of the electronics lower.
And then Bucky higher and mainly there and also we could take that are you actually operating costs are you factoring the topics I thought so nowhere and yet kind of breaking free cash flows so for much higher steel.
The main or the mainly but very selfish instantly doctrine and office, where not only argue knight has been cut down by almost 40%.
I don't know you need to include the fact that analyses that we we also took over and you company with the tone here.
So if you Buck 13, a that that's where I'm starting to train 19 numbers, where we didn't have that company.
Then the cuts will be much higher.
But in any case, India breaking that Patrick once you know the did you know like not included but the night and very focused so we're cutting down or opex significantly.
In the New office, we acquired for example in people module or I mean, CPL five consolidated a marriage, who was reporting 18 to 20, though that's the bar and okay. So we're we're cutting goes down to $10 to bottom or those group of thought there.
In Argentina in Chile, our Opex is down 50% targeting around 9.5 left for better than last year. He did 40 something closer to 20.
No I didn't see not we're cutting down around 40% or opex.
On Dan in Colombia in the other assets in Colombia down by around 20% to 25% Oh so although.
These actions are generating the <unk> did better in buttons on.
On the net.
And as a follow on do you see some of those opex reduction.
He's been structural or would you see that coming back as soon as a plus come back.
Some of them are just not putting jobs and things like that but most of them or structural structural changes either renegotiate you can contact already tightening operations or.
Things are thinking that you know well most of the reactions or our German.
<unk> expenses, if you can't do that.
Thank you.
Thank you support.
Once again, if he would like to ask a question. Please press star one again that star one for any questions over the phone line.
We do other question from Ian Macqueen with eight capital. Please go ahead.
And your line is open.
Oh, sorry, but I was on mute.
So I'm just wanting to know about shut ins and where they are occurring I know you have 100% operated production in Chile, and Argentina, but your partners in Brazil, and Colombia can you give us an idea of the beuys per day that are going to be shot in Brazil, Chile, Argentina and then in.
Colombia, where they would be shut ins, whether it would be L.A. 34, CTO Fiberplus anyhow.
Thank you.
Yes.
Hi, good morning.
I'd sort of the.
So the charting more or less the breakdown of those roughly.
7000 or or or so bars today.
Oh Gee later on 500 barrels a day related mainly to the only production the gas wells that are still flowing would come smoke on than say that comes along with that.
No I didn't see nice roughly 200 Boes a day.
Related to two old told you on your nothing.
Oh in Brazil on the only 150 barrels a day.
Would use the one or you feel about what's out there on some small knowing that he's been viewed by commodity.
And then in Colombia.
More or less the thousand Boes, a day or so related to flattening you.
That's a good do multiple election.
And then he jumped 34 net to Geopark something around five to 6000 BARDA today most of it.
I'm bodies related to.
Shouting right now being done for the photos on that to view a bunch of their own like I said five to $6000 a day.
That's great. Thank you very much Andreas.
Yeah for anybody any.
<unk>, maybe I'd, well basically throwing $10000 a day or so.
On the water that represent a almost 100000 Bucks a day of work because I play that 18 Bucks off the over these wells on the net Buffy.
Much better.
Because it's almost an average whichever chatting for that can be the 90% of work though.
Great. Thank you.
Okay. Thank you.
At this time I would like to turn the conference Bank of what you're James Park for any closing comment.
Thank you everybody for your interest in Judo Park and your continued support of our company.
Once the world's borders began to open again, we encourage you to please visit onset our operations in each country and call. It at any time for more information or comments.
Thank you.
And please stay healthy and strong.
[laughter], ladies and gentlemen, thank you for participate emailing disconnect.
[music].