Q1 2024 GeoPark Ltd Earnings Call

Operator: Good morning and welcome to the GeoPark Limited conference call. Following the results announcement for the first quarter ended March 31, 2024, and after the speaker's remarks, there will be a question and answer session. If you'd like to ask a question at this time, press the star followed by 1 on your telephone keypad.

Good morning, and welcome to the dual Clark Ltd Conference call Orlando results announcement for the first quarter ended March 31, 2024. After the Speakers' remarks, there will be a question and answer session if you'd like to ask a question.

Operator: If you would like to redraw your question, please press star followed by 2. If you do not have a copy of the press release, it is available in the Invest with us section on the company's corporate website at www.geopark.com. A replay of today's call may be accessed through this webcast, in the invest with us section of the GeoPark corporate website. Before we continue, please note that certain statements contained in the results press release and on this conference call are forward-looking statements rather than historical 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 seeks protections afforded by the Private Security Litigation Reform Act of 1995. This risk includes a variety of factors, including competitive development and risk factors.

Operator: Listed from time to time in the company's SEC Report and Public Relief. Those lists 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 companies listed.

Operator: All financial figures included here were prepared in accordance with IFRS and are stated in U.S. dollars unless otherwise indicated. Reserves figures correspond to PRMS standards. On the call today from GeoPark is Andrs Ocampo, Chief Executive Officer; Jaime Caballero, Chief Financial Officer; Augusto Zubillaga. Chief Technical Officer, Martin Terrado, Chief Operational Officer, James Beckleman, James Beckleman, Chief Operational Officer, Rodrigo De La Fiore, New Development and Portfolio Director, and Stacy Staleman, Shareholder Value Director. Now, I would like to turn the call over to Mr. Andrs Ocampo. Mr. Ocampo, please. You may begin.

Speaker Change: Stein Rijsttafel everybody line on your telephone keypad.

Speaker Change: If you would like to withdraw your question. Please press star followed by cute.

Speaker Change: If you do not have a copy of the press release. It is available at the Investor section on the company's corporate website at www.

W. W. W Dot Jill Park Dotcom.

Speaker Change: A replay of today's call may be accessed through this webcast in the Investor section of digital Park corporate website.

Speaker Change: Before we continue please note that certain statements contained in the results press release and on this conference call are forward looking statements rather than historical facts.

Speaker Change: And are subject to risks and uncertainties that could cause actual results to differ materially from those described it.

Speaker Change: With respect to such forward looking statement the company seeks protections afforded by the private Securities Litigation Reform Act of 1995.

This race. This risks include a variety of factors, including competitive development and risk factors.

Speaker Change: And he said from time to time in the company.

Speaker Change: E C.

Speaker Change: We don't reports and public releases.

Speaker Change: This list are intended to identify certain parts of it.

Speaker Change: There are some principal factors.

Speaker Change: That could cause actual results to differ materially from don't describe it easy forward looking statement.

Speaker Change: But are not intended to represent a complete list of company isn't it.

All financial figures included here and were prepared in accordance you know Curtis with I F. R. S and are stated in U S dollars unless otherwise noted.

Speaker Change: Reserves figures correspond to P. R M S standards.

Speaker Change: On the call today from Joe Barclays Andre So comfortable Chief Executive Officer, Jamie bilateral Chief Financial Officer, Oh Gosh Zubillaga.

Speaker Change: Chief Technical Officer marching to Huddle, Chief Operation Officer, James back home in that.

Speaker Change: Coleman Chief operational Officer, where do you go down a few at a new development and portfolio director.

Speaker Change: Stacy stamina.

Stacy stamina: Shareholder value director.

Speaker Change: And now I would like to turn the call over to Mr. Andre El Campo Mr. Oh come book. These you may begin.

Andrs Ocampo: Good morning, and thank you for joining our first quarter conference call. Today, we're proud to report progress and very important results on all key elements of our business and strategy. Solid first quarter results coming from our improved base business, new significant share repurchases, a big and very attractive transformational acquisition, and impressive sustainability and decarbonization. The underlying base business performance is continuing to deliver positive results. We had a strong production in both the Janus 34 and the TPO5 blocks.

Speaker Change: Good morning, and thank you for joining our first quarter conference call.

Speaker Change: Today, we're proud to report progress I'm very important results in all key elements of our business and strategy.

Speaker Change: First quarter results coming from our improved base business.

Speaker Change: Significant share repurchases, a big and very attractive transformational acquisition.

Speaker Change: Brexit sustainability of decarbonization metrics.

Speaker Change: The underlying base business performance is continuing to deliver positive results.

Speaker Change: <unk> had a strong production in both the zenith study for the CPO five blocks in the debt of 34.

Andrs Ocampo: In Design of 34, our core asset, the combination of our horizontal web program and increased water flooding project, took gross production to a range of 56,000 to 57,000 bars a day in early April. With the addition of the Indico 3 development well in April, the CPO5 block production reached over 30,000 bars a day, a new record. Our first quarter financial results were strong, generating over $111 million in adjusted EBITDA with a margin of 67%.

Speaker Change: Core asset the combination of our horizontal well program and increased water flooding project two gross production to a range of 56 to 57000 barrels a day.

Speaker Change: In early April.

Speaker Change: Tightest level in the last 12 months.

Speaker Change: With the addition of the <unk> III development well in April the CPO five block production reached over 30000 barrels a day a new record.

Speaker Change: Our first quarter financial results were strong generating over $111 million in adjusted EBITDA with a margin of 67%.

Andrs Ocampo: During the quarter, we invested almost $50 million, and every dollar invested in the base business yielded around $2.3 in adjusted income. The return on capital employed for the last 12 months was $35,000. The balance sheet remained strong, as we ended the quarter with the highest cash position in the last three years, just over $150 million.

Speaker Change: During the quarter, we invested almost $50 million and every dollar invested in the base business yielded around $2 $3 in adjusted EBITDA.

Speaker Change: The return on capital employed for the last 12 months was 35%.

Speaker Change: The balance sheet remains strong as we ended the quarter with the highest cash position in the last three years just over $150 million.

Andrs Ocampo: Net leverage closed at 0.8 times and remains well below our long-term target of 1 to 1.5%. We recently added an uptake and prepayment facility with VITO that further improves our commercial terms and gives us access to up to $500 million of oil prepayment facility, providing immediate access to competitive and flexible finance. In the last four years, GeoPark has generated more than $475 million of net free cash, almost one time our market cap, which was distributed to our shareholders in buybacks and dividends as well as to our creditors in debt repayment.

Speaker Change: Net leverage close to 0.8 times and remains well below our long term target of one to one and a half times.

Speaker Change: We recently added an uptake in prepayment facility with veto.

Speaker Change: Further improves our commercial terms and gives us access to up to up to $500 million of oil prepayment facility, providing immediate access to competitive and flexible financing.

Speaker Change: Yeah.

Speaker Change: And the last four years Geoponic has generated more than 400 $475 million of net free cash flow.

Speaker Change: Almost one type of our market cap, which was distributed to our shareholders in buybacks and dividends as well as to our creditors and debt repayment.

Andrs Ocampo: This is proof of our commitment to maintain our capital discipline and a strong balance sheet while continuing to return value to our shareholders. This month, we successfully repurchased $43.7 million in GeoPark stock during the Dodge tender offer, reducing shares outstanding by approximately 8%.

Speaker Change: Our commitment to maintain our capital discipline and a strong balance sheet, while continuing to return value to our shareholders.

Speaker Change: This month, we successfully repurchased $43 $7 million in geopolitics talk during the Dutch tender offer reducing shares outstanding by approximately 8% and our board just declared a $7 $5 million dividend to be paid on June 2014.

Andrs Ocampo: And our board just declared a $7.5 million dividend to be paid in June. We have also recently published our speed sustainability report for 2023, which highlights that we have reduced our greenhouse gas emissions intensity by 18% from 2020. At 10.6 kilos of CO2 equivalent per barrel, we are extremely proud to report that we have the lowest carbon intensity among our upstream Latin American oil fields. Our Janus 34 blog, which supplies close to 7% of Colombia's total oil production, has a remarkably low intensity of 7 kilos of CO2 equivalent per barrel.

Speaker Change: Yeah.

Speaker Change: We have also recently published our speed sustainability report for 2023, which highlights that we reduced our greenhouse gas emissions intensity by 18% from 2022.

At 10, six kilos of Cotwo per barrel were extremely proud to report that we have the lowest carbon intensity among our upstream Latin American oil peers.

Speaker Change: <unk> 34 below which supplies close to 7% of Colombia total oil production.

Speaker Change: Remarkably low intensity of seven kilo cotwo.

Speaker Change: Oh, two equivalent per barrel.

Andrs Ocampo: With respect to our asset portfolio expansion, we announced on Monday a new transformational acquisition in Bacamorta in Argentina. Strategic Investment in the World's Fastest-Growing Unconventional Place The transaction includes high-quality assets, with a combination of existing and fast-growing production and cash, with significant and tangible exploration. Matamoros Norte blog was producing zero about three years ago and is currently over 12,000 bars a day from 26 wells in eight parts, and with a ninth part of four wells already drilled and being completed now. It is expected to be put on production before the end of June.

Speaker Change: With respect to our asset portfolio expansion, we announced on Monday, a new transformational acquisition in Bucca more dine, Argentina, a strategic asset in the world's fastest growing unconventional play.

Speaker Change: The transaction includes high quality assets with a combination of existing and fast growing production and cash flow with a significant and tangible exploration upside.

Speaker Change: That multimodal, nor did look what's producing zero about three years ago and is currently over 12000 barrels a day from 26 wells in eight pots and with a ninth pod of four wells already drilled are being completed now expected to be put on production before the end of June.

Andrs Ocampo: This production base is expected to grow to nearly 40,000 barrels of oil per day within the next four years, and an expected CAGR of 35 to 40% during the execution of the multiple remaining drilling locations. Upon the closing of this transaction, we expect to have between 5500 to 6500 net working interest barrels of oil per day added to our daily production, which is about 15 to 20% increase to first quarter production. 50 million barrels of net 2P reserves of 43% versus our December 23 reserve certification, which also includes over 800 million of after-tax MPD-10 at GeoPark working into it.

Speaker Change: These production base is expected to grow to nearly 40000 barrels a day within the next four years unexpected CAGR of 35% to 40% during the execution of the multiple remaining drilling locations.

Speaker Change: Okay.

Speaker Change: Upon closing of this transaction, we expect to be.

Speaker Change: <unk> hundred 5500, 6500, net working interest barrels of oil per day towards daily production, which is about 15% to 20% increase to the first quarter production.

Speaker Change: 50 million barrels of net <unk> reserves of 43% versus December 'twenty three recertification.

Speaker Change: Which include also.

Speaker Change: 800 millions of after tax NPV 10, a geoponic working interest.

Andrs Ocampo: Equivalent to more than four and a half times the purchase price of Matamoros. An estimated annual net EBITDA of $90 to $100 million in full year 2024, which could grow by nearly three times to $300 million at plateau production and at 70 brent, or more than three and a half times at current oil prices. Approximately 240 million barrels of grass.

Speaker Change: We will lead to more than four five times the purchase price of my time with no debt.

Speaker Change: An estimated annual net EBITDA of $90 million to $100 million in full year, 2024, which could grow by nearly three times to $300 million of plateau production at 70 brand.

Speaker Change: Or more than three five times at current oil prices.

Speaker Change: Approximately 240 million barrels of gross three six certified contingent exploration resources.

Andrs Ocampo: 3C Certified Contingent Exploration Resource, in nearly 200 additional drilling locations, which could provide further significant growth, even beyond the Matamora-Norte Plateau product. A significant part of this exploration upside is imminent as the first part has been built and the first exploration well was spotted this. We also have incorporated a new strategic partner, Phoenix Global Resources, which is part of the Mercuria Group, one of the world's leading energy trading The technical and leadership teams at Phoenix have done an impressive job bringing these assets to their current state, delivering significant production growth at highly competitive drilling, completion, and operating costs.

Speaker Change: And nearly 200 additional drilling locations, which could provide further significant growth even beyond the multimodal noted plateau production.

Speaker Change: A significant part of this exploration upside as imminent as the first part has been built in the first exploration well was spud it this month.

Speaker Change: We also have incorporated a new strategic partner Phoenix Global resources, which is part of the Macquarie group one of the worlds leading energy trading companies.

Speaker Change: The technical and leadership teams at Phoenix have done an impressive job in bringing these assets to their current state deliver.

Speaker Change: Delivering significant production growth at highly competitive drilling completion and operating costs with further improvements being achieved on every new well.

Andrs Ocampo: Further improvements are being achieved on every new well. Be soon, both within Phoenix and at prior ventures, has more than a decade of experience in back and forth, and has also taken part of the de-risking of the entire Baja Muerta oil and gas play in the earlier days. We're very proud and happy to be partnering with Phoenix and Mercuria in this new initiative.

Speaker Change: These team both within Phoenix.

Speaker Change: Prior ventures as more than a decade of experience in <unk> and have also taken part of the de risking of the entire back on what our oil and gas play in the early earlier days.

Speaker Change: We're very proud and happy to be partnered with with Phoenix in Korea in these new initiatives.

Andrs Ocampo: We have started a very busy year and have an exciting 2024 and beyond. With some high-impact upcoming catalysts, both with the drilling activity underway in our existing core asset base, as well as the closing and drilling activity in our new VacaMortar. We look forward to reporting our progress to you. We remain committed to consolidating our leading position among Latin American energy companies, producing sustainable hydrocarbons that guarantee energy security, reliability, and affordability in this rapidly changing world.

Speaker Change: We have started a very busy year and have an exciting 2024 and beyond.

Speaker Change: With some high impact coming catalyst, both with the drilling activity underway in our existing core asset base as well as the closing and drilling activity new backup more tasks.

Speaker Change: We look forward to reporting our progress to you.

Speaker Change: We remain committed to consolidating our leading position among Latin American energy companies, producing sustainable hydrocarbons that guarantee energy security reliability and affordability in this rapidly changing world.

Andrs Ocampo: We will now be happy to take any questions that you may have. If you'd like to ask a question, please press star followed by 1 on your telephone keypad. If you change your mind, please press star followed by 2. When preparing to ask your question, please ensure that your device is unmuted locally.

Speaker Change: We would now be happy to take any questions that you may have thank you.

Speaker Change: If you would like to ask a question. Please press star followed by one on your telephone keypad.

Speaker Change: If you change your mind, Please press star followed by Chi.

Speaker Change: When preparing to ask your questions. Please ensure your devices and muted locally.

Jaime: And our first question comes from Alejandro Demichelis on behalf of Jeff. Yes, good morning. Thank you very much for taking my questions. Three questions, if I may. Maybe the first one, Andres, is now that you're having more CapEx going to Guacamoerta, so how should we think about the balance between extra CapEx, free cash flow, and cash returns to shareholders over the next couple of years? That was the first question. My second question is, could you please provide us with an update on the designation and appraisal program that you have been conducting on CPO5?

Speaker Change: And our first question comes from Alejandro Demichelis from Jefferies.

Speaker Change: Yeah.

Speaker Change: Okay.

Jaime: And then the third question is, on the new acreage in Guacamoerta where you're doing the exploration, what do you see as the risk of the oil getting much heavier on that side of the basin? Hello, Alejandro. This is Jaime.

Alejandro DeMichelis: Yes. Good morning, Thank you very much for taking my questions.

Speaker Change: Requests Youll see probably Mike maybe the first one Andreas.

Speaker Change: Now that you are having more capex going to welcome more.

Speaker Change: So how should we think about the balance between extra capex free cash flow on cash returns to shareholders over the next couple of years with the first question second question could you. Please provide us an update on.

Speaker Change: The delineation and appraisal program that you have been conducted on CPO five.

Speaker Change: And then the third question is on the new acreage and buckle, Martha where youre doing the exploration.

Speaker Change: What do you see at the risk of the oil getting much heavier on that side of the basin. Please.

Speaker Change: Yes.

Jaime: I'm going to address your first question, if you will. And it kind of tackles two angles, as I understand it, which is, how does this entry into ACAMUERTA and its capital profile and production profile affect shareholder returns? So I'm going to first talk a little bit about the CAPEX profile and give you a little bit more detail on what we have already announced previously. When you look at the base case for BACAMUERTA and Matamoros, in particular, our goal is to reach 40,000 barrels of production around 2027.

Jaime: Hello, Alejandro this is Jaime I'm going to address your first question, if you will and any kind of tackled dwang rotates.

Keith: I understand it Keith.

Speaker Change: How does this entry into like I'm glad it's tiny.

Speaker Change: Capital profile production profile I think shareholder returns so I am going to first start talk a little bit about capex.

Capex profile.

Speaker Change: Yes.

Speaker Change: A little bit more detail of what we already announced previously.

Speaker Change: When you look at the base case for four <unk>.

In particular, our goal is to <unk>.

Speaker Change: Reached a 40000 barrels of production around 20, Duane 27, and we expect to retain a plateau or possibly two or three years around that time in order to get there.

Jaime: And we expect to retain a plateau of possibly two, three years around that time. In order to get there, the CAPEX exposure that we see to get there is going to be around $1.3 billion over the next 10 years. It's going to gradually escalate.

Speaker Change: The capex exposure that we see to get there is going to be around $1 $3 billion over the next 10 years.

Speaker Change: It is going to gradually escalate, we see this year, it's going to imply an incremental capex of about $100 million next year about 160 $170 million.

Jaime: We see this year it's going to imply an incremental capex of about $100 million. Next year, about $160, $170 million, getting to a peak of $280 million around 2026. So that's what it's going to take in order to get there.

Speaker Change: Getting to a peak of $280 million around 2026.

Speaker Change: That's what it's going to take in order to get there now we obviously need to put that in context that gaining there is going to have a significant EBITDA contribution to the company.

Jaime: Now, we obviously need to put that in context, that getting there is going to make a significant EBITDA contribution to the company. This is a clearly value-accreted deal where we're seeing an incremental EBITDA for the company of between $360 to $400 million per annum at 70 bucks. So in that context, what we are seeing is that, over time, this deal is paying itself off with its own cash generated, and it's going to allow us the cash flexibility to sustain our shareholder return strategy.

Speaker Change: Clearly value accretive deal, where we're seeing an incremental EBITDA for the company of between $350 million to $400 million per annum at 70 box.

Speaker Change: So in that context, what we are seeing is that.

Speaker Change: Over time this deal is paying off by itself with its own cash generated and its going to allow us.

Speaker Change: The cash flexibility to sustain our shareholder return strategy, so specifically in the near term.

Jaime: So specifically in the near term, what we're seeing is we are expecting to maintain our existing policy of $30 million in dividend distributions per annum. We just announced the $7.5 million associated with the first few, and at the current price, we don't see any issue in maintaining that over time. At the same time, as you also noted, we performed the Doge Auction earlier in April. That's going to take our total shareholder returns this year to $80 million, about $80 million, which is significantly above what we had last year. Last year, we had $61 million, for example.

Speaker Change: What we're seeing is we are expecting to maintain our existing policy of $30 million in dividend distributions per annum, we just announced.

Speaker Change: Seven 5 million associated to the first SKU on that.

At the current price deck, we don't see any issue in maintaining that over time at the same time as you. As you also noted we perform that Dutch auction earlier in April that's going to take our total shareholder returns this year to $18 million.

Speaker Change: $80 million a significantly above what we had last year last year, we had $61 million being a part for example, so so all in all what we're seeing with this deal is that you would actually.

Jaime: So, all in all, what we're seeing with this deal is that it actually expands our capacity to maintain these returns over time. There is going to be a capital intensity associated with it, but given the returns that the asset provides, it doesn't affect our ability to provide an interesting yield to our shareholders. And lastly, I guess the other angle that needs to be covered when you're talking about shareholder returns is that that's probably the cash component.

Speaker Change: Expands our capacity to maintain these returns over time, there is going to be a capital intensity associated but given the returns of that the asset provides a it doesn't it doesn't affect our ability to provide on that.

Speaker Change: Interesting yield to our shareholders and lastly, I guess the other angle that needs to be covered when you are talking about.

Speaker Change: Shareholder returns is that that's probably it.

Speaker Change: The cash component we of course see with this deal that there is another angle associated to the intrinsic value of the company.

Jaime: We, of course, see with this deal that there is another angle associated with the intrinsic value of the company. When you look at our research before this deal, we were talking about a 1P net asset valuation of about $1.1 billion and a 2P net asset valuation of about $1.8 billion. With this deal, the 1P net asset valuation goes to $1.5 billion, that's a 33% increase, and the 2P net asset valuation goes from $1.8 billion to $2.6 billion, that's a 46% improvement.

Speaker Change: When you look at our reserves before this deal we were talking about a one b net asset valuation of about $1 $1 billion.

Speaker Change: To be net asset valuation of about $1 8 billion.

Speaker Change: With this deal the one b net asset valuation goes to one $5 billion, that's a 33% increase.

Speaker Change: And that to be net asset valuation goes from one 8 billion to $2 6 billion.

Speaker Change: 46% improvement so all in all we believe that our shareholders are going to be benefiting from both sides on one end from that from the direct cash yield angle. If you will but also from.

Jaime: So all in all, we believe that our shareholders are going to be benefiting from both sides on one end, from the direct cash yield angle, if you will, but also from intrinsic growth over time on CPO5. Martin, would you like to take CPO5?

Speaker Change: Intrinsic growth.

Speaker Change: <unk>.

Speaker Change: Thank you.

Speaker Change: Yes.

Speaker Change: On CPO five Martin.

Speaker Change: Thank you for your part.

Martin Terrado: Absolutely. Good morning, Alejandro. And thanks for your question. Like Andres mentioned in his initial remarks, we're really happy with CPO5's performance. We keep breaking records.

Alejandro: Absolutely good morning, Alejandro Thanks for your question.

Andres: Andres mentioned in his initial remarks, we're really happy with CPO five performance.

Andres: Keep breaking records.

Martin Terrado: Kind of remember that in November 2018-19, when we acquired Medisool, that block was 8,000 barrels of oil per day, and like Andres mentioned, we're at 30,000 right now. We have put on production the well Indico III, and it's producing well, around 3,700 with no water. The rig continues drilling in the area. When you look at delineation, like you were asking, kind of remember we got two wells that we drilled delineating the Barco Formation. They were Alcon and Perico.

Andres: I remember that in November 2018, 19, when we acquired <unk>.

Andres: <unk> 8000 barrels of oil per day, and the like Andreas mentioned, we're at 30000.

Andres: We have a.

Andres: Put on production the well in the country and it's producing.

Andres: Good rates around 3700 with no water.

Andres: The rig continues drilling in there.

Andres: When you look at delineation like you were asking you got to remember we've got two wells that we drill delineating the radical formation, they were I'll call them pretty equal.

Martin Terrado: Perico is delivering more than 900 barrels of oil per day with a very low water cut. Alcon had completion challenges, so that well is not producing as well, and as we continue delineating right now, we are drilling the well Cisne. This is part of the Barco delineation that we're doing. We expect to be completing that well by late May. And after that, the rig will go and drill another exploration well called LARC. And so that's kind of where we are on the delineation. We expect to have that rig working for the full year. That's great. Thank you. Hi Alejandro, this is Rodrigo.

Andres: Delivering more than 900 barrels of oil per day with very low water cut has gone.

Andres: The completion challenges so that when it is not producing as well.

Andres: And as we continue delineating.

Andres: We are drilling the well seasoned and.

Andres: DTC part of their barcode delineation that we're doing we expect to comp.

Completing that well by late May.

Andres: And after that the rig will go on.

Andres: And another exploration well called <unk>.

Andres: And so that's kind of where we are on delineation and we would expect to have that rig working the full year.

Speaker Change: That's great. Thank you Martin.

Andres: Yeah.

Rodrigo: I'm going to tackle your question about Confluencia. Technically, what we see there is a continuation, the continuity of Matamoros to the east part. Of course, we know that there are certain regional trends, like the heavy, for example, and how it's going to affect the API and the gravity of the oil. But there are other good things that we can mention here because, during the evaluation period, we saw many good results from, for example, Vista and Panamerica and Embajada del Palo Este and Agua del Canepa, where they are producing very good wealth in the same trends as we are in Confluencia.

Andres: Hi, Alejandro this is Rodrigo I agreed to tackle your question about consolidation.

Speaker Change: So in Italy, what we see there.

Speaker Change: Continuation.

Speaker Change: The contingency of matter more to the east part of color. We know that there are certain regional trends.

Speaker Change: This JV for example, how is going to a fitbit API and the gravity of the oil, but there are always things that we can mention here because during the evaluation period. We saw really good results from for example, beef back and biomedical and behind us by the way.

Speaker Change: Got you.

Speaker Change: They are producing very good wells in the same trends, where we are in control and so thats from.

Rodrigo: So that's. From the technical point of view, what do we see there? Of course, and also, we have a robust report from Gollier and McNaughton, where they say that we have more than 200 million barrels of oil as resources in the area. But to be honest, we have to deal with the block.

Speaker Change: From the technical point of view, what we see there.

Speaker Change: Also we have <unk>.

Speaker Change: <unk> report from <unk>, and Macnaughton, where they say that we have more than 200 media environment.

Speaker Change: Ours is in the area.

Speaker Change: But to be honest, we have to be re spin the.

Rodrigo: And what we are doing now; we are drilling three wells. We expect the results before the end of this year. And also, we have just finished... 234 square kilometers of seismic to complement this information. But we are optimistic, and we expect a range of productivity in this area in line with the same range that we see in Matamoros. And could you please confirm the rates that you see in Matamoros and Norte? Yes, we can go to Matamoros Norte.

Speaker Change: And while we are doing now we are drilling three wells. We expect the result before the end of this year and also with the desk fees too.

Speaker Change: 234 kilometers square kilometers of seismic to complement this information, but we are optimistic on these big range of productivity in this area in line with the same rates that we see in Matamoros.

Speaker Change: Can you confirm the rates that you see in Matamoros.

Speaker Change: What opinion.

Speaker Change: Yes, we can go into that number or not during the evaluation period. We ran a robinson is we not only use the 26 wells that we have been much more of that we'd also see the neighborhoods.

Rodrigo: During the evaluation period, we ran a robust analysis. We not only used the 26 wells that we have in Matamoros, but we also looked at the neighborhoods and these analog fields.

Speaker Change: These analogs fields and also we have a reserve report from Golar and monitor and do the end of the day, we see a range and that range between 500000 barrel per day, and 1 million most of the wells, but what we see now.

Rodrigo: And also, we have a reserve report from the Governor of Matamoros. And at the end of the day, we see a range of 600,000 barrels per day and 1 million barrels per day for most of the wells. But what we see now is a clear learning curve leading by our operator and partner because the most recent wells are outperforming. They are producing very, very well. You can see more than 2,000 barrels per day as productivity.

Speaker Change: Secondly, our learning curve, leading bioware, operator and partner because the most recent wells.

Speaker Change: Outperforming the app using very very good you can see more than 2000 barrels per day.

Speaker Change: A separate pvt.

Rodrigo: And another example, a good example that you can take is that in February, the Matamoros 2073 was the best producer well in the basin. So that's why we believe that the range is adequate at the moment. But also, we are seeing that our partner and operator is doing things better every day. So that's why maybe this expectation is increasing with the last result that we are seeing. That's great. Thank you very much. Our next question comes from Daniel Guardiola from BTG. Hi, good morning.

Speaker Change: Another example, a good example that you can take is there in February.

Speaker Change: 2018.

Speaker Change: 73.

Speaker Change: Reduce it will in the in the basin. So thats why we believe that the range is adequate at the moment, but also we are seeing that all we're partnering on operators.

Speaker Change: And if things better every day, so thats why maybe this expectation is increasing.

Speaker Change: The last resort that we our team.

Speaker Change: That's great. Thank you very much.

Speaker Change: Our next question comes from Daniel Guardiola from <unk>.

Speaker Change: T G.

Speaker Change: Hi, good morning Andreas.

Speaker Change: Jaime.

Jaime: I think most of my questions are about Argentina. It would be great if you could share with us additional details on the acquired assets. I'd like to know, I mean, I know Jaime just talked about the expected capex for the upcoming years, but I don't know if Jaime, maybe you could share with us the total size of the development plan agreed with Phoenix for the development of Matanora Norte and what percentage of the total identified wells or drilling locations is this plan forecasting to cover? That would be my first question.

Speaker Change: I think most of my questions are in Argentina.

Speaker Change: It would be great. If you could share with us additional details.

The acquired assets.

Speaker Change: I'd like to know I mean, I know Jaime just talked about the expected capex for the upcoming years.

Speaker Change: Jaime maybe you could share with us the total size of the development plan agreed with Phoenix for the development of Martin Nora Naughty.

Speaker Change: And what percentage of the total identified wells or drilling locations is this.

Speaker Change: Planned forecasting to cover that will be my first question. The second one would be additional details on the Matamoros.

Jaime: The second one will be additional details on the Matamora Norte wells that have already been drilled. So it would be great if you could share with us the IRRs so far that the company has seen per well. It would be great to see the EURs of the type curve that you are seeing.

<unk> already drilled wells so it would be great. If you could share with us.

Speaker Change: IRR, so far that the company has seen.

Speaker Change: Per well.

Speaker Change: Great to see the EUR of the.

Speaker Change: The type curve that you are seeing.

Jaime: And the average realized price is the price at which Phoenix is basically selling its oil flowing out from Matamora North. And the third question and the last question are about future growth opportunities. [inaudible] The main feature you will be looking at when doing another acquisition. That will be all. I'm going to try and cover a number of the questions that you asked, and I'm going to then pass it over to Rodrigo, who's going to give us a little bit more color around Matamora Norte today.

Speaker Change: And the average realized price at which set Fannie excuse basically said in its oil.

Speaker Change: Flowing out for a matter more annuity.

Speaker Change: And the third question and last question is on on future growth opportunities I mean, my understanding is that after the closing of this transaction. Your net leverage is now going to surpass one one times net debt to EBITDA, which is still very low very healthy level.

Speaker Change: So I would like to know your thoughts on additional acquisitions similar to this one.

Speaker Change: And if youre thinking about it.

Speaker Change: What will be the main thing.

Speaker Change: Feature you will be looking at when doing another acquisition.

Speaker Change: That will be all.

Speaker Change: Okay.

Speaker Change: The timing here.

Speaker Change: I'm going to try and cover a number of the questions that you made.

Speaker Change: I'm going to I'm going to then pass it over to the reality of who's going to give us a little bit more color around it.

Speaker Change: And more in order to date.

Jaime: So, let's start first with your first question which is essentially around our development plan philosophy and I would start with this notion which is that one of the key reasons why we decided to partner with Phoenix and why Phoenix decided to partner with us frankly was that a clear alignment around where we wanted to take the asset, right, where we wanted to take the asset and there is here a joint vision where we want to take the Matamora development to $40,000 a day in parallel we want to fully explore Confluencia and hopefully add to that and what we're seeing is four blocks that over time are going to have massive economies of scale and of development phase and even commercialization. So that's what we're aiming to do, right, and that vision that you can extract from our release takes us to anywhere between $40,000 to $60,000 a day within five years.

Speaker Change: So let's start first with your with your first question, which is essentially around.

Speaker Change: Our development plan philosophy, and I would start there I would start with this notion which is that one of the key reasons why we decided to partner with Phoenix on why Phoenix decided to partner with US frankly was that a clear alignment around where we wanted to take the asset.

Speaker Change: I wanted to take the asset and there is here a joint vision.

Speaker Change: <unk>, where we wanted to take the Matamoros development to 40000 barrels a day in parallel we want to fully explore compliance, yes, and hopefully add to that and what we're seeing is a four blocks that over time are going to have massive economies of scale.

Speaker Change: <unk> of development base and even commercialization. So that's that's what we're aiming to do right and that vision that you can extract from our release takes us to anywhere between 40000 barrels to 60000 barrels a day within within five years. The work program budget that we've agreed with them.

Jaime: The work program budget that we've agreed with them essentially reflects that. So the numbers that you've seen, we quoted about 150 remaining green locations. That's what we identified with Phoenix, and that's what we want to pursue together with them. Same thing applies for Confluencia in the success case. Obviously, Confluencia is farther behind, if you will, in terms of its maturity, so those are not firm numbers, you know, there's a risk component associated with that, but in Matamora, it's actually quite firm, and it's what essentially underpins the research numbers that you see us quoting. How does that translate to actual activity?

Speaker Change: <unk> essentially reflects that so the numbers that you've seen we quoted about 150 remaining drilling locations. That's why we've identified we've seen and that we are what we want to pursue together with them same thing applies for landstar in the success case obviously.

Constrains days is farther behind in if you will in terms of its maturity. So so those are not firm numbers and others. There is a de risking component associated to that but in Matamoros, it's actually quite firm and its what essentially is what underpinned by reserves numbers that you that you see.

Speaker Change: Clothing, and how does that translate to actual activity.

Speaker Change: Actually we've actually committed with Phoenix.

Jaime: We've actually committed with Phoenix, and jointly we have committed to sustaining a two-rig program over time. That's how we're seeing this develop. Currently, there's one rig; the second rig is going to come in the later part of next year, and after that, we're seeing a sustained two-rig drilling program indefinitely, essentially, indefinitely as more options as we go through this hopper of essentially 350 wells, and hopefully, other options will arise.

We are committed to sustaining a two rig program over time.

Speaker Change: That's how we're seeing this develop currently there's one rig.

Speaker Change: The second rig is going to come in.

Speaker Change: In the later part of next year.

Speaker Change: After that we're seeing a sustained two two rig drilling program.

Speaker Change: Indefinitely essentially indefinitely as more options as we go through these hopper of essentially 350 wells and hopefully other options will arise.

Jaime: That's how we're thinking about it. The CAPEX numbers that I quoted, Daniel, in the previous question are consistent with that. If you essentially do the numbers for 350 wells given the well cost, it's going to take you to that place.

Speaker Change: Is how we're thinking about it.

Speaker Change: Capex numbers that are quoted Danielle in that in the previous question are consistent with that view.

Speaker Change: We essentially do the numbers off.

Speaker Change: 350 wells given.

Speaker Change: The well cost it's going to take you to that place.

Jaime: Let me cover the average realized prices now. Essentially, what we're seeing and what we're expecting, Daniel, is, I would say there are two angles here. There's production that goes to international markets, and there's production that is sold domestically. Those ratios are going to change over time, if you look at the history that has been the case, so we cannot be too deterministic about them, but as a rule of thumb, what I would suggest is that we can sustain at least 30% of sales domestically, and about 70% can go to international markets.

Speaker Change: Let me cover now the average realized prices.

Speaker Change: Essentially what we're seeing what we're seeing and what we're expecting.

Speaker Change: Danielle.

Danielle: I would say there's two angles here. There is there is production that goes to the international markets and there's production that is sold domestically.

Danielle: Those those ratios are going to change over time, if you look at the history. That's been the case, so we cannot be too deterministic about it but as a rule of thumb. What I would suggest is that is that is that we can sustain.

Speaker Change: 30% of sales are domestic and about 70% Tango two international markets. That's what we're seeing I think thats going to change over time as the market evolves. This is this is this is a basin that is growing very quickly.

Jaime: That's what we're seeing. I think that's going to change over time, as the market evolves, this is a basin that is growing very quickly, and of course, the commercial conditions around it as infrastructure matures and evolves are going to change as well. But generally speaking, that's the direction that we're seeing. I think what underpins that assumption, that 70% of the barrels can be exported, is that we are now seeing a surplus whereby the needs of the refining sector in Argentina are very well met, so that allows for flexibility to export volumes.

Speaker Change: Of course, the commercial conditions around their cost infrastructure matures and evolves are going to change as well.

Speaker Change: But generally speaking that's the direction that we're seeing it.

Speaker Change: I think what.

Speaker Change: And their beans that assumption that 70% of the barrels can be exported that we are now seeing a surplus whereby.

Speaker Change: The needs of the of the refining sector in Argentina are very well met so that allows for flexibility to export volumes.

Jaime: The sort of differentials that we're seeing are in the range of $10 to $12 versus Brent. That's the sort of discount that we are seeing and that we're modeling going forward as we look at this development. In terms of net leverage, you already quoted Daniel, the number that we're seeing, that kind of 1.1, that's not to exceed in the near term. I think what could change that is there are two angles that could change that leverage.

Speaker Change: Differentials that we're seeing.

Speaker Change: In the in the range of 10 to $12 eight versus Brent that's the sort of discount that we are seeing and our modeling going forward as we look at this development.

Speaker Change: In terms of of of net leverage you Youre already quoted Danielle.

Speaker Change: The number that we're seeing that that kind of one one.

Speaker Change: Not to exceed.

Sure.

Speaker Change: Over over the near term I think what could change that easily.

Speaker Change: Angles that could change that leverage.

Jaime: I think that if we have a success case in Confluencia, possibly our capital, or possibly not, our capital intensity will increase, but it will increase for the right reasons. It will increase for the right reasons with substantial reserves, production, and exit prices associated with that. We modeled that at a very high level, and even in those scenarios, we are in the 1.2 range. We actually don't reach 1.3, even in those scenarios, right? Even in those scenarios,

Speaker Change: I think that.

Speaker Change: If we have a success case in confluence yeah.

Speaker Change: Possibly our capital or possibly know our capital intensity will increase but it will increase for the right reasons will increase for the right reasons with a substantial reserves production and EBITDA price associated to that we modeled that Barry at a very high level.

Speaker Change: And even in those scenarios, we are in the one two and we actually don't reach one two even though scenario right even in those scenarios. So that gives you an idea of kind of like that.

Jaime: So that gives you an idea of kind of the profile that this development has. What that means is that we do have in our portfolio. That is clearly a priority.

Speaker Change: The profile that these development as well.

Speaker Change: What that means is that we do have.

Speaker Change: A remaining firepower to do engage in.

Speaker Change: In attractive inorganic opt.

Speaker Change: Opportunities.

Speaker Change: Way that I would frame this is that in that in the near term clearly our focus is on delivering our plan.

Speaker Change: <unk> organic brand.

Speaker Change: And now a high quality incorporation of these assets into our portfolio that is clearly a priority. This is a big investment for <unk> and we are going to get it right and we need to get it right.

Jaime: This is a big investment for Geopark, and we are going to get it right, and we need to get it right. In that sense, we are setting up a team that is going to work with Phoenix to progress this development plan. As we have been discussing, we are going to be placing second deals, and we are going to be securing the provincial approvals that we need to get the transaction closed within the next few months.

Speaker Change: And in that sense, we are setting up a team that is going to work with Phoenix to progress These development done.

Speaker Change: As we've been discussing we're going to be placing second liens.

Speaker Change: Going to be securing that.

The provincial approvals that we need to get the transaction closed.

Jaime: We are going to set up performance management processes that allow us to have quality conversations with our partner and with the market around how this is evolving over time. In the end, it is ultimately all about how can we efficiently and effectively collaborate with Phoenix to deliver the value promise that we are making with this deal. That is clearly the priority.

Speaker Change: In the next few months, we're going to set up performance managers management processes that allow us to have quality conversations with with our partner and with the market around how this is evolving over time.

Speaker Change: In the end, it's all adult in the all about how can we efficiently and effectively collaborate with Phoenix to deliver the.

Bayou prominence.

Speaker Change: We are making with this deal so thats clearly the priority having said that.

Jaime: Having said that, our growth aspirations do not stop here. We will continue to look at strategic options that make sense for us. I think Andres, in the prior call when you asked about this, Andres was very eloquent about our planned regional aspiration. We are strong believers in the quality of Colombia, Brazil, and Argentina as world-class petroleum basins that we need to be in, and that is unchanged with this transaction. Actually, what I would say is that this transaction shows that, demonstrates that, and is evidence of that, but it is not the end.

Speaker Change: We are.

Speaker Change: Our growth aspirations do not stop here.

Speaker Change: And we will continue to be looking at options strategic options that make sense for us.

Speaker Change: I think andres in that in the prior call Danielle when you when you ask about this and the rest was very eloquent about our pan regional aspiration. We have we're strong believers in the quality of Columbia that I've seen in Argentina.

Speaker Change: World Class Petroleum base units that we need to be and Thats unchanged with this transaction actually what I would say is that this transaction.

Speaker Change: Those that demonstrates that and as evidence of that but it's not it's not the end. It is not the end and we will continue to look at options that make sense for us.

Jaime: It is not the end, and we will continue to look at options that make sense for us. So I know that was a long answer, but I think I covered four of your five questions. Now, over to Rodrigo. Thank you, Jaime. Hello, Daniel. This is Rodrigo.

Speaker Change: So I know that was a long answer but I covered.

Speaker Change: Think I covered four of your five questions over to it already.

Rodrigo: Thank you Tony Hello, Damian this is Rodrigo.

Rodrigo: We said that range between 600,000 bars and 1,000,000 as an average in the Matamoros North area, but let me put this in a time frame, because what we see is a clear learning curve. Most of the first wells in the area look poorer than the recent wells that we are seeing. So that means that the operator is doing a great job in order to improve not only the operational aspect but also the way that they are landing the wells.

Speaker Change: We said that range between 600000 barrels 1 million units as an average in the macro motor North area, but let me put this in a frame in a timeframe because what we see it's a clear learning curve here most of the first wells in the area of loops, where then the reason was that we are seeing.

Speaker Change: So that mean that the operator is doing a great job in order to improve the operation of the asset but also the way that they are at.

Speaker Change: Lease landing the wells because they switched from them.

Rodrigo: Because they switched from a C2, what we call a very technical definition, but they started to drill new wells in all the landing zones in the area where we have, or we see better productivity. So that's part of the learning curve that we are seeing. So that's why, if I have to summarize this, the initial estimation that we see for the area, it's a well that can produce between 1,000 and 1,500 bars a day at peak.

Speaker Change: <unk>, what we call is that very thing definition, but they started to drill new wells in other landing zones in an area, where we have or we see better productivity. So that's part of the learning curve that we're seeing so that's why if I had to two summary these.

Speaker Change: Initial estimation that we receive for the area. It's a world that can produce between 1000 and 1500 barrels a day as a peak.

Speaker Change: In the first two months now we are seeing most of the well producing more than 2000.

Speaker Change: 2000 barrels per day, so that's a great news for US is the reason because we are talking about with our produce it for three months, but definitely we see these trends in most of the activity that they are very.

Speaker Change: Carry out in the field. So that's the great news, we're asking for a review of course, another thing that we see.

Speaker Change: Optimistic eyes is the well cost.

Rodrigo: [inaudible] They were able to reduce the cost of the well by more than $15 million at the beginning. Now they are drilling between 14.3 and we expect to finish the year close to $13 million per well. So that's what we expect.

Speaker Change: We're able to reduce the cost of the world more than 15 million at the beginning now they are drilling before then between $14 three and we expect to finish the year close to $30 million per well, so thats not what we expect that the pace.

Rodrigo: That's the intention of the operator and, of course, our intention too. So that's what we are seeing in terms of productivity, well cost, and, of course, when you ask about the plan, we've got to mention, as Jaime mentioned, we expect to develop 150 wells in the area, and that's the plan that we have as a minimum plan with them. And I think the IRRs. He also talked about the IRRs expected from the wells. The IRR is a range, of course, but we are seeing between 30 and 70 percent. Thank you for reminding us.

Speaker Change: Certain of the operator and of course, our intention too.

Speaker Change: So thats, what we are seeing in terms of productivity well costs and of course, we you asked about the Gwen with gas dementia as Scott mentioned, we expect the level of the 150 wells in the area.

Speaker Change: That's the blend that we have as a minimum plan with them.

But I think the Irr's. He also talked about as expected from the woods. The IRR is a range of course that we are seeing between 30 and 70%. Thank you for reminding me.

Speaker Change: Okay.

Jaime: Thank you guys for the very thorough answer. Our next question comes from Roman Rossi from Canaccord. And good morning, guys, questions and comments on the results and the acquisition announced. I just wanted to get a sense regarding the facility we declared. I would like to understand how much we are expecting to use for the acquisition and what are the terms beyond, you know, you mentioned it's software plus 3, 35%, but does it have an undrawn fund cost associated with it? And additionally, what's the cash at hand target after the acquisition? Hello Roman. How are you?

Speaker Change: Thank you guys for the for the very thorough answer.

Speaker Change: Okay.

Speaker Change: Our next question comes from Roman <unk> from Canaccord.

Speaker Change: Hey, good morning, guys.

Speaker Change: Thanks for taking the questions and congrats on that.

Speaker Change: Followed some of the acquisition analysis.

So.

Just wanted to get a sense regarding the facility we'd be close I would like to understand how much are you expecting to use for the acquisition.

Speaker Change: And what are the terms beyond <unk>.

Speaker Change: You mentioned its software plus the 335%.

Speaker Change: Does it cover and Undrawn fund costs associated and additionally, what's the cash.

Speaker Change: Target after the acquisition.

Jaime: Let me address that question. So, I would start saying that we told you it starts with, being about commercial performance. You know, financing optionality is a plus, it's an upside, but the underpinning is commercial performance. So this deal covers and secures a very competitive commercial discount for Janus 34 products, a prime motivator for engaging in this type of deal. The nice thing is that, beyond the commercial performance that this delivers, it does provide significant financing optionality.

Speaker Change: Hello, Ron how are you let me cover that.

Speaker Change: The other question. So so I would start saying that the total view.

Speaker Change: It starts with being about commercial performance.

Speaker Change: Financing Optionality is a plus it's an upside but.

Speaker Change: Younger Phoenix its commercial performance. So this deal covers.

Speaker Change: And secures a very competitive commercial discount for Donaldson 34 production.

Speaker Change: That improved commercial differential is something that we're actually going to see a coming across as better price realizations.

Speaker Change: I think we've quoted in the statement that this represents.

Speaker Change: A 16% improvement over what we were seeing two or three years ago.

Speaker Change: That's a prime motivator for engaging in these type of deal.

Speaker Change: <unk>.

Speaker Change: Nice thing is that beyond the commercial performance that this delivers an industrial <unk> significant financing optionality. So the key terms are.

Jaime: So the key terms are, you know, Bitol has committed $300 million that we can draw on at any time in the near term, it is unsecured, it has a very competitive interest rate, you know, we quoted so far plus 375, that's about 9% interest, which compares very favorably even with our own existing bond and the sort of interest that you would get in longer-term financing in the bond market today. It also gives us a grace period that extends to the end of this year without making any payments if we draw on the line, and it can be repaid at any time.

Speaker Change: Vitol has committed $300 million that we can draw on.

Speaker Change: Any time in the in the near term.

Speaker Change: It is it is unsecured.

Speaker Change: It has a very competitive.

Speaker Change: In interest recorded sulfur plus 375, that's about 9%.

Speaker Change: Interest with.

Speaker Change: Which compares very favorably even with our own existing bonds.

Speaker Change: And the sort of interest that you were gaining longer term financing in the bond market.

Speaker Change: It also gave us a grace period that extends to the end of this year without making any payments if we draw on the line and it can be repaid at any time, so it actually keeps our longer term financing options fully available for us.

Jaime: So it actually keeps our longer-term financing options fully available for us if we believe that's the convenient thing to do, and if the market conditions adjust to that. So that's kind of like the general framework.

Speaker Change: Believe that's convenient thing to do and if the market.

Speaker Change: Market conditions adjust to that so that's that's kind of like the general framework in terms of our brands with that line.

Jaime: In terms of our plans for that line, I think the way that we think about it is to let me stand back and talk more broadly about how we are actually approaching this deal, you know, the Vaca Muerta deal. So basically, when you look at the deal, at signing, we already paid $50 million of the numbers that we quoted there, you know, in the statement. That's already been paid, and we paid that with our own cash, right, with existing cash that we had, no financing whatsoever, and actually, let me tell you the remaining balance after paying those $50 million was $110 million.

Speaker Change: I think.

Speaker Change: The way I would think about it let me stand back on.

Speaker Change: Talk more broadly about how we are actually approaching.

Speaker Change: These deals Delek I'm glad that deal. So so basically when you look at the deal at signing we already we already paid $50 million of the numbers that we quoted there.

Speaker Change: In the statement that has already been paid and we paid that back with our own cash right with existing cash that we had no financing whatsoever and actually let me tell you the the.

Speaker Change: The remaining balance after paying those $50 million was 110 meeting. So currently we have $110 million in the bank and that has already gone through the upfront consideration of this deal.

Jaime: So currently, we have $110 million in the bank, and that's already gone through the upfront consideration of this deal. The next big milestone in the deal is the balance that we need to pay at closing, and that balance is essentially $150 million that needs to be paid at closing. With that, we cover the entire upfront consideration of the deal.

Speaker Change: The next big milestone in the deal is the balance that we need to pay at closing.

Speaker Change: That band is essentially $150 million that need to be paid at <unk>.

Speaker Change: With that we cover the entire upfront consideration of the deal.

Jaime: The other thing that we need to consider when we look at our CAPEX is that the carry component, you know, the carry component of the confluencia, well, is going to go in parallel to this. And what we are estimating is that that's going to represent about $100 million this year. That's the estimate that we are expecting this year. So what that means is that for the remainder of this year, the deal is going to represent an extra $250 million versus the plan that we have. How are we going to finance that?

Speaker Change: The other thing that we need to consider when you look at our Capex is that the carry component the carry component of the complaints here.

Speaker Change: <unk> is going to go in parallel two weeks on where we are.

Speaker Change: Estimating is that that's going to represent this year about.

Speaker Change: About $100 million Thats. The estimate that we are expecting this year. So what that means is that in the remainder of this year.

Speaker Change: The deal is going to represent.

Speaker Change: Our next $250 million.

Jaime: It's likely to be a combination of the cash surplus that we are accumulating at these prices. We are accumulating an important cash surplus every month at this price deck, and the remainder, very likely, using the Avitol financing facility. If I could give you an indication, and with the caveat that this is flexible because we have total flexibility around this, I will give you an indication that we could use about $150 million of the Avitol facility this year to underpin this effort, and it represents no interest this year as it's covered by the grace period.

Speaker Change: Versus the plan that we have how are we going to finance that is going to be likely a combination of the cash surplus that we are accumulating at these prices. We are accumulating a cash as an important cash surplus every month at this price deck and the remainder very likely using that in total.

Speaker Change: A a financing facility.

Speaker Change: I will give you an indication on with the caveat that this is flexible because we have total flexibility down on this I will give you an indication that we could use about $150 million of that facility. This year.

Speaker Change: To underpin this effort and it represent no interest this year as it is covered by the Grace period.

Jaime: If we do that, payments will start in January of next year, and you're going to see monthly amortizations for that figure of about $7 million a month. That's the way to think about it from a modeling standpoint. Thank you, everyone. Good. Thank you, Jaime.

Speaker Change: We do that payment will start in January of next year, and Youre going to see monthly amortizations for that figure of about $7 million a month, that's the way to think about it.

Speaker Change: I'm a modeling standpoint.

Speaker Change: Thank you Rowan.

Speaker Change: Okay.

Jaime: And maybe I'll follow up. On the acquisition, you say that you expect to close in Q3, so that will be impacting your fourth quarter financials, right? Yes, Roman. So basically, on this, I think there are two things that, two key milestones that you need to consider. I think there is the effective date and then there is the closing date.

Speaker Change: Great. Thank you.

Speaker Change: Maybe I'll follow up.

Speaker Change: On the acquisition yesterday that you expect to close in Q3, so that will be impacting our fourth quarter financials right.

Speaker Change: Yes, one of them. So so basically on this I think there's two things that two key milestones that you need to consider I think there is there is the effective date and then there is the closing so so regardless of closing and let me define closing.

Jaime: So regardless of closing, let me define closing. So for the purposes of this deal, the private deal between Phoenix and GeoPark is fully complete. So that deal is complete, it's irrevocable, we have an agreement between us. When we talk about closing, we're really talking about the regulatory approval that the provinces in Argentina need to provide so that we are, if you will, the equivalent of a leaseholder, right? So that we come through the public deeds as a leaseholder.

Jaime: That's what we refer to as closing. And there are two aspects, you know; we need approval in Neuquén for Matamora, and we need approval in Rionegro for Confluencia. So we are expecting that to occur within the next few months. When that occurs, that triggers the payments that I mentioned previously of $150 million to Phoenix. So, that's what closing refers to. Despite that, or having said that, the effective date is going to be the 1st of July.

Speaker Change: So for the time for the purposes of this deal.

Speaker Change: The deal between Phoenix and.

Speaker Change: <unk> Park.

Speaker Change: Our fully complete so that deal is complete.

Speaker Change: Bookable, we have an agreement between US now when we talk about closing, we're really talking about the regulatory approval that the provinces in Argentina need need to provide so that we are if you will the equivalent of a lease hold right. So that we come through the public deed as <unk>.

Speaker Change: Lease holder, that's what we refer to closing on this.

Speaker Change: And there are two aspects, we need an approval in <unk> for four months and we need our approval you rune Edinburgh for control and so.

So we are expecting that to occur within the next few months.

Speaker Change: When that occurs that triggers.

Speaker Change: Payments that I mentioned previously of $150 million to two to Phoenix.

Speaker Change: So that's that's what closing reversing this.

Speaker Change: Spike that or having said that the effective date is going to be the first of July so the economic aspects of this deal are already effective starting on the first of July. So we start to look at all of the accounting of the deal.

Jaime: So the economic aspects of this deal are already effective starting on the 1st of July. So we start to look at all the accounting of the deal on that 50-50 basis, the 50% basis. [inaudible] Correct?

Speaker Change: On that 50, 50 basis, 50% basis.

Speaker Change: Well how is this going to translate into accounting wise.

Speaker Change: Is that a.

Speaker Change: Subject to closing date, and let's assume that we close by the end of of the three Q, what youre going to see is that in the fourth Q financial statements, you're going to see the fully consolidated on a line by line basis right.

Jaime: As an indication of that, in four-Q, you're going to see anywhere between, you know, 6,000, 7,000 extra barrels a day of performance and production. You're going to see a share of cost. You're going to see, you know, all the different lines of what this deal implies. On the EBITDA line, what you should be expecting for four-Q would be an additional EBITDA of around $30 million. That's what we are, you know, estimating at this time.

Speaker Change: As an indication of that in <unk> youre going to see anywhere between 6000 7000 extra barrels a day of performance of production a year.

Speaker Change: Yes, sure of course, you're going to see all the different lines, what what this deal implies on the EBITDA line, what you should be expecting for <unk>.

Speaker Change: It would be an additional it did that.

Speaker Change: <unk> of around $30 million, that's where we are.

Speaker Change: <unk> at this time.

Jaime: So it's going to be fluid from here to there, you know, but if I had to give you a message, it would be that consolidation starts post-closing, but economic effects start the 1st of July, regardless of the closing date. That's the bottom line.

Speaker Change: So it is going to be flowing from here to there.

Speaker Change: If I would have to give you a message is that consolidation start post closing, but economic FERC effects start the first of July regardless of closing date, that's the bottom line.

Jaime: And just one last question on Colombia. So a couple of days ago, there was a public hearing at the Constitutional Court regarding the non-deductibility of royalties. So, do you have any comments on that front and say that they want to keep the non-deductibility valid for 2023, which is one of the alternatives that the government is trying to get. So will you need to pay more taxes or how that will work for GeoPark? Thanks.

Speaker Change: Awesome.

Speaker Change: One last question on Colombia.

Speaker Change: Couple of minutes ago.

Speaker Change: <unk> hearing.

Speaker Change: The constitutional court regarding the non deductibility of royalties so.

Speaker Change: So do you have any comments on that front and.

Speaker Change: Day that they want to keep the non deductibility valid for 2023, which is one of the alternatives that are the government is trying to get.

Speaker Change: What do you need to pay more taxes, how that would work for calpine.

Speaker Change: Thanks.

Speaker Change: Yeah.

Jaime: Sure Roman, so let me provide some kind of broader context on this. So really, what's in discussion is that as part of the tax reform that was approved last year, the tax reform had two components. It had a surcharge linked to the price environment on the corporate tax. That surcharge went from zero to 15. That's in place. It's not under discussion. The other component was the non-deductibility of royalties, which was declared unconstitutional by the Constitutional Court at the time.

Robin: Sure Robin So let me provide some broader context on DSO. So really what's in discussion is that as part of the tax reform that was approved last year that is actually from two components. It had it had.

Robin: It had a.

Robin: A surcharge.

Robin: Link to price environment.

Robin: On the corporate tax that surcharge went from zero to 15. That's that's that's in place. It is not in discussion. The other component was the non deductibility of royalties, which was declared in constitutional by that echoes additional court at the time what has.

Jaime: What has happened is that the government presented a recourse whereby they requested a second hearing on that by the Constitutional Court, not a final decision on it, but the willingness to perform that review. While they do that, while they do that, the prior decision still stands, still stands. So this does not suspend the decision that the Constitutional Court had already made of deterring that unconstitutional.

Robin: Happen is that the government presented a recourse whereby they request that like.

Robin: Our second hearing on backed by the Constitutional Court.

Robin: The constitutional court has communicated is easy.

Robin: <unk> is not a final decision on it but the willingness to perform that reviewed willingness to perform that review.

Robin: While they do that while they do that the prior decision still stands still stands. So this does not sustained the decision that the cost of additional court had already made of declaring that unconstitutional.

Jaime: What that means is that we are actually in May, which is tax season, right? So we are in tax season. Companies are going to make a decision around how they are calculating the deductibility of royalty. What prevails at this time is that decision that is unconstitutional.

What that means is that for.

Robin: Actually in May which is tax season right. So we are in tax season.

Robin: Companies are going to make a decision around how are the calculating the deductibility of royalties.

Robin: What prevails at this time is that decision that that is unconstitutional.

Jaime: So at least for GeoPark, we are going to act on the basis that that's unconstitutional, right? What could happen later on if the Constitutional Court decides to reconsider its previous decision? This will have an effect on next year's declaration, right? And there could be some form of recognition of what was not paid in 2024. What we have estimated, what we have estimated, the impact associated with that, we have estimated it between $12 to $15 million.

Robin: So a.

Robin: At least for Hill Park, we are going to act on the basis that that's unconstitutional.

Robin: Right.

Robin: And now.

Robin: What could happen later on is that is the constitutional court decides to reconsider its previous decision. This will have an effect.

Robin: On next year's Declaration light and there could be some form of a recognition.

Robin: Mission off of what was not paid in 2024, while we have estimated while we have estimated the impact associated to that we have estimated at between $12 million to $15 million. That's the rough estimate that we have associated to that it is a range because it depends.

Jaime: That's the rough estimate that we have associated with that. It is a range because it depends on things like royalties paid on time, fluctuating volumes, you know, there's some moving pieces around that, so we estimate it in the $12 to $15 range.

Robin: On things like royalties paid on time flip trading volumes Theres. Some theres some moving pieces around that so we estimated an adult the 15 range importantly.

Jaime: Importantly, in the guidance that we have provided to you guys around our full year 2024 EBITDA, we actually, this actually doesn't have any impact on that because the way that we provided that guidance, it assumed at the time, remember that this was the plan that we announced back in November, at the time, we were operating under the existing tax reform. So for us, this is an upside, you know. If, ultimately, this is confirmed as inconstitutional, it is an upside to our case, right? And if the government's idea of, you know, contesting this and challenging this goes forward, it won't represent a downside. Okay, that's awesome. Thank you, Jaime, and congrats again on the...

Robin: In the guidance that we have provided to you guys around our full year 2020 for EBITDA.

Robin: We actually this actually doesn't have any impact on that because the way that we provided that guidance.

Robin: Assume at the time, but remember that this this this was the plan that we announced back in November at the time.

Robin: We were operating under the existing tax reform so a.

Robin: For us.

Robin: Sure.

Robin: This is an upside is this ETE if ultimately a.

Robin: This is confirmed as in constitutional it is an upside to our case.

And if the governments idea of contesting this in China. This goes forward.

Speaker Change: Im going to represent the downside.

Speaker Change: Okay Awesome. Thank you Jaime and congrats again on the acquisition.

Thank you. Thank you very much.

Jaime: Thank you. Thank you very much. And our next question comes from Oriana Kovald from Ballet. Hi, thanks for taking my question. Many of them have been answered already, but I have... A couple of follow-ups on the Nakamora acquisition. First, regarding the development and completion costs that you shared, it's our understanding that local authorities have been in the trend to $11 million per well. So just to understand if there's a difference between the numbers that you're targeting, is it because of area specifics? And or if you could share additional color on what you're seeing on your end, and also related to the Vagabond work acquisition. If you could comment on any, from the regulatory side of things, would you?

Speaker Change: And our next question comes from Ariana closeout on balance.

Speaker Change #100: Hi, Thanks for taking my question.

Speaker Change: Yes.

Speaker Change #101: <unk> already by half.

Speaker Change #102: One a couple of follow ups.

Speaker Change #102: Acquisition.

Speaker Change #102: First regarding <unk>.

Speaker Change #103: The development and completion costs have you shared.

Speaker Change #104: Before I understanding that right.

Speaker Change #105: Is it 10 to 11 million per well.

Speaker Change #105: So understanding.

Speaker Change #106: Between the numbers that you are targeting.

Speaker Change #106: Because the areas.

Speaker Change #106: Yeah.

Speaker Change #107: And or if you can share additional color on what youre seeing on your end.

Speaker Change #108: And also related to that acquisition.

Speaker Change #109: If you could comment on.

Speaker Change #108: Tony.

On the regulatory side of things.

Andrs Ocampo: How are you seeing the landscape in terms of the possibility of repatriating profits of the operations once they are ongoing? And one last one regarding quality discounts. Congratulations on becoming a Shogun among the people, but just to understand, um, she's expecting.

Speaker Change #110: How are you seeing the landscape.

Speaker Change #108: Yeah.

Speaker Change #111: With our Canadian partners.

All of the operational slides.

Speaker Change #111: They are ongoing and one last one regarding quality discounts.

Speaker Change #111: This is on the commercial and people that just do.

Speaker Change #112: I understand.

Speaker Change #112: We are expecting.

Andrs Ocampo: Any potential, what are you seeing from the entry into operation of the focus refineries and climax lower? Lower exports of crude oil could potentially benefit you in terms of quality discounts. That would be a helpful color to have.

Speaker Change #112: The proposal.

Speaker Change #113: What are your thoughts from the entry.

Speaker Change #113: So there are pockets of pioneering and pemex lowered.

Lower exports of crude oil could potentially benefit you.

Speaker Change #113: Terms of quality discounts that would be helpful color.

Yeah.

Speaker Change #113: Yeah.

Andrs Ocampo: Thank you. Hi Oriana, this is Andres. Your line comes in a little bit noisy. Let me repeat to see if we understood your questions correctly. Your first question concerns the drilling and completion cost of the well that we are estimating for this asset. Yes, it has to do with the drilling and completion cost compared to what local peers have been reporting in the same area. Our understanding is that it is closer to perhaps $11 million per well, so just to understand what the different... is something area specific. But or if you could share additional color and what you're seeing.

Irina: Hi, Irina this is under the airline comes on.

Irina: A little bit noisy, let me repeat.

Irina: To see if we understood your question correctly.

Irina: First question.

Irina: <unk>.

Irina: The drilling and completion cost of the wells that we're estimating for these assets.

Speaker Change #115: Yes, it has to do with the daily localization cost compared to what local peers have been reporting.

Speaker Change #115: Again in the same area.

Speaker Change #115: And that is that it is closer to perhaps $11 million. So well so just to understand whether the difference.

Speaker Change #115: It's something area specific.

But if you can share additional color on what youre seeing.

Andrs Ocampo: And also, on the Vaca Muerta transaction, the additional follow-up had to do with the regulatory challenges that you may see the professionals taking profit from the operation. And the last one had to do with quality discounts and where you see them going through the remainder of the year. So the second one is related to capital controls in Argentina and the last one to quality discounts on crude sales, correct? Yes, sorry for the trouble with the lines. No, no, that's okay. That's fine. Hello, good morning.

Speaker Change #116: And also in light of that infection.

Speaker Change #117: Additional follow up has to do with the regulatory challenges.

Speaker Change #116: Yes.

Speaker Change #118: To the professionals taking profits.

Speaker Change #118: From the operation and the last one had to do with quality discounts.

Speaker Change #119: And where do you see them going through the remainder of the year.

Speaker Change #118: Yeah.

Speaker Change #120: So the second one is related to capital controls in Argentina, and the last one to quality discounts on the crude sales correct.

Yeah.

Yes, sorry.

Speaker Change #120: Sorry for the follow up with a life.

Speaker Change #121: No no that's okay. That's okay.

Speaker Change #120: Alright.

Rodrigo: This is Rodrigo here. It's important to remark that the drilling cost two years ago was close to $16 million per well. Now, the last 23, they end the year with $14.3 million per well. So that's a tremendous improvement. Of course, this is because they learn, but they also introduce technology, and service prices go down. So that's the trend that we see for the future in the model we use for the next two years, $14.3 million per well. But after 26... with an extra drilling rig in the area.

Speaker Change #122: Hello. Good morning, this is illegal here.

Speaker Change #122: It is important to remark that the drilling cost two years ago was close to $60 million per well now less than 23, they end the year with a $14 3 million per well.

Speaker Change #122: A tremendous improvement of core this is because the learn but also they introduce technology.

Speaker Change #122: And the services prices getting down so thats the trend that we see for the future in the model we use for the next two years 14 million.

Speaker Change #122: Millions of dollars per well, but after 'twenty six.

Speaker Change #122: Nextera really reaching the area, we are talking about $13 6 million per well. So that's the base case that we have to be honest, what we see is.

Rodrigo: We are talking about $13.6 million per well. So that's the base case that we have. But to be honest, what we see is a trend not only here in Argentina, but at the same time, you can see the same trend in Permian. The trend in efficiency in terms of drilling wells is continuing to improve. So that's why we expect better performance in the future and lower costs. But that's the cost that we use for the moment. Oriana, I guess in terms of your angle around benchmarking, I think there's...

Speaker Change #122: This is a trend not only here in Argentina, but at the same time you can see the same trend in Permian.

Speaker Change #122: The trend in there.

Speaker Change #122: Patients in terms of really well is continued improvements. So that's why we spent.

Speaker Change #122: Performance in the future and lower costs, but thats the cost that we use for the model.

Speaker Change #122: Yes.

Speaker Change #123: Oh, Dan Oriana I guess in terms of your the angle of our own benchmarking.

Speaker Change #122: <unk>.

Speaker Change #122: I think there is.

Speaker Change #122: Yeah.

Jaime: There are several considerations here, but I think the most important thing is, right? Regardless of who is the operator, what we're seeing in Vaca Muerta is a consistent trend where your cost per well is improving over time. I think, as you would expect, there are differences from operator to operator. That's always the case. It depends on the standards that we use.

Speaker Change #122: There are several considerations here, but I think I think the most important thing is.

Speaker Change #122: If you look at that trend right, regardless of regardless of who is the operator, the while we are seeing in back in light of that you say a.

Speaker Change #122: System trend where a.

Speaker Change #122: Your cost per well is improving over time I think.

Speaker Change #122: As you would expect there are differences from operator to operator that that's always the case it depends on on the standards that the yields it depends on it.

Jaime: It depends on a specific requirement of the locations and geographies where they are operating that allow synergies or not. The $10 to $11 million cost per well that you're mentioning, we believe that is on the very low end. We prefer to use a more conservative assumption that ensures that we can maintain the robust well designs that have characterized Phoenix so far. That's something that actually attracted us to this deal, and it has to do with these alignments of ways of operating and everything. Phoenix is of the view that you need to ensure certain integrity standards and quality standards around the well, and we're comfortable with that.

Speaker Change #122: <unk>.

Speaker Change #122: The specific requirements of that locations are in geographies, where there are operating that allow synergies or not.

Speaker Change #124: The $10 million to $11 million cost per well that you are mentioning we believe that is in the very low end, we prefer to use a a more conservative assumption.

Speaker Change #124: That that ensures that we can maintain that.

Speaker Change #124: Robust well designs that have characterized phoenix, so far that's something that that is actually a attracted us to these do any has to do with this alignment.

Speaker Change #124: Ways of operating on everything in a Phoenix is of the view that that that you need to ensure a certain integrity standards and quality standards around the world and we're comfortable with that I think anything that can be delivered on top of the $13 6 million is going to be upside and.

Jaime: I think anything that can be delivered on top of the $13.6 million is going to be upside, and that is, of course, great news. With regard to your other questions, Oriana, about regulatory challenges in Argentina, I'd say the way that we structure the transaction is that the transaction needs to fly under the existing regulatory environment. We are not banking on any type of positive development in the regulatory environment, even though there are clear winds of change that could suggest that those upsides are possible.

Speaker Change #124: Of course.

Speaker Change #125: <unk> news.

Speaker Change #125: With regards to your other questions already on it.

Regulatory challenges.

Speaker Change #125: In our in Argentina.

Speaker Change #125: I'd say the way that we structured that transaction is that the transaction needs to fly on their existing under the existing regulatory environment right. So we are not banking on any type of a positive.

Speaker Change #125: Well it means in the regulatory environment, even though there are clear winds of change that could suggest that those upsides are possible.

Jaime: In the near term, the biggest consideration that we've looked into is capital controls, and particularly those associated with the influx of money going into Argentina and coming out of Argentina, and what the impact of that will be on the economy. I would say that our biggest consideration is that when you look at the profile of this program and the goals that we talked about in this program where we want to grow the asset quickly over the next five years, what we're seeing is that capital controls are not a big issue because we actually expect all the revenues and all the EBITDA that this deal generates to stay in the country to underpin that growth in the near term.

Speaker Change #125: In the near term the biggest consideration that we've looked into it is capital controls.

Speaker Change #125: And particularly those associated to the influx of money going into into Argentina, and coming out of Argentina, and what are the impact of that in the economics.

Speaker Change #125: I would I would say that our biggest consideration.

Speaker Change #125: Is that when you look at the profile of this program.

Speaker Change #125: And the goals that we talked about this program, where we want to we want to grow the asset quickly over the next five years, while we are seeing is that.

Speaker Change #125: A <unk> it is not a big issue the capital controls because we actually expect that that all of the revenues.

Speaker Change #125: EBITDA these deal generate sustained country to underpin that growth in the near term.

Jaime: I'm sure that in the medium and long term, options will come up if that is needed, but the priority at this time is to make sure that we can fully fund the growth of that asset, and we're confident that we can do that under the existing regulation.

Speaker Change #125: I'm sure that over the medium and long term.

Speaker Change #125: <unk> will come up.

Speaker Change #125: That is needed but the priority at this time is to make sure that we can fully fund the growth of both of that asset and we are confident that we can do that under the existing regulation and lastly, with regards to the quality to the evolution of discounts over time.

Jaime: And lastly, with regard to the quality and the evolution of discounts over time, I think it's going to be very fluid, and as I mentioned before, Oriana, on a prior question, the important thing is the trend, and the trend that we're seeing is that as Vaca Muerta grows, the surplus production relative to the requirements of domestic refining is just going to grow and grow and grow and grow, right? Surely there's going to be a discussion between, you know, the regulator and between operators about how you distribute and how you allocate export capacities.

Speaker Change #126: I think it's going to be very fluid and as high as I mentioned before oriana on that.

Speaker Change #126: On a prior question.

Speaker Change #126: <unk> thing is the trend and the trend that we're seeing is that as back on more of that growth.

Speaker Change #126: The surplus production relative to the requirements of domestic refining is just going to grow and grow and grow and grow right surely there's going to be a discussion between with the regulator on between operators about how do you distribute and how do you allocate exports capacities.

Jaime: Surely that's going to develop over time. What we're seeing is that even in a stress scenario where you have to fundamentally alter that balance between exports and domestic sales, the quality of this asset is such that it allows you a good return. So even in those scenarios, that is not a concern.

Speaker Change #126: Surely are currently available at a time, while we are seeing is that this this.

Speaker Change #127: Even in us and even in a stress scenario, where you have to fundamentally alter that balance between export and domestic sales.

Speaker Change #127: The quality of these assets is such that it allows you a good return.

Speaker Change #127: So even in those scenarios that is not a concern so.

Jaime: So obviously, to the extent that you can fully, you know, if the market in Argentina develops in a way that you have, if you will, a free market, you know, with perfect conditions, that's only going to represent an upside to this deal. Thank you. Okay, yeah, thanks for your question. Just one follow-up, because maybe I wasn't fully clear, but I was referring more to the Colombian side of quality discounts to understand how you are seeing the evolution of potentially fewer exports out of FEMEX because of the entry into operations of those low-cost refineries having a potential upside for your heavy crude commercial application. That was more of the angle of this amazing thing.

Speaker Change #127: To the extent that you can fully.

Speaker Change #127: <unk> is the marketing Argentina develops in a way.

Speaker Change #127: You have if you will of.

Speaker Change #127: Our three market.

Speaker Change #127: With perfect conditions, that's only going to represent upside to this deal.

Speaker Change #128: Thank you.

Speaker Change #129: Yes. Thanks for your question just one follow up because maybe I wasn't very clear, but I was referring on the Colombian side quality discounts just to understand how are you seeing the evolution of <unk>.

Speaker Change #130: Actually fewer exports out of Fedex, because as we enter into arrangements have they just walk us refinery.

Speaker Change #130: Having a potential upside into your.

Speaker Change #131: Heavy could collect amputation.

Speaker Change #132: That was more of the angle.

Speaker Change #133: Thank you.

Jaime: Yeah, sure. Thanks for clarifying, Oriana. So I guess in Colombia, I'd say I'll start with a simpler view and then kind of a broader kind of market.

Speaker Change #134: Yes sure.

Speaker Change #135: Thanks for clarifying oriana so.

Speaker Change #136: So I guess all in Colombia, I would say.

Speaker Change #137: I'll start with a simpler view on them from the kind of more broader kind of market.

Jaime: In our case, you know, the bulk of our production, which is down to 34, we've already secured commercial conditions for those through a VITOL deal. That covers, you know, about 20,000 barrels of production, give or take. And then what you're talking about is really the remainder, which is a combination of CPO5, Janus 34, Exploration, and Putumayo.

Speaker Change #137: In our case.

Speaker Change #137: A.

Speaker Change #137: The bulk of our production with <unk> four we have already secured commercial conditions for those through.

Speaker Change #137: Deal.

Speaker Change #137: That covers about 20000 barrels of production.

Speaker Change #137: Give or take and then while Youre talking about is really the remainder which is which is a combination of CPO five downstairs for exploration and putumayo that the fundamentals for all of them are going in a positive direction CPO five aesop.

Jaime: The fundamentals for all of them are going in a positive direction. CPO5 is a super-high-quality crude that is extremely attractive to local refineries in Colombia. We believe that we can maintain the existing differentials that we're seeing, the existing commercial differentials that we're seeing for that, which are actually a premium. We're actually getting a premium on Brent of about $5 a barrel for that. So we're very optimistic about the commercial differentials that we can get for CPO5.

Super high quality crude that.

Speaker Change #137: That is extremely attractive to the local refineries in Colombia.

Speaker Change #137: We believe that we can maintain the existing differentials that we're seeing the existing commercial differentials that we're seeing for that which are actually a premium we're actually getting a premium brand of about five bucks a barrel on that so so we are very we're very optimistic about the about the <unk>.

<unk> differentials that we can get for CPO five.

Jaime: On the Putumayo front, you know, on the Oriente front, what we're seeing is an interesting development, you know, where a number of players are actually quite interested in getting those volumes because they're able to export them through the Pacific or to make blends, you know, special blends, as I stated before.

On the Putumayo upfront on Orient their front, while we are seeing is an interesting development, where we were a number of players are actually quite.

Interesting in getting those volumes because they are able to export them through our Pacific or to make brands special blends associated to that so overall.

Jaime: So overall, you know, what I would tell you, Adrian, is that the sort of differentials that you saw in 1Q, we believe we can sustain them over the medium term. Perfect. That's great.

Speaker Change #137: I would tell you is that the sort of differentials that you saw in <unk>. We believe we can sustain them over over the medium term.

Speaker Change #137: Yes.

Speaker Change #138: Perfect. That's very clear thank you very much guys.

Speaker Change #139: Thank you.

Jaime: Thank you very much, guys. And our next question comes from Alexandre Andrade from JP Morgan. Hi, thanks so much for taking my question. Mine is a quick one.

Speaker Change #140: And our.

Speaker Change #141: Next question comes from Alexandra <unk> from JP Morgan.

Alexandra: Hi, Thanks, so much for taking my question mine is a quick one I know you said you already have some existing infrastructure for transportation in Argentina.

Alexandra <unk>: Wondering because you said that there was a pipeline fill that needed to be built in order to have all the proper infrastructure for exports and transportation. So just wondering if you could comment a little bit more on that thank you.

Jaime: I know you said you already have some existing infrastructure for transportation in Argentina, but I was wondering because you said that there was a pipeline still that needed to be built in order to have all the proper infrastructure for exports and transportation. So just wondering if you could comment a little bit more on that. Thank you. Hi Alejandro, this is Jaime. So, effectively, as part of this transaction, we secured access to the mixing capacity that we need to make the deal work.

Speaker Change #144: Hi, Alejandro.

Simon: Simon So yes effectively.

Speaker Change #146: As part of this as part of this transaction we secured.

Jaime: Essentially, we secured entry into the Duplicar pipeline that provides us with a capacity of 19, the equivalent of about 19,000 barrels per day. Of that, about 5,000 barrels per day are already in place, and the pipeline is under construction, and it's expected to be fully delivered by April 2026. So by that time, which is when we are going to get near to plateau production, we are expecting to have that capability fully in place.

The access to the midstream capacity that we need to make the deal work.

Speaker Change #146: Essentially.

Speaker Change #146: We secured a entry into into that.

Speaker Change #147: <unk> got a pipeline that is.

Speaker Change #147: It provides us with an <unk> with a capacity of 19, the equivalent of about 19 8000 barrels per day of that about.

Speaker Change #147: About 5000 barrels a day are already in place and the pipeline is under construction and is expected to be fully delivered by April 2026. So so by that time, which is when we are starting to we're going to get near to the plateau production, we are expecting to have.

Speaker Change #147: That capability fully in place there is also open market.

Jaime: There's also open market access to redundant capacity in that pipeline where there is the ability to access it, and there are other projects in place to construct additional capacity in Argentina. With respect to this deal in particular, what we have secured is that 19,000 barrels a day that I mentioned. That covers essentially 50% of the plateau, right? So the way to think about it is that we have secured transport rights to export ports for about 50% of the production already, and there's optionality for other infrastructure that's going to come about over the next couple of years.

Speaker Change #147: Access.

Speaker Change #147: Two a redundant capacity in that pipeline, where there is the ability to access that and there are other projects in place to construct additional capacity in Argentina, but with respect to this deal in particular, while we have secured is that 19000 barrels a day that I.

Speaker Change #147: That I mentioned.

That covers essentially 50% of the plateau right. So so the way to think about it is that we have secured transport rights to export boards for about 50% of our production already.

Speaker Change #147: And there is optionality for all of their infrastructure that is going to come about over the next couple of years.

Jaime: We currently have no further questions, so I will hand over to Andrs Ocampo to conclude. Thank you, everybody, for your interest and your support of our company. We're always here to answer any questions you may have, and we encourage you to visit us in our field and our operations, or call us anytime for further information.

Speaker Change #148: Thank you so much.

Speaker Change #149: Thank you.

Speaker Change #149: Yeah.

Speaker Change #150: We currently have no further questions I will hand back over to Andrew Campbell Chief complaint.

Speaker Change #150: Okay.

Andrew Campbell: Thank you everybody for your interest and your support of our company. We're always here to answer any questions. You may have and we encourage you to visit us at our appeal and our operations or call us anytime for further information.

Andrs Ocampo: So, thank you, and have a good day. And this concludes today's call. Thank you for joining. You may now disconnect your line. So, thank you, and have a good day. And this concludes.

Andrew Campbell: Thank you and have a good day.

Speaker Change #152: And this concludes today's call. Thank you for joining you may now disconnect your lines.

Speaker Change #152: So thank you and have a good day.

Speaker Change #152: And this concludes.