Q2 2024 GeoPark Ltd Earnings Call
Andrs Ocampo Terrado,
Speaker Change: Good morning and welcome to the Geopark Limited conference call following the results announcement for the second quarter ending June 30th 2024.
Speaker Change: After the speaker's remarks, there will be a question and answer session.
Speaker Change: If you'd like to ask a question at this time, please press star 1 on your telephone keypad. If you'd like to withdraw your question...
Speaker Change: Andrs Ocampo
Speaker Change: If you do not have a copy of the press release, it is available at the Invest With Us section on the company's corporate website at www.investwithus.com.
Speaker Change: Geopark.com. A replay of today's call may be accessed through this website in the Invest With Us section of the Geopark corporate website. Before we continue please note certain statements contained in the results press release and on the conference call are forward-looking statements rather than historical facts and are subject to risks 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 Securities Litigation Reform Act of 1995. These risks include a variety of factors including competitive development and risk factors listed from time to time in the company's SEC reports and public releases.
Speaker Change: Those lists are intended to identify certain principal factors that could cause actual results to differ materially from those described in forward-looking statements, but are not intended to represent a complete list of the company's business. All financial figures, including hearings, were prepared in accordance with the IFRS Act.
Speaker Change: and are stated in U.S. dollars unless otherwise noted. Reserved figures correspond to PRMS standards.
Speaker Change: On the call today from GeoPark is Andres Ocampo, Chief Executive Officer.
Speaker Change: Jaime Caballero, Chief Financial Officer Augustus Zubiala, Chief Technical Officer Martin Tarrado
Speaker Change: Chief Operating Officer Rodrigo De La Fiori New Development and Portfolio Director
Speaker Change: Stacey Steinmeier, shareholder, value director, and Maria Catalina Escobar, shareholder value and capital markets director. And now I'll turn the call over to Mr. Andreas Ocampo. Mr. Ocampo, you may begin.
Andreas Ocampo: Good morning and thank you for joining our second quarter conference call.
Andreas Ocampo: We're pleased to report on our continued progress and results.
Speaker Change: In the second quarter, Geopark demonstrated strong financial performance despite some operational challenges.
Speaker Change: Our revenue increased by 14% compared to the first quarter to $190 million on the back of higher oil prices.
Speaker Change: Adjusted EBITDA increased 15% to $128 million, resulting in an EBITDA margin of 67%.
Speaker Change: Net profit was $25.7 million, equivalent to $0.50 per share, mainly affected by non-cost charges related to the impact of the devaluation of the Colombian peso over deferred income taxes.
Speaker Change: During the second quarter, Geofarq invested around $49 million in capital expenditures and generated almost three times that amount in adjusted EBITDA within the same quarter, again showing our team's capital discipline and efficiency of our investments.
Speaker Change: The return on average capital employed in the last 12 months was 38%.
Speaker Change: Geopark's strong net-free cash flow generation continues, having finished the quarter with a cash position of $66 million after repurchasing $43.7 million worth of shares through a Doge auction in May.
Speaker Change: paying $52 million in taxes and making a down payment of $49 million for the Vaca Muerta assets and having paid $7.5 million in dividends for the quarter.
Speaker Change: GEOPAR continues to further enhance its financial flexibility and balance sheet through two strategic oil prepayment agreements, one effective in the second quarter and the other one nearing finalization, providing additional liquidity available at any time.
Speaker Change: We continue growing shareholder returns with the board approving a dividend of $7.5 million payable on September 12th.
Speaker Change: which combined with the Doge auction results, Geopark will have returned over $66 million to shareholders.
Speaker Change: Equivalent to $1.29 per share by the end of the third quarter, already exceeding the total amount returned in all of 2023.
Speaker Change: As we look ahead to the second half of 2024
Speaker Change: We're looking forward to continue our drilling, water cover and water flooding campaign in our core Janus 34 block.
Speaker Change: as well as the potential new abrasion opportunities coming from our recent exploration discoveries.
Speaker Change: in the other Janus Racing Vlogs.
Speaker Change: namely the Toritos, Saltador, Vigdita and Sorzal fields which are currently producing approximately 3600 barrels a day gross and we expect to drill 3 to 5 new wells before the end of the year.
Speaker Change: In addition, we have already started initial activities and civil works in the Putumayo 8 block, getting ready to drill our first exploration well before year-end, the Machaca 1 prospect.
Speaker Change: New abrasion and exploration drilling activities in our core CPO5 block will continue, and our team is already mapping new prospectivity coming from recent 3D seismic in the Janus 86 and Janus 104 blocks, as well as in the CPO5 block for next year's exploration campaign.
Speaker Change: It is important to mention that Geoparks consolidated production is currently 5,000 to 5,500 barrels a day, higher than reported, following our recent acquisition in Vaca Muerta, effective since July 1st, and we are on target to close by the end of the third quarter.
Speaker Change: The Matamora Norte block produced an average of 12,500 barrels a day gross in the second quarter, and the operator is continuing development drilling there.
Speaker Change: Production from this block would boost Average 2024 production levels to well within our stated guidance.
Speaker Change: Part number four in Matamora Norte, which was drilling at the time we announced the transaction, has been put on production and is already producing more than 5,000 barrels a day gross with a 45% water cut.
Speaker Change: which means that these wells continue to clean up with less water and higher production until they reach the initial peak in the incoming weeks.
Speaker Change: Results so far are quite encouraging.
Speaker Change: The drilling rig is on the Confluencia Norte block finishing the first exploration path that includes three wells. Drilling activities are almost complete and a completion set is scheduled for October.
Speaker Change: We look forward to testing production from these first exploration activities before the year ends.
Speaker Change: The drilling rig will immediately move back to Mata Amora Norte block to continue drilling development wells and increase production.
Speaker Change: Geopark is well positioned to continue its success in 2024 and beyond. Our strategic growth initiatives, disciplined financial management, and focus on sustainability will continue to be key drivers of our performance.
Speaker Change: Thank you for your continued support and confidence in our company.
Speaker Change: We are now ready to take any questions you may have.
Speaker Change: Thank you. If you'd like to register a question please press star followed by one on your telephone keypad ensuring your line is unmuted locally. If you wish to withdraw your question at any time you can do so by pressing star followed by two.
Speaker Change: The first question comes from the line of Daniel Garbiola of BTG. Your line is now open, please go ahead.
Daniel Garbiola: Hi, thank you.
Daniel Garbiola: for a presentation. Andres, just a couple of questions for my end.
Daniel Garbiola: and the first one related to Argentina and I would like to know if you could share with us how do you envision the progress of production coming from Argentina I mean toward the second half of the year but also in 2025
Speaker Change: And the second question is related to potential additional inorganic opportunities and if you can share with us if the company is actually targeting new potential acquisitions.
Speaker Change: in the region, and if you could share the rationale behind this potential M&A strategy. That will be all for my end.
Speaker Change: Hello Daniel, good morning. This is Rodrigo from Design. Let's start with a question about Argentina and the perspective that we have in terms of production.
Speaker Change: We have a robust result during the second quarter of this year.
Speaker Change: We perform 12,500 barrels per day during the quarter. What we expect after the drill...
Speaker Change: came back to Matamora Vlogs.
Speaker Change: it started increasing again.
Speaker Change: That's why we expect a slowly increasing production during 2025.
Speaker Change: For 25, another important...
Speaker Change: Milestone is the second drilling rig. So for the future...
Speaker Change: to achieve the base plan, where we try to tackle 20,000 bar... Sorry, 20,000 bar per day net. We need the second one. We expect to get that drill by the end of next year. So that's the perspective that we have in terms of activity, and the production is going to increase.
Speaker Change: We expect to finish the year between 13,000 and 14,000 virus equivalent per day. And that's the guidance that we did last call. So we're still in the same line.
Speaker Change: I think the big picture comments on our new acquisition is that everything is going really ahead of our expectations.
Speaker Change: If you remember some of the activities that we're doing, that we're actually doing right now.
Speaker Change: was putting on production the PAD4 and as I mentioned in my introduction, that PAD is already contributing approximately 5,000 barrels a day and it's still cleaning up, I mean it's still producing at...
Speaker Change: 50% water, and if you remember, these wells should clean up to almost zero water in the incoming weeks. So we have high expectations for the productivity coming from that pad.
Speaker Change: And the second big item here is the initial of the exploration activities in Confluencia. And that is underway. We haven't completed the wells, but we have completed the drilling of the wells.
Speaker Change: And, of course, these are quite close to Matamora.
Speaker Change: So our expectation was to encounter more or less similar conditions that we found in Matamora, and that is confirmed. So, so far, what we found is well within what we expected, so we look forward to completing and testing production from these wells.
Speaker Change: This doesn't fully de-risk the entire confluencia play, but with positive results will open up more opportunities for us to continue drilling there.
Speaker Change: So, very encouraged and very happy with how the operations are going in Baca Muerta right now. We have a great relationship with the operator and they are doing an incredible job. We have already Geopark team members participating in the operation.
Speaker Change: We have three people named in the operation that are fully dedicated to work with them to get everything right. So, so far, really so great.
Speaker Change: Daniel, good morning. I'm going to take your question around inorganic opportunities, and I think it's no surprise for anybody in the call that inorganic opportunities are a key component of our
Speaker Change: at has a really strong track record of delivering value through inorganic opportunities.
Speaker Change: We have done that in the past, we are doing it now through Vaca Muerta and we believe that we can continue to do that into the future.
Speaker Change: When you look at the perspectives in the region, we believe that we can actually access new barrels, new reserves, and provide kind of long-term sustainability to the business through those acquisitions.
Speaker Change: I would say that our focus is around three things when you try to drill down into what that strategy is trying to accomplish. The first thing is that we are focusing on assets.
Speaker Change: that provide immediate production capabilities.
Speaker Change: But whilst we still look at, you know, exploration opportunities and those sort of renewal type opportunities in the medium to long term.
Speaker Change: That is not our prime focus and that's not where our primary capital allocation from an inorganic standpoint is going to be. At this time, we believe that our capital allocation needs to be biased towards
Speaker Change: All these opportunities that bring immediate production to the business. We think that's one key component. A second component is, of course, around scale, right? We are focusing the agenda on material opportunities.
Speaker Change: that moved the dial in terms of reserves progression for the business. You know, we have spoken in the past.
Speaker Change: of our growth ambition and we believe that the opportunities that are going to be made available to this company, if we reach a next ceiling of scale, something around the lines
Speaker Change: Ocampo.
Speaker Change: a 70,000 barrels a day or so are different you know it opens up new opportunities for the business it opens up
Speaker Change: a different type of liquidity in the market and we believe that is of strategic value and real economic value for our shareholders. So those are, I would say, those are two elements of color in the strategy and I think the third one
Speaker Change: is of course the geographic footprint and as we've said many times in the past, and I'm going to reiterate that, Colombia, Argentina, and Brazil are the places that we are focusing our attention right now.
Speaker Change: Thanks, Daniel.
Daniel Garbiola: Thank you, Jaime, Andres, and Rodrigo. If I may just squeeze another one related to the last comment you did, Jaime.
Speaker Change: Can you share with us what is the maximum level of leverage that the company will feel comfortable at operating?
Speaker Change: Sure, Daniel. I don't know if you heard that. I had a bit of a mute moment here, but I was saying that sure. You know what, what we...
Speaker Change: indicated in the past and when we look at our financial frame going forward, we believe that a gross debt to EBITDA ratio of 1.5
Speaker Change: is manageable. We're nowhere near that.
Speaker Change: that ratio.
Speaker Change: nor do we think that we would be in a sustained way at that level, but we believe that we can
Speaker Change: A look at opportunities that at times take us to that level, right? Of course, we're going to look at the type of asset and the nature of how those assets look to give us financial flexibility and assurance. We've been a company that is known for its
Speaker Change: prudent financial discipline and that's not going to change. But when we're looking at opportunities, that's the debt ceiling that we put to ourselves.
Speaker Change: Thank you very much
Speaker Change: Thank you very much for joining us today, and we'll see you in the next video.
Speaker Change: Thank you. As a reminder, if you'd like to ask a question, please press start followed by one on your telephone keypad. The next question comes from the line of Stefan Borco of Optus Advisors. Your line is now open, please go ahead.
Speaker Change: Hi guys, thanks for taking my question. I've got a few. The first one around production. So what's the current production net in the Lianos and Argentina? I think there was a number quoted of that. We'll get confirmation of that.
Speaker Change: Second, at least in my model, the cash tax in the quarter was quite lower than what I was expecting in Colombia.
Speaker Change: And I was wondering, what do you expect to pay in cash tax in the second half of the year, 2025?
Speaker Change: And lastly, what's the... so there is a new prepay with Trafee, I think, that comes with...
Speaker Change: an improved discount, a lower discount for CPO5.
Speaker Change: I was wondering if you could give us a sense of how long is that discount for and what's the
Speaker Change: What did you have to pay for the traffic prepayment? What I'm trying to get...
Speaker Change: to is whether the lower discount for CPO5 production is just for the duration of the prepay or that's something that can carry for longer. Thank you.
Speaker Change: Andrs Ocampo
Speaker Change: So, Stefan, good morning. This is Martín Terrado. Nice to talk to you again. I'm going to cover the...
Speaker Change: The question around how we're doing on the current production in Chanos, I will let Rodrigo talk about Argentina.
Rodrigo: So, for channels, we look at it three ways. The first one is our two legacy blocks, which are CPO5 and channel 34. And then the third component is exploration. So, I'll touch a little bit on each of those.
Rodrigo: In CPO5 and Chanos, remember we got three of the top ten fields for the country. We're right now between those two blocks producing around 70,000 barrels gross.
Rodrigo: and net to us is in the order of 28,000 barrels of oil per day.
Rodrigo: These fields are...
Rodrigo: a little more mature than as time goes by. If we think about CPO5, when we acquired CPO5 back in early 2020, we were producing 8,000 barrels. Now, as we already published, we reach
Rodrigo: a peak production last quarter of around $26,400 net in the block. We're still in that order of magnitude between $26,000 and $26,500.
Speaker Change: As you recall, all of those wells are naturally flowing, so the next step is to put artificial lift in some of those wells. We plan to do that on the second half of the year for three of those wells.
Speaker Change: We have one rig that is running, it has drilled three exploration wells.
Speaker Change: One of them has been a successful well in Col Perico, producing 900 barrels.
Speaker Change: And then we had two exploration whales that did not result in putting them on production, Lark and Cisne.
Speaker Change: Lark was a low chance of success but high potential prospect that was targeting the same as Indico in the Huaca Formation, and Cisne was delineating and evaluating the stratigraphic.
Speaker Change: Play that we have in the north of the block where we have two out of three wells already producing. So that's what has been going on from a drilling perspective. Yesterday we spotted Cante Flamenco II, which is an appraisal well, and we expect to have results from that well in about 45 days.
Speaker Change: In addition to that, in CPO5...
Speaker Change: We, as we mentioned before, we do have that 3D seismic that was acquired early this year.
Speaker Change: and our subsurface teams are looking at.
Speaker Change: That data, that's about 470 square kilometers of 3D, so that's, like Andres mentioned at the beginning, is what we are envisioning for additional prospects in the block.
Speaker Change: When we moved to Channels 34, Channels 34 has been on production and if we recall what we've been talking in the past, we had three drilling rigs.
Speaker Change: pretty much most of last year and the stage of that asset is going into a phase where we're going to be doing less drilling. Most of the drilling that we did
Speaker Change: late last year and that we're doing this year. It's about horizontal wells, some injector wells that were required as part of our water flooding strategy. Right now the field has about 17% of the production coming from horizontal wells.
Speaker Change: Those horizontal wells have been very successful on production and also economically. We spend around $90 million of gross CAPEX. The payout for those wells has been around 14 months and they already provided positive cash flow.
Speaker Change: So, Horizontal Wells has been a good story.
Speaker Change: And...
Speaker Change: Now, we're running out of horizontal wells, as the ones we originally drilled, and that's why we're releasing a rig. We have some additional ideas, and we were successful drilling a short radius well, which
Speaker Change: using an existing vertical to do another horizontal well and by by that we can do it cheaper so that's part of what we're doing next.
Speaker Change: We continue doing workovers, our workover campaign has been very successful and again as the field gets more mature some of those
Speaker Change: formations that initially we left behind pipe. We're going back into those and opening those. So a very successful campaign and we're going to do about 14 more. We're doing deepening of some pumps.
Speaker Change: and we continue reinforcing the water flood. So that's what we're doing in the Channels 34.
Speaker Change: As you can imagine, when you bring down the number of rigs and we're not drilling that many wells...
Speaker Change: The decline of the field is probably going to be something that it's not keeping the field flat. So with all the activity that we got planned for the second half of the year,
Speaker Change: We expect that the decline of the field is going to be in the order of 10 to 15 percent.
Speaker Change: Now, the other component that is affecting both of these blocks, CpO5 and Sh34, is blockages.
Speaker Change: When we put together our budget, we always assume downtime for several root causes. One of them is social unrest.
Speaker Change: and what we assume for the year 2024 was...
Speaker Change: the same numbers that we had seen...
Speaker Change: in the year 2023. And one of the reasons why...
Speaker Change: We're saying that there's a chance of being on the low end.
Speaker Change: of our guidance and maybe even below that is blockages in these two blocks.
Speaker Change: The blockages that we had assumed for CPO5 had a 3% downtime, and in CPO5 it has been around 4 times that. And when we look at our block, Shannos 34, we had assumed 1.5, and it has been around twice that much.
Speaker Change: So, that's something that we see in most of the blocks, not only ours, but the neighboring blocks.
Speaker Change: It's something that we're working with the local, regional and government entities, also with the National Hydrocarbon Agency, and also with the petroleum operators that are associated in Colombia.
Speaker Change: So that's something that we wanted to address.
Speaker Change: Thank you. Bye bye. Bye bye.
Speaker Change: The other component that we have is
Speaker Change: Thank you very much.
Speaker Change: We had three successful explorations, Huevos Saltadores, Islita, and Toritos. Those are in the blocks very close to Channels 34 and GP05.
Speaker Change: In those blocks, if we look back one year, they were producing about a hundred barrels
Andres Ocampo: Net to Us. We started the year and they were producing 1,500 and today they're producing like Andres mentioned 1,800 barrels net to us.
Speaker Change: That's a really good story. We have one rig.
Speaker Change: that is drilling in the area and we got one more rig coming. The latest wells that we have drilled, one of them is producing around 900 barrels of oil per day and the other one is producing around 500 barrels of oil per day. So we're encouraged about the results.
Speaker Change: that we have in the channels 123, we will keep drilling about three to five more wells in that block.
Speaker Change: And...
Speaker Change: The other component that we have is exploration in a block
Speaker Change: about two years, which is Putumayo 8, that is in the Putumayo Basin, adjacent to the Platanitio block.
Speaker Change: And as we speak, we're doing the...
Speaker Change: Civil Works, so we expect to drill the first well called Machaca, like Andres mentioned, spot that well in October, November, followed by another well. So as our CPO5 Indico field
Speaker Change: Thank you very much.
Speaker Change: We expect to continue having good results from the exploration program that we have in Colombia.
Andres Ocampo: Andrs Ocampo.
Andres Ocampo: Hello, Estefan. This is Rodrigo. We are moving to Argentina. As you can see, the average production for the last quarter was 2,500 barrels, and we are producing the same level today. We have some wells, shooting wells, due to a work over operation in the past six.
Andres Ocampo: But the good news are coming from the new paths.
Speaker Change: We started with the PAD 22 last February , and the results are far away from what we expect in the model that we did by the business.
Speaker Change: at that time. So the result of those wells are above the P10 of our estimation. The characteristic of that well is that it's located in the center of the block. There are three wells there, and I think...
Speaker Change: This is part of the learning curve that we have with the operator in the area. They started to drill only the top side of Bacamuerta. The level we call it C3.5. The result that we are achieving there is really good, even better than with SPEC as I mentioned.
Speaker Change: So, after six months, the performance is over the P10 of the expectation that we have. Even so, this is a shorter path. We have 2,200 meters of horizontal leg.
Speaker Change: The other good news that we have recent because we put it on production the part number four
Speaker Change: Part number four starts 25 days ago. Four wells, the same levels, as I mentioned, C3.5 and C3. So we are talking about the top side of Paca Muerta. But this part is located in the north of the block.
Speaker Change: The results are pretty good. We are in the beginning. We are cleaning the well, but at least at the moment we are far away from the P10. So we have to wait and see the decline projection, but at the moment we are very happy with the performance of the new wells.
Speaker Change: Why there is a good performance, as I mentioned, something has related with the subsurface, but there is new technology what we are doing. We have oriented perforation in both spots, and so apparently this is something that contributes a lot in the performance of the well.
Speaker Change: The next path is going to be Confluencia. That's the first exploratory path that we drill in the next door block.
Speaker Change: We are very excited what we saw in the logs.
Speaker Change: We cannot promise production yet. We have to see the productivity we are going to find, but at least the projection that we see is similar than Matamoros, so we are very happy with that.
Speaker Change: The results at the moment. In that case, we have three wells. Those are long wells, so we are talking about almost 3,000 lateral length wells.
Speaker Change: That's it from Matamora and Confluencia at the moment. What we expect is to finish the year between 13 and 14,000 barrels a day and increasing the production as soon as we are putting new wells on production.
Jaime Caballero: Stefan, this is Jaime. Thanks for your questions. I'm gonna cover the other two points. The first one is around a lower cash taxes and I get so on that one let me put some some kind of facts in the room.
Speaker Change: The first half of the year, which is where the bulk of the tax season is, our outflows amounted to circa $70 million.
Speaker Change: And that's, you know, that's the pareto, if you will, of tax payments that we're going to have this year. We expect.
Speaker Change: a further $20 million, perhaps $25 million from here to year-end, taking us to about $95 million for the full year.
Speaker Change: That, if you do the math, and it basically puts the...
Speaker Change: tax-effective rate from a from a cash standpoint at around 40% it is
Speaker Change: It is a good outcome and what we're seeing compared to our estimates that we had perhaps you know at the back end of last year is that we are actually seeing lower withholding taxes.
Speaker Change: particularly there's been some changes in effect in Colombia around that.
Speaker Change: the withholding tax rate specifically actually went from 10% to 7% on one end. And the other thing that we're seeing is more deductible items, you know, more deductible items that can actually offset our tax position.
Speaker Change: With regards to outlook on taxes beyond 2024, the biggest factor is going to be in what price environment we are because actually the biggest lever regarding tax
Speaker Change: is the calculation around the...
Speaker Change: around the tax surcharge.
Speaker Change: that we have as part of the tax reform that occurred in Colombia. That is the biggest component. While we're estimating at this stage that the price tax that we're gonna see are that if we have a price environment that is above 76 bucks.
Speaker Change: per barrel, we're going to be in the 10% tax surcharge environment. And if we are above 81, we are going to be at 15%. That takes you to a nominal of 50% kind of ceiling. So that's the way kind of to look at it.
Speaker Change: And with regards to your other question around the Trafigura prepayment, let me just kind of two, three kind of key facts to put in the room. The first one is the scope.
Speaker Change: And we have mentioned, this is about CPO5, but it's specifically around the lighter crude in CPO5, right? That's that particular scope. And the reason for that, and to put you in our terms, it's the indigo production particularly, it's because the quality of that...
Speaker Change: of that oil is very special, you know. This is probably the best crude or maybe, you know, top two crudes in Colombia, you know. So it actually has.
Speaker Change: Not actually does it have a better discount. It actually has a premium over Brent, right? And what we were searching for from a commercial standpoint was to capture that premium.
Speaker Change: So, that's the aim of that deal with Trafigura, to capture the premium. Now, it has other benefits, you know, and the other benefit is, obviously, it diversifies our off-takers.
Speaker Change: and it gives us a little bit more flexibility around how do we market that crude in particular. With regards to the off-take agreement, it has a 12-month duration.
Speaker Change: That's how we've laid it out, so it covers, it started the first of August, it's going to go for a full year.
Speaker Change: And...
Speaker Change: And it gives us also the option to obtain financing from the off-taker for up to a hundred million dollars, which is something that we also appreciate in terms of the toolbox of financial flexibility to deliver our strategy. So those are the biggest elements.
Speaker Change: If you ask, I think your other element in the question was, what was the outlook for this crude?
Speaker Change: Fundamentally, when you look at Colombia
Speaker Change: there is an increasing deficit of lighter crudes in countries.
Speaker Change: and that's actually going to grow over time.
Speaker Change: We, you know, so over time, this crude is going to become...
Speaker Change: more and more and more attractive because it's actually a key component
Speaker Change: of the local refineries. So the local refineries in Colombia need this crude as part of their mix.
Speaker Change: And if they cannot find it domestically, they need to import it. So for the next 12 months, we've locked in a very competitive differential. We'll see how market conditions are next year, and we'll work with that. Thank you.
Speaker Change: Thank you. The next question comes from the line of Vincent Balanga of Bridesco. Your line is now open, please go ahead.
Vincent Balanga: Hello Jaime, Andres, Stefan, thank you for taking my questions. I was trying to figure out a little bit more over the long term for Llanos 1-2-3, Estejo and Putumayo 8 blocks. I know you've been running tests there and they leave...
Speaker Change: They've been encouraging. I was just wondering, you know, what sort of output these fields could grant you over the next coming years.
Speaker Change: If you could explain a little bit more about the results of the Matamora Norte 2223 well, which, if I'm not mistaken, produced an average of 2,136.
Speaker Change: barrels of oil per day during the second quarter. If you can walk us through what sort of the peak production you saw there and how it's declining and if we could expect other wells with similar characteristics. Thank you very much.
Speaker Change: Hello Vicente, again this is Martin Terrado. I'll cover the Channels 123 and the Kutumayo 8 questions and let Rodrigo go over the...
Rodrigo: When we think about channels 1, 2, 3, again, like I said before, I'll make more focus on channels 1, 23, but this block right now is producing net to us 1,800 barrels of oil per day.
Speaker Change: A year ago it was producing 90 barrels, so the increase and the proportion of barrels coming out of that block are representative.
Speaker Change: We have one rig that is running and we're bringing another rig so that gives you an idea of how how confident we are on
Speaker Change: On more more drooling in that block in
Speaker Change: The latest wells that we have drilled have given us, between the two, around...
Speaker Change: 1,300 barrels of oil per day and right now we're drilling an exploration well called Torito Sur. We spotted that well around 10 days ago and the second rig will be spotting in the middle of September.
Speaker Change: These are usually barco formation Guadalupe wells and that are similar to what we've seen in Channels 34. We have
Speaker Change: Facility is in place, ready to put the wells on production as soon as we have discovered it.
Speaker Change: And based on the results that we see on the second half of the year, we will sit together with our partner and decide on what are the next wells that we want to drill going into 2025. At this point, what we have for sure is the campaign for...
Speaker Change: for this year and encourage about those results.
Speaker Change: When we look at Putumayo 8, Putumayo 8 is...
Speaker Change: A hundred percent acceleration, right? So, these are...
Speaker Change: When we acquired Amerisur back in 2020, and we look at the blocks that were available coming with that acquisition in the Putumayo,
Speaker Change: We focus on around six blocks. Putumayo 8 is clearly one of the top ones. And since then, in that block, we've done seismic. We got the environmental permit.
Speaker Change: We went through one of the first...
Speaker Change: public hearings, successfully went through that one, and we have
Speaker Change: We have three prospects already identified, some more coming on the way, but out of the three, Machaca is the first one that we will be drilling, spotting in October, and then Bien Parado. So if you ask us, okay, what's the output for the next years, we have to see how the results are.
Speaker Change: Thank you.
Speaker Change: Hello Vicente, this is Rodrigo. I'm going back to your question about Matamoros 20...
Speaker Change: That was one of the best words that we have in the blog, definitely.
Speaker Change: put it on production last February. After six months, we can say that the well is outstanding, but at the same time, if you see the performance of the entire pad that is located in the center of the block, it's quite good. It's on the P10 of the expectation that we have. So we are
Speaker Change: Thank you very much.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: 2,500 bars per day. Remember that this well is a short well, now 2,050 meters so that's if you know well about one of the best wells in the basin. So I understand what you are saying about the well.
Speaker Change: The question you said is, can we find more words than these in the blog? Definitely, yes.
Speaker Change: Yes, because if you see at least the beginning of the path number 4, located in the north of the path, it's even better than this well. But we are in the first month, so we have to wait, see the peak of the production, and then the decline ratio. But after this new...
Speaker Change: These two new paths, we are very excited about the results. We believe that the new technology, as I mentioned, oriented perforation helps a lot, but definitely...
Speaker Change: Put the wells in the upper sides of Acamuerta, as I mentioned, C3.5 level is one of the key elements here, so where we can develop a better performance in the fracking. So we are seeing very good results, not only one well, in most of the new wells that we have in the block.
Speaker Change: Let's see what happened in Confluencia. Of course we have to wait to October to see the results but we are very, at least at the moment, we have very encouraging results.
Speaker Change: Thank you very much.
Speaker Change: almost in the entire Vacamorta play.
Speaker Change: are very encouraging and can be seen in other wells. As Roderick said, we're seeing it on one of the wells in the Part IV.
Speaker Change: So that's why we're happy. Obviously, whether these higher initial rates are going to translate in future incrementally URs, things like that, it will take time. So we'll be more cautious about it. But so far, the results are being ahead of our expectations.
Speaker Change: Thank you. Thank you very much. That was very clear.
Speaker Change: Thank you.
Speaker Change: As there are no additional questions waiting at this time, I'd like to hand the conference call back over to Mr. Andres Ocampo for closing remarks.
Andres Ocampo: Thank you everybody for your interest and your support of our company. We're always here to answer any questions you may have and encourage you to come visit us in our field and our operations or call us anytime for further information. Thank you and have a good day.
Speaker Change: ladies and gentlemen this concludes today's call you may now disconnect your lines
Speaker Change: Thank you. Thank you.