Q1 2025 GeoPark Ltd Earnings Call
Good morning, and welcome to the <unk> Limited conference call. Following the results announcement for the first quarter ended March 31, 2025. After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question at this time press star one on your telephone keypad, you said, we'd like to withdraw your question Press Star two.
You do not have a copy of the press release, it's available at the Investor with a section on the company's corporate website at Www Dot Geo Dash Park Dot com.
Today's call may be accessed through this webcast in the Investor section of <unk> corporate website.
Before we continue please note certain statements contained in the results press release and on this 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 of the private Securities Litigation Reform Act of 1995.
These risks include a variety of factors, including competitive developments and risk factors listed from time to time in the Companys SEC reports and public releases.
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 the company's business.
Financial figures included herein were prepared in accordance with <unk> and are stated in U S dollars unless otherwise noted adjusted figures correspond to <unk> standards on.
Andres Ocampo: On the call today from Ta pockets, Andres Ocampo, Chief Executive Officer, Jason <unk>, Chief Financial Officer, Matson, Girard, Chief operating Officer, Rodrigo <unk>, Chief exploration and development Officer, and Maria Catalina Escobar shareholder value and capital markets Director and now I will turn the call over to Mr. Andres Ocampo <unk>. Mr. <unk> you may begin.
Andres Ocampo: Good morning, everyone and thank you for joining us to review our first quarter of 2025 results our performance highlights the strength and resilience of the company, we build together disciplined in operations focusing strategy and financially robust despite persistent market volatility Brexit ablation.
Andres Ocampo: We delivered solid results, while preserving the flexibility to pursue value accretive opportunities.
Andres Ocampo: Pro forma consolidated production averaged 36000 barrels a day exceeding our base case guidance of 35000 barrels a day.
Andres Ocampo: <unk> delivery was driven by stable output across our core assets in Colombia, and Ecuador and in.
Andres Ocampo: Record breaking quarter from the new Argentina assets.
Andres Ocampo: <unk> acquired Bucca, Martha blocks continue to demonstrate their transformative potential within our portfolio with gross production, reaching a record high of over 17000 barrels a day in February.
Andres Ocampo: In the matter more in order to block our partner Phoenix completed by nine drilled Bud number 12 and began the construction of new central processing facility is targeting 40000 barrels a day gross capacity by mid 2026.
Andres Ocampo: Drilling also began on the second exploration part in the conference you sort of bloke following last USP volatile Rio <expletive> discovery first quarter financial results do not yet consolidated production revenue or costs from these assets pending the completion of regulatory approvals by provincial authorities, we continue to work daily.
Andres Ocampo: Currently to advance the approval process, we acknowledge that they know tailing. This approval has created material uncertainty around the timing and successful completion of these transactions. The agreement includes an outside date of May 13, 2025, marking one youre seeing signing a standard milestone in transactions of this client after that.
Andres Ocampo: That base either party has the right under the terms of the agreement to withdraw from the transaction unless a termination notice is given the agreement remains fully in place and continuous without change within this framework. The parties may also explore potential strategic alternatives taking into account the information and context available.
Andres Ocampo: As such we remain committed to pursuing a positive outcome, while we continue focused on protecting value on maintaining flexibility for Giovanni <unk>.
Andres Ocampo: Regarding exploration in Colombia, Nicaragua, two one well encountered approximately 70 feet of net pay in the vertical formation untested production of around 1300 bars, a day growth boosted block output to nearly 5000 barrels a day a new record.
Andres Ocampo: Financially, we delivered adjusted EBITDA of $88 million up 13% from the previous quarter with operating costs decreasing to $12 $3 per barrel in line with our full year guidance net income reached $13 million. Despite one time costs related to the debt refinancing, which extended our average debt maturity to almost.
Andres Ocampo: Five years, we invested $23 million in our core assets and an additional $24 million pro forma impact on work supporting development infrastructure and our exploration campaign.
Andres Ocampo: Closed the quarter with over $308 million in cash our net leverage ratio of 0.9 times preserving our financial flexibility and balance sheet strength, a proactive hedging program remains highly effective covering approximately 70% of our 2025 production with floors of 68 to 70.
Andres Ocampo: Dollars per barrel.
Andres Ocampo: We continued our decisive cost reductions and efficiency drivers during the quarter and general 34, our new next generation rig has already reduced cycle times by 20% generating meaningful cost savings.
Andres Ocampo: Willing team has recently set a new record in the blocks, reaching total depth of 11000 feet in just six one days on the <unk> 53, well this represents more than 25% reduction on the cost of the well even more impressively. The team has already taken on the challenge of ranking its own record again with the next well.
Andres Ocampo: <unk> 56, aiming to reach TD in just under six days. This relentless focus on operational excellence and bodies, who we are.
Andres Ocampo: As an operator and represents one of the most effective ways to enhance returns while expanding our ability to reinvest in growth. We also took decisive steps to streamline our portfolio by divesting our interest and design a study to block on demand that you guys field aligned with our strategy to focus on high impact material assets are efficient.
Andres Ocampo: The program is on track, having already captured 90% of the targeted 5% to $7 million in annual savings.
Andres Ocampo: Afflicting, our strong financial position and consistent cash generation, we declared a quarterly dividend of <unk> 15 per share reinforcing our ongoing commitment to shareholder returns targeting an annualized 30 million dollar dividend or approximately 9% dividend yield.
Andres Ocampo: Looking ahead, we're fully committed to executing our 2025 work program with seven wells in Colombia, and four in Argentina during the second quarter.
Andres Ocampo: Our vision remains clear build a more valuable and sustainable Geo Park focused on big assets in big basins with the right partners on the right strategy.
Speaker Change: As I prepare to hand over the leadership of Dr Park to Philippe Rajan.
Speaker Change: And do so with deep fried and immense gratitude.
Speaker Change: Helping to build Geopolitik over these past 15 years has been the most rewarding chapter of my professional life.
Speaker Change: I've had the privilege of working alongside an exceptional group of women and men with passion integrity and resilience of made everything possible.
Speaker Change: Together, we turned bold ambitions into real achievements.
Speaker Change: <unk> guided by our core values, our responsibility to stakeholders and our unwavering commitment to putting Geo Park first.
Speaker Change: Our culture and our shared belief in doing things the right way have been the foundation of our success.
Speaker Change: I am deeply proud of what we have built an equally excited for all that lies ahead.
Speaker Change: I will continue to support Geo Park, its board and its team of long term shareholder and Thats a trend.
Speaker Change: Thank you for your trust.
Speaker Change: Partnership for walking this journey together.
Speaker Change: We will now take any questions you may have.
Speaker Change: Thank you.
Speaker Change: If you would like to ask a question on todays call. Please press star followed by one on your telephone keypad through into the queue.
Speaker Change: And our first question today comes from Alejandro Demichelis from Jefferies.
Speaker Change: Your line is open. Please go ahead.
Alejandro DeMichelis: Yes, good morning, guys.
Speaker Change: Thank you for taking my questions first on <unk> best of luck in your new endeavors have been really a privilege to have you.
Speaker Change: <unk> has always been plain sailing, but you have.
Speaker Change: Very well with their challenges.
Speaker Change: The first question Andreas if you how you see the situation about tap.
Speaker Change: Production growth in the current oil.
Speaker Change: Oil price environment, obviously.
Speaker Change: That's part of your production, but kind of looking at more kind of medium.
Speaker Change: That's the first question and then the second question is you touched on the process of growth and believe in Argentina, maybe you can give us some kind of more color on how these classes.
Speaker Change: Going with both your partner also.
Speaker Change: Products.
Speaker Change: Yeah.
Speaker Change: Hey, good morning Alejandro.
Speaker Change: Thank you for your comments.
Speaker Change: And also for your questions.
Speaker Change: I will start with your second question and then I will leave <unk> to address the.
Speaker Change: The production will capex outlook on oil prices.
Speaker Change: So as I said in the introduction.
Speaker Change: The results for the first quarter do not include pro forma production revenue.
Speaker Change: Ross.
Speaker Change: Related to this transaction because it is still pending.
Speaker Change: The approval of these assets were effectively acquired on July.
Speaker Change: First 2024.
Speaker Change: And as of today, the transaction has not been closed and remain subject to the completion of this approach.
Speaker Change: We as a company remain focused on closing the transaction and continue working diligent diligently.
Speaker Change: To advance the approval process.
Speaker Change: I personally.
Speaker Change: <unk> also agreed with our board that is part of the CEO transition I will continue supporting personally.
Speaker Change: These process as long as required.
Speaker Change: I think I think it was you had mentioned in your in your report no unfinished business. So that's my commitment to the company on top of others.
Speaker Change: The agreement that we have with our partner includes an outside date as we mentioned before which is on May 13. This year.
Speaker Change: That marks one year since signing.
Speaker Change: And is this basically standard milestone in transactions of this kind.
Speaker Change: After that date either party has the right under the terms of the agreement to withdraw from the transaction.
Speaker Change: So unless a termination notice is given the agreement remains fully in place and continues without any change.
Speaker Change: Within this framework the parties may also explore potential strategic alternatives taking into account the information on the context salary level at such time.
Speaker Change: Geoponic made the decision to enter back in what.
Speaker Change: Following our long term strategic growth plan of expanding our footprint.
Speaker Change: Big basins.
Speaker Change: Big place, which.
Speaker Change: <unk> is obviously one of them.
Speaker Change: So as part of that decision, we've made already significant investments.
Speaker Change: We're committed to do and to make more investments in the future.
Speaker Change: We believe that our long term relationship and partnership with Argentina in particular with the provinces of Nokia and in Rio <expletive> will continue to bring significant.
Speaker Change: The economic.
Speaker Change: And social benefits to the country the provinces in their communities.
Speaker Change: I think this is a good opportunity for me.
Speaker Change: Also to add some comments about several social media comments.
Speaker Change: Declarations are statements regarding our process.
Speaker Change: And regarding these transactions regulatory.
Speaker Change: Fluid.
Speaker Change: <unk> Park, and we are not associated with or we do not endorse in any way.
Speaker Change: Any comments or any pud locations on social media or any other media that could be interpreted as completing with the authorities of the jurisdictions in which.
Speaker Change: We invest in.
Speaker Change: None of those comments reflect in any possible way.
Speaker Change: Our way Geo park's way of conducting business and our long term approach with respect to partnering.
Speaker Change: Therapies and communities.
Speaker Change: We have already issued a public statement about this and we have taken additional actions to separate ourselves.
Speaker Change: Angio part from this unfounded allegations.
Speaker Change: Yes.
Speaker Change: I think it is important for us to reiterate.
Speaker Change: We will try to do.
Speaker Change: Sure.
Speaker Change: Processes timings.
Speaker Change: For over 22 years.
Speaker Change: Operating internationally throughout the entire region in Latin America in a number of different countries.
Speaker Change: Argentina, Colombia, Brazil, Chile borrower.
Speaker Change: Sure.
Speaker Change: And we have a program.
Speaker Change: Currency commitment mutual benefit.
Speaker Change: Model space.
Speaker Change: Collaborative long term relationships with partners authorities.
Speaker Change: Our community is always following the proposal of creating value.
Speaker Change: Okay.
Speaker Change: So I know this quarter.
Speaker Change: Non <unk> condos.
Speaker Change: But I think it's important for us to make very clear that we remain focused on closing the transaction.
Speaker Change: We continue working very diligently to advance.
Speaker Change: Yes.
Speaker Change: That's great. Thank you.
Speaker Change: Thank you a question around the outlook.
Speaker Change: Timing here good morning so.
Speaker Change: I think.
Speaker Change: R R.
Speaker Change: Our outlook.
Speaker Change: Unchanged when we think.
Speaker Change: Okay.
Speaker Change: Some one time.
Speaker Change: Thanks for that.
Speaker Change: We think they create a plan for 2025 tablets.
Speaker Change: One capital allocation criteria of everything.
Speaker Change: Accretive and cash OTT 60, Bucks a barrel that was the.
Speaker Change: The key principles of <unk>.
Speaker Change: Right.
Speaker Change: And with that it actually means that our capital deployment is designed by designed to work at these at the current price environment that we're seeing.
Speaker Change: Further to that as you rightly mentioned, we hedge actively.
Speaker Change: 70% or so of our volumes for this year are hedged.
Speaker Change: So we are we have a well covered our our average.
Speaker Change: <unk> realizations.
Speaker Change: Our currently.
Speaker Change: <unk> type Brent price before that 70% that hedge.
Speaker Change: There is that 30% that is not hedged that he's been on spot market prices more or less when you look at the average it actually puts us in a very.
Speaker Change: Very comfortable position.
Speaker Change: A further.
Speaker Change: Important to note that our aim to blend into these price decline is a very solid for us.
Speaker Change: Set of results.
Speaker Change: We delivered strong EBITDA.
Speaker Change: A leaner cost structure very strong cash position, we have more than $300 million of cash in the bank. So we're ongoing on these is that we don't see any reason whatsoever to change our capital allocation for this year in this price environment. So we remain committed.
Speaker Change: Does that program.
Speaker Change: That we announced earlier this year.
Speaker Change: That's why we intend to execute.
Speaker Change: That's very clear thank you.
Speaker Change: The index.
Speaker Change: Thank you Alejandro.
Speaker Change: The next question comes from Daniel Guardiola from BTG Toni Your line is open. Please go ahead.
Andres Ocampo: Thank you thank you Andres and Jaime.
Speaker Change: First of all I wanted to wish you Andreas all the best in your future endeavors.
Andres Ocampo: Truly a pleasure to get to meet you on until now.
Andres Ocampo: All the and to do all the insightful meetings will leave in the past. So so really you know I try I appreciate that.
Andres Ocampo: Going through the questions.
I just wanted to do a follow up on Argentina.
Andres Ocampo: Just wanted to confirm what you mentioned on the on the contract with Phoenix.
Andres Ocampo: Wanted to confirm that if on may 13th.
Speaker Change: Each party decides to walk away if they can do it freely without penalties.
Speaker Change: And if that's the case if you believe that scenario is a realistic scenario that could happen in the next days. So that's my first question on the second one is I don't know if you can share with us.
Speaker Change: There are requirements that are preventing you know this transaction from getting close.
Speaker Change: And just a third one if I may.
Speaker Change: It would be great. If you can share with us in IV iron considering I know you are very well hedged for the next nine to 12 months, you would be greater than IV, we're considering right now.
Speaker Change: To take.
Speaker Change: Some measures to further streamline.
Speaker Change: The company in terms of Opex and Capex to better weather the current uncertain storm.
Speaker Change: We are going through.
Speaker Change: Those are all my questions guys. Thank you.
Speaker Change: Hey, good morning, Daniela. Thank you for for your comments on likewise, it has been a great run.
Speaker Change: I appreciated all the multiple million meetings and trips together.
Speaker Change: Certainly really fun and.
Speaker Change: Been great for me.
Speaker Change: I will start.
Speaker Change: Again ill just try to address your points on Argentina I think.
Speaker Change: I've said a lot.
Speaker Change: I've covered most of it is in my previous response, but specifically.
Speaker Change: Youre asking about.
Speaker Change: Anything specific any any requirements.
Speaker Change: Aye.
Speaker Change: We've complied with all the requisite.
Speaker Change: And we've presented all of their requirements and at this stage. There is no specific requirement studies that is impeding us to close the transaction.
Speaker Change: No.
Speaker Change: On weather.
Speaker Change: The second point about what happens on the outside date as I said each party.
Speaker Change: Right.
Speaker Change: Good luck.
Speaker Change: And yes, that's under with no penalty.
Speaker Change: And.
Speaker Change: The reality is I cannot comment on whether each part D. What each party is going to move with whatever rights they acquired at any point.
Speaker Change: At this stage.
Speaker Change: That is the fact to a reality of the contract.
Speaker Change: And I don't know if I missed anything else with respect to Argentina otherwise.
Speaker Change: I leave it to him.
Speaker Change: Daniela and on your question around around a.
Speaker Change: Weathering the current volatility.
Speaker Change: I think the key elements I already described.
Speaker Change: In the previous answer.
Speaker Change: I think obviously a.
Speaker Change: Not ignore.
Speaker Change: Market context, we are in a in a in a very.
Speaker Change: <unk> solid position to face this market context.
Speaker Change: <unk>.
Speaker Change: But I what I can tell you at this stage is that the sort of things that we're looking into given the market context is probably three things I would say in terms of what changed.
Speaker Change: I think we have we are in an ongoing conversation about capital allocation priorities. We are always in that conversation needs to do anticipate stuff right and.
Speaker Change: In the context of that conversation, while we're seeing is that our.
Speaker Change: Our willingness and ability to deploy capital is unchanged it's unchanged. So for instance.
Speaker Change: In.
Speaker Change: Yes.
Speaker Change: In organic agenda.
Speaker Change: Actually seeing the current price environment actually as an opportunity.
Speaker Change: We have a <unk>.
Speaker Change: <unk> cash position right now.
Speaker Change: Such flexibility it gives us flexibility on.
Speaker Change: It allows us to react to different outcomes that we might find along the way right given that given the uncertainties that we have.
Speaker Change: For instance, <unk> has spoken about the uncertainty.
Speaker Change: One our own back I'm glad that we.
Speaker Change: We believe that having the cash position that we have right now actually puts us in a good position to face that uncertainty. So that's one thing that I would say in terms of how we're thinking about weathering the current environment.
Speaker Change: The other thing that I would say is our own costs and as you probably saw in our results.
Speaker Change: We delivered some important.
Speaker Change: Cost efficiencies in the first quarter relative to the fourth quarter.
Speaker Change: I would say that we have already started to change our trajectory in terms of in terms of cost and the way that we're thinking about it east is a broader conversation about total cash cost that has four elements to it there is an element.
Speaker Change: <unk> Opex there is an element that martine.
Speaker Change: Actually going to ask Martin to talk about in a moment there is an element around structure, our G&A and you saw our announcement that we made with a few weeks ago.
Speaker Change: Interventions that we need.
Speaker Change: In that area.
Speaker Change: There is an element around tax efficiency, you probably saw that relative to <unk>, we're starting to see a lower tax effective rate and that sort of in our tac into going into the future to see if there are more opportunities.
Speaker Change: And of course.
Speaker Change: There is there is there is a large component of our own cost, which is really related to the midstream and transportation cost. So what I'm trying to go here is we are looking at all of them we are working.
Speaker Change: I don't I cant say at this time that we have changed our guidance or targets around any of these because we believe that our plan remains solid and we don't need to but we're actively looking at all of these to see if there is more opportunities that can be captured that that's where we are.
Speaker Change: And then yet.
Speaker Change: Perfect. Thank you very much to both of you for your thorough answers.
Speaker Change: Our next question comes from <unk> <unk> from <unk> capital.
Speaker Change: Your line is now open. Please go ahead.
Speaker Change: Great. Thank you guys hear me guys.
Speaker Change: Yes, great.
Speaker Change: Alright, thank you for that space.
Speaker Change: So my first my first question is you have secured a solid hedge position for 2025.
Speaker Change: Driving some protection against current oil price volatility are your plans for China six if so at what price levels would you feel comfortable walking and catches and how much of your production into hedge.
Speaker Change: Hi, Hawking.
Speaker Change: Good morning.
Speaker Change: Yes, so to your question on hedging so we have a long standing.
Speaker Change: <unk> I would say that.
Speaker Change: Hedging is an integral part of our financial framework.
Speaker Change: And.
Speaker Change: We don't see any reason to change it as a matter of fact, we.
Speaker Change: While we are while we're seeing right now is the value of the hedges and the.
Speaker Change: The benefit that it brings to the company and the strategic flexibility that it brings to the company.
Speaker Change: So we don't intend to change that.
Speaker Change: As a as a general rule and on the way that I would that I would frame it.
Speaker Change: We want sufficient hedging coverage to ensure that our capital programs remain unchanged.
Speaker Change: In the midst of off market volatility that that's what we aim for.
Speaker Change: That's how we're thinking about it and Thats, how we are monitoring.
Speaker Change: During 2026 right.
Speaker Change: It's still early days to give you a number a specific number around that because there are some market realities.
Speaker Change: That.
Speaker Change: That that we need to navigate right now if you try and obtain.
Speaker Change: Obtain had this for.
Speaker Change: You'd have sort of prices that youre going to get our prices that are heavily.
Speaker Change: Heavily impacted by the existing uncertainty that we're seeing right now so it's a bit of a.
Speaker Change: It's a bit of a timing thing so our view.
Speaker Change: And see how how market conditions develop which is what we've done historically this is no different to what we've done in the past the geese.
Speaker Change: We monitor the market actively and then we make decisions around what are the floors and what are the <unk> team.
Speaker Change: <unk> is acceptable and competitive for ensuring a consistent delivery of our plan.
Speaker Change: So too early to give you a number on what price a frame we're going to hedge 2026, what I can what I can say at this time is that we do intend to hedge we are monitoring that and as market conditions evolve.
Speaker Change: If we see good opportunities to capture.
Speaker Change: Right.
Speaker Change: But then we do have our programs we will we will.
Speaker Change: We will execute on that.
Speaker Change: Okay.
Thank you for rounds or.
Speaker Change: My second question.
Speaker Change: <unk> would be.
Speaker Change: We noted that net leverage increased to $4.
Speaker Change: Nine times for the 2000 <unk> issuance.
Speaker Change: Level of leverage do you think to your comfort level and what is your target cash position for years.
Speaker Change: And so so on the on the leverage side I'd say that we are we are in a way too comfortable box right now.
Speaker Change: Hey.
Speaker Change: It's a very low LOE ratio 0.9.
Speaker Change: I do taking your comment that you see that it's growing but it's actually quite marginal.
Speaker Change: I think our general guidance is that.
Speaker Change: We intend to maintain a leverage ratio over and over the long term of around one five so we are well well below that.
Speaker Change: And that that view of one five bina being a long term.
Speaker Change: Gravitational pull is unchanged is unchanged, we believe that that that still makes sense for the company.
Speaker Change: Of course.
Speaker Change: Hey.
Speaker Change: <unk>.
Speaker Change: We continue we always monitor changing market conditions right in <unk>.
Speaker Change: Market conditions change.
Speaker Change: <unk> like dramatically to a point off of stress testing our financial framework, we might take a second look at that but.
Speaker Change: As you can see that.
Speaker Change: The assets that we have there low breakeven the cash position that we have the nature of our debt profile, which is pushed into the long term that healthy cash contribution that our assets are making.
Speaker Change: Environment all of those elements put us in a position where where we are.
Speaker Change: Sailing comfortably the current environment.
Speaker Change: Thanks again.
Speaker Change: Okay. Thank you very much.
Speaker Change: The next question comes from Christian <unk> from <unk> Securities Christian Your line is open. Please go ahead.
Christian: Hey, everyone. Good afternoon.
Christian: So I have two questions first one is if you can be sure any updates or revisions to the guidance for the.
Christian: Integrations.
Christian: And in that regard we would appreciate your view on the Brent price assumption on differentials.
Speaker Change: Hi, Christian so so.
Christian: Let me recap your question so.
Speaker Change: And the outlook on brand right presently crunch and Brent <unk> differentials, yes, Greg So so guidance, the Colombian operations plus brand including differential.
Christian: Sure.
Christian: Okay great.
Christian: So let me give you some some general commentary.
Christian: Items more on both aspects.
Martin: And then perhaps Martin can give us more color.
Martin: <unk> specifics in the Colombia operation so so.
Martin: The big frame for our guidance East, while we said when we launched 2025.
Martin: We were aiming for a pro forma production of 35000 barrels a day right that was our guidance from a production standpoint a.
Martin: Capex expenditures of between $2 75 and $310 million.
Lifting costs in the 12% to 14 box.
Martin: <unk> per barrel and adjusted EBITDA in the 70 to 80 type.
Martin: This range of between 304.
Martin: Three to 400 points. So thats those are if you will the goalposts on.
Martin: What has changed since then.
Martin: Say basically that.
Martin: There is two things that that I would say do not change the guidance, but need to be incorporated in in understanding the outlook on what youre actually going to see.
Martin: In our consolidated results right because that was a pro forma guidance. So the first the first component.
Martin: Right.
Martin: As you as you know we announced a couple of divestments in the first quarter that have an impact on production. They make a lot of sense from a portfolio standpoint on from a cash standpoint, and from a capital allocation standpoint, and the like but from a volumetric standpoint, they do have an impact on it it's an impact of about.
Martin: 1000 barrels a day.
Martin: Annual basis, so that 35000 barrel guidance.
Martin: Becomes 34, when you make that adjustment right. So that's the first.
Martin: A point of note. The second point of note east is that timing of Delek I'm glad at the closing because we cannot consolidate results until the closing occurs right. So.
Martin: As Andres explained previously from economic standpoint, there is no change because the transaction has been effective since last year. So so economically the reasonable change on this but from a financial consolidation standpoint, and a number that youre going to see both step is subject to the timing of when that transaction.
Martin: Closest.
Martin: So right now if we close the transaction, but if we close back in May.
Martin: While we will be well, we would be looking at it will be a consolidated number for production that would be around 32000 barrels a day right. That's what we would be consolidating.
Martin: On an annual basis and this is in line with that pro forma number so.
Martin: So pro forma guidance is unchanged consolidated numbers. This is what you can.
Speaker Change: You had you kind of expect and last but not least to your point of Columbia on a standalone basis, while we are seeing for Colombia and again.
Speaker Change: Giving you the umbrella numbers here, while we're seeing forward for this business without back I'm glad that you say.
Speaker Change: Option number that is in that 26 to 27000 barrels a day on a on an annual basis. Those are the headline numbers. We don't see important changes in Capex, we don't see important changes in EBITDA dollars lifting cost while we expect this to fall within that guidance.
Speaker Change: A firmly so over time I think yeah, So hello, Kristine I'll go a little bit.
Speaker Change: Well the key assets that we have.
Speaker Change: When we look at <unk> 34 and <unk>.
Speaker Change: As we mentioned in the past and incentives 34, it's a it's a more mature field.
Speaker Change: Our activity.
Speaker Change: We are expecting decline rates in the order of 15% to 18%.
Speaker Change: The first quarter of the year was well within that guideline.
Speaker Change: So we.
Speaker Change: We feel in general 34.
Speaker Change: We will be delivering the plan that we have and we have a couple of <unk>.
Andres Ocampo: Update in China's 34, like Andres mentioned.
Andres Ocampo: We were expecting the drilling activity to start in January.
Andres Ocampo: It took us a little bit longer to socialize.
Andres Ocampo: The incorporation of the rig, but the results have been doing very well actually.
Andres Ocampo: Slightly better than what we expected so.
Andres Ocampo: About a year and a half ago, we said the.
Andres Ocampo: A strategy that we needed. This is a mature asset we need to do things different. So we brought a rig that is.
Andres Ocampo: The newest generation rigs that are available and we set a target to drill and complete the wells at 25% less.
Andres Ocampo: Less so thats basically for the for the wells from four one to go to around $3 million, we have more wells, we drilled and.
Andres Ocampo: And we have the first one that we drill and complete and it was done at two point 75. So we.
Andres Ocampo: We feel good about had that fresh production is coming.
Andres Ocampo: The results from the well is producing around 450 barrels of oil play on in our plan, we had less than that.
Andres Ocampo: Again this is a program it's a six well program. So far the results are doing very well.
Andres Ocampo: We're drilling the wells safely and the last one that we finished.
Andres Ocampo: Reaching the bottom that the total debt.
Andres Ocampo: We're about to check, but we believe is a record for the channels basing that $4 five days getting to 11000 feet. So when we think about fresh production from that perspective, we are on plan.
Andres Ocampo: When we think a lot of the component of their fresh production, which is workovers.
Andres Ocampo: Year to date, we have done several workovers, which is part of our arresting the decline in bringing some fresh production from other zones.
Andres Ocampo: And it's on track so when we think about that asset.
Andres Ocampo: We feel that is going to deliver what we have in the plan. When we look at the next asset CPO five hour program was basically it.
Andres Ocampo: To replace natural flowing wells for pumps as the water was increasing.
Andres Ocampo: We have done that very successfully three wells, we did workovers, we got around 2300 barrels of oil per day gross.
Andres Ocampo: Incremental production so CPO five is delivering according to the plan.
Andres Ocampo: Again this is an asset that we expect water to be reaching anybody.
Andres Ocampo: But it's delivering as we as we expected.
Andres Ocampo: And then when we look at like Underestimation as Keith stated remarks in China as well.
Andres Ocampo: China's exploration, which is basically channels 123 block.
Andres Ocampo: Mark we are really close to 5000 barrels of oil per day record levels. We recently drilled an exploration well political to one that is started producing in the order of <unk> thousand 500 barrels of oil per day.
Andres Ocampo: So as production comes in in those assets.
Andres Ocampo: We feel that again to give you a flavor of that we are within our guideline.
Speaker Change: So on the first quarter actually higher and when we look at Argentina, I'll just reiterate the message from Andreas we had record levels in February higher than 70000 barrels of oil per day, we are right now drilling in the confluence yourself pad more wells.
Andres Ocampo: So from from production.
Andres Ocampo: Yeah.
Andres Ocampo: Thats kind of a high level and where we are at the same time.
Andres Ocampo: We're working really diligent and focused on our opex.
Andres Ocampo: Late last year, we added a third party review.
Andres Ocampo: Well known.
Andres Ocampo: Helping combat.
Andres Ocampo: We're working on.
Andres Ocampo: I think last you saw.
Andres Ocampo: So the part of the rest of it.
Andres Ocampo: And when we said 12 to 14, so on that front.
Andres Ocampo: We are looking really strong.
Andres Ocampo: RFP.
Andres Ocampo: We're working on.
Andres Ocampo: Bruce Moore.
Andres Ocampo: The mine.
Andres Ocampo: With that I can say.
Andres Ocampo: I'll give you a flavor of things we're looking at.
Andres Ocampo: How we then optimized maintenance.
Andres Ocampo: Sure.
Andres Ocampo: Absolutely not.
Andres Ocampo: Tom.
Andres Ocampo: Additional.
Andres Ocampo: Boiling in artificial lift.
Andres Ocampo: But it also in Colombia.
Andres Ocampo: And that's good for the country.
Andres Ocampo: The hydroelectric.
Andres Ocampo: Water, so our energy costs.
Andres Ocampo: Are helping us.
Another component of our Opex being at the level that we are.
Andres Ocampo: Okay.
Andres Ocampo: Timing here again.
Andres Ocampo: I recognize that the Internet address your point around Brent.
Andres Ocampo: Really quickly so basically.
Andres Ocampo: Our brand outlook, let me give you three three numbers. The first number is our plan. So our plan was done at 60 Bucks a barrel.
Andres Ocampo: Obviously as I said before I do can say, we do think Dvds 60 box to do that.
Andres Ocampo: That location $60. So these are the sort of price environment is by no means a surprise to us to our outlook.
Andres Ocampo: We need our internal view is that prices are going up.
Andres Ocampo: To date towards integration.
Andres Ocampo: Jason.
Brendan: Brendan policies, how many policies projection, we do need to swap to a backup line.
Andres Ocampo: Increased coal sales volumes.
Andres Ocampo: Thanks.
Andres Ocampo: Okay.
Andres Ocampo: Thanks.
Andres Ocampo: Hello can you hear hub right.
Andres Ocampo: Yes, yes.
Andres Ocampo: Yes, your backlog been sounding good do continue when everybody okay. Yes.
Speaker Change: Great Fantastic.
Brent: Brent I was saying three numbers one our plan.
Speaker Change: Has been developed at 68.
Speaker Change: On capital allocation has been done at 60, so no fundamental changes from that standpoint to our outlook our out our internal outlook around full year prices for 2025 is that theyre going to be in the 66 to 68 range. This is by no means.
Speaker Change: Precise, but directionally what it suggests is that.
Speaker Change: The prices that we saw in <unk>, which were higher prices price realizations were in the 72 to 73 type range for that quarter.
Speaker Change: Will compensate some of the softer prices that we're going to see over over the next three quarters.
Speaker Change: Again remember here that we are a hedge on.
Speaker Change: Effect of that on US is very limited and last but not least differentials. So the scania differential is actually.
Speaker Change: All set in part of these fall in Brent prices, while we're seeing while we have been seen as an important compression in Dallas going any differential and historically, we've seen that differential in the five to six range. It's actually currently in the two five bucks a barrel type.
Speaker Change: A spot price right now so it has become very competitive and it's offsetting part of the declines that we're seeing in the headline Brent price.
Speaker Change: Hope that helps Christian thank you.
Speaker Change: Perfect. Thank you very much just to recap a couple of numbers.
Speaker Change: So excluding Argentina, and you would expect around 30 32.
Speaker Change: <unk> thousand barrels per day roughly for the year.
Speaker Change: That's consistent with an EBITDA, assuming some opex normalization.
Speaker Change: When lets say 330 or maybe 360.
Speaker Change: For the year would you be comfortable with that theaters.
Speaker Change: Sure.
I didn't pick up the door 330, <unk> hundred 60 point, what I can tell you is that.
Speaker Change: Consolidated production closing, if we close that transaction in May ease of 32 to 33000 barrels a day.
Speaker Change: That is that is true that will be the consolidated number that we will be posting on a full year basis.
Speaker Change: The $3 30 number im not sure Youre coming.
Speaker Change: <unk> Okay great.
Speaker Change: That will be including back on one of them you are saying.
Speaker Change: Yes, yes.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay perfect.
Speaker Change: And my second question is.
Speaker Change: Yeah.
Speaker Change: The.
The acquisition in Argentina.
Speaker Change: It is not approved.
Speaker Change: How are you thinking about.
Speaker Change: Potential cash uses.
Speaker Change: Considering the strong position that you have at the moment.
Speaker Change: Minor.
Speaker Change: Additional question.
Speaker Change: You could clarify.
Speaker Change: This deadline date that you have so you said, it's may 13 that.
Speaker Change: Would be next week.
Speaker Change: Starting that date either party can.
Speaker Change: Can leave the contract that's correct. Thank you.
Speaker Change: Yes, so a couple of things let me take first your first point around.
Speaker Change: How we would think about capital allocation and a scenario.
Speaker Change: Off of not closing right back on Microsoft right now.
Speaker Change: A couple a couple of things to note right.
Speaker Change: The first thing is upon closing the transaction, which.
Speaker Change: Continues to be while we are actively working on which is closing the transaction, while we see a capital disbursement, which is in the area of $230 million to $240 million. That's a combination of 150.
Speaker Change: <unk> 52, or $55 million or so of the original acquisition cost.
Speaker Change: A balance of around $80 million to $90 million of the interim period entering Peter is what has occurred the activities that have occurred between.
Speaker Change: July one of last year on.
Speaker Change: The actual closing right. So that's the ammonia that's going out the door.
Speaker Change: If we close back I'm glad that right now to $30 million to $40 million right. That's the first consideration.
Speaker Change: If we do not close on that transaction doesn't close for any reason.
Speaker Change: We we don't have to allocate that money basically right and the way that we're thinking about it east is probably a three tier structure, which is consistent with our strategy, which is one we will continue to pursue growth opportunities for.
Speaker Change: The company we have.
Speaker Change: Pipeline associated to that that we couldnt have continued to work on.
Speaker Change: And we would prioritize that.
Speaker Change: <unk> is to bring reserves and production to the company.
Speaker Change: Consistent with our long term aspiration that we have so that will be the first <unk>.
Speaker Change: Capital allocation priority the second capital allocation priority.
Speaker Change: East I would say it would be around Optionality strategic optionality and things that we could consider around.
Speaker Change: Perhaps looking at our debt on on <unk>.
Speaker Change: Reviewing those debt levels, although we are comfortable with the existing debt levels. We could review them. If the market conditions are appropriate for that so thats optionality right.
Speaker Change: Buybacks also our optionality that we would be considering so thats there, but if I had to tell you firm a firm view I would say two things first ensuring continuity of our organic plan too.
Speaker Change: Ensuring that we have the ability to pursue the inorganic pipeline that we have been actively working on.
Speaker Change: Again. These are options, we remain focused on closing the transaction and we continue to work diligently to advance that approval process. So with regards to your question on the outside date.
Speaker Change: And there is already made along a statement around that which I don't think we need to repeat.
Speaker Change: Thank you.
Thanks.
Speaker Change: Yes.
Speaker Change: The next question comes from Isabella <unk> with Bank of America Isabella. Your line is open. Please go ahead.
Isabella: Hi, Thank you for taking my question first of all I would like to congratulate Andrew.
Speaker Change: Trajectory and impact you said part.
Isabella: Yes.
Isabella: And I think that most of my questions have been already answered.
Isabella: I just had one specific question around prediction in Colombia. So.
Speaker Change: Yes. Thank you for speaking natural declines, but I would like to talk to any other operational disruptions.
Speaker Change: And lower production levels and if possible could you. Please break down production of Nike athletes and explain where the shortfall came from.
Speaker Change: Sure.
Speaker Change: Hi, Isabella this is Martin.
So again I'll go back to a high level and then we can go into the details, but overall in the first quarter, we had no surprises.
Speaker Change: Our guideline was exceeded in if we just focus on the Colombia assets.
Speaker Change: Basically we are we're delivering according to our plan.
Speaker Change: Yes. There is every now and then there are some one offs, but so for.
Speaker Change: For example, we had.
Speaker Change: Around 12 days of blockages in CPO, five but that was within our guideline is something that we learn from last year. So when we did our downtime estimations for 2025, we put a range on.
Speaker Change: Those days are within the range that we put out.
Speaker Change: I'll stay in CPO, five and then I'll go to the other assets in.
Speaker Change: In CPO five we are delivering according to the plan are actually exceeding and exceeding is basically because the like I mentioned before.
Speaker Change: The plan for the first part of the year was to do Workovers on wells, which by natural flow there were getting to low production levels.
Speaker Change: So we put a pump and that's something that is normal in the maturity of the reservoir.
Speaker Change: It was successful so we got incremental production from that so CPO five is delivering.
Speaker Change: According to the plan I will go now to channels 34, <unk> hundred 34.
Speaker Change: And we've been delivering in the order of 94% to 95% production efficiency. So what that means is that it within the.
Speaker Change: The plan that we had in so what the only thing that did not.
Speaker Change: Deliver exactly according to the plan was the infield drilling campaign, which in our program. We had it starting in January and it took us a little bit longer to socialize, but again like I mentioned before.
Speaker Change: We we got this rig running in the month of March.
Speaker Change: The latest generation rig.
Speaker Change: Like Andres mentioned, we had a target on we're aiming for 25%.
Speaker Change: Reduction in completion and drilling cost these wells with previous rigs on previous procedures were costing us $4 $1 million and.
Speaker Change: We're targeting <unk> III and the first well.
Speaker Change: Ended up being at $2 75, so we feel good about that it's a campaign. So we need to look at the whole campaign results. The well is delivering 450 barrels of oil per day, and thats a higher than expected.
Speaker Change: No.
Speaker Change: Sure.
Speaker Change: When you look at channel 34 is the normal decline.
Speaker Change: We had that.
Speaker Change: Offsetting off when the rate came in.
Speaker Change: And then finally, when you look at China's exploration, which is basically the block China's 123.
Speaker Change: We are on track on our production guideline for that particular block working really well with our.
Speaker Change: Non operating partner.
Speaker Change: Looking at how could we could do well delivers and.
Speaker Change: So from that perspective, maybe what you saw in <unk>.
Speaker Change: There is a little bit down production in China is because of the.
Speaker Change: Divestment of channels 32.
And that had been in the middle of March.
Speaker Change: And then on.
Speaker Change: That was producing around 1000 barrels of oil per day net.
Speaker Change: Net to Geo Park.
Speaker Change: And finally, when we move outside of the channel spacing flatten issue is an asset that we shut in.
Speaker Change: Due to.
Speaker Change: The high Opex, So we're working to see.
Speaker Change: With the with our supply chain group, if we can do some additional ideas on how to reopen that that asset.
Speaker Change: At lower Opex, so that we can make money.
Speaker Change: I hope that answers the question on Isabela.
Speaker Change: Thank you very much.
Speaker Change: Thank you for your comments is around this year. Thanks very much appreciate it.
Speaker Change: We have some questions from the webcast Vincent forlenza from Bradesco asks how much more cost efficiency can the company achieve.
Speaker Change: Vincent.
Speaker Change: We share a lot of color I think around how we're approaching costs.
Speaker Change: On an on.
Speaker Change: I guess, what I could add further color that I could add on DC.
Speaker Change: Is that.
Speaker Change: Is it around flexibility right.
Speaker Change: <unk>.
Speaker Change: I cannot give you a number on technical limit.
Speaker Change: But what we what we've done is we look at our peer group, we look at our operating environments, both in Colombia, and Argentina on where we are regularly monitoring and testing ourselves to ensure that in those spear comparisons we show up well that's that's.
Speaker Change: One of our key.
Speaker Change: Our approach is still large that a second approach that we've had.
Speaker Change: We actually bring outsiders to look under the Hood.
Speaker Change: And kick the tires, we did such exercise with BCG.
Speaker Change: Last year on any gave us.
Speaker Change: This on one hand, it told us that we have an extremely efficient operation.
Speaker Change: But at the same time illuminated a few medium and long term opportunities that we're looking into right.
Speaker Change: <unk>, probably Martin can give us a little bit.
Speaker Change: Color around that.
Speaker Change: We also look at that cost Shane from an integrated standpoint. So we don't just focus on one specific point of the cost, but the totality of how we approach development for instance, when we look at Argentina. It is not just about the lifting costs, which are.
Speaker Change: Extremely competitive in the five to six type dollars range per barrel.
Speaker Change: But we actually look at the development decisions that we're making we Phoenix to ensure that over the long run that remains a efficient.
Speaker Change: I know I'm, not giving you a specific number.
Speaker Change: Because we don't have it I think it's more of an approach on our approach.
Want to be as competitive as we can possibly be right, obviously, ensuring safety and integrity.
Speaker Change: On the.
Speaker Change: Reliability of our operation within those constraints, we look to be as best as we can and those are the things that we're working on.
Speaker Change: Yes.
Vincent Forlenza: Vincent I'll just add to <unk>.
Speaker Change: Again reiterate that.
Speaker Change: We're in the low side of our range on the 12% to $14 per barrel guidance like Andres mentioned in the first pool.
Speaker Change: We were at $12 three in.
Speaker Change: Our our men and women working in the field, but also supporting those field guys here in the office are all very aligned that number one is to have safe operations, but we know that.
Speaker Change: To be competitive and we have done it historically, we have to have low opex.
Speaker Change: I'll give you a couple of examples of the things that we've done and the ones that we're working I think that.
The connection got cut one when we were talking about that but we don't things together with the <unk> group on reviewing our contracts looking at long term contracts.
Speaker Change: So a portion of the.
Speaker Change: The numbers that you see are related to that.
Speaker Change: Look at <unk>.
Speaker Change: Toughing.
Speaker Change: In the field, we have look at things that we can optimize so reducing the number of trucks that move around by innovative Lee.
Speaker Change: The pump so that the bolt ons from the tanks.
Speaker Change: <unk> mean that were having 15 trucks going out of the field every three days now we only have one and that is not only opex savings but.
Speaker Change: We're reducing the chance of somebody getting hurt we are reducing our emissions. So those are examples of the things that we already did example of the things that are are coming.
Speaker Change: We're looking in very detail of our maintenance strategy, how are we doing our maintenance.
Speaker Change: Integrated not only the contracts that we have but are we doing the maintenance properly income we optimize even further depending on what kind of criticality of equipment has and we feel that we that we're going to.
Speaker Change: Probably optimize a little bit more.
Speaker Change: In chemicals artificial lift and pulling I mean, we have done a very good job the guys in the field have done a very good job from facilities to artificial lift to have really reliable energy and with that it means that our pumps don't fail that often.
Speaker Change: The pump zone fail it means that our opex on pooling go down.
Speaker Change: When we look at the benchmark our days between failures in channels 34 are actually.
Speaker Change: The top rank ranked not only in Colombia, but worldwide. So that's the philosophy on what our teams are working on day to day.
Speaker Change: I think I would like to turn the call we are making just one.
Speaker Change: Just one highlight on that.
Speaker Change: And I think the special mention to Martine steam.
Speaker Change: Because we made some comments and im not sure if they were very well.
Speaker Change: Captured.
Speaker Change: The fact that we drilled.
Speaker Change: The last world in <unk>.
Speaker Change: Six one days and I've mentioned that in my introduction on US as we were in the call. We've got a report for the following well which is the <unk> 56, well.
Speaker Change: We reached TD in four or five days that has to be some record in debate in not only in the block.
Speaker Change: We're checking that but this means that we spud a well on Monday, and we reached TD before the end of Friday.
Speaker Change: <unk> huge savings.
Speaker Change: Team was targeting to reach wells that we drilled last year for $4 1 million to drill them and completing them this year.
Speaker Change: $3 million on the first one has already come in at less than two 2 million <unk> 75.
Speaker Change: These one is obviously to go into come cheaper than that so that relentless effort in finding efficiencies breaking paradigms and making sure that we make the most out of each dollar that goes to the ground. These would motivate these team I think they are doing an incredible job. So thanks very much for your.
Speaker Change: Question.
Speaker Change: Yeah.
Speaker Change: So I think that's the end of the call. There is no more questions. So I would like to thank everybody for your interest in and your support of Geo Park and the team is always here to answer any questions. Please reach out give us a call or even better please visit our operations. Thank.
Speaker Change: Thank you and have a good day.
Speaker Change: This concludes today's call. Thank you very much for your attendance you may now disconnect your lines.
Speaker Change: Yeah.
Speaker Change: [music].