Strong Free Cash Flow Generation From Low Breakevens & Capital Efficiency

Expanded Work Program Accelerates Profitable Growth In 2021

BOGOTA, Colombia--(BUSINESS WIRE)--GeoPark Limited (“GeoPark” or the “Company”) (NYSE: GPRK), a leading independent Latin American oil and gas explorer, operator and consolidator with operations and growth platforms in Colombia, Ecuador, Chile, Brazil and Argentina reports its consolidated financial results for the three-month period (“Fourth Quarter” or “4Q2020”) and for the year ended December 31, 2020 (“Full-year” or “FY2020”). A conference call to discuss 4Q2020 and FY2020 financial results will be held on March 11, 2021 at 10:00 am (Eastern Standard Time).

All figures are expressed in US Dollars and growth comparisons refer to the same period of the prior year, except when specified. Definitions and terms used herein are provided in the Glossary at the end of this document. This release does not contain all of the Company’s financial information and should be read in conjunction with GeoPark’s consolidated financial statements and the notes to those statements for the year ended December 31, 2020, available on the Company’s website.

FOURTH QUARTER AND FULL-YEAR 2020 HIGHLIGHTS

Profitable Production Growth

• Annual average production of 40,192 boepd in 2020, extending 18-year track record
• Consolidated oil and gas production of 39,304 boepd
• CPO-5 block (GeoPark non-operated, 30% WI) produced 10,310 bopd gross, 55% higher than 3Q2020

Free Cash Flow Generation

• Revenue of $106.7 million / Full-year Revenue of $393.7 million
• Cash flow from operations of $77.1 million / Full-year Cash flow from operations of $168.7 million
• Adjusted EBITDA of $56.0 million / Full-year Adjusted EBITDA of $217.5 million
• Full-year non-cash accounting impairments in Chile, Peru, Argentina and Brazil of $133.9 million and write-offs of $52.7 million for an operating loss of $110.7 million / Full-year Net loss of $233.0 million
• Capital expenditures of $26.1 million / Full-year 2020 work program of $75.3 million

Cost and Capital Efficiencies

• Cost and investment reductions of over $290 million¹ across regional platform
• Full-year Production and operating costs reduced by 26% to $125.1 million
• Full-Year G&G, G&A and selling expenses reduced by 24% to $71.1 million

Strong Risk-Managed Balance Sheet

• $201.9 million of Cash & cash equivalents as of Dec. 31, 2020 ($111.2 million as of Dec. 31, 2019)
• $75 million oil prepayment facility, with $50 million committed and no amounts drawn
• $125.6 million in uncommitted credit lines
• Long-term financial debt maturity profile with no bond principal payments until September 2024
• Continuously adding new hedges for the next 12 months

Fully Funded Growth in 2021 Work Program

• Expanding full-year 2021 work program to $130-150 million (from prior $100-120 million), targeting 41,000-43,000² boepd average production and operating netbacks of $330-370 million assuming Brent at $50-55 per bbl³
• Flexible work program, quickly adaptable to any oil price scenario

Returning Value to Shareholders

• Quarterly cash dividend of $0.0205 per share ($1.25 million) to be paid on April 13, 2021, to the shareholders of record at the close of business on March 31, 2021
• Resumed cash dividends, having paid $4.9 million in full-year 2020 (quarterly and extraordinary)
• Resumed discretionary share buyback program, having acquired 119,289 shares for $1.2 million since November 6, 2020, totaling $4.0 million in full-year 2020

Decisive Actions on SPEED/ESG+

• Exceeded all Health and Safety goals in 2020
• Obtained Bureau Veritas certification on biosecurity protocols to mitigate and manage the impact of Covid-19 in GeoPark Colombia in June and again in December 2020
• Signed contract to connect the Llanos 34 block (GeoPark operated, 45% WI) to the national electricity grid, which has 68% installed hydroelectric capacity. The electrification of Llanos 34 is expected to be operational in 2022, and will help reduce carbon emissions and the cost of energy
• Connected the Tigana field (Llanos 34 block) to the ODCA pipeline in December 2020, further reducing truck traffic by an estimated 205 trucks per day, contributing to further reduce operational risk, costs and carbon emissions

Big Expansion Fairway

• Certified 2P reserves of 175 mmboe with a net present value (after tax) of $2.5 billion
• 199% 2P reserve replacement in Colombia (including acquisitions)
• Net debt-adjusted 2P NPV10 after tax of $31.3 per share ($25.5 per share corresponding to Colombia)
• Exploration inventory of 380-780 mmbbl⁴ potential recoverable resources in Colombia

James F. Park, Chief Executive Officer of GeoPark, said: “After such a historically-complex year and the exceptional efforts by our team to prevail through and succeed during 2020 – we must again express our gratitude and admiration to the GeoPark women and men that made this all possible and continued us along our 18-year growth trajectory. We kept our teams safe and healthy, we operated in the field without interruption for 365 days, we grew production, we found more oil and gas, we beat down each and every cost, we funded all our work and obligations with our own cashflow, we acquired and integrated a new company, we completely restructured our asset portfolio and organization, we strengthened our balance sheet and almost doubled our cash, we provided aid and support to our neighboring communities, we moved to reduce our carbon footprint and social and environmental impacts, and we reinstated our shareholder value initiatives with share buybacks and cash dividends. Bottom-line: GeoPark is a better and stronger Company today and well-positioned for the promising opportunities ahead. 2021 is already well underway with three drilling rigs at work, seismic being run to identify new prospects on our high-potential acreage, and our team fully engaged in getting every molecule of hydrocarbons safely, cleanly and profitably out of the ground and to market.”

CONSOLIDATED OPERATING PERFORMANCE

Key performance indicators:

REVISED 2021 WORK PROGRAM

Resulting from a sustained increase in oil prices since early November 2020, GeoPark is expanding its 2021 work program and investment plan to $130-150 million (from $100-120 million), maintaining full flexibility to expand or adjust depending on prevailing oil prices.

The revised 2021 work program reflects an average production of 41,000-43,000¹ boepd (excluding potential production from the 2021 exploration drilling program), which includes drilling of 37-42 gross wells, with approximately 60-65% to be allocated to development activities and 35-40% to exploration activities.

Using a $50-55/bbl Brent assumption, GeoPark can execute a risk-balanced work program to continue growing its business by producing, developing and exploring its portfolio of assets, fully funded within cashflow, maintaining a strong balance sheet and returning value to its shareholders.

The table below provides further details about GeoPark’s revised 2021 work program compared to its November 4, 2020 guidance.

Production: Annual average 2020 production of 40,192 boepd compared to 40,046 boepd in 2019. Oil and gas production in 4Q2020 decreased by 6% to 39,304 boepd from 41,786 boepd in 4Q2019, due to limited drilling and maintenance activities in Colombia, Chile and Argentina and lower gas demand in Brazil, partially offset by the addition of production from the Amerisur acquisition in Colombia. Oil represented 85% of total reported production in 4Q2020 and 4Q2019.

For further details, please refer to the 4Q2020 Operational Update published on January 7, 2021.

Reference and Realized Oil Prices: Brent crude oil prices averaged $46.0 per bbl during 4Q2020, $16.4 per bbl lower than 4Q2019 levels. However, consolidated realized oil sales price averaged $35.5 per bbl in 4Q2020, $13.2 per bbl lower than the $48.7 per bbl in 4Q2019, reflecting a lower local marker differential in Colombia and lower commercial and transportation discounts.

In Colombia, the local marker differential to Brent averaged $2.3 per bbl in 4Q2020, compared to $3.2 per bbl in 4Q2019. Commercial and transportation discounts averaged $8.4 per bbl in 4Q2020, compared to $10.6 per bbl in 4Q2019, resulting from further improvements achieved for production in the Llanos 34 block plus the addition of the Platanillo (GeoPark operated, 100% WI) and CPO-5 blocks as part of the Amerisur acquisition, both of which have lower commercial and transportation discounts.

The tables below provide a breakdown of reference and net realized oil prices in Colombia, Chile and Argentina in 4Q2020 and 4Q2019:

(*) Specified Brent oil price differs in each country as sales are priced with different Brent reference prices.

Revenue: Consolidated revenue decreased by 33% to $106.7 million in 4Q2020, compared to $158.1 million in 4Q2019 reflecting lower oil and gas prices and lower deliveries.

Sales of crude oil: Consolidated oil revenue decreased by 32% to $97.5 million in 4Q2020, driven by a 27% decrease in realized oil prices and an 8% decrease in oil deliveries. Oil revenue was 91% of total revenue in 4Q2020 and 4Q2019.

• Colombia: In 4Q2020, oil revenue decreased by 32% to $91.6 million reflecting lower realized oil prices and a 7% decrease in oil deliveries. Realized prices decreased by 27% to $35.3 per bbl due to lower Brent oil prices, partially compensated by lower commercial and transportation discounts and a lower Vasconia differential. Oil deliveries decreased by 7% to 29,324 bopd, reflecting temporary shut-ins and limited drilling and maintenance activity in previous quarters of 2020. Colombian earn-out payments decreased by 42% to $3.6 million in 4Q2020, compared to $6.1 million in 4Q2019, in line with lower oil revenue in the Llanos 34 block.
• Chile: In 4Q2020, oil revenue decreased by 46% to $1.3 million, due to lower oil prices and volumes sold. Realized oil prices decreased by 33% to $37.8 per bbl, in line with lower Brent prices. Oil deliveries decreased by 20% to 383 bopd due to limited maintenance works and no drilling activity, combined with the natural decline of the fields.
• Argentina: In 4Q2020, oil revenue decreased by 32% to $4.4 million due to lower oil prices and lower deliveries. Realized oil prices decreased by 14% to $41.0 per bbl, and oil deliveries decreased by 21% to 1,171 bopd due to limited maintenance works and no drilling activity, combined with the natural decline of the fields.

Sales of gas: Consolidated gas revenue decreased by 33% to $9.2 million in 4Q2020 compared to $13.7 million in 4Q2019 reflecting 30% lower gas prices and an 4% decrease in volumes delivered. Gas revenue was 9% of total revenue in both 4Q2020 and 4Q2019.

• Chile: In 4Q2020, gas revenue decreased by 35% to $3.5 million reflecting lower gas prices, partially offset by higher gas deliveries. Gas prices were 39% lower, or $2.3 per mcf ($13.7 per boe) in 4Q2020. The successful development of the Jauke gas field and the discovery of the Jauke Oeste gas field in early 2020 increased gas deliveries by 5% to 16,565 mcfpd (2,761 boepd).
• Brazil: In 4Q2020, gas revenue decreased by 33% to $4.5 million, due to lower gas deliveries and lower gas prices. Gas deliveries fell by 20% in the Manati gas field (GeoPark non-operated, 10% WI) to 11,706 mcfpd (1,951 boepd) due to lower gas demand in Brazil. Gas prices decreased by 16% to $4.2 per mcf ($24.9 per boe), due to the impact of the local currency devaluation, which was partially offset by the annual price inflation adjustment of approximately 7%, effective in January 2020.
• Argentina: In 4Q2020, gas revenue decreased by 41% to $0.6 million, resulting from lower gas prices, partially offset by higher deliveries. Gas prices decreased by 49% to $1.6 per mcf ($9.8 per boe) due to local market conditions while deliveries increased by 14% to 4,251 mcfpd (708 boepd) due to optimization activities focused on enhancing base production levels and the improved performance of the Challaco Bajo gas field.

Commodity Risk Management Contracts: Consolidated commodity risk management contracts amounted to a $17.5 million loss in 4Q2020, compared to a $6.5 million loss in 4Q2019.

Commodity risk management contracts have two different components, a realized and an unrealized portion.

The realized portion of the commodity risk management contracts registered a cash gain of $5.3 million in 4Q2020 compared to zero in 4Q2019. Realized gains in 4Q2020 resulted from hedges in place providing protection from prevailing oil prices during 4Q2020.

The unrealized portion of the commodity risk management contracts amounted to a $22.8 million loss in 4Q2020, compared to a $6.5 million loss in 4Q2019. Unrealized losses during 4Q2020 resulted from the increase in the forward Brent oil price curve compared to September 30, 2020 and the impact of new hedges added during 4Q2020, as measured at December 31, 2020.

GeoPark recently added new oil hedges that further increased its low-price risk protection over the next 12 months. Please refer to the “Commodity Risk Oil Management Contracts” section below for a description of hedges in place as of the date of this release.

Production and Operating Costs⁸: Consolidated production and operating costs decreased by 18% to $34.9 million from $42.3 million resulting from lower royalties and lower operating costs.

The table below provides a breakdown of production and operating costs in 4Q2020 and 4Q2019:

Consolidated operating costs decreased by 10%, or $2.7 million to $22.9 million in 4Q2020 compared to $25.7 million in 4Q2019.

The breakdown of operating costs is as follows:

• Colombia: Operating costs per boe increased to $6.5 in 4Q2020 compared to $5.2 in 4Q2019. Total operating costs increased by 6% and amounted to $16.5 million, due to higher well maintenance costs plus the addition of the Platanillo block as part of the Amerisur acquisition, which has higher costs per boe than the Llanos 34 block.
• Chile: Operating costs per boe decreased by 36% to $8.9 in 4Q2020 compared to $13.9 in 4Q2019, due to successful cost reduction efforts (including lower well intervention activities, efficiencies and the renegotiation of existing contracts). Total operating costs decreased by 35% to $2.6 million in 4Q2020 from $4.0 million in 4Q2019, in line with lower operating costs per boe and flat oil and gas deliveries.
• Brazil: Operating costs per boe remained flat at $7.6 in 4Q2020 compared to $7.5 in 4Q2019. Total operating costs decreased by 32% to $0.9 million in 4Q2020 compared to $1.3 million in 4Q2019, reflecting lower gas deliveries in Manati gas field, which decreased by 20%.
• Argentina: Operating costs per boe decreased by 29% to $18.5 in 4Q2020 compared to $26.0 in 4Q2019 due to ongoing cost-reduction efforts (including lower well intervention activities, efficiencies and the renegotiation of existing contracts) and to a lesser extent, due to the devaluation of the local currency. Total operating costs decreased by 37% to $3.1 million in 4Q2020 compared to $4.9 million in 4Q2019 due to lower operating costs per boe and lower oil and gas deliveries, which decreased by 11%.

Consolidated royalties fell by 30% or $5.0 million to $11.6 million in 4Q2020 compared to $16.6 million in 4Q2019, mainly resulting from lower oil and gas prices.

Selling Expenses: Consolidated selling expenses decreased by $1.9 million to $0.9 million in 4Q2020 (of which $0.7 million, or $0.2 per bbl, correspond to Colombia), compared to $2.8 million in 4Q2019.

Administrative Expenses: Consolidated G&A costs per boe decreased by 25% to $4.2⁹ in 4Q2020 compared to $5.5 in 4Q2019 due to cost reduction initiatives that outweighed the incremental G&A costs related to the addition of Amerisur operations. Total consolidated G&A decreased by $5.3 million to $16.0 million in 4Q2020, compared to $21.3 million in 4Q2019.

Geological & Geophysical Expenses: Consolidated G&G costs per boe decreased by 26% to $1.4¹⁰ in 4Q2020 versus $1.9 in 4Q2019 due to ongoing cost reduction initiatives and despite incremental G&G costs related to the addition of Amerisur operations. Total consolidated G&G expenses decreased to $4.8 million in 4Q2020 compared to $5.7 million in 4Q2019.

Adjusted EBITDA: Consolidated Adjusted EBITDA¹¹ decreased by 35% to $56.0 million, or $16.6 per boe, in 4Q2020 compared to $85.7 million, or $23.6 per boe, in 4Q2019.

• Colombia: Adjusted EBITDA of $60.5 million in 4Q2020
• Chile: Adjusted EBITDA of $0.3 million in 4Q2020
• Brazil: Adjusted EBITDA of $2.2 million in 4Q2020
• Argentina: Adjusted EBITDA of negative $1.7 million in 4Q2020
• Corporate, Ecuador and Peru: Adjusted EBITDA of negative $5.3 million in 4Q2020

The table below shows production, volumes sold and the breakdown of the most significant components of Adjusted EBITDA for 4Q2020 and 4Q2019, on a per country and per boe basis:

Depreciation: Consolidated depreciation charges remained flat at $28.8 million in 4Q2020, compared to $28.7 million in 4Q2019, in line with lower volumes delivered and higher depreciation costs per boe resulting from the Amerisur acquisition.

Write-off of unsuccessful exploration efforts: The consolidated write-off of unsuccessful exploration efforts amounted to $48.9 million in 4Q2020 compared to $9.0 million in 4Q2019. Amounts recorded in 4Q2020 include $46.6 million related to exploration costs incurred in prior years in the Tierra del Fuego and Fell blocks in Chile, plus costs associated with unsuccessful exploration projects in Colombia, including the Aguila exploration prospect in the CPO-5 block and re-entry costs related to the Grulla 1 well in the Llanos 94 block (GeoPark non-operated, 50% WI).

Impairment of Non-Financial Assets: Consolidated non-cash impairment of non-financial assets amounted to $35.4 million in 4Q2020 ($31.7 million recorded in the Fell block in Chile, $3.0 million in the Morona block in Peru and $0.7 million in the REC-T-128 block in Brazil) mainly related to costs incurred in previous years. A non-cash impairment loss is recognized for the amount by which an asset’s carrying amount exceeds its recoverable amount.

For further details, please refer to Note 37 of GeoPark’s consolidated financial statements as of December 31, 2020, available on the Company’s website.

Other Income (Expenses): Other operating expenses showed a $2.7 million loss in 4Q2020, compared to a $2.4 million loss in 4Q2019.

CONSOLIDATED NON-OPERATING RESULTS AND PROFIT FOR THE PERIOD

Financial Expenses: Net financial expenses increased to $16.4 million in 4Q2020, compared to $12.2 million in 4Q2019 mainly resulting from higher interest expenses related to the issuance of $350 million notes due in 2027 (2027 Notes).

Foreign Exchange: Net foreign exchange charges added a $6.3 million loss in 4Q2020 compared to a $1.8 million loss in 4Q2019.

Income Tax: Income taxes totaled a $13.4 million loss in 4Q2020 compared to a $17.9 million loss in 4Q2019, mainly resulting from lower profits before income taxes and the write-down of a portion of tax losses and other deferred income tax assets in Chile, Brazil and Argentina, partially offset by the effect of fluctuations of local currencies over deferred income taxes.

Profit: Losses of $119.

INVESTORS:
Stacy Steimel This email address is being protected from spambots. You need JavaScript enabled to view it.
Shareholder Value Director
T: +562 2242 9600
Miguel Bello This email address is being protected from spambots. You need JavaScript enabled to view it.
Market Access Director
T: +562 2242 9600
Diego Gully This email address is being protected from spambots. You need JavaScript enabled to view it.
Investor Relations Director
T: +5411 4312 9400

MEDIA:
Communications Department This email address is being protected from spambots. You need JavaScript enabled to view it.