GeoPark Reports Q3 Results, Venezuela Entry and Argentina Block Award

GeoPark (NYSE: GPRK ) reported third-quarter financial results on Wednesday. The transcript from the company's third-quarter earnings call has been provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

View the webcast at Summary GeoPark Limited announced its strategic entry into Venezuela through the Bare block, with a 25-year production participation contract with PDVSA, focusing on reactivating 300-400 wells. The company expanded its portfolio in Argentina with the award of the Corralera Noreste Block in Vaca Muerta, aiming to apply a phased appraisal program for development. Q3 production averaged 27,973 BOE per day, with stable output in Colombia and a 51% production increase in Argentina.

Despite stable operational performance, financial results were impacted by wider crude oil differentials and increased operating costs, leading to a realized price of $56.20 per barrel, down from $67.20. GeoPark issued $550 million in senior notes due in 2033 to extend its debt maturity profile and support its investment program, maintaining a net leverage of 1.6 times the last 12 months adjusted EBITDA. The company remains focused on improving margins and cash generation, with full-year production and EBITDA expected to remain within guidance ranges.

Management emphasized operational readiness in Venezuela, with plans to perform 100-150 well reactivations next year, and highlighted efforts to optimize costs and energy efficiency in Colombia and Argentina. Full Transcript OPERATOR Welcome to the GeoPark Limited conference call following the results announcement for the third quarter ended September 30, 2026. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question at this time, press Star 1 on your telephone keypad.

If you would like to withdraw your question, press Star 1 again. If you do not have a copy of the press release, it is available in the Invest With Us section of the Company's corporate website. A replay of today's call may be accessed through this webcast in the Invest With Us section of the GeoPark corporate website. Before we continue, please note that certain statements contained in the results press release and on this conference call are forward-looking statements rather than historical 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 developments and risk factors listed from time to time in the Company's SEC reports and public releases. Those lists are intended to identify certain principal factors that could cause actual results to differ materially from those described in the forward-looking statements, but are not intended to represent a complete list of the Company's business. All financial figures included herein were prepared in accordance with IFRS and are stated in U.S.

dollars unless otherwise noted. Reserves figures correspond to PRMS standards. On the call today from GeoPark are Philippe Bayon, Chief Executive Officer; Ayemi Caballero, Chief Financial Officer; Martin Terrado, Chief Operating Officer; Rodrigo Dalle Fiore, Chief Exploration and Development Officer; and Catalina Escobar, Shareholder Value and Capital Markets Director. And now I will turn the call over to Mr.

Philippe Bayon. Mr. Bayon, you may begin. Philippe Bayon (Chief Executive Officer) I would like to highlight two important developments that reflect the progress we are making in transforming GeoPark into a more diversified energy company with multiple platforms for long-term growth.

Earlier this week we announced the successful completion of our strategic entry into Venezuela through the Bare block following the effectiveness of the 25-year production participation contract with PDVSA. This milestone was achieved well ahead of the original contractual timeline and reflects the execution capabilities of our teams and the constructive collaboration we have built with PDVSA. With the contract now effective, our focus shifts to the safe and disciplined operational takeover of Bare, which we expect to complete before the end of the year.

We have already assessed approximately 300 to 400 wells for potential reactivation, establishing a foundation for the initial redevelopment phase. The transaction adds a large-scale, long-duration redevelopment opportunity to our portfolio with significant potential to restore production by leveraging existing wells and infrastructure. It also marks an important step in our strategy to build a more diversified regional platform. We also announced recently the award of Corralera Noreste Block in Argentina, adding approximately 26 gross acres to our position in northern Vaca Muerta.

This is a very important expansion to our unconventional portfolio with material resource potential and a strategic location adjacent to an expanding development area. We will approach this opportunity through a phased appraisal program, applying the same technical discipline and investment criteria that guide our capital allocation decisions across the company. Together, these developments reflect the progress we have made in expanding our portfolio beyond Colombia while preserving the strong operating foundation that has supported GeoPark's growth over the past two decades.

Turning now to our third quarter results, we delivered solid operational performance with stable production in Colombia and accelerating growth in Argentina. Consolidated production averaged 27,973 barrels of oil equivalent per day, increasing approximately 3% compared with the prior quarter. In Colombia, production remained stable at approximately 25,900 barrels of oil equivalent per day. Our Llanos 34 block continued benefiting from waterflooding and polymer injection projects, while Llanos 123 delivered higher production supported by ongoing development activity at CP05.

We also achieved encouraging exploration results, including the Milano 1x discovery, which has been testing at around 1,000 barrels of oil equivalent per day, reinforcing the remaining potential of our Colombian portfolio. Argentina continues to demonstrate the progress of our development program. Production increased by 51% quarter over quarter to approximately 2,100 barrels of oil equivalent per day following the successful completion and startup of five wells at PAD 1030 in Loma Jarillosa Este. These wells underwent 180 hydraulic fracturing stages and gross field production exceeded 5,000 barrels of oil equivalent per day following their startup.

We are now preparing for the next phase of development with a focus on transitioning towards a more continuous and efficient drilling and completion program. From a financial perspective, the third quarter was more challenging despite our good operations performance. Although Brent prices remained relatively strong, averaging $91.4 per barrel, our results were significantly affected by wider crude oil differentials in both Colombia and Argentina. In Colombia, the Vasconia differential widened from a discount of $1.43 per barrel in the second quarter to $6.67 per barrel.

In Argentina, the Medanito differential shifted from a premium of $1.79 per barrel to a discount of $3.50 per barrel. These movements, together with the impact of our existing commodity hedging contracts, reduced our combined realized price to $56.20 per barrel of oil equivalent compared to $67.20 per barrel in the prior quarter. Our commodity risk management contracts resulted in a negative impact of $36.4 million on revenue compared to $41.2 million in the second quarter.

In response, we have continued to actively manage our hedge portfolio to improve future price protection and participation in stronger market conditions, including optimizing our fourth-quarter positions and extending coverage into 2028. At the same time, operating costs increased to $20.7 per produced barrel of oil equivalent compared to $17.9 in the prior quarter, mainly reflecting higher energy costs, increased well intervention activities, and the appreciation of the Colombian and Argentine currencies. We recognize the importance of addressing these pressures.

Our teams are implementing operational efficiencies and cost optimization initiatives, including energy price hedges designed to mitigate price volatility. As a result of these factors, quarterly revenue reached $116.2 million and adjusted EBITDA totaled $45.8 million, representing a 39% margin. While financial performance was below the prior quarter, our operational results demonstrate the resilience of our portfolio and the progress of our development program. We remain focused on improving margins and cash generation through disciplined execution and active cost management.

During the third quarter we invested $72.2 million, primarily focused on development activities in Vaca Muerta and continued production and infrastructure investments in Colombia. Operating cash flow was also impacted by lower profitability and working capital requirements. As expected during this phase of elevated investment, free cash flow remained negative. This reinforces the importance of maintaining a disciplined approach to capital allocation and preserving liquidity as we advance our development plans.

At quarter end, GeoPark held $253.4 million in cash, with net leverage of 1.6 times the last 12 months adjusted EBITDA. Following quarter end, we successfully completed our liability management transaction, including a $550 million senior notes issuance due in 2033. This transaction extended our debt maturity profile, addressed our near-term refinancing requirements, and secured long-term funding for a substantial portion of our planned investment program in Vaca Muerta. It represents an important step in aligning our capital structure with our growth strategy and provides greater financial flexibility as we move through this investment phase.

Looking ahead, we continue to expect full-year production and adjusted EBITDA to remain within our guidance ranges, supported by growth production contributions from Argentina and Colombia and the optimization of our fourth-quarter hedge positions. Our priorities remain clear: complete the safe operational takeover of the Bare block, accelerate development in Vaca Muerta, sustain the performance of our Colombian assets, and maintain discipline in the allocation of capital.

When I look at the progress we have made over the past year, I see a company that has significantly expanded its growth opportunities while continuing to build on the operating strengths of its Colombian business. We recognize the challenges reflected in this quarter's financial results, and we remain focused on the actions needed to improve profitability, generate sustainable cash flow, and create long-term value for our shareholders. Finally, I want to recognize our employees for their commitment to safety, operational excellence, and disciplined execution, and thank our partners and shareholders for their continued support. Thank you again for joining us today.

With that, we are ready to take your questions. OPERATOR We will now begin the question-and-answer session. If you would like to ask a question, please press Star 1 to raise your hand. To withdraw your question, press Star 1 again.

We do ask that you pick up your handset when asking a question to allow for optimum sound quality. If you're muted locally, please remember to unmute your device. If you would like to submit a question via the webcast, you may do so by clicking the Q&A button in the bottom right corner of your screen. Now please stand by while we compile the Q&A roster.

Your first question comes from the line of Jacob Roberts with TPH Research. Your line is open. Please go ahead. Jacob Roberts (Analyst at TPH Research) Good.

I wanted to start on Venezuela and some of the numbers that were referenced in the September call and then also this morning, but roughly we're looking at 300 to 400 reactivations, I think 100 workovers and 30 potential new drill horizontals by 2030, I think with the new drills starting in 2028. So now that the CPP is effective, you're taking over before year end. Can you walk us through the cadence across those three buckets year by year to reach that 2030 exit rate? Philippe Bayon (Chief Executive Officer) Thanks, Jacob, and good morning again everyone.

And good news: I found the unmute button because I didn't at the beginning of the call, so apologies for that. I think you may have missed my first sentence. Absolutely, Jacob. In terms of the Bare block, we signed the contract and we had up to 120 days to make that effective.

We actually took only 65 days, roughly, to make that happen, so we're well ahead of schedule, which is great. And currently we're with our teams and working with PDVSA to take over the operation before year end. So a lot of activity, a lot of preparation, a lot of work being done in terms of supply chain, people, and the likes. But I'd like to ask Martin to take us through some of the details, especially around reactivations, workovers, and everything else and how we're viewing that.

Martin Terrado (Chief Operating Officer and Director of Operations) Absolutely, Felipe. And good morning, Jacob, so I'll put a little bit of color into where we are and reiterate what Felipe was saying. Safely taking over the operations is our top priority, and that's something that we're planning and feel comfortable doing before the end of this year. The first phase of the three phases that we presented is reactivation, followed by drilling and then steam injection.

So for the first year we're going to be doing reactivation, and eventually we'll start doing drilling next year. What we have, and when we look at the numbers, out of the 300 to 450 reactivations we're going to be doing by 2030, one-third of those would be done next year. So we're talking about 100 to 150 reactivations that we're going to be performing. That's basically OPEX.

When we move to the next category, which is workover, you spend a little bit more time on that and more money. Out of the 100 workovers that we said by 2030, it's going to be about a fourth. So 25% of those will be done in 2027. And then when we talk about drilling by 2030, we did say 30 wells.

That's about 12 to 15 wells per year, and we will start drilling operations in 2028. So from a drilling perspective, it's zero for 2027. Now, I do want to take a few more minutes to talk about two things. One is readiness and the other one is our relationship with PDVSA, which is very, very good.

On readiness, right now we have more than 50% of the contracts that are critical to take over operations already awarded, and we're awarding the remaining in the next two to three weeks, so we feel confident about that. And which are those contracts? That's rigs, chemicals, artificial lift, tubulars, and engineering. Because on the reactivation it's not only reactivating wells, but we are aware that as we go into some pads, we will have to do some engineering to understand integrity of facilities.

So that one we feel very good about. And actually we had a visit with PDVSA in which we got a really high ranking, and that's part of the requirements to get the effective approval. The other one I want to talk about is readiness teams on the ground. We have teams both in Caracas and in El Tigre for the past month and a half.

We have offices in both places, and we already have an understanding on the names of the PDVSA employees that are going to be joining the Barí Block development. And finally, I just want to say once again that we feel that the reason why we have been able to accelerate this timing that Felipe was saying to be effective is not only what GeoPark is doing, but our relationship with PDVSA. And we continue to work on many fronts, including identifying which of the wells that we're reactivating jointly with them. So, very good about what's coming in Venezuela.

Jacob Roberts (Analyst at TPH Research) Thanks, Martin. Thank you. That was great detail and super helpful. And then for my second question, I wanted to move to Argentina, and I apologize for my pronunciation here, but in the Corralera Noreste, we just don't have access to much well data.

And so I'm wondering if you could talk about the technical case of the asset and specifically what data your team was looking at, what you're seeing in terms of rock quality, all those kind of details, and then ultimately what you're expecting out of the asset to make it competitive with the current Vaca Muerta blocks. Philippe Bayon (Chief Executive Officer) So, absolutely, Jacob. And before handing over to Rodrigo, I'll just give you a bit of context which I think is relevant. The first thing is that the award is official now for Corralera, so that's great.

We're in the process of closing, so it will take some weeks probably to get everything sorted in terms of the contracts and everything else. And, as probably you're aware and we've announced this to the market, we have four years initially to do a lot of work to de-risk the area. And I know Rodrigo will go into some detail, but briefly, if you think about the neighborhood, obviously this is different from where we have the other two blocks that we're operating right now. But there's probably around 80,000 barrels of production being done by other companies in the area.

This is around 27,000 acres gross. So that would take us, in terms of GeoPark adding the existing two blocks on this one, to 39,000 acres, which is great. And we've identified—remember, in Loma Jarillosa and Puesto Silva, we have two landing zones. In this one, we see two to four landing zones.