GeoPark Limited (NYSE:GPRK) Q4 2023 Earnings Call Transcript
GeoPark Limited (NYSE:GPRK) Q4 2023 Earnings Call Transcript March 7, 2024
GeoPark Limited isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning, and welcome to the GeoPark Limited Conference Call. Following the results announcement for the Fourth Quarter ended December 31 2023. After the speakers are marked, there will be a question-and-answer session. [Operator Instructions] If you do not have a copy of the press release it is available at the Invest with Us section on the company's corporate website at www.geopark.com. A replay of today's call may be accessed through this website in the Invest with Us section of the GeoPark corporate website. Before we continue, please note that certain statements contained in the results, press release and on this conference call are forward-looking statements rather than the 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 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 here and were prepared in accordance with the IFRS and stated in the U.S. dollars unless otherwise noted. Reserves figures correspond to PRMS Standards. On the call today from GeoPark is Andres Ocampo, Chief Executive Officer; Jaime Caballero, Chief Financial Officer; Augusto Zubillaga, Chief Technical Officer; Martin Terrado, Chief Operating Officer; James Deckelman, Chief Exploration Officer; and Stacy Steimel, Shareholder Value Director.
And now I'll turn the call over to Mr. Andres Ocampo. Mr. Ocampo, you may begin.
Andres Ocampo: Good morning and thank you for joining our fourth quarter and full-year 2023 conference call. We have recently celebrated our 10 year anniversary of listening on the New York Stock Exchange, and we're thankful for the more than 2,000 shareholders and bondholders and the many others that have joined us in this journey and look forward to continuing delivering results over the next 10-years. GeoPark had a strong finish in 2023 where operational results during the fourth quarter allowed us to recover volumes, replenish 2P reserves, and build a healthier balance sheet. We invested $200 million in capital expenditures during 2023 to drill 48 gross wells resulting in a 2P reserve replacement ratio of 110% and average production annually of 36,500 barrels of oil per day equivalent.
Thanks to the restoration of production from the Indico 6 and 7 wells in the CPO-5 block in September and boosted by the more than 5,500 new gross barrels added from our successful exploration drilling campaign, we were able to increase our fourth quarter production to an average of 38,400 barrels of oil per equivalent per day, which is 10% higher than the third quarter. For the full-year 2023, GeoPark generated $452 million in adjusted dividend, down 16%, compared to 2022, following lower prices and production. These results also reflect lower operating and administrative costs and lower hedge losses. Every dollar invested on our assets returned 2.3 times adjusted EBITDA, proving the quality of our asset base and consistent capital efficiency.
We ended the year with a significant cash position of $133 million, further illustrating our financial quality. Our net leverage of 0.8 times was well below our long-term target of 1 times to 1.5 times adjusted EBITDA, and we have no principal maturities due until 2027. We ended 2023 with a net income of $111 million, the equivalent of approximately $2 per share. Our financial performance allowed us to continue returning cash to our shareholders with a 13% capital return yield or a $61 million balance between buybacks and dividends. We continue to invest as one of our top priorities in our ESG plus that we call SPEED initiatives and efforts with great results and recognition, mainly on carbon intensity, as well as in governance. We were upgraded by MSCI to a AA rating, placing us in the ESG leader bracket for the first time.
That is also a significant improvement over our initial single-B rating back in 2018. We have also recently embarked on that journey with the Carbon Disclosure Project CDP, climate change, participating for the second year in a row and achieving an upgrade to B from C. Internally, we completed a double materiality exercise to fine tune our sustainability strategy and a thorough human rights risk impact assessment for our operations in Colombia. The action plans resulting from this productive exercise will continue to make us a better company and a better partner for employees, neighbors, authorities, and investors. Looking ahead, at the end of last year and the beginning of this year, we had encouraging results in our CPO-5 block with the Halcon 1 well and the Perico 1 well, both which tested oil, proving our team thesis of a potential continuation of the Tigana, Jacana oil play into the Northern part of the CP0-5 block.
These were long-awaited results and we're excited and encouraged by these wells so far. We expect to continue operating and de-risking this new play going forward. We're also having encouraging results in Ecuador with oil production being tested at Perico Norte 5 wells, which means four out of four successful wells in this new used sand play developed by our team. Same in the Llanos Exploration acreage, where more wells and more production are expected to come from the four new discoveries of last year. In the core Llanos 34 Block, we continue with the horizontal drilling campaign, as well as expanding our water flooding project with more injected wells being added. As part of our disciplined capital allocation process, our own shares are currently offer a unique opportunity for repurchase, which is why we announced our intention to commence a modified Dutch auction tender to buy up to $50 million of GeoPark shares, following our view that the current market value of GeoPark does not properly reflect the intrinsic net value of our assets.
We also believe that the current market environment and financial health of the company provide ample headroom to execute this great investment while continuing to achieve our long-term goals. We continue to assess other opportunities to grow and improve our underlying business performance. Our goal is very simple. Deliver more energy, more value, and more shared prosperity. We're ready for and excited about our next 10-years on the New York Stock Exchange and thank you for your support and trust during this journey. We look forward to reporting on our progress throughout the year and would be happy now to answer any of your questions.
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