GeoPark Ltd (GPRK) Q4 2024 Earnings Call Highlights: Strategic Gains Amid Production Challenges

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Fri, Mar 7, 2025, 12:11 AM 4 min read

Total Oil and Gas Production: Averaged almost 34,000 barrels a day equivalent in 2024, a 7% decrease from 2023.
Vaca Muerta Production: Over 15,000 barrels a day gross in Q4 2024, 19% higher than Q3 2024.
Vaca Muerta EBITDA: Approximately $25 million net to GeoPark in Q4 2024, $100 million net on a full year pro forma basis.
Pro Forma 2P Reserves: Nearly over 160 million barrels, a 41% year-on-year increase.
1P Reserves: 102 million barrels, extending reserve life index to 8.2 years.
Adjusted EBITDA: $416 million for 2024, an 8% decrease compared to 2023.
Capital Expenditures: $191 million in 2024.
Net Income: $96.4 million for 2024, 13% lower than 2023.
Cash Balance: $276.8 million at year-end 2024.
Net Leverage: 0.9 times, below the long-term target of under 1.5 times adjusted EBITDA.
Shareholder Returns: Almost $74 million through dividends and buybacks in 2024, a 14% yield.
Outstanding Shares: Reduced by 8% to 51.2 million through a Dutch auction tender.
Quarterly Dividend: $0.15 per share declared, payable on March 31.

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Release Date: March 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

GeoPark Ltd (NYSE:GPRK) achieved a game-changing acquisition in Vaca Muerta, significantly extending its reserves life.
The company delivered the highest annual shareholder cash return in its history, with a record 14% yield.
GeoPark Ltd (NYSE:GPRK) maintained a strong capital efficiency ratio of 2.2 times adjusted EBITDA.
The company concluded the year with $276.8 million in cash, enhancing financial flexibility.
GeoPark Ltd (NYSE:GPRK) was recognized for its sustainability efforts, maintaining an AA rating in the MSCI Index and being included in the S&P sustainability yearbook.

Negative Points

Total oil and gas production for 2024 averaged 7% less than 2023 due to temporary production disruptions and natural decline in Colombia.
Full year 2024 adjusted EBITDA decreased by approximately 8% compared to 2023.
Net income for the year was 13% lower than 2023, mainly due to lower production, lower revenues, and higher effective tax rates.
The closing of the acquisition in Argentina is taking longer than expected, affecting the reporting of consolidated production and financial figures.
There are challenges in Vaca Muerta, including well cost pressures and the parent-child effect impacting well productivity.

Q & A Highlights

Q: Can you provide details on the $152 million recorded as customer advanced payments in the cash flow statements? And what is the expectation on this item for the upcoming quarter? A: Jaime Caballero, Chief Financial Officer, explained that the $152 million recorded as customer advance payment is related to the withdrawal from Vitol's committed line to fund the Argentina transaction. This amount was characterized as a pre-payment of oil proceeds. Following a successful bond placement in January, the balance has been reduced to about $20 million. Going forward, the gross debt is expected to be around $670 million.

Q: Why is the closing of the acquisition in Argentina taking longer than expected? What is the pushback from the regulatory entities? A: Andres Ocampo, Chief Executive Officer, stated that there is no specific pushback or requirements delaying the closing. The process is going through normal regulatory procedures, and there is no impact on the financials or economics of the transaction due to the delay, as the effective date was set as July 1 of the previous year.

Q: What net transportation capacity do you have in the Duplicar project and what is the expected trajectory of the production of the Vaca Muerta assets in 2025? A: Martin Terrado, Chief Operating Officer, mentioned that the current capacity is around 6,800 barrels of oil per day, which will increase to 19,000 barrels per day with the Duplicar project coming online in March. Production is expected to reach 20,000 barrels per day by mid-2025 and 40,000 barrels per day by early 2026 with the addition of a second rig.

Q: At which price of Brent would you consider revising downward the expected CapEx to deploy in Vaca Muerta? A: Jaime Caballero, Chief Financial Officer, stated that capital allocation is tested at $60 per barrel to ensure resilience to oil price volatility. The company has a mature hedging program covering 70% of the next 12 months of production, securing floors of $68-$69 per barrel. A sharp and prolonged drop in oil prices would be required to change current plans.

Q: How many drilling locations is the reserve's report of the Vaca Muerta assets considering? A: Rodrigo Fiore, Chief Exploration and Development Officer, noted that the reserve report includes 33 wells in Mata Mora and three in Confluencia, with 148 more wells to drill in Mata Mora. The reserves are divided into 69 proven and developed, 30 probable, and 48 possible wells. Additionally, there are 113 million barrels of certified contingent resources from Confluencia and Mata Mora Sur.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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