管理層發言
Good morning, and welcome to the GeoPark Limited conference call following the results announcement for the second quarter ended June 30, 2025. 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.geo-park.com. 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 the 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 the IFRS and are stated in U.S. dollars, unless otherwise noted. Reserves figures correspond to PRMS standards. On the call today from GeoPark, we have Felipe Bayon, Chief Executive Officer; Jaime Caballero, Chief Financial Officer; Martin Terrado, Chief Operating Officer; Rodrigo Dalle Fiore, Chief Exploration and Development Officer; and Maria Catalina Escobar, Shareholder Value and Capital Markets Director. And now, I'll turn the call over to Mr. Felipe Bayon. Mr. Bayon, you may now proceed.
Good morning, everyone, and thank you for joining us at our second quarter 2025 conference call. This is my first earnings call as GeoPark's CEO, and I want to start by acknowledging the strong platform I've encountered here. Over the last couple of months, I focused on taking a thorough comprehensive view of every aspect of our business at the project level, asset by asset. The work is ongoing, and it's grounded on a simple objective: ensuring GeoPark is positioned to thrive in the current environment and build durable long-term value for our shareholders. This review is part of a broader strategic effort to challenge legacy assumptions and strengthen the way we prioritize capital and performance. From day one, we've been working to identify opportunities to accelerate the development of our portfolio, increase our ability to adapt and grow smartly. We're also continuing a rigorous portfolio reassessment, where our teams are actively working to enhance field productivity, stabilize production, and improve returns over time. This is not about changing guidance today but about building the technical and operational foundation for better outcomes in the future. Finally, we are working closely and constructively with authorities and partners to unlock additional activity across our core assets in Colombia. These discussions are active and ongoing, and they reflect our shared commitment to responsibly increase investment, accelerate development, and support the long-term competitiveness of Colombia's oil and gas sector. Let me now walk you through the quarter's performance. In the second quarter, GeoPark delivered solid operational and financial results despite having market volatility, a lower Brent price environment, divestment of some of our non-core assets, and some temporary blockades that impacted operations. Consolidated average production for the quarter reached 27,380 barrels of oil equivalent per day, contributing to year-to-date average production of 28,223 barrels of oil equivalent per day, in line with our guidance. The 6% decline when compared to last quarter reflects the divestment of the non-operated Llanos 32 Block and 16 days of shut-in production in CPO-5 Block due to local blockades. The strong operational delivery reflects stable performance across core assets. For example, Llanos 34 delivered 17,605 barrels of oil equivalent per day net with base management, water flooding, and workovers exceeding our expectations. Our drilling team also delivered step changes in efficiency. For example, average well costs were reduced by more than 30% and pad-to-pad mobilization time dropped from 7 days to just 18 hours. In CPO-5, although some production was impacted by higher-than-anticipated downtime in relation to the first quarter of 2025, performance remains stable, and the field is currently operating normally. In Llanos 123, two exploration wells, Currucutu-1 and Toritos Sur-3, were drilled and completed, contributing new production and demonstrating additional upside. In particular, at Toritos Sur-3, the strategic decision to reposition the well to intercept the Mirador formation as a secondary target proved successful and revealed a new productive horizon for the block. In late 2025, we plan to drill a second well to further explore and appraise the potential of this discovery. On the financial side, results reflect proactive cost management, disciplined capital allocation, and financial flexibility to pursue long-term growth. Adjusted EBITDA was $71.5 million with a 60% margin, driven by cost discipline and a $4.9 million gain from our commodity hedging program. Operating costs remained within 2025 guidance at $12.3 per barrel. We invested approximately $24 million during the quarter and ended up with $266 million in cash and a net leverage ratio of 1.1x. We also completed an open market repurchase of $54.5 million of our 2030 notes below par, thus enhancing long-term financial flexibility and reducing future interest payments, underscoring our disciplined approach to balance sheet optimization. Finally, as of today, our hedging program has advanced to protect oil price volatility over approximately 9,000 barrels of oil equivalent per day for the first half of 2026 and 8,000 barrels of oil equivalent per day for the second half of 2026. Let me now turn briefly to how we see the second half of 2025 shaping up. We see a full year organic production range of 26,000 to 28,000 barrels of oil equivalent per day, which incorporates the strength of our core assets and the adjusted impact of Llanos 32, Manati, and Ecuador divestments. Importantly, this production range excludes volumes from inorganic acquisitions. We expect the adjusted EBITDA of $260 million to $290 million at $65 to $70 per barrel Brent, supported by the quality and resilience of our base business and the price support provided by our existing hedging program. We are executing this plan with a lean, focused capital program of $90 million to $120 million, directed primarily to short-cycle, high-return development and appraisal drilling. At the same time, we've captured $12.5 million in structural efficiencies to date, which equates roughly to $17.5 million annually. As part of our anticipated portfolio optimization, we agreed to divest our interest in the Perico and Espejo blocks in Ecuador. This transaction reflects our ongoing focus on prioritizing material, high-return assets and streamlining the portfolio for maximum impact. The divestments brought a non-recurring impairment charge, and as a result, a net loss for the quarter of $10.3 million. If we exclude this charge, net profit for the quarter amounted to $20.7 million, significantly higher than in previous quarters. Finally, the Board has approved the payment of a $7.5 million dividend for the second quarter of 2025, reflecting the company's performance during the period. In parallel, the Board is actively reviewing the company's capital allocation priorities, including dividend distribution going forward in the context of evolving strategic priorities and the need to preserve flexibility to pursue value-accretive growth opportunities. This review will continue over the coming months as part of our ongoing overall financial and strategic positioning. In summary, this was a resilient quarter for GeoPark. We delivered solid results, protected our financial strength, and are actively reshaping the business to be more focused, more agile, and better positioned for long-term value growth. We're just getting started, and we're committed to building a more competitive, resilient, and value-driven GeoPark. With that, let me now open the floor for your questions.
分析師問答
Our first question comes from Alejandro Demichelis of Jefferies.
Felipe, congratulations on your first few months here, and welcome. A couple of questions, if I may. Maybe you talked about the review that you're kind of taking over on the company. Maybe you can give us some kind of examples of where you think that things can be improved, where you think that things can kind of move to. That's probably the first part of the question. And then the second one is, you mentioned some of the inorganic moves that you have been kind of working on. Maybe you can kind of give us some update on how you see things, particularly in Argentina.
Thank you for being here today and showing interest in GeoPark. I'd like to share some personal insights from my first few months here. I've known GeoPark for about 8 or 9 years and have always respected the company. Since joining, I've found a well-functioning operation that prioritizes safety, efficiency, ethics, and strong community relationships. Regarding our existing assets, there are two main objectives we need to focus on: protecting our ongoing business and creating additional value. First, we've been reviewing every asset in detail for the past few months. Despite a drop in Brent prices and some production challenges related to blockages in non-operated areas, our results have remained resilient. I believe we can extract significant value from our existing assets. Our teams are improving operations, including drilling and well completion processes, water management, and mobilization of drilling rigs. These efforts give me confidence that we can manage natural decline effectively and explore opportunities for future growth. For example, the Toritos Sur-3 well has shown good results after we adjusted its direction, opening up potential new areas. In terms of inorganic growth, particularly in Argentina, we are concentrating our efforts in Colombia while also recognizing the promising opportunities in Vaca Muerta. I visited Neuquen shortly after starting in this role and conveyed our strong interest in becoming involved in the development of unconventionals in the area. We are looking to invest and operate there, with a solid pipeline of opportunities in Vaca Muerta that potential partners have also expressed interest in. We'll keep you updated on our progress with our current portfolio reassessment and M&A efforts. Thank you.
Our next question comes from Joaquin Robet of Balanz Capital.
Welcome, Felipe. I have two questions. First, could you provide more color on your plans to enhance the P1 reserve's life? And how are you approaching reserves replacement? And what portion of the strategy is expected to come from organic versus inorganic efforts? That's the first question.
Okay. Joaquin, I was expecting you to ask the second question, but I'll start with the first. To provide some context, as of the end of 2024, our 2P reserves in Colombia are approximately 84 million barrels, which is broader than P1. When I reference the detailed exercise we've conducted on all our assets, our execution plans, and our understanding of the subsurface, I believe these factors are closely connected in terms of the life of these reserves. I'm speaking about 2P reserves extending into the end of the decade and beyond, projecting five to ten years ahead, which aligns well with our internal review. We're focusing on increasing our reserves and accelerating their development. Additionally, I want to highlight that our previous guidance for capital expenditure was around $80 million to $100 million for this year, but we've now increased that to $90 million to $120 million. This change reflects our operational efficiency, our ability to deploy capital effectively, and the promising opportunities we can now evaluate. Therefore, the increase in our capital expenditure guidance is significant. Lastly, our inorganic growth initiatives will materialize when the time is right and will be communicated accordingly. Can you hear me well?
Yes, I can hear you now.
Okay. Sorry, yes, I don't know where I was cut off. But I was saying that additional sort of guidance or increased guidance in terms of capital expenditures, so we can have some additional opportunities this year. And then, in terms of the inorganic, which was the second part of your first question was, we're very thoughtful. We're looking at a good pipeline of opportunities. And obviously, when they come, we will be talking about them in detail. But as I said on my initial response, there are quite a few potential partners that have reached out to us, and we're assessing opportunities. So, that will come when they come. And hopefully, they'll provide additional upsides and potential on reserves. You want to go with your second question, Joaquin?
Yes, sure. Okay. And a bit in line with your answer, my second question is, following recent divestments from non-core areas, are you planning to accelerate CapEx in core assets to offset decline more aggressively? Or is it the focus shifting towards inorganic growth opportunities to sustain?
Sure, should. But I'd say, yes, we've done some divestments. We announced yesterday on the release, Ecuador, and closing on that will take some months. But yes, absolutely. So I think we're deploying some more CapEx, which is great news. We finalized these divestments. We continue to look at our portfolio constantly. We're reassessing the portfolio, and we'll let you guys know when we have something around new opportunities that actually come into the fold, and we actually have agreed on some inorganic opportunities. Thanks for that, Joaquin.
Our next question comes from Anne Milne of Bank of America.
It's great to have you on the call, Felipe. I have a few questions that follow up on some of the strategic comments you've shared. It seems like your current focus is on Colombia for production and Argentina for non-conventional efforts moving forward. Since you've divested Ecuador, I'm curious about Brazil's role in your strategic plan. Regarding Argentina, with the recent decline in Brent prices, have you noticed any changes in the valuations of the transactions you're considering? If you proceed, given GeoPark's experience primarily in unconventional resources, do you have the necessary staffing, or would you consider partnering with others who do? Would you prefer to take the lead as operator on a potential transaction, or are you leaning towards partnering instead? This brings me to my main strategic question. On a financial note, regarding the bond buyback you recently conducted, would you be open to more buybacks if prices remain low? Also, investors have expressed satisfaction with the significant cash reserves GeoPark has maintained, especially amid market volatility. What is the minimum cash balance you would aim to maintain, considering your increased CapEx program, dividend payments, and the bond buybacks?
Thanks, Anne, it's a pleasure to hear from you. I appreciate you being here today. Regarding our focus on Colombia and Argentina, I believe you're correct. In Colombia, we have a strong business that continues to perform well, and we are finding new opportunities within it. Specifically, we see potential in areas like Llanos 123 and Toritos Sur-3, which will allow us to expand our operations. There are existing licenses that are currently producing, as well as others that offer significant exploration potential, which we will continue to pursue. It's crucial that we strengthen our foundation to support further growth. In Argentina, we are concentrating on Vaca Muerta and are particularly interested in unconventional resources. I have a strong belief in these types of projects based on past experiences. We have the flexibility to operate or partner as a non-operating entity, and we possess the necessary expertise internally. When GeoPark previously operated in Argentina, our team was integrated into the operator's operations, and we've retained that knowledgeable group, who have extensive experience, particularly in Neuquen. Additionally, we're exploring opportunities in the range of 30 to 50 million barrels. This could involve investments of $300 million to $500 million, encompassing both the acquisition cost and initial commitments. These figures are approximate, but they offer a glimpse into how we're evaluating opportunities in Argentina. While many are interested in entering the market, others are retracting or exiting, which continuously presents opportunities. Remember that GeoPark completed a deal in Argentina last year, so we have substantial knowledge about valuations and development potential. We're committed to efficiently developing unconventional resources in a systematic way, and I am personally excited about the prospects. We will keep you updated as we finalize any agreements. Regarding Brazil, the divestment of Manati will take time to close, but we are continually assessing opportunities across the broader region, with a focus on Colombia and Argentina. In response to your question about the bond buyback, I'm pleased with how that process unfolded as it created value for us and demonstrated our effective capital deployment. We're also focusing on cost efficiencies, redeploying capital, and bond repurchases. It's essential to view our capital management strategies in a comprehensive manner. Jaime?
Thanks, Felipe. Anne, I’d like to discuss our perspective on liquidity. By the end of the first half of the year, we expect to have a cash balance of approximately $270 million. Behind this figure, the EBITDA stands at about $160 million. However, we have experienced significant outflows worth noting. Taxes accounted for $87 million, capital expenditures were $47 million, and debt service was $16 million. Despite these considerable outflows, particularly the seasonal tax payments, our current cash position remains robust, especially given the strong performance last year. Looking towards the second half of the year, we anticipate three significant improvements. First, a substantial reduction in tax outflows as the tax season has concluded. Going forward, we will only incur minor withholding tax payments, with the major income tax burden now behind us. Additionally, we will see lower debt service costs due to recent debt repurchases. Lastly, EBITDA should benefit from the recent cost structure adjustments we made. Overall, if we normalize our expectations, our cash generation outlook for the second half of the year should comfortably cover the anticipated capital expenditures for our organic business. This analysis supports a positive cash position moving forward. Strategically, our cash balance of $270 million allows for sufficient funding for organic capital expenditures, which could reach up to $120 million this year, thanks to promising projects from our team. Our second priority focuses on potential mergers and acquisitions, and our financial position positions us well for these opportunities. We estimate the minimum liquidity required for our organic business to be around $30 million to $40 million. Given these considerations, we might also have some capacity for further debt repurchases, which will depend on prevailing circumstances and will be approached opportunistically.
Our next question comes from Cristian Fera of KNG Securities.
Felipe, welcome. So I have three questions. I'll go one by one. First question is, if you could comment on whether there are any additional asset divestments planned in the near term?
Thanks, Cristian, and thanks for joining the call. As I referred to in one of the prior responses, I'd say that we've done the divestments, finishing with Ecuador that we announced yesterday. And we will constantly continue to look at our portfolio. We want to ensure that we're optimizing value, and in that sense, creating value for shareholders. So I won't talk about any specifics or if there's anything else planned, but we will continue to look at our assets. And remember, I was saying earlier that we've had an in-depth very detailed review of all of our assets at the project level. So we will continue to do that. Next question, Cristian.
Yes. Could you remind us of the updated guidance for the year?
Sure, Cristian, and I'll give you some headlines. But we've talked about a production that is between 26,000 and 28,000 barrels of oil equivalent per day. So I think that's the first thing, and you saw where we ended up not only in the average for the first half of the year, but in the second quarter. EBITDA, adjusted it to $260 million to $290 million. That would be in the $65 to $70 per barrel range for Brent. I'll repeat the CapEx number. Remember, we had a guidance of $80 million to $100 million that we've reviewed to $90 million to $120 million. So it does show that we've come up with a lot more opportunities. And the other thing that we haven't talked too much, I briefly mentioned it, but we've captured already $12.5 million in structural efficiencies. And this is over the last couple of months that we've gone out and looked for them. The teams are working very hard on that. And this, if you look at what that would mean on an annual basis, it's equivalent to $17.5 million. So that's sort of the framework, Cristian, that I would use to describe what's coming in terms of our next few months to close the year.
Just a quick follow-up on that. Are those efficiencies reflected in the operating costs that we see continuing to decline?
Yes. Some of them are. Some of them have been implemented, and I'll ask Martin to expand on that a bit to give us more color and detail. Remember that we've given guidance on the $12 to $14 per barrel range. We ended up at roughly $12.5. So we're in a good place. And efficiencies in terms of operating is always part of the focus that we have. Martin, do you want to expand on that, please?
Thanks, Felipe. Cristian, thanks for your interest in GeoPark. So like Felipe was saying, our guidance on operating expenses is $12 to $14, and we took the challenge of keeping that guidance even though Vaca Muerta was gone. That guidance was the guidance that we had with Vaca Muerta production, but also Vaca Muerta had around $6 to $7 per barrel. So the teams, not only from operations but back here in Bogotá supporting the field, have been working on several initiatives that are already implemented. And I'll give you a little bit of a flavor of what are the things that we've done. First one, we can talk about energy efficiency. Energy efficiency is critical for these assets since most of the OpEx is around energy. And not only are we looking at the price of the energy that we pay, but also trying to use less energy. And we've been communicating to you guys the success of workovers. And it's a success, not only getting additional production but also we're shutting off water. So year-to-date, we have shut off 5% of the water that we were producing. So that's around 24,000 barrels of water per day. That's energy that we use to produce it and then inject it back in the ground. So that's one example. I'll give you another example: we have been working thoroughly to use all of the associated gas that comes with the production. So we've been working together to reduce our emissions. And the last thing that we did, which is already implemented, is that gas is not only captured but is generating energy, and that's around 2% of the total consumption. So we're basically saving by not going out and purchasing that energy. The second big one is around innovation. And in innovation, the example we want to share in Llanos 123, we just put on stream about a month ago, a water treatment plant. That water treatment plant is helping us save around $2 per barrel versus what we were doing before, which was trucking the water. And when we look ahead, what's coming is that modular facilities that were designed in-house, we're going to start applying in other blocks that we operate. And we're also sharing that with those blocks where we are non-operators. So examples of how we're pushing for reducing the OpEx. And other things that we're working on right now are about maintenance and pooling efficiencies. One of the things that we will continue doing is trying to use the workover rig for the least amount of time as possible and do rigless interventions. By doing that, we're saving around 25% of the cost. Since they're rigless, it's much cheaper. So those are the things that we've been doing. There are some risks. And the main risks looking ahead are, first one is, like I said, increased total fluid production and cost of energy. So that's one. The second one is community claims as there are blockages, and some of those blockages many times result in some increased costs. And finally, it’s not going to hit us this year, but it’s something that we're monitoring very closely: in Colombia, any labor cost regulations. So with that, those are what are the things we're doing, what are the risks? And finally, to close, our guidance stays that we're going to be between the $12 to $14 per barrel before the end of the year, on average for the year.
Thanks, Martin. Cristian, anything else?
Yes. My final question is regarding your cash uses for 2025 and 2026. Do you anticipate further bond buybacks and/or dividend distributions?
Thanks, Cristian. I think Jaime alluded to that earlier. As we were saying, there's obviously the minimum requirements in terms of cash for the operations. There is an increase in the guidance on CapEx. There are some efficiencies that we continue to pursue in terms of cost efficiencies. And again, I would say that we do have the right amount in terms of balancing sources and uses to pursue, should the space be there, additional repurchases of bonds. Well, we just announced a dividend distribution yesterday, and be able to do M&A. So I think in that sense, we're in a good shape. Thanks, Cristian.
Our next question comes from Juan Jose Muñoz of BTG Pactual.
Just a last question here regarding Colombia. Looking ahead to 2026 with an election year in Colombia, what new opportunities this could open up for GeoPark if a market-friendly government comes to power? And yes, what new opportunities do you see if a change of regime happens here in Colombia?
Thank you, Juan José, for your interest in GeoPark. I have some thoughts to share. There remains considerable uncertainty in this sector, particularly in the oil and gas industry. Overall oil production in the country has not seen significant growth. When we look at the industry more broadly, not just GeoPark, we notice a decline in the number of rigs and a reduction in investment. The industry seems to be focused on what's to come in 2026. One possibility is that the current government remains in place, which has halted new exploration acreage allocations to the industry. This has likely contributed to a decline in activity, as people recognize that there are no new licenses being issued. On the other hand, it’s still early in the election cycle, with the first round set for May and potential second round in June. Many candidates are currently proposing measures to strengthen the sector and increase licensing opportunities, which would be beneficial. Additionally, some candidates are discussing unconventionals in Colombia. Looking ahead, GeoPark is very interested in Vaca Muerta and intends to apply our experience and expertise to enhance our capabilities in Neuquén. If unconventionals are once again considered in Colombia, we could leverage that experience here. I wanted to mention that possibility. However, we will need to wait and see what unfolds. Thank you for your question, Juan José.
Our next question comes from Stephane Foucaud of Auctus Advisors.
I've got three. So the first one, the context of those blockades and so forth, what's the current production excluding Ecuador?
Stephane, this is Martin. I’ll start with our guidance, which is between 26,000 and 28,000. In the first half of the year, as Felipe mentioned, we were producing 28,200 barrels of oil per day. In July, our production was similar to that average on the higher end. In Llanos 34, we successfully conducted an infill drilling campaign, and Felipe has already highlighted our efficiency in execution. We are currently testing the wells, which are contributing about 6% of total production and meeting our expectations. Our workovers and upsizing efforts in Llanos 34 are adding fresh production while also reducing our operating expenses by shutting down water, which is contributing approximately 11%. Water flooding continues to yield positive results at around 14% of production, and in Llanos 34, we are delivering as planned. In Llanos 123, we have seen a 16% increase in production quarter-on-quarter. Toritos Sur-3 has shown promising results, and we are in discussions with our partner. We are on the verge of starting to drill the next well there, continuing with appraisals and exploration wells. Regarding CPO-5, we have successfully managed our workovers, implementing artificial lift to counter water encroachment, which has resulted in above-average performance and helped mitigate previous blockages. We have collaborated effectively with the local communities to maintain low downtime. However, CPO-5 does face the challenge of not being connected to an oil pipeline or electric lines. We are working closely with ONGC, the operator, and since our last blockage, there have been no issues throughout July. Overall, July and the first few days of August have shown strong production results.
Great. That's useful. Second, on exploration, so you reported Currucutu, Toritos Sur-3. So first, I was wondering what sort of EUR potential additional resources those two areas add? And maybe as a follow-on, I saw that there is a write-down associated with CPO-5, I think, over the quarter. Did you have disappointing drilling at CPO-5 in Q2? And I have another question afterwards.
Stephane, this is Jaime. I'm going to address your second question regarding write-offs in CPO-5. We haven't had any write-offs in CPO-5 this year. What you might be referring to is some comparisons we made year-over-year. Last year, we did incur an exploration write-off in CPO-5 linked to two wells: one in the second quarter and the other in the third quarter. These were the Cisne and Lark wells, and the total write-off for both quarters amounted to $7 million. However, that was an event for 2024. We have not experienced any write-offs related to CPO-5 in 2025. Now, I will turn it over to Rodrigo for your first question.
Stephane, regarding your question about the recent discovery we announced from Llanos 123, we can start with Currucutu-1. We had a very good result in that well, beginning with over 1,000 barrels per day of oil. Currently, we are producing about 400 barrels per day. The preliminary results appear promising. We are collaborating with our partner to incorporate one more well in the structure to better define the area, so it is too early to discuss volumes at this point. More activity is needed to estimate the potential, but we are certainly seeing positive results there. Concerning Toritos Sur-3, the Mirador formation looks very promising as well, as we are seeing 900 barrels per day with no water. Our next step is to incorporate a new well, and we aim to do this as soon as possible, ideally before the end of this year. With that outcome, we will be able to determine the size of the discovery. Both cases in Llanos 123 are very promising, and we plan to expand in the coming months and years. Currently, we are drilling in Block Llanos 104, which is our first well in the block, and we intend to drill another one back to this well before the year ends, named Dencejo. We anticipate more exploration this year and will evaluate the results. Looking ahead, we also need to drill the project we have discussed for some time, located in CPO-5. We are working to reach an agreement with our partner, ONGC, to initiate that well in the next drilling campaign. Additionally, we are identifying prospects in Llanos 87 and continuing our efforts in Llanos 123, where we see numerous near-field exploration opportunities.
That's great. Thank you for providing the CPO-5 file. I'll review it from here. My last question is about strategy. I'm curious about your focus on Argentina and the region. Given the challenges of operating in Argentina, the high prices in Brazil, and the situation in Venezuela, how competitive do you perceive the landscape to be? How challenging is it to pursue your M&A strategy, and where do you see your differentiation?
Yes, thanks, Stephane. I believe there are numerous opportunities, especially in Argentina, where there is significant activity. It's important to note that nearly $10 billion is invested annually in this area, with future commitments expected to exceed $100 billion. GeoPark offers valuable assets, which is supported by our discussions with local provincial authorities and potential partners who seek our expertise in operations, efficiencies, and subsurface knowledge. This creates strong alignment. There's always room for opportunity. On June 6th, I met with the Governor of Neuquen, Dr. Figueroa, who publicly stated their desire for companies like ours to enter the province. We will see how this unfolds, but clearly, competition for opportunities will always exist. However, I believe we are in a strong position to seize some of those opportunities. Thank you.
That will conclude the audio portion of today's call. So we do have text questions that did come in from the webcast. Our first question is from Eduardo Muniz of Santander. The question reads, congratulations on the results, and welcome, Felipe. Following the recent portfolio review, what should we expect in terms of capital allocation priorities? Whether that is M&A, reinvestment, buybacks, or dividends, how do those decisions align with your growth ambitions over the next couple of years?
Thank you, Eduardo, and I appreciate your participation in the call today via the webcast. I believe we've already addressed some of these points in our previous responses. Regarding capital allocation, the key point I'd like to emphasize is the importance of maintaining discipline. When we assess our options, particularly concerning the use of capital, we are very disciplined. I want to refer back to some highlights from the past few days. Firstly, we've increased our guidance on capital expenditures, reflecting some promising opportunities we can pursue before the year-end, adjusting from $80 million to $100 million, then to $90 million, and now to $120 million. Additionally, we've discussed cost efficiencies and the efforts we're implementing. We also declared dividends yesterday, which received Board approval, and we've focused on debt reduction and bond repurchases. M&A has also been part of the discussion. All the elements of your question are indeed considered in our approach. We will continue to examine these in a disciplined manner to ensure the appropriate allocation of capital expenditures. Looking at our longer-term vision, I reiterate the need to safeguard our ongoing business. Martin and Rodrigo have detailed some of these initiatives, and we will persist in that direction, including the redeployment of some capital expenditures. We also aim to return to a growth trajectory, as we've mentioned regarding M&A. In summary, Eduardo, that's how I would address your question. Thank you.
Our next question is from Vicente Falanga of Bradesco. The question reads, could you please provide an update on the result of the polymer injections in Llanos? When should we have final results?
Thanks, Vicente. I'd say we're very enthused. We're very happy with the polymer injection project. All the approvals have been gained. So we have all the approvals, and we should start in December of this year. It’s going to take some months before we see results. But Rodrigo, why don't you expand a bit on that?
Yes, we are proactively moving forward with the project. The study that we have conducted, along with the background information shared by our partner, Parex coming from Cabrestero field, which is next to our field, Llanos 34, are very encouraging. So we are very excited to move forward with the project. We also completed the bidding process. So we have already selected both, not only the polymer but the associated facilities as well. The result will show us how good the technology is for the field. But we are ready to expand the technology as soon as we identify those results, and we are able to dimension how good that is in terms of economics. So that's the status today of the project.
Our last question of today's call is from João Cabrita of Sunao Research. The question reads, how is your relationship with Pampa Energia going? Do you plan to partner in Vaca Muerta?
João, thanks, and thanks for being here today with us. Yes, I was mentioning earlier that on the 6th of June, I had the opportunity to visit the Governor of Neuquen in his office. Since then, I have had some discussions with them, with the provincial authorities and with the Governor himself. The day before that, on the 5th, I had the opportunity to meet with Pampa in Buenos Aires. I'd say it was a very encouraging, very respectful conversation. We're always, I think, striving to identify opportunities where we can jointly partner. Those conversations are ongoing. Obviously, I won't go into more details, but I think we have a very respectful conversation with Pampa. Pampa has been a very successful company over the last years, and they've aggressively looked at gas developments. They're looking at pursuing oil developments and stuff. So a lot of respect for Pampa, and we're having some very good conversations with them. Thanks, João. Thank you so much. Thanks for that. Again, thanks for your help with the call today, and especially thanks to all of you that participated in the call. Before we close, I'd like to share with you some results of our AGM. Our 2025 Annual General Meeting was held earlier today, this morning, and a few things coming out of that. The first one is that all nominated candidates were duly elected and confirmed as members of the Boards of Directors for GeoPark. The second one, E&Y, Ernst & Young Audit S.A.S., was appointed as external auditor to the company. The third one is that the Audit Committee, which is part of the Board, was authorized to determine remuneration for the auditor. I just wanted to provide that update, which I think is very timely. I'll say that we will continue in GeoPark to be focused on capital discipline. I know there's a lot of interest. I mean, I don't know, probably 50% of the questions had some element of capital discipline. So thanks for that. We will protect our financial strength. We will continue to invest to position the company for the next phase that will be profitable and sustainable in the long term, always with the vision of growth. We remain very confident in our strategy and our ability to continue to create value always safely, responsibly, and consistently. Again, thanks, everybody, for your interest and support in GeoPark. We're always here to answer any questions. If there are follow-up questions, please reach out to the team, and we'll be happy to address them.
Thank you. That will conclude today's call. Thank you for your participation. You may now disconnect your line.