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, 2026. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question at this time, press 1 on your telephone keypad. If you would like to withdraw your question, press the same key again. If you do not have a copy of the press release, it is available in 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 web 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 protection afforded by the Private Securities Litigation Reform Act of 2000. These risks include a variety of factors, including competitive development, 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 risks. 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 is 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 will turn the call over to Mr. Felipe Bayon. Mr. Bayon, you may begin.
Good morning, everyone, and thank you for joining us for our second quarter 2026 results call. We delivered another quarter of consistent execution, demonstrating the resilience of our core business while continuing to advance our strategic priorities. Colombia continues to provide resilient production and cash generation while Argentina is progressing well and becoming an increasingly important contributor to our future growth. During the second quarter, we achieved production on average of 37.3 thousand barrels of oil equivalent per day, performing within our full-year guidance and broadly in line with the first quarter. This consistency reflects disciplined reservoir management and the operational capabilities of our teams. In Argentina, execution accelerated significantly during the quarter. We completed drilling on pad 1.03, advancing the hydraulic fracturing campaign, and secured environmental approval for the next phase of drilling in Loma Jarillosa.
These milestones reinforce our confidence in the quality of the assets and in our ability to deliver the targeted exit production of approximately 5 thousand to 6 thousand barrels of oil equivalent per day by year-end 2026. Importantly, we also secured a dedicated drilling rig under a three-year agreement providing long-term execution certainty for the development of our Vaca Muerta program. In addition, together with Gas y Petroleo del Neuquén, we applied to Argentina's RIGI Investment Incentive Program, which supports the development of our unconventional oil hub and reinforces our long-term growth strategy. Argentina continues to evolve into a transformational growth platform for GeoPark. In Colombia, Llanos 34 continued benefiting from disciplined reservoir management and secondary recovery initiatives. CPO-5 remained a very stable contributor despite operational challenges experienced earlier in the year, while Llanos 23 continued to perform well through ongoing development activities.
Together, these assets continue to provide stable production and cash generation. Importantly, all operations were conducted with strong health and safety performance with no injuries and no major process safety events. The quarter also benefited from a stronger commodity price environment. Brent averaged approximately $97 per barrel and a narrower Vasconia differential supported higher realized prices, partly offset by hedging cost. This operational and commercial performance translated into solid financial results. Revenue increased 12% sequentially to $143.3 million supported by stable production and improved realized prices. Adjusted EBITDA reached $73.1 million representing a 51% margin despite higher energy cost and the strong appreciation of the Colombian and Argentine currencies which impacted our operating cost. Operating profit totaled $40.8 million. It is important to remember that first quarter results included a nonrecurring breakup fee associated with the Frontera acquisition.
Net income for the quarter was $14 million. Capital allocation remained disciplined throughout the quarter. We invested approximately $76 million with nearly two-thirds directed to Argentina as we continue executing the Vaca Muerta development plan while maintaining a 19% return on average capital employed. Our balance sheet remains one of GeoPark's key competitive advantages. During the quarter, our cash position increased to $316 million and we reduced net leverage to 1.2x EBITDA. We also renewed and extended a committed contingent credit facility through 2028 providing additional financial flexibility as we execute our investment program. Our disciplined risk management approach also remains unchanged. We continue protecting cash flows through three-way collars covering approximately 19 thousand barrels per day during 2026, while approximately 19 thousand barrels per day of expected 2027 production has already been protected under similar structures.
This approach provides downside protection while preserving upside participation. The board declared a quarterly dividend of $0.023 per share representing the final payment under the dividend framework announced last year. As previously communicated, our capital allocation priorities are now on completing this peak investment phase while preserving balance sheet strength and positioning the company for the next stage of free cash flow generation. Overall, we believe GeoPark is very well positioned. Our Colombian portfolio continues generating resilient cash flows. Argentina is advancing, and our balance sheet provides the financial flexibility to continue the disciplined pursuit of material inorganic options in Colombia, Argentina, and Venezuela. I would like to recognize the continued commitment of our employees and contractors and their focus on safety, operational excellence, and efficiency to deliver these results.
Before closing, I would like to take a moment to thank our shareholders for their continued support, reflected in the successful outcome of our annual general meeting; all resolutions were approved by more than 99% of votes cast. Following the strengthening of our long-term shareholder base earlier this year with a strategic investment from Grupo Gilinski, we have been glad to welcome a number of other long-term shareholders to our company. The AGM approved the appointment of new members to our board of directors. To this effect, I would like to sincerely thank Sylvia Escobar and Marcela Vaca for their dedication and valuable contributions to GeoPark over the years, and welcome Dorita Gilinski and Camilo Martinez to our board. We look forward to their contributions. Thank you again for joining us. With that, let's open the floor to your questions.
分析師問答
If you would like to ask a question, please press * on your telephone keypad. To withdraw any questions, press * again. Our first question comes from Alejandro Anibal Demichelis from Jefferies. Please go ahead. Your line is open.
Morning, gentlemen. Thank you very much for taking my questions and congratulations on the results. Felipe, a couple of questions, if I may, please. First is with the new Colombian administration coming in very shortly, what kind of changes in policies for the sector can you expect, and how do you see those benefiting GeoPark? And then the second question is, you just mentioned some opportunities in Venezuela. Maybe you can give us some indication of the size and quality of the opportunities that you have seen in Venezuela, please. Thank you.
Thanks, Alejandro, and good morning, and thanks for joining the call and for your congratulations on the results. On Colombia, we are very pleased with the incoming government. The administration has been very vocal in terms of their support for oil and gas, mining, infrastructure, and overall private investment and creating good conditions for that investment to be received by Colombia. From that perspective, we are very pleased, especially considering the backdrop of the current government that had been against the industry in terms of no new licensing for oil and gas and little support for the sector. We have already had discussions with the incoming administration. GeoPark is a long-term investor in Colombia. Colombia is the source of our cash generation; it is where we are supporting the growth that we are seeing in Vaca Muerta in particular. We see a good opportunity set in Colombia, both in conventional and unconventional hydrocarbons, and in liquids and gas.
As you know, Colombia has a structural shortage of gas where the country is importing 30% to 35% of the gas it uses on a daily basis. I would like to create a bridge to Argentina, which I think is relevant. As you know, we acquired the areas from Pluspetrol in September of last year. In October, we started operating, and today we have already drilled our initial horizontal wells and we have fracked those wells. In nine months, we have gone from entering an area to fracking wells. As a matter of fact, the first well started flowing recently. It will take some time for cleanup and stabilization of that production. The bridge I want to make is how we bring that expertise from Argentina into Colombia. When I have spoken to some of the new members of congress and the incoming government, I have pointed out that GeoPark is a company that has actually fracked and has experience in fracking, which is a differentiator and can play very well in terms of opportunities in Colombia.
There is a massive opportunity set in unconventionals in Colombia, and that is something we are assessing. In terms of timing, inauguration is in a couple of days, but changes will not be immediate. It will take some time, but I see the right signals from government and GeoPark is ready to do its part. We are willing to invest and grow in Colombia should there be opportunities, and our technical teams have been assessing opportunities. Regarding Venezuela, our thoughts and support go to the people who suffered after the earthquakes of June 24th. Over the last months, my team and I have visited Venezuela on numerous occasions. There are many opportunities. The potential in terms of oil in place in different licenses and basins is very large. We are assessing several opportunities; I will not go into details, but we are pleased with the technical aspects of the licenses, some of the terms being discussed, and the quality of people at PDVSA.
There are very good conversations going on and, hopefully, we can get some of these opportunities across the finish line. We will inform the markets and share updates when those happen. Thanks, Alejandro.
Thank you very much for the answers.
Thank you.
Our next question comes from the web. Andres Peltaso from Itau BBA asks, what is the estimated CapEx for the remainder of 2026 in Vaca Muerta? Could you provide a breakdown by quarter along with the main activities driving the spend?
Good morning, Andres. This is Martin Terrado. Thanks again for your interest in GeoPark. We are very proud of the accomplishments we have had in Vaca Muerta. I will go straight to your question and then expand a little bit on Felipe's comments. For the second half of the year, we expect in the order of $40 million to $50 million of capital investment. That is pretty much aligned with what we have done in the first half of the year, which was around $55 million, with two-thirds of our capital program directed to Argentina. What we have done in the first half on CapEx is mainly workovers, drilling and completion, and a bit of facilities upgrades. As we go into the second half, spending will switch mainly to finishing the facility upgrades, completing the connection to a neighboring operator that has spare capacity, and also completing a water disposal well. On top of that, we will build the pad that will be the first pad to be drilled early next year, spotting in December with a rig that Felipe mentioned has been awarded for our frack program.
In terms of quarterly split, you can think about around 70% to 80% of those $40 million to $50 million in the third quarter and the remaining in the fourth quarter. I want to reiterate how proud we are of our team accomplishments in Vaca Muerta during the past nine months that have been full of activity—drilling, completing, doing facilities work. We have fracked 180 stages incident-free, and the efficiencies we have seen with our team during the frac stages are among the top quartile. Some metrics: the number of fracs per day—we have done several days with nine fracs per day, which is a benchmark. On number of hours per day where the frac sets were working, again, several days with 20 hours per day fully operational. That gives you a flavor of Vaca Muerta and the answer to your question.
Our next question also comes from the web. It comes from Alvaro Pelaez from BTG Pactual. They ask: given the currently favorable oil market outlook, and the fact that it generated $41 million in hedging losses, why would you increase your hedging position in 2027? And secondly, are the wells you are planning to tie in Argentina in 2H 2026 within the RIGI proposal? If so, will you only tie in the wells once the RIGI application is approved?
Thanks, Alvaro. I will start with the second question and then ask Jaime to take the hedging question. To continue the conversation around Vaca Muerta, the wells that we have drilled are being put into production as we speak and we are not going to wait. The first well started flowing recently, and we have facilities work to do on the pad. We will see some increase in production in Vaca Muerta in the next weeks and months and we are targeting the exit production of approximately 5 thousand to 6 thousand barrels per day by year-end. We are awaiting an announcement from the government around RIGI. We have had good discussions over the last few months, but we will wait for the RIGI approval when it comes. If it is granted, it will support the larger investments—facility drilling, pipeline processing facilities, and the frack mode drilling. The wells that we have drilled will be connected and put into production in the next few days and weeks.
Hi, Alvaro. On hedging, we need to start with the purpose of hedging. Our goal at GeoPark is to deliver strong double-digit risk-adjusted returns under any market conditions. In that context, having predictable cash flow in a period where we will be increasing investment and where there is persistent volatility is key. We are going through a phase where our exposure to Vaca Muerta is growing and there is increased capital deployment. We also have inorganic ambitions that would require capital. That is why hedging is part of the equation and will continue to be. For 2027, current market conditions allow us to obtain attractive floors. For example, over the last few weeks we have been able to access positions where floors are around $75 per barrel with ceilings of $85 to $86 per barrel. In that price environment of $75 to $86, the company can deliver very attractive cash flow and returns, and that gives us comfort that as we engage in more investments in Vaca Muerta or elsewhere the balance sheet will not be compromised. That is the rationale.
Thank you, Jaime.
And our next question comes from Gustavo Sadka from Bradesco. Please go ahead. Your line is open.
Hello. Good morning, everyone. I have a couple of questions. First, we saw a strong increase in costs this quarter. It seems to be driven by appreciation of the Colombian peso and Argentine peso and higher energy cost. Based on how these variables have evolved recently, is it reasonable to expect normalization in the second half of the year, or should we expect costs to remain at this level? Second, a follow-up on Colombia: with the incoming government, do you expect unconventional potential to become a possibility? Could conventional development be possible in all GeoPark's blocks, or would you have to pursue new bidding rounds? And would new bidding rounds attract interest for GeoPark? Thank you.
Thanks, Gustavo, and good morning. We have reported upward pressure on operating cost from the appreciation of both the Colombian and Argentine currencies versus the dollar, and from energy costs. Martin will give more color on magnitudes and mitigation. We have also factored in potential impacts from El Niño, which could increase energy prices. From the initial guidance of $13 to $15 per barrel, we are outside that range and moving higher, and we expect to finish the year higher than initially guided. Regarding Colombia, we are excited with the incoming government. They have been supportive of industry and investment and seem keen on acting quickly. Our experience in Vaca Muerta shows we can be agile: from receiving operations to fracking in nine months. We are definitely interested in the unconventional potential in Colombia; we have experience and technical know-how and we will proactively pursue opportunities as they arise.
Hello, Gustavo. Thanks again for the question. The increase in operating cost in the first half reflects the combination of FX impacts and higher energy demand and prices in Llanos 34. On a unit basis, lifting cost increased from $14.7 to $17.8 per barrel quarter over quarter, with a first half average of $16.2, versus guidance of $13 to $15. For the full year, we currently expect lifting cost to stay within the order of $17 to $19 per barrel for the remainder of the year. The exchange rate effect is in the order of $2.1 to $2.5 per barrel on our OpEx, and the impact from energy costs is about $1.5 per barrel. What we are doing includes long-term initiatives such as greater connectivity to the electric grid; we are already connected but have two initiatives ongoing that will provide greater flexibility and will come into effect next year and the year after. We have signed a biomass energy contract.
For the short term, our focus is on reducing energy cost via fixed contracts versus spot, and exploring different energy sources such as fuel and others. Internally, we are improving energy efficiency—capturing gas and generating power where feasible and reducing field consumption from pumps and other equipment. For example, we currently capture all of our gas and generate around 1.5 MW, while the field consumes roughly 65 MW, so there is room to improve. Finally, a sensitivity: for each 100 Colombian pesos per U.S. dollar move in the exchange rate over the remainder of the year, this would mean about $2.5 million either above or below in our OpEx. So the FX effect is considerable and we are working on all those fronts.
Thanks, Martin. We will continue to operate efficiently and reliably and do what is within our control. The central bank intervened recently and exchange rates can move, so we will manage within our remit. Thanks, Gustavo.
And our next question comes from the web. It is from Joaquin Robet from Balanz. The first question reads: water flooding has helped support production at Llanos 34. How do you plan to keep output stable going forward? And secondly, with a strong hedge position in place for 2H 2026, how should we think about expected hedging results over the next two quarters?
Thanks, Joaquin. I'll ask Rodrigo to take the first question on waterflooding and Jaime to take the question on hedging.
Hello, Joaquin. Thank you for your question. Waterflooding is key not only to production but it represents 25% of the production of Llanos 34 today. These initiatives are central to our development plan. But waterflooding is not the only activity in the field. We are executing an infill development program: last year was very successful with six wells; we started this year with seven and are moving to the north of the field with another seven wells in that area. We expect to finish the year with more than 25 workovers in the field. We have four wells injecting polymer today, expect to finish the year with nine injectors, and for next year we want to add another nine wells for a total of 18 wells in polymer flood. These are key actions to keep production stable and they require disciplined operations and strong alignment with our partner, which we have. For the future, most of the waterflooding and polymer activity is located in the southwest of the field; we expect to move to the northwest and northeast of the field with new injector wells. That is the plan for the rest of this year and next year with more infill drilling and injector wells in terms of water and polymer. So that is our plan to keep production stable in Llanos 34.
Joaquin, regarding hedging, our 2026 position remains unchanged since the last call. It was acquired at the back end of last year or early this year: around 20 thousand barrels per day hedged. We have a growing set of volumes in the third and fourth quarters that can get to about 25 thousand barrels per day after Vaca Muerta production ramps up. The floors and ceilings associated with the 2026 position are $65 per barrel on the floor end and ceilings of about $72 to $73 per barrel. That position provides price support for full-year EBITDA in excess of $250 million despite the cost escalation discussed. So even with the OpEx ranges Martin spoke about, we expect to have strong and competitive EBITDA.
Thank you, Jaime, and thank you, Joaquin.
Our next question comes from the web. It is from Isabella Pacheco from Bank of America. It reads: what are your expectations on social unrest under the new administration in Colombia? Can GeoPark do anything to work around it?
Thanks, Isabella, and thanks for the question. One of the things we value at GeoPark, and part of our core values, is long-term relationships with the communities and the environments where we operate. I joined the company just over a year ago, and one of the key reasons I joined was the way GeoPark conducts its business as a safe, reliable operator that works well with communities and the environment. GeoPark has built very strong relationships with local communities, providing goods and works and working with authorities and local partners, and that will not change with the incoming administration. We will continue to strengthen our community engagement, our social investment, and our long-term approach. We will be watchful, proactive, and always respectful, with a long-term view in mind. Thanks, Isabella.
And our last question from the web comes from Peter Low from Jefferies. On inorganic growth opportunities, is GeoPark considering only oil-focused assets or are gas assets a possibility as well, particularly in Colombia where natural gas looks to be experiencing a multiyear supply-demand imbalance? Thank you.
Thanks, Peter. We have been focused on oil, but we do produce gas and use some for self-power generation in the field. Gas opportunities are something we have looked at throughout the years, so we are not closed to gas opportunities. As you rightly point out, there is a deficit in gas supply in Colombia and we believe there are opportunities, including opportunities associated with unconventionals. If through fracking and developing unconventionals we can get gas to the market, that is something we are ready to pursue. There are bigger opportunities around gas including offshore and cross-border opportunities with Venezuela; those would be outside the immediate remit of the company but we have looked at them. So gas is something we would consider if the right opportunity comes and we will continue to be proactive in that space. Thanks, Peter.
We have no further questions. I would like to turn the call back over to the company's CEO, Felipe Bayon, for closing remarks.
Thank you. Again, thanks for participating in today's call for our Q2 results. We are very pleased with how we have managed to implement our strategy, which is focused on two main things: protecting what we have and pursuing a path of growth. We have delivered good operating results in Colombia and Argentina, and Vaca Muerta has already contributed to our growth. Going forward, we continue to work on opportunities in Colombia, opportunities in Venezuela, and there is potential in Argentina as well. There is an upcoming round before the end of the month and we should be participating, as we want to grow our presence in Argentina. Given the current environment and the incoming government, and considering where we were previously in terms of CapEx guidance of around $190 million to $220 million, we see opportunities to accelerate accretive activities and the CapEx number could go up to $250 million. This reinforces our commitment to the countries in which we operate and our willingness to continue to provide value to shareholders. Thanks again for your interest in the company, for joining today's call. Have a great day and stay safe.
This concludes today's conference call. Thank you for your participation. You may now disconnect.