BOGOTA - GeoPark Limited (NYSE:GPRK), an independent oil and gas explorer and operator in Latin America, has released its operational update for the third quarter of 2024. The company reported a consolidated average oil and gas production of 33,215 boepd for the period, a 7% decrease compared to the second quarter of 2024. This decline was attributed to the ongoing closure of the Manati gas field in Brazil, underperformance in the Llanos 34 block in Colombia, and operational blockades in both the Llanos 34 and CPO-5 blocks.
Despite the overall production decrease, the Llanos exploration area in Colombia saw a 28% increase in production compared to the previous quarter, mainly due to the Toritos 2 and Toritos Norte wells. Additionally, Argentina's Mata Mora Norte block reached a record production of 15,418 boepd gross in August 2024, with GeoPark set to consolidate production from this acquisition in the fourth quarter of 2024.
The company's Llanos 34 block in Colombia continues its secondary recovery efforts, with horizontal wells contributing 16% of the block's total production. Waterflooding projects in this block have been performing above plan, contributing around 5,000 boepd. The CPO-5 block in Colombia remains close to record production levels, with the Cante Flamenco-2 exploration well targeting the Lower Mirador Formation.
In Ecuador, the Perico block saw an 8% production increase due to successful workovers and well services. However, the Espejo Norte A1 exploration well in the Espejo block was deemed non-economic after testing.
Looking ahead, GeoPark plans to drill 3-6 wells in the fourth quarter of 2024, focusing on conventional, unconventional, appraisal, and exploration projects. Key projects include the drilling of infill and additional wells in the Llanos 34 block, development of Pad-9 in the Mata Mora Norte block, and the start of production from the first exploration pad in the Confluencia Norte block.
The company will report its third-quarter financial results on November 6, 2024, after market close, followed by a conference call on November 7.
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In other recent news, GeoPark Limited has posted robust financial figures for the second quarter of 2024, demonstrating substantial growth in revenue and adjusted EBITDA. The company's Q2 revenue surged by 14% to reach $190 million, while adjusted EBITDA saw a 15% increase to $128 million. Despite non-cost charges due to the Colombian peso devaluation, GeoPark secured a net profit of $25.7 million.
The company's capital expenditures, amounting to $49 million, were comfortably covered by its sizable adjusted EBITDA, which was nearly three times the investment. GeoPark also reported a strong net free cash flow, concluding the quarter with a cash position of $66 million. The board has greenlighted a $7.5 million dividend payable in September, with intentions to return over $66 million to shareholders by the end of the third quarter.
GeoPark continues to invest in drilling and exploration, specifically in Colombia and Argentina. The company's recent acquisition in Vaca Muerta, Argentina, is already contributing approximately 5,000 barrels per day to their production. The company maintains a strategic focus on Colombia, Argentina, and Brazil for growth and acquisitions, with a comfortable gross debt to EBITDA ratio of 1.5. These developments reflect GeoPark's commitment to strategic growth and shareholder returns.
InvestingPro Insights
GeoPark Limited's operational update reveals a complex picture, but InvestingPro data provides additional context for investors. Despite the reported production decrease, GeoPark's financials show some strengths. The company boasts an impressive gross profit margin of 74.19% for the last twelve months as of Q2 2024, reflecting efficient operations even in challenging conditions.
InvestingPro Tips highlight that GeoPark has been aggressively buying back shares and offers a high shareholder yield. This strategy could be seen as management's confidence in the company's long-term prospects, even as it navigates current operational challenges. Additionally, GeoPark has raised its dividend for 5 consecutive years, with a current dividend yield of 7.16%, which may appeal to income-focused investors.
The company's P/E ratio of 3.72 (adjusted for the last twelve months) suggests that the stock might be undervalued relative to its earnings. This low valuation could present an opportunity for investors who believe in GeoPark's ability to overcome its current production issues and capitalize on its exploration projects.
For those interested in a deeper analysis, InvestingPro offers 9 additional tips for GeoPark, providing a more comprehensive view of the company's financial health and market position.
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