OUR GENERATION OF VALUE
GeoPark’s objective is to create value through a company with persistent, conscious and supportive action, with the best oil and gas assets, and which generates “added value for shareholders”. Only a financially sound company can grow, attract resources and create long-term benefits.
| 40,046 | boepd |
|
| 32,304 | boepd |
|
| ||
|---|---|---|---|---|---|---|---|---|---|
| Consolidated production | Production in Colombia | ||||||||
| US$ 2.8 | billion |
|
| US$ 42.5 |
|
| |||
|---|---|---|---|---|---|---|---|---|---|
| 2P reserves net present value | Net asset value per share, debt adjusted | ||||||||
| 130.6 | mmboe |
|
| 197.3 | mmboe |
|
| ||
|---|---|---|---|---|---|---|---|---|---|
| 1P Reserves | 2P Reserves | ||||||||
| 351.3 | mmboe | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 3P Reserves | |||||||||
| US$ 57.8 | million | US$ 363.3 | million |
|
| ||
|---|---|---|---|---|---|---|---|
| Net income | Adjusted EBITDA | ||||||
| US$ 0.96 | US$ 109.0 | million | |||||
|---|---|---|---|---|---|---|---|
| Earnings per share | Cash flow | ||||||
| US$ 628.9 | million |
|
| ||
|---|---|---|---|---|---|
| Sales revenue | |||||
FINANCIAL PERFORMANCE
The following table summarizes the most important data and facts related to financial indicators, income, operating costs, and reserves and production, demonstrating the ability of our Company to give back to its different stakeholders.
For the year ended December 31
| 2019 | 2018 | Change from previous year | |
|---|---|---|---|
| (in thousands of US$, except for percentages) | |||
| Income | |||
| Net oil sales | 579,030 | 545,490 | 6 % |
| Net gas sales | 49,877 | 55,671 | (10) % |
| Revenue | 628,907 | 601,161 | 5 % |
| Commodity risk management contracts | (22,523) | 16,173 | (239) % |
| Production and operating costs | (168,964) | (174,260) | (3) % |
| Exploration expenses | (18,593) | (13,951) | 33 % |
| Administration expenses | (60,818) | (52,074) | 17 % |
| Sales expenses | (14,113) | (4,023) | 251 % |
| Depreciation | (105,532) | (92,240) | 14 % |
| Write-off of exploration assets | (18,290) | (26,389) | (31) % |
| Impairment loss reversed for non-financial assets | (7,559) | 4,982 | (252) % |
| Other operating expenses | (1,840) | (2,887) | (36) % |
| Operating profit | 210,675 | 256,492 | (18) % |
| Financial expenses | (41,070) | (39,321) | 4 % |
| Financial revenue | 2,360 | 3,059 | (23) % |
| Foreign exchange loss | (2,446) | (11,323) | (78) % |
| Profit before income tax | 169,519 | 208,907 | (19) % |
| Income tax expense | (111,762) | (106,240) | 5 % |
| Profit for the year | 57,757 | 102,667 | (44) % |
| Non-controlling interest | — | 30,252 | (100) % |
| Profit (loss) for the year attributable to owners of the Company | 57,757 | 72,415 | (20) % |
| 2019 | 2018 | Change from previous year | |
|---|---|---|---|
| (in thousands of US$, except for percentages) | |||
| Net production volumes | |||
| Oil (mbbl)** | 12,571 | 11,113 | 13 % |
| Gas (mcf)*** | 12,271 | 12,219 | 0 % |
| Total net production (mboe) | 14,617 | 13,150 | 11 % |
| Average net production (boepd) | 40,046 | 36,027 | 11 % |
| 2019 | 2018 | Change from previous year | |
|---|---|---|---|
| (in thousands of US$, except for percentages) | |||
| Average realized sales price | |||
| Oil (US$ per bbl) | 50.7 | 53.0 | (4) % |
| Gas (US$ por mmcf) | 4.5 | 5.1 | (12) % |
| 2019 | 2018 | Change from previous year | |
|---|---|---|---|
| (in thousands of US$, except for percentages) | |||
| Average unit cost per boe (US$) | |||
| Operating cost | 7.6 | 8,2 | (7) % |
| Royalties and other | 4.7 | 5.8 | (19) % |
| Production costs* | 12.3 | 14.0 | (12) % |
| Exploration expenses | 1.5 | 1.1 | 36 % |
| Administrative expenses | 4.9 | 4.2 | 17 % |
| sales expenses | 1.1 | 0.3 | 267 % |
*Calculated pursuant to FASB ASC 932.
**Corresponds to production figures before deduction of royalties, as we believe that net production before royalties is more appropriate in light of our foreign operations and the attendant royalty regimes. Oil production figures on page F‑70 of the 20-F are before deduction of royalties.
***Corresponds to production measured after separation but prior to compression, which is the measure we use to monitor business performance. Gas production detailed on page F-71 of the 20-F is gas measured at the delivery point.
PRODUCTION
Levels of oil and gas production are influenced by drilling results, acquisitions, and the prices of oil and natural gas. Our production grew to 40.0 mboepd in 2019 from 36.0 mboepd in 2018.
| Production |
| ||
|---|---|---|---|
| 40.0 | mmboe | ||
| 2019 | |||
| 36.0 | mboepd | ||
| 2018 | |||
Oil and natural gas production in Colombia, Chile, Brazil and Argentina in 2017, 2018 y 2019*
- 2019
- 2018
- 2017
| Colombia | Chile | Brazil | Argentina | |
|---|---|---|---|---|
| Oil production | ||||
| Average crude oil production (bopd) | 32,127 | 656 | 57 | 1,603 |
| Average sales price of crude oil (US$/bbl) | 50.4 | 56.2 | 70.3 | 53.1 |
| Natural gas production | ||||
| Average natural gas production (mcfpd) | 1,063 | 14,917 | 12,806 | 4,834 |
| Average sales price of natural gas (US$/ mcf) | 5.7 | 4.2 | 5.1 | 3.4 |
| Oil and gas production costs | ||||
| Average operating cost (US$/boe) | 5.4 | 17.7 | 5.6 | 26.7 |
| Average royalties and other (US$/boe) | 5.0 | 1.1 | 2.5 | 6.5 |
| Average production cost (US$/boe)** | 10.4 | 18.9 | 8.1 | 33.2 |
| Colombia | Chile | Brazil | Argentina | |
|---|---|---|---|---|
| Oil production | ||||
| Average crude oil production (bopd) | 28,421 | 782 | 42 | 1,202 |
| Average sales price of crude oil (US$/bbl) | 52.6 | 62.3 | 79.1 | 65 |
| Natural gas production | ||||
| Average natural gas production (mcfpd) | 740 | 11,640 | 17,300 | 3,796 |
| Average sales price of natural gas (US$/ mcf)) | 2.6 | 5.4 | 5 | 5 |
| Oil and gas production costs | ||||
| Average operating cost (US$/boe) | 5.6 | 22.8 | 6.1 | 31.2 |
| Average royalties and other (US$/boe) | 6.3 | 1.6 | 2.9 | 7.5 |
| Average production cost (US$/boe)** | 11.9 | 24.4 | 9 | 38.7 |
| Colombia | Chile | Brazil | Argentina | |
|---|---|---|---|---|
| Oil production | ||||
| Average crude oil production (bopd) | 21,718 | 1,000 | 42 | 4 |
| Average sales price of crude oil (US$/bbl) | 36.1 | 45.7 | 60.1 | 52.3 |
| Natural gas production | ||||
| Average natural gas production (mcfpd) | 414 | 11,317 | 17,209 | - |
| Average sales price of natural gas (US$/ mcf) | 5.9 | 4.5 | 5.8 | - |
| Oil and gas production costs | ||||
| Average operating cost (US$/boe) | 5.6 | 20.3 | 7.8 | 242.6 |
| Average royalties and other (US$/boe) | 3.2 | 1.4 | 3.2 | 10 |
| Average production cost (US$/boe)** | 8.8 | 21.7 | 11 | 252.6 |
*We present production figures net of interests due to others, but before deduction of royalties, as we believe that net production before royalties is more appropriate in light of our foreign operations and the attendant royalty regimes.
**Calculated pursuant to FASB ASC 932.
***We acquired the Neuquen blocks in March 2018. Production figures do not include production prior to their acquisition.
OIL AND GAS RESERVES
Our independent evaluation of oil and gas reserves was certified by DeGolyer and MacNaughton (D&M), in accordance with PRMS methodology [Petroleum Reserves Management System] to December 31, 2019 and covers 100% of our assets in Colombia, Peru, Chile, Argentina and Brazil. The D&M evaluation does not include reserves information or any other information relevant to the acquisition of Amerisur Resources PLC (“Amerisur”). All the included reserves correspond to the GeoPark share before royalties paid in kind.
At December 31, 2019, we achieved record certified 2P Reserves of 197.3 mmboe (88% oil and 12% gas), divided by country as 65% Colombia, 16% Peru, 13% Chile, 4% Argentina and 2% Brazil. In Colombia, the increase in 2P Reserves was 10% for a total of 129 mmboe.
Consolidated reserves numbers
| 52.4 | mmboe |
|
| US$ 2.8 | billion |
|
| |||
| PD Reserves | 2P Reserves value | |||||||||
| US$ 42.5 | per share |
|
| US$ 2 | billion |
|
| |||
| 2P value per share (adjusted for net debt) | 1P Reserves value | |||||||||
| 155% | ||||||||||
| 2P Reserves replacement | ||||||||||
Reserves by country and category
| Country | Reserves category | December 2019 (mmboe) | % oil | December 2018 (mmboe) | % change |
|---|---|---|---|---|---|
| Colombia | PD | 42.4 | 99 % | 36.3 | 17 % |
| 1P | 95.9 | 100 % | 83.4 | 15 % | |
| 2P | 129.0 | 100 % | 116.8 | 10 % | |
| 3P | 168.9 | 100 % | 152.6 | 10 % |
| Country | Reserves category | December 2019 (mmboe) | % oil | December 2018 (mmboe) | % change |
|---|---|---|---|---|---|
| Peru | PD | – | 100 % | – | N/D |
| 1P | 19.2 | 100 % | 18.5 | 4 % | |
| 2P | 31.4 | 100 % | 30.3 | 4 % | |
| 3P | 121.4 | 100 % | 131.2 | -7 % |
| Country | Reserves category | December 2019 (mmboe) | % oil | December 2018 (mmboe) | % change |
|---|---|---|---|---|---|
| Chile | PDP | 3.4 | 26 % | 2.8 | 21 % |
| 1P | 7.4 | 50 % | 7.2 | 3 % | |
| 2P | 24.6 | 38 % | 24.7 | 0 % | |
| 3P | 41.1 | 37 % | 37.9 | 8 % |
| Country | Reserves category | December 2019 (mmboe) | % oil | December 2018 (mmboe) | % change |
|---|---|---|---|---|---|
| Argentina | PDP | 3.3 | 59 % | 3.5 | -6 % |
| 1P | 4.9 | 67 % | 5.7 | -14 % | |
| 2P | 8.5 | 52 % | 14.2 | -40 % | |
| 3P | 14.2 | 42 % | 28.9 | -51 % |
| Country | Reserves category | December 2019 (mmboe) | % oil | December 2018 (mmboe) | % change |
|---|---|---|---|---|---|
| Brazil | PDP | 3.2 | 5 % | 3.1 | 3 % |
| 1P | 3.2 | 5 % | 3.1 | 3 % | |
| 2P | 3.8 | 13 % | 3.2 | 19 % | |
| 3P | 5.6 | 40 % | 3.4 | 65 % |
| Reserves category | December 2019 (mmboe) | % oil | December 2018 (mmboe) | % change | |
|---|---|---|---|---|---|
| PDP | 52.4 | 86 % | 45.8 | 14 % | |
| 1P | 130.6 | 93 % | 117.8 | 11 % | |
| 2P | 197.3 | 88 % | 189.3 | 4 % | |
| 3P | 351.3 | 89 % | 354.0 | -1 % |
REVENUE
Crude oil sales were our main source of revenue at end-2019 and accounted for 92% of our total revenue, with the remaining 8% coming from gas sales.
| Revenue for the year ended December 31 | |||
|---|---|---|---|
| 2019 | 2018 | % change from previous year | |
| (in US$ thousand, except percentages) | |||
| Consolidated revenue | |||
| Net oil sales | 579,030 | 545,490 | 6 % |
| Net gas sales | 49,877 | 55,671 | (10) % |
| Total | 628,907 | 601,161 | 5 % |
Our revenue increased 5%, from US$ 601.2 million in 2018 to US$ 628.9 million at end-December 2019, mainly because of higher volumes sold. Oil sales increased because of higher volumes sold, from 10.7 mmbbl in 2018 to 11.9 mmbbl sold in 2019, which meant that net revenue increased from US$ 545.5 million in 2018 to US$ 579.0 million in 2019. Gas sales decreased from US$ 55.7 million in 2018 to US$ 49.9 million in 2019, mainly due to lower prices.
Revenue by country
| Year ended December 31 | Change from previous year | |||
|---|---|---|---|---|
| 2019 | 2018 | % change from previous year | ||
| (in US$ thousand, except percentages) | ||||
| Sales revenue by country | ||||
| Colombia | 538,917 | 497,870 | 41,047 | 8 % |
| Chile | 32,336 | 37,359 | (5,023) | (13) % |
| Brazil | 23,049 | 30,053 | (7,004) | (23) % |
| Argentina | 34,605 | 35,879 | (1,274) | (4) % |
| Total | 628,907 | 601,161 | 27,746 | 5 % |
Colombia accounts for 85.7% of all our sales. Its variation against 2018 was due to the increase in sales volumes from 10.0 mmbbl to 11.1 mmbbl and a fall in the average price per barrel of crude oil from US$ 52.6 (2018) to 50.4 (2019).
Argentina accounts for 5.5% of our sales, and the variation in revenue was due to the fall in oil sales because of the decrease in the average price per barrel of crude oil from US$ 65.0 per barrel (2018) to US$ 53.1 (2019), partially offset by an increase in the volume of oil sales from 0.5 mmbbl to 0.6 mmbbl. Gas sales also decreased by US$ 0.8 million, reflecting lower gas prices that were partially offset by higher deliveries.
Chile represents 5.1% of our total sales and the variation in revenue was due to a decrease in oil sales volumes, from 0.3 mmbbl to 0.2 mmbbl, at lower average prices per barrel of oil, from US$ 62.3 (2018) to US$ 56.2 (2019), and an increase in the volume of gas sales.
Brazil represents 3.7% of our sales, and the variation in revenue was mainly due to a decrease in gas sales volumes, from 1.0 mmboe to 0.7 mmboe.
We became one of the 100 largest companies in Colombia
In the financial information report of the companies supervised by the Superintendency of Corporations in Colombia, published in May 2019, GeoPark Colombia was ranked number 81 of the 1,000 largest companies in the country, rising 77 positions from the position obtained in 2017.
PRODUCTION AND OPERATING COSTS
Our production and operating costs correspond mainly to expenses associated with the production of oil and gas.
| For the year ended December 31 | |||
|---|---|---|---|
| 2019 | 2018 | % change from previous year | |
| (in US$ thousand, except percentages) | |||
| Consolidated (including Colombia, Chile, Argentina, Peru and Brazil) | |||
| Royalties | (64,576) | (71,836) | (10) % |
| Staff costs | (14,542) | (18,603) | (22) % |
| Operations and maintenance | (7,743) | (7,756) | (0) % |
| Transportation costs | (2,941) | (2,628) | 12 % |
| Well and facilities maintenance | (27,660) | (20,262) | 37 % |
| Consumables | (17,625) | (17,444) | 1 % |
| Equipment rental | (10,476) | (9,317) | 12 % |
| Other costs | (23,401) | (26,414) | (11) % |
| Total | (168,964) | (174,260) | (3) % |
Our consolidated production and operating costs decreased 3%, from US$ 174.3 million (2018) to US$ 169.0 million (2019), mainly due to lower royalties and lower maintenance costs of the gas plant, which was partially offset by an increase in maintenance costs of the facilities, focused on improving production levels and personnel costs.
production and operating costs by country
- 2019
- 2018
| For the year ended December 31 | ||||
|---|---|---|---|---|
| Colombia | Chile | Argentina | Brazil | |
| (en US$ ‘000) | ||||
| Royalties | (56,399) | (1,181) | (5,141) | (1,855) |
| Staff costs | (7,439) | (4,822) | (1,833) | (448) |
| Operations and maintenance | (4,280) | — | (3,454) | (9) |
| Transportation costs | (1,030) | (1,285) | (626) | — |
| Well and facilities maintenance | (13,868) | (4,823) | (7,742) | (1,227) |
| Consumables | (14,777) | (1,492) | (1,312) | (44) |
| Equipment rental | (7,684) | (940) | (1,502) | (350) |
| Other costs | (11,467) | (5,246) | (4,668) | (2,020) |
| Total | (116,944) | (19,789) | (26,278) | (5,953) |
| For the year ended December 31 | ||||
|---|---|---|---|---|
| Colombia | Chile | Argentina | Brazil | |
| (en US$ ‘000) | ||||
| Royalties | (62,710) | (1,473) | (4,833) | (2,820) |
| Staff costs | (8,529) | (6,521) | (3,167) | (386) |
| Operations and maintenance | (4,879) | — | (2,877) | — |
| Transportation costs | (1,258) | (1,250) | (120) | — |
| Well and facilities maintenance | (8,837) | (4,095) | (6,044) | (1,286) |
| Consumibles | (14,714) | (1,712) | (1,018) | — |
| Equipment rental | (7,761) | (287) | (1,269) | — |
| Other costs | (9,845) | (6,561) | (5,715) | (4,293) |
| Total | (118,533) | (21,899) | (25,043) | (8,785) |
Production and operating costs in Colombia decreased 1%, from US$ 118.5 million (2018) to US$ 116.9 million (2019), mainly due to lower royalties, in line with lower oil prices. Operating costs in Colombia decreased to US$ 5.4 per boe (2019) from US$ 5.6 per boe (2018). Production and operating costs in Chile decreased by 10% to US$ 19.8 million due to lower personnel expenses that resulted from cost reduction initiatives, considering the lower level of activity. Costs per boe decreased from US$ 22.8 (2018) to US$ 17.7 (2019).
Production and operating costs in Brazil decreased 32% to US$ 6.0 million (2019), mainly as a result of the adoption of IFRS 16, which changes the treatment and presentation of operating lease expenses. Operating costs per boe decreased from US$ 6.1 (2018) to US$ 5.6 (2019). Production and operating costs in Argentina increased by 5% from 2018, to US$ 26.3 million in 2019, mainly due to higher maintenance costs of facilities. Operating costs per boe decreased from US$ 31.2 (2018) to US$ 26.7 (2019).
TAXES AND ROYALTIES
We are strict in ensuring the correct payment of taxes and royalties in the countries where we operate, and we do not receive financial assistance from governments, nor do we contribute to parties and/or political representatives.
Income tax
The calculation of our income tax expense implies the interpretation of applicable tax laws and regulations in many jurisdictions. The resolution of the fiscal positions we take through negotiations with the relevant authorities or through litigation may take several years to complete and, in some cases, it is difficult to predict the final result.
Income tax expenses
(in US$ thousand)
2019
2018
2017
88,638
67,704
6,925
Royalties
In Colombia, royalties on production are payable to the Colombian Government and are determined on a field-by-field basis using a sliding scale level of production at a rate ranging between 6%-8%. The Colombian National Hydrocarbons Agency (ANH) also has an additional economic right equivalent to 1% of production, net of royalties. In Chile, royalties are payable to the Chilean Government. In the Fell block, royalties are calculated at 5% of crude oil production and 3% of gas production. In the Flamenco, Campanario and Isla Norte blocks, royalties are calculated at 5% of oil and gas production.
In Brazil, the Brazilian National Petroleum, Natural Gas and Biofuels Agency (ANP) is responsible for determining monthly minimum prices for petroleum produced in concessions. Royalties generally correspond to a percentage ranging between 5% and 10% applied to reference prices for oil or natural gas, as established in the relevant bidding guidelines and the concession agreement. In the Manati block, royalties are calculated at 7.5% of gas production. In Argentina, crude oil and gas production accrues royalties payable to the Provinces of Mendoza and Neuquen equivalent to 15% of the estimated value of those products. This value is equivalent to the final sales price less transport, storage and treatment costs.
Royalties by country
(in US$ thousand)
| Colombia | Argentina | ||||||
| 56,399 | 2019 |
| 5,141 | 2019 | ||
| 62,710 | 2018 | 4,833 | 2018 | ||||
| Chile | Brazil | ||||||
| 1,181 | 2019 |
| 1,855 | 2019 | ||
| 1,473 | 2018 | 2,820 | 2018 | ||||
Consolidated royalties
(in US$ thousand)
(includes Colombia, Chile, Argentina, Peru y Brazil)
64,576
71,836
28,684
2019
2018
2017
Operational efficiency –Casanare pipeline (Colombia)
In May 2019 we completed the construction of the flowline connecting the Llanos 34 block to the Llanos Pipeline (ODL by its Spanish acronym), one of the main pieces of crude oil transport infrastructure in Colombia. This engineering work was carried out with a team of 327 workers (91% of which were local), 286,770 person/hours worked, 209,129 kilometers travelled by vehicles and, most importantly, with zero lost-time incidents and without any social disturbances during its construction. Crude started to be pumped from Jacana in May, and on 4th June the first barrel passed through the LACT* crude oil measurement unit at Jaguey.
Barrels of oil transported:
5,380,448 by 31st December 2019
Impact on road transport:
11,500 tanker loads
(Figures correspond to the impact of the participation percentage operated by GeoPark).
* The LACT unit is a measuring system used to precisely measure flows of liquid hydrocarbons or natural gas for the sale or delivery to third parties.
VALUE CHAIN AND SUPPLY CHAIN MANAGEMENT
To successfully carry out our operations, we need a myriad of goods and services that are supplied by a significant number of strategic partners, whom we call suppliers and contractors. With their support, we develop activities that ensure responsible operation of the value chain and promote joint growth. Our management guidelines are clearly defined in our Corporate Supply Commitment (Policy), which establishes principles and standards for our activities for the acquisition of goods and services.
During 2019, we developed business relationships with 1,925 suppliers, of which 723 were local companies, making a significant impact on regional and local economies. The approximate value of our budget for payments to suppliers was US$ 371,420,092.
Supply commitment
In 2019 we defined a new supply commitment aligned with the type of company we are today, to establish the rigid and controlled contracting rules without losing sight of the flexibility that the industry demands. The objective of the commitment is to clearly establish the procedure to obtain an efficient and effective chain that maximizes the value for the Company through the best planning, contracting, purchasing and logistics.
| N° local suppliers | N° national suppliers | N° international suppliers | Total suppliers | |
|---|---|---|---|---|
| Operations (drilling & completion, engineering, production, works and maintenance) | 213 | 312 | 39 | 564 |
| Administration, transport, support equipment and logistics | 234 | 368 | 20 | 622 |
| Various others (IT, health, safety, consultancy, etc.) | 276 | 433 | 30 | 739 |
| Total | 723 | 1,113 | 89 | 1,925 |