GeoPark Limited (NYSE: GPRK): Low 2025 production on strategy shift but 50% increase in Argentina’s 2P reserves
• 4Q24 production was 31,489 boe/d. Excluding Argentina (as the acquisition has not completed yet), this is ~1.4 mboe/d below our forecasts. The shortfall is primarily due to CPO-5, which experienced more blockades than anticipated, resulting in actual production of 6.4 mbbl/d compared to our expectation of 7.5 mbbl/d.• The highlight of the 4Q24 operating update is the 50% increase in net 2P reserves at Mata Mora as of the end of June, reaching ~75 mmboe compared to 49 mmboe. We believe this could further increase at YE24, given the success at Confluencia Norte.
• GeoPark has changed its strategy to focus on material growth assets. In 4Q24, gross production in Argentina reached 15,052 bbl/d (GeoPark WI: 45%). With a large reserve base and significant running room, the Vaca Muerta portfolio is a key component of this strategy. Argentina's gross production is expected to grow to ~45 mboe/d (~20 mboe/d net to GeoPark) by 2028.
• As a result of this strategic shift, GeoPark will reduce investment in smaller assets and lower-return projects. The FY25 capex budget of US$275-310 mm will allocate US$195-220 mm for Argentina and US$80-90 mm for Colombia. In comparison, the FY24 budget included US$140-170 mm for Colombia.
• As we factor in the performance of the Colombian assets, which reflects lower future investments, reduced production (and likely lower reserves), and more modest exploration upside, partially offset by the higher value of Argentina, we have adjusted our target price to US$18/sh in line with our new ReNAV. The US$30 mm annual dividend remains a priority, implying a yield of approximately 5.7%.
FY25 production guidance
GeoPark expects to produce 35 mboe/d ± 2.5 mboe/d in 2025. This is lower than our estimate of 41.5 mboe/d, primarily due to the shutdown of Platanillo (-1 mboe/d), faster declines at CPO (-1.8 mboe/d), and reduced capital allocation to the Llanos assets (-2 mboe/d). We now assume only US$60 mm in capex for the Llanos assets in 2026, US$40 mm in 2027, and US$20-30 mm per year thereafter.
Valuation
Our ReNAV now stand at ~US$17.05/sh. The main source of potential upside is Confluencia Norte (~US$6.90/sh unrisked NAV). The 2025 exploration programme in Colombia (5 wells) has an unrisked value ~US$5.00/sh. We are not carrying any value for the ~79 mmboe net 3C contingent resources at Confluencia Sur and Mata Mora Sur yet.
Auctus Advisors is a specialist Equity Capital Markets and Advisory business with a focus in the Energy Sector.
The partners have complementary skill sets, with decades of experience across Equity Capital Markets, Investment Banking and the Energy industry. We have worked at Société Générale, Canaccord Capital, BMO Capital Markets and Schlumberger. Most recently we have worked together for many years at GMP FirstEnergy.
Auctus has been set up at the beginning of a new decade in which we see significant opportunities in the Energy space. Globally, demand for energy is at record levels and continues to grow. Conversely, investment in traditional energy sources has been severely constrained. We believe this imbalance creates opportunities for both companies and investors.
Auctus provides Corporate Broking, Equity Research and Investment Banking services.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.