GeoPark Limited (NYSE: GPRK): 110% Reserve Replacement Ratio in 2023
• 2P YE23 reserves were estimated at 115.1 mmboe. Excluding 14.6 mmboe at YE22 in Chile (being sold), this compares to 113.8 mmboe at YE22. During 2023, GeoPark has added ~14 mmboe of 2P reserves. With 12.7 mmbope production in FY23, this represents a reserve replacement ratio of 110%.• The largest contributors to reserve addition are Ecuador (2P increased by 5.3 mmboe to 7.1 mmboe) and the new 2023 discoveries in Colombia with YE23 2P reserves of 3 mmboe at Halcon/Perico (CPO-5) and 3 mmboe at Bisibita, Saltador and Toritos. No reserves were associated to these three new Llanos fields at YE22. We anticipate that the reserves at these fields could continue to grow as GeoPark drill 3-9 further wellsin these new Llanos areas in 2024.
• The Net debt-adjusted 1P NPV10 and 2P NPV10 (after Tax) were estimated at respectively ~US$14 per share and US$26 per share. The 2023 discoveries are estimated by the reserve auditor to have added US$175 mm NPV10 (after tax).
• As we incorporate the impact of the reserve additions, we have increased our target price from US$24 per share to US$25 per share in line with our new ReNAV.
• The key newsflow for 1Q24 includes testing of two exploration wells in Llanos basin in Colombia (Halcon-1 and Zorzal Este-2) and appraisal drilling in Ecuador (Perico Norte 5).
FY24 guidance (adjusted for the divestment of Chile) unchanged
GeoPark has now excluded Chile from its FY24 production guidance. This results in a FY24 production guidance of 35.5-39 mboe/d (37-40 mboe/d including Chile) with US$150-200 mm capex (unchanged as no capex was expected to be allocated to Chile). Halcon/Perico (CPO-5), Bisibita, Saltador and Toritos are key areas for potential reserves and production addition in 2024.
Valuation
Following the reserves addition at YE23, we have increased our Core NAV from ~US$18 per share to ~US$20 per share and our ReNAV from US$23.80 per share to ~US$25 per share.
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.
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