GeoPark Limited (NYSE: GPRK): CPO-5 production expected to be back to full capacity in early 2Q23
• FY22 production and YE22 net debt had been previously reported.• January to February WI production was only ~37 mboe/d, below the production potential of 39,400-40,300 boe/d as the Indico 6 and Indico 7 wells in the CPO-5 block in Colombia continue to be off line until definitive surface facilities are completed. These two wells represent ~2.4-3.3 mbbl/d net to GeoPark, The facilities are now expected to be completed in early 2Q23 according to the operator. Importantly this does not reflect a more stringent attitude of ANH.
• In addition, since 28 February, temporary localized blockades have been affecting overall production and operations in the CPO-5 block, which are expected to be normalized within the next few days.
• GeoPark is re-iterating its FY23 guidance of 39.5-41.5 mboe/d (excluding any contributions from exploration) but given the low production in January and February FY23 production will be most likely be near the low end of the guidance range.
• The FY22 capex was well below the company’s guidance and our expectations (US$169 mm versus our forecast of >US$210 mm). This mostly reflects delays in activities that are now expected to take place in 2023 and are included in the FY23 capex guidance of US$200-220 mm.
• We re-iterate our target price of US$28 per share as the lower FY22 capex offsets the lower production and cashflow in 1Q23.
Very busy upcoming weeks
GeoPark could announce the results of multiple appraisal/exploration wells over the coming weeks. These include Yarico-1 at CPO-5, Tororoi, Picabuey 1 and Zorzal 1 at LLA-87. The results of the Guaco Sur exploration well announced in early February in LLA-34 could open additional drilling locations. Our overall unrisked NAV for the FY23 Colombian exploration programme is ~US$16 per share.
Valuation
Our Core NAV stands at ~US$17/sh (ReNAV of ~US$27/sh). A key near term catalyst continues to be the Halcon-1 well on CPO-5 investigating the extension of the Llanos-34 play into CPO-5.
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