GeoPark Limited (NYSE: GPRK): CPO-5 wells back online. Multiple discoveries in Colombia and Ecuador
• The Indico 6 and Indico 7 wells in the CPO-5 block in Colombia are now back online. Each well is expected to reach 4,000 bbl/d gross production (8,000 bbl/d gross total, 2,400 bbl/d net to GeoPark). The total gross production of both wells could reach 9,000 bbl/d by YE23.• The Toritos 1 exploration well at LL-123 encountered hydrocarbons in the Guadalupe and Gacheta formations and is now on production at a rate of ~1.4 mbbl/d with 1% water cut. The Saltador 1 well at LL-123 is on production at a rate of 765 bbl/d with 3% water cut. Overall gross production from LL-123 is now >2.1 mbbl/d, which will contribute to 4Q23 production. This is expected to add reserves.
• The positive result at Toritos led GeoPark to decide to drill a new exploration well in 4Q23 (Bisbita Centro 1) on LL-123. The prospect will be located 1.5 km south of Saltador 1.
• The Yin 2 well (result announced in August) is currently producing 765 bbl/d with 1% water cut. The Perico Centro 1 exploration well has also encountered hydrocarbons in the U-sand formation (as at Yin-2) and has been put on production at a rate of 800 bbl/d (28 deg API and 1% water cut). These wells are also expected to add reserves. The U-sand is a new reservoir that had not been developed previously by GeoPark.
• With multiple near term drilling catalysts by YE23, we have increased our target price to US$26 per share to incorporate the positive exploration drilling results.
Newsflow by YE23
There are multiple near term catalysts by YE23 including the drilling of Zorzal Este 1 (LL-87), Halcon (CPO-5), Cucarachero 1 (LL-124), Bisbita Centro 1 (LL-123) and Perico Norte-4 (Ecuador). GeoPark has also initiated a production test of the longest horizontal well drilled so far at LL-34. The result of this well could have positive implications on recovery factor, production plateau and reserves at LL-34. The first horizontal well drilled at LL-34 earlier this year initially produced >3 mbbl/d.
Valuation
Our Core NAV has increased from ~US$16.80/sh to ~US$18.80/sh. Our RENAV has also increased from US$24.80/sh to US$25.70/sh. Our FY23 production profile is marginally reduced. While the late production re-start of CPO-5 is offset by the new production at LL-123 and in Ecuador, we have taken a more cautious view on production in Chile and Brazil.
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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