GeoPark Limited (NYSE: GPRK): Discoveries in Colombia and Ecuador. Important drilling results over coming quarters
• 2Q23 production of 36,581 boe/d and cash at the end of June had already been reported.• The Indico 6 and Indico 7 wells in the CPO-5 block in Colombia continue to be expected to return to production in August. The operator has completed most of the required surface work. GeoPark has re-iterated its FY23 production target of 38.0-40.0 mboe/d.
• With contribution from 5-6 new horizontal wells with increasingly long laterals by YE23 and better uptime at Llanos-34, 4Q23 production is expected to reach 40-41 mboe/d.
• The Saltador-1 well at Llanos-123 has encountered 29’ of net pay in the Barco (Guadalupe) formation. The formation has been put on production at ~880 bbl/d (5% water cut). Importantly the well could derisk a larger prospect located to the south of the block that could be drilled around YE23 or early 2024.
• The discovery of 48’ of net pay in the new U-sand formation at the Yin 2 well is another positive. Frontera Energy reported initial production rates of ~1,200 bbl/d of 30.5 degree API crude oil.
• With multiple near term drilling catalysts including (1) the testing of Yin-2 that could add reserves and production, (2) the drilling of the Zorzal Este-1 (Llanos-87), Toritos-1 (Llanos-123) and Halcon (CPO-5) exploration wells, (3) the Cucarachero 1 exploration well (Llanos-124) reaching TD imminently, we re-iterate out target price of US$25 per share.
Reflections on cost and discounts
Opex in Colombia has increased by ~US$2/boe to US$10.8/boe due to an increase in electricity cost. This is the result of a dryer climate that negatively impacted hydroelectricity supplies. The Vasconia discount in Colombia has now decreased to ~US$3.5/bbl but it was between US$8.4/bbl and U$5.9/bbl in 2Q23.
Valuation
Our Core NAV is ~US$16.80/sh (ReNAV of ~US$24.80/sh). Over 1H23, GeoPark has already returned ~US$34 mm through dividends and share buybacks. Assuming the same amount is distributed to shareholders during 2H23 would lead to FY23 total shareholder distributions representing ~12% of the current market cap.
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.