GeoPark Limited (NYSE: GPRK): Dutch auction for 10% of the market cap at significant premium to the share price
• The key takeaway from the 4Q23 results press release is the announcement of a modified Dutch auction tender offer to purchase up to US$50 mm of GeoPark shares at a price of US$9-10 per share. This represents ~10% of the current market cap of the company. The tender price range represents a premium of 8-20% to the prior day close.• The company is sending a strong signal that its shares offer value. The tender price is well below the independent net debt adjusted NPV (after tax) of the company’s 1P reserves (~US$14 per share).
• The auction could also reduce any potential overhang on the share price by allowing selling shareholders to tender blocks of shares at a premium (rather than by having to progressively sell their positions in the market, which could generate downward pressure on the share price).
• A Dutch auction offers the benefit of a traditional share buyback with potentially reduced impact on the daily share liquidity.
• As we incorporate the impact of the US$50 mm Dutch auction tender offer, we have increased our target price from US$25 per share to US$26 per share in line with our new ReNAV. While the tender offer is in addition to the share repurchase program announced last November we are assuming that this traditional share buyback programme will be minimal in 2024.
Valuation
We have increased our Core NAV from ~US$18 per share to ~US$21.4 per share and our ReNAV from US$25 per share to ~US$26.1 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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