GeoPark Limited (NYSE: GPRK): Potential acquisition of unconventional producing assets in Argentina
• GeoPark has submitted a binding offer to acquire a non-operated Working Interest in unconventional blocks in the Neuquen Basin in Argentina. The offer has been accepted by the seller and the parties are working on an exclusive basis towards execution of definitive agreements. The completion of the transaction could occur in 3Q24• The acquisition would add net production of 5 mboe/d.
• The acquisition price is ~US$200 mm plus an additional carry of US$110-120 mm (gross), over a two year period, for exploration activities.
• Since the new administration in Argentina came to power a few months ago, the country has attracted more interest from the industry with multiple new laws looking to loosen regulations. YPF has also started a formal sale process for 55 mature producing conventional fields with 100 mboe/d aggregate production that it expects to be complete by YE24. Along the same lines of what happened in Brazil, this could revitalize interest in Argentina with the entry of multiple new players.
• Pending further details on the transaction, we re-iterate our target price of US$26 per share.
Vista Energy: a blue print for what can be achieved in Argentina
Vista Energy is an almost pure play on Argentina with a focus on developing unconventional asset in the Vaca Muerta. The company holds ~308 mmboe 2P reserves in the area and produced 55.5 mboe/d (86% oil) in 4Q23. Vista has increased production by 45% since 2022 and proven reserves by ~70% from YE21 to YE23. FY23 opex are expected to be only US$5.1/boe in 2023 with adjusted EBITDA of US$871 mm. Vista expects to grow production further to 68-70 mboe/d in 2024 and 100 mboe/d in 2026. Over the last 12 months, the share price of Vista has doubled and the current EV of the company is ~US$4.6 bn, suggesting that the shares trade at multiples of >5x for EV/EBITDA 2023 and US$83,000 per flowing barrel per day (2023). By comparison, GeoPark’s shares trade at only ~2x EV/EBITDA 2023 and ~US$27,000 EV/flowing barrel (2023) respectively.
Valuation
Our Core NAV and ReNAV are unchanged at respectively US$21.4 per share and US$26.15 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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