GeoPark Limited (NYSE: GPRK): Potential material acquisition in Colombia
• GeoPark has signed a binding agreement to acquire Repsol’s 45% interest in CPO-9 and its 25% stake in SierraCol Energy Arauca. Carlyle owns 100% of SierraCol Energy, that owns 75% of SierraCol Energy Arauca. Sierracol Energy Arauca holds interests in Cravo Norte, Cosecha, Chipiron and Rondon, all located in the Llanos basin in Colombia. SierraCol has grouped these fields under the Cano Limon area.• Very limited information is available on CPO-9 that is operated by Ecopetrol (55% WI). There are heavy oil producing fields (Chimene and Castilla) with 8-16 deg API oil on the licence that represent the largest proportion of the 16 mbbl/d net production being acquired by GeoPark. The licence is located to the southwest of CPO-5.
• According to SierraCol, the Cano Limon area has produced a total of >1.5 bn bbl of light and sweet oil. The gross original oil in place is >2.3 bn bbl and gross production has been flat at ~50 mbbl/d over the last four years. SierraCol carried 34 mmboe net 2P reserves at YE23 for the area.
• The consideration for the potential acquisition at full scope is approximately US$530 mm, funded through a combination of cash resources and debt, including a non-recourse amortizing debt facility of up to US$345 mm.
• The transaction is subject to a right of first refusal by the existing partners (SierraCol Energy for SierraCol Energy Arauca and Ecopetrol for CPO-9). Assuming these parties do not exercise their rights, the transaction could complete in 30 days.
• Pending confirmation of the transaction and further details on reserves, resources and growth potential, we have not included these assets in our valuation.
• We re-iterate our target price of US$26 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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