GeoPark Limited (NYSE: GPRK): Success at Confluencia Norte: material reserves and production boost
• The three exploration wells at Confluencia Norte in Argentina are now in production with an aggregate gross flow rate of 4 mbbl/d (Geopark WI: 50%). The wells are still cleaning-up and production is increasing towards its peak within 90 days.• This is a very good result that derisks the area where no reserves have been booked so far. We understand that the performance of the wells currently tracks GeoPark’s P10 case.
• We are increasing our expected total YE24 WI production for GeoPark in Argentina from 6.1-6.5 mboe/d to >8 mboe/d. This will also have a positive impact on FY25 production in Argentina.
• 3C contingent resources at Confluencia Norte are estimated at ~39 mmboe. This represents ~80% upside to GeoPark’s ~50 mmboe net 2P reserves in Argentina. We believe that a proportion of these resources will now be converted into reserves. The balance of the resources will also be attributed a lower risk factor.
• Pending further visibility on the FY25 production guidance and the YE24 reserves, we have increased our chance of development for the 39 mmboe 3C resources at Confluencia Norte from 35% to 55%. We are increasing our target price from US$25 per share to US$26 per share.
• This success showcases the quality of GeoPark’s assets in Argentina where the running room is important. GeoPark’s net 3C contingent resources at Mata Mora Sur and Confluencia Sur are estimated at respectively ~23 mmboe and 56 mmboe.
Valuation
Our Core NAV and ReNAV stand at ~US$21.30 per share and US$25.60 per share, respectively. Fully derisking Confluencia Norte could add ~US$2.30 per share to our valuation. We are not carrying any value for the ~79 mmboe net 3C contingent resources at Confluencia Sur and Mata Mora Sur yet.
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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