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GeoPark’s Earnings Call: Achievements and Challenges in 2024

GeoPark’s Earnings Call: Achievements and Challenges in 2024

GeoPark ((GPRK)) has held its Q4 earnings call. Read on for the main highlights of the call.

GeoPark’s Earnings Call Reflects Balanced Sentiment Amid Achievements and Challenges

The recent earnings call for GeoPark highlighted a balanced sentiment, showcasing both significant achievements and notable challenges faced by the company in 2024. While GeoPark celebrated record shareholder returns, strategic acquisitions, and sustainability recognitions, these successes were offset by production declines, delayed acquisition closures, and decreased financial performance.

Record Shareholder Cash Return

GeoPark achieved a milestone in shareholder returns, delivering the highest annual cash return in its history. The company distributed almost $74 million through dividends and buybacks, equating to a record annual shareholder cash return of approximately 14% yield.

Strategic Acquisition in Vaca Muerta

A significant acquisition in Vaca Muerta marked a strategic advancement for GeoPark, extending the reserves life and boosting production by 19% in the fourth quarter of 2024 compared to the third quarter. This move underscores GeoPark’s commitment to expanding its production capabilities.

Sustainability Achievements

GeoPark’s inclusion in the S&P Sustainability Yearbook and maintaining an AA rating in the MSC Index highlights its leadership in global sustainability. These achievements reflect the company’s dedication to sustainable practices and environmental responsibility.

Financial Stability and Flexibility

Despite challenges, GeoPark maintained financial stability, ending the year with $276.8 million in cash and a net leverage of 0.9 times, well below its long-term target. The company has no significant debt commitments due until 2030, providing financial flexibility for future endeavors.

Exploration Success

GeoPark reported a transformational discovery in the Confluencia block in Vaca Muerta, with two out of three wells ranking among the top eight producing wells in the basin over the last 90 days. This discovery is a testament to GeoPark’s exploration capabilities.

Strong Reserve Growth

The company’s pro forma 2P reserves saw a 41% year-on-year increase, reaching over 160 million barrels. This growth was driven by the addition of 74.6 million barrels from the Vaca Muerta assets, reinforcing GeoPark’s resource base.

Production Decline

GeoPark faced a 7% decline in total oil and gas production for 2024, averaging almost 34,000 barrels a day. This decline was attributed to temporary production disruptions and natural declines in Colombia’s main fields.

Delayed Acquisition Closure

The delayed closure of an acquisition in Argentina affected GeoPark’s ability to report consolidated production and financial figures for 2024, presenting a challenge in their operational timeline.

Lower Financial Performance

GeoPark’s full-year 2024 adjusted EBITDA decreased by 8% compared to 2023, with net income falling by 13%. This decline was due to lower production, reduced revenues, and a higher effective tax rate.

Forward-Looking Guidance

Looking ahead to 2025, GeoPark plans to enhance recovery and productivity in Colombia while continuing development in Vaca Muerta. The company aims for a gross plateau production of 40,000 barrels per day, reflecting its strategic focus on growth and efficiency.

In conclusion, GeoPark’s earnings call presented a balanced view of the company’s achievements and challenges in 2024. While the company celebrated record shareholder returns and strategic advancements, it also faced operational hurdles and financial declines. Looking forward, GeoPark remains committed to enhancing production and sustainability, aiming for continued growth in 2025.

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