GeoPark Limited

Good morning and welcome to the Geopark Limited conference call following the results announcement for the second quarter ended June 30, 2020. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at this time, press star 1 on your telephone keypad. If you would like to withdraw your question, press the pound key. If you do not have a copy of the press release, it is available at the Investor Support section on the company's corporate website at www.geo-park.com. A replay of today's call may be accessed through this webcast in the Investor Support section of the Geopark corporate website. Before we continue, please note that certain statements contained in the results press release and on this conference call are forward-looking statements rather than historical facts and are subject to risks and uncertainties that could cause actual results to differ materially from those described. With respect to such forward-looking statements, the company seeks protections afforded by the Private Securities Litigation Reform Act of 1995. These risks include a variety of factors. including competitive developments and risk factors listed from time to time in the company's SEC reports and public releases. Those lists are intended to identify certain principal factors that could cause actual results to differ materially from those described in the forward-looking statements, but are not intended to represent a complete list of the company's business. All financial figures included herein were prepared in accordance with the IFRS and are stated in U.S. dollars unless otherwise noted. Reserves figures correspond to PRNS standards. On the call today from Geopark is James F. Park, Chief Executive Officer, Andres Ocampo, Chief Financial Officer, Martin Tirado, Director of Operations, and Stacy Stimel, Shareholder Value Director. And now I'll turn the call over to Mr. James Park. Mr. Park, you may begin.

Thank you and welcome, everyone. We are joining you this morning with our executive team, united as ever, but still physically separated and calling in from our respective locations in Colombia, Argentina, and Texas. Again, We wish to begin by expressing our passionate thanks and respect for the Geopark women and men who are working day and night, pushing us through this downturn and continuously making our company perform, protecting our shareholders, and positioning us for the new world on the other side. And wow, this second quarter, was the ugliest and meanest three-month period I have experienced in 40-plus years in this business. We got the whole rotten enchilada. A global pandemic, a production war, a lockdown of the world's economy, a historic demand collapse, and even negative oil prices. Before opening up to questions, And in order to give some flavor to the dynamics and operational and financial efforts during the quarter, let's please review five key areas of our business. First, looking at our production and drilling response and actions. With speed and agility, all of our drilling and work over suspended at the beginning of the quarter. involving a shutdown of eight rigs. Then, always considering health and safety, reservoir, mechanical and cost factors, we shut in 6,500 to 7,500 barrels per day of production when prices were at their lowest. As prices subsequently strengthened, we reopened 70% to 80% of these wells. which raised us back up to our current production of over 40,000 barrels per day and a quarterly average of 37,000 barrels per day. We also resumed drilling with a revised program of six to eight wells in the Llanos 34 block where Geopark is operating and one to two wells in the CPO5 block where ONGC is operating. and we put our work-over and well-maintenance rigs back into operation. Second, looking at our cost and investment response and actions. We put the brakes on capital expenditures with an 80% cut and began driving down each and every cost. Production and operating costs down 55%. Operating cost per barrel down 26% to $6 per barrel, and G&A and G&G cost down 19%. Across our platform, total cost and investment savings exceeded $290 million. And now, with strengthened prices, we were able to revise our full year 2020 budget upward to $65 to $75 million, supporting a program targeting production of 40,000 to 42,000 barrels per day, and an operating net back of $230 to $260 million at rent of $35 to $40 per barrel. Third, looking at our cash preservation, safety net, and risk management response and actions. Cash preservation was a key risk management principle. And after beginning the quarter with cash of $166 million, we have the same level today. As an additional safety net, we secured a $75 million oil prepayment facility with $50 million committed and no amounts drawn. And we have an additional $140 million in uncommitted credit lines. We have a long-term financial debt maturity profile with no principal payments until September 2024. And S&P and Fitch recently reaffirmed Geopark's long-term corporate credit rating at B+. Our hedging program was an effective tool in protecting our base oil price and provided a $14 million cash gain in the first half of 2020. Fourth, looking at our SPEED ESG response and actions. SPEED is Geopark's successful integrated value system, which includes ESG components as well as health and safety and employee well-being. Conferring the pandemic, we quickly put protocols, preventative measures, and crisis response plans in place across our six-country platform and reduced field teams to a minimum with backup crews and contingencies in place to keep people working safely and production flowing. Geopark was the first E&P company in Columbia to obtain Bureau Veritas certification on biosecurity protocols to mitigate and manage the impact of COVID-19 in our operations. In keeping with our continuous work with our neighbors and communities, we stepped up our efforts during the pandemic to provide safety, medical, and food supplies, particularly for the most vulnerable. Our efforts have impacted over 1,100 families or 6,000 people, supported local health officials, and also coordinated with federal officials.

Fifth, looking at our structural efforts to create a better and stronger business.