GeoPark Limited

Good morning and welcome to the Geopark Limited conference call following the results announcement for the third quarter ended September 30, 2020, and the 2021 Work Program and Investment Guideline. 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 PRMS standards. On the call today from Geopark is James F. Park, Chief Executive Officer, Andres Socampo, Chief Financial Officer, Martin Tirado, Director of Operations, and Stacy Simel, 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 reunited in Bogota, Colombia, to report on our third quarter 2020 results, introduce our work and investment program for 2021, and highlight our steps to return more value to shareholders. When we founded Geopark in 2002, we set out to build a company for the long term that would be the premier Latin American oil and gas independent and capture the big energy opportunity prize in this region. We want to always express our gratitude to the women and men of Geopark, past and present, who have made this company what it is today and created an unparalleled track record, a track record that incredibly, despite this monster storm we are fighting, is on target for our 18th straight year of growth. We had a great start to this year in the first quarter with the acquisition of AmeriStore, which significantly advanced our quietly effective Llanos Basin expansion effort, which has now positioned us with 1.4 million prime acres surrounding Llanos 34. This has made us one of the leading landholders in one of the world's most attractive onshore hydrocarbon basins and secured us with a powerful, low-risk, short-, medium-, and long-term growth fairway. During the wild and turbulent second quarter, our team moved decisively and significantly on all fronts, first to keep our team safe and healthy, and then pulling in our horns hard and dropping our capital investment program by 80% and attacking each and every cost line to achieve nearly $300 million of future cost savings. This quickness and agility allowed us to then re-engage and get back to work smoothly during a more stable third quarter, meaning putting rigs back to work and opening up temporarily shut-in production. Our unique low break-even production base, coupled with our relentless cost-cutting efforts, which again resulted in big declines of over 30% in operating costs, and 30% in GNA and GMG costs during the third quarter generated a doubling of our second quarter EBITDA to $56 million. Our forceful cash preservation efforts maintained a healthy cash balance of $164 million, which is even more cash than what we started the year with. Operationally, we resumed drilling on the YAML 34 block, and significantly began drilling a CPO5 block to appraise the indigo oil field. We have high expectations of the CPO5 block with its combination of development opportunities and very large multi-play exploration prospects and see it as a key component of our continuing Yanospace and growth story. Taking advantage of the downturn, we worked to transform Geopark into an even better and stronger company. This included a major restructuring of our project portfolio from a country or regional perspective to an asset-focused approach, which allowed us to capture large savings through synergies and improved efficiency. As always, The underlying foundation for Geoparks' performance is our in-house integrated value ESG Plus program we call Speed. This program was a founding element of our company and one of our proudest accomplishments, always pushing us to be the employer of choice, partner of choice, and neighbor of choice. This has been especially evident during the pandemic, with our success in keeping our team safe and healthy and assisting our neighboring communities with medical and economic aid. So today, from a position of strength, we are finishing another successful year and have been able to build an attractive work program for 2021 to grow our company and return cash to our shareholders. Turbulence has been an opportunity zone for us throughout our history, and we are heading into 2021 with confidence and optimism. Our projected work program, using a base case assumption of $40 to $45 Brent, provides for $100 to $120 million to drill 31 to 34 wells, approximately 65% development, and 35% exploration, with an average annual production of 40,000 to 42,000 barrels per day, and generating an operating net back of $210 million to $280 million. And as in every program every year, we have built in our flexibility with a fully funded high case at Brent over $50, and a fully funded low case at Brent below $35, focusing on the lowest risk projects that can yield attractive returns. Overall, 90% of our production is cash flow positive between $20 to $30 Brent. One year ago, in our November 2019 conference call, we said, quote, we believe that a company that can consistently execute, invest, find oil, grow, and return value back to its shareholders, all funded by its own cash flow, is the right model for our industry today. In a volatile world, being able to deliver on all these fronts is the true measure of a company's durability and value." We did not know at that time that we were about to face the biggest collapse in our industry's history. But Geopark's ability to prevail, continue growing, provide cash back to its shareholders, and maintain a strong and secure financial position during this time is a powerful test of our resilience and enduring value. Thank you, and we would be pleased to answer any questions you may have.