GeoPark Limited

Good morning and welcome to the GL Park limited conference call following the results announcement for the first quarter ended March 31st, 2022. 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.geopark.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 development 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 statement, 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. Reserved figures correspond to PRMS standards. On the call today from Geopark is James F. Park, Chief Executive Officer, Augusto Zubalaga, Chief Operating Officer, Andres Ocampo, Chief Financial Officer, Martin Tirado, Director of Operations, Veronica Bebula, Commercial Director, and Stacey 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 in Bogota, Colombia, to report on our achievements and financial results for the first quarter of of 2022 we want to begin by thanking and recognizing all the hard-working women and men of geopark for delivering one of the most successful quarters in our 20-year history while continuing building value across our complete business we believe we are in the right business in the right place with the right team, the right platform, the right partners and the right approach to succeed and capture an immense value proposition. Our previously announced management transition is proceeding and being received very well, and the Geopark team is responding with energy, enthusiasm, ideas, and optimism. And it is with tremendous gratitude and confidence that I'm moving on from this wonderful job to becoming a full-time shareholder and cheerleader. Before passing the word to Andres, as well as opening for questions, just a word, please, about our full cycle performance and delivery. something which underlies our unique 20-year track record of continuous value growth. Since the very beginning, Geopark has been committed to a big idea and long-term plan, which allowed us to build our company solidly and steadily while keeping our focus on the larger prize. This gave us a rock-hard foundation which allows us to weather any world or industry crises, and we have been through a bunch, and be in a position with all we need to create and win more and more opportunities for the future. So today we are successfully keeping our team safe, healthy, and rewarded, using our G&G and operational excellence to drill, find, and produce more oil and gas, being innovative and staying disciplined to achieve greater capital efficiency and reduce costs. Protecting the environment and reducing emissions. Being a constructive and desired community neighbor. Adding more high potential acreage and assets to further expand our big growth fairway. Managing the risks of our business and protecting downsides. strengthening and celebrating our powerful culture and using our record cash flows and revenues to invest more to expand our work program and improve our business, pay down debt, and give back more to our shareholders. With all this activity across the full E&P value chain, being self funded by our own cash flows, as we have for nearly 10 years. And which provides a continuous snowballing of value and scale. So Andres, thank you for stepping up and taking on this job. Perhaps you can please add some more details on this quarter.

Thank you, Jim. We have a year filled with activity across our company, and our first quarter results show our strong start to the year. First, we have drilled 13 new wells and increased production by 6% over the fourth quarter of last year. In the TPO5 block, we're now producing over 20,000 barrels a day gross. That's two and a half times higher than when we acquired the block almost two years ago. In Ecuador, we discovered two new oil fields currently producing almost 2,000 barrels a day gross. Second, the increased production and oil prices generated record financial results. Our adjusted EBITDA generation in the quarter was up 84% to $123 million, which means more than $350 million for the last 12 months. This also means a net income of more than $100 million in the same period. Third, we invested $39 million of capex in the quarter, which means that we generated more than $3 of adjusted EBITDA for every dollar invested in that period. We also used our cash flow to reduce debt as we repurchased $33 million of our 2024 bonds and also doubled our dividends to $5 million per quarter. Fourth, we added new acreage in our core place. The CPO-4-1 block is strategically located and covers 120,000 acres adjacent to CPO-5 and other Janos Basin blocks that we own. Finally, as we're always striving to be a better and cleaner company, we advanced on connecting to the Colombian national grid, as well as building our solar plant which has the multiple benefit of reducing our emissions, reducing our costs, and increasing our operational reliability. Our efforts are being recognized at MSCI ESG Improval Ratings 2A, and also we were included in the Bloomberg Gender Equality Index, covering companies with best-in-class gender-related practices and policies. As is always the case, we designed our work programs to be adaptable up or down based on asset performance and oil price volatility. So given the new discoveries and higher oil prices, we have expanded our self-funded 2022 work program by another $40 million to drill an additional eight to nine new wells, plus facilities permitting and licensing. Consequently, We increased our annual production guidance up 8% to a range of 38.5 to 40.5 thousand barrels of oil equivalent per day to reflect new production from Ecuador, the expanded war program, as well as the production from Manatee in Brazil. This revised guidance represents an 11% growth compared to 2021, adjusting for Argentina's but not including any future exploration success. A $95 to $100 grant, this revised work program is expected to generate more than half a billion dollars in adjusted EBITDA, which would be more than $250 million of free cash flow after CapEx debt service and taxes, representing almost a 30% free cash flow yield. We expect to use this extra cash to continue investing in growing our asset base, paying down debt, and giving back more value to shareholders. Our operations and technical teams are busier than ever. We have today eight Greeks working full-time across our asset platform in Latin America and have four more Greeks on their way. We're executing an exciting low-cost, low-risk, and high-impact exploration campaign, not only in CPO5, but also in our other genospacing blocks. So we really look forward to reporting on progress and results from these very exciting activities. Thank you, and we will be pleased to answer any questions you may have.