GeoPark Limited

Good morning and welcome to the Geopark Limited conference call following the results announcement for the second quarter ended June 30, 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, please 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 forward-looking statements, rather than historical facts, and are subject to risks and uncertainties that could cause accidental results to differ materially from those described. With this respect to forward-looking statements, the company seeks protections afforded by the private security quotation reform law of 1995. Risks include a variety of factors, including competitive development and risk factor, listed from time to time in the company's SEC reports. Those lists are intended to identify certain principal factors that could cause actual to differ material 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 Andres Ocampo, Chief Executive Officer, Veronica Davila, Chief Financial Officer, Augusto Zubiaga, Chief Technical Officer, Martin Tirado, Officer, and Steve Simel, Shareholder and Value Director. And now, turn the call over to Mr. Andres Ocampo. Mr. Ocampo, you may begin.

Good morning and thank you everyone for joining the call. We're connecting from Bogota, Colombia with our team to report on our business performance and second quarter results. This quarter can be characterized by a successful high momentum transition, our on the ground full cycle performance with record results and a lot of good work and drilling underway, opening even more opportunities for the rest of the year. we would like to thank the entire Geopark team for their discipline and success in delivering another record quarter by increasing production and cash flow, reducing emissions, as well as paying down debt and accelerating shareholder cash returns. In terms of operations and our base business performance, during the second quarter, we drilled nine wells and increased production to an average of almost 39,000 barrels a day, a 14% increase over the second quarter last year. we remain on track to achieve a recently upwardly revised full-year average production guidance of 38.5 to 40.5 thousand barrels a day. With higher oil prices and production, we were able to maintain our costs in line and increase our cash flow generation significantly. Our adjusted EBITDA jumped by 140% over the same quarter last year to $145 million, which after spending $32 million in CAPEX, allowed our cash flow generation to grow to $113 million. This means that every dollar that we invested delivered 4.5 times in adjusted EBITDA, another proof of the quality of our assets and team. Bottom line, our profits increased to $68 million, more than $1 per share. We have been allocating our cash flows following the same priorities as always. First, invest in our assets and fund our world program, and in the current oil price environment, prioritize and accelerate production. And second, always a combination of debt reduction and returning value to our shareholders. In the year to date, we invested more than $70 million in our assets to drill more than 20 wells. We paid down $103 million of debt, returned $25 million in cash to our shareholders, and ended the quarter with $122 million in cash. In the second half of the year, we're looking to accelerate the investments in our assets by doubling our capex relative to the first half of the year. We expect to also fully repay our 2024 bonds at current oil prices, and our dividends were just increased by 50%. We also will continue executing our accelerated share buyback program. We're also investing in our energy transition efforts, as we just completed the full connection of our main producing fields to the national power grid in Colombia. which is largely hydroelectric power. We're also completing the construction of our solar park, which means that soon our main fields will be consuming electricity that is 70% to 100% generated from renewable sources. This is a big step forward towards our emission reduction targets and has the additional benefit of producing both cost savings and improved operational reliability. On governance, We would like to welcome Brian Maxted and Carlos Machelari to our board, two proven oil finders with extensive experience in our industry and our region who represent a significant contribution to our majority independent board and our company. We also welcome to the board and thank Marcella Vaca for her more than 10 years of incredible contributions to our management team, as well as to our company. Marcela is one of the most experienced oil and gas professionals in Colombia today, and is a great addition as well. We had a great half of the year producing record results, and our team is excited about what is coming. Eleven rigs are currently working in our assets, and three more rigs are on the way. We're executing a multiple catalyst work program that includes, in CP05, further accelerating production with one to two more development wells in the Indigo field. We're also testing the Cante Flamenco exploration well during the upcoming weeks. And then there's a second rig that is currently moving to initiate the exploration campaign in the southeast area of the block. In the Llanos 34 block, a third rig is already in place to continue developing the main fields and continue adding production. In our Llanos exploration acreage, we will be spotting the first well in the Llanos 87 block, the first well since we added the block in the 2019 land graph. Finally, in Ecuador, we will be drilling the first well on our operated Espejo block and are discussing more development drilling with our partner in the Perico block. We look forward to reporting results on these activities in the upcoming quarters, and we thank you, and also now we'll be happy to answer any questions you may have. Thank you.

If you would like to ask a question, please press star followed by one on your telephone keypad. To remove your question, press star followed by two. Again, to ask a question, please press star one. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. Our first question comes from Alejandro Demichelis with Now Securities. Please go ahead.