GeoPark Limited

Good morning and welcome to the Geopark Limited Conference Call. Following the results announcement for the third quarter ended September 30th 2022 and the 2023 Work Programme and Investment Guidelines. After the speaker's remarks there will be a question and answer session and 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 please press star 2. If you do not have a copy of the press release, it is available at the Invest with Us section on the company's corporate website at www.geo-park.com. A replay of today's call may be accessed through the webcast with the Invest with Us section on the 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 statements but are not intended to represent a company's list of the company's business all financial figures included herein were prepared in accordance with the ifrs and are stated in the us dollars unless otherwise noted reserve figures corresponded to prms standards On the call today from Geopark is Andreas Ocampo, Chief Executive Officer Veronica Davila, Chief Financial Officer Augusto Zubigila, Chief Technical Officer Martin Tirado, Chief Operating Officer and Stacey Stiemel, Shareholder Value and Director. And now I'll turn the call over to Mr. Andreas Ocampo. So Mr. Ocampo, you may begin.

Good morning and thank you everyone for joining the call. We're connecting with our management team from Bogota, Colombia to report on our third quarter financial results and provide guidance about our expected 2023 work program and plan. During the third quarter, we invested $43 million to drill 11 wells and increase our oil and gas production by 8% compared to the same quarter last year. with a continued main focus on developing our core Janos 34 block and strong production growth coming from CP05, probably one of the fastest growing and most economic projects in the region. When Geopark purchased CP05, the block was producing just 8,000 barrels a day, and today production just tripled to over 24,000 barrels a day with net bucks of approximately $50 per barrel. We continued accelerating our drilling activity with 13 rigs active across our assets, a new company record. This is about 62% higher than last year. Congratulations to the Geopark team, particularly those in the field, for developing another quarter of record results and maintaining such an intense level of activity while keeping our people safe, our emissions under control, and our operations as low cost and efficient as possible. Our production base generated strong cash flow from operations, over 140 million, which more than doubled the same quarter last year. We generated more than $3 per barrel in adjusted EBITDA for every dollar that we invested, an outstanding capital efficiency. Revenues were up 48%, adjusted EBITDA was up 63%, and we had record net profits of 73 million, which is $1.2 per share during the quarter. As we usually mentioned, following the funding of our investment program, we have allocated significant capital to our balance sheet strengthening and our shareholder value returns initiatives. During the third quarter, we fully redeemed our 2024 notes for 67 million, totaling a gross debt reduction of $170 million since January this year. Geopark ended the quarter with comfortable net leverage of 0.8 times well below our long-term target range of one to one and a half times adjusted EBITDA. Our cash position at the end of the quarter remained at about $93 million. We continued our base dividend program as well as our discretionary share buyback. Geopark paid 13 cents per share in dividends, which analyzed represents nearly a 4% dividend yield and has completed its share buyback for a total of $30 million in the last 12 months, which is over 3% of total shares purchased. And we have also announced that we will do more in 2023. Our teams are busy executing our ambitious and aggressive 2022 work program, which will continue full speed during the next year as well. We currently have six rigs in Janus 34, two rigs in CP05 during the IndyCo7 development well and which will be followed by further development and exploration wells. One rig in Janus 87 currently drilling the first wells there. One rig in Janus 94, one rig in Platanillo, and another one in Oriente Basin in Ecuador. As we announce this phase of activity, we'll continue non-stop over and into 2023 with our self-funded work program. We're planning to drill 50 to 55 wells with approximately 10 to 15 exploration and abrasal wells for a total CAPEX program of 200 to 220 million dollars with 35% of these CAPEX allocated to exploration. As anticipated previously, all of our environmental licenses for 2023 program have been obtained. As always, our work program is flexible and can be adjusted up or down based on drilling results and oil prices, and in this particular year, it will also be depending on final outcome of the tax reform in Colombia that is currently underway. We are estimating an annual average production between 39.5 to 41.5 hundred barrels per day, not including any production from exploration efforts, which would generate over half a billion dollars in adjusted EBITDA at 80 to 90 dollars per After fully funding our base and growth work program, we will continue strengthening our balance sheet as well as returning value to our shareholders. We announced yesterday our intention to deliver approximately 40 to 50% of our free cash flow after taxes back to shareholders through a combination of our base dividends, share buybacks, and all variable or extraordinary dividends. We continue to make progress towards our aggressive emission reduction plan to reduce scope one and two greenhouse gas emissions intensity by 35 to 40% in 2025 or sooner. We expect to have our solar park fully operational before the end of this quarter, which complements the connection to the national electric grid that was fully completed in July. Additional investments were included in our 2023 work program to connect more geopark operated blocks to the national grid improving the reliability of our source of energy, and helping us reduce further our emissions and environmental footprint. We look forward to reporting the results of these activities in the upcoming quarters, and we thank you for your participation. We also please invite you to come down and visit us in our operations, and now also to visit our new and updated website, which was launched in October this year. And now we would be happy to answer any questions. Thank you.

Thank you. If you would like to ask a question, please press Start, then 1 on your telephone keypad now. We have our first question from Daniel Garriera of BTG. Please go ahead when you're ready.