GeoPark Limited

Good morning and welcome to Geoparks Limited conference call following the results announcement for the first quarter ended March 31st 2023. 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 star 2. If you do not have a copy of the press release it is available at the invest with us section of the company's corporate website at www.geopark.com A replay of today's call may be accessed through this webcast in the Invest With Us 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 report 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 the US dollars, unless otherwise noted, reserved figures corresponding to PRMS standards. On the call today from Geopark is Andreas Ocampo, Chief Executive Officer, Veronica de Villa, Chief Financial Officer, Augustas Zubilaga, Chief Technical Officer, Martin Torredo, Chief Operating Officer, and Stacey Stimel, Share Value Director. And now I'll turn the call over to Mr. Andreas Ocampo. Mr. Ocampo, you may begin.

Good morning and welcome everyone to our first quarter results call. We're joining with our team here in Bogota where we just celebrated our 10th anniversary in Colombia and our 20th year as a company. We're proud of our accomplishments so far. Today, we are the second largest operator in Colombia with about 8% of the country's oil production and are excited about the future in Colombia and in Latin America as well. During the first quarter, we suffered some temporary production shortages particularly in CP05 due to matters that are beyond our control. We lost approximately 2,400 barrels a day of production from Indigo 6 and Indigo 7 wells, and have been working on assisting the operator to get those two wells back online as soon as possible. As a result of these shortages, and as previously announced, with the operator's new expectation that these wells may not be back online before July, we had to revise our full year production guidance down to 38, a range of 38 to 40,000 bars a day. Despite these challenges, we were able to adapt quickly, streamline our capital allocation, and continue reducing our cost base to maintain our cash flow generation guidance, and following that, maintain our shareholder return program unchanged. During the first quarter, we invested 45 million to drill 12 wells all in Colombia, including wells in new exploration acreage in the Janus 87 block and the successful drilling of the first horizontal well in the Tigana field in our core Janus 34 block. This first horizontal well was a great success, executed within budget and within time, and now flowing about 3,000 barrels a day with barely no water. In less than two months, the well has accumulated 50% of the production needed to recover the investment, encouraging our team, to define multiple new drilling locations going forward. Next one is expected to start in June. The base business continues generating solid financial results with revenues topping about $182 million and an adjusted EBITDA of almost $115 million, a 63% EBITDA margin. Cost and capital efficiencies were a highlight of the quarter once again. And despite inflationary pressures, we were able to reduce our structured costs, G&A and G&G, by 6% compared to the first quarter last year. Every dollar invested generated $2.50 in adjusted EBITDA, which showed both the efficiency of our capital investments and the profitability of our assets. Over the past 12 months, we have generated a 62% return on capital employed. Bottom line, in the quarter, we generated $26 million of net profits, or 45 cents per share, during this quarter. Following our debt reduction of $275 million during the last two years, our interest payments in the quarter were down by 30% to $13.5 million. We ended the quarter with $145 million of cash in hand and a net leverage ratio of just 0.7 times. We continue to deliver on our increased program to return more value to shareholders. Share buybacks increased by 142% to $7.5 million, and cash dividends increased by 55% to $7.5 million, approximately a 5% dividend yield. On April 26th, Geopark published its 2022 Speed ESG report, from which I would highlight our 34% carbon intensity reduction, which is a big step towards meeting our near and mid-term goals, as well as the positive impact that we were able to have on 240,000 people that benefited from the company's social and environmental programs in 2022. Looking forward, we're executing the multi-year drilling program in our core and surrounding blocks in the Llanos Basin. For the remainder of 2023, We're targeting the drilling of six to eight exploration wells, including exploration prospects in the Janus 123, 124, and CPO5 blocks, in addition to continue developing our core asset base. We look forward to reporting results on these activities in the upcoming quarters. Thank you, and we will be happy to answer your questions.

Thank you. If you'd like to ask a question, please press star followed by one on your telephone keypad. If for any reason you'd like to withdraw your question, it is star followed by two. 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 the line of Stefan Burkhardt of Oxford Advisors. Your line is now open. Please go ahead.