GeoPark Limited

Good morning and welcome to the Geopark Limited conference call following the results announcement for the second quarter ended June 30th, 2023. After the speaker's remarks, there'll be a question and answer session. If you'd like to ask a question at this time, please press star followed by one on your telephone keypad. If you'd like to withdraw your question, press star two. 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 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 Reforms 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 US dollars unless otherwise noted. Results figures correspond to PRMS standards. On the call today from Geopark is Andres Ocampo, Chief Executive Officer, Veronica Davila, Chief Financial Officer, Augusto Zubalaga, Chief Technical Officer, Martin Tirado, Chief Operating Officer, and Stacey Stiemel, Shareholder Value Director. And now I'll turn the call over to Mr. Andres Acampo. Mr. Acampo, you may begin.

Good morning, everyone, and welcome to our second quarter results call. We're joining with our team here in Bogota, Colombia. We're advancing on a drilling program which is already delivering results. We drilled ten wells in the second quarter and have a busy schedule ahead of us, with ten rigs now in operation and two more coming this quarter. Our horizontal well drilling campaign in the Mirador Formation in the Janus 34 block is moving ahead full speed, with two wells already completed and on production and the third one already spotted and about 30 days from reaching TD. These are some of the highest capital return projects in our company. The first horizontal well has already been paid off in approximately three and a half months and continues producing over 2,000 barrels of oil per day. Our team is quickly taking advantage of the multiple wells campaign and applying new cost efficiencies to the next ones. The second well was drilled faster with 10% lower drilling costs and 32% longer lateral length. We expect to continue pushing these costs down to improve our payback and capital returns even more. Our exploration team has also delivered a new discovery in the Janos base in Acreage that had been acquired during the 2019 bid round. Saltabor I, our first well of the Janos 123 block, is producing approximately 880 barrels per day with 5% water. In Ecuador, the GENE2 development well in the Perico block has encountered a new phase zone in the USAND formation, in addition to confirming its development potential in the OGENE formation. Therefore, we expect to test this new zone before the end of this month. In the CPO5 block, where our production has been down on the back of two very productive wells being shut in, the operator has advanced and completed most of the works requested by the ANH, and anticipates that it will have the two wells back online before the end of the month. They also expect to spot the Alcon-1 exploration well in September, which could test the potential continuity of the Hakana plate into the CPO5 block. Following Alcon, the operator expects to drill another development well on the Indico field before the end of 2023. Geopark continues to invest in our decarbonization efforts, by installing a new photovoltaic solar power system in the OVA pipeline from our Platanillo block, which will help reduce our emissions and introduce efficiency gains by lowering energy and maintenance costs. We reinforced and extended our sustainability reporting with new submissions to the Carbon Disclosure Project, CDP, in both water and climate. These initiatives assess our ESG management performance and disclosures. Despite production being behind its full potential, Geopark continued to record strong financial results in the quarter with revenues of $182 million and adjusted EBITDA of 104 million, representing an adjusted EBITDA margin of 57% and profits of nearly 34 million or 59 cents per share. We invested $43 million during the quarter and generated $2.4 in adjusted EBITDA for each dollar invested, proof of Geopark's capital discipline and the quality of our assets. Additionally, the return on capital employed over the last 12 months reached 51%. Our financial expenses dropped by almost one-third to $11 million in the quarter following our debt reduction of $275 million during the last two years. After paying $88 million in cash taxes in the second quarter and returning almost $19 million to our shareholders through dividends and buybacks, we ended the period with more than $86 million in cash. Also, we completed a new $80 million unsecured committed credit facility for the next two years. Over the rest of this year, we will continue at full speed on our drilling program, adding more rigs and accelerating our activities. With 20 to 25 gross wells, we are targeting short-cycle exploration and development projects, including new horizontal wells in our core Janos 34 block, exploration drilling in the CP05 block, the continued development of the prolific Indico field, and more exploration drilling in our operated Janos acreage, as well as our oriented basin acreage. In our two eastern Janos blocks adjacent to CP05, we have started preliminary activities to acquire over 650 square kilometers of 3D seismic, one of the largest 3D seismic onshore campaigns in the history of Colombia, and will significantly expand our exploration portfolio and inventory. We look forward to reporting to you the results of these activities. And we will now take any questions you may have. Thank you.

As a reminder, if you'd like to register a question, please press star followed by 1 on your telephone keypad. We have a question from Alejandro Demichelis of Jefferies. Alejandro, the line is yours.