GeoPark Limited

Good morning and welcome to the Geopark Limited conference call following the results announcement for the second quarter ending June 30th 2024. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question at this time, please press star 1 on your telephone keypad. If you'd 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 on the company's corporate website at www.geopark.com. A replay of today's call may be accessed through this website in the Invest With Us section of the Geopark corporate website. Before we continue, please note certain statements contained in the results press release and on the 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 forward-looking statements that are not intended to represent a complete list of the company's business. All financial figures, including hearings, were prepared in accordance with the IFRS and are stated in US dollars unless otherwise noted. Reserved figures correspond to PRMS standards. On the call today from Geopark is Andreas Ocampo, Chief Executive Officer, Jaime Caballero, Chief Financial Officer, Augustus Zubiala, Chief Technical Officer, Martin Tirado, Chief Operating Officer, Rodrigo Della Fiori, New Development and Portfolio Director, Stacey Steinmull, Shareholder Value Director and Maria Catalina Escobar, Shareholder Value and Capital Markets Director. And now I'll turn the call over to Mr. Andreas Ocampo. Mr. Ocampo, you may begin.

Good morning and thank you for joining our second quarter conference call. We're pleased to report on our continued progress and results. In the second quarter, Geopark demonstrated strong financial performance despite some operational challenges. Our revenue increased by 14% compared to the first quarter to 190 million on the back of higher oil prices. Adjusted EBITDA increased 15% to 128 million, resulting in an EBITDA margin of 67%. Net profit was 25.7 million, equivalent to 50 cents per share, mainly affected by non-cost charges related to the impact of the devaluation of the Colombian peso over deferred income taxes. During the second quarter, Geopark invested around $49 million in capital expenditures and generated almost three times that amount in adjusted EBITDA within the same quarter, again showing our team's capital discipline and efficiency of our investments. The return on average capital employed in the last 12 months was 38%. Geopark's strong net free cash flow generation continues, having finished the quarter with a cash position of $66 million after repurchasing $43.7 million worth of shares through a Dutch auction in May, paying $52 million in taxes and making a down payment of $49 million for the Vaca Muerta assets and having paid $7.5 million in dividends for the quarter. Geopark continues to further enhance its financial flexibility and balance sheet through two strategic oil prepayment agreements, one effective in the second quarter and the other one nearing finalization, providing additional liquidity available at any time. We continue growing shareholder returns with the Board approving a dividend of $7.5 million payable on September 12th. which combined with the Dutch auction results, Geopark will have returned over $66 million to shareholders, equivalent to $1.29 per share, by the end of the third quarter, already exceeding the total amount returned in all of 2023. As we look ahead to the second half of 2024, we're looking forward to continue our drilling, workover, and water-flooding campaign in our core Janus 34 block, as well as the potential new abrasion opportunities coming from our recent exploration discoveries in the other Llanos Basin blocks, namely the Toritos, Saltador, Vivita and Sorzal fields, which are currently producing approximately 3,600 barrels a day gross, and we expect to drill three to five new wells before the end of the year. In addition, we have already started initial activities and civil works in the Putumayo 8 block, getting ready to drill our first exploration well before year end, the Machaca 1 prospect. New abrasion and exploration drilling activities in our core CP05 block will continue, and our team is already mapping new prospectivity coming from recent 3D seismic in the Janus 86 and Janus 104 blocks, as well as in the CP05 block for next year's exploration campaign. It is important to mention that Geopark's consolidated production is currently 5,000 to 5,500 barrels a day higher than reported, following our recent acquisition in Vaca Muerta, effective since July 1st, and we're on target to close by the end of the third quarter. The Matamora Norte block produced an average of 12,500 barrels a day gross in the second quarter, and the operator is continuing development drilling there. Production from this block would boost average 2024 production levels to well within our stated guidance. Path number four in Matamoranorte, which was drilling at the time we announced the transaction, has been put on production and is already producing more than 5,000 barrels a day gross, with a 45% water cut, which means that these wells continue to clean up with less water and higher production until they reach the initial peak in the incoming weeks. Results so far are quite encouraging. The drilling rig is on the Confluencia Norte block, finishing the first exploration path that includes three wells. Drilling activities are almost complete, and a completion set is scheduled for October. We look forward to testing production from these first exploration activities before the year ends. The drilling rig will immediately move back to Matarmoramor Norte block to continue drilling development wells and increase production. Geopark is well positioned to continue its success in 2024 and beyond. Our strategic growth initiatives, disciplined financial management, and focus on sustainability will continue to be key drivers of our performance. Thank you for your continued support and confidence in our company. We are now ready to take any questions you may have.

Thank you. If you'd like to register a question, please press star followed by 1 on your telephone keypad, ensuring your line is unmuted locally. If you wish to withdraw your question at any time, you can do so by pressing star followed by 2. The first question comes from the line of Daniel Guardiola of BTG. Your line is now open. Please go ahead.