GeoPark Limited

Good morning and welcome to the GeoPark Limited Conference Call following the results announcement for the first quarter ended March 31st, 2025. After the speakers remarks, there will be a question and answer session. If you would like to ask a question at this time, press star one on your telephone keypad. If you would 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 -park.com. A replay of today's conference 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 adopted by the Private Securities Litigation Reform 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 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 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 as stated in US dollars and as otherwise noted. Reserved figures correspond to PRMS standards. On the call today from the GeoPark is Andrés Ocampo, Chief Executive Officer, Chief Cavalero, Chief Financial Officer, Martin Tirado, Chief Operating Officer, Rodrigo D'Alefio, Chief Exploration and Development Officer and Maria Catalina Escobar, Shareholder Value and Capital Markets Director. And now I'll turn the call over to Mr. Andrés Ocampo. Mr. Ocampo, you may begin.

Good morning everyone and thank you for joining us to review our first quarter 2025 results. Our performance highlights the strength and resilience of the company we've built together, disciplined in operations, focused in strategy and financially robust. Despite persistent market volatility and breadth fluctuations, we delivered solid results while preserving flexibility to pursue value-accretive opportunities. Reforma consolidated production averaged 36,000 barrels a day, exceeding our base-case guidance of 35,000 barrels a day. The strong delivery was driven by stable output across our core assets in Colombia and Ecuador and another record-breaking quarter from the new Argentina assets. These acquired Bacchymorta blocks continue to demonstrate their transformative potential within our portfolio, with gross production reaching a record high of over 17,000 barrels a day in February. In the Matamoranorte block, our partner Phoenix completed pad 9, drilled pad number 12, and began the construction of new central processing facilities targeting 40,000 barrels a day gross capacity by mid-2026. Drilling also began on the second exploration pad in the Confluencia Sur block following last year's pivotal Rio Negro discovery. First quarter financial results do not yet consolidate production, revenue or costs from these assets, pending the completion of regulatory approvals by provincial authorities. We continue to work diligently to advance the approval process. We acknowledge that the delay in obtaining this approval has created material uncertainty around the timing and successful completion of this transaction. The agreement includes an outside date of May 13, 2025, marking one year since signing a standard milestone in transactions of this kind. After that date, either party has the right, under the terms of the agreement, to withdraw from the transaction. Unless a termination notice is given, the agreement remains fully in place and continues without change. Within this framework, the parties may also explore potential strategic alternatives, taking into account the information and context available at such time. We remain committed to pursuing a positive outcome while we continue focused on protecting value and maintaining flexibility for GeoPART. Regarding exploration in Colombia, the Currucu II-1 wells encounter approximately 70 feet of net pay in the barco formation and tested production of around 1300 bars a day gross and boosted block output to nearly 5000 bars a day, a new record. Financially, we delivered a just dividend of 88 million, up 13% from the previous quarter, with operating costs decreasing to $12.3 per barrel in line with our full year guidance. Net income reached $13 million despite one-time costs related to the debt refinancing, which extended our average debt maturity to almost five years. We invested $23 million in our core assets and an additional $24 million pro forma in Vaca Muerta, supporting development, infrastructure and our exploration campaign. We closed the quarter with over $308 million in cash and net leverage ratio of 0.9 times, preserving our financial flexibility and balance sheet strength. Our proactive hedging program remains highly effective, covering approximately 70% of our 2025 production, with floors of $68 to $70 per barrel. We continued our decisive cost reductions and efficiency drivers during the quarter. In January 34, our new next-generation rig has already reduced cycle times by 20%, generating meaningful cost savings. Our drilling team has recently set a new record in the block, reaching a total depth of 11,000 feet in just 6.1 days on the Tiggy 53 well. This represents more than a 25% reduction on the cost of the well. Even more impressively, the team has already taken on the challenge of breaking its own record again with the next well, Tiggy 56, aiming to reach TD in just under six days. This relentless focus on operational excellence embodies who we are as an operator and represents one of the most effective ways to enhance returns while expanding our ability to reinvest in growth. We also took decisive steps to streamline our portfolio by divesting our interest in the Genre 32 block and the Manatee gas field, aligned with our strategy to focus on high-impact material assets. Our efficiency program is on track, having already captured 90% of the targeted $5 to $7 million in annual savings. Reflecting our strong financial position and consistent cash generation, we declared a quarterly dividend of $0.15 per share, reinforcing our ongoing commitment to shareholder returns, targeting an annualized $30 million dividend or approximately 9% dividend yield. Looking ahead, we're fully committed to executing our 2025 work program with seven wells in Colombia and four in Argentina during the second quarter. Our vision remains clear, build a more valuable and sustainable geopark focused on big assets in big basins with the right partners and the right strategy. Finally, as I prepare to hand over the leadership of Geopark to Felipe Bayon, I do so with deep pride and immense gratitude. Helping to build Geopark over these past 15 years has been the most rewarding chapter of my professional life. I've had the privilege of working alongside an exceptional group of women and men whose passion, integrity, and resilience have made everything possible. Together, we turn bold ambitions into real achievements, always guided by our core values, our responsibility to stakeholders, and our unwavering commitment to putting Geopark first. Our culture and our shared belief in doing things the right way have been the foundation of our success. I am deeply proud of what we have built and equally excited for all that lies ahead. I will continue to support Geopark, its board and its team as a long-term shareholder and as a friend. Thank you for your trust, your partnership, and for walking this journey together. We will now take any questions you may have. Thank you.

If you would like to ask a question on today's call, please press star followed by one or your telephone keypad to enter the queue. And our first question today comes from Alejandro Demichelis from Jefferies. Alejandro, your line is open. Please go ahead.

Yes, good morning guys. Thank you very much for taking my questions. First, Andres, best of luck in your new endeavors. It has been really a privilege to have you as a CEO. It has not always been plain sailing, but you have done very well with the challenges. The first question, Andres, is how you see the situation about CAP-ED, production growth in the current kind of oil price environment. Obviously, you have not touched part of your production, but looking at the medium term, that is the first question. And then the second question is, you touched on the process of closing the deal in Argentina. Maybe you can give us some more color on how these catches are going with both your partner and also with the province.

Hey, good morning, Alejandro. Thank you for your comments and also your questions. If you want, I will start with your second question and then I will leave Jaime to address the production of CAPEX outlook and oil prices. So as I said in the introduction, the results for the first quarter do not include performance production revenues or costs related to this transaction because it is still pending the approval. These assets were effectively acquired on July 1st, 2024. As of today, the transaction has not been closed and remains subject to the completion of these approvals. We as a company remain focused on closing the transaction and continue working diligently to advance the approval process. I personally have also agreed with the board that as part of the CEO transition, I will continue supporting personally this process as long as required. I think it was you that mentioned in your report, no one finished business. So that's my commitment to the company on top of others. The agreement that we have with our partner includes an outside date, as we mentioned before, which is on May 13th this year. That marks one year since signing and it's basically standard milestone in transactions of this kind. After that date, either party has the right under the terms of the agreement to withdraw from the transaction. So unless a termination notice is given, the agreement remains fully in place and continues without any change. Within this framework, the parties may also explore potential strategic alternatives, taking into account the information and the context at the level at such time. GeoParks made a decision to enter Vaca Muerta following a long-term strategic growth plan of expanding our footprint in big basins and in big plays, which Vaca Muerta is obviously one of them. So as part of that decision, we've made already significant investments, we're committed to do and to make more investments in the future. We believe that our long-term relationship and partnership with Argentina, in particular with the provinces of Neuquén and Río Negro, will continue to bring significant economic and social benefits to the country, the provinces and their communities. I think this is a good opportunity for me also to add some comments about several social media comments, declarations or statements regarding our process and regarding these transactions regulatory approval. GeoParks, we are not associated with or we do not endorse in any way any comments or any publications on social media or any other media that could be interpreted as conflicting with the authorities of the jurisdictions in which we invest. None of those comments reflect in any possible way our way, GeoParks' way of conducting business and our long-term approach with respect to partnering with our authorities and communities. We have already issued a public statement about this and we have taken additional actions to separate ourselves and GeoParks from these unfounded allegations. I think it is important for us to reiterate with respect to government institutions, to the regulatory processes, the timings. For over 22 years, GeoParks has operated internationally throughout the entire region, in Latin America, in a number of different countries. You follow us in Argentina, Colombia, Brazil, Chile, Ecuador, Peru. We have a track record of transparency, commitment and mutual benefit. Our business model is based on constructive, collaborative, long-term relationships with partners, authorities, and local communities always following the model of creating value. I know this was a long answer, but I think it is important for us to make very clear that we remain focused on closing the transaction and we will continue working very diligently to advance the approval process.

That's

great, thank you. I'm

going to

take your question around the outlook. Good morning. I think on outlook, I would basically tell you that our outlook remains unchanged when we think from a work program standpoint. The basis for that is that we created a plan for 2025 that was built around a capital allocation criteria of everything being economic, value-accreted, and cash-positive at $60 a barrel. That was the principles of the plan. With that, it actually means that our capital deployment is designed, by design, to work at the current price environment that we're seeing. Further to that, as you rightly mentioned, we hedge actively and 70% or so of our volumes for this year are hedged. We are well covered. Our average rent realizations are currently a 99-type rent price. For that 70%, that's hedged. There's a 30% that is not hedged that is at spot market prices, more or less. When you look at the average, it actually puts us in a very comfortable position. Further, it's important to note that our entry point into this price decline is a very solid set of results that we delivered. Strong EBITDA, a leaner cost structure, very strong cash position. We have more than $300 million of cash in the bank. Where I'm going at this is that we don't see any reason whatsoever to change our capital allocation for this year in this price environment. We remain committed to the program that we announced earlier this year. That's what we intend to execute.

That's very clear. Thank you, Jaime. Thank you, Andres.

Thank you, Alejandro.

The next question comes from Daniel Gardiola from BTIG. Daniel, your line is open. Please go ahead.

Thank you. Thank you, Andres and Jaime. First of all, I wanted to wish you, Andres, all the best in your future endeavors. It was truly a pleasure to get to meet you and to know you and to do all the insightful meetings we did in the past. Really, I truly appreciate that. Going to the questions, I just wanted to do a follow-up on Argentina. I just wanted to confirm what Gilles mentioned on the contract with Phoenix. I just wanted to confirm that if on May 13, each party decides to walk away, if they can do it freely without penalties. And if that's the case, if you believe that scenario is a realistic scenario that could happen in the next days. So that's my first question. The second one is, I don't know if you can share with us what are the requirements that are preventing this transaction from getting closed. And just a third one, if I may, it would be great if you can share with us, if you are considering. I know you are very well-hatched for the next nine to 12 months, but it would be great to know if you're considering right now to take some measures to further streamline the company in terms of OPEC and CAPEX to better weather the current uncertain storm that we're going through. So those are my questions, guys. Thank you.

Good morning, Daniel. Thank you for your comments. And likewise, it has been a great run. And I appreciate all the multiple meetings and trips together. It was certainly really fun and great for me. I will start again, I'll just try to address your points on Argentina. I think I've said a lot and I've covered most of it in my previous response. But specifically, you're asking about if there's anything specific, any requirements. I, we've complied with all the requisites and we've presented all the requirements. And at this stage, there's no specific requirement that is impeding us to close the transaction. So, and whether, your second point about what happens on the outside date, as I said, each party has the right to withdraw from the contract. And yes, that's under, with no penalty. And the reality is I cannot comment on whether each party, what each party is going to do with whatever rights they acquired at any point at this stage. That is the factual reality of the contract today. And I don't know if I missed anything else with respect to Argentina. Otherwise, I leave it to Jaime.

Daniel, on your question around a, you know, weathering the volatility. I think the key elements, I already described them in the previous answer. I think obviously, not ignore a market context. We are in a very solid position to face this market context. But what I can tell you at this stage is that the sort of things that we're looking into, given the market context, is probably three things, I'd say, in terms of what's changed. I think we are in an ongoing conversation about capital allocation priorities. We are always in that conversation. And it's to anticipate stuff, right? And in the context of that conversation, what we're seeing is that our willingness and ability to deploy capital is unchanged. It's unchanged. So, for instance, in organic agenda, we're actually seeing the current price environment actually as an opportunity. We have an important cash position right now. It gives us flexibility. It gives us flexibility. And it allows us to react to different outcomes that we might find along the way, given the uncertainties that we have. For instance, Andres has spoken about the uncertainty around Vaca Muerta. And we believe that having the cash position that we have right now actually puts us in a good position to face that uncertainty. So that's one thing that I would say in terms of how we're thinking about weathering the current environment. The other thing that I would say is that we have covered some important cost efficiencies in the first quarter relative to the fourth quarter. I would say that we have already started to change our trajectory in terms of cost. And the way that we're thinking about it is a broader conversation about total cash cost that has four elements to it. There is an element around OPEC. There is an element that Martin, I'm actually going to ask Martin to talk about in a moment. There is an element around structure or GNA. And you saw our announcements that we did with a few weeks ago, interventions that we did in that area. There is an element around tax efficiency. You probably saw that relative to 4Q, we're starting to see a lower tax effective rate. And that's something that we're tackling too going into the future to see if there's more opportunities. And of course, there is a last component around cost, which is related to the midstream and transportation costs. So where I'm trying to go here is we are looking at all of them. We are working. I can't say at this time that we have changed our guidance or targets around any of this because we believe that our plan remains solid and we don't need to. But we're actively looking at all of these to see if there's more opportunities that can be captured. That's where we are, Daniel.

Perfect. Thank you very much to both of you for your thorough answers.

Our next question comes from Joaquin Robay from Balanz Capital. Joaquin, your line is now open.

Great. Thank you. Can you hear me guys?

Yes. Great. Hi Joaquin.

Thank you, Fordspace. So my first question is, you have secured a solid hedge position for 2025, providing some protection against current overpriced volatility. Are you planning on using that approach for 2006? If so, at what price levels would you feel comfortable locking in hedges and how much of your production are you looking to hedge?

Hi Joaquin. Good morning. Yes, so to your question on hedging, so we have a long-standing policy around hedging. I would say that hedging is an integral part of our financial framework and we don't see any reason to change it. As a matter of fact, what we're seeing right now is the value of the hedges and the benefit that it brings to the company and the strategic flexibility that it brings to the company. So we don't intend to change that as a general rule. And the way that I would frame it is that we want sufficient hedging coverage to ensure that our capital programs remain unchanged in the midst of market volatility. That's what we aim for. That's how we're thinking about it and that's how we are monitoring a 2020-26. It's still early days to give you a number, a specific number around that because there are some market realities that we need to navigate. Right now, if you try and obtain hedges for the sort of prices that you're going to get are prices that are heavily impacted by the existing uncertainty that we're seeing right now. So it's a bit of a timing thing. So our view and see how market conditions develop, which is what we've done historically. This is no different to what we've done in the past, which is we monitor the market actively and then we make decisions around what are the floors and what are the teams acceptable and competitive for ensuring a consistent delivery of our plan. So too early to give you a number on what price frame we're going to hedge 20-26. What I can say at this time is that we do intend to hedge. We are monitoring that and as market conditions evolve, if we see good opportunities to capture a price continuity of our programs, we will execute on that.

Great. Thank you for your answer. My second question would be, we noted that net leverage increased to 0.9 times following the 2030 decisions. What level of leverage do you consider comfortable and what is your target cash position for the year?

So on the leverage side, I'd say that we are in the way too comfortable box right now. It's a very low ratio, 0.9. I do take in your comment that you see that it's growing, but it's actually quite marginal. I think our general guidance is that we intend to maintain a leverage ratio over the long term of around 1.5, so we're well below that. That view of 1.5 being a long term gravitational pull is unchanged. We believe that that still makes sense for the company. Of course, we always monitor changing market conditions. If market conditions change dramatically, dramatically to the point of stress testing our financial framework, we might take a second look at that. But as you can see, the assets that we have, their low break evens, the cash position that we have, the nature of our debt profile, which is pushed into the long term, the healthy cash contribution that our assets are making, and the environment. All those elements put us in a position where we're sailing comfortably the current environment. Thanks, Joaquin.

Thank you very much.

The next question comes from Christian Ferrer from KNG Securities. Christian, your line is open. Please go ahead.

Hey, everyone. Good afternoon. I have two questions. First one is if you could please share any updates or revisions to the guidance for the Colombian operations. In that regard, we would appreciate your view on the Brent price assumptions and the franchisees.

Thanks. Hi, Christian. Let me recap your question. It's the and the outlook on Brent,

right?

Brent and the franchisees.

Brent and the franchisees. Great. Yes. Guidance for the Colombian operations plus Brent including the franchisees.

Okay,

great. So

let me give you some general comments on both aspects and then perhaps Martin can give us a little bit more color around specifics in the Colombian operations. The big frame for our guidance is what we said when we launched 2025. It was we were aiming for a performance production of 35,000 barrels a day, right? That was our guidance from a production standpoint. A capex expenditures of between 275 and 310 million, lifting costs in the 12 to 14 bucks per barrel and adjusted EBITDA in the 70 to 80 type price range of between 340 to 420. So those are, if you will, the goalposts. What has changed since then? I'd say basically that there's two things that I would say do not change the guidance but need to be incorporated in understanding the outlook what you're actually going to see in our consolidated results, right? Because that was a performance guidance. So the first component is, right? And as you know, we announced a couple of investments in the first quarter that have an impact on production. They make a lot of sense from a portfolio standpoint and from a cash standpoint and from a capital allocation standpoint and the like. But from a volumetric standpoint, they do have an impact and it's an impact of a thousand barrels a day on an annual basis. So that 35,000 barrel guidance becomes 34 when you make that adjustment, right? So that's the first point of note. The second point of note is the timing of the Vaca Muerta closing because we cannot consolidate results until the closing occurs, right? So as Andres explained previously, from an economic standpoint, there is no change because this transaction has been effective since last year. So economically, there is no change on this, but from a financial consolidation standpoint, the number that you're going to see posted is subject to the timing of when the transaction closes. So right now, if we close the transaction, but if we close Vaca Muerta in May, what we would be looking at is would be a consolidated number for production that would be around 32,000 barrels a day, right? That's what we would be consolidating on an annual basis. And this is in line with that performance number. So formal guidance is unchanged, consolidated numbers. This is what you can expect. And last but not least, to your point of Colombia on a standalone basis, what we're seeing for Colombia, and again, I'm giving you the umbrella numbers here, what we're seeing for this business Vaca Muerta is a production number that is in the 26,000 to 27,000 barrels a day on an annual basis. Those are the headline numbers. We don't see important changes in CAPEX. We don't see important changes in every dollar in lifting costs. What we expect is to fall within that guidance firmly. So over to Martin.

Yeah. So hello, Christian. I'll go a little bit on the key assets that we have. When we look at Shannos 34, as we mentioned in the past, Shannos 34 is a more mature field. And with our activity, we are expecting decline rates in the quarter of 15 to 18%. The first quarter of the year was well within that guideline. So we feel in Shannos 34 that we will be delivering the plan that we have. We have a couple of updates in Shannos 34. Like Andres mentioned, we were expecting the drilling activity to start in January. And it took us a little bit longer to socialize the incorporation of the rig. But the results have been doing very well, actually slightly better than what we expected. So about a year and a half ago, we said the strategy that we needed, this is a mature asset, we need to do things different. So we brought a rig that is the newest generation rigs that are available. We set a target to drill and complete the wells at 25% less. So that's basically for the wells from 4.1 to go to around $3 million. We have four wells that we drilled. And we have the first one that we drilled and complete. And it was done at 2.75. So we feel good about how that fresh production is coming. The results from the wells is producing around 450 barrels of oil per day. And in our plan, we had less than that. So again, this is a program. It's a six-well program. So far, the results are doing very well. We're drilling the wells safely. And the last one that we finished reaching the bottom depth, the total depth, we're about to check. But we believe it's a record for Chano's basing at 4.5 days, getting to 11,000 feet. So when we think about fresh production, from that perspective, we are on plan. When we think about a component of the fresh production, which is workovers, year to date, we have done several workovers, which is part of our arresting the decline and bringing some fresh production from other zones. And it's on track. So when we think about that asset, we feel that it's going to deliver what we have in the plan. When we look at the next asset, CP05, our program was basically to replace natural flowing wells for pumps as the water was increasing. And we have done that very successfully, three wells. We did workovers. We have done various workovers. We have done the same action. So CP05 is delivering according to the plan. Again, this is an asset that we expect water to be reaching. But it's delivering as we expected. And then when we look at, like Andrés mentioned in his statement remarks, in what we call channel exploration, which is basically channel 123 block, on that block, we were really close to 5,000 barrels per day. Record levels, we recently drilled an exploration well, -2-1, that started producing in the order of 1,300 barrels per day. So as production comes in those assets, we feel that, again, to give you a flavor of that, we are within our guideline. And as you saw in the first quarter, actually higher. And when we look at Argentina, I'll just reiterate the message from Andrés. We had record levels in February, higher than 17,000 barrels per day. We are right now drilling in the Confluencia South Path four wells. So from production, and that's kind of high level where we are. At the same time, we're working really diligent and focused on our optics. Late last year, we had a third party review with a well-known consulting company. And we're working on some additional things. But as you saw, from the low part of the office at 12.3, when we set cost to 14. So on that front as well, we are working really strong on the well. More activity, and we're working on how we can reduce more and optimize

our

objects without jeopardizing safety. I'll give you a flavor of a couple of things. We're looking at detail on how we can optimize maintenance cost partner. We're also looking at how we can optimize additional pooling and artificial lid. And for those of you that live in Colombia, you'll see that it's great in a lot. And that is good for the country because the hydroelectric starts to have political waters. So our energy costs are helping us. And that's another component of our optics being at the level that we are.

Time here

again. I recognize that I didn't address your point around rent. So I'm going to do that really quickly. So basically, our rent outlook, let me give you three numbers. The first number is our plan. So our plan was done at $68 a barrel. Obviously, as I said before, we do sensitivities at $60. And we do capital allocation at $60. So this sort of price environment is by no means a surprise to our outlook. We need our internal view is that pool year prices are going to gravitate towards that $68 rent.

Apologies, Jaime. Apologies for the interjection. We do need to swap to a backup line.

Hello,

can you hear me now? Right. Is that okay? Yes. Back on. Yes, you're back live and sounding good. Do continue when you're ready.

Okay. Yeah. Great. Fantastic. So on Brent, I was saying three numbers. One, our plan has been developed at $68 and capital allocation has been done at $60. So no fundamental changes from that standpoint. Two, our outlook, our internal outlook around pool year prices for 2025 is that they're going to be in the $66 to $68 range. This is by no means precise, but directionally what it suggests is that the prices that we saw in one queue, which were higher, prices, price realizations were in the $72 to $73 type range for that quarter. It will compensate some of the softer prices that we're going to see over the next three quarters. Again, remember here that we are a hedge and the effect of that on us is very limited. And last but not least, differential. So the Lasconia differential is actually offsetting part of this fall in Brent prices. What we have been seeing is an important compression in the Lasconia differential. Historically, we've seen that differential in the five to six range. It's currently in the $2.5 a barrel type spot price right now. So it's become very competitive and it's offsetting part of the declines that we're seeing in the headline Brent price. Hope that helps, Christian. Thank you.

Perfect. Thank you very much. Just to recap a couple of numbers. So excluding Argentina, you would expect around 30, 32,000 barrels per day, roughly for the year. And that's consistent with an EVDA, assuming some OPEX normalization between let's say 330 or maybe 360 million for the year. Would you be comfortable with that figure?

I didn't pick up the $3.30, $3.60 point. What I can tell you is that a consolidated production closing, if we close the Vaca Muerta transaction in May is of 32, 33,000 barrels a day. That is true. That would be the consolidated number that we would be posting on a full year basis. The $3.30 number

I'm not

sure

where you're

coming out from. Okay. Okay. That would be including Vaca Muerta, you're saying?

Yes. Yes. Okay. Okay. Perfect. And my second question is if the acquisition in Argentina is not approved, how are you thinking about potential cash uses considering the strong position that you have at the moment? And minor additional question is if you could clarify this deadline date that you have, so you said it's May 13th, that would be next week. And starting that date, either party can leave the contract. That's correct. Thank you.

Okay. So a couple of things. Let me take first your first point around how we would think about capital allocation in a scenario of not closing, right, Vaca Muerta. So right now, a couple of things to note, right? The first thing is upon closing the transaction, which continues to be what we are actively working on, which is closing the transaction, what we see is a capital disbursement, which is in the area of $230 to $240 million. That's a combination of $152 or $55 million or so of the original acquisition cost and a balance of around $80 to $90 million of the interim period. The interim period is what has occurred, the activities that have occurred between July 1st of last year and the actual closing, right? So that's the money that's going out the door if we close Vaca Muerta right now to $30 to $40 million, right? That's the first consideration. If we do not close and the transaction doesn't close for any reason, we don't have to allocate that money, basically, right? And the way that we're thinking about it is probably a three-tier structure, which is consistent with our strategy, which is one, we will continue to pursue growth opportunities for the company. We have a pipeline associated to that that we can have continued to work on. And we would prioritize that. The intent is to bring reserves and production to the company consistent with the long-term aspiration that we have. So that would be the first capital allocation priority. The second capital allocation priority is, I would say, would be around optionality, strategic optionality and things that we could consider around perhaps looking at our debt and reviewing those debt levels, although we are comfortable with the existing debt levels, we could review them if the market conditions are appropriate for that. So that's optionality, right? Buybacks also are optionality that we would be considering. So that's there. But if I have to tell you a firm view, I would say two things. First, ensuring continuity of our organic plan. Two, ensuring that we have the to pursue the inorganic pipeline that we have been actively working on. Again, these are options. We remain focused on closing that transaction, and we continue to work diligently to advance that approval process. So with regards to your question on the outside date, Andrés already made a long statement around that, which I don't think we need to repeat.

Thank

you.

Thanks. The next question comes from Isabella Panissio from Bank of America. Isabella, your line is open. Please go ahead.

Hi, thank you for taking my question. First of all, I would like to congratulate Andrés on your trajectory and the impact you've had on your part in these past years. And I think that most of my questions have been already answered. I just had one specific question around a prediction in Colombia. So I know that Yano 34 is facing natural declines, but I would like to know if there were any other operational disruptions that led to lower production levels. And if possible, could you please break down production by key assets and explain where the shortfall came from? Thank you.

Hi, Isabella. This is Martin. So again, I'll go back to a high level and then we can go into the details, but overall in the first quarter, we had no surprises. Our guideline was exceeded, and if we just focus on the Colombia assets, and basically we're delivering according to our plan. And yes, every now and then there are some one offs, but so for example, we had around 12 days of blockages in CPO5, but that was within our guidelines, something that we learned from last year. So when we did our downtime estimations for 2025, we put a range and those days are within the range that we put. So I'll stay in CPO5 and then I'll go to the other assets. In CPO5, we are delivering according to the plan and actually exceeding. The exceeding is basically because like I mentioned before, the plan for the first part of the year was to do workovers on wells, which by natural flow, they were getting to low production levels. So we put a pump and that's something that is normal in the maturity of the reservoir and it was successful. So we got incremental production from that. So CPO5 is delivering according to the plan. I will go now to channel 34. In channel 34, we've been delivering at the order of 94 to 95% production efficiency. So what that means is that it's within the plan that we had. So the only thing that did not deliver exactly according to the plan was the infield drilling campaign, which in our program, we had it starting in January and it took us a little bit longer to socialize. But again, like I mentioned before, we got this rig running in the month of March. It's a latest generation rig. Like Andres mentioned, we had a target and we're aiming for 25% reduction in completion and drilling cost. These wells with previous rigs and previous procedures were costing us $4.1 million. We're targeting three and the first well ended up being at 2.75. So we feel good about that. It's a campaign, so we need to look at the whole campaign results. The well is delivering 450 barrels of oil per day and that's higher than expected. So when you look at channel 34, it's the normal decline and we had that offsetting of when the rig came in. And then finally, when you look at channel exploration, which is basically the block channel 123, we are on track on our production guideline for that particular block, working really well with our non-operating partner, looking at how Kuru Kutu well delivers. So from that perspective, maybe what you saw, there's a little bit of down production in channels because of the divestment of channels 32. That happened in the middle of March and that was producing around 1,000 barrels of oil per day net to Geopark. And finally, when we move outside of the channels basing, Platanisio is an asset that we shot in due to the high OPEC. So we're working to see with our supply chain group if we can do some additional ideas on how to reopen that asset at lower OPEC so that we can make money. I hope that answers the question, Isabella.

Thank you very much.

Thank you for your comments, Isabella. Andres here. Thanks very much. Appreciate it.

We have some questions from the webcast. Vincent Falando from Bradesco asks, how much more cost efficiency can the company achieve?

Vincent, we share a lot of color, I think, around how we're approaching costs. I guess what I could add, the further color that I could add on this is that it's around flexibility. And I cannot give you a number on technical limits, but what we've done is we look at our peer group, we look at our operating environments both in Colombia and in Argentina, and we're regularly monitoring and testing ourselves to ensure that in those peer comparisons, we show up well. That's one of our key approaches towards that. A second approach that we've had is we actually bring outsiders to look under the hood and kick the tires. We did such exercise with BCG late last year, and he gave us this. On one hand, he told us that we have an extremely efficient operation, but at the same time, it illuminated a few medium and long-term opportunities that we're looking into. And probably Martin can give us a little bit of color around that. We also look at the cost chain from an integrated standpoint. So we don't just focus on one specific point of a cost, but the totality of how we approach developments. For instance, when we look at Argentina, it's not just about the lifting costs, which are extremely competitive in the five to six type dollar range per barrel, but we actually look at the development decisions that we're making with Phoenix to ensure that over the long run, that remains efficient. I know I'm not giving you specific numbers because we don't have it. I think it's more of an approach, and our approach is we want to be as competitive as we can possibly be, obviously ensuring safety, integrity, and the reliability of our operation. Within those constraints, we look to be as best as we can, and those are the things that we're working on.

Vincent, I'll just add to Jaime's that, again, reiterate that we're in the low side of our range on the 12 to 14 dollars per barrel guidance. Like Andres mentioned in the first pool, we were at 12.3. Our man and woman working in the field, but also supporting those field guys here in the office, are all very aligned that number one is to have safe operations, but we know that to be competitive, and we have done it historically, we have to have low optics. I'll give you a couple of examples of the things that we've done and the ones that were working. I think that the connection got cut when we were talking about that, but we've done things together with the Jaime's group on reviewing our contracts and looking at long-term contracts. A portion of the numbers that you see are related to that. We have looked at staffing. In the field, we have looked at things that we can optimize, reducing the number of trucks that move around by innovatively pumping the pump so that the bottoms from the tanks doesn't mean that we're having 15 trucks going out of the field every day. Now we only have one, and that is not only OPEC savings, but we're reducing the chance of somebody getting hurt. We're reducing our emissions. Those are examples of the things that we already did, examples of the things that are coming. We're looking in very detail at our maintenance strategy. How are we doing our maintenance? And it's integrated. Not only the contracts that we have, but are we doing the maintenance properly and can we optimize even further depending on what kind of criticality the equipment has? And we feel that with that, we're going to probably optimize a little bit more. Chemicals, artificial lift and pulling. We have done a very good job. The guys in the field have done a very good job from facilities to artificial lift to have really reliable energy. And with that, it means that our pumps don't fail that often. And if the pumps don't fail, it means that our OPECs and pulling go down. When we look at the benchmark, our days between failures in Shannos 34 are actually top ranked, not only in Colombia, but worldwide. So that's the philosophy and what our teams are working on day to day.

I think I wouldn't like to end the call without making just one highlight and I think a special mention to Martin's team because we made some comments and I'm not sure if they were very well captured. The fact that we drilled the last weld in Tigui in 6.1 days, and I mentioned that in my introduction and as we were in the call, we got the report for the following weld, which is the Tigui 56 weld. We reached TD in four and a half days. That has to be some record in the basin, not only in the block, and we're checking that. But this means that we spotted a weld on Monday and we reached TD before the end of Friday. That's huge saving. The team was targeting two rich welds that we drilled last year for $4.1 million to drill them and completing them this year at $3 million and the first one has already come in at less than $2.75 and this one is obviously going to come cheaper than that. So that relentless effort in finding efficiencies, breaking paradigms and making sure that we make the most out of each dollar that goes to the ground is what motivates this team and I think they are doing an incredible job. So thanks very much for your question. So I think that's the end of the call. There's no more questions. So I would like to thank everybody for your interest and your support of GeoPark. The team is always here to answer any questions. Please reach out, give us a call or even better, please visit our website for more information. Thank you and have a good day.