GeoPark Limited — FY2021 Form 20-F
Reporting period: Fiscal year ended December 31, 2021; filed March 31, 2022. This is an annual report, not a standalone Q4 filing, and the supplied text does not provide separate fourth-quarter results. Financial statements are audited under IFRS as issued by the IASB, in U.S. dollars.
Business context and key financial metrics
GeoPark is an independent oil and gas exploration and production company operating in Colombia, Chile, Brazil, Argentina and Ecuador. FY2021 average net production was 37,602 boepd, down 6% from 40,192 boepd in 2020; oil was 86% of production. Oil accounted for 94% of revenue. Colombia generated 90% of consolidated revenue, and three customers accounted for 89% of consolidated revenue.
| Metric | FY2021 | FY2020 |
|---|---|---|
| Revenue | US$688.5 million | US$393.7 million |
| Operating profit (loss) | US$185.8 million | (US$110.7 million) |
| Profit (loss) for the year | US$61.1 million | (US$233.0 million) |
| Adjusted EBITDA (non-IFRS) | US$300.8 million | US$217.5 million |
| Cash from operating activities | US$216.8 million | US$168.7 million |
| Capital expenditures | US$129.3 million | US$75.3 million |
| Cash and cash equivalents at year-end | US$100.6 million | US$201.9 million |
| Total borrowings at year-end | US$674.1 million | US$784.6 million |
| Total equity | (US$61.9 million) | (US$109.2 million) |
Revenue rose 75%, mainly because the average realized oil price increased to US$58.3/bbl from US$31.2/bbl; sold volumes declined. The realized gas price rose to US$4.0/mcf from US$3.1/mcf. Production and operating costs increased 70% to US$212.8 million, principally as royalties rose with commodity prices. Reported production cost was US$16.1/boe, compared with US$9.1/boe in 2020. Derived from reported figures, operating margin was approximately 27% and net margin approximately 9%.
Cash flow from investing activities was negative US$126.6 million; financing activities used US$190.4 million. Current assets were US$232.6 million and current liabilities US$203.7 million. The filing reports a negative equity balance and accumulated losses of US$314.8 million. Adjusted EBITDA is a supplemental non-IFRS measure and should not be treated as cash flow or an alternative to IFRS profit.
Material changes versus the prior year
- Revenue and profit rebounded as prices recovered: the company moved from a US$233.0 million net loss in 2020 to US$61.1 million net profit in 2021.
- Commodity risk management contracts produced a net loss of US$109.2 million in 2021, versus a gain of US$8.1 million in 2020. The 2021 result included a realized loss of US$109.7 million.
- Net proved reserves fell to 87.8 mmboe from 100.6 mmboe, a decline of about 13%; production was 13.7 mmboe. Lower-than-expected well performance and reserve revisions were partly offset by higher price assumptions, extensions and discoveries. Proved undeveloped reserves decreased to 32.5 mmboe from 47.6 mmboe.
- Capital spending increased 72% to US$129.3 million, while cash declined by US$101.3 million over the year.
- In April 2021, GeoPark repurchased US$255 million principal amount of its 2024 notes, partly funded by issuing US$150 million of additional 2027 notes. The company says the transactions reduced nominal indebtedness by US$105 million and extended maturities; a US$6.3 million cancellation cost was recorded.
Outlook, commentary and risks
Management’s preliminary 2022 base capital program was US$160–180 million, based on a reference oil price of US$65–70/bbl, intended to be funded from operating cash flow and cash on hand. The downside plan was US$120–150 million at prices below US$50/bbl; the upside plan was US$190–220 million at prices above US$80/bbl. The base plan focused on Colombia development and exploration and two or three gross exploration wells in Ecuador. These are plans, not guarantees. Management also reported oil-price hedges covering part of 2022 and 2023 production.
- Debt and liquidity: Management stated it expected adequate resources to meet obligations for the foreseeable future. About 97% of borrowings were scheduled to mature in 2024 or 2027; debt documents include restrictions on additional borrowing, dividends and other actions. Management reported covenant compliance at the financial-statement date. Lower prices or operating disruption could reduce cash generation and financing flexibility.
- Operational and market exposure: Results are highly sensitive to oil prices, and reserves and production are concentrated in Colombia and the Llanos 34 Block. The filing describes production curtailments and supply-chain disruption during 2021 protests and blockades, as well as ongoing COVID-19 uncertainty.
- Customers and infrastructure: Three Colombian customers represented 89% of consolidated revenue. Chilean gas sales were made entirely to Methanex; pipeline, transport and customer interruptions could affect sales.
- Commitments and contingencies: Outstanding potential liability for contractual guarantees was US$74.9 million, mainly relating to capital commitments. A UK claim by members of a Colombian farming community remained ongoing; claimed damages could reach approximately US$6.0 million, and a letter of credit had replaced a prior asset-freezing order.
- Asset changes: The sale of the Aguada Baguales, El Porvenir and Puesto Touquet assets for US$16 million closed January 31, 2022. The company recognized a US$13.3 million impairment reversal on those assets in 2021 and a US$17.6 million impairment loss in Chile’s Fell Block.
- Other risks: The filing highlights reserve-estimation uncertainty, permitting and contract-retention requirements, environmental and climate obligations, indigenous and community engagement, political and regulatory change, foreign-exchange volatility and cybersecurity. Management set operational Scope 1 and 2 emissions reduction targets and a 2050 net-zero ambition; achieving them depends on technology, investment and other uncertain factors.
The independent auditor gave an unqualified opinion on the financial statements and internal control over financial reporting. Management also concluded disclosure controls were effective as of December 31, 2021.
Most important facts for investors to verify
- Reconcile the US$109.2 million commodity-hedging loss, hedge volumes and price floors/caps with realized sales prices and expected future cash receipts.
- Review debt principal, maturities, interest, covenant calculations and refinancing needs; distinguish reported borrowings from note principal amounts.
- Assess reserve revisions, the independent engineer’s assumptions, the 32.5 mmboe of proved undeveloped reserves and the company’s ability to fund development.
- Verify customer concentration and the continued availability of Colombian and Chilean transport routes and offtake agreements.
- Track delivery of the 2022 capital program against actual oil prices, production, cash balances and the post-year-end divestiture proceeds.
- Monitor the UK claim, US$74.9 million of contractual guarantees, block commitments and any community, environmental or regulatory developments that could delay operations.