GeoPark Limited — FY2022 Form 20-F Summary
Reporting period: Fiscal year ended December 31, 2022. This is an audited annual report, not a standalone fourth-quarter filing; the source does not provide clear standalone Q4 financial results. Financial statements are prepared under IFRS as issued by the IASB and audited by EY member firm Pistrelli, Henry Martin y Asociados S.R.L., which gave an unqualified opinion.
Business context
GeoPark is an independent oil and gas exploration and production company operating in Colombia, Chile, Brazil and Ecuador. Average net production was 38.6 thousand boe per day, 90.7% oil. Colombia generated 93.2% of revenue and held 91.7% of net proved reserves, leaving results highly concentrated in that country. The company divested its Aguada Baguales, El Porvenir and Puesto Touquet blocks in Argentina in January 2022.
Key financial and operating metrics
| Metric | FY2022 | FY2021 | Change |
|---|---|---|---|
| Revenue | US$1,049.6 million | US$688.5 million | +52% |
| Operating profit | US$429.1 million | US$185.8 million | +131% |
| Profit before tax | US$394.9 million | US$128.4 million | +208% |
| Net profit | US$224.4 million | US$61.1 million | +267% |
| Adjusted EBITDA (non-IFRS) | US$540.8 million | US$300.8 million | +80% |
| Cash from operating activities | US$467.5 million | US$216.8 million | +116% |
| Capital expenditures | US$168.8 million | US$129.3 million | +31% |
| Cash and cash equivalents, year-end | US$128.8 million | US$100.6 million | +28% |
| Borrowings, year-end | US$497.6 million | US$674.1 million | −26% |
Approximate operating and net margins were 40.9% and 21.4%, respectively; Adjusted EBITDA margin was approximately 51.5%. Adjusted EBITDA is a company-defined non-IFRS measure and should not be viewed as a substitute for IFRS profit or cash flow.
Crude oil sales were US$1,004.8 million; purchased-crude sales were US$9.5 million and gas sales were US$35.4 million. Revenue growth primarily reflected higher oil prices and deliveries. Average net production rose 3% to 38.6 thousand boe per day; average realized oil price increased to US$82.2 per barrel from US$58.3. Higher royalties and economic rights drove production and operating costs up 69% to US$359.8 million, with economic-rights expense rising to US$189.0 million. Commodity risk management contracts produced a US$70.2 million loss, including a realized loss of US$83.2 million partly offset by a US$13.0 million unrealized gain.
Net cash was approximately US$368.8 million, calculated as borrowings less cash. Current assets were US$238.1 million and current liabilities US$229.2 million. Lease liabilities were a further US$32.1 million. The company reported positive equity of US$115.6 million, compared with a deficit of US$61.9 million a year earlier. Income tax expense was US$170.5 million, including deferred tax expense.
Material changes versus FY2021
- Revenue and earnings increased substantially, mainly reflecting stronger oil prices; operating cash generation more than doubled.
- Production rose 3%, while net proved reserves fell 20% to 70.4 million boe from 87.8 million boe. The reported reserve movement included production, a 3.6 million boe reduction related to certain Colombian royalties changing from cash to kind, lower-than-expected Manati performance and the Argentina divestment, partly offset by higher prices, performance and discoveries.
- Capital spending increased by US$39.6 million. Operating costs and royalties rose with activity and higher prices; total production costs per boe increased to US$26.8 from US$16.1, with the increase substantially affected by royalties and economic rights.
- GeoPark repurchased or redeemed its remaining 2024 Notes and fully retired them in September 2022. It reduced nominal indebtedness by US$275 million, leaving the 5.50% Notes due 2027 as its material outstanding borrowings. The 2027 Notes indenture was amended to increase restricted-payment capacity.
- Share repurchases totaled US$36.3 million and cash distributions totaled US$24.3 million in 2022. The board declared a US$0.13-per-share dividend in March 2023.
Outlook, management commentary and key risks
- Management’s preliminary 2023 base capital program was US$200–220 million, based on a reference oil price of US$80–90 per barrel, primarily for Colombia, with US$10–15 million planned for Ecuador. A downside scenario below US$60 per barrel contemplated US$120–150 million of spending; an upside scenario above US$90 contemplated US$220–260 million.
- Management targeted returning approximately 40–50% of 2023 free cash flow, as defined by the company, through dividends and discretionary buybacks. A portion of 2023 production was hedged with zero-premium collars; hedges limit some participation in price increases.
- Management stated that cash on hand and operating cash flow were expected to fund the 2023 program. The filing warns that lower oil prices, delivery restrictions or other shocks could prompt spending cuts, prepayment arrangements, asset sales or equity issuance.
- Operating and financial exposure is concentrated: three customers represented 90% of consolidated revenue through Colombian sales, and Colombia accounted for most production and proved reserves. The Colombian sales contracts described in the filing extended through the first half of 2023.
- Key risks include commodity-price volatility, reserve replacement and depletion, country and regulatory changes, foreign exchange exposure, infrastructure access, customer concentration, and social protests, blockades and security issues. 2022 protests in Putumayo affected operations and delayed drilling; a local blockade contributed to an exploratory-well cost overrun.
- Colombia’s 2022 tax reform restricts royalty deductions for income-tax purposes and introduces a price-linked surtax on crude-oil extractive activities from 2023. The filing says the surtax was considered in deferred tax calculations.
- A UK court allowed claims against Amerisur concerning alleged harm associated with a 2015 oil-truck attack to proceed; the company sought permission to appeal. GeoPark carried a US$5.4 million provision for the related contingent liability at year-end. Separately, potential guarantees for contractual commitments totaled US$96.7 million.
- The company recognized US$25.8 million of unsuccessful exploration write-offs in 2022 and no impairment losses. It reported one recordable hydrocarbon spill in Colombia and no operational fatalities.
Important facts for investors to verify
- Whether 2023 production, oil prices and realized sales proceeds support the capital program and planned shareholder returns.
- Current status and renewal terms of major Colombian sales contracts, customer concentration and oil transportation alternatives.
- Reserve revisions, development economics and the timing and cost of converting proved undeveloped reserves into production.
- Compliance with the 2027 Notes’ incurrence tests and restricted-payment provisions, as well as cash needs for contractual commitments, taxes and decommissioning.
- Developments in the Amerisur litigation, the US$5.4 million provision and the US$96.7 million of potential guarantees.