BOGOTA – GeoPark Limited (NYSE: NYSE:), an independent oil and gas company operating in Latin America, has received regulatory approval from Argentina’s Comisión Nacional de Valores (CNV) to issue up to $500 million in debt securities over the next five years. Alongside this development, GeoPark Argentina, a subsidiary of the company, has been assigned an AA+(arg) credit rating by Fitch Ratings’ local Argentine affiliate, FIX.
The positive credit rating reflects GeoPark Argentina’s solid performance and potential following its recent acquisition of four unconventional blocks in the Vaca Muerta shale formation. The company’s reserves, production capacity, and cash flow, particularly from the Mata Mora Norte Block, were key contributors to the high rating. This block is currently producing over 12,500 barrels of oil equivalent per day (boepd) and is projected to contribute $90-100 million in Adjusted EBITDA for GeoPark in 2024.
GeoPark’s strategy to fund its capital expenditures includes utilizing cash flow from existing operations and accessing debt markets. The company has already secured over $100 million in local credit lines in Argentina, which remain undrawn.
The Mata Mora Norte Block is expected to significantly increase its output to about 40,000 boepd by 2028-2030, with a potential Adjusted EBITDA contribution of approximately $300 million annually for GeoPark, assuming a price of $70 per barrel. This projection does not account for potential exploratory success in the additional blocks acquired.
The company’s forward-looking statements, including expected production and Adjusted EBITDA, are based on current management expectations and are subject to various risks and uncertainties that could cause actual results to differ materially.
GeoPark’s planned acquisition of the unconventional blocks in Vaca Muerta is expected to close in the fourth quarter of 2024, subject to customary regulatory approvals. This move is part of the company’s broader strategy to consolidate its presence in the region and leverage Argentina’s attractive capital market conditions.
This article is based on a press release statement from GeoPark Limited. The company has cautioned that forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. Investors are advised to consider these factors when evaluating the company’s prospects.
In other recent news, GeoPark Limited reported a 7% decrease in consolidated average oil and gas production for the third quarter of 2024. Despite this, certain areas showed promising developments, with a 28% production increase in the Llanos exploration area in Colombia and record production in Argentina’s Mata Mora Norte block. Operational updates reveal that the company plans to drill 3-6 wells in the fourth quarter of 2024, focusing on various projects.
GeoPark Limited also posted robust financial figures for the second quarter of 2024, demonstrating substantial growth in revenue and adjusted EBITDA. The company’s Q2 revenue surged by 14% to reach $190 million, while adjusted EBITDA saw a 15% increase to $128 million. GeoPark secured a net profit of $25.7 million, despite non-cost charges due to the Colombian peso devaluation.
The company’s capital expenditures, amounting to $49 million, were comfortably covered by its sizable adjusted EBITDA. GeoPark reported a strong net free cash flow, concluding the quarter with a cash position of $66 million. The board has approved a $7.5 million dividend payable in September, with plans to return over $66 million to shareholders by the end of the third quarter. These recent developments reflect GeoPark’s commitment to strategic growth and shareholder returns.
InvestingPro Insights
GeoPark Limited’s recent regulatory approval for debt issuance and its strong credit rating in Argentina align well with its financial profile, as revealed by InvestingPro data. The company’s impressive gross profit margin of 74.19% for the last twelve months as of Q2 2024 underscores its operational efficiency, particularly in light of its expanding operations in the Vaca Muerta shale formation.
InvestingPro Tips highlight that GeoPark has been aggressively buying back shares and offers a high shareholder yield. This shareholder-friendly approach is further evidenced by the company’s dividend yield of 7.13%, which is notably high for the oil and gas sector. Moreover, GeoPark has raised its dividend for 5 consecutive years, demonstrating a commitment to returning value to shareholders even as it pursues growth opportunities.
The company’s valuation metrics are particularly intriguing in the context of its expansion plans. With a P/E ratio of 3.74 for the last twelve months as of Q2 2024, GeoPark is trading at a low earnings multiple. This suggests that the market may not be fully pricing in the potential of its Vaca Muerta assets, which are projected to contribute significantly to future earnings.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights that could provide a deeper understanding of GeoPark’s financial position and growth prospects. There are 8 additional InvestingPro Tips available for GeoPark, which could offer valuable perspective on the company’s investment potential.
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