GeoPark Ltd. (GPRK:NYSE) recently reported its first quarter 2024 (1Q24) production results and provided an update on its current operations. The company's net production in 1Q24 was 35,473 boe/d, with production from the CPO-5 block in Colombia impacted by blockades over 22 days, resulting in a net production of only ~5.6 mbbl/d, below the forecast of 7.5 mbbl/d by Auctus Advisors.
However, production at CPO-5 has now been restored, and the Indico well, which started production in April, has a current gross rate of 3.71 mbbl/d. "Overall net production at CPO-5 is now ~9 mbbl/d, the highest rate achieved on the block," noted Auctus Advisors analyst Stephane Foucaud in a research report published on April 25, 2024.
Foucaud also highlighted that production in the Manati gas field in Brazil has been temporarily suspended since mid-March due to unscheduled maintenance activities. The field was producing approximately 1,200 boe/d before the suspension, and production is expected to be restored in May.
According to Foucaud's report, GeoPark's horizontal drilling program at the Llanos-34 block in Colombia is delivering good results, with current net production of 24.3-24.8 mbbl/d, up ~1 mbbl/d compared to 1Q24.
"Overall, current net production is over 38 mboe/d," Foucaud stated.
The company maintained its full-year 2024 (FY24) production guidance of 35.5-39.0 mboe/d, and Auctus Advisors reiterated its target price of US$26 per share for GeoPark. "Further visibility on the Argentina acquisition could be a catalyst for the share price," Foucaud added.
GeoPark is also growing its exploration activities, with 650+ km2 of 3D seismic acquired on the Llanos-86 and Llanos-104 blocks in Colombia and exploration drilling expected in 1Q25. These areas are adjacent to the eastern side of CPO-5. The company has also acquired 232 km2 of 3D seismic in the northeastern part of CPO-5 and has spudded the Cisne 1 exploration well to further delineate the northern area of the block where reserves can grow.
In addition, GeoPark is expected to drill one appraisal and one exploration well on the Llanos-123 block in Colombia, one appraisal well at Perico in Ecuador, and one exploration well at Espejo, also in Ecuador.
Auctus Advisors' Core NAV and ReNAV for GeoPark remain broadly unchanged at US$20.84 per share and US$25.51 per share, respectively. The company's dividend yield at the time of the report was approximately 5.5%.
With a strong production performance, particularly at the CPO-5 block, and an ambitious exploration program, Foucaud believes GeoPark is well-positioned for growth in the near future. The company's focus on high-potential assets in Colombia and Ecuador, as well as its recent acquisition in Argentina, could provide further upside to its valuation and share price.
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Disclosures for Auctus Advisors, GeoPark Ltd., April 25, 2024
GeoPark Limited (“GeoPark” or the “Company”) is a corporate client of Auctus Advisors LLP (“Auctus”). Auctus receives, and has received in the past 12 months, compensation for providing corporate broking and/or investment banking services to the Company, including the publication and dissemination of marketing material from time to time.
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Author The research analyst who prepared this research report was Stephane Foucaud, a partner of Auctus.
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