GeoPark Ltd 6-K, filed Nov 12, 2021
GeoPark Ltd (GPRK)
About this 6-K
GeoPark Ltd filed this 6-K on November 12, 2021.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2021
Commission File Number: 001-36298
GeoPark Limited
(Exact name of registrant as specified in its charter)
Calle 94 N° 11-30 8° piso
Bogota, Colombia
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F | X |
| Form 40-F |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes |
| No | X |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes |
| No | X |
GEOPARK LIMITED
TABLE OF CONTENTS
ITEM
1. | Interim Condensed Consolidated Financial Statements and Explanatory Notes for the three-months and nine-months periods ended September 30, 2020 and 2021. |
Item 1
GEOPARK LIMITED
INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
AND EXPLANATORY NOTES
For the three-months and nine-months periods ended September 30, 2020 and 2021
CONDENSED CONSOLIDATED STATEMENT OF INCOME
|
| |
| Three-months |
| Three-months | | Nine-months |
| Nine-months |
| | |
| period ended |
| period ended | | period ended |
| period ended |
| | | | September 30, |
| September 30, | | September 30, |
| September 30, |
| | | | 2021 |
| 2020 | | 2021 |
| 2020 |
Amounts in US$ '000 | | Note |
| (Unaudited) |
| (Unaudited) | | (Unaudited) | | (Unaudited) |
REVENUE |
| 3 |
| 173,972 |
| 98,147 | | 486,165 | | 287,036 |
Commodity risk management contracts |
| 4 |
| (11,733) |
| 2,722 | | (106,693) | | 25,602 |
Production and operating costs |
| 5 |
| (49,232) |
| (28,404) | | (145,204) | | (90,193) |
Geological and geophysical expenses |
| 6 |
| (2,065) |
| (2,777) | | (7,268) | | (10,186) |
Administrative expenses |
| 7 |
| (11,782) |
| (10,361) | | (35,809) | | (34,364) |
Selling expenses |
| 8 |
| (1,792) |
| (1,294) | | (5,344) | | (4,894) |
Depreciation |
|
|
| (23,641) |
| (26,695) | | (66,802) | | (89,318) |
Write-off of unsuccessful exploration efforts |
| 10 |
| (4,201) |
| (575) | | (12,262) | | (3,780) |
Impairment loss reversed (recognized) for non-financial assets | | 10 | | 13,307 | | (1,007) | | 13,307 | | (98,488) |
Other expenses |
|
|
| (1,555) |
| (1,278) | | (3,703) | | (8,939) |
OPERATING PROFIT (LOSS) |
|
|
| 81,278 |
| 28,478 | | 116,387 | | (27,524) |
Financial expenses |
| 9 |
| (13,994) |
| (16,637) | | (50,703) | | (47,936) |
Financial income |
| 9 |
| 699 |
| 814 | | 1,297 | | 2,911 |
Foreign exchange gain (loss) |
| 9 |
| 936 |
| (674) | | 5,440 | | (6,735) |
PROFIT (LOSS) BEFORE INCOME TAX |
|
|
| 68,919 |
| 11,981 | | 72,421 | | (79,284) |
Income tax expense |
|
|
| (31,907) |
| (16,332) | | (48,214) | | (34,463) |
PROFIT (LOSS) FOR THE PERIOD |
|
|
| 37,012 |
| (4,351) | | 24,207 | | (113,747) |
Earnings (Losses) per share (in US$) for profit (loss) attributable to owners of the Company. Basic |
|
|
| 0.61 |
| (0.07) | | 0.40 | | (1.88) |
Earnings (Losses) per share (in US$) for profit (loss) attributable to owners of the Company. Diluted |
|
|
| 0.60 |
| (0.07) | | 0.39 | | (1.88) |
The above condensed consolidated statement of income should be read in conjunction with the accompanying notes.
3
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
|
| Three-months |
| Three-months | | Nine-months |
| Nine-months |
|
| period ended |
| period ended | | period ended |
| period ended |
| | September 30, |
| September 30, | | September 30, |
| September 30, |
|
| 2021 |
| 2020 | | 2021 |
| 2020 |
Amounts in US$ '000 |
| (Unaudited) |
| (Unaudited) | | (Unaudited) |
| (Unaudited) |
Profit (Loss) for the period |
| 37,012 |
| (4,351) | | 24,207 |
| (113,747) |
Other comprehensive income |
|
|
|
| |
|
|
|
Items that may be subsequently reclassified to profit or loss: |
|
|
|
| |
|
|
|
Currency translation differences |
| (2,226) |
| (778) | | (414) |
| (10,960) |
Losses on cash flow hedges |
| — |
| — | | — |
| (6,770) |
Income tax relating to losses on cash flow hedges |
| — |
| — | | — |
| 2,166 |
Other comprehensive loss for the period |
| (2,226) |
| (778) | | (414) |
| (15,564) |
Total comprehensive profit (loss) for the period |
| 34,786 |
| (5,129) | | 23,793 |
| (129,311) |
The above condensed consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
4
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
|
| Note |
| At September 30, 2021 |
| Year ended |
Amounts in US$ '000 | | |
| (Unaudited) |
| December 31, 2020 |
ASSETS |
|
|
|
|
|
|
NON CURRENT ASSETS |
|
|
|
|
|
|
Property, plant and equipment |
| 10 |
| 607,395 |
| 614,665 |
Right-of-use assets |
|
|
| 20,925 |
| 21,402 |
Prepayments and other receivables |
|
|
| 223 |
| 1,060 |
Other financial assets |
|
|
| 13,790 |
| 13,364 |
Deferred income tax asset |
|
|
| 13,585 |
| 18,168 |
TOTAL NON CURRENT ASSETS |
|
|
| 655,918 |
| 668,659 |
CURRENT ASSETS |
|
|
|
|
|
|
Inventories |
|
|
| 13,832 |
| 13,326 |
Trade receivables |
|
|
| 64,081 |
| 46,918 |
Prepayments and other receivables |
|
|
| 14,923 |
| 27,263 |
Derivative financial instrument assets |
| 15 |
| 12 |
| 1,013 |
Other financial assets |
|
|
| 13 |
| 28 |
Cash and cash equivalents |
|
|
| 76,845 |
| 201,907 |
Assets held for sale | | 18 | | 25,641 |
| 1,152 |
TOTAL CURRENT ASSETS |
|
|
| 195,347 |
| 291,607 |
TOTAL ASSETS |
|
|
| 851,265 |
| 960,266 |
EQUITY |
|
|
|
|
|
|
Equity attributable to owners of the Company |
|
|
|
|
|
|
Share capital |
| 11 |
| 61 |
| 61 |
Share premium |
|
|
| 175,525 |
| 179,399 |
Reserves |
|
|
| 87,007 |
| 92,216 |
Accumulated losses |
|
|
| (352,514) |
| (380,866) |
TOTAL EQUITY |
|
|
| (89,921) |
| (109,190) |
LIABILITIES |
|
|
|
|
|
|
NON CURRENT LIABILITIES |
|
|
|
|
|
|
Borrowings |
| 12 |
| 656,806 |
| 766,897 |
Lease liabilities |
|
|
| 12,210 |
| 11,457 |
Provisions and other long-term liabilities |
| 13 |
| 61,369 |
| 82,370 |
Deferred income tax liability |
|
|
| 8,643 |
| 7,190 |
Trade and other payables |
| 14 |
| 1,435 |
| 4,886 |
TOTAL NON CURRENT LIABILITIES |
|
|
| 740,463 |
| 872,800 |
CURRENT LIABILITIES |
|
|
|
|
|
|
Borrowings |
| 12 |
| 18,138 |
| 17,689 |
Lease liabilities |
|
|
| 7,741 |
| 10,890 |
Derivative financial instrument liabilities |
| 15 |
| 49,658 |
| 15,094 |
Current income tax liability |
|
|
| 8,945 |
| 52,775 |
Trade and other payables |
| 14 |
| 97,031 |
| 100,156 |
Liabilities associated with assets held for sale | | 18 | | 19,210 |
| 52 |
TOTAL CURRENT LIABILITIES |
|
|
| 200,723 |
| 196,656 |
TOTAL LIABILITIES |
|
|
| 941,186 |
| 1,069,456 |
TOTAL EQUITY AND LIABILITIES |
|
|
| 851,265 |
| 960,266 |
The above condensed consolidated statement of financial position should be read in conjunction with the accompanying notes.
5
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
|
| Attributable to owners of the Company | ||||||||||
|
| Share |
| Share |
| Other |
| Translation |
| Accumulated |
| |
Amount in US$ '000 |
| Capital |
| Premium |
| Reserve |
| Reserve |
| losses | | Total |
Equity at January 1, 2020 |
| 59 |
| 173,715 |
| 116,291 |
| (3,820) |
| (153,364) |
| 132,881 |
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the nine-months period |
| — |
| — |
| — |
| — |
| (113,747) |
| (113,747) |
Other comprehensive loss for the period |
| — |
| — |
| (4,604) |
| (10,960) |
| — |
| (15,564) |
Total comprehensive loss for the period ended September 30, 2020 |
| — |
| — |
| (4,604) |
| (10,960) |
| (113,747) |
| (129,311) |
Transactions with owners: |
|
|
|
|
|
|
|
|
|
|
|
|
Share-based payment |
| 2 |
| 2,828 |
| — |
| — |
| 3,009 |
| 5,839 |
Repurchase of shares |
| (1) |
| (3,070) |
| — |
| — |
| — |
| (3,071) |
Stock distribution | | 1 |
| 2,342 |
| (2,343) |
| — |
| — |
| — |
Cash distribution | | — | | — | | (2,343) | | — | | — | | (2,343) |
Total transactions with owners for the period ended September 30, 2020 |
| 2 |
| 2,100 |
| (4,686) |
| — |
| 3,009 |
| 425 |
Balance at September 30, 2020 (Unaudited) |
| 61 |
| 175,815 |
| 107,001 |
| (14,780) |
| (264,102) |
| 3,995 |
| | | | | | | | | | | | |
Balance at January 1, 2021 |
| 61 |
| 179,399 |
| 104,485 |
| (12,269) |
| (380,866) |
| (109,190) |
Comprehensive profit (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the nine-months period |
| — |
| — |
| — |
| — |
| 24,207 |
| 24,207 |
Other comprehensive loss for the period |
| — |
| — |
| — |
| (414) |
| — |
| (414) |
Total comprehensive (loss) profit for the period ended September 30, 2021 |
| — |
| — |
| — |
| (414) |
| 24,207 |
| 23,793 |
Transactions with owners: |
|
|
|
|
|
|
|
|
|
|
|
|
Share-based payment |
| 1 |
| 1,535 |
| — |
| — |
| 4,145 |
| 5,681 |
Repurchase of shares |
| (1) |
| (5,409) |
| — |
| — |
| — |
| (5,410) |
Cash distribution | | — |
| — |
| (4,795) |
| — |
| — |
| (4,795) |
Total transactions with owners for the period ended September 30, 2021 |
| — |
| (3,874) |
| (4,795) |
| — |
| 4,145 |
| (4,524) |
Balance at September 30, 2021 (Unaudited) |
| 61 | | 175,525 |
| 99,690 |
| (12,683) |
| (352,514) |
| (89,921) |
The above condensed consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
6
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
|
| Nine-months |
| Nine-months |
|
| period ended |
| period ended |
|
| September 30, 2021 |
| September 30, 2020 |
Amounts in US$ '000 |
| (Unaudited) |
| (Unaudited) |
Cash flows from operating activities |
|
|
|
|
Profit (Loss) for the period |
| 24,207 |
| (113,747) |
Adjustments for: |
|
|
|
|
Income tax expense |
| 48,214 |
| 34,463 |
Depreciation |
| 66,802 |
| 89,318 |
Loss on disposal of property, plant and equipment | | 307 | | 229 |
Write-off of unsuccessful exploration efforts |
| 12,262 |
| 3,780 |
Impairment loss (reversed) recognized for non-financial assets | | (13,307) | | 98,488 |
Amortization of other long-term liabilities |
| (171) |
| (319) |
Accrual of borrowing interests |
| 34,043 |
| 36,251 |
Borrowings cancellation costs | | 6,308 | | — |
Unwinding of long-term liabilities |
| 3,528 |
| 4,424 |
Accrual of share-based payment |
| 5,681 |
| 5,839 |
Foreign exchange gain |
| (5,440) |
| (2,679) |
Unrealized loss (gain) on commodity risk management contracts |
| 27,993 |
| (9,862) |
Income tax paid |
| (65,091) |
| (22,857) |
Change in working capital |
| (16,546) |
| (31,702) |
Cash flows from operating activities – net |
| 128,790 |
| 91,626 |
Cash flows from investing activities |
|
|
|
|
Purchase of property, plant and equipment |
| (85,365) |
| (49,289) |
Acquisition of business, net of cash acquired |
| — |
| (272,335) |
Proceeds from disposal of long-term assets (Note 18) | | 1,100 | | — |
Cash flows used in investing activities – net |
| (84,265) |
| (321,624) |
Cash flows from financing activities |
|
|
|
|
Proceeds from borrowings |
| 172,174 |
| 350,000 |
Debt issuance costs paid |
| (2,019) |
| (7,507) |
Principal paid |
| (264,388) |
| (3,575) |
Interest paid |
| (42,477) |
| (37,483) |
Borrowings cancellation costs paid | | (12,908) |
| — |
Lease payments |
| (5,551) |
| (7,319) |
Repurchase of shares |
| (5,410) |
| (3,071) |
Cash distribution | | (4,795) | | (2,343) |
Payments for transactions with former non-controlling interest | | (3,580) | | (4,500) |
Cash flows (used in) from financing activities - net |
| (168,954) |
| 284,202 |
Net (decrease) increase in cash and cash equivalents |
| (124,429) |
| 54,204 |
Cash and cash equivalents at January 1 |
| 201,907 |
| 111,180 |
Currency translation differences |
| (633) |
| (1,637) |
Cash and cash equivalents at the end of the period |
| 76,845 |
| 163,747 |
Ending Cash and cash equivalents are specified as follows: |
|
|
|
|
Cash at bank and bank deposits |
| 76,828 |
| 163,725 |
Cash in hand |
| 17 |
| 22 |
Cash and cash equivalents |
| 76,845 |
| 163,747 |
The above condensed consolidated statement of cash flow should be read in conjunction with the accompanying notes.
7
EXPLANATORY NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1
General information
GeoPark Limited (the “Company”) is a company incorporated under the laws of Bermuda. The Registered Office address is Clarendon House, 2 Church Street, Hamilton HM11, Bermuda.
The principal activity of the Company and its subsidiaries (the “Group” or “GeoPark”) is the exploration, development and production for oil and gas reserves in Colombia, Chile, Brazil, Argentina and Ecuador.
This condensed consolidated interim financial statements were authorized for issue by the Board of Directors on November 10, 2021.
Basis of Preparation
The condensed consolidated interim financial statements of GeoPark Limited are presented in accordance with IAS 34 “Interim Financial Reporting”. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the annual consolidated financial statements as of and for the year ended December 31, 2020, which have been prepared in accordance with IFRS.
The condensed consolidated interim financial statements have been prepared in accordance with the accounting policies applied in the most recent annual consolidated financial statements. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective. Several amendments and interpretations apply for the first time in 2021, but do not have an impact on the condensed consolidated interim financial statements of the Group.
Whenever necessary, certain comparative amounts have been reclassified to conform to changes in presentation in the current period.
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss.
The activities of the Group are not subject to significant seasonal changes.
Estimates
The preparation of interim financial information requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. Actual results may differ from these estimates.
In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the annual consolidated financial statements as of and for the year ended December 31, 2020.
8
Note 1 (Continued)
Financial risk management
The Group’s activities expose it to a variety of financial risks: currency risk, price risk, credit risk- concentration, funding and liquidity risk, interest risk and capital risk. The condensed consolidated interim financial statements do not include all financial risk management information and disclosures required in the annual consolidated financial statements, and should be read in conjunction with the Group’s annual consolidated financial statements as of and for the year ended December 31, 2020.
The Group is continually reviewing its exposure to the current market conditions and adjusting the capital expenditures program which remains flexible, quickly adaptable and expandable as prices recover. The Group also continues to add new oil hedges, increasing its price risk protection within the next twelve months. GeoPark maintained a cash position of US$ 76,845,000, has signed new funding agreements (see Note 19) and has available US$ 127,643,000 in uncommitted credit lines as of September 30, 2021.
Subsidiary undertakings
The following chart illustrates the main companies of the Group structure as of September 30, 2021:
Details of the subsidiaries and joint operations of the Group are set out in Note 21 to the annual consolidated financial statements as of and for the year ended December 31, 2020.
On March 13, 2021, the Company incorporated a subsidiary in the United States named Market Access LLP (ownership interest: 9%), which is in start-up phase.
The Chilean branch GeoPark Latin America Limited - Agencia en Chile was voluntary dissolved and liquidated. In May 2021, the Register of Commerce registered the dissolution with an effective date as of March 31, 2021.
9
Note 2
Segment Information
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Executive Committee. This committee is integrated by the CEO, COO, CFO and managers in charge of the Geoscience, Operations, Legal and Corporate Governance, People and Sustainability departments. This committee reviews the Group’s internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on these reports. The committee considers the business from a geographic perspective.
The Executive Committee assesses the performance of the operating segments based on a measure of Adjusted EBITDA. Adjusted EBITDA is defined as profit (loss) for the period (determined as if IFRS 16 Leases had not been adopted), before net finance cost, income tax, depreciation, amortization, certain non-cash items such as impairments and write-offs of unsuccessful exploration efforts, accrual of share-based payment, unrealized result on commodity risk management contracts, geological and geophysical expenses allocated to capitalized projects and other items. Operating Netback is equivalent to Adjusted EBITDA before cash expenses included in Administrative and Geological and Geophysical expenses. Other information provided to the Executive Committee is measured in a manner consistent with that in the financial statements.
Nine-months period ended September 30, 2021:
Amounts in US$ '000 |
| Total |
| Colombia |
| Chile |
| Brazil |
| Argentina |
| Ecuador |
| Corporate |
Revenue |
| 486,165 |
| 433,671 |
| 15,757 |
| 15,402 |
| 21,335 |
| — |
| — |
Sale of crude oil |
| 454,639 |
| 432,059 |
| 4,039 |
| 477 |
| 18,064 |
| — |
| — |
Sale of gas |
| 31,526 |
| 1,612 |
| 11,718 |
| 14,925 |
| 3,271 |
| — |
| — |
Production and operating costs |
| (145,204) |
| (120,765) |
| (8,036) |
| (3,479) |
| (12,924) |
| — |
| — |
Royalties |
| (75,300) |
| (70,185) |
| (553) |
| (1,309) |
| (3,253) |
| — |
| — |
Share-based payment |
| (278) |
| (238) |
| (37) |
| — |
| (3) |
| — |
| — |
Operating costs |
| (69,626) |
| (50,342) |
| (7,446) |
| (2,170) |
| (9,668) |
| — |
| — |
Depreciation |
| (66,802) |
| (44,063) |
| (10,706) |
| (3,060) |
| (8,803) |
| (167) |
| (3) |
Operating profit (loss) |
| 116,387 |
| 126,523 |
| (8,978) |
| 7,714 |
| 8,215 |
| (1,371) |
| (15,716) |
Operating Netback |
| 253,177 |
| 227,677 |
| 7,519 |
| 10,739 |
| 7,242 |
| — |
| — |
Adjusted EBITDA |
| 213,684 |
| 204,701 |
| 5,812 |
| 9,700 |
| 4,891 |
| (1,415) |
| (10,005) |
Nine-months period ended September 30, 2020:
Amounts in US$ '000 |
| Total |
| Colombia |
| Chile |
| Brazil |
| Argentina |
| Peru (a) | | Ecuador |
| Corporate |
Revenue |
| 287,036 |
| 242,409 |
| 16,895 |
| 8,194 |
| 19,538 |
| — | | — |
| — |
Sale of crude oil |
| 262,163 |
| 240,855 |
| 3,770 |
| 774 |
| 16,764 |
| — | | — |
| — |
Sale of gas |
| 24,873 |
| 1,554 |
| 13,125 |
| 7,420 |
| 2,774 |
| — | | — |
| — |
Production and operating costs |
| (90,193) |
| (65,384) |
| (7,440) |
| (2,639) |
| (14,730) |
| — | | — |
| — |
Royalties |
| (24,312) |
| (20,195) |
| (582) |
| (686) |
| (2,849) |
| — | | — |
| — |
Share-based payment |
| (192) |
| (130) |
| (34) |
| — |
| (28) |
| — | | — |
| — |
Operating costs |
| (65,689) |
| (45,059) |
| (6,824) |
| (1,953) |
| (11,853) |
| — | | — |
| — |
Depreciation |
| (89,318) |
| (47,885) |
| (25,228) |
| (2,533) |
| (13,253) |
| (336) | | (21) |
| (62) |
Operating profit (loss) |
| (27,524) |
| 124,626 |
| (71,273) |
| (219) |
| (27,858) |
| (39,273) | | (567) |
| (12,960) |
Operating Netback |
| 201,750 |
| 184,834 |
| 9,268 |
| 3,998 |
| 3,650 |
| — | | — |
| — |
Adjusted EBITDA |
| 161,557 |
| 158,083 |
| 7,890 |
| 2,544 |
| 2,883 |
| (1,864) | | (521) |
| (7,458) |
| (a) | As of the date of these interim condensed consolidated financial statements, Peru is no longer an operating segment due to the decision to retire from the Morona Block. |
10
Note 2 (Continued)
Segment Information (Continued)
Total Assets |
| Total |
| Colombia |
| Chile |
| Brazil |
| Argentina |
| Peru |
| Ecuador |
| Corporate |
September 30, 2021 |
| 851,265 |
| 674,769 |
| 91,713 |
| 36,841 |
| 37,656 |
| 834 |
| 1,705 |
| 7,747 |
December 31, 2020 |
| 960,266 |
| 680,828 | | 101,742 | | 38,172 | | 36,803 | | 4,656 | | 1,127 | | 96,938 |
A reconciliation of total Operating Netback to total profit (loss) before income tax is provided as follows:
|
| Three-months |
| Three-months | | Nine-months |
| Nine-months |
|
| period ended |
| period ended | | period ended |
| period ended |
| | September 30, | | September 30, | | September 30, | | September 30, |
|
| 2021 |
| 2020 | | 2021 |
| 2020 |
Operating Netback |
| 99,616 |
| 67,674 | | 253,177 |
| 201,750 |
Geological and geophysical expenses |
| (2,379) |
| (2,834) | | (7,638) |
| (10,450) |
Administrative expenses |
| (10,473) |
| (8,737) | | (31,855) |
| (29,743) |
Adjusted EBITDA for reportable segments |
| 86,764 |
| 56,103 | | 213,684 |
| 161,557 |
Unrealized gain (loss) on commodity risk management contracts |
| 10,626 |
| 1,290 | | (27,993) |
| 9,862 |
Depreciation (a) |
| (23,641) |
| (26,695) | | (66,802) |
| (89,318) |
Write-off of unsuccessful exploration efforts |
| (4,201) |
| (575) | | (12,262) |
| (3,780) |
Impairment loss reversed (recognized) for non-financial assets | | 13,307 | | (1,007) | | 13,307 | | (98,488) |
Share-based payment |
| (1,911) |
| (1,904) | | (5,681) |
| (5,839) |
Lease accounting - IFRS 16 |
| 1,603 |
| 2,544 | | 5,551 |
| 7,319 |
Others (b) |
| (1,269) |
| (1,278) | | (3,417) |
| (8,837) |
Operating profit (loss) |
| 81,278 |
| 28,478 | | 116,387 |
| (27,524) |
Financial expenses |
| (13,994) |
| (16,637) | | (50,703) |
| (47,936) |
Financial income |
| 699 |
| 814 | | 1,297 |
| 2,911 |
Foreign exchange gain (loss) |
| 936 |
| (674) | | 5,440 |
| (6,735) |
Profit (Loss) before tax |
| 68,919 |
| 11,981 | | 72,421 |
| (79,284) |
| (a) | Net of capitalized costs for oil stock included in Inventories. Depreciation for the nine-months period ended September 30, 2021 includes US$ 2,081,000 (US$ 2,114,000 in 2020) generated by assets not related to production activities. For the three-months period ended September 30, 2021 the amount included in depreciation is US$ 657,000 (US$ 708,000 in 2020). |
| (b) | Includes allocation to capitalized projects. |
11
Note 2 (Continued)
Segment Information (Continued)
The following table presents a reconciliation of Adjusted EBITDA to operating profit (loss) for the nine-months period ended September 30, 2021 and 2020:
|
| Nine-months period ended September 30, 2021 | ||||||||||
|
| Colombia |
| Chile |
| Brazil |
| Argentina |
| Other (a) |
| Total |
Adjusted EBITDA for reportable segments |
| 204,701 | | 5,812 | | 9,700 | | 4,891 | | (11,420) | | 213,684 |
Depreciation |
| (44,063) | | (10,706) | | (3,060) | | (8,803) | | (170) | | (66,802) |
Unrealized loss on commodity risk management contracts |
| (27,993) | | — | | — | | — | | — | | (27,993) |
Write-off of unsuccessful exploration efforts | | (7,827) | | (4,435) | | — | | — | | — | | (12,262) |
Impairment loss reversed for non-financial assets | | — | | — | | — | | 13,307 | | — | | 13,307 |
Share-based payment |
| (589) | | (73) | | (10) | | (104) | | (4,905) | | (5,681) |
Lease accounting - IFRS 16 |
| 3,074 | | 493 | | 1,250 | | 572 | | 162 | | 5,551 |
Others |
| (780) | | (69) | | (166) | | (1,648) | | (754) | | (3,417) |
Operating profit (loss) |
| 126,523 |
| (8,978) |
| 7,714 |
| 8,215 |
| (17,087) |
| 116,387 |
| (a) | Includes Ecuador and Corporate. |
|
| Nine-months period ended September 30, 2020 | ||||||||||
|
| Colombia |
| Chile |
| Brazil |
| Argentina |
| Other (a) |
| Total |
Adjusted EBITDA for reportable segments |
| 158,083 | | 7,890 | | 2,544 | | 2,883 | | (9,843) |
| 161,557 |
Depreciation |
| (47,885) | | (25,228) | | (2,533) | | (13,253) | | (419) |
| (89,318) |
Unrealized gain on commodity risk management contracts |
| 9,862 | | — | | — | | — | | — |
| 9,862 |
Write-off of unsuccessful exploration efforts |
| — | | (3,205) | | (575) | | — | | — |
| (3,780) |
Impairment loss recognized for non-financial assets | | — | | (50,281) | | (1,007) | | (16,205) | | (30,995) | | (98,488) |
Share-based payment |
| (261) | | (65) | | (10) | | (117) | | (5,386) |
| (5,839) |
Lease accounting - IFRS 16 |
| 4,589 | | 78 | | 1,647 | | 682 | | 323 |
| 7,319 |
Others |
| 238 | | (462) | | (285) | | (1,848) | | (6,480) |
| (8,837) |
Operating profit (loss) |
| 124,626 |
| (71,273) |
| (219) |
| (27,858) |
| (52,800) |
| (27,524) |
| (a) | Includes Peru, Ecuador and Corporate. |
Note 3
Revenue
|
| Three-months |
| Three-months | | Nine-months |
| Nine-months |
|
| period ended |
| period ended | | period ended |
| period ended |
| | September 30, | | September 30, | | September 30, | | September 30, |
Amounts in US$ '000 |
| 2021 |
| 2020 | | 2021 |
| 2020 |
Sale of crude oil |
| 163,472 |
| 89,326 | | 454,639 |
| 262,163 |
Sale of gas |
| 10,500 |
| 8,821 | | 31,526 |
| 24,873 |
| | 173,972 |
| 98,147 | | 486,165 |
| 287,036 |
12
Note 4
Commodity risk management contracts
The Group entered into derivative financial instruments to manage its exposure to oil price risk. These derivatives are zero-premium collars, fixed price or zero-premium 3 ways (put spread plus call), and were placed with major financial institutions and commodity traders. The Group entered into the derivatives under ISDA Master Agreements and Credit Support Annexes, which provide credit lines for collateral posting thus alleviating possible liquidity needs under the instruments and protect the Group from potential non-performance risk by its counterparties. The Group’s derivatives are accounted for as non-hedge derivatives and therefore all changes in the fair values of its derivative contracts are recognized as gains or losses in the results of the periods in which they occur.
The following table summarizes the Group’s production hedged during the nine-months period ended September 30, 2021 and for the following periods as a consequence of the derivative contracts in force as of September 30, 2021:
|
| |
| |
| Volume |
| Average |
Period | | Reference | | Type | | bbl/d | | price US$/bbl |
January 1, 2021 - March 31, 2021 | | ICE BRENT | | Zero Premium Collars | | 23,500 | | 38.91 Put 52.72 Call |
January 1, 2021 - March 31, 2021 | | VASCONIA(a) | | Zero Premium Collars | | 2,000 | | 35.00 Put 43.01 Call |
| | | | | | 25,500 | | |
April 1, 2021 - June 30, 2021 | | ICE BRENT | | Zero Premium Collars | | 25,500 | | 40.61 Put 53.59 Call |
| | | | | | 25,500 | | |
July 1, 2021 - September 30, 2021 | | ICE BRENT | | Zero Premium Collars | | 18,000 | | 43.19 Put 60.64 Call |
July 1, 2021 - September 30, 2021 | | VASCONIA(a) | | Zero Premium Collars | | 2,000 | | 41.50 Put 68.57 Call |
| | | | | | 20,000 | | |
October 1, 2021 - December 31, 2021 | | ICE BRENT | | Zero Premium Collars | | 19,500 | | 43.72 Put 62.65 Call |
| | | | | | 19,500 | | |
January 1, 2022 - March 31, 2022 | | ICE BRENT | | Zero Premium Collars | | 14,500 | | 49.10 Put 74.81 Call |
| | | | | | 14,500 | | |
April 1, 2022 - June 30, 2022 | | ICE BRENT | | Zero Premium Collars | | 12,500 | | 53.35 Put 79.38 Call |
| | | | | | 12,500 | | |
July 1, 2022 - September 30, 2022 | | ICE BRENT | | Zero Premium Collars | | 5,500 | | 56.77 Put 81.24 Call |
| | | | | | 5,500 | | |
| (a) | Vasconia Crude (ICE Brent minus Vasconia Differential). |
The table below summarizes the (loss) gain on the commodity risk management contracts:
|
| Three-months |
| Three-months | | Nine-months |
| Nine-months |
|
| period ended |
| period ended | | period ended |
| period ended |
| | September 30, | | September 30, | | September 30, | | September 30, |
|
| 2021 |
| 2020 | | 2021 |
| 2020 |
Realized (loss) gain on commodity risk management contracts |
| (22,359) |
| 1,432 | | (78,700) |
| 15,740 |
Unrealized gain (loss) on commodity risk management contracts |
| 10,626 |
| 1,290 | | (27,993) |
| 9,862 |
Total |
| (11,733) |
| 2,722 | | (106,693) |
| 25,602 |
13
Note 4 (Continued)
Commodity risk management contracts (Continued)
The following table presents the Group’s derivative contracts agreed after the balance sheet date:
| | | | | | Volume | | |
Period |
| Reference |
| Type |
| bbl/d |
| Price US$/bbl |
July 1, 2022 - September 30, 2022 | | ICE BRENT | | Zero Premium Collars | | 1,500 | | 60.00 Put 83.60 Call |
July 1, 2022 - September 30, 2022 | | ICE BRENT | | Zero Premium Collars | | 1,500 | | 60.00 Put 88.10 Call |
July 1, 2022 - September 30, 2022 | | ICE BRENT | | Zero Premium Collars | | 1,500 | | 60.00 Put 92.90 Call |
October 1, 2022 - December 31, 2022 | | ICE BRENT | | Zero Premium Collars | | 1,500 | | 60.00 Put 81.00 Call |
October 1, 2022 - December 31, 2022 | | ICE BRENT | | Zero Premium Collars | | 1,500 | | 60.00 Put 85.30 Call |
October 1, 2022 - December 31, 2022 | | ICE BRENT | | Zero Premium Collars | | 1,500 | | 60.00 Put 89.00 Call |
Note 5
Production and operating costs
|
| Three-months |
| Three-months | | Nine-months |
| Nine-months |
| | period ended |
| period ended | | period ended |
| period ended |
| | September 30, | | September 30, | | September 30, | | September 30, |
Amounts in US$ '000 |
| 2021 |
| 2020 | | 2021 |
| 2020 |
Staff costs |
| 3,970 |
| 2,678 |
| 11,995 |
| 9,948 |
Share-based payment |
| 145 |
| 60 |
| 278 |
| 192 |
Royalties |
| 30,871 |
| 8,398 |
| 75,300 |
| 24,312 |
Well and facilities maintenance |
| 3,721 |
| 3,426 |
| 13,265 |
| 11,321 |
Operation and maintenance |
| 2,127 |
| 1,672 |
| 5,692 |
| 5,257 |
Consumables |
| 5,078 |
| 3,685 |
| 13,873 |
| 12,420 |
Equipment rental |
| 2,379 |
| 1,513 |
| 5,956 |
| 5,938 |
Transportation costs |
| 581 |
| 560 |
| 2,131 |
| 4,085 |
Gas plant costs |
| 619 |
| 27 |
| 1,885 |
| 1,021 |
Safety and insurance costs |
| 772 |
| 1,139 |
| 2,789 |
| 3,060 |
Field camp |
| 1,015 |
| 787 |
| 3,119 |
| 2,134 |
Non-operated blocks costs |
| 1,240 |
| 739 |
| 3,617 |
| 2,079 |
Crude oil stock variation |
| (5,117) |
| 2,363 |
| (394) |
| 2,431 |
Other costs |
| 1,831 |
| 1,357 |
| 5,698 |
| 5,995 |
| | 49,232 |
| 28,404 | | 145,204 |
| 90,193 |
Note 6
Geological and geophysical expenses
|
| Three-months |
| Three-months | | Nine-months |
| Nine-months |
| | period ended |
| period ended | | period ended |
| period ended |
| | September 30, | | September 30, | | September 30, | | September 30, |
Amounts in US$ '000 |
| 2021 |
| 2020 | | 2021 |
| 2020 |
Staff costs |
| 1,960 |
| 2,527 |
| 5,705 |
| 8,608 |
Share-based payment |
| 41 |
| 21 |
| 141 |
| 87 |
Other services |
| 350 |
| 229 |
| 1,708 |
| 1,593 |
Allocation to capitalized project |
| (286) |
| — |
| (286) |
| (102) |
| | 2,065 |
| 2,777 | | 7,268 |
| 10,186 |
14
Note 7
Administrative expenses
|
| Three-months |
| Three-months | | Nine-months |
| Nine-months |
| | period ended |
| period ended | | period ended |
| period ended |
| | September 30, | | September 30, | | September 30, | | September 30, |
Amounts in US$ '000 |
| 2021 |
| 2020 | | 2021 |
| 2020 |
Staff costs |
| 5,514 |
| 5,676 |
| 18,151 |
| 16,922 |
Share-based payment |
| 1,725 |
| 1,823 |
| 5,262 |
| 5,560 |
Consultant fees |
| 2,882 |
| 2,097 |
| 7,456 |
| 6,734 |
Travel expenses |
| 79 |
| 17 |
| 193 |
| 884 |
Director fees and allowance |
| 508 |
| 397 |
| 2,074 |
| 1,481 |
Communication and IT costs |
| 869 |
| 642 |
| 2,798 |
| 2,080 |
Allocation to joint operations |
| (1,962) |
| (1,317) |
| (5,887) |
| (4,580) |
Other administrative expenses |
| 2,167 |
| 1,026 |
| 5,762 |
| 5,283 |
| | 11,782 |
| 10,361 | | 35,809 |
| 34,364 |
Note 8
Selling expenses
|
| Three-months |
| Three-months | | Nine-months |
| Nine-months |
|
| period ended |
| period ended | | period ended |
| period ended |
| | September 30, | | September 30, | | September 30, | | September 30, |
Amounts in US$ '000 |
| 2021 |
| 2020 | | 2021 |
| 2020 |
Transportation |
| 1,359 |
| 1,090 |
| 3,125 |
| 4,017 |
Selling taxes and other |
| 433 |
| 204 |
| 2,219 |
| 877 |
| | 1,792 |
| 1,294 | | 5,344 |
| 4,894 |
Note 9
Financial results
|
| Three-months |
| Three-months | | Nine-months |
| Nine-months |
|
| period ended |
| period ended | | period ended |
| period ended |
| | September 30, | | September 30, | | September 30, | | September 30, |
Amounts in US$ '000 |
| 2021 |
| 2020 | | 2021 |
| 2020 |
Financial expenses |
|
|
|
|
|
|
|
|
Bank charges and other financial costs |
| (2,274) |
| (2,393) |
| (6,584) |
| (7,157) |
Interest and amortization of debt issue costs |
| (10,643) |
| (12,693) |
| (34,283) |
| (36,355) |
Borrowings cancellation costs | | — |
| — | | (6,308) |
| — |
Unwinding of long-term liabilities |
| (1,077) |
| (1,551) |
| (3,528) |
| (4,424) |
| | (13,994) |
| (16,637) | | (50,703) |
| (47,936) |
Financial income |
|
|
|
|
|
|
|
|
Interest received |
| 699 |
| 814 |
| 1,297 |
| 2,911 |
| | 699 |
| 814 | | 1,297 |
| 2,911 |
Foreign exchange gains and losses |
|
|
|
|
|
|
|
|
Foreign exchange gain (loss) |
| 936 |
| (674) |
| 5,440 |
| 3,553 |
Result on currency risk management contracts (a) |
| — |
| — |
| — |
| (10,288) |
| | 936 |
| (674) | | 5,440 |
| (6,735) |
Total financial results |
| (12,359) |
| (16,497) |
| (43,966) |
| (51,760) |
| (a) | GeoPark manages its exposure to local currency fluctuation with respect to income tax balances in Colombia. As of December 31, 2019, the Group entered into derivative financial instruments with local banks in Colombia for an amount equivalent to US$ 83,700,000 in order to anticipate any currency fluctuation with respect to income taxes payable in February, April and June 2020. The realized result on these contracts for the nine-months period ended September 30, 2020 was a loss of US$ 9,414,000. No currency risk management contracts were in place during 2021. |
15
Note 10
Property, plant and equipment
|
| |
| Furniture, |
| |
| |
| |
| Exploration |
| |
| | | | equipment | | Production | | Buildings | | | | and | | |
| | Oil & gas | | and | | facilities and | | and | | Construction | | evaluation | | |
Amounts in US$ '000 | | properties |
| vehicles | | machinery | | improvements | | in progress |
| assets | | Total |
Cost at January 1, 2020 |
| 830,937 |
| 19,549 |
| 172,507 |
| 11,770 |
| 69,587 |
| 48,036 |
| 1,152,386 |
Additions |
| (479) | (a) | 918 | | — | | 423 | | 36,155 | | 12,320 | | 49,337 |
Disposals | | — | | (399) | | — | | (115) | | — | | — | | (514) |
Acquisitions |
| 174,984 | | 617 | | 34,613 | | — | | 1,199 | | 79,693 | | 291,106 |
Write-off / Impairment |
| (67,493) | (b) | — | | — | | — | | (30,995) | (b) | (3,780) | (c) | (102,268) |
Transfers |
| 30,069 | | 174 | | 14,078 | | 78 | | (38,798) | | (5,601) | | — |
Currency translation differences |
| (24,191) | | (334) | | (2,293) | | (85) | | (88) | | (80) | | (27,071) |
Assets held for sale | | (1,996) | | — | | — | | — | | — | | — | | (1,996) |
Cost at September 30, 2020 |
| 941,831 | | 20,525 | | 218,905 | | 12,071 | | 37,060 | | 130,588 | | 1,360,980 |
| | | | | | | | | | | | | | |
Cost at January 1, 2021 |
| 968,617 |
| 20,707 |
| 197,829 |
| 12,442 |
| 18,848 |
| 78,614 |
| 1,297,057 |
Additions |
| (1,688) | (a) | 826 | | 9 | | — | | 50,707 | | 33,823 | | 83,677 |
Disposals | | — | | (825) | | (900) | | (543) | | (3,371) | (d) | — | | (5,639) |
Write-off / Impairment | | 13,307 | (e) | — | | — | | — | | — | | (12,262) | (f) | 1,045 |
Transfers |
| 41,758 | | — | | 13,202 | | 387 | | (45,728) | | (9,619) | | — |
Currency translation differences |
| (2,276) | | (31) | | (159) | | (10) | | (11) | | (89) | | (2,576) |
Assets held for sale (Note 18) | | (73,047) | | (1,178) | | (6,052) | | (177) | | (27) | | — | | (80,481) |
Cost at September 30, 2021 |
| 946,671 | | 19,499 | | 203,929 | | 12,099 | | 20,418 | | 90,467 | | 1,293,083 |
| | | | | | | | | | | | | | |
Depreciation and write-down at January 1, 2020 |
| (467,806) |
| (15,149) |
| (95,047) |
| (6,596) |
| — |
| — |
| (584,598) |
Depreciation |
| (66,063) | | (1,743) | | (12,103) | | (371) | | — | | — |
| (80,280) |
Disposals | | — | | 213 | | — | | 72 | | — | | — | | 285 |
Currency translation differences |
| 17,193 | | 311 | | 2,802 | | 23 | | — | | — |
| 20,329 |
Assets held for sale | | 134 | | — | | — | | — | | — | | — | | 134 |
Depreciation and write-down at September 30, 2020 |
| (516,542) |
| (16,368) |
| (104,348) |
| (6,872) |
| — |
| — |
| (644,130) |
| | | | | | | | | | | | | | |
Depreciation and write-down at January 1, 2021 |
| (548,445) | | (16,985) | | (109,987) | | (6,975) | | — | | — |
| (682,392) |
Depreciation |
| (50,208) | | (1,556) | | (9,421) | | (525) | | — | | — | | (61,710) |
Disposals | | — | | 500 | | 900 | | 436 | | — | | — | | 1,836 |
Currency translation differences |
| 1,548 | | 23 | | 158 | | 9 | | — | | — | | 1,738 |
Assets held for sale (Note 18) |
| 49,080 | | 915 | | 4,692 | | 153 | | — | | — | | 54,840 |
Depreciation and write-down at September 30, 2021 |
| (548,025) |
| (17,103) |
| (113,658) |
| (6,902) |
| — |
| — |
| (685,688) |
| | | | | | | | | | | | | | |
Carrying amount at September 30, 2020 |
| 425,289 |
| 4,157 |
| 114,557 |
| 5,199 |
| 37,060 |
| 130,588 |
| 716,850 |
Carrying amount at September 30, 2021 |
| 398,646 |
| 2,396 |
| 90,271 |
| 5,197 |
| 20,418 |
| 90,467 |
| 607,395 |
| (a) | Corresponds to the effect of the change in the estimate of assets retirement obligations. |
| (b) | Corresponds to impairment losses recognized in the Fell Block (Chile), the REC-T-128 Block (Brazil) the Aguada Baguales and El Porvenir Blocks (Argentina) and the Morona Block (Peru) for US$ 50,281,000, US$ 1,007,000, US$ 16,205,000 and US$ 30,995,000, respectively. |
| (c) | Corresponds to an unsuccessful exploratory well drilled in the Isla Norte Block (Chile) and exploration costs incurred in previous years in the POT-T-619 Block (Brazil) for which no additional work would be performed. |
| (d) | Corresponds to assets related to the operationship of the non-producing Morona Block (Block 64) in Peru, that were transferred to Petroperu in May 2021. See Note 18. |
| (e) | Corresponds to an impairment loss reversed in the Aguada Baguales and El Porvenir Blocks (Argentina) in accordance with their fair value less cost to sale. See Note 18. |
| (f) | Corresponds to two unsuccessful exploratory wells drilled in the Llanos 32 Block (Colombia), other exploration costs incurred in the Fell Block (Chile), and an exploratory well drilled in previous years in the CPO-5 Block (Colombia) and other exploration costs incurred in previous years in the PUT-30 Block (Colombia) for which no additional work would be performed. |
16
Note 11
Equity
Share capital
|
| At |
| Year ended |
Issued share capital |
| September 30, 2021 |
| December 31, 2020 |
Common stock (US$ '000) |
| 61 |
| 61 |
The share capital is distributed as follows: |
|
|
| |
Common shares, of nominal US$ 0.001 |
| 60,741,952 |
| 61,029,772 |
Total common shares in issue |
| 60,741,952 |
| 61,029,772 |
| | | | |
Authorized share capital |
|
|
|
|
US$ per share |
| 0.001 |
| 0.001 |
| | | | |
Number of common shares (US$ 0.001 each) |
| 5,171,949,000 |
| 5,171,949,000 |
Amount in US$ |
| 5,171,949 |
| 5,171,949 |
GeoPark’s share capital only consists of common shares. The authorized share capital consists of 5,171,949,000 common shares, par value US$ 0.001 per share. All of the Company issued and outstanding common shares are fully paid and nonassessable.
Cash distributions
On March 10, 2021, and on May 5, 2021, the Company’s Board of Directors declared quarterly cash distributions of US$ 0.0205 per share that were paid on April 13, 2021 and on May 28, 2021, respectively.
On August 4, 2021 the Company’s Board of Directors declared a quarterly cash distribution of US$ 0.041 per share that was paid on August 27, 2021.
Buyback Program
On November 4, 2020, the Company’s Board of Directors approved a program to repurchase up to 10% of its shares outstanding or approximately 6,062,000 shares. The repurchase program began on November 5, 2020 and will expire on November 15, 2021. During the nine-months period ended September 30, 2021, the Company purchased 446,593 common shares for a total amount of US$ 5,410,000. These transactions have no impact on the Group’s results.
17
Note 12
Borrowings
The outstanding amounts are as follows:
|
| At |
| Year ended |
Amounts in US$ '000 |
| September 30, 2021 |
| December 31, 2020 |
2024 Notes (a) (c) |
| 169,019 |
| 428,737 |
2027 Notes (b) (c) |
| 492,494 |
| 352,113 |
Banco Santander | | 3,568 | | 3,736 |
Itau (d) |
| 9,863 |
| — |
| | 674,944 |
| 784,586 |
Classified as follows:
Current |
| 18,138 |
| 17,689 |
Non-Current |
| 656,806 |
| 766,897 |
The tender total consideration included the tender offer consideration of US$ 1,000 for each US$ 1,000 principal amount of the 2024 Notes plus the early tender payment of US$ 50 for each US$ 1,000 principal amount of the 2024 Notes. The tender also included a consent solicitation to align the covenants of the 2024 Notes to those of the 2027 Notes.
The reopening of the 2027 Notes was priced above par at 101.875%, representing a yield to maturity of 5.117%. The debt issuance cost for this transaction amounted to US$ 2,019,000. The Notes were offered in a private placement to qualified institutional buyers in accordance with Rule 144A under the Securities Act, and outside the United States to non-U.S. persons in accordance with Regulation S under the Securities Act. The Notes are fully and unconditionally guaranteed jointly and severally by two principal subsidiaries of the Company.
18
Note 12 (Continued)
Borrowings (Continued)
After these transactions, the Company reduced its total indebtedness nominal amount in US$ 105,000,000 and improved its financial profile by extending its debt maturities. The current outstanding nominal amount of the 2024 Notes and 2027 Notes is US$ 170,000,000 and US$ 500,000,000, respectively. The Company recorded a loss of US$ 6,308,000 within Financial expenses as a consequence of these transactions.
The indentures governing the 2024 Notes and the 2027 Notes include incurrence test covenants that provide, among other things, that the Net Debt to Adjusted EBITDA ratio should not exceed 3.25 times and the Adjusted EBITDA to Interest ratio should exceed 2.5 times. Failure to comply with the incurrence test covenants does not trigger an event of default. However, this situation may limit the Company’s capacity to incur additional indebtedness, as specified in the indentures governing the Notes. Incurrence covenants as opposed to maintenance covenants must be tested by the Company before incurring additional debt or performing certain corporate actions including but not limited to dividend payments, restricted payments and others. As of the date of these interim condensed consolidated financial statements, the Company is in compliance of all the indentures’ provisions and covenants.
On May 14, 2021, GeoPark Colombia S.A.S. executed a loan agreement with Bancolombia for Colombian Pesos 35,000,000,000 (equivalent to US$ 9,388,000 at the moment of the loan execution) to finance working capital requirements in Colombia. In August 2021, GeoPark executed an optional prepayment for the full amount of the loan, with no additional cost.
This note should be read in conjunction with Note 27 to the annual consolidated financial statements as of and for the year ended December 31, 2020.
As of the date of these interim condensed consolidated financial statements, the Group has credit lines available for US$ 127,643,000.
Note 13
Provisions and other long-term liabilities
The outstanding amounts are as follows:
|
| At |
| Year ended |
Amounts in US$ '000 |
| September 30, 2021 |
| December 31, 2020 |
Assets retirement obligation (a) |
| 44,386 |
| 64,040 |
Deferred income |
| 3,474 |
| 3,828 |
Other |
| 13,509 |
| 14,502 |
| | 61,369 |
| 82,370 |
| (a) | As of September 30, 2021, Assets retirement obligation related to the Aguada Baguales, El Porvenir and Puesto Touquet Blocks (Argentina) was classified as Liabilities associated with assets held for sale. See Note 18. |
19
Note 14
Trade and other payables
The outstanding amounts are as follows:
|
| At |
| Year ended |
Amounts in US$ '000 |
| September 30, 2021 |
| December 31, 2020 |
Trade payables |
| 71,694 |
| 63,528 |
To be paid to co-venturers |
| — |
| 5,760 |
Payables to LGI |
| — |
| 3,528 |
Staff costs to be paid |
| 10,858 |
| 13,752 |
Royalties to be paid |
| 7,809 |
| 5,287 |
V.A.T. |
| 3,663 |
| 3,453 |
Taxes and other debts to be paid |
| 4,442 |
| 9,734 |
| | 98,466 |
| 105,042 |
Classified as follows:
Current |
| 97,031 |
| 100,156 |
Non-Current |
| 1,435 |
| 4,886 |
Note 15
Fair value measurement of financial instruments
Fair value hierarchy
The following table presents the Group’s financial assets and financial liabilities measured and recognized at fair value at September 30, 2021 and December 31, 2020 on a recurring basis:
|
| |
| |
| At |
Amounts in US$ '000 | | Level 1 | | Level 2 |
| September 30, 2021 |
Assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
| |
Money market funds |
| 1,929 |
| — |
| 1,929 |
Derivative financial instrument assets | | | | | | |
Commodity risk management contracts | | — | | 12 | | 12 |
Total Assets | | 1,929 | | 12 | | 1,941 |
Liabilities |
|
|
|
|
|
|
Derivative financial instrument liabilities |
|
|
|
|
| |
Commodity risk management contracts |
| — |
| 49,658 |
| 49,658 |
Total Liabilities |
| — |
| 49,658 |
| 49,658 |
|
| |
| |
| At |
Amounts in US$ '000 | | Level 1 | | Level 2 |
| December 31, 2020 |
Assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
|
Money market funds |
| 823 |
| — |
| 823 |
Derivative financial instrument assets |
|
|
|
|
|
|
Commodity risk management contracts |
| — |
| 1,013 |
| 1,013 |
Total Assets |
| 823 |
| 1,013 |
| 1,836 |
Liabilities |
|
|
|
|
|
|
Derivative financial instrument liabilities |
|
|
|
|
|
|
Commodity risk management contracts |
| — |
| 15,094 |
| 15,094 |
Total Liabilities |
| — |
| 15,094 |
| 15,094 |
20
Note 15 (Continued)
Fair value measurement of financial instruments (Continued)
Fair value hierarchy (Continued)
There were no transfers between Level 2 and 3 during the period. The Group did not measure any financial assets or financial liabilities at fair value on a non-recurring basis as of September 30, 2021.
Fair values of other financial instruments (unrecognized)
The Group also has a number of financial instruments which are not measured at fair value in the balance sheet. For the majority of these instruments, the fair values are not materially different to their carrying amounts, since the interest receivable/payable is either close to current market rates or the instruments are short-term in nature.
Borrowings are comprised primarily of fixed rate debt and variable rate debt with a short term portion where the interest has already been fixed and are measured at their amortized cost. The Group estimates that the fair value of its main financial liabilities is approximately 102% of its carrying amount, including interests accrued as of September 30, 2021. Fair values were calculated based on market price for the Notes and cash flows discounted for other borrowings using a rate based on the borrowing rate and are within Level 1 and Level 2 of the fair value hierarchy, respectively.
Note 16
Tax reform
In September 2021, a tax reform was approved in Colombia. The new legislation focuses on corporate income tax, increasing the tax rate from 30% to 35% from fiscal year 2022 onwards.
New tax provisions do not affect tax bases or tax rate for fiscal year 2021. Nevertheless, the tax rate increase shall be considered for deferred income tax purposes.
Capital commitments
Capital commitments are detailed in Note 33.2 to the audited Consolidated Financial Statements as of December 31, 2020. The following updates have taken place during the nine-months period ended September 30, 2021:
Colombia
The Colombian National Hydrocarbons Agency (“ANH”) approved GeoPark’s proposal to transfer part of its capital commitments in the PUT-30 Block to the Llanos 34 Block. Consequently, GeoPark committed to drill 3 exploratory wells in the Llanos 34 Block for a total amount of US$ 17,381,000, before November 10, 2021. Due to a private agreement with the partner in the block, the investment commitment incurred by GeoPark amounts to US$ 12,840,000. As of the date of these interim condensed consolidated financial statements, GeoPark is awaiting the ANH’s approval over the three exploratory wells that have already been drilled to fulfill the investment commitment.
21
Note 17 (Continued)
Capital commitments (Continued)
Colombia (Continued)
The ANH approved GeoPark’s proposal to transfer its remaining capital commitments in the PUT-30 Block to the Platanillo Block. Consequently, GeoPark committed to drill 2 exploratory wells in the Platanillo Block for a total amount of US$ 10,894,000, before February 2, 2022.
GeoPark filed a proposal to the ANH to transfer its remaining capital commitments in the VIM-3 Block to the CPO-5 Block. Consequently, GeoPark proposed to assume a commitment to drill 1 exploratory well and to acquire 3D seismic in the CPO-5 Block for a total amount of US$ 9,322,000, before July 8, 2024. Due to a private agreement with the partner in the block, the investment commitment will be fully incurred by GeoPark. As of the date of these interim condensed consolidated financial statements, GeoPark’s proposal is under review.
On October 13, 2021, due to a national strike, the ANH granted 74 days to the current phase of the exploratory period in the PUT-8 Block. The new expiration date is September 9, 2022. Due to other matters affecting the activity in the block, GeoPark had filed a request to extend this exploratory period for 418 additional days. As of the date of these interim condensed consolidated financial statements, GeoPark’s request is under review.
During the nine-months period ended September 30, 2021, GeoPark drilled the 2 exploratory wells committed in the Llanos 32 Block, drilled the 3 exploratory wells committed in the Llanos 34 Block (transferred from the PUT-30 Block in 2021), acquired the 3D seismic committed in the CPO-5 Block and acquired part of the 3D seismic committed in the PUT-8 Block. These investments need the ANH’s approval to fulfil the commitment.
Ecuador
On April 27, 2021 and May 7, 2021, the Ecuadorian Ministry of Energy and Non-Renewable Resources approved the requests to extend the exploratory period in the Espejo and Perico Blocks until June 17, 2025 and June 16, 2025, respectively.
Note 18
Business transactions
Aguada Baguales, El Porvenir and Puesto Touquet Blocks (Argentina)
In August 2021, the Company’s Board of Directors approved the decision to evaluate farm-out or divestment opportunities to sell its 100% working interest and operationship in the Aguada Baguales, El Porvenir and Puesto Touquet Blocks in Argentina, including the associated gas transportation license through the Puesto Touquet pipeline. Several local and international companies have participated in the process and submitted binding offers in September 2021.
On November 3, 2021, the sale and purchase and assignment agreement was signed for a total consideration of US$ 16,000,000, subject to working capital adjustments. GeoPark has collected an advance payment of US$ 1,600,000. Closing of the transaction is subject to regulatory approvals, which are expected to occur by year-end or early 2022.
As of September 30, 2021, the amount of Property, plant and equipment related to the blocks was subject to a reversal of the impairment recognized in 2020 (net of depreciation) in accordance with its fair value less cost to sale and it has been classified as held for sale.
22
Note 18 (Continued)
Business transactions (Continued)
REC-T-128 Block (Brazil)
In July 2020, GeoPark initiated a farm-out process to sell its 70% interest in the currently non-producing REC-T-128 Block in Brazil. On March 1, 2021, the farm-out agreement was signed. The total consideration is US$ 1,100,000, plus a contingent payment of up to US$ 710,000. Closing of the transaction took place in May 2021, after the corresponding customary regulatory approvals.
Morona Block (Peru)
On July 15, 2020, GeoPark notified its irrevocable decision to retire from the non-producing Morona Block (Block 64) in Peru, due to extended force majeure, which allows for the termination of the license contract. On April 6, 2021, the final agreement with Petroperu was signed and, on May 31, 2021, the joint operation agreement was ended. From such date, GeoPark has only been acting as operator of the Morona Block on behalf of Petroperu. On September 28, 2021, the supreme decree approving the assignment was issued by the Peruvian Government, and the public deed corresponding to that assignment is expected to be executed by GeoPark and Petroperu before year-end. Consequently, all the rights and obligations under the Morona Block license contract will be the strict and exclusive responsibility of Petroperu from the date of execution of the public deed.
Note 19
Subsequent events
Funding agreements
On October 7, 2021, GeoPark Colombia S.A.S. signed a loan agreement with Banco BTG Pactual S.A. which provides GeoPark with access to up to US$ 20,000,000 until October 7, 2022. The agreement establishes an interest rate of 4.50% per annum and a commitment fee of 1.95% per annum with respect to any undrawn amount. As of the date of these interim condensed consolidated financial statements, GeoPark has not withdrawn any amount from this loan agreement.
On October 8, 2021, the Colombian subsidiaries entered into an offtake and prepayment agreement with Shell Western Supply and Trading Limited (“Shell”), one of their key customers. The prepayment agreement provides GeoPark with access to up to US$ 15,000,000 in the form of prepaid future oil sales and has a twelve months availability period. Funds committed by Shell will be made available to GeoPark upon request and will be repaid by GeoPark, through future oil deliveries over the year after funds are disbursed. As of the date of these interim condensed consolidated financial statements, GeoPark has not withdrawn any amount from this prepayment agreement.
23
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| GeoPark Limited | |
| | |
| | |
| By: | /s/ Andrés Ocampo |
| | Name: Andrés Ocampo |
| | Title: Chief Financial Officer |
Date: November 10, 2021
24