GeoPark Ltd (GPRK) 2026 Q2 法說會逐字稿

Good morning and welcome to the Geopark Limited conference call following the results announcement for the second quarter ended June 30, 2026.

(Operator Instructions)

Before we continue, please note that certain statements contained in the results press release and on this conference call are forward-looking statements rather than historical facts and are subject to risks and uncertainties that could cause actual results to get them materially from those described.

With respect to such forward-looking statements, the company seeks protections supported by the Private Securities Litigation Reform Act of 1,995. These risks include a variety of factors including competitive development and risk factors listed from time to time in the company's SEC reports and public releases.

Those lists are intended to identify certain principal factors that could cause actual results to differ materially from those described in the forward-looking statements, but are not intended to represent a complete list of the company's business.

All financial figures included herein were prepared in accordance with IFRS and are stated in U.S. Dollars unless otherwise noted.

Reserved figures correspond to PRMS standards.

On the call today from GeoPark are Felipe Bayon, Chief Executive Officer; Jaime Caballero, Chief Financial Officer; Martin Terrado, Chief Operating Officer; Rodrigo Della Fiori, Chief Exploration and Development Officer; and María Catalina Escobar, Shareholder Value and Capital Markets Director.

And now I will turn the call over to Mr. Felipe Bayon.

Mr. Bayon, you may begin.

Good morning, everyone, and thank you for joining us for our second quarter 2026 results call.

We delivered another quarter of consistent execution, demonstrating the resilience of our core business while continuing to advance in our strategic priorities. Colombia continues to provide resilient production and cash generation, while Argentina is progressing well and becoming an increasingly important contributor to our future growth.

During the second quarter, we achieved production on an average of 27,271 barrels of oil equivalent per day, performing within our full year guidance and broadly in line with the first quarter. This consistency reflects disciplined reservoir management and the operational capabilities of our teams.

In Argentina. Execution accelerated significantly during the quarter.

We completed drilling on PAD 1,030, advanced hydraulic fracturing campaign, and secured environmental approval for the next phase of drilling in Loma Jarillosa Este.

These milestones reinforce our confidence in the quality of the assets and in our ability to deliver the targeted exit production of approximately. 5,000 to 6,000 barrels of oil equivalent per day by year-end 2026.

Importantly, we also secured a dedicated drilling rig under a three-year agreement. Providing long-term execution certainty for the development of our Vaca Muerta program.

In addition, together with Gas y Petroleo del Neuquen, we apply to Argentina's Rigi Investment Incentive Program, which supports the development of our unconventional oil hub and reinforces our long-term growth strategy. Argentina continues to evolve into a transformational growth platform for Geopark.

In Colombia, Janus 34 continued benefiting from disciplined reservoir management and secondary recovery initiatives. CPO5 remained a very stable contributor despite operational challenges experienced earlier in the year, while Janus 123 continued to perform well. Through ongoing development activities. Together, these assets continue to provide stable production and cash generation. Importantly, all operations were conducted with strong health and safety performance with no injuries and no major process safety events.

The quarter also benefits from a stronger commodity price environment. Brent averaged approximately $97 per barrel and narrower Vasconia differential supported higher realized prices, partly offset by hedging costs. This operational and commercial performance translated into solid financial results.

Revenue increased 12% sequentially to $143.3 million. Supported by stable production and improved realized prices. Adjusted EBITDA reached $73.1 million, representing a 51% margin despite higher energy costs and a strong appreciation of the Colombian and Argentine currencies, which impacted our operating costs.

Operating profit totaled $40.8 million. Compared with the previous quarter, it is important to remember that the first quarter results included a non-recurring breakout fee associated with the Frontera acquisition. Net income for the quarter was $14 million. Capital allocation remained disciplined throughout the quarter.

We invested approximately $76 million with nearly two-thirds directed to Argentina as we continue executing the Vaca Muerta development plan while maintaining a 19% return on average capital employed.

Our balance sheet remains one of Geopark's key competitive advantages. During the quarter, our cash position increased to $316 million. And we reduced net leverage to 1.2 times EBITDA.

We also renewed and extended a committed contingent credit facility throughout 2028 providing additional financial flexibility as we execute our investment program.Our disciplined risk management approach also remains unchanged.

We continue protecting cash flows through three-way colors covering approximately 19,000 barrels per day during 2026, while approximately 19,000 barrels per day of expected 2027 production has already been protected under similar structures. This approach provides downside protection while preserving upside participation.

The Board declared a quarterly dividend of $0.023 per share, representing the final payment under the dividend framework announced last year. As previously communicated, our capital allocation priorities are now on completing this peak investment phase while preserving balance sheet strength and positioning the company for the next stage of the free cash flow generation.

Overall. We believe Geopark is very well positionedOur Colombian portfolio continues generating resilient cash flows. Argentina is advancing and our balance sheet provides the financial flexibility to continue with the disciplined pursuit of material inorganics options in Colombia, Argentina and Venezuela.

I would like to recognize the continued commitment of our employees and contractors and their focus on safety, operational excellence and efficiency to deliver these results. Before closing, I would like to take a moment to thank our shareholders for their continued support reflected in the successful outcome of our Annual General Meeting where all resolutions were approved by more than 99% of votes cast.

Following the strengthening of our long-term shareholder base earlier this year, with the strategic investment from Grupo Gilinski, we have been glad to welcome a number of other long-term shareholders to our company. The AGM approved the appointment of new members to our Board of Directors.

To this effect, I would like to sincerely thank Silvia Escobar and Marcela Vacca. For their dedication and valuable contributions to Geopark over the years and welcome Dorita Gielinski and Camilo Martinez to our board. We look forward to their contributions.

Thank you again for joining us.

And with that, let us open the floor to your questions.

(Operator Instructions) Alejandro Demichelis, Jefferies.

Good morning, gentlemen. Thank you very much for taking my patience and congratulations on the results.

A couple of questions, if I may, please.

First one is, with the new Colombian administration coming in very shortly, what kind of changes on policies for the sector? Can you expect and how do you see those benefiting Geopark? And then the second question is just mentioned some opportunities in Venezuela. Maybe you can give us some kind of indication of what are those kind of and quality of the opportunities that you see in Venezuela, please.

Thank you.

Thanks, Alejandro, and good morning, and thanks for joining the call, and thanks for your congratulations on the results. The first thing in terms of Colombia, and I will start there. We are very pleased with the incoming government. You know the government, the incoming administration has been very vocal in terms of their support to oil and gas and mining and infrastructure and an overall private investment and creating good conditions for that investment to be received by Colombia. So I think from that point of view, we are very pleased, especially, Alejandro, with the backdrop of the current government that has been against industry quite publicly in terms of no new licensing for oil and gas and absolutely very little support for industry. So from that point of view, I think we are very pleased. We have already had discussions with the incoming administration, and as Geopark is a long-term investor in Colombia.

Colombia is the source of our cash generation, is where we are actually supporting the growth that we are seeing in Vaca Muerta in particular. So we are very pleased with that. And I would say, Alejandro, one thing is we do see. A good opportunity set in Colombia, both in the conventional and the unconventional hydrocarbons, and also in oil and gas or liquids and gas. As you very well know, Colombia has a structural shortage of gas where the country is importing 30% to 35% of the gas it uses on a daily basis.

And Alejandro, I would like to create a bridge to Argentina, which I think is very relevant. As you well know, and I know it was not in the question, but I think it is relevant for context, we acquired the areas from Plus Petrol September of last year. In October, we actually started operating. Today, we have already drilled our five initial horizontal wells. We fracked those wells. So in nine months, we have gone from entering into an area to fracking the wells, and as a matter of fact, Alejandro, the first well started flowing yesterday, and it will take some time for the cleanup and everything else and stabilizing that production. The bridge I want to make is, we have discussed this before in other calls, how do we bring that expertise from Argentina into Colombia.

And when I have spoken to some of the new members of Congress and new members of the incoming government, I am saying, look, Geopark is a company that has actually fracked, and we have had experience in fracking. So I think that is sort of a differentiator as a company is something that can play very well in terms of Colombia and opportunities. And there is a massive, massive, Opportunity set in unconventionals in Colombia. So that is something that we are assessing, Alejandro. And so in terms of changes, because that is part of your question is, I think in terms of new licensing rounds, both conventional and unconventional, oil and gas, there is a lot of discussion around environmental permitting. Audiences (Publicas), sort of the public audiences with the communities and everything else. So I do sense that there will be some changes.

But I would like to highlight, Alejandro, that having said all of that, it is not immediate. Inauguration is in a couple days. It is not going to happen on the next day or August 8th. It will take some time, but I do see a lot of the right signals from government.

Geopark is ready to do its part. We are willing to invest. we are willing to grow in Colombia should there be opportunities. And as the technical teams have been looking at these and assessing opportunities. So that is the first part.

And you asked about Venezuela, opportunities in Venezuela. And the first thing I would say is that our thoughts and prayers and support goes to the people that suffered or have suffered and are suffering after the earthquakes, Of June 24th. So over the last months, four to five months, myself, the team, we visited Venezuela numerous occasions. There is a lot of opportunities, I mean the potential in terms of the oil in place in different licenses in different basins is very large. We are setting several opportunities. I will not go into details, but we are very pleased in terms of the technical aspects of the licenses, some of the terms that are being discussed, the quality of the people in Peda Vesa. I would like to highlight that. So there is some very good conversations going on. And hopefully we can get some of those opportunities across the finish line. And Alejandro, lastly, will obviously inform the markets and share with the markets any updates when those happen. Thanks, Alejandro.

Thank you.

Our next question comes from the web.

Andres Pattaso from Argentaria asks. What is the estimated CapEx for the remainder of 2026 in Vaca Muerta? Could you provide a breakdown by quarter along with the main activities driving the spend?

Good morning, Andres. This is Martin Tirado.

Thanks again for your interest in Geopark. We are very proud of the accomplishments we had in.

I will go straight to your question, and then I want to expand a little bit on the comments from Felipe. But basically, for the second-half of the year, we expect in the order of $40 million to $50 million of capital investment. That is pretty much aligned with what we have done in the first half of the year, which was, like Felipe said, two-thirds of our capital program for the first half, around $55 million. So what we have done in the first half on CapEx is mainly. Work hours, drilling and completion, and a little bit of facilities upgrade. As we go into the second-half of the year, it is going to switch and it is going to go mainly to finishing the facility upgrades, finishing a connection to a neighboring operator that has spare capacity, and also the completion of a water disposal well. On top of that, we are going to be building the pad that would be the first pad to be drilled early next year, spotting in December of this year with the rig that Felipe mentioned that has been awarded for our factory mode.

So that is a high level. How the split, you can think about it, is going to be around 70% to 80% of those 40% to 50% in the third quarter and the remaining on the fourth quarter. And I do want to reiterate one more time how proud we are of our team accomplishments in Vaca Muerta during the past months, nine months that have been full of activity, drilling, completing, doing facilities work. We have tracked 180 stages, incident free.

And the efficiencies that we have seen with our team during the frac stages are amongst the top quartile. And some of those metrics, I mean, number of fracs per day, we have done several days with nine fracs per day. That is a benchmark on our number of hours per day where the frac sets were working, again, several days with 20 hours per day, fully operational. That is a little bit of flavor of Vaca Muerta and the answer to your question.

Our next question also comes from the web, comes from Alvaro Leyva from DTG Pactual. They ask, given the currently favorable oil market outlook and the fact that it generated USD41 million in hedging losses, why would you increase your hedging position in 2027?

And secondly, they ask, are the wells you are planning to tie in Argentina in 2H26 within the RIGI proposal? If so, will you only tie in the wells until the RIGI application is approved?

Thanks, Alvaro, and this is Felipe, and I will start with the second question, and then I will ask Jaime to take the first one, if that is alright. Just to continue with the conversation around Vaca Muerta, so as I was mentioning earlier, the wells that we have drilled. Are being put into production as we speak. So we are not going to wait.

Actually, the first well, it started flowing yesterday, and we have some facilities that we need start in the pad of the wells. So we will be seeing some increase in production, Vaca Muerta, and end at the end of the year from around 5,000 to 6,000 barrels per day.

we are expecting. I mean, a statement from the government around RIGI, we have had some very good discussions over the last few months, but we will wait for that approval on the RIGI ,when it comes, and that will eventually and if it is granted, will cover everything else, our factory drilling and the big investments on the completion of one portion of the pipeline, full processing facilities, and the factory mode drilling. So the wells that were drilled will be connected or in the next and put into production in the next few days and weeks. Jaime.

Hey, sure. Hi, Alvaro. Hi, everybody.

In the matter of hedging, I think we need to start first with, what is the purpose of hedging, right? And, our goal at Geopark is to deliver, strong double-digits risk-adjusted returns under any market period, and in that context. Having the possibility of delivering predictable cash flow in a period where we are going to be having increased investment and where we have persistent volatility is key. And that is what we are seeing.

If we want to put color on that, we are going through a phase in the company where as we are growing our exposure to (Alcamuerta), there is increased capital deployment. And as you all know, those who have been following us, we also have an organic ambition that would also require that. So that is why we believe that hedging needs to be part of the equation and it will continue to be part of the equation.

In that context, when we look at 2027, currently we see that we are under market conditions that allow us to. To obtain some very attractive floors for our pricing. To give you an example, over the last few weeks, we have been able to attain positions where we are accessing floors of $75 per barrel and ceilings of $85, $86 per barrel. In that price environment of $75 to $86. The company can deliver very attractive cash flow, very attractive returns, and that is good. And it also gives us the comfortable position that we know as we engage in more investments in Vaca Muerta or elsewhere that the balance sheet of the company is not going to be compromised. So that is the rationale of our

Gustavo Satka from Tradesco.

Hello. Good morning, everyone.

So I have a couple of questions here. My first one's about cost. We saw a stronger uptake in cost this quarter. It seems to be driven by the Colombia Peso and Argentina Peso appreciation in energy cost. Based on how these variables evolved recently, these reasonable. The second-half of the year, or we should at this level.

And my second question is a follow-up on the Colombia question: did this unconventional potential in Colombia seem to be now a possibility with this new government? This unconventional development is something that we could see in already all Geopark blocks or this would for Geopark to do in conventional Colombia which will desire new buildings and also in conventional oil in Colombia. Are new buildings something that could affect interest for Geopark?

Thanks, Gustavo, and good morning and thanks for being in the call today. And yes, you have mentioned and we have reported there is upward pressure on our operating costs from both Colombian and Argentine currencies' appreciation versus the dollar.

Martin will give us a bit of flavor in terms of magnitudes and everything else.

I think also because of energy and do not, I mean, we need to be sure that we have factored something that is upcoming, which is El Nino, the phenomenal El Nino with droughts and very little rain that will eventually. Take energy prices higher up. We have done a lot of work in terms of getting ready for that, but Martin will take us through that. But we do see, Gustavo, that from the initial guidance, that was $13 to $15 per barrel.

we are outside of the guidance, and we are moving north, if you will. We will be higher up in terms of where we end up the year. So, Martin, why do not you give us a bit more details around that, and then I will take the other question.

Thanks again for your question. So the increase in operating cost, as was stated by Felipe during the first half of the year, reflects basically the combination of the FX impacts and the higher energy demand. And prices in Channels 34, so it is demand and prices for Channels 34. When we look at a unit basis, the lifting cost increase in the first quarter of this year from 14.7% to the quarter we just finished, 17.8%. So the average that we had for the first half was $16.2 and our guidance has been $13 to $15. So it is outside of the guidelines.

For the full year, we currently expect the lifting costs to pretty much stay within where they are. So our guidance for the second-half and finishing the year is in the order of $17 to $19 per barrel now. This is mainly, again, if you look at each of the effects of exchange rate is in the order of $2.1 to $2.5 per barrel in our OpEx, and the impact on the energy costs that are rising is about $1.5.

What we are doing on this matter, we have some long-term initiatives, which is connections to the electric grid. we are already connected, but we have two initiatives which are already ongoing to have a greater flexibility. Those will be coming next year and the year after. We have already signed a contract on biomass energy, but for short-term, our focus is getting the lower energy costs, looking at instead of spot, what we can do on fixed contracts and also on different sources. So we are looking at different sources that could be available such as fuel and others.

Then we look inside and what is it that we can do to improve our efficiency, energy efficiency. And I will give you one example so that I do not extend that much, but one example is. In the past year, we have captured all of our gas and we are generating out of that gas around 1.5 megawatts and our field consumes in the order of 65 megawatts. So those are things that we are looking, working internally and with our contractors to see, can we reduce the energy consumption of our pumps and so forth.

And finally, one of the numbers that we have done, so that you get a sense for, we have done some sensitivity, and for each 100 pesos per U.S. Dollars that the exchange rate changes, for the remaining of the year, it will mean around $2.5 million, either above or below our. In our OpEx. So it is considerable and like I said, we are working on all those fronts.

Thanks, Martina. I would just ask Gustavo that.

Obviously, we are doing everything in terms of our own.

A remit of responsibilities in terms of ensuring that our operations are safe and efficient and reliable, and we will see where the exchange rate will go. Last week, the central bank intervened with the purchasing of dollars. The dollar has gone up a bit, but we will need to operate efficiently and reliably, and we will continue to do what is within our own hands in terms of our operations.

I will move on to your question on Colombia. And I do not want to repeat myself, but we are very excited with the incoming government. They have been supportive of industry overall of investment of rule of law.

They are very keen on trying to do things quickly. And that is why I was mentioning our experience in Vaca Muerta, from receiving the operation to fracking in nine months with drilling wells in the middle of that. So we can be very. Agile, we can be very nimble and we can operate safely. And we are definitely interested in the unconventional potential in Colombia. Absolutely. So, I mean, a lot of our team members have a lot of experience in unconventionals. One of the strategic reasons behind Vaca Muerta, which is a great investment for the company.

And even better with the RIGI opportunity or possibility is to bring some of that expertise and know-how back to Colombia. So doing the fracking and doing the unconventional development and bringing some of that experience back to Colombia. So if there is no bidding in unconventionals and conventionals, we will obviously look at that. We have a strong foothold in Colombia. We like operating here. we are committed to the country. So we will definitely look at the opportunities as they come and be very proactive in terms of capturing some of those opportunities.

And our next question comes from the web.

It is from Joaquin Robay from Balance. The first question reads, water flooding has helped support production at LLA 34. How do you plan to keep output stable going forward?

And secondly, with a strong hedge position in place for 2H26, how should we think about expected hedging results over the next two quarters?

Thanks, Joaquin, and I will ask Rodrigo to take the first one, and Jaime, if you can take the second one. Rodrigo.

Hello, Joaquin.

Thank you for your question. Actually, water flooding is key, not only in production, that represents 25% of the production of the (JANA 34 ) today. It is also key in the development plan.

But water flooding is not the only thing that we are executing and doing in the field. We are executing an infield development, an infield drilling program with a very successful last year with six wells. We started this year with all the seven and we are moving to the north of the field with another seven wells in that area. Actually, we are executing a work program where we execute, well, we expect to finish the year with more than 25 work covers in the field and we have four wells injecting polymer today. We expect to finish the year.

(In nine injector) and for next year, for the beginning of next year, we want to add another nine wells for a total of 18 wells in polymer flow. So we are doing a lot of things to keep production stable. It is impossible to do it if we are not very detailed in the surveillance disciplinary operation and also have a very strong alignment with our partner. So that is key also in this relationship that we have.

If you ask about the future, what we are thinking about the future, most of the activity in water floating and polymer are located in the southwest of the field. What we expect is to move to the northwest, northeast of the field with new injector wells, so the water floating is not there yet. So that is the plan for the rest of this year and next year, with more influence relief wells, injector wells in terms of water and polymer as well. So that is the plan that we have to keep production stable. In (January 34).

Yes, Joaquin, moving on to the question around hedging. Basically, our 2026 position has remained unchanged since the last call that we had.

It was a position that was acquired probably at the back end of last year, early 1st year of this year. To do a quick recap on that, essentially what we are seeing is we are at around 20,000 barrels a day of barrels that we have hedged currently, and, we have a growing set of volumes in 3Q and 4Q that can get to about 25,000 barrels a day as the Vaca Muerta production ramps up. So that is remained unchanged since the last call. The floors and ceilings associated to that production. $65 per barrel on the floor end and ceilings of about $72, $73 per barrel. And that position provides price support for a full year EBITDA that is in excess of $250 million. Despite the cost escalation that we have been talking about today. So even in these scenarios of when you think about the ranges that Martin spoke about, the $17 to $19 per barrel potentially of OpEx cost escalation, we are expecting to have an EBITDA that is strong and competitive.

Our next question comes from the web as well. It comes from Isabella Pacheco from Bank of America.

It reads, what are your expectations on social unrest under the new administration in Colombia?

Can Geoparks do anything to work around it?

Thanks, Isabella, and thanks for the question. And one of the things.

That in Geopark we value, it is part of our core values, is these long-term relationships with the communities and the overall environment in which we operate. And I will probably share something with you, Isabella.

I have joined just over a year ago, the company, and one of the key reasons why I joined Geopark is the way in which Geopark conducted its businesses in terms of being a safe operator.

A reliable operator and an operator that in terms of both the environment and the communities did things very well. So I think, I mean, in its history, Geopark has built very strong relationships with the local communities. In terms of some of them providing goods and works and actually working in some of our fields with the authorities and the likes. And that is not going to change, with the incoming administration. I think we will just continue to strengthen. How we do things in terms of our activities, working with those communities, our social investment, and our long-term view. We will be watchful. We will be very proactive and always sort of approaching this in a matter that is respectful and that actually has this long-term view in mind.

Thank you, Isabella.

And our last question from the web comes from Peter Bowley from Jefferies.

On inorganic growth opportunities, is Geopark considering only oil-focused assets or gas assets a possibility as well, particularly in Colombia where natural gas looks to be experiencing a multi-year supply-demand imbalance?

Thank you.

Thanks, Peter. Thanks for the question. Yeah, I mean, we have been indeed focused on oil.

We produce some gas and we do some self-power generation in the field. But gas and gas plays and gas opportunities is something that we have looked throughout the years. We are not close to gas opportunities. As you rightly point out, there is a deficit in terms of demand of gas in Colombia. I would probably just add that there is ,we firmly believe there is opportunities, gas opportunities in Colombia.

Some of them associated with unconventionals that we have already mentioned in the call. If through fracking of unconventionals and developing the unconventionals. We can get some gas to the market, that is something that we are ready to pursue.

There is bigger opportunities around gas, but those are outside of the remit of the company, things like the offshore. And probably the other thing, and I will tie it back to a question that was made earlier, is there could be some opportunities, cross-border opportunities with Venezuela around gas. That is something else that we have looked at. And we are not close to that. So definitely, gas is something that should the right opportunity come, we want to be involved, and we will continue to be proactive in that space. Thanks, Peter.

And we have no further questions. I would like to turn the call back over to the company's CEO, Felipe Bayon, for closing remarks.

Thank you. Thanks a lot. And again, thanks for participating this morning and this afternoon in this call for our two Q results.

Very thrilled with what is going on in terms of how we have managed to implement strategy, which is absolutely, as we have discussed before, two main things protecting what we have, and we have some good operating results in Colombia and in Argentina in Vaca Muerta, and going back to a path of growth with Vaca Muerta has actually delivered to us so far, and we are very happy with that.

And going forward, we have talked about opportunities in Colombia, so we will continue to work on those opportunities in Venezuela. And I just want to highlight that there is some potential opportunities in Argentina as well. There is an upcoming round. Before the end of the month, and we should be participating in that round as we want to grow our presence in Argentina.

And one last thing I would say, given where we are with the current environment, the incoming government, before we have said that we want it to be probably around $190 to $220 million of CapEx, we see an opportunity of accelerating some activities that are accreted in value.

And we see that the CapEx number could go all the way to $250 million. So I think that just reinforces our commitment to the geographies and countries in which we operate and our willingness to continue to provide value to shareholders. So thanks again for your interest in the company and for joining today's call. Have a great day and stay safe.

This concludes today's conference call.

Thank you for your participation. You may now disconnect.