GeoPark 3Q2026 Results Conference Call - GEOPARK LTD

Explicit Guidance:

• Full-year production and adjusted EBITDA expected to remain within previously provided guidance ranges, supported by Argentina/Colombia growth and 4Q hedge optimization.
• Commodity hedging positions optimized for 4Q 2026 with coverage extended through 2028 to protect against downside while allowing participation in upside as incremental volumes ramp.

Business-Segment Outlook:

• Colombia: Production expected to remain stable (~25,900 BOE/day) as Janus 34 benefits from water flooding/polymer injection and Janus 123 from development activity; CPO5 exploration potential reinforced.
• Argentina: Vaca Muerta production accelerating (Q3 growth +51% to ~2,100 BOE/day) with five wells at Pad 1030 now producing >5,000 BOE/day; transitioning to continuous, efficient drilling/completion programs; 4Q 2026 initial tie-ins to regional pipelines completed.
• Venezuela (Bari Block): Targeting safe operational takeover completion by year-end 2026; initial reactivation phase expected to deliver 100–150 well reactivations in 2027; drilling operations (12–15 wells/year) scheduled to commence in 2028; long-term plan targets ~30 new horizontal wells by 2030 and ~600 million barrels production over 25 years from ~16 billion barrels in place.
• Argentina (Corralera Noreste): 26,900 gross acres added to portfolio; four-year phased appraisal program to de-risk 80,000-barrel production neighborhood; preliminary development plan includes >120 wells targeting >120 million barrels reserves; well costs estimated at $14–15 million per well; landing zones T7 and Veracium to be tested.

Market and Competitive Outlook:

• Pricing & Differentials: Anticipates normalization of the Vasconia differential (currently widened discount due to Gulf of Mexico supply surge and freight costs) as geopolitical disruptions unwind; actively optimizing 4Q hedges and exploring commercial blending strategies with other operators to mitigate realized price impacts.
• Operational Efficiency: Argentina OPEX trend expected to improve further (dropped from $29–32 to < $10/barrel via facility optimization); Colombia OPEX pressure driven by energy costs and FX to be mitigated via fixed-price energy contracts and feedstock switching.
• Capital Allocation: Disciplined approach prioritizing liquidity preservation during elevated investment phase; Vaca Muerta development characterized as highly CAPEX-intensive with factory-mode drilling ramping in 2027.

Macro / Industry Outlook:

• Venezuela Tax: Contingent milestone for potential additional shareholder shares linked to a downward revision of the 50% corporate income tax applicable to the Bari block; revision window closes December 1, 2026, requiring clear scope application to the specific asset.
• Energy Costs (Colombia): Energy spot pricing volatility expected to persist; transition to fixed-price energy contracts targeting 45% fixed in 4Q 2026 rising to 75% fixed by 2027; CREG grid rate intervention (30% discount) and energy hedges expected to reduce Q4 energy costs significantly.
• FX: Colombian and Argentine currency appreciation continues to lift unit costs; hedging programs provide downside protection for rates below $3,000/COP; exposure remains elevated if rates stay near $3,200.

Strategic Initiatives:

• Venezuela Entry: Successful body block (Bari) acquisition completed 65 days ahead of schedule; 300–400 wells assessed for reactivation; 50% of critical service contracts (rigs, chemicals, tubulars) awarded as of 3Q; focus on incident-free operations and PDVSA team integration.
• Argentina Expansion: Award of Corralera Noreste block (26,900 acres) adjacent to existing Vaca Muerta hubs; phased appraisal program to validate T7 and Veracium landing zones.
• Capital Structure: $550 million senior notes issued (due 2033) to extend maturity profile and fund Vaca Muerta investments; net leverage 1.6x; total available financing estimated at $600–700 million (cash + committed lines) funding needs through 2027.
• Hedge Portfolio: Active management to extend coverage through 2028; 4Q 2026 hedge optimization involving releasing ceilings and rolling positions to capture better pricing conditions.

Risks and Headwinds to Outlook:

• Commodity Differentials: Vasconia and Medanito discounts remain volatile and atypical; potential for continued structural pressure if geopolitical disruptions persist or heavy oil supply from Canada/Mexico remains elevated.
• Operational Execution: Safety risks in Venezuela transition; potential delays in well reactivation or drilling if rig/supply chain constraints emerge; uncertainty in Argentina landing zone productivity (water cut, reservoir potential).
• Macro & Regulatory: Persistent FX volatility in Colombia/Argentina; potential failure to meet Venezuela tax milestone conditions (by Dec 1, 2026) affecting shareholder dilution; energy cost inflation if fixed-price transitions lag.
• Capital Discipline: Elevated CAPEX in Vaca Muerta and Venezuela could strain liquidity if production ramp lags or prices decline further.

Management Tone on the Future:

• Confidence: High confidence in execution capabilities, citing "significant expansion of growth opportunities" and a "very competitive, high-quality portfolio."
• Optimism: Expresses "thrill" and "optimism" regarding the regional platform transformation, despite acknowledging "pains" from increased activity and costs.
• Discipline: Emphasizes strict capital allocation discipline and focus on "improving margins and cash generation" as priorities over short-term volatility.
• Hedges: Proactive and adaptive stance on hedging and cost mitigation, framing current challenges as manageable through operational improvements and financial instruments.

Miscellaneous:

• Share Count: No immediate changes anticipated beyond potential milestone-triggered shares related to Venezuelan tax outcomes (deadline Dec 1, 2026); tender offer for Grupo Genizti shares will proceed on a pro-rata basis for all shareholders excluding controlling shareholder over 90-day post-closing window.
• Timeline: Factory-mode drilling in Vaca Muerta begins December 2026; drilling operations in Venezuela begin 2028; 2033 debt maturity secured.