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GEOPARK
Santiago, 23 de Abril de 2012
Geopark Holdings Limited
Inscrito en el Registro de Valores Extranjeros bajo N* 045
Señor
Fernando Coloma Correa
Superintendente de Valores y Seguros
Av. Libertador Bernardo O”Higgins N* 1449, piso 1
PRESENTE
EF.: Adjunta información relevante que se
publicó el día de hoy en la AIM del
Mercado Bursátil de Londres.
Señor Superintendente:
En virtud de lo establecido en la Norma de Carácter General
N*217 sección ll, por medio de la presente, adjunto información considerada como
relevante para la empresa, que ha sido entregada el día de hoy en el Alternative
Investment Market, mercado secundario de la London Stock Exchange, en donde
mediante un comunicado se informa sobre los resultados de la compañía para sus
operaciones en el año finalizado en el 31 de diciembre de 2011.
La información adjunta consiste en un comunicado de prensa de
veintitrés páginas en idioma inglés. Con respecto a la traducción del comunicado al idioma
español, esta será entregada por esta misma vía dentro del plazo estipulado para estos
efectos en la Norma De Carácter General n*217 del año 2008.
Pedro Aylwin Chiorrini
pp.GEOPARK HOLDINGS LIMITED
NUESTRA SEÑORA DE LOS ANGELES N*179 – LAS CONDES + SANTIAGO – CHILE
Pa
Ma all
GEOPARK
GEOPARK HOLDINGS LIMITED
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2011
GeoPark Holdings Limited (“GeoPark” or the “Company”), the Latin American oil and
gas exploration and production company, operating in Chile, Colombia and Argentina
(AlM: GPK), is pleased to announce its results for the year ended 31 December 2011.
Summary
During 2011, GeoPark continued its steady record of organic growth by achieving its
sixth consecutive year of key performance improvements.
Important initiatives during the last 12 months also strengthened GeoPark’s balance
sheet and expanded its portfolio — laying the foundations for significant growth in
production and cash-flow in 2012 and beyond. These included the:
award of three new high potential hydrocarbon blocks in Tierra del Fuego, Chile;
entry by LG International (“LGl”) into GeoPark’s Chile business via its acquisition of a
20% interest; and
e acquisition of two oil and gas exploration and production companies in Colombia,
with interests in ten hydrocarbon blocks, during 1Q 2012.
Key Operational Results
Oil Production Up 27%: Crude oil production averaged 2,510 barrels per day (bopa) in
2011 compared to 1,970 bopd in 2010 — resulting from a strategic emphasis towards
increasing more valuable oil production in the oil / gas mix. Natural gas production
increased 2% to an average of 30.5 million cubic feet per day (mmctpa) in 2011 from an
average of 29.8 mmcfpd in 2010. Total oil and gas production therefore increased 9% to
7,593 barrels of oil equivalent per day (boepd) in 2011 compared to 6,947 boepd in
2010. GeoPark’s current production is approximately 12,200 boepd (with 64% oil),
including contributions from the new properties in Colombia.
72% Drilling Success: GeoPark’s 25 well drilling program in 2011 represented a
balance between exploration, appraisal and development and resulted in 18 wells
drilled, completed and placed into production (compared to twelve out of fifteen wells
drilled and put on production in 2010). Of the remaining wells, one well was plugged and
abandoned and six wells are awaiting completion or under evaluation.
100% Reserve Replacement: DeGolyer and MacNaughton (“D8M”), independent
reservoir engineers, certified 2P reserves of 49.5 million barrels of oil equivalent
(mmboe) at 31 December 2011, representing a 6% 2P reserve growth compared to 31
December 2010, allowing for production of 2.8 mmboe during 2011. 2P reserve
additions resulted in a reserve replacement ratio of 100%. D8M estimated P3 reserves
to be 57 mmboe at 31 December 2011. D83M assessed the Net Present Value of
GeoPark’s 2P reserves to be US$852 million (unrisked, post tax and at a 10% discount
rate) and 3P reserves to be US$1,418 million (unrisked, post tax and at a 10% discount
rate). The 2011 reserve figures do not include approximately 10 mmbo of additional 2P
oil reserves (Company estimates) acquired via the two Colombian acquisitions
completed during 1Q 2012.
Fell Block Conversion to Exploitation Phase: In August 2011, the exploration period
for the Fell Block, the Company’s principal exploration and production block in Chile,
was completed and resulted in the Company converting approximately 84% of the total
Fell Block area into an exploitation phase now valid up to 2032. (GeoPark exceeded its
minimum work and investment commitment on the Fell Block during the exploration
period by over 75 times.)
Seismic Operations: Seismic surveys were conducted on the Tranquilo and Otway
Blocks in Chile during 2011 – with 293 km of 2D seismic and 165 square kilometers of
3D seismic completed in total. Geophysical processing and interpretation of these
surveys is underway to define additional drilling prospects on both blocks. A 3D seismic
survey was started in 1Q 2012 on the Flamenco Block, one of GeoPark’s newly
acquired Tierra del Fuego Blocks.
Unconventional Resource Potential: GeoPark has initiated a technical review and
assessment of the oil and gas shale potential of its acreage in Argentina and Chile. In
Argentina, GeoPark has two blocks (approximately 48,000 acres) in the Neuquen Basin
with the attractive Vaca Muerta shale opportunity. In Chile, GeoPark’s extensive acreage
(approximately 3.1 million acres) in the Magallanes Basin contains the Estratos con
Favrella shale formation.
Key Financial Results
Revenues Up 40%: Total revenues increased to US$111.6 million in 2011 (2010:
US$79.6 million) driven by a combination of higher oil and gas production and increased
oil and gas prices. Oil revenues increased by 52% to US$73.5 million – representing
66% of total revenues – and resulting from a 27% increase in oil production and a 15%
increase in realized oil prices. Natural gas revenues increased by 21% to US$38.1
million.
EBITDA Up 54%: EBITDA (adjusted for non cash items such as impairment charges,
write-offs and share based payments), increased to US$63.4 million in 2011 compared
to US$41.1 million in 2010. Cash flow from operating activities in 2011 increased by
106% year-on-year to US$63.8 million (2010: US$30.9 million).
Netbacks Up 40%: Netback per barrel of oil equivalent produced increased to US$22.9
per boe in 2011 compared to US$16.3 per boe in 2010 reflecting an increase
percentage of oil in the production mix.
Net Income Up 21%: Net Income increased to US$5.1 million (2010:US$ 4.2 million).
Net income was impacted by interest paid on the US$133 million corporate bond (issued
in December 2010), expenses related to the acquisition of new projects and certain non-
cash charges resulting from write-offs of exploration assets and employee stock awards.
Capital Expenditures Up 70%: Capital expenditures increased to US$98.7 million in
2011 (2010: US$58.0 million), driven primarily by an increase in drilling activity on the
Fell and Tranquilo Blocks in Chile.
Shareholders Equity Up 126%: As a result of the transaction with LG International and
the improved financial performance during the year, GeoPark’s equity attributable to
shareholders increased by US$116.6 million to US$208.9 million.
Year-End Positive Net Cash Position: The Company’s 2011 year-end cash resources
were US$201.9 Million, including cash guarantees. Year-end 2011 debt was US$165.3
million – resulting in a net cash position at 31 December 2011 of US$36.8 million
(compared to a net debt position of US$ 64.4 million at 31 December 2010). The
Company’s current cash position is approximately US$75 million.
Key Strategic Results
Entry by LG International into the Chile Business: In March 2010, LGl and the
Company agreed to form a strategic partnership to jointly acquire and develop upstream
oil and gas projects throughout Latin America. During 2011, the Company and LGl
executed agreements by which LGl acquired in total a 20% equity interest in GeoPark’s
Chilean business for an aggregate consideration of US$148 million. These transactions
imply a 100% valuation of GeoPark’s Chile business at more than US$780 million and
contributed funding for new acquisition opportunities and investment programs.
Three New High Potential Blocks in Tierra del Fuego: In September 2011, GeoPark
signed three participation agreements with Empresa Nacional del Petróleo (“ENAP”), the
State Oil Company of Chile, to acquire the Campanario, Flamenco and Isla Norte blocks
located in Tierra del Fuego, Chile. These three blocks cover more than 400,000 acres
and are similar and geologically contiguous to the Fell Block where the Company has
developed current oil and gas production of approximately 9,500 boepd. From
preliminary evaluations, GeoPark currently estimates unrisked mean resources (100%
WI) of 50 to 100 million boe on the three new blocks. Following its successful
methodology employed on the Fell Block, the Company will also evaluate early
production opportunities from existing non-producing wells. GeoPark has committed to
spend in excess of US$101 million on these blocks over the next three years. Final
regulatory approval has now been obtained for the Flamenco and Isla Norte blocks and
remains pending for the Campanario block. Seismic operations were initiated on the
Flamenco block during 1Q 2012.
Acquisition of 10 Block Colombia Platform: In February 2012, GeoPark acquired
Winchester Oil and Gas S.A. and La Luna Oil Company Limited S.A. (“Winchester
Luna”), privately-held exploration and production companies operating in Colombia. In
March 2012, GeoPark acquired Hupecol Cuerva LLC (“Hupecol”), a privately-held
company with two exploration and production blocks in Colombia. The combined
Hupecol and Winchester Luna purchases (acquired for a total cash consideration of
US$105 million, adjusted for working capital, plus certain possible contingent payments)
provide GeoPark with the following in Colombia:
e Interests in 10 blocks (ranging from 5% to 100%), located in the Llanos,
Magdalena and Catatumbo basins, covering an area of approximately 220,000
gross acres.
e Risk-balanced asset portfolio of existing reserves, low risk development potential
and attractive exploration upside.
e Current oil production of approximately 2,800 bopd from three blocks.
e 2P oil reserves of approximately 10 million barrels and prospective oil resources
(unrisked) in excess of 25 million barrels (Company estimates).
+ Successful Colombian operating and administrative team to support a smooth
transition and start-up by GeoPark in Colombia.
Gas Purchase and Incentive Agreement: In March 2011, GeoPark signed a new
commercial agreement with Methanex Corporation (the purchaser of the Company’s gas
in Chile) designed to increase gas production volumes by improving the relative
economics of gas exploration and development. In March 2012, GeoPark signed a new
commercial agreement with Methanex that provides GeoPark with additional incentives
to explore for and develop the Company’s gas reserves in Chile.
Current Activities and Outlook
GeoPark begins 2012 with strong fundamentals in place:
e Atrack record of execution and growth;
e Expanded asset base, including a new platform for growth in Colombia and a
growing platform in Chile;
e Improved capabilities and organization;
+. Healthy financial position resulting from significant cash reserves and supporting
operating cash flows; and
e Increased portfolio of new project opportunities.
Consequently, the Company expects to realize important organic operational and
financial performance improvements throughout 2012 following an aggressive
investment plan that will include:
e Risk-balanced production, development and exploration work programs on 19 blocks
in 3 countries (Chile, Colombia and Argentina);
+ Capital expenditures of US$220-240 million, funded from existing cash resources
and operating cash flows;
e Drilling of 45-55 new wells (gross) – approximately 35% of which will focus on
exploration for new reserves; and
.e Atargeted increase in average oil and gas production from 2011 of between 80 –
100%.
GeoPark will also continue to actively work with LGl, as part of its strategic alliance, to
acquire new oil and gas upstream projects throughout Latin America. GeoPark and LGl
are currently reviewing a range of asset and corporate opportunities in Colombia, Peru,
Brazil, Chile, Ecuador and Argentina.
Commenting, James Park, Chief Executive Officer, said, “Our efforts during 2011 again
allowed us to continue our track record of consistent performance improvement and
growth while demonstrating our core differentiating strengths of execution, risk
management, opportunity creation and commitment. We are beginning 2012 with strong
momentum, important foundations in place and exciting opportunities ahead – and
expect during the year to create significant additional value for our shareholders and
stakeholders. As the first company with operations and growth platforms in Chile,
Colombia and Argentina, we are optimistic about being able to provide strong organic
growth in 2012 and over the near term. We also believe our strategic partnership with
LG International affords us the opportunity to continue to acquire new projects and
strengthen our portfolio.”
In accordance with the AIM Rules, the information in this report has been reviewed and
signed off by Salvador Minniti, geologist (30 years of oil and gas experience) and
Director of Development of GeoPark.
Reserve and resource estimates in this release have been compiled by DeGolyer and
MacNaughton and the Company in accordance with the 2011 Petroleum Resources
Management System produced by the Society of Petroleum Engineers.
GeoPark can be visited online at www.geo-park.com
For further information please contact:
GeoPark Holdings Limited
Andres Ocampo (Buenos Aires) +54 11 4312 9400
Carolina Arroyo (Santiago) +56 2 242 9600
Nick Clayton (London) +44 207 734 9922
Oriel Securities – Nominated Adviser and Joint Broker
Michael Shaw (London) +44 (0)20 7710 7600
Tunga Chigovanyika (London)
Macquarie Capital (Europe) Limited – Joint Broker
Paul Connolly (London) +44 (0)20 3037 2000
Steve Baldwin (London)
CONSOLIDATED STATEMENT OF INCOME
Amounts in US$ “000 Note 2011 2010
NET REVENUE 2 111,580 79,550
Production costs 3 (54,513) (43,923)
GROSS PROFIT 57,067 35,627
Exploration costs 4 (10,066) (5,482)
Administrative costs 5 (18,169) (13,764)
Selling expenses (2,546) (2,027)
Other operating costs (502) (1,130)
OPERATING PROFIT 25,784 13,224
Financial income 6 162 239
Financial expenses 7 (13,678) (4,427)
PROFIT BEFORE INCOME TAX 12,268 9,036
Income Tax (7,206) (4,856)
PROFIT FOR THE YEAR 5,062 4,180
Attributable to:
Owners of the Company 54 4,180
Non-controlling interest 5,008 –
Earnings per share (in US$) tor
profit attributable to owners of the Company. 0.0013 0.1000
minas per share (in US$) tor
profit attributable to owners of the Company. 0.0012 0.0944
Diluted
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Amounts in US$ “000 2011 2010
Income for the year 5,062 4,180
Other comprehensive income: – –
Total comprehensive Income tor year 5,062 4,180
Attributable to:
Owners of the Company 54 4,180
Non-controlling interest 5,008 –
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Amounts in US$ “000 Note 2011 2010
ASSETS
NON CURRENT ASSETS
Property, plant and equipment 8 224,635 159,717
Prepaid taxes 2,957 2,655
Other financial assets 5,226 5,601
Deferred income tax asset 450 374
Prepayments and other receivables 707 183
TOTAL NON CURRENT ASSETS 233,975 168,530
CURRENT ASSETS
Other financial assets 3,000 –
Inventories 584 252
Trade receivables 15,929 13,071
Prepayments and other receivables 24,984 3,158
Prepaid taxes 147 1,341
Cash and cash equivalents 193,650 99,411
TOTAL CURRENT ASSETS 238,294 117,233
TOTAL ASSETS 472,269 285,763
TOTAL EQUITY
Equity attributable to owners of the
Company
Share capital 10 43 42
Share premium 112,231 107,858
Reserves 115,164 3,919
Retained losses (18,549) (19,527)
208,889 92,292
Non-controlling interest 41,763 –
TOTAL EQUITY 250,652 92,292
LIABILITIES
NON CURRENT LIABILITIES
Borrowings 11 134,643 143,824
Provisions and other long-term liabilities 9,412 3,153
Deferred income tax liability 13,109 6,014
TOTAL NON CURRENT LIABILITIES 157,164 152,991
CURRENT LIABILITIES
Borrowings 11 30,613 25,564
Current income tax liabilities 187 –
Trade and other payable 28,535 12,710
Provisions for other liabilities 5,118 2,206
TOTAL CURRENT LIABILITIES 64,453 40,480
TOTAL LIABILITIES 221,617 193,471
TOTAL EQUITY AND LIABILITIES 472,269 285,763
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to owners of the Company
Translati Non-
Share Share Other on Retained controllin
Amount in US$ ‘000 Capital Premium Reserve Reserve Losses glInterest Total
Equity at 1 January 2010 42 107,524 3,056 894 (26,034) – 85,482
Comprehensive income:
Profit for the year – – – – 4,180 – 4,180
Other comprehensive income:
Currency translation differences – – – – – – –
Total Comprehensive Income for
the Year 2010 : : : = 4160 – 4,180
Transactions with owners:
Share-based payment – 334 (31) – 2,327 – 2,630
Total 2010 – 334 (31) – 2,327 – 2,630
Balances at 31 December 2010 42 107,858 3,025 894 (19,527) – 92,292
Comprehensive income:
Profit for the year – – – – 54 5,008 5,062
Other comprehensive income:
Currency translation differences – – – – – – –
Total Comprehensive Income for
the Year 2011 7 – – – 54 5,008 5,062
Transactions with owners:
Proceeds from transaction with Non-
controlling interest (Note 13) – 111,245 – 36,755 148,000
Share-based payment 1 4,373 – – 924 – 5,298
Total 2011 1 4,373 111,245 – 924 36,755 153,298
Balances at 31 December 2011 43 112,231 114,270 894 (18,549) 41,763 250,652
CONSOLIDATED STATEMENT OF CASH FLOW
Amounts in US$ *000 2011 2010
Cash flows from operating activities
Income for the year 5,062 4,180
Adjustments for:
Income tax for the year 7,206 4,856
Depreciation of the year 26,408 22,700
Loss on disposal of property, plant and equipment 2,010 115
Write off of unsuccessful efforts 5,919 3,033
Impairment loss 1,344 –
Accrual of borrowing’s interests 11,130 2,758
Amortization of other long-term liabilities (1,038) –
Unwinding of long term liabilities 350 259
Accrual of share-based payment 5,298 2,630
Exchange difference generated by borrowings (15) 55
Changes in working capital 89 (9,688)
Cash flows from operating activities – net 63,763 30,898
Cash flows from investing activities
Purchase of property, plant and equipment (98,651) (58,025)
Deferred income 5,000 –
Purchase of financial assets (2,625) (3,387)
Cash flows used in investing activities – net (96,276) (61,412)
Cash flows from financing activities
Proceeds from borrowings 9,668 1,853
Proceeds from the issue of bond – 130,296
Bond emission expenditures – (3,162)
Proceeds from transaction with Non-controlling interest 142,000 –
Principal paid (9,150) (36,171)
Interest paid (10,779) (1,666)
Cash flows from financing activities – net 131,739 91,150
Net increase in cash and cash equivalents 99,226 60,636
Cash and cash equivalents at 1 January 84,396 23,760
Currency translation differences relating to cash and cash Ñ –
equivalents
Cash and cash equivalents at the end of the year 183,622 84,396
Ending Cash and cash equivalents are specified as follows:
Cash in bank 193,642 99,408
Cash in hand 8 3
Bank overdratts (10,028) (15,015)
Cash and cash equivalents 183,622 84,396
NOTES
Note
1 Summary of significant accounting policies
Basis of preparation
The consolidated financial statements of GeoPark Holdings Limited have been prepared in accordance
with International Financial Reporting Standards (IFRS).
However, this announcement of preliminary results does not itself contain sufficient information to comply
with IFRS and does not constitute the Group’s full consolidated financial statements for the years ended
31 December 2011 and 2010. The Consolidated Statement of Financial Position as at 31 December 2011
and 2010, the Consolidated Statement of Income, the Consolidated Statement of Changes in Equity, the
Consolidated Statement of Cash Flow and associated notes for the year ended 31 December 2011 and
2010 have been extracted from the Group’s full consolidated financial statements for the year ended 31
December 2011 and 2010 upon which the Auditor’s opinion is unqualified. The Group expects to publish
full consolidated financial statements in June 2012. The preliminary results are presented in United States
Dollars and all values are rounded to the nearest thousand (US$’000), except where otherwise indicated.
The principal accounting policies of the group have remained unchanged from those set out in the group’s
2010 consolidated financial statements.
The following chart illustrates the Group structure as of 31 December 2011:
AS
O
(cana GeoPark Nro
MS Argentina Limited AS
AE LIT MEE
GeoPark Chile
Limited – Agencia
en Chile
(ao
TS
Argentina Limited
OS
EEN
GeoPark
S.A. TN
GeoPark
IS
MS
(Al
S.p.A.
10
(ES
Note
2 Net Revenue
Amounts in US$ ‘000 2011 2010
Sale of crude oil 73,508 48,186
Sale of gas 38,072 31,364
111,580 79,550
Note
3 Production costs
Amounts in US$ ‘000 2011 2010
Depreciation 25,844 22,301
Royalties 4,843 3,940
Staff costs 4,568 2,936
Gas plant costs 3,242 3,067
Transportation costs 2,541 1,876
Facilities maintenance 2,302 2,206
Well maintenance 1,692 1,293
Consumables 1,687 1,319
Share-based payments 1,447 372
Vehicle rental and personnel transportation 1,404 870
Pulling costs 1,086 614
Field camp 1,009 955
Landowners 344 239
Insurance costs 316 312
Other costs 2,188 1,623
54,513 43,923
Note
4 Exploration costs
Amounts in US$ ‘000 2011 2010
Staff costs 2,292 1,749
Share-based payments 985 299
Impairment loss (a) 1,344 –
Write off of unsuccessful efforts (b) 5,919 3,033
Amortization of other long-term liabilities (600) –
Other services 126 401
10,066 5,482
(a) The 2011 impairment charge relates to exploration assets in Del Mosquito Block based on an
impairment test performed.
11
(b) The 2011 charge corresponds to the write off of exploration and evaluation assets in the Fell
Block. The charge includes the cost of an unsuccessful exploratory well amounting to US$ 2,331,000
and also in accordance with the Group’s accounting policy and considering that no additional work will
be performed, wells from previous years have been written off for an amount of US$ 3,588,000. The
2010 charge corresponds to the write off of exploration and evaluation assets amounting to
US$ 2,793,000 and US$ 240,000 in the Fell Block and Del Mosquito Block, respectively.
Note
5 Administrative costs
Amounts in US$ ‘000 2011 2010
Staff costs 5,282 3,826
Share-based payments 2,866 1,959
Consultant fees 1,896 2,499
New projects 1,726 974
Office expenses 1,025 696
Director fees 903 822
Travel expenses 686 242
Communication and IT costs 539 454
Depreciation 501 290
Other administrative expenses 2,745 2,002
18,169 13,764
Note
6 Financial income
Amounts in US$ ‘000 2011 2010
Exchange difference 32 237
Interest received 130 2
162 239
Note
7 Financial expenses
Amounts in US$ ‘000 2011 2010
Bank charges and other financial costs 1,856 534
Exchange difference 496 921
Unwinding of long-term liabilities 350 259
Interest and amortization of debt issue costs 11,573 3,110
Less: amounts capitalised on qualifying assets (597) (397)
13,678 4,427
12
Note
8 Property, plant and equipment
Buildings Exploration
Furniture, Production and and
Oil 8 gas equipment facilities and improvemen Construction evaluation
Amounts in US$’000 properties and vehicles machinery ts in progress assets Total
Cost at 31 December 2010 126,626 1,445 38,142 2,076 16,197 23,412 207,898
Additions 2,318 825 1,261 156 56,570 39,469 100,599
Disposals (227) (177) (1,852) – (272) – (2,528)
Write off / Impairment – – – – – (7,263) (7,263)
Transfers 43,239 82 9,551 205 (39,599) (13,478) –
Cost at 31 December 2011 171,956 2,175 47,102 2,437 32,896 42,140 298,706
Depreciation and write-
down at 31 December (33,508) (851) (13,308) (514) – – (48,181)
2010
Depreciation (20,096) (343) (5,767) (202) – – (26,408)
Disposals – 71 447 – – – 518
Depreciation and write-
down at 31 December (53,604) (1,123) (18,628) (716) – – (74,071)
2011
Carrying amount at 31 118,352 1,052 28,474 1,721 32,896 42,140 224,635
December 2011 ? ? ? ? > > >
Note
9 Segment information
Amounts in US$ ‘000 Argentina Chile Corporate Total
2011
Net revenue 1,477 110,103 – 111,580
Gross profit 179 56,888 – 57,067
Adjusted EBITDA (1,081) 70,421 (5,949) 63,391
Depreciation (1,083) (25,297) (28) (26,408)
Impairment and write off (1,344) (5,919) – (7,263)
Total assets 10,895 453,384 7,990 472,269
Employees (average) 83 98 1 182
13
A reconciliation of total Adjusted EBITDA to total profit before income tax is provided as follows:
Amounts in US$ ‘000 2011
Adjusted EBITDA for reportable segments 63,391
Depreciation (26,408)
Accrual of stock options and stock awards (5,298)
Impairment and write off of unsuccessful efforts (7,263)
Others (a) 1,362
Operating profit 25,784
Net finance cost (13,516)
Profit before tax 12,268
(a) Includes internally capitalized costs.
Note
10
Share capital
Details regarding the share capital of the Company are set out below:
Shares Shares
GeoPark common shares history issued closing US$(000)
Date (millions) (millions) Closing
Shares outstanding at the end of 2009 41.7 42
Issue of shares to Non-Executive Directors 2010 0.02 41.7 42
Stock awards Dec 2010 0.02 41.7 42
Shares outstanding at the end of 2010 41.7 42
Issue of shares to Non-Executive Directors 2011 0.01 41.7 42
Stock awards May 2011 0.06 41.8 42
Stock awards Oct 2011 0.10 41.9 42
IPO stock options Oct 2011 0.60 42.5 43
Shares outstanding at the end of 2011 42.5 43
During 2011, the Company issued 12,028 (14,704 in 2010) shares to Non-Executive Directors in
accordance with contracts as compensation. Shares are issued at average price for the period, generating
a share premium of US$ 130,733 (US$ 91,000 in 2010).
During 2011, 158,000
agreement for services rendered to GeoPark Holdings Limited generating a shared premium of
US$ 1,730,000 (US$ 243,000 in 2010).
On 6 October 2011 601,235 common shares, were allotted to the trustee of the EBT in anticipation of the
exercise of the 2006 Stock Option Plan.
14
(22,000 in 2010) new common shares were issued, pursuant to a consulting
Note
11 Borrowings
Amounts in US$ ‘000 2011 2010
Outstanding amounts as of 31 December
Methanex Corporation (a) 18,068 25,848
Banco de Crédito e Inversiones (b) 8,845 541
Overdrafts (c) 10,028 15,015
Bond (d) 128,315 127,984
165,256 169,388
Classified as follows:
Non current 134,643 143,824
Current 30,613 25,564
(a) The financing obtained in 2007, for development and investing activities on the Fell Block, is structured
as a gas pre-sale agreement with a six year pay-back period and an interest rate of LIBOR flat. In each
year, the Group will repay principal up to an amount equal to the loan amount multiplied by a specified
percentage. Subject to that annual maximum principal repayment amount, the Group will repay principal
and interest in an amount equal to the amount of gas specified in the contract at the effective selling price.
In addition on 30 October 2009 another financing agreement was signed with Methanex Corporation
under which Methanex have funded GeoPark’s portions of cash calls for the Otway Joint Venture for
US$ 3,100,000. The loan is being repaid by GeoPark funding Methanex’s portion of cash calls made
between August 2011 and 11 May 2012 (or earlier). If any amount of loan remains outstanding on 11 May
2012, it will be repaid in a lump sum on that date. The purpose is to finance the exploration, development
and production of natural gas from the Otway Block. This financing does not bear interests.
(b) Facility to establish the operational base in the Fell Block. This facility was acquired through a
mortgage loan granted by the Banco de Crédito e Inversiones (BCI), a Chilean private bank. The loan was
granted in Chilean pesos and is repayable over a period of 8 years. The interest rate applicable to this
loan is 6.6%. The outstanding amount at 31 December 2011 is US$ 410,000.
In addition, during the last quarter of 2011, GeoPark TdF obtained short term financing from BCI to start
the operations in the new blocks acquired. This financing is structured as letter of credit. The maturity is
within a year. The outstanding amount at 31 December 2011 is US$ 8,435,000
(c) The Group has been granted with credit lines for approximately US$ 15,000,000.
(d) Private placement of US$ 133,000,000 of Reg S Notes on 2 December 2010. The Notes carry a
coupon of 7.75% per annum and mature on 15 December 2015. The Notes are guaranteed by the
Company and secured with the pledge of 51% of the shares of GeoPark Fell. In addition, the Note
agreement allows for the placement of up to an additional US$ 27,000,000 of Notes under the
15
same indenture, subject to the maintenance of certain financial ratios. The net proceeds of the Notes are
being used to support the Group’s growth strategy and improve the Group’s financial flexibility.
The fair value of these financial instruments at 31 December 2011 amounts to US$ 159,602,000
(US$ 158,492,000 in 2010).
Note
12 Share-based payments
IPO Award Program and Executive Stock Option plan
The Group has established IPO Award Program and Executive Stock Option plans. These schemes were
established to incentivise the Directors, senior management and employees, enabling them to benefit
from the increased market capitalization of the Company.
During 2008, GeoPark Shareholders have voted to authorize the Board to use up to 12% of the issued
share capital of the Company at the relevant time for the purposes of the Performance-based Employee
Long Term Incentive Plan.
Main characteristics of the Stock Awards Programs are:
+ All employees are eligible.
+ Exercise price is equal to the nominal value of shares.
+ Vesting period is four years.
e Specific Award amounts are reviewed and approved by the Executive Directors and the
Remuneration Committee of the Board of Directors.
Details of these costs and the characteristics of the different stock awards programs are described in the
following table and explanations:
Amount of Shares not
Year Grant Date Shares vested 2011
2011 15 December 2011 500,000 – 37
2010 15 December 2010 1,000,000 136,900 2,776
2008 15 December 2008 1,000,000 41,686 925
Subtotal 3,738
Stock awards for service contracts October 2010 300,000 120,000 672
Stock awards for service contracts 31 August 2011 90,000 – 757
Shares granted to Non-Executive Directors 131
5,298
The awards that do not vest are cancelled since they correspond to employees that had left the Group
before vesting date.
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Note
13 Business transactions
LGl partnership
On 12 March 2010, LGl and the Company agreed to form a new strategic partnership to jointly acquire
and develop upstream oil and gas projects in Latin America.
During 2011, GeoPark and LGl entered into the following agreements through which LGl acquires an
equity interest in the Chilean Business of the Group:
. On 20 May 2011, the Company (through its wholly owned subsidiaries GeoPark Chile Chilean
Branch and GeoPark Chile S.A.) and LGl signed a subscription agreement in which LGl subscribed
10 million of ordinary shares representing 10% equity interest in GeoPark Chile S.A, the Company
owner of the Chilean assets, for a total consideration of US$ 70,000,000.
. On 4 October 2011, an addendum to the agreement dated 20 May 2011 was signed whereby 12.5
million of ordinary shares in GeoPark Chile S.A. were subscribed by LGl, for a consideration of US$
78,000,000, representing an additional 10%.
The transactions mentioned above have been considered to be a deemed disposal and in accordance
with IAS 27 it has been accounted for as a transaction with Non-controlling interest. Consequently, the
gain arising on the transactions of US$ 111,245,000 has been recognised through equity rather than in
the income statement for the year.
Tierra del Fuego blocks
In 2011, after participating in a farm-in process organized by ENAP, GeoPark was awarded three blocks
in Tierra del Fuego (Isla Norte Block, Flamenco Block and Campanario Block).
GeoPark is the operator in all blocks with a share of 60% for Isla Norte Block and 50% for the other 2
blocks.
Future investment commitments assumed by GeoPark were:
– 3 €xploratory wells and 350 km2 of Seismic on Isla Norte Block
– 8exploratory wells and 578 km2 of Seismic on Campanario Block
– 10exploratory wells and 570 km2 of Seismic on Flamenco Block
As part of the agreement, the investments made in the first exploratory period will be carried 100% by
GeoPark and will not be recoverable in the future (commitment of 21 exploratory wells and 1,498 km2 of
3D Seismic). lf commercial production is reached, both parties will fund the development and operating
expenses on a pro rata basis.
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Note
14 – Subsequent Events
Acquisitions in Colombia
In February 2012, GeoPark acquired two privately-held exploration and production companies operating in
Colombia, Winchester Oil and Gas S.A. and La Luna Oil Company Limited S.A. (“Winchester Luna”).
In March 2012, a second acquisition occurred with the purchase of Hupecol Cuerva LLC (“Hupecol”), a
privately-held company with two exploration and production blocks in Colombia.
The combined Hupecol and Winchester Luna purchases (acquired for a total consideration of
US$ 105,000,000, adjusted for working capital, plus certain possible contingent payments) provide
GeoPark with the following in Colombia:
e Interests in 10 blocks (ranging from 5% to 100%), with license operations in four of them, located
in the Llanos, Magdalena and Catatumbo Basins, covering an area of approximately 220,000
gross acres.
+. Risk-balanced asset portfolio of existing reserves, low risk development potential and attractive
exploration upside. With current oil production of approximately 2,800 barrels per day (bopd) from
three blocks.
e 2P oil reserves of approximately 10 million barrels and prospective oil resources (unrisked) of 25+
million barrels (Company estimates).
+ Successful Colombian operating and administrative team to support a smooth transition and start-
up by GeoPark in Colombia together with Associations and JVs with principal Colombian
operators.
The acquisitions were afforded from the existing cash resources as of 31 December 2011. In the same
way, the Company will fund the investment programme from the same source.
Agreement with Methanex
In March 2012, the Company and Methanex signed a third addendum and amendment to the Gas Supply
Agreement in order to incentivize the development of gas reserves. Through this new agreement, the
Company undertakes a programme consisting of drilling a minimum of five new gas wells during 2012.
Methanex will contribute to the cost of drilling the wells in order to improve the project economics.
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Link al archivo en CMFChile: https://www.cmfchile.cl/sitio/aplic/serdoc/ver_sgd.php?s567=e9148c87ba8baf2dd18a98e10d363d27VFdwQmVFMXFRVEJOUkVFeFRrUnJlRTlCUFQwPQ==&secuencia=-1&t=1682366909
