RIO DE JANEIRO—The independent Colombia-based oil company GeoPark (NYSE: GPRK) ended 2017 with some positive results. After reaching an output of 10.2 million barrels of oil equivalent (MMboe) last year, the oil company became the country’s third largest operator.
Also, the operator grew its net proven reserves by 24% to 97 MMboe last year, according to the company’s latest quarterly results report released in February.
“Our team did its job by growing every component of our business plan. Production continues to increase with over 30,000 barrels per day today as our drilling keeps finding oil and pushing out the boundaries of our key oil fields in Colombia,” GeoPark CEO James Park said during a conference call. “With our successful drilling results, GeoPark became the third largest operator in Colombia, a milestone accomplished in just five years beginning from scratch.”
In 2017, the operator invested $106 million in its South American assets.
Of the company’s total proved oil reserves in 2017, 66.1 MMboe (55%) are in assets in Colombia, followed by Chile (21%), Peru (20%), Brazil (3%) and Argentina (1%).
Currently, the Llanos 34 Block is the company’s main asset in Colombia, representing 94% of GeoPark’s Colombian proved and probable reserves.
For 2018, GeoPark is focused on the Llanos 34 Block with an expected investment of about $90 million. This investment amount includes drilling 20 gross wells to continue developing and appraising the Tigana/Jacana oil fields and targeting new exploration prospects within and adjacent to the Llanos 34 Block.
“The program also includes construction of a new flowline and facilities to continue reducing transport and operating costs,” the company said. “These represent low-cost, low-risk, quick cash flow generating projects with high-expected economic returns.”
Despite the company’s positive results in Colombia in 2017, GeoPark did not experience the same in other countries such as Brazil and Chile.
In Brazil, the company’s proved reserves fell 20% from 5.4 MMboe to 4.3 MMboe. The result is a reflection of a year without discoveries by the company in Brazil.
This year, GeoPark will work on exploration drilling in the Recôncavo and Potiguar onshore blocks, where the company has a 70% and 100% stake, respectively. The investment plan for 2018 in Brazil is between $3 million and $4 million.
The program includes two exploratory wells and seismic surveys. The company also has a 10% stake in the Manati Field in the Camamu Basin. The field is operated by Petrobras (35%) in partnership with PetroRio (10%) and QGEP (45%), both Brazilian independent oil companies.
In Chile, after producing 1.1 MMboe in 2017, GeoPark’s proven and probable reserves in the country decreased by 11% to 34.0 MMboe compared to 2016.
According to the GeoPark, delays in expected development plans, technical revisions and to a lesser extent, the impact of oil prices on some marginal fields led tothe fall in reserves. GeoPark intends to invest in Chile between $1 million and 2 million, focusing on business optimization in addition to environmental and unconventional studies in the Fell Block.
As for Peru and Argentina, GeoPark is planning to boost investments in those countries.
In Peru, where the operator signed an agreement with the Peruvian state-owned company Petroperu in 2016 to operate the Morona Block, GeoPark plans to invest between an estimated $6 million and $9 million on environmental impact studies and preliminary engineering works and facilities in the field acquired.
According to GeoPark, the company expects to start producing oil by the end of 2019. The Morona Block is located in northern Peru covering an area of 1.9 million acres in the Marañon Basin. The Morona Block contains the Situche Central oil field, which has been delineated by two wells (which tested about 2,400 and 5,200 bbl/d) and by 3-D seismic.
Argentina was the last country where GeoPark acquired assets. In August 2017, GeoPark announced successful drilling results in CN-V Block (GeoPark operated, 50%), which resulted in the discovery of the Rio Grande Oeste oil field. During fourth-quarter 2017, GeoPark initiated a long-term test in the Rio Grande Oeste 1 exploration well. “We started production in Argentina at our new Rio Grande Oeste oil field, and we will be drilling more in Argentina next quarter in the Sierra del Nevado Block,” GeoPark COO Augusto Zubillaga said.
The company has a $100 million investment plan that enables the operator to produce, develop and explore its assets in 2018, Park said.
“We believe this structure differentiates GeoPark from many oil and gas companies and is the right formula for an E&P company to achieve enduring success in today’s world,” Park said. “Our team is ready and excited about our upcoming 2018 work program, which includes drilling over 30 new wells targeted to extend our 15-year track record of production and reserve growth and adaptable to succeed in any oil price scenario.”