Geopark Holdings Ld (GPK) - Half Yearly Report RNS Number : 1532N Geopark Holdings Limited 26 September 2012 Embargoed for release at 7:00 am 26 September 2012 GEOPARK HOLDINGS LIMITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2012 GeoPark Holdings Limited ("GeoPark" or the "Company"), the Latin American oil and gas exploration and production company with operations and producing properties in Chile, Colombia and Argentina (AIM: GPK), is pleased to announce its interim results for the six months ended 30 June 2012. Summary During the first half of 2012, GeoPark achieved record growth in key performance measures of oil and gas production, revenues, EBITDA and net income. Continuous organic expansion, bolstered by new project acquisitions in Colombia and Chile, are leading GeoPark in 2012 to a projected seventh consecutive year of overall growth. New Project Acquisitions Highlights GeoPark's 1H2012 results have been complemented by key strategic developments including: · Colombian Platform Acquisition: GeoPark acquired a solid growth platform in Colombia consisting of interests in 10 blocks with a balanced mix of production, development and exploration opportunities, through two acquisitions closed during 1Q2012, for a total consideration of US$105 million plus possible contingent payments and working capital adjustments. · Tierra del Fuego Operations Start-Up: GeoPark initiated works in the recently acquired Tierra del Fuego Blocks in Chile (consisting of the Isla Norte, Campanario and Flamenco blocks), through the registration of 289 sq km of 3D seismic in the Flamenco Block. Preliminary interpretation of processed data suggests hydrocarbon prospects that could allow drilling to begin in 1Q2013. · Business Development: Along with its strategic partner, LG International, GeoPark is continuing its efforts to build a risk-balanced oil and gas asset portfolio throughout Latin America by acquiring oil and gas properties and interests in Colombia, Brazil, Argentina, Peru, and Chile. Operational Highlights · 87% Oil and Gas Production Increase: Total oil and gas production increased 87% to 11,930 barrels of oil equivalent per day (boepd) in 1H2012 compared to 6,369 boepd in 1H2011. Crude oil production increased 377% to 7,473 barrels per day (bopd) in 1H2012 compared to 1,566 bopd in 1H2011, which reflects an improvement in GeoPark's production balance towards oil, as well as the incorporation of new production from Colombia. Total production for 2012 is now expected to average approximately 11 - 12,000 boepd, representing an approximate 50% increase compared to 2011 total production. This revised forecast represents a decrease from previous production estimates in April 2012 and is the result of issues integrating new acquisitions, tie-in delays and flow rates from discoveries in Colombia being below initial expectations, as well as lower than expected results from drilling activities in Chile. · Drilling of 27 Wells: As described in GeoPark's Quarterly Operations Updates, GeoPark drilled and/or participated in twenty seven new wells in 1H2012, including ten wells in Chile and seventeen wells in Colombia. Currently, two wells are being drilled in Chile and one well being drilled in Colombia. GeoPark's 2012 revised work program encompasses drilling 42-46 new wells (gross) with a capital expenditure budget of approximately US$200-210 million. · New Oil and Gas Discoveries in Colombia and Chile: From its exploration drilling program in Colombia and in Chile, GeoPark made the following new discoveries during 1H2012: 1. Max Oil Field / Block 34, Colombia (45% WI, GeoPark operated): Max 1 well was GeoPark's first oil discovery in Colombia, and is currently on production by electrical submersible pump (ESP) from the Guadalupe formation. An appraisal well on Max will spud during 4Q2012. 2. Tua Oil Field / Block 34, Colombia (45% WI, GeoPark operated): Tua 1 well was GeoPark's second discovery in Colombia, and is currently on production by ESP from the Mirador formation. The Tua 2 appraisal well finished drilling during September and is currently under completion. The Tua 3 development well is expected to spud in 4Q2012. 3. Maniceño Oil Field / Block 32, Colombia (10% WI, GeoPark non-operated): Maniceño was tested and put into production from the Mirador formation. 4. Azor Oil Field / Arrendajo Block, Colombia (10% WI, GeoPark non-operated): Azor was tested and put into production from the Carbonera C5 formation. 5. Kosten Gas Field / Fell Block (100% WI, GeoPark operated), Chile: Kosten 1 was tested and put into production from the Springhill formation by natural flow. 6. Kiuaku Gas Field / Fell Block, Chile (100% WI, GeoPark operated): Kiuaku 1 was tested and put into production from the Springhill formation by natural flow. · Seismic Surveys: In Chile, GeoPark carried out 67 km of 2D seismic in the Otway and Tranquilo Blocks and 289 km^2 of 3D seismic in the Flamenco Block in Tierra del Fuego. In Colombia, GeoPark carried out 111 km^2 of 3D seismic work in the Llanos 62 Block. · Unconventional Resource Potential Assessment: In Chile, GeoPark's acreage position in the Magallanes Basin contains the Estratos con Favrella shale formation which has previously tested and produced oil. GeoPark initiated a program of diagnosticfracture injection tests (DFITs) on a selection of six to eight wells on the Fell Block to determine the fracability and reservoir properties of the shale. Preliminary results of this program are expected in 4Q2012. Financial Highlights · Revenues Up 194%: Total revenues increased to US$122.7 million in 1H2012 from US$41.8 million in 1H2011, mainly as a result of a significant increase in oil production. Oil revenues from Chilean and Argentinean operations increased by 179% to US$68.9 million and Colombian operations incorporated additional oil revenues for US$36.7 million. Oil revenues represented 86% of total revenues. · Adjusted EBITDA Up 241%: Adjusted EBITDA (adjusted earnings before interest, tax, depreciation, amortization and certain non-cash items such as write offs and share based payments) increased to US$72.6 million in 1H2012 compared to US$21.3 million in 1H2011. In addition, cash flow from operating activities in 1H2012 increased by 329% to US$71.6 million from US$16.7 million in 1H2011. · Netbacks Up 113%: Netback per boe produced increased to US$37.2 per boe in 1H2012 compared to US$17.5 per boe in 1H2011 reflecting a higher weighting of oil in GeoPark's production mix, as well as the incorporation of Colombian operations into the portfolio. · Net Income Up Significantly: Net income for 1H2012 increased to US$16.6 million, compared to nil reported for the 1H2011. The increase in net results arose from an improvement in operating results which increased to US$38.9 million in 1H2012 (including US$8.3 million from our new Colombian operations) compared to US$8.8 million in 1H2011. · Total Equity Up 57%: Total Equity attributable to shareholders increased to US$242.3 million in 1H2012 compared to US$153.8 million at the end of 1H2011. · Cash Availability: GeoPark had US$66.3 million in cash and cash equivalents at the end of 1H2012, with a liquidity ratio of 1.7x (current assets divided by current liabilities), and total financial debt of US$154.9 million. Outlook GeoPark's active 2012 work and investment program of US$200-210 million in Chile, Colombia and Argentina includes drilling 42-48 wells, with 15 - 21 wells planned for 2H2012 and producing 11,000-12,000 boepd. Commenting, James F. Park, CEO of GeoPark, said: "GeoPark is on track for a year of record growth -- both from existing assets and newly acquired projects. Despite taking over the new Colombian properties within the first semester, our team has been able to integrate the new companies, rapidly initiate drilling and production operations and contribute important results to our bottom-line already in the first half of 2012. We are encouraged by our new projects and results in Colombia and look forward to further growth and expansion. Drilling results in Chile did not match our historical track record and consequently our growth rate in Chile was lower than expected. However, we are looking forward to further exploration and development drilling results during 2H2012 - as well as soon being able to begin operations on our new high potential blocks in Tierra del Fuego". In accordance with the AIM Rules, the information in this report has been reviewed by Salvador Minniti, a geologist with 32 years of oil and gas experience and Director of Exploration of GeoPark. GeoPark can be visited online at www.geo-park.com For further information please contact: GeoPark Holdings Limited Andres Ocampo (Buenos Aires) +54 11 4312 9400 Pablo Ducci (Chile) +56 2 242 9600 Oriel Securities - Nominated Adviser and Joint Broker Michael Shaw (London) +44 (0)20 7710 7600 Tunga Chigovanyika (London) Macquarie Capital (Europe) Limited - Joint Broker Jeffrey Auld (London) +44 (0)20 3037 2000 Steve Baldwin (London) GEOPARK HOLDINGS LIMITED FIRST HALF 2012 INTERIM CONSOLIDATED FINANCIAL REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2012 CONSOLIDATED STATEMENT OF INCOME Six-months period Six-months period Year ended ended 30 June ended 30 June 31 December Amounts in US$ ´000 Note 2012 2011 2011 NET REVENUE 2 122,688 41,765 111,580 Production costs (51,670) (22,294) (54,513) GROSS PROFIT 71,018 19,471 57,067 Exploration costs (10,199) (1,872) (10,066) Administrative costs (13,562) (7,816) (18,169) Selling expenses (7,981) (848) (2,546) Other operating loss (413) (165) (502) OPERATING PROFIT 38,863 8,770 25,784 Financial income 4 318 84 162 Financial expenses 5 (7,662) (6,727) (13,678) PROFIT BEFORE TAX 31,519 2,127 12,268 Income tax (9,487) (1,749) (7,206) PROFIT FOR THE 22,032 378 5,062 PERIOD/YEAR Attributable to: Owners of the parent 16,574 10 54 Non-controlling interest 5,458 368 5,008 Earnings per share (in US$) for profit attributable 0.3902 0.0002 0.0013 to owners of the Company. Basic Earnings per share (in US$) for profit attributable 0.3669 0.0002 0.0012 to owners of the Company. Diluted STATEMENT OF COMPREHENSIVE INCOME Six-months period Six-months period Year ended ended 30 June ended 30 June 31 December Amounts in US$ ´000 2012 2011 2011 Profit for the period / year 22,032 378 5,062 Other comprehensive income - - - Total comprehensive Income 22,032 378 5,062 for the period / year Attributable to: Owners of the parent 16,574 10 54 Non-controlling interest 5,458 368 5,008 CONSOLIDATED STATEMENT OF FINANCIAL POSITION At 30 June At 30 June Year ended 31 Amounts in US$ ´000 Note 2012 2011 December 2011 ASSETS NON CURRENT ASSETS Property, plant and equipment 6 381,334 184,249 224,635 Prepaid taxes 5,504 2,922 2,957 Other financial assets 6,738 5,287 5,226 Deferred income tax 6,932 394 450 Prepayments and other receivables 609 544 707 TOTAL NON CURRENT ASSETS 401,117 193,396 233,975 CURRENT ASSETS Other financial assets - - 3,000 Inventories 11,134 2,656 584 Trade receivables 22,569 15,898 15,929 Prepayments and other receivables 41,244 6,286 24,984 Prepaid taxes 5,466 3,683 147 Cash and cash equivalents 66,347 143,961 193,650 TOTAL CURRENT ASSETS 146,760 172,484 238,294 TOTAL ASSETS 547,877 365,880 472,269 EQUITY Equity attributable to owners of the Company Share capital 7 43 42 43 Share premium 7 118,821 108,554 112,231 Reserves 123,006 62,416 115,164 Retained earnings (losses) 440 (17,153) (18,549) Non-controlling interest 54,355 11,625 41,763 TOTAL EQUITY 296,665 165,484 250,652 LIABILITIES NON CURRENT LIABILITIES Borrowings 8 127,404 134,725 134,643 Provisions for other long-term liabilities 14,994 6,795 9,412 Trade and other payables 1,018 - - Deferred income tax 19,726 7,783 13,109 TOTAL NON CURRENT LIABILITIES 163,142 149,303 157,164 CURRENT LIABILITIES Borrowings 8 27,488 31,435 30,613 Current income tax 3,419 - 187 Trade and other payables 49,961 17,482 28,535 Provisions for other liabilities 7,202 2,176 5,118 TOTAL CURRENT LIABILITIES 88,070 51,093 64,453 TOTAL LIABILITIES 251,212 200,396 221,617 TOTAL EQUITY AND LIABILITIES 547,877 365,880 472,269 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Attributable to owners of the Company Retained Non - Amount in Share Share Other Translation Earnings controlling US$ '000 Capital Premium Reserve Reserve (Losses) Interest Total Equity at 1 42 107,858 3,025 894 (19,527) - 92,292 January 2011 Profit for the first half of - - - - 10 368 378 the year Total comprehensive income for the - - - - 10 368 378 period ended 30 June 2011 Proceeds from transaction with - - 58,497 - - 11,257 69,754 Non-controlling interest Shared-based - 696 - - 2,364 - 3,060 payment Balance at 30 42 108,554 61,522 894 (17,153) 11,625 165,484 June 2011 Profit for the second half of - - - - 44 4,640 4,684 the year Total comprehensive income for the - - - - 44 4,640 4,684 second half of the year 2011 Proceeds from transaction with - - 52,748 - - 25,498 78,246 Non-controlling interest Share-based 1 3,677 - - (1,440) - 2,238 payment Balance at 31 43 112,231 114,270 894 (18,549) 41,763 250,652 December 2011 Profit for the first half of - - - - 16,574 5,458 22,032 the year Total comprehensive income for the - - - - 16,574 5,458 22,032 period ended 30 June 2012 Proceeds from transaction with - - 14,432 - - 7,134 21,566 Non-controlling interest Share-based - - - - 2,415 - 2,415 payment Balance at 30 43 112,231 128,702 894 440 54,355 296,665 June 2012 CONSOLIDATED STATEMENT OF CASH FLOW Six-months period Year ended Six-months period ended 30 June 31 December, Amounts in US$ '000 ended 30 June 2012 2011 2011 Cash flows from operating activities Profit for the period/year 22,032 378 5,062 Adjustments for: Income tax for the 9,487 1,749 7,206 period/year Depreciation of the 22,013 10,040 26,408 period/year Loss on disposal of property, plant and 125 414 2,010 equipment Write-off of unsuccessful 8,564 - 5,919 efforts Impairment loss - - 1,344 Accrual of borrowing's 5,796 5,465 11,130 interests Unwinding of discount 298 166 350 Accrual of stock awards 2,415 3,060 5,298 Exchange difference 20 24 (15) generated by borrowings Changes in working capital 795 (4,615) 89 Cash flows from operating 71,545 16,681 63,763 activities - net Cash flows from investing activities Purchase of property, plant (88,056) (33,728) (98,651) and equipment Acquisitions of subsidiaries, net of cash (104,965) - - acquired (Note 9) Purchase of financial - - (2,625) assets Deferred income 2,850 - 5,000 Sale of financial assets - 314 - Cash flows used in (190,171) (33,414) (96,276) investing activities - net Cash flows from financing activities Proceeds from borrowings 3,923 1,237 9,668 Proceeds from transaction with Non-controlling 8,869 70,000 142,000 interest Principal paid (16,297) (8,850) (9,150) Interest paid (5,259) (5,575) (10,779) Cash flows (used in) from (8,764) 56,812 131,739 financing activities - net Net (decrease) increase in (127,390) 40,079 99,226 cash and cash equivalents Cash and cash equivalents 183,622 84,396 84,396 at 1 January Cash and cash equivalents at the end of the 56,232 124,475 183,622 period/year Ending Cash and cash equivalents are specified as follows: Cash in banks 66,324 143,958 193,642 Cash in hand 22 3 8 Bank overdrafts (10,114) (19,486) (10,028) Cash and cash equivalents 56,232 124,475 183,622 SELECTED EXPLANATORY NOTES Note 1 General information GeoPark Holdings Limited (the Company) is a company incorporated under the law of Bermuda. The Registered Office address is Cumberland House, 9th Floor, 1 Victoria Street, Hamilton HM11, Bermuda. The Company is quoted on the AIM market of London Stock Exchange plc. This consolidated interim financial report has neither been audited nor reviewed by the Company's auditors. It was authorised for issue by the Board of Directors on 24 September 2012. The consolidated interim financial report of GeoPark Holdings Limited is presented in accordance with IAS 34 "Interim Financial Reporting". It does not include all of the information required for full annual financial statements, and should be read in conjunction with the annual financial statements as at and for the year ended 31 December 2011, which have been prepared in accordance with IFRSs. The consolidated interim financial report has been prepared in accordance with the accounting policies applied in the most recent annual financial statements. For further information please refer to GeoPark Holdings Limited's consolidated financial statements for the year ended 31 December 2011. Subsidiary undertakings The following chart illustrates the Group structure: Details of the subsidiaries and jointly controlled assets of the Company are set out below: Name and registered office Ownership interest GeoPark Argentina Ltd. - Subsidiaries Bermuda 100% GeoPark Argentina Ltd. - Argentine Branch 100% (a) Servicios Southern Cross Limitada (Chile) 100% (b) GeoPark Chile Ltd. - Bermuda 100% GeoPark Chile Ltd. - Chilean Branch 100% (a) GeoPark S.A. (Chile) 100% (a) (b) GeoPark Chile S.A. (Chile) 80% (a) (c) GeoPark Fell S.p.A. (Chile) 80% (a) (c) GeoPark Magallanes Limitada (Chile) 80% (a) (c) GeoPark TdF S.A. (Chile) 69% (a) (d) GeoPark Colombia S.p.A. (Chile) 100% (a) (e) GeoPark Luna SAS (Colombia) 100% (a) (e) GeoPark Colombia SAS (Colombia) 100% (a) (e) GeoPark Llanos SAS (Colombia) 100% (a) (e) La Luna Oil Co. Ltd. (Panama) 100% (a) (e) Winchester Oil and Gas S.A. (Panama) 100% (a) (e) GeoPark Cuerva LLC (United States) 100% (a) (e) Sucursal La Luna Oil Co. Ltd. (Colombia) 100% (a) (e) Sucursal Winchester Oil and Gas S.A. (Colombia) 100% (a) (e) Sucursal GeoPark Cuerva LLC (Colombia) 100% (a) (e) GeoPark Brazil S.p.A. (Chile) 100% (a) (b) Jointly controlled assets Tranquilo Block (Chile) 29% (f) Otway Block (Chile) 25% Flamenco (Chile) 50% (g) Isla Norte (Chile) 60% (g) Campanario (Chile) 50% (g) (a)Indirectly owned. (b)Dormant companies. (c)Since 20 May 2011, LG International acquired 20% interest. (d)LG International has 20% interest through GeoPark Chile S.A. and a 14% direct interest. (e)During the first quarter of 2012, the Company entered into a business combination acquiring 100% interest in each entity (see Note 10). (f)On 14 April 2011 following Governmental approval the new ownership of the Tranquilo Block was confirmed. The other partners in the JVs are Pluspetrol (29%), Methanex (17%) and Wintershall (25%). (g)After participating in a farm-in process organized by ENAP, GeoPark was awarded 3 blocks in Tierra del Fuego, Chile (Isla Norte Block, Flamenco Block and Campanario Block). GeoPark will be the operator in all blocks with a share of 60% for Isla Norte Block and 50% for the other 2 blocks. Note 2 Net revenue Year ended Amounts in US$ Six-months period ended Six-months period ended 31 December '000 30 June 2012 30 June 2011 2011 Sale of crude oil 105,590 24,656 73,508 Sale of gas 17,098 17,109 38,072 122,688 41,765 111,580 Note 3 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 strategic steering committee. This committee is integrated by the CEO, Managing Director, CFO and managers in charge of the Geoscience, Drilling, Operations and SPEED 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 strategic steering committee assesses the performance of the operating segments based on a measure of adjusted earnings before interest, tax, depreciation, amortisation and certain non cash items such as write offs and share based payments (Adjusted EBITDA). This measurement basis excludes the effects of non-recurring expenditure from the operating segments, such as impairments when it is result of an isolated, non-recurring event. Interest income and expenditure are not included in the result for each operating segment that is reviewed by the strategic steering committee. Other information provided, except as noted below, to the strategic steering committee is measured in a manner consistent with that in the financial statements. Six-months period ended 30 June 2012 Amounts in US$ '000 Total Argentina Chile Colombia Corporate NET REVENUE 122,688 664 85,320 36,704 - GROSS PROFIT 71,018 146 52,135 18,583 154 OPERATING PROFIT / (LOSS) 38,863 (2,714) 36,572 8,320 (3,315) Adjusted EBITDA 72,586 (808) 59,028 17,622 (3,256) Six-months period ended 30 June 2011 Amounts in US$ '000 Total Argentina Chile Colombia Corporate NET REVENUE 41,765 725 41,040 - - GROSS PROFIT 19,471 884 18,587 - - OPERATING PROFIT / (LOSS) 8,770 (1,991) 14,977 - (4,216) Adjusted EBITDA 21,287 (453) 25,580 - (3,840) Total Assets Total Argentina Chile Colombia Corporate 30 June 2012 547,877 10,448 377,165 157,923 2,341 31 December 2011 472,269 10,895 453,384 - 7,990 30 June 2011 365,880 10,287 351,724 - 3,869 A reconciliation of total Adjusted EBITDA to total profit before income tax is provided as follows: Six-months period ended Six-months period ended 30 June 2012 30 June 2011 Adjusted EBITDA for reportable 72,586 21,287 segments Depreciation (22,013) (10,040) Accrual of stock awards (2,415) (3,060) Write-off of unsuccessful (8,564) - efforts Others (731) 583 Operating profit 38,863 8,770 Financial results (7,344) (6,643) Profit before tax 31,519 2,127 Note 4 Financial income Six-months period ended 30 Six-months period Year ended 31 Amounts in US$ June 2012 ended 30 June 2011 December '000 2011 Exchange 70 - 32 difference Bank interest 248 84 130 318 84 162 Note 5 Financial expenses Year ended 31 Six-months period Six-months period December Amounts in US$ '000 ended 30 June 2012 ended 30 June 2011 2011 Bank charges and other 838 471 1,856 financial costs Exchange difference 1,045 280 496 Unwinding of long-term 298 166 350 liabilities Interest and amortisation 6,132 5,919 11,573 of debt issue costs Less: amounts capitalised (651) (109) (597) on qualifying assets 7,662 6,727 13,678 Note 6 Property, plant and equipment Furniture, Production Exploration equipment facilities Buildings and Amounts in Oil & gas and and and Construction evaluation US$'000 properties vehicles machinery improve-ments in progress assets TOTAL Cost at 1 140,908 1,600 42,192 2,281 18,622 36,627 242,230 July 2011 Additions 1,287 648 955 156 43,389 19,178 65,613 Disposals (227) (155) (1,220) - (272) - (1,874) Write-off and - - - - - (7,263) (7,263) impairment Transfers 29,988 82 5,175 - (28,843) (6,402) - Cost at 31 December 171,956 2,175 47,102 2,437 32,896 42,140 298,706 2011 Additions 675 548 645 - 31,040 55,556 88,464 Disposals (48) (60) (17) - - - (125) Write-off - - - - - (8,564) (8,564) Transfers 51,679 - 5,482 466 (35,795) (21,832) - Acquisitions of 62,842 481 15,404 - 6,976 13,234 98,937 subsidiaries Cost at 30 287,104 3,144 68,616 2,903 35,117 80,534 477,418 June 2012 Depreciation and write-down (41,036) (958) (15,394) (593) - - (57,981) at 1 July 2011 Depreciation (12,568) (221) (3,456) (123) - - (16,368) Disposals - 56 222 - - - 278 Depreciation and write-down (53,604) (1,123) (18,628) (716) - - (74,071) at 31 December 2011 Depreciation (17,859) (319) (3,698) (137) - - (22,013) Depreciation and write-down (71,463) (1,442) (22,326) (853) - - (96,084) at 30 June 2012 Carrying amount at 31 118,352 1,052 28,474 1,721 32,896 42,140 224,635 December 2011 Carrying amount at 30 215,641 1,702 46,290 2,050 35,117 80,534 381,334 June 2012 Note 7 Share capital Year ended Six-months period Six-months period 31 December Issued share capital ended 30 June 2012 ended 30 June 2011 2011 Common stock 43 42 43 The share capital is distributed as follows: Common shares, of 42,474,274 41,765,559 42,474,274 nominal US$ 0.001 Total common shares in 42,474,274 41,765,559 42,474,274 issue Authorised share capital US$ per share 0.001 0.001 0.001 Number of common shares 5,171,969,000 5,171,969,000 5,171,969,000 (US$ 0.001 each) Amount in US$ 5,171,969 5,171,969 5,171,969 Note 8 Borrowings The outstanding amounts are as follows: Six-months period Six-months period Year ended ended ended 31 December Amounts in US$ '000 30 June 2012 30 June 2011 2011 Bond (a) 128,838 127,859 128,315 Methanex Corporation (b) 8,041 18,316 18,068 Banco de Crédito e Inversiones 7,899 499 8,845 (c) Overdrafts (d) 10,114 19,486 10,028 154,892 166,160 165,256 Classified as follows: Current 27,488 31,435 30,613 Non Current 127,404 134,725 134,643 (a) 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 same indenture, subject to the maintenance of certain financial ratios. (b) 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 has been fully repaid during the current period. The purpose was to finance the exploration, development and production of natural gas from the Otway Block. This financing did not bear interest. (c) 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 30 June 2012 is US$ 378,000. During the last quarter of 2011, GeoPark TdF obtained short-term financing from BCI. This financing is structured as letter of credit with a pledge of the seismic equipment acquired to start the operations in the new blocks. The maturity is May 2013 and the applicable interest rate ranging from 4.45% to 5.45%. The outstanding amount at 30 June 2012 is US$ 7,521,000. (d) The Group has been granted with credit lines for approximately US$ 28,000,000. Note 9 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: 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. 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 in Colombia together with Associations and JVs with principal Colombian operators. The purchase price allocation performed is preliminary as we have not had sufficient time to complete the valuation process. There will be adjustments to the estimated fair values as the valuation work is finalised, which we expect to complete by the end of 2012. In accordance with the acquisition method of accounting, the acquisition cost was allocated to the underlying assets acquired and liabilities assumed based primarily upon their estimated fair values at the date of acquisition. We used an income approach (being the net present value of expected future cash flows) to determine the fair values of the mineral interest. Estimates of expected future cash flows reflect estimates of projected future revenues, production costs and capital expenditures based on our business model. The excess of acquisition cost, if any, over the net identifiable assets acquired represents goodwill. The following table summarises the combined consideration paid for Winchester Luna and Hupecol, the preliminary fair value of assets acquired and liabilities assumed for these transactions: Amounts in US$ '000 Total Cash (including working capital adjustments) 111,584 Total consideration 111,584 Cash and cash equivalents 6,619 Property, plant and equipment (including mineral interest) 98,872 Trade receivables 9,981 Prepayments and other receivables 10,904 Deferred income tax assets 6,893 Inventories 8,838 Trade payables (16,003) Borrowings (1,368) Provision for other long-term liabilities (13,152) Total identifiable net assets 111,584 Note 10 Agreement with Methanex In March 2012, the Company and Methanex signed a third addendum and amendment to the Gas Supply Agreement to incentivise the development of gas reserves. Through this new agreement, the Company is undertaking 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. As of 30 June, the Company has already fulfilled the minimum drilling commitment for 2012. Nota 11 Subsequent events GeoPark Holdings Limited has executed a loan agreement with Banco Itaú BBA S.A., Nassau Branch for US$ 37,500,000. GeoPark will use the proceeds to finance the acquisition and development of the La Cuerva and Llanos 62 blocks. These blocks represent two of the ten production, development and exploration blocks, which GeoPark currently owns in Colombia (see Note 9). The loan, which will have a maturity of five years, amortising from month 21 in 14 equal quarterly instalments, is ring-fenced by and secured against 100% of the capital of GeoPark Llanos SAS, the owner of the La Cuerva and Llanos 62 blocks. Interest on the loan is accrued at market rates. This information is provided by RNS The company news service from the London Stock Exchange END IR KMGZLMKKGZZZ -0- Sep/26/2012 06:01 GMT
Geopark Holdings Ld GPK Half Yearly Report
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