Geopark Q2 Earnings Call Highlights

Key Points

• Strong Q2 financial performance: GeoPark’s production reached 27,271 barrels of oil equivalent per day, while revenue rose 12% sequentially to $143.3 million and adjusted EBITDA totaled $73.1 million, a 51% margin.
• Vaca Muerta investment is accelerating: GeoPark plans to invest $40 million–$50 million in Argentina during the second half of 2026 and expects Vaca Muerta production to reach 5,000–6,000 barrels of oil equivalent per day by year-end.
• Higher costs and expanded capital flexibility: Rising currency and energy costs pushed full-year lifting-cost guidance to $17–$19 per barrel. The company reduced net leverage to 1.2 times EBITDA, hedged much of its 2026 production, and said capital spending could increase to as much as $250 million for value-accretive opportunities.

Geopark NYSE: GPRK reported second-quarter 2026 production of 27,271 barrels of oil equivalent per day and said stable Colombian operations and accelerating development activity in Argentina supported sequential revenue growth and continued investment in its Vaca Muerta program.

Chief Executive Officer Felipe Bayon said production was within the company’s full-year guidance and broadly consistent with the first quarter, citing disciplined reservoir management and operating execution. Revenue rose 12% from the prior quarter to $143.3 million, while adjusted EBITDA reached $73.1 million, representing a 51% margin. Operating profit was $40.8 million and net income totaled $14 million.

Bayon said the quarter benefited from a stronger commodity-price environment, with Brent averaging about $97 per barrel and a narrower Vasconia differential supporting realized prices. Higher energy costs and appreciation in the Colombian and Argentine currencies increased operating costs, however.

Argentina development accelerates

GeoPark said it completed drilling on Pad 1030 in Argentina, advanced its hydraulic fracturing campaign and obtained environmental approval for the next drilling phase at Loma Jarillosa Este. The company has secured a dedicated drilling rig through a three-year agreement for its Vaca Muerta development program.

Bayon said the company’s first well in the recently drilled group began flowing the day before the call, though it will require cleanup and time to stabilize production. GeoPark expects Vaca Muerta production to reach approximately 5,000 to 6,000 barrels of oil equivalent per day by the end of 2026.

The company and Gas y Petróleo del Neuquén also applied to Argentina’s RIGI Investment Incentive Program. Bayon said the wells already drilled will be connected and put into production in the coming days and weeks and will not wait for a decision on the RIGI application. If approved, the program would cover future factory-mode drilling and larger investments, including pipeline and processing infrastructure, he said.

Chief Operating Officer Martín Terrado said GeoPark expects to invest $40 million to $50 million in Vaca Muerta during the second half of 2026, following roughly $55 million of spending in the first half. About 70% to 80% of the second-half investment is expected in the third quarter, with the remainder in the fourth quarter.

Second-half work is expected to focus on completing facility upgrades, connecting to a neighboring operator with spare capacity, completing a water-disposal well and building a pad for drilling expected to begin early next year. Terrado said the company completed 180 fracture stages without incidents and recorded several days with nine fracture stages per day.

Colombian production and costs

In Colombia, Bayon said Llanos 34 continued to benefit from reservoir management and secondary recovery work, while CPO-5 remained stable despite operational challenges earlier in the year. Llanos 123 also continued to perform through development activities.

Chief Exploration and Development Officer Rodrigo Dalle Fiore said water flooding accounts for 25% of current production at Llanos 34 and remains central to the field’s development plan. The company is also conducting infield drilling, workovers and polymer-injection activity. GeoPark expects to finish the year with more than 25 workovers and nine polymer injectors, and plans to add another nine polymer wells at the beginning of next year.

Terrado said lifting costs increased from $14.70 per barrel in the first quarter to $17.80 per barrel in the second quarter, producing a first-half average of $16.20 per barrel, above prior guidance of $13 to $15 per barrel. The company now expects full-year lifting costs to finish in a range of $17 to $19 per barrel.

He attributed the increase primarily to currency movements and higher energy demand and prices at Llanos 34. Terrado said foreign-exchange effects accounted for approximately $2.10 to $2.50 per barrel of operating expenses, while energy costs added about $1.50 per barrel. The company is pursuing energy-efficiency measures, fixed-price supply arrangements, expanded grid flexibility and biomass-energy initiatives.

Capital allocation, hedging and growth options

GeoPark invested about $76 million during the quarter, with nearly two-thirds directed to Argentina. Cash increased to $316 million and net leverage declined to 1.2 times EBITDA. The company also renewed and extended a committed contingent credit facility through 2028.

The board declared a quarterly dividend of $0.023 per share, which Bayon described as the final payment under the dividend framework announced last year. He said the company’s capital-allocation priorities are completing its peak investment phase, maintaining balance-sheet strength and positioning for future free-cash-flow generation.

Chief Financial Officer Jaime Caballero said GeoPark has hedged about 20,000 barrels per day of 2026 production, with volumes rising to roughly 25,000 barrels per day in the third and fourth quarters as Vaca Muerta output increases. The 2026 hedges carry floors of $65 per barrel and ceilings of approximately $72 to $73 per barrel. Caballero said the company has also established 2027 positions with floors around $75 per barrel and ceilings of $85 to $86 per barrel.

Bayon said GeoPark sees opportunities for conventional and unconventional oil and gas investment in Colombia, citing support for the sector from the incoming administration. He also said the company is assessing opportunities in Venezuela and could consider gas opportunities, including those linked to Colombia’s gas supply-demand imbalance. In Argentina, GeoPark plans to participate in an upcoming round before month-end as it seeks to expand its presence.

Bayon added that the company’s capital spending, previously expected to be about $190 million to $220 million, could rise to as much as $250 million if it accelerates activities management considers value-accretive.

About Geopark (NYSE:GPRK)

Geopark Ltd. NYSE: GPRK is an independent oil and gas exploration and production company focused on Latin America. Founded in 2002 and with corporate offices in Canada and regional headquarters in Bogotá, Colombia, Geopark pursues the discovery and development of unconventional and conventional hydrocarbon resources. The company's strategy emphasizes asset consolidation in established basins alongside disciplined capital allocation to maximize production efficiency.

The company's core operations are centered in Colombia's Llanos Basin, where it holds interests in several producing blocks that deliver light crude oil to local and export markets.

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