TIDMGPK
RNS Number : 9696B
Geopark Holdings Limited
10 April 2013
Embargoed for release at 7:00 10 April 2013
am
GEOPARK HOLDINGS LIMITED
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2012
GeoPark Holdings Limited ("GeoPark" or the "Company"), the Latin
American oil and gas explorer, operator and consolidator with
operations and producing properties in Chile, Colombia and
Argentina (AIM: GPK), is pleased to announceits full year financial
results ended 31 December 2012.
Summary
During 2012, GeoPark continued to execute its business plan and
grow its key performance measures of oil and gas production,
revenues, EBITDA and net income. The results achieved led GeoPark
to register its seventh consecutive year of overall growth in
2012.
2012 Highlights
-- Revenues increased 124% to US$250 million in 2012.
-- Full year production increased 49% averaging 11,276 boepd.
-- 2P Reserves increased 15% to 56.9 MMboe.
-- Full year Adjusted EBITDA increased 92% to US$121 million.
Net income increased 264% to US$18 million.
-- Netback per boe produced increased to US$30.8 per boe in
2012, representing an increase of 34.5% from 2011.
-- Acquisition and consolidation of two Colombian Companies -
Winchester Oil and Gas and Hupecol - for a combined consideration
of US$105 million.
-- First gas discovery in Tranquilo block (Chile) in 40 years,
Palos Quemados (with a production test of 4.6 mmcf/day).
-- Operations commenced in Tierra del Fuego, Chile on the Isla
Norte, Flamenco and Campanario blocks.
-- Over US$195 million invested in capital expenditures in 2012
with 44 new wells. Total investment of US$300 million including
Colombian acquisitions.
-- US$300 million bond issue in February 2013 (144A/RegS): more
than 6 times oversubscribed, initial yield of 7 5/8%. Funds will be
used for new investments and refinancing.
Commenting, James F. Park, CEO of GeoPark, said: " Our 2012
results represent a significant performance step-up and reflect the
growing strength of our underlying asset foundation and record of
execution. In 2012, GeoPark demonstrated improvements in each of
its three principal capacities as an oil and gas explorer, operator
and consolidator -- with increases in production, reserves, and
cash flows and new project growth in Colombia and Tierra del Fuego.
Our team's ability to consistently find and produce oil and gas,
our strengthening balance sheet and reliable cash flow generation,
and our exciting new project opportunity portfolio provide
substantial encouragement for our expectations in 2013 and beyond.
We are pleased that GeoPark is continuing to achieve the scale and
scope and the balance which assure long term value creation in our
business."
In accordance with the AIM Rules, the information in this
announcement 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
Juan Pablo Spoerer +56 2 2242 9600
Pablo Ducci (Chile) +56 2 2242 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
CONSOLIDATED FINANCIAL STATEMENTS
As of and for the year ended 31 December 2012
Company Overview
GeoPark Holdings Limited ("GeoPark" or "the Company") and its
subsidiaries together are referred to herein as the Group.
Addresses
The Registered office address is Cumberland House, 9(th) Floor,
1 Victoria Street, Hamilton HM 11, Bermuda. The Company has a
representative office at 35 Piccadilly, London, United Kingdom.
Principal Activity
The principal activity of the Group in the period under review
was to explore, develop and produce for oil and gas reserves in
Chile, Colombia and Argentina. The Group owns a solid and
well-balanced portfolio of assets that includes 19 hydrocarbon
blocks in which we have working interests and/or economic
interests.
We were founded in 2002. Our first acquisition was the purchase
of AES Corporation's upstream oil and natural gas assets in Chile
and Argentina. Those assets included a non-operating working
interest in the Fell block in Chile, which at that time was
operated by Empresa Nacional de Petróleo ("ENAP"), the Chilean
state-owned hydrocarbon company, and operating working interests in
the Del Mosquito, Cerro Doña Juana and Loma Cortaderal blocks in
Argentina (collectively, the "Argentina Blocks"). In 2006, we were
awarded a 100% operating working interest in the Fell block by the
Republic of Chile. In 2008 and 2009, we continued our growth in
Chile by acquiring operating working interests in each of the Otway
and Tranquilo blocks. In 2011, we were awarded operating working
interests in each of the Isla Norte, Flamenco and Campanario blocks
in Tierra del Fuego, Chile (collectively, the "Tierra del Fuego
Blocks"), and in 2012, we formalized and entered into special
operation contracts (Contratos Especiales de Operación para la
Exploración y Explotación de Yacimientos de Hidrocarburos) (each, a
"CEOP") with Chile for the exploitation and exploration of these
blocks. In the first quarter of 2012, we extended our footprint to
Colombia by acquiring three privately held Exploration and
Production ("E&P") companies, Winchester, La Luna and Cuerva,
that includes working interests and/or economic interests in 10
blocks located in the Llanos, Magdalena and Catatumbo basins. We
have operating working interests in four of these blocks and
non-operating and/or economic interests in six of these blocks.
Business transactions
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 were acquired
for a total consideration of US$ 105 million, adjusted for working
capital. Under the terms of the sale and purchase agreement entered
into in 2012 in respect of the acquisition of Winchester Luna, the
Company has to make certain payments to the former owners arising
from the production and sale of hydrocarbons discovered by
exploration wells drilled after 25 October 2011 on the working
interests of the companies at that date. These payments which
involve both, an earnings based measure and an overriding revenue
royalty, equate to an estimated 4% carried interest on the part of
the vendor.
LGI partnership
During 2011, the Company transferred 20% of its Chilean business
to LGI (see Note 35). Therefore the non-controlling interest on the
profit of that year corresponds to the profit generated by the
Chilean operations. The profits of the Chilean operations that are
attributable to the owners of the Company were offset by losses
incurred by the Company in its Corporate and Argentine
operations.
During 2012, the Company transferred 20% of its Colombian
business to LGI (see Note 35). As the transaction occurred at the
end of the year, there was no profit attributable to
non-controlling interest.
In addition, in March 2013, GeoPark and LGI announced their
agreement to extend their strategic alliance to build a portfolio
of upstream oil and gas assets throughout Latin America through
2015.
Dividends
The Directors do not recommend the payment of any dividend for
the year ended 31 December 2012 (2011: nil). The Group is currently
re-investing all cash generated by its operations and intends to
continue to re-invest these funds for the near future. Cumulative
losses for the Group are US$ 5.9 million. Net free available equity
reserves, defined as Other Reserve plus Accumulated Losses, amount
to US$ 121.7 million.
Directors' Interests
The Directors who served the Company during the year and
subsequently, together with their (and their families') beneficial
interests in shares in the Company, were as follows:
Committees
Ordinary
shares of
USD 0.001
each at 31
December
Name Reappointment Audit Nomination Remuneration 2012
Gerry O'Shaughnessy
Executive 6 August 2012
Chairman (*) 8,172,793
James F. Park
Chief Executive 6 August 2012
Officer (*) 6,983,068
Sir Michael
Jenkins
Non-Executive 6 August 2012
Director (*) +/- 40,364
Christian M.
Weyer
Non-Executive 6 August 2012
Director (*) +/- 219,844
Peter Ryalls
Non-Executive 6 August 2012
Director (*) 39,778
Juan Cristóbal
Pavez
Non-Executive 6 August 2012
Director (*) +/- 2,168,457
Carlos Gulisano
Non-Executive 6 August 2012
Director (*) 1,469 (1)
Steven J. Quamme
Non-Executive 6 August 2012
Director (*) 4,906,488
: Committee Member +/-: Committee Chairman (*): Most recent reappointment date.
(1) Carlos Gulisano holds 50,000 IPO stock options and 100,000 stock awards.
Auditors
PricewaterhouseCoopers LLP has completed the audit of the 2012
Financial Statements, as appointed in the Annual General Meeting
held in August 2012 and offer themselves for Re-Appointment.
NOMAD
Oriel Securities Limited is the Company's Nominated Advisor
under the AIM rules of the London Stock Exchange.
Annual General Meeting
At the Annual General Meeting of the Company, resolutions will
be proposed to re-elect the Directors, according to the Company's
Bye Laws. Other resolutions may be proposed in accordance with the
circular to be sent out. Further details will be set forth in the
formal Notice of Meeting.
Going Concern
The Directors regularly monitor the Group's cash position and
liquidity risks throughout the year to ensure that it has
sufficient funds to meet forecast operational and investment
funding requirements. Sensitivities are run to reflect latest
expectations of expenditures, oil and gas prices and other factors
to enable the Group to manage the risk of any funding short falls
and/or potential loan covenant breaches.
Considering macroeconomic environment conditions, the
performance of the operations, the US$ 300 million debt fund
raising completed in February 2013 and the Group's cash position,
the Directors have formed a judgement, at the time of approving the
financial statements, that there is a reasonable expectation that
the Group has adequate resources to continue with its investment
programme in order to increase oil and gas reserves, production and
revenues and meet all its obligations for the foreseeable future.
For this reason, the Directors have continued to adopt the going
concern basis in preparing the consolidated financial
statements.
Corporate Governance
GeoPark is committed to maintaining high standards of corporate
governance which it defines as managing the Group in an efficient,
effective and entrepreneurial manner for the benefit of all
shareholders over the longer term. The Directors strongly intend,
as is feasible given the Group's size and the constitution of the
Board, to comply with the guidelines on corporate governance of the
Quoted Companies Alliance for AIM companies.
GeoPark's corporate governance goals include:
-- Efficiency: Creating a governing body of an appropriate size
to permit efficient decision-making with transparency for major
decisions, clear definition of responsibilities and performance
targets, and procedures in place to protect and ensure the
protection of the Company's assets.
-- Effectiveness: Assembling a governing body with the required
skills, provided with the proper information and collectively
involved to make the best decisions for the Company.
-- Entrepreneurial: Defining a vision for the Company with an
understanding of goals, timing and necessary resources.
-- Shareholder Common Good: Taking decisions which consider the
good of all shareholders and which, if they involve management,
major shareholders and other related parties, are reported in a
transparent manner.
Board Matters
The Board sets the Group's strategic aims, ensuring that the
necessary resources are in place to achieve those aims, and reviews
management and financial performance. It is accountable to
shareholders for the creation and delivery of strong, sustainable
financial performance and long-term shareholder value.
To achieve this, the Board directs and monitors the Group's
affairs within a framework of controls which enable risk to be
assessed and managed effectively through clear procedures, lines of
responsibility and delegated authorities. The Board also has
responsibility for setting the Group's core values and standards of
business conduct and for ensuring that these, together with the
Group's obligations to its stakeholders, are widely understood
throughout the Group.
Board Members
The composition of the Board is a key factor in ensuring that
the right mix of skills and experience are in place to lead the
Group. The Chairman and Chief Executive roles are not exercised by
the same individual and the Company has at least two independent
Non-Executive Directors. All Directors submit themselves for
re-election at the Annual General Meetings each year - a practice
the Group has followed since 2006. All Directors proposed to
shareholders for election are accompanied by a biography and a
description of the skills and experience that the Group feels are
relevant.
The Chairman is responsible for the effective running of the
Board, ensuring that the Board plays a full and constructive part
in the development and determination of the Group's strategy, and
acting as guardian and facilitator of the Board's decision-making
process.
The Chief Executive is responsible for managing the Group's
business, proposing and developing the Group's strategy and overall
commercial objectives in consultation with the Board and, as leader
of the Executive team, implementing the decisions of the Board and
its Committees. In addition, the Chief Executive is responsible for
maintaining regular dialogue with shareholders as part of the
Group's overall investor relations programme.
The Board comprises:
Executive Directors:
Gerald E. O'Shaughnessy - Chairman
James F. Park - Chief Executive Officer
Non-Executive Directors:
Sir Michael R. Jenkins (up until his death on 31 March 2013)
Christian M. Weyer
Peter Ryalls
Juan Cristóbal Pavez
Carlos Gulisano
Steven J. Quamme
Together, the Executive and Non-Executive Directors bring a
broad range of business, commercial and other relevant experience
to the Board, which is vital to the management of an expanding
company.
Board Meetings
The Board meets at least quarterly and when issues arise and has
a schedule of matters reserved for decisions of the Board. In
addition to those formal matters required by relevant local laws to
be set before a Board of Directors, the Board will also consider
strategy and policy, acquisition and divestment proposals, approval
of major capital investments, risk management policy, significant
financing matters and statutory shareholder reporting. The Board
met seven times during 2012 and maintains regular communication
with Management.
The Directors also regularly visit the Group's operations. These
field visits provide important perspective and expose the Directors
directly to the quality and depth of the Group's operations and
workforce. In these visits, the Directors are also able to make
recommendations regarding improvements of the Group's
operations.
Independence
The Board reviews annually the independence of all Non-Executive
Directors and has determined that, with the exception of Carlos
Gulisano, all current Non-Executive Directors are independent and
have no cross-directorships or significant links which could
materially interfere with the exercise of their independent
judgment.
Board Support
Mr. Pedro Aylwin Chiorrini is currently the Company Secretary
and is available to advise all Directors and ensure compliance with
Board procedures. The Board has the power to appoint and remove the
Company Secretary.
A procedure is in place to enable Directors, if they so wish, to
seek independent professional advice at the Group's expense.
Timely Information
Directors have access to a regular supply of financial,
operational, strategic and regulatory information to assist them in
the discharge of their duties. Much of this information is provided
as part of the normal management reporting process. Board papers
are circulated in time to allow Directors to be properly briefed in
advance of meetings. In addition, Board meetings generally include
a review of the history, performance and future potential of a
material individual asset or business unit. This is designed to
ensure that all material assets are considered on a cyclical basis
and to enable Board members to familiarise themselves with the key
assets and operations of the Group.
Internal Control Review
Directors review on an ongoing basis, inter alia, financial,
operational, compliance matters and risk management, and approve
the annual budget and monitor performance. The Board has the
responsibility to establish and maintain the Group's system of
internal controls and review its effectiveness. The procedures are
reviewed on an ongoing basis.
The Group maintains an approval procedure for capital
expenditures and expenses. It includes different levels of
authorisation based on functions and position of individuals. The
Board has approved the annual budget and performance against the
budget is monitored and reported.
The internal control system can only provide reasonable and not
absolute assurance against material misstatement or loss. The Board
has considered the need for an internal audit function but does not
consider it necessary at the current time.
During 2012, the company implemented an Ethics Line in order to
provide employees a channel to report any irregularity or concerns
on working environment, through an anonymous and independent
service held by a subcontracted company. An internal ethics
committee is in charge of reviewing any allegations received and to
provide advice and recommendations if applicable.
Insurance
The Company maintains Directors' and Officers' liability
insurance cover, the level of which is reviewed annually.
Audit Committee
The Audit Committee is comprised of three independent
Non-Executive Directors (being Sir Michael Jenkins (up until his
death on 31 March 2013), Mr. Peter Ryalls and Mr. Juan Cristóbal
Pavez). During the year the Committee was chaired by Sir Michael
Jenkins and met to approve the Financial Statements, as required
during the year.
The Committee's specific responsibilities to the Board are:
-- Reviewing Financial Statements and formal announcements
relating to the Group's performance;
-- Assessing the independence, objectivity and effectiveness of the external auditors;
-- Making recommendations for the appointment, re-appointment
and removal of the external auditors and approving their
remuneration and terms of engagement; and
-- Implementing and monitoring policy on the engagement of the
external auditor to supply non-audit services to the Group.
Nomination Committee
The Nomination Committee is comprised of three Directors (being
Mr. Christian M. Weyer, Sir Michael Jenkins (up until his death on
31 March 2013) and Mr. Gerald O'Shaughnessy), the majority of whom
are independent Non-Executive Directors. The Committee is chaired
by Mr. Christian M. Weyer and meets as required.
The Committee's specific responsibilities to the Board are:
-- Reviewing the structure, size and composition of the Board
and making recommendations to the Board with regard to any changes
required;
-- Identifying and nominating, for Board approval, candidates to
fill Board vacancies as and when they arise;
-- Making recommendations to the Board with regard to membership
of the Audit and Remuneration Committees in consultation with the
Chairman of each Committee;
-- Reviewing the outside directorship/commitments of the Non-Executive Directors;
-- Succession planning for Directors and other senior executives.
Remuneration Committee
The Remuneration Committee is comprised of three independent
Non-Executive Directors, who currently are Mr. Juan Cristóbal
Pavez, Mr. Steven J. Quamme and Mr. Peter Ryalls. The Committee is
chaired by Mr. Juan Cristóbal Pavez and meets as required during
the year.
The Committee's specific responsibilities are:
-- Determining and agreeing with the Board the remuneration
policy for the Chief Executive Officer, Chairman, Executive
Directors and other members of the Executive Management;
-- Reviewing the performance of the Executive Directors and
other members of the Executive Management;
-- Reviewing the design of the share incentive plans for
approval by the Board and shareholders.
Shareholder Relations
Communication with Shareholders is given high priority and there
is regular dialogue with institutional investors, as well as
general presentations to analysts at the time of the release of the
annual and interim results. Throughout 2012, Executive Directors
and Senior Management met with institutional investors and
Shareholders in Europe, North America and South America and
conducted field trips to the Group's operations.
The Company maintains regular contact with analysts to ensure
that the information regarding the business status and strategy is
communicated to Shareholders. Analysts also visit the Company's
field operations and have access to management and technical staff
to ask questions.
Press releases have been issued throughout the year and the
Company maintains a website(www.geo-park.com) on which all press
releases are posted and which also contains major corporate
presentations and the Financial Statements. Regular updates to
record news in relation to the Group and the status of exploration
and development programmes are also included on the website.
Additionally, this Annual Report, which is sent to all registered
Shareholders, contains extensive information about the Group's
activities. Enquiries from individual Shareholders on matters
relating to their shareholdings and the business of the Group are
welcomed. Shareholders are also encouraged to attend the Annual
General Meeting to discuss the progress of the Group. Notice of the
Annual General Meeting is sent to Shareholders at least 20 working
days before the meeting and includes further information on how to
vote by proxy.
Financial Accounts
A statement of Director's responsibilities in respect of the
accounts is set out on this document.
Directors' Remuneration Report
The following information is not subject to audit.
Remuneration Committee
The Company has a Remuneration Committee. The members of the
Committee during 2012 were Juan Cristóbal Pavez, Chairman, Peter
Ryalls and Steven J. Quamme, who are Non-Executive Directors.
The Remuneration Committee agrees with the Board the framework
for the remuneration of the Chief Executive, the Chairman of the
Company and such other members of the Executive Management as it is
designated to consider.
No Director plays a part in any discussion about his own
remuneration.
Executive remuneration packages are designed to attract,
motivate and retain Directors of the calibre required to grow the
business and enhance value to Shareholders. The performance
measurement of the Executive Directors and the determination of
their annual remuneration package are undertaken by the
Committee.
The Company's policy is that a substantial proportion of the
remuneration of the Executive Directors should be performance
related.
Performance-based Employee Long-Term Incentive Programme - Key
Terms
IPO Award Programme and Executive Stock Option plan
On admission to AIM, the Executive Directors, the Management and
key employees of the Company received the following options over
common shares of the Company granted under the Executive Stock
Options Plan.
IPO Stock Options to Management and key employees
Ndeg of % of issued Earliest
Underlying Common Share Exercise Exercise
Common Shares Capital Grant Date Price (GBP) Date Expiry Date
Approximately
545,000 1.3% 15 May 2006 4.00 15 May 2008 15 May 2013
Dr. Carlos Gulisano holds 50,000 of these IPO Stock Options.
IPO Stock Options to Executive Directors
Ndeg of Underlying Exercise Price Earliest Exercise
Name Common Shares (GBP) Date Expiry Date
153,345 3.20 15 May 2008 15 May 2013
Gerald O'Shaughnessy 306,690 4.00 15 May 2008 15 May 2013
153,345 3.20 15 May 2008 15 May 2013
James F. Park 306,690 4.00 15 May 2008 15 May 2013
In accordance with the programme, 601,235 common shares were
issued to the GeoPark Employee Benefit Trust for use in the
settlement of the exercise of stock options granted to certain
Executive Directors and employees at the time of the Company's
IPO.
Stock Awards to Management, Employees and Executive
Directors
In order to align the interests of its Management, employees and
key advisors with those of the Company and its Shareholders, the
Directors have established a Performance-based Employee Long Term
Incentive Programme ("the Plan"). At the Annual General Meeting
held on 19 November 2007,Shareholders 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 Employee Long Term Incentive
Plan. GeoPark's Shareholders authorized the Board of Directors to
implement this plan and determine the specific conditions for each
programme within some broadly-defined guidelines.
During 2012, the Remuneration Committee and the Board of
Directors approved the granting of 500,000 performance share awards
to employees and Management under the Plan. The 2012 awards also
encompass new employees that have joined the Company since the 2011
awards. The awards will vest on the fourth anniversary of the grant
date and will be subject to the award holder remaining in
employment during that period (following the rules set out in the
Plan).
Stock Awards to Management and Employees
Ndeg of % of issued Earliest
Underlying Common Share Exercise Exercise
Common Shares Capital Grant Date Price (US$) Date Expiry Date
976,211 Approximately
(1) 2.2% 15 Dec 2008 0.001 15 Dec 2012 15 Dec 2018
Approximately
852,100 2.0% 15 Dec 2010 0.001 15 Dec 2014 15 Dec 2020
Approximately
500,000 1.1% 15 Dec 2011 0.001 15 Dec 2015 15 Dec 2021
Approximately
500,000 1.1% 15 Dec 2012 0.001 15 Dec 2016 15 Dec 2022
(1) Dr. Carlos Gulisano holds 100,000 of these Stock awards. In
accordance with the programme, 976,211 common shares were issued to
the GeoPark Employee Benefit Trust for use in the settlement of the
exercise of stock awards.
Stock Awards to Executive Directors
Ndeg of % of issued Earliest
Underlying Common Share Exercise Exercise
Name Common Shares Capital Grant Date Price (US$) Date
Approximately
Gerald O'Shaughnessy 270,000 0.6% 23 Nov 2012 0.001 23 Nov 2015
Approximately
James F. Park 450,000 1.0% 23 Nov 2012 0.001 23 Nov 2015
Considering the previously issued IPO Awards, plus the 12% limit
established for the Plan, the total share capital awarded and to be
awarded to employees, Management and Executive Directors represents
approximately 13.4% of the shares issued.
Executive Directors' Contracts
It is the Group's policy that Executive Directors should have
contracts of an indefinite term providing for a maximum of one
year's notice. The details of the Director's contracts are
summarized below:
Gerald O'Shaughnessy
Gerald O'Shaughnessy has a service contract with the Company
which provides for him to act as Executive Chairman of the Company
at a salary of US$ 250,000 per annum. The agreement is stated to
continue indefinitely, subject to it being terminable by either
party by giving not less than 12 months' notice in writing at any
time. The payment of any bonus to Mr O'Shaughnessy is at the
Company's discretion. Mr. O'Shaughnessy's service agreement
contains restrictive covenants which restrict him, for a period of
12 months following the termination of employment, from soliciting
senior employees of the Company and, for a period of 6 months
following the termination of employment, from being involved in any
competing undertaking.
During 2012 a bonus for a total amount of US$ 150,000 was
awarded to Gerald O'Shaughnessy (no bonus in 2011).
James F. Park
James F. Park has a service contract with the Company which
provides for him to act as Chief Executive Officer of the Company
at a salary of US$ 500,000 per annum. The agreement is stated to
continue indefinitely, subject to it being terminable by either
party by giving not less than 12 months' notice in writing at any
time. The payment of any bonus to Mr. Park is at the Company's
discretion. Mr. Park's service agreement contains restrictive
covenants which restrict him, for a period of 12 months following
the termination of employment, from soliciting senior employees of
the Company and, for a period of 6 months following the termination
of employment, from being involved in any competing
undertaking.
During 2012 a bonus for a total amount of US$ 300,000 was
awarded to James F. Park (no bonus in 2011).
Non-Executive Directors Contracts
In August 2012 at the Annual General Meeting, the Shareholders
re-elected the Non-Executive Directors. The remuneration package
approved for Non-Executive Directors, which is detailed in the
corresponding service contracts, contains the following
components:
a) Annual salary of GBP 35,000; the fees payable shall be made
up, at the option of the Company, of an issue of new shares in the
Company on the basis determined by the Board and/or cash
consideration payable quarterly in arrears. The share price to
determine the quantity of share is the simple average to the daily
closing price of the stock in the quarter prior to the payment
date.
b) Committee Chairman fee: annual remuneration of GBP 5,750
payable quarterly in arrears in cash.
c) Notice for contract termination: 2 months.
The following chart summarises the detail of payments made to
Non-Executive Directors:
2012 Cash Payment Stock Payment
Non-Executive Director Fees
Directors' Committee Chairman Paid in Shares
Fees Fees No. of Shares
Sir Michael Jenkins
(1) GBP17,500 GBP5,750 3,020
Peter Ryalls (2) GBP17,500 GBP5,750 3,020
Christian Weyer (3) GBP17,500 GBP5,750 3,020
Juan Cristóbal
Pavez GBP17,500 - 3,020
Carlos Gulisano GBP35,000 - -
Steven J. Quamme GBP17,500 - 3,020
Additionally Dr. Carlos Gulisano received US$ 250,000 for
technical consultancy during 2012(US$ 138,000 in 2011).
(1) Audit Committee Chairman
(2) Remuneration Committee Chairman before the 2012 AGM
designated Juan Cristóbal Pavez.
(3) Nominations Committee Chairman
Approval
This report was approved by the Board of Directors on 9 April
2013 and signed on its behalf by:
Juan Cristóbal Pavez
Chairman, Remuneration Committee
9 April 2013
Statement of Directors' Responsibilities
The Directors are responsible for preparing the financial
statements in accordance with applicable laws and regulations in
Bermuda. The Directors have elected to prepare financial statements
for the Group in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union.
International Accounting Standard 1 requires that financial
statements present fairly for each financial year the Group's
financial positions, financial performances and cash flows. This
requires the faithful representation of the effects of
transactions, other events and conditions in accordance with the
definitions and recognition criteria for assets, liabilities,
income and expenses set out in the International Accounting
Standard Board's "Framework for the preparation and presentation of
Financial Statements". In virtually all circumstances, a fair
presentation will be achieved by compliance with all applicable
International Financial Reporting Standards.
The Directors are also required to:
-- select suitable accounting policies and apply them consistently;
-- make judgments and estimates that are reasonable and prudent;
-- present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
-- provide additional disclosures when compliance with the
specific requirements in IFRS are insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the Group's financial position and financial
performance; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume the Group will continue in
business.
The Directors are responsible for keeping proper accounting
records, for safeguarding the assets of the Group and for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website.
In so far as each of the Directors is aware:
-- there is no relevant audit information of which the Group's auditors are unaware; and
-- the Directors have taken all steps that they ought to have
taken to be aware of any relevant audit information and to
establish that the auditors are made aware of that information.
INDEPENDENT AUDITORS' REPORT
to the Members of GeoPark Holdings Limited
We have audited the Group financial statements (the "financial
statements") of GeoPark Holdings Limited for the year ended 31
December 2012 which comprise the consolidated statement of income,
the consolidated statement of comprehensive income, the
consolidated statement of financial position, the consolidated
statement of changes in equity, the consolidated statement of cash
flow and the related notes. The financial reporting framework that
has been applied in their preparation is applicable law in Bermuda
and International Financial Reporting Standards (IFRSs) as adopted
by the European Union.
Respective responsibilities of directors and auditors
As explained more fully in the Directors' Responsibilities
Statement set out the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give
a true and fair view. Our responsibility is to audit and express an
opinion on the financial statements in accordance with applicable
law in Bermuda and International Standards on Auditing (UK and
Ireland). Those standards require us to comply with the UK Auditing
Practices Board's Ethical Standards for Auditors.
This report, including the opinion, has been prepared for and
only for the company's members as a body in accordance with Section
90 of The Companies Act 1981 (Bermuda) and for no other purpose. We
do not, in giving the opinion, accept or assume responsibility for
any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the Group's circumstances and have been consistently
applied and adequately disclosed; the reasonableness of significant
accounting estimates made by the Directors; and the overall
presentation of the financial statements.
In addition, we read all the financial and non-financial
information in the annual report to identify material
inconsistencies with the audited financial statements. If we become
aware of any apparent material misstatements or inconsistencies we
consider the implications for our report.
Opinion on financial statements
In our opinion the financial statements:
-- give a true and fair view of the state of the Group's affairs
as at 31 December 2012 and of the Group's profit and cash flows for
the year then ended;
-- have been properly prepared in accordance with IFRSs as adopted by the European Union; and
-- have been prepared in accordance with the requirements of the Companies Act 1981 (Bermuda).
Other matters
a. The maintenance and integrity of theGeoPark Holdings Limited
website is the responsibility of the Directors; the work carried
out by the auditors does not involve consideration of these matters
and, accordingly, the auditors accept no responsibility for any
changes that may have occurred to the financial statements since
they were initially presented on the website.
b. Legislation in Bermuda and the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
PricewaterhouseCoopers LLP
Chartered Accountants
London, United Kingdom
9 April 2013
CONSOLIDATED STATEMENT OF INCOME
Amounts in US$ '000 Note 2012 2011
NET REVENUE 7 250,478 111,580
Production costs 8 (129,235) (54,513)
GROSS PROFIT 121,243 57,067
Exploration costs 11 (27,890) (10,066)
Administrative costs 12 (28,798) (18,169)
Selling expenses 13 (24,631) (2,546)
Other operating income (expenses) 823 (502)
OPERATING PROFIT 40,747 25,784
Financial income 14 892 162
Financial expenses 15 (17,200) (13,678)
Bargain purchase gain on acquisition
of subsidiaries 35 8,401 -
PROFIT BEFORE INCOME TAX 32,840 12,268
Income tax 16 (14,394) (7,206)
PROFIT FOR THE YEAR 18,446 5,062
Attributable to:
Owners of the Company 11,879 54
Non-controlling interest 6,567 5,008
Earnings per share (in US$)
for
profit attributable to owners
of the Company. Basic 18 0.2784 0.0013
Earnings per share (in US$)
for
profit attributable to owners
of the Company. Diluted 18 0.2693 0.0012
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Amounts in US$ '000 2012 2011
Income for the year 18,446 5,062
Other comprehensive income: - -
Total comprehensive Income for
year 18,446 5,062
Attributable to:
Owners of the Company 11,879 54
Non-controlling interest 6,567 5,008
The notes are an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Amounts in US$ '000 Note 2012 2011
ASSETS
NON CURRENT ASSETS
Property, plant and equipment 19 457,837 224,635
Prepaid taxes 21 10,707 2,957
Other financial assets 24 7,791 5,226
Deferred income tax asset 17 13,591 450
Prepayments and other receivables 23 510 707
TOTAL NON CURRENT ASSETS 490,436 233,975
CURRENT ASSETS
Other financial assets 24 - 3,000
Inventories 22 3,955 584
Trade receivables 23 32,271 15,929
Prepayments and other receivables 23 49,620 24,984
Prepaid taxes 21 3,443 147
Cash at bank and in hand 24 48,292 193,650
TOTAL CURRENT ASSETS 137,581 238,294
TOTAL ASSETS 628,017 472,269
TOTAL EQUITY
Equity attributable to
owners of the Company
Share capital 25 43 43
Share premium 116,817 112,231
Reserves 128,421 115,164
Accumulated losses (5,860) (18,549)
Attributable to owners
of the Company 239,421 208,889
Non-controlling interest 72,665 41,763
TOTAL EQUITY 312,086 250,652
LIABILITIES
NON CURRENT LIABILITIES
Borrowings 26 165,046 134,643
Provisions and other long-term
liabilities 27 25,991 9,412
Deferred income tax liability 17 17,502 13,109
TOTAL NON CURRENT LIABILITIES 208,539 157,164
CURRENT LIABILITIES
Borrowings 26 27,986 30,613
Current income tax liabilities 7,315 187
Trade and other payable 28 54,890 28,535
Provisions for other liabilities 29 17,201 5,118
TOTAL CURRENT LIABILITIES 107,392 64,453
TOTAL LIABILITIES 315,931 221,617
TOTAL EQUITY AND LIABILITIES 628,017 472,269
The financial statements were approved by the Board of Directors
on 9 April 2013.
The notes are an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to owners of the Company
Share Share Other Translation Accumulated Non-controlling
Amount in US$ '000 Capital Premium Reserve Reserve Losses Interest Total
Equity at 1 January
2011 42 107,858 3,025 894 (19,527) - 92,292
Comprehensive income:
Profit for the year - - - - 54 5,008 5,062
Total Comprehensive
Income for the Year
2011 - - - - 54 5,008 5,062
Transactions with
owners:
Proceeds from transaction
with Non-controlling
interest (Notes 25
and 35) - - 111,245 - - 36,755 148,000
Share-based payment
(Note 30) 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
Comprehensive income:
Profit for the year - - - - 11,879 6,567 18,446
Total Comprehensive
Income for the Year
2012 - - - - 11,879 6,567 18,446
Transactions with
owners:
Proceeds from transaction
with Non-controlling
interest (Notes 25
and 35) - 13,257 - - 24,335 37,592
Share-based payment
(Note 30) - 4,586 - - 810 - 5,396
Total 2012 - 4,586 13,257 - 810 24,335 42,988
Balances at 31 December
2012 43 116,817 127,527 894 (5,860) 72,665 312,086
The notes are an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF CASH FLOW
Amounts in US$ '000 Note 2012 2011
Cash flows from operating activities
Income for the year 18,446 5,062
Adjustments for:
Income tax for the year 16 14,394 7,206
Depreciation of the year 9 53,317 26,408
Loss on disposal of property, plant
and equipment 546 2,010
Write-off of unsuccessful efforts 11 25,552 5,919
Impairment loss 11 - 1,344
Accrual of interest on borrowings 12,478 11,130
Amortisation of other long-term liabilities 27 (2,143) (1,038)
Unwinding of long-term liabilities 27 1,262 350
Accrual of share-based payment 10 5,396 5,298
Exchange difference generated by borrowings 35 (15)
Gain on acquisition of subsidiaries (8,401) -
Deferred income 27 5,550 5,000
Income tax paid (408) -
Changes in working capital 5 5,778 89
Cash flows from operating activities
- net 131,802 68,763
Cash flows from investing activities
Purchase of property, plant and equipment (198,204) (98,651)
Acquisitions of companies, net of cash
acquired 35 (105,303) -
Purchase of financial assets - (2,625)
Cash flows used in investing activities
- net (303,507) (101,276)
Cash flows from financing activities
Proceeds from borrowings 37,200 9,668
Proceeds from transaction with non-controlling
interest 12,452 142,000
Principal paid (12,382) (9,150)
Interest paid (10,895) (10,779)
Cash flows from financing activities
- net 26,375 131,739
Net (decrease) increase in cash and
cash equivalents (145,330) 99,226
Cash and cash equivalents at 1 January 183,622 84,396
Cash and cash equivalents at the end
of the year 38,292 183,622
Ending Cash and cash equivalents are
specified as follows:
Cash in bank 48,268 193,642
Cash in hand 24 8
Bank overdrafts (10,000) (10,028)
Cash and cash equivalents 38,292 183,622
The notes are an integral part of these consolidated financial
statements.
NOTES
Note
1 General Information
GeoPark Holdings Limited (the Company) is a company incorporated
under the laws of Bermuda. The addresses of its registered office
and principal places of business are disclosed in the introduction
to the Directors' Report. The principal activities of the Company
and its subsidiaries (the Group) are described in the Directors'
Report.
The Company is quoted on the AIM London Stock Exchange. Also its
shares are authorized for trading on the Santiago Off-Shore Stock
Exchange, in US$ under the trading symbol "GPK".
These consolidated financial statements were authorised for
issue by the Board of Directors on 9 April 2013.
Note
2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied to the years presented,
unless otherwise stated.
2.1 Basis of preparation
The consolidated financial statements of GeoPark Holdings
Limited have been prepared in accordance with International
Financial Reporting Standards as adopted by the European Union
(IFRS).
The consolidated financial statements are presented in thousands
(US$ '000) of United States Dollars and all values are rounded to
the nearest thousand (US$'000), except where otherwise
indicated.
The consolidated financial statements have been prepared on a
historical cost basis.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated
financial statements are disclosed in this note under the title
"Accounting estimates and assumptions".
2.1.1 Changes in accounting policy and disclosure
New and amended standards adopted by the Group
There are no IFRSs or IFRIC interpretations that are effective
for the first time for the financial year beginning on or after 1
January 2012 that would be expected to have a material impact on
the Group.
New standards, amendments and interpretations issued but not
effective for the financial year beginning 1 January 2012 and not
early adopted
IFRS 9, 'Financial instruments', addresses the classification,
measurement and recognition of financial assets and financial
liabilities. IFRS 9 was issued in November 2009 and October 2010.
It replaces the parts of IAS 39 that relate to the classification
and measurement of financial instruments. IFRS 9 requires financial
assets to be classified into two measurement categories: those
measured at fair value and those measured at amortised cost. The
determination is made at initial recognition. The classification
depends on the entity's business model for managing its financial
instruments and the contractual cash flow characteristics of the
instrument. For financial liabilities, the standard retains most of
the IAS 39 requirements. The main change is that, in cases where
the fair value option is taken for financial liabilities, the part
of a fair value change due to an entity's own credit risk is
recorded in other comprehensive income rather than the income
statement, unless this creates an accounting mismatch. The Group is
yet to assess IFRS 9's full impact and intends to adopt IFRS 9 no
later than the accounting period beginning on or after 1 January
2015.
IFRS 10, 'Consolidated financial statements" builds on existing
principles by identifying the concept of control as the determining
factor in whether an entity should be included within the
consolidated financial statements of the parent company. The
standard provides additional guidance to assist in the
determination of control where this is difficult to assess. The
Group is yet to assess IFRS 10's full impact and intends to adopt
IFRS 10 no later than the accounting period beginning on or after 1
January 2014.
IFRS 11, 'Joint arrangements', establishes principles for
financial reporting by entities that have an interest in
arrangements that are controlled jointly. IFRS 11 defines joint
control and requires an entity that is a party to a joint
arrangement to determine the type of joint arrangement in which it
is involved by assessing its rights and obligations and to account
for those rights and obligations in accordance with that type of
joint arrangement. The Group is yet to assess IFRS 11's full impact
and intends to adopt IFRS 11 no later than the accounting period
beginning on or after 1 January 2014.
IFRS 12, 'Disclosures of interests in other entities' includes
the disclosure requirements for all forms of interests in other
entities, including joint arrangements, associates, special purpose
vehicles and other off balance sheet vehicles. The Group is yet to
assess IFRS 12's full impact and intends to adopt IFRS 12 no later
than the accounting period beginning on or after 1 January
2014.
IFRS 13, 'Fair value measurement', aims to improve consistency
and reduce complexity by providing a precise definition of fair
value and a single source of fair value measurement and disclosure
requirements for use across IFRSs. The requirements, which are
largely aligned between IFRSs and US GAAP, do not extend the use of
fair value accounting but provide guidance on how it should be
applied where its use is already required or permitted by other
standards within IFRSs. IFRS 13 is not expected to have a
significant impact on the balances recorded in the financial
statements as at 31 December 2012 but would require the company to
apply different valuation techniques to certain items (e.g. debt
acquired as part of a business combination) recognised at fair
value as and when they arise in the future. The company will adopt
IFRS 13 from 1 January 2013.
There are no other IFRSs or IFRIC interpretations that are not
yet effective that would be expected to have a material impact on
the Group.
2.2 Going concern
The Directors regularly monitor the Group's cash position and
liquidity risks throughout the year to ensure that it has
sufficient funds to meet forecast operational and investment
funding requirements. Sensitivities are run to reflect latest
expectations of expenditures, oil and gas prices and other factors
to enable the Group to manage the risk of any funding short falls
and/or potential loan covenant breaches.
Considering macroeconomic environment conditions, the
performance of the operations, the US$ 300 million debt fund
raising completed in February 2013 and Group's cash position, the
Directors have formed a judgement, at the time of approving the
financial statements, that there is a reasonable expectation that
the Group has adequate resources to continue with its investment
programme to increase oil and gas reserves, production and revenues
and meeting all its obligations for the foreseeable future. For
this reason, the Directors have continued to adopt the going
concern basis in preparing the consolidated financial
statements.
2.3 Consolidation
The consolidated financial statements consolidate those of the
Company and all of its subsidiary undertakings drawn up to the
Balance Sheet date. Subsidiaries are entities over which the Group
has the power to control the financial and operating policies so as
to obtain benefits from its activities, generally accompanying a
shareholding of more than one half of the voting rights.
Subsidiaries are fully consolidated from the date on which control
is transferred to the Group.
The Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary is the fair values of the assets transferred, the
liabilities incurred to the former owners of the acquiree and the
equity interests issued by the Group. The consideration transferred
includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date.
Acquisition-related costs are expensed as incurred.
Goodwill is initially measured as the excess of the aggregate of
the consideration transferred and the fair value of non-controlling
interest over the net identifiable assets acquired and liabilities
assumed. If this consideration is lower than the fair value of the
net assets of the subsidiary acquired, the difference is recognised
in profit or loss.
Intercompany transactions, balances and unrealised gains on
transactions between the Group and its subsidiaries are eliminated.
Unrealised losses are also eliminated unless the transaction
provides evidence of an impairment of the asset transferred.
Amounts reported in the financial statements of subsidiaries have
been adjusted where necessary to ensure consistency with the
accounting policies adopted by the Group.
2.4 Segment reporting
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
that makes strategic decisions. This committee consists of the CEO,
Managing Director, CFO and managers in charge of the Exploration,
Development, 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.
2.5 Foreign currency translation
a) Functional and presentation currency
The consolidated financial statements are presented in US
Dollars, which is the Group's presentation currency.
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates (the "functional
currency"). The functional currency of Group companies incorporated
in Chile, Colombia and Argentina is the US Dollar.
b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at period
end exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognised in the Consolidated Statement
of Income.
2.6 Joint operations
The Company's interests in oil and gas related joint operations
and other agreements involved in oil and gas exploration and
production, have been consolidated line by line on the basis of the
Company's proportional share in their assets, liabilities,
revenues, costs and expenses.
2.7 Revenue recognition
Revenue from the sale of crude oil and gas is recognised in the
Statement of Income when risk transferred to the purchaser, and if
the revenue can be measured reliably and is expected to be
received. Revenue is shown net of VAT, discounts related to the
sale and overriding royalties due to the ex-owners of oil and gas
properties where the royalty arrangements represent a retained
working interest in the property.
2.8 Production costs
Production costs include wages and salaries incurred to achieve
the net revenue for the year. Direct and indirect costs of raw
materials and consumables, rentals and leasing, property, plant and
equipment depreciation and royalties are also included within this
account.
2.9 Financial costs
Financial costs include interest expenses, realised and
unrealised gains and losses arising from transactions in foreign
currencies and the amortisation of financial assets and
liabilities. The Company has capitalised borrowing cost for wells
and facilities that were initiated after 1 January 2009. Amounts
capitalised totalled US$ 1,368,952 (US$ 597,127 in 2011).
2.10 Property, plant and equipment
Property, plant and equipment are stated at historical cost less
depreciation, and impairment if applicable. Historical cost
includes expenditure that is directly attributable to the
acquisition of the items; including provisions for asset retirement
obligation.
Oil and gas exploration and production activities are accounted
for in accordance with the successful efforts method on a field by
field basis. The Group accounts for exploration and evaluation
activities in accordance with IFRS 6, Exploration for and
Evaluation of Mineral Resources, capitalizing exploration and
evaluation costs until such time as the economic viability of
producing the underlying resources is determined. Costs incurred
prior to obtaining legal rights to explore are expensed immediately
to the income statement.
Exploration and evaluation costs may include: license
acquisition, geological and geophysical studies (i.e.: seismic),
direct labour costs and drilling costs of exploratory wells. No
depreciation and/or amortisation are charged during the exploration
and evaluation phase. Upon completion of the evaluation phase, the
prospects are either transferred to oil and gas properties or
charged to expense (exploration costs) in the period in which the
determination is made depending whether they have found reserves or
not. If not developed, exploration and evaluation assets are
written off after three years unless, it can be clearly
demonstrated that the carrying value of the investment is
recoverable.
A charge of US$ 25,552,000 has been recognised in the
Consolidated Statement of Income within Exploration costs (US$
5,919,000 in 2011) for write-offs in Argentina, Colombia and Chile
(see Note 11).
All field development costs are considered construction in
progress until they are finished and capitalised within oil and gas
properties, and are subject to depreciation once complete. Such
costs may include the acquisition and installation of production
facilities, development drilling costs (including dry holes,
service wells and seismic surveys for development purposes),
project-related engineering and the acquisition costs of rights and
concessions related to proved properties.
Workovers of wells made to develop reserves and/or increase
production are capitalized as development costs. Maintenance costs
are charged to income when incurred.
Capitalised costs of proved oil and gas properties and
production facilities and machinery are depreciated on a licensed
area by the licensed area basis, using the unit of production
method, based on commercial proved and probable reserves. The
calculation of the "unit of production" depreciation takes into
account estimated future finding and development costs and is based
on current year end unescalated price levels. Changes in reserves
and cost estimates are recognised prospectively. Reserves are
converted to equivalent units on the basis of approximate relative
energy content.
Commercial reserves are proved and probable oil and gas reserves
as defined in chapter 19 of the listing rules of the United Kingdom
Listing Authority (UKLA). Oil and gas reserves for this purpose are
determined in accordance with Society of Petroleum Engineers
definitions and were estimated by DeGolyer and MacNaughton, the
Group's independent reservoir engineers.
Depreciation of the remaining property, plant and equipment
assets (i.e. furniture and vehicles) not directly associated with
oil and gas activities has been calculated by means of the straight
line method by applying such annual rates as required to write-off
their value at the end of their estimated useful lives. The useful
lives range between 3 years and 10 years.
Depreciation is allocated in the Consolidated Statement of
Income as production, exploration and administrative expenses,
based on the nature of the associated asset.
An asset's carrying amount is written down immediately to its
recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount (see Impairment of non-financial
assets in
Note 2.12).
2.11 Provisions and other long-term liabilities
Provisions for asset retirement obligations, deferred income,
restructuring obligations and legal claims are recognised when the
Group has a present legal or constructive obligation as a result of
past events; it is probable that an outflow of resources will be
required to settle the obligation; and the amount has been reliably
estimated. Restructuring provisions comprise lease termination
penalties and employee termination payments.
Provisions are measured at the present value of the expenditures
expected to be required to settle the obligation using a pre-tax
rate that reflects current market assessments of the time value of
money and the risks specific to the obligation. The increase in the
provision due to passage of time is recognised as interest
expense.
2.11.1 Asset Retirement Obligation
The Group records the fair value of the liability for asset
retirement obligations in the period in which the wells are
drilled. When the liability is initially recorded, the Group
capitalises the cost by increasing the carrying amount of the
related long-lived asset. Over time, the liability is accreted to
its present value at each reporting period, and the capitalized
cost is depreciated over the estimated useful life of the related
asset. According to interpretations and application of current
legislation and on the basis of the changes in technology and the
variations in the costs of restoration necessary to protect the
environment, the Group has considered it appropriate to
periodically re-evaluate future costs of well-capping. The effects
of this recalculation are included in the financial statements in
the period in which this recalculation is determined and reflected
as an adjustment to the provision and the corresponding property,
plant and equipment asset.
2.11.2 Deferred Income
Relates to contributions received in cash from the Group's
clients to improve the project economics of gas wells. The amounts
collected are reflected as a deferred income in the balance sheet
and recognised in the Consolidated Statement of Income over the
productive life of the associated wells. The depreciation of the
gas wells that generated the deferred income is charged to the
Consolidated Statement of Income simultaneously with the
amortisation of the deferred income.
2.12 Impairment of non-financial assets
Assets that are not subject to depreciation and/or amortisation
(i.e.: exploration and evaluation assets) are tested annually for
impairment. Assets that are subject to depreciation and/or
amortisation are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be
recoverable.
An impairment loss is recognised for the amount by which the
asset's carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset's fair value less
costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash flows (cash-generating units),
generally a licensed area. Non-financial assets other than goodwill
that suffered impairment are reviewed for possible reversal of the
impairment at each reporting date.
No asset should be kept as an exploration and evaluation asset
for a period of more than three years, except if it can be clearly
demonstrated that the carrying value of the investment will be
recoverable.
In 2012, no charge (US$ 1,344,000 in 2011) has been recognised
within exploration costs as a result of the impairment test
performed regarding operating fields in Argentina (see Note
11).
2.13 Lease contracts
All current lease contracts are considered to be operating
leases on the basis that the lessor retains substantially all the
risks and rewards related to the ownership of the leased asset.
Payments related to operating leases and other rental agreements
are recognised in the Consolidated Income Statement on a straight
line basis over the term of the contract. The Group's total
commitment relating to operating leases and rental agreements is
disclosed in Note 32.
2.14 Inventories
Inventories comprise crude oil and materials.
Crude oil is measured at the lower of cost and net realisable
value. Materials are measured at the lower of cost and recoverable
amount. Cost is determined using the first-in, first-out (FIFO)
method. The cost of materials and consumables is calculated at
acquisition price with the addition of transportation and similar
costs.
2.15 Current and deferred income tax
The tax expense for the year comprises current and deferred tax.
Tax is recognised in the Consolidated Statement of Income.
The current income tax charge is calculated on the basis of the
tax laws enacted or substantially enacted at the balance sheet date
in the countries where the Company's subsidiaries operate and
generate taxable income.
Deferred income tax is recognised, using the liability method,
on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated
financial statements. Deferred income tax is determined using tax
rates (and laws) that have been enacted or substantially enacted by
the balance sheet date and are expected to apply when the related
deferred income tax asset is realised or the deferred income tax
liability is settled.
In addition, tax losses available to be carried forward as well
as other income tax credits to the Group are assessed for
recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no
discounting. Deferred tax assets are recognised only to the extent
that it is probable that the underlying deductible temporary
differences will be able to be offset against future taxable
income.
2.16 Financial assets
Financial assets are divided into the following categories:
loans and receivables; financial assets at fair value through the
profit or loss; available-for-sale financial assets; and
held-to-maturity investments. Financial assets are assigned to the
different categories by management on initial recognition,
depending on the purpose for which the investments were acquired.
The designation of financial assets is re-evaluated at every
reporting date at which a choice of classification or accounting
treatment is available.
All financial assets are recognised when the Group becomes a
party to the contractual provisions of the instrument. All
financial assets are initially recognised at fair value, plus
transaction costs.
Derecognition of financial assets occurs when the rights to
receive cash flows from the investments expire or are transferred
and substantially all of the risks and rewards of ownership have
been transferred. An assessment for impairment is undertaken at
each balance sheet date.
Interest and other cash flows resulting from holding financial
assets are recognised in the Consolidated Income Statement when
receivable, regardless of how the related carrying amount of
financial assets is measured.
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. They are included in current assets, except for maturities
greater than twelve months after the balance sheet date. These are
classified as non-current assets. The Group's loans and receivables
comprise trade receivables, prepayments and other receivables and
cash and cash equivalents in the balance sheet. They arise when the
Group provides money, goods or services directly to a debtor with
no intention of trading the receivables. Loans and receivables are
subsequently measured at amortised cost using the effective
interest method, less provision for impairment. Any change in their
value through impairment or reversal of impairment is recognised in
the Consolidated Statement of Income. All of the Group's financial
assets are classified as loan and receivables.
2.17 Other financial assets
Non current other financial assets mainly relate to the cash
collateral account required under the terms of the Bond issued in
2010 (see Note 26). This investment was intended to guarantee
interest payments and was recovered at repayment date (see Note
37). Non current other financial assets also include contributions
made for environmental obligations according to a Colombian
government request.
Current other financial assets relate solely to the cash paid
into escrow that has been released on the closing of the purchase
of Colombian assets (see Notes 24 and 35).
2.18 Impairment of financial assets
Provision against trade receivables is made when objective
evidence is received that the Group will not be able to collect all
amounts due to it in accordance with the original terms of those
receivables. The amount of the write-down is determined as the
difference between the asset's carrying amount and the present
value of estimated future cash flows.
2.19 Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held
at call with banks, other short-term highly liquid investments with
original maturities of three months or less, and bank overdrafts.
Bank overdrafts, if any, are shown within borrowings in the current
liabilities section of the Consolidated Statement of Financial
Position.
2.20 Trade and other payable
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of the business from
suppliers. Accounts payable are classified as current liabilities
if payment is due within one year or less (or in the normal
operating cycle of the business if longer). If not, they are
presented as non-current liabilities.
Trade payables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method.
2.21 Borrowings
Borrowings are obligations to pay cash and are recognised when
the Group becomes a party to the contractual provisions of the
instrument.
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently stated at
amortised cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in the
Consolidated Statement of Income over the period of the borrowings
using the effective interest method.
Direct issue costs are charged to the Consolidated Statement of
Income on an accruals basis using the effective interest
method.
2.22 Share capital
Equity comprises the following:
-- "Share capital" representing the nominal value of equity shares.
-- "Share premium" representing the excess over nominal value of
the fair value of consideration received for equity shares, net of
expenses of the share issue.
-- "Other reserve" representing:
- the equity element attributable to shares granted according to
IFRS 2 but not issued at year end or
- the difference between the proceeds from the transaction with
non-controlling interests received against the book value of the
shares acquired in the subsidiaries GeoPark
Chile S.A. and GeoPark Colombia S.A. (see Note 35).
-- "Reserve for exchange adjustment" representing the
differences arising from translation of investments in overseas
subsidiaries.
-- "Accumulated losses" representing accumulated and losses.
2.23 Share-based payment
The Group operates a number of equity-settled, share-based
compensation plans comprising share awards payments and stock
options plans to certain employees and other third party
contractors.
Fair value of the stock option plan for employee or contractors
services received in exchange for the grant of the options is
recognised as an expense. The total amount to be expensed over the
vesting period is determined
by reference to the fair value of the options granted calculated using the Black-Scholes model.
Non-market vesting conditions are included in assumptions about
the number of options that are expected to vest. At each balance
sheet date, the entity revises its estimates of the number of
options that are expected to vest. It recognises the impact of the
revision to original estimates, if any, in the Consolidated
Statement of Income, with a corresponding adjustment to equity.
The fair value of the share awards payments is determined at the
grant date by reference of the market value of the shares and
recognised as an expense over the vesting period.
When the options are exercised, the Company issues new shares.
The proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share
premium when the options are exercised.
Note
3 Financial Instruments-risk management
The Group is exposed through its operations to the following
financial risks:
-- Currency risk
-- Price risk
-- Credit risk - concentration
-- Funding and liquidity risk
-- Interest rate risk
-- Capital risk management
The policy for managing these risks is set by the Board. Certain
risks are managed centrally, while others are managed locally
following guidelines communicated from the corporate office. The
policy for each of the above risks is described in more detail
below.
Currency risk
In Argentina, Colombia and Chile the functional currency is the
US Dollar. The fluctuation of the local currencies of these
countries against the US Dollar does not impact the loans, costs
and revenues held in US Dollars; but it does impact the balances
denominated in local currencies. Such is the case of the prepaid
taxes. As currency rate changes between the U.S. Dollar and the
local currencies, the Group recognizes gains and losses in the
Consolidated Statement of Income.
In Chile, Colombia and Argentina subsidiaries most of the
balances are denominated in US Dollars, and since it is the
functional currency of the subsidiaries, there is no exposure to
currency fluctuation except from receivables or payables originated
in local currency mainly corresponding to VAT. The balances as of
31 December 2012 of VAT were credits for US$ 3,624,000 (US$
3,630,000 in 2011) in Argentina, credits for US$ 221,000 (US$
955,000 payable in 2011) in Chile and VAT payable for US$ 2,418,000
in Colombia.
The Group minimises the local currency positions in Argentina
and Chile by seeking to equilibrate local and foreign currency
assets and liabilities. However, tax receivables (VAT) are very
difficult to match with local currency liabilities. Therefore the
Group maintains a net exposure to them.
Most of the Group's assets are associated with oil and gas
productive assets. Such assets in the oil and gas industry even in
the local markets are usually settled in US Dollar equivalents.
During 2012, the Argentine peso weakened by 16% (8% in 2011)
against the US Dollar, the Chilean Peso strengthened by 8%
(weakened by 11% in 2011) and the Colombian Peso strengthened by
9%. If the Argentine Peso, the Chilean Peso and the Colombian Peso
had each weakened an additional 5% against the US dollar, with all
other variables held constant, post-tax profit for the year would
have been lower by US$ 45,500 (US$ 41,000 in 2011).
Price risk
The price realised for the oil produced by the Group is linked
to WTI (West Texas Intermediate) and Brent (in respect of our
Colombian operations), which is settled in the international
markets in US dollars. The market price of these commodities is
subject to significant fluctuation but the Board does not consider
it appropriate to manage the Group's risk to such fluctuation
through futures contracts or similar because to do so would not
have been economic at the achieved production levels.
In Chile, the oil price is based on WTI minus certain marketing
and quality discounts such as, inter alia, API quality and mercury
content. In Argentina, the oil price is also subject to the impact
of the retention tax on oil exports defined by the Argentine
government which limits the direct correlation to the WTI.
The Company has signed a long-term Gas Supply Contract with
Methanex in Chile. The price of the gas under this contract is
indexed to the international methanol price.
If the market prices of WTI, Brent and methanol had fallen by
10% compared to actual prices during the year, with all other
variables held constant, post-tax profit for the year would have
been lower by US$ 18,784,000 (US$ 9,501,000 in 2011).
The Board will consider adopting a hedging policy against
commodity price risk, when deemed appropriate, according to the
size of the business and market implied volatility.
Credit risk - concentration
The Group's credit risk relates mainly to accounts receivable
where the credit risks correspond to the recognised values. There
is not considered to be any significant risk in respect of the
Group's major customers. Substantially all oil production in
Argentina is sold to Oil Combustibles.
In Chile, all gas production is sold to the local subsidiary of
the Methanex Corporation, a Canadian public company (12% of total
revenue, 34% in 2011). All the oil produced in Chile is sold to
ENAP (48% of total revenue, 65% in 2011), the State owned oil and
gas company. In Colombia, 78% of the oil we produced there, was
sold to Hocol, a subsidiary of Ecopetrol, the Colombian Sate owned
oil Company (31% of total revenue). The mentioned companies all
have a very good credit standing and despite the concentration of
the credit risk, the Directors do not consider there to be a
significant collection risk.
See disclosure in Note 24.
Funding and Liquidity risk
Following its successes in 2012 and 2011, the Group is in the
fortunate position of having a secure production base and cash flow
stream - coupled with a strong cash position that enables the Group
to fully fund the committed work programmes of the new Blocks.
Producing Blocks combine low operating costs and the flexibility of
a discretionary investment programme that can be maintained,
reduced or increased in the short-term depending on economic
conditions.
The Group has strong support from its financial partners and
significant flexibility in adjusting the programme to ensure the
development of the key properties.
In addition, during 2011, the Group was able to secure US$
148,000,000 from the disposal of 20% of the Chilean business and
during 2012 LGI made a capital subscription in GeoPark Colombia
S.A. for an amount of US$ 14,920,000 for the 20% of the Colombian
business. In addition, as part of the transaction, US$ 5,000,000
was transferred directly to the Colombian subsidiary as a loan.
See disclosure in Note 35.
Interest rate risk
As the Group has no significant interest-bearing assets, the
Group's profit and operating cash flows are substantially
independent of changes in market interest rates. The Group's
interest rate risk arises from long-term borrowings issued at
variable rates, which expose the Group to cash flow to interest
rate risk.
The Group does not face interest rate risk on its US$
133,000,000 Reg S Notes which carry a fixed rate coupon of 7.75%
per annum.
The interest rate of the loans from Methanex Corporation and
Itau Bank depends on the LIBOR rate. For the period covered by
these financial statements, the Group has decided not to buy any
coverage for this risk. At 31 December 2012 the outstanding
long-term borrowing affected by variable rates amounted to US$
45,721,000, representing 24% of total long-term borrowings.
The Group analyses its interest rate exposure on a dynamic
basis. Various scenarios are simulated taking into consideration
refinancing, renewal of existing positions, alternative financing
and hedging. Based on these scenarios, the Group calculates the
impact on profit and loss of a defined interest rate shift. For
each simulation, the same interest rate shift is used for all
currencies. The scenarios are run only for liabilities that
represent the major interest-bearing positions.
At 31 December 2012, if interest rates on currency-denominated
borrowings had been 1% higher with all other variables held
constant, post-tax profit for the year would have been US$ 160,866
lower (US$ 144,267 in 2011), mainly as a result of higher interest
expense on floating rate borrowings.
Capital risk management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital.
Consistent with others in the industry, the Group monitors
capital on the basis of the gearing ratio. This ratio is calculated
as net debt divided by total capital. Net debt is calculated as
total borrowings (including 'current and non-current borrowings' as
shown in the consolidated balance sheet) less cash and cash
equivalent. Total capital is calculated as 'equity' as shown in the
consolidated balance sheet plus net debt.
The Group's strategy is to keep the gearing ratio within a 30%
to 45% range.
Particularly, in 2011 the gearing ratio has been affected by the
transactions with non-controlling interests, by which the Group
received proceeds of US$ 142,000,000.
The gearing ratios at 31 December 2012 and 2011 were as
follows:
Amounts in US$ '000 2012 2011
Net Debt 144,740 86,768 (a)
Total Equity 312,086 250,652
Total Capital 456,826 337,420
Gearing Ratio 32% 26%
((a) For the calculation of the gearing ratio the Group does not
consider the cash that has been allocated for future M&A
activities.
Note
4 Accounting estimates and assumptions
Estimates and assumptions are used in preparing the financial
statements. Although these estimates are based on management's best
knowledge of current events and actions, actual results may differ
from them. Estimates and judgements are continually evaluated and
are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable
under the circumstances.
The key estimates and assumptions used in these consolidated
financial statements are noted below:
-- The Group adopts the successful efforts method of accounting.
The Management of the Company makes assessments and estimates
regarding whether an exploration asset should continue to be
carried forward as an exploration and evaluation asset not yet
determined or when insufficient information exists for this type of
cost to remain as an asset. In making this assessment the
Management takes professional advice from qualified independent
experts.
-- Cash flow estimates for impairment assessments require
assumptions about two primary elements - future prices and
reserves. Estimates of future prices require significant judgments
about highly uncertain future events. Historically, oil and gas
prices have exhibited significant volatility. Our forecasts for oil
and gas revenues are based on prices derived from future price
forecasts amongst industry analysts and our own assessments. Our
estimates of future cash flows are generally based on our
assumptions of long-term prices and operating and development
costs.
Given the significant assumptions required and the possibility
that actual conditions will differ, we consider the assessment of
impairment to be a critical accounting estimate.
The process of estimating reserves is complex. It requires
significant judgements and decisions based on available geological,
geophysical, engineering and economic data. The estimation of
economically recoverable oil and natural gas reserves and related
future net cash flows was performed based on the Reserve Report
dated December 2012 prepared by DeGolyer and MacNaughton, an
international consultancy to the oil and gas industry based in
Dallas. It incorporates many factors and assumptions including:
o expected reservoir characteristics based on geological,
geophysical and engineering assessments;
o future production rates based on historical performance and
expected future operating and investment activities;
o future oil and gas prices and quality differentials;
o assumed effects of regulation by governmental agencies;
and
o future development and operating costs.
Management believes these factors and assumptions are reasonable
based on the information available to us at the time we prepare our
estimates. However, these estimates may change substantially as
additional data from ongoing development activities and production
performance becomes available and as economic conditions impacting
oil and gas prices and costs change.
-- Oil and gas assets held in property plant and equipment are
mainly depreciated on a unit of production basis at a rate
calculated by reference to proven and probable reserves and
incorporating the estimated future cost of developing and
extracting those reserves. Future development costs are estimated
using assumptions as to the numbers of wells required to produce
those reserves, the cost of the wells, future production facilities
and operating costs together with assumptions on oil and gas
realisations.
-- Obligations related to the plugging of wells once operations
are terminated may result in the recognition of significant
obligations. Estimating the future abandonment costs is difficult
and requires management to make estimates and judgments because
most of the obligations are many years in the future. Technologies
and costs are constantly changing as well as political,
environmental, safety and public relations considerations. The
Company has adopted the following criterion for recognising well
plugging and abandonment related costs: The present value of future
costs necessary for well plugging and abandonment is calculated for
each area on the basis of a cash flow that is discounted at an
average interest rate applicable to Company's indebtedness. The
liabilities recognised are based upon estimated future abandonment
costs, wells subject to abandonment, time to abandonment, and
future inflation rates.
Note
5 Consolidated Statement of Cash Flow
The Consolidated Statement of Cash Flow shows the Group's cash
flows for the year for operating, investing and financing
activities and the change in cash and cash equivalents during the
year.
Cash flows from operating activities are computed from the
results for the year adjusted for non-cash operating items, changes
in net working capital, and corporation tax. Tax paid is presented
as a separate item under operating activities.
The following chart describes non-cash transactions related to
the Consolidated Statement of Cash Flow:
31 December 2012
Movements Acquisition
derived from of Colombian
Consolidated subsidiaries Movements
Statement Other non-cash from Consolidated
of Financial movements Statement
Balance Sheet Items Position (*) of Cash Flow
Property, plant and
equipment 233,202 (110,973) (3,440) 118,789
Prepaid taxes 11,046 - 11,046
Inventory 3,371 (12,208) - (8,837)
Trade receivables 16,342 (8,500) - 7,842
Prepayment and other
receivables 24,439 (8,623) (25,140) (9,324)
Other financial assets (435) - - (435)
Cash at bank and in
hands (145,358) (6,570) - (151,928)
Borrowings (27,776) 1,368 - (26,408)
Trade accounts payable (26,355) 32,468 - 6,113
Deferred tax 8,748 (15,606) (7,128) (13,986)
Current income tax
liabilities (7,128) - 7,128 -
Other liabilities (28,662) 8,370 3,440 (16,852)
Equity (61,434) 120,274 25,140 83,980
31 December 2011
Movements derived Movements from
from Consolidated Other non-cash Consolidated
Statement of movements Statement of
Balance Sheet Items Financial Position (*) Cash Flow
Property, plant and
equipment 64,918 (1,948) 62,970
Prepaid taxes (892) - (892)
Inventory 332 - 332
Trade receivables 2,858 - 2,858
Prepayment and other
receivables 22,350 (6,000) 16,350
Other financial assets 2,625 - 2,625
Cash at bank and in
hands 99,226 - 99,226
Borrowings (855) - (855)
Trade accounts payable (15,825) - (15,825)
Deferred tax (7,019) (187) (7,206)
Current income tax
liabilities (187) 187 -
Other liabilities (9,171) 1,948 (7,223)
Equity (158,360) 6,000 (152,360)
(*) Non-cash movements include increase in the asset retirement
obligation and deferred tax. In 2012, the movement amounting to US$
14,920,000 relates to the contribution to be paid by LGI referring
to the Colombian transactions with Non-controlling interest (see
Notes 25 and 35). In 2011, the movement amounting to US$ 6,000,000
relates to the difference between the proceeds from transactions
with Non-controlling interest and the total consideration of these
transactions (see Notes 25 and 35).
Cash flows from investing activities include payments in
connection with the purchase and sale of property, plant and
equipment and cash flows relating to the purchase and sale of
enterprises to third
parties. Cash flows from financing activities include changes in
Shareholders' equity, and proceeds from borrowings and repayment of
loans. Cash and cash equivalents include bank overdraft and liquid
funds with a term of less than three months.
Changes in working capital shown in the Consolidated Statement
of Cash Flow are disclosed as follows:
Amounts in US$ '000 2012 2011
Change in Prepaid taxes (11,046) 892
Change in Inventories 8,837 (332)
Change in Trade receivables (7,842) (2,858)
Change in Prepayments and
other receivables and Other
assets 9,759 (16,350)
Change in liabilities 6,070 18,737
5,778 89
Note
6 Segment information
Management has determined the operating segments based on the
reports reviewed by the strategic steering committee that are used
to make strategic decisions. 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, impairments 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 the result of an isolated, non-recurring
event. Interest income and expenses 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.
Segment areas (geographical segments):
Amounts in US$ '000 Argentina Colombia Chile Corporate Total
2012
Net revenue 1,050 99,501 149,927 - 250,478
Gross (loss) / profit (2,194) 39,304 84,133 - 121,243
Adjusted EBITDA 2,051 34,474 93,908 (9,029) 121,404
Depreciation (3,408) (21,050) (28,734) (125) (53,317)
Impairment and write-off (1,915) (5,147) (18,490) - (25,552)
Total assets 6,108 213,202 405,674 3,033 628,017
Employees (average) 100 80 144 - 324
Amounts in US$ '000 Argentina Colombia 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)
453,384
Total assets 10,895 - (1) 7,990 472,269
Employees (average) 83 - 98 1 182
(1) Includes cash received from disposal of 20% of the Chilean
business in 2011.
Approximately 70% of capital expenditure was allocated to Chile
(95% in 2011) and 30% was allocated to Colombia (0% in 2011).
A reconciliation of total Adjusted EBITDA to total profit before
income tax is provided as follows:
Amounts in US$ '000 2012 2011
Adjusted EBITDA for reportable
segments 121,404 63,391
Depreciation (53,317) (26,408)
Share-based payment (5,396) (5,298)
Impairment and write-off of unsuccessful
efforts (25,552) (7,263)
Others (a) 3,608 1,362
Operating profit 40,747 25,784
Financial results (16,308) (13,516)
Gain on acquisition of subsidiaries 8,401 -
Profit before tax 32,840 12,268
(a) Includes internally capitalised costs.
Note
7 Net Revenue
Amounts in US$ '000 2012 2011
Sale of crude oil 221,564 73,508
Sale of gas 28,914 38,072
250,478 111,580
Note
8 Production costs
Amounts in US$ '000 2012 2011
Depreciation 52,307 25,844
Royalties 11,424 4,843
Staff costs (Note 10) 12,384 4,568
Gas plant costs 3,371 3,242
Transportation costs 7,211 2,541
Facilities maintenance 3,277 2,302
Well maintenance 3,803 1,692
Consumables 9,884 1,687
Share-based payments (Notes 10 and
30) 1,787 1,447
Vehicle rental and personnel transportation 1,680 1,404
Pulling costs 2,305 1,086
Field camp 2,407 1,009
Landowners 845 344
Safety and Insurance costs 1,428 316
Non operated blocks costs 1,030 -
Equipment rental 5,936 -
Cost of crude oil sold from acquired 3,826 -
business
Other costs 4,330 2,188
129,235 54,513
Note
9 Depreciation
Amounts in US$ '000 2012 2011
Oil and gas properties 44,552 20,096
Production facilities and machinery 7,708 5,767
Furniture, equipment and vehicles 713 343
Buildings and improvements 344 202
Depreciation of property, plant and
equipment 53,317 26,408
Recognised as follows:
Production costs 52,307 25,844
Administrative costs 1,010 501
Other operating costs - 63
Depreciation total 53,317 26,408
Note
10 Staff costs and Directors Remuneration
2012 2011
Average number of employees 324 182
Amounts in US$ '000
Wages and salaries 19,132 9,914
Shared-based payment 5,396 5,298
Social security charges 3,636 2,228
28,164 17,440
2012 2011
Board of Directors' and key managers'
remuneration
Salaries and fees 5,711 4,045
Other benefits 846 2,257
6,557 6,302
Directors' Remuneration
2012 Cash Payment Stock Payment
Director Cash Equivalent
Executive Executive Non-Executive Fees Paid Total Remuneration
Directors' Directors' Directors' in Shares
Fees Bonus Fees No. of Shares
Gerald O'Shaughnessy US$ 250,000 US$ 150,000 - - US$ 400,000
James F. Park US$ 500,000 US$ 300,000 - - US$ 800,000
Sir Michael
Jenkins(1) - - GBP23,250 3,020 GBP40,750
Peter Ryalls(1) - - GBP23,250 3,020 GBP40,750
Christian Weyer(1) - - GBP23,250 3,020 GBP40,750
Juan Cristóbal
Pavez - - GBP17,500 3,020 GBP35,000
Carlos Gulisano - - GBP35,000 - GBP35,000
Steven J. Quamme - - GBP17,500 3,020 GBP35,000
(1) Non-executive director fee includes a fee of GBP5,750 for
holding a committee chairman position during the year.
IPO Stock Options to Executive Directors
The following Stock Options were issued to Executive Directors
during 2006:
Ndeg of Underlying Exercise Price Earliest Exercise
Name Common Shares (GBP) Date Expiry Date
153,345 3.20 15 May 2008 15 May 2013
Gerald O'Shaughnessy 306,690 4.00 15 May 2008 15 May 2013
153,345 3.20 15 May 2008 15 May 2013
James F. Park 306,690 4.00 15 May 2008 15 May 2013
Stock Awards to Executive Directors
The following Stock Options were issued to Executive Directors
during 2012:
Ndeg of % of issued Earliest
Underlying Common Share Exercise Exercise
Name Common Shares Capital Grant Date Price (US$) Date
Approximately
Gerald O'Shaughnessy 270,000 0.6% 23 Nov 2012 0.001 23 Nov 2015
Approximately
James F. Park 450,000 1.0% 23 Nov 2012 0.001 23 Nov 2015
In addition, Dr Carlos Gulisano holds the following interests in
stock options and awards as a result of the services that he has
previously provided to the Company:
-- 50,000 IPO Stock Options issued on 15 May 2008 at an exercise
price of GBP4.00 to be exercised between 15 May 2008 and 15 May
2013.
-- 100,000 Stock awards issued on 15 December 2008 at an
exercise price of $0.001 to be exercised between 15 December 2012
and 15 December 2018.
No stock options or awards were exercised by Directors during
2012.
Note
11 Exploration costs
Amounts in US$ '000 2012 2011
Staff costs (Note 10) 3,089 2,292
Allocation to capitalised project (1,849) (1,471)
Share-based payments (Notes
10 and 30) 1,329 985
Write-off of unsuccessful efforts
(a) 25,552 5,919
Impairment loss (b) - 1,344
Amortisation of other long-term
liabilities related to unsuccessful
efforts (1,500) (600)
Other services 1,269 1,597
27,890 10,066
(a) The 2012 charge corresponds to the cost of eight
unsuccessful exploratory wells: five of them in Chile (two in Fell
Block, two in Otway Block and the remaining in Tranquilo Block) and
three of them in Colombia (one well in Cuerva Block, one well in
Arrendajo Block and the remaining in Llanos 17 Block). The 2012
charge also includes the loss generated by the relinquishment of an
area in the Del Mosquito Block in Argentina. 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 would be performed, wells from previous years were
written-off for an amount of US$ 3,588,000.
(b) The impairment charge relates to assets located in Del
Mosquito Block based on the impairment test performed in 2011.
Note
12 Administrative costs
Amounts in US$ '000 2012 2011
Staff costs (Note 10) 7,295 5,282
Share-based payments (Notes 10 and 30) 2,280 2,866
Consultant fees 5,122 1,896
New projects 2,927 1,726
Office expenses 3,293 1,172
Director fees and allowance 1,516 903
Travel expenses 1,563 686
Communication and IT costs 889 539
Depreciation 1,010 501
Public relations 919 1,289
Other administrative expenses 1,984 1,309
28,798 18,169
Note
13 Selling expenses
Amounts in US$ '000 2012 2011
Transportation 22,066 1,886
Delivery or pay penalty 1,718 -
Storage 645 508
Selling taxes 202 152
24,631 2,546
Note
14 Financial income
Amounts in US$ '000 2012 2011
Exchange difference 348 32
Interest received 544 130
892 162
Note
15 Financial expenses
Amounts in US$ '000 2012 2011
Bank charges and other financial costs 1,764 1,856
Exchange difference 2,429 496
Unwinding of long-term liabilities 1,262 350
Interest and amortisation of debt issue
costs 13,114 11,573
Less: amounts capitalised on qualifying
assets (1,369) (597)
17,200 13,678
Note
16 Income tax
Amounts in US$ '000 2012 2011
Current tax 7,536 187
Deferred income tax (Note 17) 6,858 7,019
14,394 7,206
The tax on the Group's profit before tax differs from the
theoretical amount that would arise using the weighted average tax
rate applicable to profits of the consolidated entities as
follows:
Amounts in US$ '000 2012 2011
Profit before tax 32,840 12,268
Tax losses from non-taxable jurisdictions 8,373 8,565
Taxable profit 41,213 20,833
Income tax calculated at statutory tax
rate 6,290 5,473
Tax losses where no deferred income tax
is recognised 2,864 2,560
Difference between functional currency
and tax currency 3,784 (761)
Expenses not deductible for tax purposes 1,903 -
Non-taxable profit (447) (66)
Income tax 14,394 7,206
Under current Bermuda law, the Company is not required to pay
any taxes in Bermuda on income or capital gains. The Company has
received an undertaking from the Minister of Finance in Bermuda
that, in the event of any taxes being imposed, they will be exempt
from taxation in Bermuda until March 2016. Income tax rates in
those countries where the Group operates (Argentina, Colombia and
Chile) ranges from 15% to 35%.
The Group has significant tax losses available which can be
utilised against future taxable profit in the following
countries:
Amounts in US$ '000 2012 2011
Argentina 11,645 18,656
Total tax losses at 31 December 11,645 18,656
At the balance sheet date deferred tax assets in respect of tax
losses in Argentina have not been recognised as there is
insufficient evidence of future taxable profits before the statute
of limitation of these tax losses causes them to expire.
Expiring dates for tax losses accumulated at 31 December 2012
are:
Expiring date Amounts in US$ '000
2013 3,348
2014 634
2015 5,024
2016 2,639
2017 -
Note
17 Deferred income tax
The gross movement on the deferred income tax account is as
follows:
Amounts in US$ '000 2012 2011
Deferred tax at 1 January (12,659) (5,640)
Acquisition of subsidiaries 15,606 -
Income statement charge (6,858) (7,019)
Deferred tax at 31 December (3,911) (12,659)
The breakdown and movement of deferred tax assets and
liabilities as of 31 December 2012 and 2011 are as follows:
At the beginning Acquisition (Charged) At end of
of year of subsidiaries / credited year
Amounts in US$ '000 to net profit
Deferred tax assets
Difference in depreciation
rates and other (1,426) 11,313 (676) 9,211
Taxable losses (*) 1,876 4,293 (1,789) 4,380
Total 2012 450 15,606 (2,465) 13,591
Total 2011 374 - 76 450
At the beginning (Charged) / At end of year
of year credited to
Amounts in US$ '000 net profit
Deferred tax liabilities
Difference in depreciation
rates and other (12,338) (4,564) (16,902)
Borrowings (771) 171 (600)
Total 2012 (13,109) (4,393) (17,502)
Total 2011 (6,014) (7,095) (13,109)
(*) In Chile, taxable losses have no expiration date.
Note
18 Earnings per share
Amounts in US$ '000 2012 2011
Numerator:
Profit for the year 11,879 54
Denominator:
Weighted average number of shares used
in basic EPS 42,673,981 41,912,685
Earnings after tax per share (US$) - basic. 0.2784 0.0013
Amounts in US$ '000 2012 2011
Weighted average number of shares used
in basic EPS 42,673,981 41,912,685
Effect of dilutive potential common shares
Stock award at US$ 0.001 1,435,324 2,004,482
Weighted average number of common shares
for the purposes of diluted earnings per
shares 44,109,305 43,917,167
Earnings after tax per share (US$) - diluted 0.2693 0.0012
Note
19 Property, plant and equipment
Exploration
Furniture, Production Buildings and
Amounts in Oil & gas equipment facilities and Construction evaluation
US$'000 properties and vehicles and machinery improvements in progress assets Total
Cost at 1
January
2011 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
Additions 4,071 637 32,335 - 81,241 83,360 201,644
Disposals (416) - (130) - - - (546)
Write-off /
Impairment - - - - - (25,552) (25,552)
Acquisition
of
subsidiaries 62,449 389 10,865 - 9,452 27,818 110,973
Transfers 106,311 375 (3,223) 761 (69,564) (34,660) -
Cost at 31
December
2012 344,371 3,576 86,949 3,198 54,025 93,106 585,225
Depreciation
and
write-down
at 1
January 2011 (33,508) (851) (13,308) (514) - - (48,181)
Depreciation (20,096) (343) (5,767) (202) - - (26,408)
Disposals - 71 447 - - - 518
Depreciation
and
write-down
at 31
December
2011 (53,604) (1,123) (18,628) (716) - - (74,071)
Depreciation (44,552) (713) (7,708) (344) - - (53,317)
Depreciation
and
write-down
at 31
December
2012 (98,156) (1,836) (26,336) (1,060) - - (127,388)
Carrying
amount
at 31
December
2011 118,352 1,052 28,474 1,721 32,896 42,140 224,635
Carrying
amount
at 31
December
2012 246,215 1,740 60,613 2,138 54,025 93,106 457,837
As of 31 December 2012, the Group has pledged, as security for a
mortgage obtained for the acquisition of the operating base in
Chile, assets amounting to US$ 692,000 (US$ 638,000 in 2011). See
Note 26.
On 25 August 2011 the exploratory period in the Fell Block
ended. The exploration programme carried out during the exploration
period enabled the Company to declare commerciality on
approximately 84% of the total area of the Block. The remaining
area not declared as commercial was relinquished, which did not
generate any loss for the Group.
Note
20 Subsidiary undertakings
Details of the subsidiaries and jointly controlled assets of the
Company are set out below:
Name and registered office Ownership interest
Subsidiaries GeoPark Argentina Ltd. - Bermuda 100%
GeoPark Argentina Ltd. - Argentine
Branch 100% (a)
Servicios Southern Cross Limitada
(Chile) 100% (b)
GeoPark Latin America 100% (i)
GeoPark Latin America - Chilean
Branch 100% (a) (i)
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.A. (Chile) 80% (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)
Raven Pipeline Company LLC (United
States) 23.5% (h)
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. In
December 2012 LG International acquired 20% equity.
(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.
(h) Raven Pipeline Company LLC had no movements during 2012.
(i) Formerly named GeoPark Chile Limited.
Note
21 Prepaid taxes
Amounts in US$ '000 2012 2011
V.A.T. 5,962 2,669
Withholding tax 3,347 -
Income tax credits 4,692 -
Other prepaid taxes 149 435
Total prepaid taxes 14,150 3,104
Classified as follows:
Current 3,443 147
Non current 10,707 2,957
Total prepaid taxes 14,150 3,104
Note
22 Inventories
Amounts in US$ '000 2012 2011
Crude oil 3,838 499
Materials and spares 117 85
3,955 584
Note
23 Trade receivables and Prepayments and other receivables
Amounts in US$ '000 2012 2011
Trade accounts receivable 32,271 15,929
32,271 15,929
To be recovered from co-venturers 8,773 537
Related parties receivables (Note 33) 31,138 6,000
Prepayments and other receivables 10,219 19,154
50,130 25,691
Total 82,401 41,620
Classified as follows:
Current 81,891 40,913
Non current 510 707
Total 82,401 41,620
Trade receivables that are aged by less than three months are
not considered impaired. As of 31 December 2012, trade receivables
of US$ 31,984 (US$ 4,019 in 2011) were aged by more than 3 months,
but not impaired. These relate to customers for whom there is no
recent history of default. There are no balances due between 31
days and 90 days as of 31 December 2012 and 2011.
Movements on the Group provision for impairment are as
follows:
Amounts in US$ '000 2012 2011
At 1 January 33 33
Provision for receivables impairment - -
33 33
The credit period for trade receivables is 30 days. The maximum
exposure to credit risk at the reporting date is the carrying value
of each class of receivable. The Group does not hold any collateral
as security related to trade receivables.
The carrying value of trade receivables is considered to
represent a reasonable approximation of its fair value due to their
short-term nature.
Note
24 Financial instruments by category
Amounts in US$ '000 Loans and receivables
2012 2011
Assets as per statement of
financial position
Trade receivables 32,271 15,929
To be recovered from co-venturers 8,773 537
Other financial assets (*) 7,791 8,226
Cash and cash equivalents 48,292 193,650
97,127 218,342
Other financial liabilities
Amounts in US$ '000 at amortised cost
2012 2011
Liabilities as per statement
of financial position
Trade payables 50,590 27,580
To be paid to co-venturers 2,007 -
Borrowings 193,032 165,256
245,629 192,836
(*) Other financial assets relate to the cash collateral account
required under the terms of the Bond issued in 2010. This
investment was intended to guarantee interest payments and was
recovered at repayment date (see Note 37). For 2012, they also
include contributions made for environmental obligations according
to Colombian government regulations. In 2011, they included the
cash escrow payment that has since been released on closing of the
purchase of the Colombian assets (Note 35).
Credit quality of financial assets
The credit quality of financial assets that are neither past due
nor impaired can be assessed by reference to external credit
ratings (if available) or to historical information about
counterparty default rates:
Amounts in US$ '000 2012 2011
Trade receivables
Counterparties with an external credit
rating (Moody's)
A3 - 11,333
Ba1 4,769 4,089
Baa1 13,488 -
Baa2 4,781 -
Counterparties without an external credit
rating
Group1 (*) 9,233 507
Total trade receivables 32,271 15,929
(*) Group 1 - existing customers (more than 6 months) with no defaults in the past.
All trade receivables are denominated in US Dollars.
Cash at bank and other financial assets
(1)
Amounts in US$ '000 2012 2011
Counterparties with an external credit
rating (Moody's)
A1 7,408 2,139
A3 366 7,631
Aa1 2,131 50,000
Aa2 - 54
Aa3 38,952 139,594
P1 2,537 2,450
Counterparties without an external credit
rating 4,665 -
Total 56,059 201,868
(1) The rest of the balance sheet item 'cash and cash
equivalents' is cash on hand amounting to US$ 24,000 (US$ 8,000 in
2011).
Financial liabilities - contractual undiscounted cash flows
The table below analyses the Group's financial liabilities into
relevant maturity groupings based on the remaining period at the
balance sheet to the contractual maturity date. The amounts
disclosed in the table are the contractual undiscounted cash
flows.
Between Between
Less than 1 and 2 2 and 5
Amounts in US$ '000 1 year years years
At 31 December 2012
Borrowings 36,031 10,437 181,100
Trade payables 50,590 - -
86,621 10,437 181,100
At 31 December 2011
Borrowings 30,613 8,265 179,489
Trade payables 27,580 - -
58,193 8,265 179,489
Note
25 Share capital
Issued share capital 2012 2011
Common stock (amounts in US$ '000) 43 43
The share capital is distributed as
follows:
Common shares, of nominal US$ 0.001 43,495,585 42,474,274
Total common shares in issue 43,495,585 42,474,274
Authorised share capital
US$ per share 0.001 0.001
Number of common shares (US$ 0.001
each) 5,171,969,000 5,171,969,000
Amount in US$ 5,171,969 5,171,969
Details regarding the share capital of the Company are set out
below:
Common shares
As of 31 December 2012 the outstanding common shares confer the
following rights on the holder:
-- the right to one vote per share;
-- ranking pari passu, the right to any dividend declared and payable on common shares;
Shares issued Shares closing US$(`000)
GeoPark common shares history Date (millions) (millions) Closing
Shares outstanding at the end
of 2010 41.7 42
Issue of shares to Non-Executive
Directors 2011 0.01 41.7 42
Stock awards May 2011 0.06 41.8 42
Stock awards Oct 2011 0.10 41.9 42
IPO stock options Oct 2011 0.60 42.5 43
Shares outstanding at the end
of 2011 42.5 43
Issue of shares to Non-Executive
Directors 2012 0.02 42.5 43
Stock awards Oct 2012 1.01 43.5 43
Shares outstanding at the end
of 2012 43.5 43
During 2012, the Company issued 15,100 (12,028 in 2011) shares
to Non-Executive Directors in accordance with contracts as
compensation. Shares are issued at average price for the period,
generating a share premium of US$ 142,492 (US$ 130,733 in
2011).
During 2012, 30,000 (158,000 in 2011) new common shares were
issued, pursuant to a consulting agreement for services rendered to
GeoPark Holdings Limited generating a share premium of US$ 253,315
(US$ 1,730,000 in 2011).
On 22 October 2012, 976,211 common shares were allotted to the
trustee of the EBT in anticipation of the exercise of the 2008
Stock Awards Plan (see Note 30), generating a share premium of US$
4,191,000. 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 (see Note 30).
The accounting treatment of the shares is in line with the
Group's policy on share-based payments.
Other Reserve
During 2011, LGI acquired a 20% interest in GeoPark Chile S.A.,
the subsidiary that owns the Chilean assets for a total
consideration of US$ 148,000,000.
During 2012, LGI also acquired a 20% interest in GeoPark
Colombia S.A., the subsidiary that owns the Colombian assets by
making a capital contribution in GeoPark Colombia S.A. for an
amount of US$ 14,920,000. In addition, as part of the transaction,
US$ 5,000,000 was transferred directly to the Colombian subsidiary
as a loan. The differences between total consideration and the net
equity of the Companies as per the book value were recorded as
Other Reserve in the Consolidated Statement of Changes in
Equity.
Note
26 Borrowings
Amounts in US$ '000 2012 2011
Outstanding amounts as of 31 December
Methanex Corporation (a) 8,036 18,068
Banco de Crédito e Inversiones (b) 7,859 8,845
Overdrafts (c) 10,000 10,028
Banco Itaú (d) 37,685 -
Bond (e) 129,452 128,315
193,032 165,256
Classified as follows:
Non current 165,046 134,643
Current 27,986 30,613
The fair value of these financial instruments at 31 December
2012 amounts to US$ 190,188,000 (US$ 159,602,000 in 2011).
(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. 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 Operation for
US$ 3,100,000. On May 2012 the outstanding amount was fully
repaid.
(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
(Note 20) in 2007. 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 2012 is
US$ 344,000(US$ 410,000 in 2011).
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 with a maturity less than a year. The outstanding amount at
31 December 2012 is US$ 7,515,000 (US$ 8,435,000 in 2011).
(c) The Group has been granted with credit lines for over US$
46,000,000.
(d) In 2012 GeoPark Holdings Limited executed a loan agreement
with Banco Itaú BBA S.A., Nassau Branch for US$ 37,500,000. GeoPark
used 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 35).
The loan, which has a maturity of five years, repayable 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 LIBOR + 4.55%.
(e) 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. The net
proceeds of the Notes are being used to support the Group's growth
strategy and improve the Group's financial flexibility. See Note 37
for additional information.
Note
27 Provisions and other long-term liabilities
Amounts in US$ Asset retirement Deferred income Other Total
'000 obligation
At 1 January 2011 3,153 - - 3,153
Addition to provision
/ Contributions
received 1,947 5,000 - 6,947
Amortisation - (1,038) - (1,038)
Unwinding of discount 350 - - 350
At 31 December
2011 5,450 3,962 - 9,412
Addition to provision
/ Contributions
received 3,440 5,550 100 9,090
Acquisition of
subsidiaries 6,061 - 2,309 8,370
Amortisation - (2,143) - (2,143)
Unwinding of discount 1,262 - - 1,262
At 31 December
2012 16,213 7,369 2,409 25,991
The provision for asset retirement obligation relates to the
estimation of future disbursements related to the abandonment and
decommissioning of oil and gas wells.
Deferred income and other mainly relates to contributions
received to improve the project economics of the gas wells. The
amortisation is in line with the related asset.
Note
28 Trade and other payable
Amounts in US$ '000 2012 2011
V.A.T 4,300 955
Trade payables 50,590 27,580
54,890 28,535
The average credit period (expressed as creditor days) during
the year ended 31 December 2012 was 69 days (2011: 74 days)
The fair value of these short-term financial instruments is not
individually determined as the carrying amount is a reasonable
approximation of fair value.
Note
29 Provisions for other liabilities
Amounts in US$ '000 2012 2011
Staff costs to be paid 5,867 3,859
Royalties to be paid 3,909 458
Other taxes to be paid 5,418 155
To be paid to co-venturers 2,007 -
Other - 646
17,201 5,118
Note
30 Share-based payments
IPO Award Programme and Executive Stock Option plan
The Group has established IPO Award Programme, an Executive
Stock Option Programme and Stock Award Programmes 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.
IPO Award Programme
A total of 613,380 IPO Awards were granted to all of the Group's
employees and certain consultants at the IPO date (May 2006). The
Awards vested on 15 May 2008, the second anniversary of admission
to IPO. On 3 July 2008, the Company issued 602,000 shares for
nominal value of $ 0,001 each, corresponding to the total IPO
awards vested which are held in a Beneficiary Trust. There are
11,380 awards that did not vest and were cancelled since they
involved employees that had left the Group before the vesting
date.
IPO Executive Stock Option Programme
On admission to AIM the Company granted:
i. 605,000 stock options to the senior management and some
eligible employees, from which 60,000 have expired. The exercise
price of these stock options is GBP 4.00 (125%% of placing price).
The vesting date of these stock options was 15 May 2008 and they
expire in five years from that date, on 15 May 2013. The stock
options give no voting rights to the holders until they are
exercised and converted into common shares when they will rank
pari-passu with all existing common shares.
ii. 306,690 stock options to the Executive Directors at an
exercise price of GBP 3.20 and 613,380 at an exercise price of GBP
4.00. The vesting conditions of these options are equal to
those
described in i.
The fair value of the options granted was calculated using the
Black-Scholes model. Due to the short trading history of the
Company, expected volatility was determined by comparison to a
sample of AIM listed oil and gas companies with a similar market
capitalisation to the Group but a longer trading history.
Stock Award Programmes and Other Share Based Payments
During 2008, GeoPark Shareholders 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 Programmes are:
-- All employees are eligible.
-- Exercise price is equal to the nominal value of shares.
-- Vesting period is four years.
-- 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 programmes and other share based payments are
described in the following table and explanations:
Charged to net
profit
Awards
Awards granted Awards
at the in the Awards Awards at year
Year beginning year forfeited exercised end 2012 2011
2012 - 500,000 - - 500,000 55 -
2011 500,000 - - - 500,000 926 37
2010 863,100 - 11,000 - 852,100 2,929 2,776
2008 976,211 - - 976,211 - 1,087 925
Subtotal 4,997 3,738
Stock awards
for service
contracts 90,000 - - 30,000 60,000 - 1,429
Stock options
to Executive
Directors - 720,000 - - 720,000 257 -
Shares granted
to Non-Executive
Directors - 3,020 - 3,020 - 142 131
5,396 5,298
The awards that are forfeited correspond to employees that had
left the Group before vesting date.
In addition, a simplified procedure for the exercise of the
Options was approved by the Board. It is a payment mechanism
available to option holders that enables a cash-free exercise of
their Options. The mechanism allows participating option holders to
exercise their options utilizing fully issued shares made available
by the EBT (Employee Beneficiary Trust) according to a formula (the
"Stock Option cash-free payment option"). This allows participating
option holders to exercise options to buy shares for the same
number of shares they would have obtained with borrowed cash and
then sell sufficient shares to repay the borrowed sums.
On 6 October 2011, 601,235 common shares each credited as fully
paid, were allotted to the trustee of the EBT in anticipation of
the exercise of the Options. This number of shares issued was
estimated assuming that all beneficiaries will adopt the cash-less
exercise mechanism at market price GBP 6.5.
On 22 October 2012, a total of 976,211 common shares were
allotted to the trustee of the EBT in anticipation of the exercise
of the 2008 Stock Awards Plan generating a shared premium of US$
4,191,000.
During 2012, 21,000 (15,000 in 2011) of these shares were sold
by the employees at a weighted average price of GBP6.61 (GBP7.45 in
2011) per share. The shares held in the employee Beneficiary Trust
rank pari-passu with GeoPark's ordinary shares.
On 23 November 2012, the Remuneration Committee and the board of
directors approved granting 720,000 options over ordinary shares of
US$0.001 each to the Executive Directors. Options granted vest on
the third anniversary of the date on which they are granted and
have an exercise price of US$0.001.
Other share-based payments
As it is mentioned in Note 25, the Company granted 15,100
(12,028 in 2011) shares at average price for each three month
period for services rendered by the Non-Executive Directors of the
Company. Fees paid in shares were directly expensed in the
Administrative costs line in the amount of US$ 142,492 (US$ 130,745
in 2011).
In October 2010 and August 2011 the company issued a total of
180,000 options over US$0.001 shares with an exercise price equal
to their nominal value in consideration for certain consultancy
services.
Note
31 Interests in Joint operations
The Group has interests in nine joint operations, which are
involved in the exploration of hydrocarbons in Chile and Colombia.
Three of the Chilean joint operations are related to the blocks
acquired in Tierra del Fuego (TdF), Chile. No significant
activities have commenced in these joint operations in 2012 and
therefore no separate financial information is presented.
GeoPark is the operator of all of the Chilean Blocks.
The following amounts represent the Company's share in the
assets, liabilities and results of the joint operations which have
been consolidated line by line in the consolidated statement of
financial position and statement of income:
Chile
Joint operation Tranquilo Block Otway Block
GeoPark Magallanes GeoPark Magallanes
Subsidiary Ltda. Ltda.
Interest 29% 25%
2012 2011 2012 2011
ASSETS
PP&E / E&E 13,328 8,438 6,516 2,561
Other assets 1,467 2,458 1,326 262
Total Assets 14,795 10,896 7,842 2,823
LIABILITIES
Current liabilities (3,252) (1,048) (2,412) (332)
Total Liabilities (3,252) (1,048) (2,412) (332)
NET ASSETS / (LIABILITIES) 11,543 9,848 5,430 2,491
Sales - - - -
Net loss (544) (569) (386) (232)
Colombia
Llanos 17 Yamu/Carupana Llanos 34 Llanos 32
Joint operation Block Block Block Block
GeoPark Luna GeoPark Colombia GeoPark Colombia GeoPark Luna
SAS and Luna SAS SAS
Subsidiary SAS
Interest 36.84% 75%/54.50% 45% 10%
2012 2012 2012 2012
ASSETS
PP&E / E&E 3,872 12,626 25,178 4,384
Other assets 144 26 72 1,484
Total Assets 4,016 12,652 25,250 5,868
LIABILITIES
Current liabilities (224) - - (1,509)
Total Liabilities (224) - - (1,509)
NET ASSETS / (LIABILITIES) 3,792 12,652 25,250 4,359
Sales 144 23,283 10,362 2,900
Net profit / (loss) 144 4,034 3,767 1,207
Capital commitments are disclosed in Note 32 (b).
Note
32 Commitments
(a) Royalty commitments
In Argentina, crude oil production accrues royalties payable to
the Provinces of Santa Cruz and Mendoza equivalent to 12% on
estimated value at well head of those products. This value is
equivalent to final sales price less transport, storage and
treatment costs.
In Argentina crude oil sales accrue private royalties payable to
EPP Petróleo S.A. (2.5% on invoiced amount of crude oil obtained
from wells at "Del Mosquito", Province of Santa Cruz, Argentina)
and to Occidental Petroleum Argentina INC, formerly Vintage
Argentina Ltd. (8% on invoiced amount of crude oil obtained from
wells at "Loma Cortaderal" and "Cerro Doña Juana", Province of
Mendoza, Argentina).
In Chile, royalties are payable to the Chilean Government, which
is calculated at 5% of crude oil production and 3% of gas
production.
In Colombia, royalties on production are payable to the
Colombian Government and are determined at a rate of 8%.
Additionally, under the terms of the Winchester Stock Purchase
Agreement, we are obligated to make certain payments to the
previous owners of Winchester based on the production and sale of
hydrocarbons discovered by exploration wells drilled after October
25, 2011. These payments involve both an earnings based measure and
an overriding royalty equal to an estimated 4% carried interest on
the part of the vendor. As at the balance sheet date and based on
preliminary internal estimates of additions of 2P reserves since
acquisition, the Company's best estimate of the total commitment
over the remaining life of the concession is a range of US$ 35
million - US$ 42 million (assuming a discount rate of 9.7% and oil
price of US$ 94 per barrel).
(b) Capital commitments
Chile
The Tranquilo Block Consortium has committed to drill four
exploratory wells, to perform 2D and 3D seismic in the period to
January 2013. The joint operation estimates that the remaining
commitment amounts to US$ 5,500,000 at GeoPark's working interest
(29%), related to the first exploratory phase. In January 2013, the
Energy Ministry were informed that, in accordance with the article
3.3 of the Special Operations Contract for the Exploration and
Exploitation (CEOP) that after the termination of the first
exploratory phase, and after fulfilling the commitment previously
mentioned, it had been decided not to continue to the second
exploratory period. GeoPark and its partners relinquished the
Tranquilo Block, except for an area of 92,417 acres consisting of
protected exploitation zones for the Cabo Negro, Marcou Sur, Maria
Antonieta and Palos Quemados prospects.
The Otway Block Consortium has committed to drill two
exploratory wells and to perform 3D seismic until May 2013. The
joint operation estimates that the remaining commitment amounts to
US$ 2,400,000 at GeoPark's working interest (25%).
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).
On 6 November 2012, the Chilean Government signed the CEOPs
related to Flamenco and Isla Norte blocks. Subsequently, on 9
January 2013, the Chilean Government also signed the CEOP for
Campanario block.
Future investment commitments assumed by GeoPark were:
-- 3 exploratory wells and 350 km2 of seismic surveys on Isla Norte Block (US$ 16,330,000)
-- 8 exploratory wells and 578 km2 of seismic surveys on Campanario Block (US$ 41,530,000)
-- 10 exploratory wells and 570 km2 of seismic surveys on Flamenco Block (US$ 43,570,000)
As part of the agreement, the investments made in the first
exploratory period will be assumed 100% by GeoPark.
Colombia
The Yamu Block Consortium has committed to drill one exploratory
well during 2013.
The Llanos 34 Block Consortium has committed to drill one
exploratory well between 2013 and 2014. The joint operation
estimates that the remaining commitment amounts to US$ 3,555,000 at
GeoPark's working interest (45%). The Arrendajo Block (10% working
interest) Consortium has committed to drill one exploratory well
during 2013.
The Llanos 32 Block Consortium has committed to drill two
exploratory wells between 2013 and 2014. The joint operation
estimates that the remaining commitment amounts to US$ 750,000 at
GeoPark's working interest (10%).
The Llanos 17 Block Consortium has committed to drill either two
exploratory wells or one exploratory well and perform 3D seismic
between 2013 and 2014. The joint operation estimates that the
remaining commitment amounts to US$ 2,450,000 at GeoPark's working
interest (36.84%).
The Llanos 62 Block (100% working interest) has committed to
drill two exploratory wells between 2013 and 2014. The remaining
commitment amounts to US$ 3,000,000.
The Cuerva Block (100% working interest) has committed to drill
two exploratory wells between 2013 and 2014. This represents an
approximately amount of US$ 4,800,000.
(c) Operating lease commitments - Group company as lessee
The Group leases various plant and machinery under
non-cancellable operating lease agreements.
The Group also leases offices under non-cancellable operating
lease agreements. The lease terms are between 2 and 3 years, and
the majority of lease agreements are renewable at the end of the
lease period at market rate.
During 2012 a total amount of US$ 4,531,000 (US$ 3,313,000 in
2011) was charged to the income statement and US$ 32,706,000 of
operating leases were capitalised as Property, plant and equipment
(US$ 28,132,000 in 2011).
The future aggregate minimum lease payments under
non-cancellable operating leases are as follows:
Amounts in US$ '000 2012 2011
Operating lease commitments
Falling due within 1 year 26,464 34,126
Falling due within 1 - 3 years 3,709 24,797
Falling due within 3 - 5 years 443 222
Falling due over 5 years 895 -
Total minimum lease payments 31,511 59,145
Note
33 Related parties
Controlling interest
The main shareholders of GeoPark Holdings Limited, a company
registered in Bermuda, as of 31 December 2012, are:
a) 18.79 % of share capital, by Gerald O'Shaughnessy
(founder).
b) 16.05 % of share capital, by Energy Holdings, LLC controlled
by James F. Park (founder).
c) 11.44 % of share capital, by Cartica Corporate Governance
Fund, L.P.
d) 7.95 % of share capital, by IFC (International Finance
Corporation).
e) 4.99 % of share capital, by Socoservin Overseas Ltd
controlled by Juan Cristóbal Pavez (Non- Executive Director)
f) 5.21 % of share capital, by MONEDA A.F.I.
g) 7.60 % of share capital, by Pershing Keen, New Jersey
(ND).
Balances outstanding and transactions with related parties
Account (Amounts in Transaction Balances
'000) in the year at year end Related Party Relationship
2012
To be recovered from
co-ventures - 8,773 Joint Operations Joint Operations
Prepayment and other
receivables - 31,138 LGI Partner
To be paid to co-venturers - (2,007) Joint Operations Joint Operations
Non-Executive Director
Exploration costs 31 - Carlos Gulisano (*)
Non-Executive Director
Administrative costs 219 - Carlos Gulisano (*)
2011
To be recovered from
co-ventures - 537 Joint Operations Joint Operations
Prepayment and other
receivables - 6,000 LGI Partner
Non-Executive Director
Exploration costs 138 - Carlos Gulisano (*)
(*) Corresponding to consultancy services.
There have been no other transactions with the Board of
Directors, Executive Board, Executive officers, significant
shareholders or other related parties during the year besides the
intercompany transactions which have been eliminated in the
consolidated financial statements, and normal remuneration of Board
of Directors and Executive Board.
Note
34 Fees paid to Auditors
Amounts in US$ '000 2012 2011
Fees payable to the Group's auditors for
the audit of the consolidated financial
statements 346 120
Fees payable to the Group's auditors for
the review of interim financial results 52 32
Fees payable for the audit of the Group's
subsidiaries pursuant to legislation 298 113
Non-audit services 713 239
Fees paid to auditors 1,409 504
Non-audit services relates to tax services for US$ 121,000 (US$
123,000 in 2011) and due diligence and other services for US$
592,000 (US$ 116,000 in 2011).
Note
35 Business transactions
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 million, adjusted for working
capital) provide GeoPark with the following in Colombia:
-- Interests in 10 blocks (ranging from 5% to 100%), with
license operationship 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.
-- 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.
Under the terms of the sale and purchase agreement entered into
in 2012 in respect of the acquisition of Winchester Luna, the
Company has to make certain payments to the former owners arising
from the production and sale of hydrocarbons discovered by
exploration wells drilled after 25 October 2011 on the working
interests of the companies at that date. These payments which
involve both, an earnings based measure and an overriding revenue
royalty, equate to an estimated 4% carried interest on the part of
the vendor.
In Colombia, royalties on production are payable to the
Colombian Government and are determined at a rate of 8%.
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. An income approach (being the
net present value of expected future cash flows) was adopted 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 following table summarises the combined consideration paid
for Winchester Luna and Hupecol, the fair value of assets acquired
and liabilities assumed for these transactions:
Winchester
Amounts in US$ '000 Hupecol Luna Total
Cash (including working
capital adjustments) 79,630 32,243 111,873
Total consideration 79,630 32,243 111,873
Cash and cash equivalents 976 5,594 6,570
Property, plant and
equipment (including
mineral interest) 73,791 37,182 110,973
Trade receivables 4,402 4,098 8,500
Prepayments and other
receivables 5,640 2,983 8,623
Deferred income tax
assets 10,344 5,262 15,606
Inventories 10,596 1,612 12,208
Trade payables and other
debt (20,487) (11,981) (32,468)
Borrowings - (1,368) (1,368)
Provision for other
long-term liabilities (5,632) (2,738) (8,370)
Total identifiable net
assets 79,630 40,644 120,274
Gain on acquisition
of subsidiaries - 8,401 8,401
The purchase price allocation above mentioned is final.
Acquisition-related costs have been charged to administrative
expenses in the consolidated income statement for the year ended 31
December 2012.
In accordance with disclosure requirements for business
combinations, the Company has calculated its net revenue and
profit, considering as if the mentioned acquisitions had occurred
at the beginning of the reporting period. The following table
summarises both results:
Amounts in US$ '000 Total
Net revenue 275,051
Profit for the year 22,087
The revenue included in the consolidated statement of
comprehensive income since acquisition date contributed by the
acquired companies was US$ 99,501,000. The acquired companies also
contributed profit of US$ 1,152,000 over the same period.
LGI partnership
On 12 March 2010, LGI 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 LGI entered into the following
agreements through which LGI acquires an equity interest in the
Chilean Business of the Group:
-- On 20 May 2011, the Company (through its wholly owned
subsidiaries GeoPark Latin America Chilean Branch and GeoPark Chile
S.A.) and LGI signed a subscription agreement in which LGI
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 LGI, 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 of US$ 111,245,000 has been recognised through equity
rather than in the income statement for the year. Under the terms
of this agreement LGI also committed to provide additional equity
funding of US$ 18 million to GeoPark Chile S.A. over the next three
years, being LGI's share of GeoPark Chile S.A.'s commitments under
the minimum work programme of the three Tierra del Fuego licences
(see Note 32).
In December 2012, LGI has also joined GeoPark's operations in
Colombia through the acquisition of a 20% interest in GeoPark
Colombia S.A., a company that holds GeoPark's Colombian assets and
which includes interests in 10 hydrocarbon blocks. A capital
contribution in GeoPark Colombia S.A. for an amount of US$
14,920,000 was made in 2013. In addition, as part of the
transaction, US$ 5,000,000 was transferred directly to the
Colombian subsidiary as a loan.
In addition, in March 2013 GeoPark and LGI announced their
agreement to extend their strategic alliance to build a portfolio
of upstream oil and gas assets throughout Latin America through
2015.
Note
36 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 completed the drilling of five new gas wells during 2012.
Methanex contributed to the cost of drilling the wells in order to
improve the project economics. As of 31 December, the Company has
fulfilled all the commitments under this agreement.
The Agreement also included monthly commitments of delivering
certain volume of gas; in case of failure, the Company could meet
the obligation from future deliveries without penalties during a
period of three months. Otherwise, the Company has to recognise the
corresponding liability. As of 31 December 2012, the accrued
penalty amounts to US$ 1.7 million.
Note
37 Subsequent Events
Notes issuance
During February 2013, the Company successfully placed US$ 300
million notes which were offered under Rule 144A and Regulation S
exemptions of the United States Securities laws.
The Notes, issued by the Company's wholly-owned subsidiary
GeoPark Latin America Limited Agencia en Chile ("the Issuer"), were
priced at 99.332% and will carry a coupon of 7.50% per annum to
yield 7.625% per annum. Final maturity of the notes will be 11
February 2020. The Notes are guaranteed by GeoPark Holdings and
GeoPark Latin America Chilean Branch and are secured with a pledge
of all of the equity interests of the Issuer in GeoPark Chile S.A.
and GeoPark Colombia S.A. and a pledge of certain intercompany
loans. Notes were rated single B by both Standard & Poor's and
Fitch Ratings.
The net proceeds of the notes will be used to finance the
Company's expansion plans in the region and also to repay existing
debt of approximately US$170 million, including the existing Reg S
Notes due 2015 and the Iatu loan. The transaction extends GeoPark's
debt maturity significantly, allowing the Company to allocate more
resources to its investment and inorganic growth programs in the
coming years.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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