GeoPark Renews Oil Offtake Agreement with Vitol
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1d ago
0mins
Source: Businesswire
- Agreement Renewal: GeoPark's renewed oil offtake agreement with Vitol extends the sales term for its crude oil production in Colombia's Llanos basin until December 31, 2028, ensuring revenue stability and predictability for the company over the next two years.
- Netback Recovery: The new agreement restores GeoPark's weighted-average netbacks to single-digit levels comparable to 2020 benchmarks, effectively offsetting the cumulative impacts of midstream tariffs and inflation over the past five years, thereby enhancing profitability.
- Prepayment Facility: GeoPark secures a prepayment facility from Vitol of up to $500 million, including a firm $330 million committed availability, which enhances the company's financial flexibility and provides funding certainty for future strategic plans.
- Interest Rate Advantage: The new agreement features an interest rate based on SOFR plus 3.50%, representing a 25-basis point reduction from the prior agreement, currently translating to an interest rate of approximately 7.15%-7.25%, which will further lower financing costs and improve cash flow visibility.
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Analyst Views on GPRK
Wall Street analysts forecast GPRK stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for GPRK is 9.50 USD with a low forecast of 8.50 USD and a high forecast of 10.50 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
2 Analyst Rating
1 Buy
1 Hold
0 Sell
Moderate Buy
Current: 8.430
Low
8.50
Averages
9.50
High
10.50
Current: 8.430
Low
8.50
Averages
9.50
High
10.50
About GPRK
GeoPark Ltd is a Colombia-based company operating in the energy sector. As an oil and gas explorer, operator and consolidator the Company has assets and growth platforms in Colombia, Ecuador, Chile and Brazil. Working interests from operation in 42 hydrocarbon blocks comprise of natural gas exploration and production (E&P) and crude oil production on land as well as offshore across over 700,000 acres. The Del Mosquito block in Argentina's Austral basin, and the Cerro Dona Juana and Loma Cortaderal blocks in the Neuquen basin are wholly owned by GeoPark Holdings Limited, while the Fell block in Chile's Magallanes region is 90% owned by the Company, with the remaining interest in associated infrastructure, production facilities, operating licenses and a technical database are held by state oil firm, Enap.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
GeoPark Acquires Frontera Energy, Doubling Production and Reserves
- Transaction Scale Expansion: GeoPark's acquisition of Frontera Petroleum International Holdings B.V. for $375 million is set to boost its projected 2028 production to over 90,000 boepd, with EBITDA expected to reach approximately $950 million, significantly enhancing the company's cash flow generation capacity.
- Reserves Doubling: The acquisition adds approximately 99 million barrels of 1P reserves and 147 million barrels of 2P reserves, more than doubling GeoPark's reserves, which will support sustained development activity and long-term cash flow visibility, ensuring robust growth of its independent E&P platform in Latin America.
- Improved Financial Health: Post-transaction, GeoPark's net leverage is expected to drop to about 2.0x EBITDA, with continued free cash flow generation and ramp-up of Vaca Muerta development projected to further reduce it to 1.4x by 2028, enhancing the company's financial flexibility and debt servicing capacity.
- Significant Synergies: The transaction is expected to deliver annual synergies of $30-50 million by 2027, with a structured transition plan agreed upon between GeoPark and Frontera Energy to ensure operational continuity and support timely integration, further enhancing asset value.
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GeoPark Acquires Frontera International Oil Assets for $375 Million
- Transaction Overview: GeoPark has entered into a definitive agreement with Frontera Energy to acquire Frontera International's oil and gas assets for $375 million, significantly enhancing GeoPark's position as the largest private operator in Colombia.
- Financial Impact: This acquisition is expected to materially increase GeoPark's scale, reserves, and cash flow generation, strengthening its independent E&P platform in Latin America and supporting disciplined growth through economic cycles.
- Strategic Significance: By integrating Frontera's assets, GeoPark can implement a full-field development approach, extending production plateaus and improving investment efficiency, which will benefit regional economies by creating more jobs.
- Future Outlook: Post-transaction, GeoPark will leverage its operational experience and local relationships in Colombia to drive efficient integration and operation of the acquired assets, ensuring long-term value creation and sustainable development.
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