“While most of our oil brothers here are scrambling hard to get every good acre in the U.S., this whole southern continent has been left wide open” – GeoPark CEO Jim Park
According to GeoPark, companies looking for the best place for oil and gas investment in the Permian are cruising the wrong neighborhood.
“The best place today to look for oil and gas and oil and gas investment,” GeoPark CEO and Director Jim Park told EnerCom Dallas attendees, “is Latin America, a region with the resource potential, business environment, and financial returns that beat most of the U.S. and the rest of the world.”
“All assembled at such a low cost we really can’t tell you because we’re afraid it’ll start a stampede south”
Along with good plays and returns Latin American operations lack one of the main difficulties seen in the U.S., Park commented. “While most of our oil brothers here are scrambling hard to get every good acre in the U.S., this whole southern continent has been left wide open. “
GeoPark has taken advantage of this opening, snapping up acreage in five different countries, Colombia, Peru, Brazil, Chile and Argentina.
GeoPark holds some 5.7 million acres in these nations, giving it very extensive holdings. Park summed up the company’s holdings: “Five countries, 30 blocks, nine basins, five million acres, and all assembled at such a low cost we really can’t tell you because we’re afraid it’ll start a stampede south.”
Building from cash flows since 2014
The company has also been able to achieve a target often set for E&Ps, but rarely reached. “We have been building our company from our own cash flows since late 2014,” Park said. “That means we’re doing our drilling, we’re paying for our teams, we’re paying for our new acreage all out of our own pocket and we’re still getting bigger.” The company reports that 65% of its production is cash flow positive at $25-$30/BBL Brent, and the remaining 35% is either gas or cash flow positive at $40-$50.
Colombian
wells show 500% IRRs
GeoPark has grown significantly in the past years, and plans to expand even further in the future.
In five years, the company went from zero production in Colombia to the third-largest operator in the country. Park showed a graph of the company’s Colombian production, saying “Forty years in the oil industry, I’ve always wanted to have a graph that looked like this.”
“Five years, zero to 56,000 barrels a day, nearly 50 million barrels already produced, value increased over 40 times. And it means everything is working – the rocks, the drill bits, the production facilities, the teams, the permitting, the communities, even the guys buying the crude.”
“And the cherry on top of the sundae is the economics. So look at this: three million-dollar wells, EURs of two to three million barrels each, initial production rates of 1,500 to 2,000 barrels per day, all in IRRs from 400 and 500%. And we’ve already identified 75 drilling locations for that project.”
Plans to at least double production by 2022
The company has ambitious goals, with current assets set to double production by 2022.
GeoPark is evaluating expanding its assets through acquisitions or partnerships with other companies, with the goal of reaching 100 MBOEPD by 2022. Large acquisitions are certainly possible, given the stances of many of the major NOCs in South America. “We have initiatives with all of the national oil companies in the region,” Park said. “Pemex, Petrobras, Petroamazonas, Petroperu, Ecopetrol, YPF, ENAP. And those are the groups that have the best acreage and they’re all actively working in divesting or selling off their underperforming assets. Those are the assets we love.”
