Executive Summary / Key Takeaways

• Strategic Transformation through Vaca Muerta: GeoPark is undergoing a significant transformation, pivoting towards a dual-core strategy centered on optimizing its established Colombian assets and aggressively expanding its operated position in Argentina's world-class Vaca Muerta unconventional play. The recent Pluspetrol acquisition is a "defining milestone," adding immediate production, substantial reserves, and positioning GeoPark as a key operator in a prolific basin.
• Robust Financial Health and Disciplined Capital Allocation: GeoPark maintains a strong financial position with a healthy cash balance of $266 million (Q2 2025) and a low net leverage ratio of 1.1x. The company's capital allocation strategy is disciplined, balancing increased organic CapEx (up to $120 million for 2025) with strategic M&A, consistent dividends, and opportunistic debt repurchases.
• Operational Excellence and Technological Edge: GeoPark consistently demonstrates operational efficiency, particularly in Colombia, with significant reductions in well costs (over 30% in Llanos 34) and drilling times. Its focus on enhanced oil recovery techniques, such as upcoming polymer injection in Llanos 34, and innovative water management, underscores a commitment to maximizing asset value and controlling operating expenses, which stood at $12.3 per barrel in Q2 2025.
• Clear Growth Trajectory and Outlook: The Vaca Muerta acquisition is projected to boost proforma consolidated production to approximately 30,000 boepd in 2025, with a clear line of sight to 20,000 boepd from the acquired blocks by year-end 2028. This growth, combined with ongoing Colombian asset optimization, underpins an Adjusted EBITDA guidance of $260-290 million for full-year 2025 at $65-70 Brent.
• Mitigated Risks and Competitive Positioning: GeoPark's extensive hedging program (70% of 2025 production at $68-70/bbl floors) and proactive cost management provide resilience against oil price fluctuations and inflationary pressures. Its regional expertise and partnership-driven approach differentiate it from larger, more diversified competitors, allowing it to capture opportunities in Latin America's dynamic energy landscape.

GeoPark's Strategic Evolution and Market Position

GeoPark Limited, founded in 2002 in Bogotá, Colombia, has evolved into a prominent independent energy company with a two-decade track record across Latin America. Its core business of oil and natural gas exploration and production has seen it establish a footprint in countries including Argentina, Colombia, Brazil, Chile, and Ecuador. The company's strategic journey has been marked by a pragmatic approach to portfolio management, balancing established production with opportunistic growth.

The current investment narrative for GeoPark is defined by a strategic pivot: solidifying its foundational assets in Colombia while aggressively expanding into the world-class Vaca Muerta unconventional play in Argentina. This dual-core strategy aims to leverage GeoPark's operational expertise and regional knowledge to drive sustainable, long-term value. The company's recent agreement with Pluspetrol S.A. to acquire a 100% operated working interest in the Loma Jarillosa Este and Puesto Silva Oeste blocks in Neuquen Province, Argentina, is a "defining milestone" in this strategy. This move transforms GeoPark by adding immediate production, increasing reserves, and providing significant long-term value as an accredited unconventional operator in one of the world's most prolific unconventional plays.

The broader industry landscape in Latin America presents both opportunities and challenges. In Colombia, the oil and gas sector faces uncertainty, with overall oil production not dramatically increasing, a reduction in rigs, and decreased investment. This is partly due to government policies that have not favored new exploration acreage. However, there is potential for a shift in 2026, with some political candidates advocating for restrengthening the sector and allowing more licenses, including for unconventionals. In Argentina, particularly in Vaca Muerta, the investment environment is robust, with close to $10 billion invested annually and over $100 billion in commitments projected. This dynamic backdrop underscores GeoPark's strategic focus on Vaca Muerta as a key growth engine.

In this competitive environment, GeoPark positions itself as an agile, regionally focused player. While it lacks the sheer scale and global diversification of majors like Chevron (CVX) or Occidental Petroleum (OXY), or the state backing of Ecopetrol (EC), GeoPark differentiates itself through its deep regional expertise, flexible partnership models, and a lean operational structure. Its ability to navigate cross-border complexities and execute efficiently in targeted areas allows it to compete effectively. For instance, GeoPark's operational efficiency in Colombia, with "top-ranked" days between failures in Llanos 34, suggests a qualitative advantage in localized operational execution. The company's strategic partnerships, such as its previous collaboration with Phoenix Global Resources in Vaca Muerta and ongoing discussions with entities like Pampa Energia (PAM), provide access to funding and projects, enhancing capital efficiency.

Technological Differentiation and Operational Excellence

GeoPark's competitive edge is significantly bolstered by its commitment to technological differentiation and operational excellence, particularly evident in its drilling efficiencies and reservoir management. The company's core technology lies in its ability to optimize drilling and completion processes in complex geological settings, translating directly into tangible and quantifiable benefits.

In its Colombian operations, GeoPark's drilling team has achieved remarkable efficiency improvements. Average well costs have been reduced by over 30%, and pad-to-pad mobilization time has dropped dramatically from 7 days to just 18 hours. A notable achievement in Llanos 34 involved setting a new record, reaching a total depth of 11,000 feet in just 4.5 days for the Tigui 56 well. This relentless focus on operational efficiency directly contributes to lower capital expenditures per well and faster time to production, enhancing overall project economics and profitability.

Beyond drilling, GeoPark is actively pursuing advanced reservoir management techniques. The company is "very enthused" about a polymer injection project in Llanos 34, with all necessary approvals secured and an expected start in December 2025. This enhanced oil recovery (EOR) method aims to improve conformance and recovery rates, potentially extending the economic life of this mature field. Furthermore, innovation in water management is yielding significant cost savings. GeoPark has successfully shut off 5% of produced water, equivalent to approximately 24,000 barrels per day, which directly reduces energy consumption. A new water treatment plant in Llanos 123 is saving approximately $2 per barrel compared to previous water trucking methods. The company is also capturing associated gas to generate 2% of its total energy consumption, reducing reliance on external power sources and lowering operating costs. The use of rigless interventions is another technological advantage, saving around 25% of costs compared to traditional workover rigs.

These technological advancements and operational efficiencies are not merely incremental improvements; they form a critical part of GeoPark's competitive moat. By lowering operating costs, improving capital efficiency, and maximizing recovery from existing assets, these innovations directly enhance the company's financial performance, leading to better margins and stronger cash flow generation. This strategic focus on technology allows GeoPark to maintain its operating cost guidance of $12 to $14 per barrel, even after divesting assets with lower operating costs, demonstrating its ability to drive efficiencies across its portfolio.

Operational Performance and Growth Catalysts

GeoPark's operational performance in 2025 reflects a dynamic period of portfolio optimization and strategic growth. Consolidated average production for the second quarter of 2025 reached 27,380 barrels of oil equivalent per day (boepd), contributing to a year-to-date average of 28,223 boepd, aligning with the company's guidance. This figure, however, reflects a 6% decline from the previous quarter, primarily due to the divestment of the non-operated Llanos 32 Block and 16 days of shut-in production in the CPO-5 Block due to local blockades.

In Colombia, GeoPark's core assets continue to deliver. Llanos 34, a mature field, produced 17,605 boepd net in Q2 2025, with base management, waterflooding, and workovers exceeding expectations. The field is expected to experience decline rates of 15% to 18%, which the company aims to mitigate through continued infill drilling and the upcoming polymer flooding pilot in the second half of 2025. In Llanos 123, exploration efforts have been particularly fruitful, with the Toritos Sur-3 well successfully intercepting the Mirador formation, revealing a new productive horizon. This block saw a 16% quarter-on-quarter production increase in Q2 2025, reaching approximately 4,000 boepd.

The most significant growth catalyst for GeoPark is its renewed entry into Argentina's Vaca Muerta. The recent acquisition of the Loma Jarillosa Este and Puesto Silva Oeste blocks from Pluspetrol S.A. is expected to increase GeoPark's proforma consolidated production to approximately 30,000 boepd in 2025. These blocks, targeting black oil, hold estimated 2P reserves of 25.80 million barrels of oil equivalent (mmboe) and 2C contingent resources of 44.20 mmboe, providing substantial upside. The development plan for these assets includes the potential for 50-55 additional wells across 15 pads, unlocking over 60 mmboe of gross recoverable volumes. GeoPark plans to develop these blocks as a hub, with a new central processing facility at Puesto Silva Oeste (expected capacity 20,000 bopd) and a connecting pipeline, with construction projected to start in 2026. This strategic investment is anticipated to achieve plateau production of approximately 20,000 boepd by year-end 2028 from these acquired blocks.

Financial Strength and Capital Discipline

GeoPark's financial strategy is characterized by robust liquidity, disciplined capital allocation, and proactive risk management. The company reported $266 million in cash and a net leverage ratio of 1.1x at the end of Q2 2025, well below its long-term target of 1.5x. This strong balance sheet provides significant flexibility for strategic initiatives.

For the second quarter of 2025, GeoPark delivered an Adjusted EBITDA of $71.5 million, achieving a 60% margin. This was supported by stringent cost discipline and a $4.9 million gain from its commodity hedging program. Operating costs remained within the 2025 guidance at $12.3 per barrel. While a non-recurring impairment charge from the Ecuador divestment led to a net loss of $10.3 million for the quarter, excluding this, net profit was a healthy $20.7 million. The company has also achieved $12.5 million in structural efficiencies to date, projected to reach $17.5 million annually, further bolstering profitability.

Capital allocation is a key focus. The 2025 capital program is set at a lean $90 million to $120 million, an increase from previous guidance, reflecting newly identified high-return development and appraisal drilling opportunities. This capital is deployed with a strict criterion: projects must be economic, value-accretive, and cash-positive at a $60 Brent price, ensuring resilience against market fluctuations. GeoPark's hedging program is a critical component of its financial stability, covering approximately 70% of its 2025 production with floors of $68 to $70 per barrel, and extending to 9,000 boepd for H1 2026 and 8,000 boepd for H2 2026.

The company's commitment to shareholder returns is evident through its consistent dividend payments, with a $7.5 million dividend approved for Q2 2025. Additionally, GeoPark opportunistically repurchased $54.5 million of its 2030 notes below par, enhancing financial flexibility and reducing future interest payments. The Vaca Muerta acquisition, valued at $115 million at closing (plus a $22.70 million security deposit), will be funded with available cash. The development plan for these new assets requires a gross investment of $500-600 million through 2028, with a projected peak net debt-to-EBITDA ratio of 2-2.5x in 2026, before rapidly deleveraging to below 1.0x as plateau Adjusted EBITDA is achieved.

Outlook and Risk Assessment

GeoPark's outlook for the remainder of 2025 and beyond is anchored in its strategic growth initiatives and operational efficiencies. The full-year organic production guidance is set at 26,000 to 28,000 boepd, excluding inorganic acquisitions. With the Pluspetrol acquisition expected to close before year-end 2025, proforma consolidated production is anticipated to reach approximately 30,000 boepd. The Adjusted EBITDA guidance for 2025 is $260 million to $290 million, assuming a Brent price of $65 to $70 per barrel. The Vaca Muerta assets alone are expected to contribute $12-14 million in incremental pro-forma Adjusted EBITDA in 2025, growing to $300-350 million of gross Adjusted EBITDA at plateau production (20,000 boepd) and a $70/bbl Brent price.

Key assumptions underpinning this outlook include the successful execution of the Vaca Muerta development plan, which involves significant investment in new wells and infrastructure. The company's internal outlook for full-year 2025 Brent prices is in the $66-68 range, with the Vasconia differential compressing to around $2.5 per barrel, partially offsetting Brent price declines. GeoPark's continued focus on cost efficiencies, including locking in favorable energy contracts and optimizing operations, is crucial for maintaining its operating cost guidance of $12-14 per barrel.

However, several risks could impact this outlook. Market volatility in oil prices remains a constant concern, though GeoPark's robust hedging program provides significant protection. Operational risks include potential community blockades, particularly in Colombia, which can lead to production downtime and increased costs. The company's COO, Martin Terrado, highlighted risks related to increased total fluid production and energy costs, as well as potential labor cost regulations in Colombia. The political landscape in Colombia, with upcoming elections in 2026, introduces uncertainty regarding future exploration acreage and industry policies. In Vaca Muerta, challenges include well cost pressure, even with increased fracking intensity, and the "parent-child effect" on well productivity, which GeoPark is actively monitoring and incorporating into its estimations. The successful and timely closing of the Pluspetrol acquisition is also a critical factor, as previous Vaca Muerta transactions have faced regulatory delays.

Conclusion

GeoPark Limited stands at a pivotal juncture, strategically repositioning itself for a new phase of profitable and sustainable growth. The company's disciplined approach to capital allocation, coupled with a relentless pursuit of operational efficiencies, forms the bedrock of its investment thesis. The transformative entry as an operator into Argentina's Vaca Muerta unconventional play, through the Pluspetrol acquisition, is set to significantly enhance GeoPark's production, reserves, and long-term value, complementing its robust and optimized core assets in Colombia.

While the energy sector inherently carries risks such as commodity price volatility and regional political dynamics, GeoPark's proactive hedging strategy, strong balance sheet, and proven operational capabilities provide a resilient framework. The company's commitment to technological innovation in drilling and reservoir management, alongside its focused M&A strategy, positions it to capitalize on high-potential opportunities. For discerning investors, GeoPark offers a compelling blend of established cash flow, strategic growth catalysts, and a clear path to enhanced shareholder returns, underpinned by a management team focused on disciplined execution and long-term value creation.