GeoPark Limited Q2 FY2026 earnings call

Operational Milestones

• Average Q2 2026 total production reached 27,271 barrels of oil equivalent per day, in line with full-year guidance and consistent with Q1 2026 production
• In Argentina: completed drilling on pad 1030, advanced the hydraulic fracturing campaign, secured environmental approval for the next phase of drilling in Loma Jarillosa Este, secured a dedicated 3-year drilling rig for long-term Vaca Muerta development certainty, and jointly applied for Argentina's RIGI Investment Incentive Program with Gas y Petróleo del Neuquén
• The first five initial horizontal Vaca Muerta wells acquired from PlusPetrol in September 2025 were drilled and fracked within 9 months, with the first well starting production flow in Q2
• All operations achieved zero recordable injuries and no major process safety events in the quarter

Financial Performance & Capital Allocation

• Sequential revenue growth of 12% driven by stable production and improved realized prices from a stronger commodity price environment (Brent averaged $97 per barrel in Q2)
• Disciplined capital allocation: $76 million total Q2 capital investment, 19% return on average capital employed maintained
• Strong balance sheet: cash position increased to $316 million, net leverage reduced to 1.2x adjusted EBITDA, and a committed contingent credit facility was renewed and extended through 2028 for additional financial flexibility
• Risk management: 19,000 barrels per day of 2026 production hedged via three-way collars, with 19,000 barrels per day of 2027 production already hedged to protect against downside price volatility while retaining upside participation
• A $0.023 per share quarterly dividend was declared, the final payment under the company's prior dividend framework, as capital allocation shifts to supporting peak investment in growth projects

Strategic Update

• Geopark is pursuing material inorganic growth opportunities in Colombia, Argentina, and Venezuela, supported by its strong balance sheet
• All resolutions at the 2026 AGM were approved by over 99% of votes cast; two new board members (Dorita Gilinski and Camilo Martinez) were appointed following the strategic investment from Grupo Gilinski earlier in 2026

Geopark reports two core operating segments: Colombia and Argentina. The Colombia segment is the company's primary cash generation contributor, accounting for approximately two-thirds of total capital investment allocation in Q2 2026, and delivers stable, resilient production supported by disciplined reservoir management and secondary recovery initiatives. In Q2 2026, the Colombia portfolio maintained consistent overall production, with Janus34 benefiting from water flooding and polymer injection programs, CPO5 remaining stable despite earlier operational challenges, and Janus123 performing well through ongoing development. The Argentina Vaca Muerta unconventional development segment received nearly two-thirds of the company's $76 million total Q2 2026 capital investment, and is a transformational growth platform on track to reach 5,000 to 6,000 barrels of oil equivalent per day exit production by the end of 2026. Consolidated Q2 2026 total revenue was $143.3 million (up 12% sequentially), adjusted EBITDA was $73.1 million (51% margin), operating profit was $40.8 million, and net income was $14 million.

• Full-year 2026 average lifting cost guidance was revised upward from the prior range of $13-$15 per barrel to $17-$19 per barrel, driven by the appreciation of Colombian and Argentine currencies against the U.S. dollar and higher energy costs amplified by the El Niño weather event
• Vaca Muerta Argentina is on track to reach exit production of 5,000 to 6,000 barrels of oil equivalent per day by the end of 2026
• Full-year 2026 total capital expenditure guidance was revised upward from the prior range of $190-$220 million to as high as $250 million, to accelerate value-accretive investment activities
• Hedging guidance: 19,000 barrels per day of 2027 production is already hedged with price floors of $75 per barrel and ceilings of $85-$86 per barrel, to deliver predictable cash flow during the peak investment phase

• Foreign exchange volatility: appreciation of the Colombian and Argentine currencies against the U.S. dollar increased operating costs, with every 100 COP/USD exchange rate change impacting full-year operating costs by approximately $2.5 million
• Higher energy costs: El Niño-driven droughts are expected to keep energy prices elevated, contributing to higher-than-previously-forecast lifting costs
• Commodity price volatility: the company's peak investment phase creates exposure to price swings, mitigated by active hedging programs
• Social and regulatory uncertainty: while the incoming Colombian administration has signaled support for private oil and gas investment, policy changes will take time to implement, and social unrest remains a potential risk to operations
• Geopolitical risk: expansion into Venezuela carries inherent operational and geopolitical uncertainty, with no guarantee that currently assessed opportunities will reach completion

Q: What policy changes does Geopark expect from the incoming Colombian administration, and what opportunities does the company see in Venezuela?

A: The incoming administration has publicly supported private investment in oil and gas, which contrasts with the prior government's ban on new licensing. Geopark expects new licensing rounds for conventional and unconventional resources, and streamlining of environmental permitting, though changes will not be immediate. The company has a longstanding foothold in Colombia and is prepared to invest in new opportunities, including using its Vaca Muerta unconventional expertise to develop Colombia's domestic resources. For Venezuela, Geopark has assessed multiple large, high-potential opportunities across several basins, and has had productive technical discussions with PDVSA, with updates to be provided if any deals are finalized.

Q: What is the 2026 second half capex outlook for Vaca Muerta, and how is it allocated?

A: Geopark expects $40-$50 million in Vaca Muerta capex for H2 2026, aligned with the ~$55 million invested in H1 2026. 70-80% of H2 capex will be spent in Q3, with the remainder in Q4. Spend will go toward facility upgrades, pipeline connection to a neighboring operator's spare capacity, completion of a water disposal well, and pad construction for the first 2027 drilling program. Operational efficiencies at Vaca Muerta are top-quartile, with up to 9 fracturing stages completed per day.

Q: Why is Geopark increasing its 2027 hedging position despite hedging losses in Q2 and a favorable oil outlook? And are planned 2H 2026 well tie-ins contingent on RIGI approval?

A: Hedging is used to guarantee predictable cash flow during the company's peak capital deployment phase for Vaca Muerta and pursuit of inorganic growth, protecting the balance sheet and enabling double-digit risk-adjusted returns regardless of price volatility. Current 2027 hedges are secured at attractive levels ($75/bbl floor, $85-$86/bbl ceiling) that still deliver strong returns. Already drilled Vaca Muerta wells will be tied-in immediately, not waiting for RIGI approval. If approved, RIGI incentives will cover future large-scale investments including pipeline completion, full processing facilities, and factory-mode drilling.

Q: Will operating costs remain at current elevated levels, and is Geopark interested in new conventional and unconventional development in Colombia?

A: Full-year 2026 lifting costs are now expected to stay between $17-$19 per barrel, up from the prior $13-$15 guidance. Currency appreciation added $2.1-$2.5 per barrel to operating costs, and higher energy prices added ~$1.5 per barrel, with El Niño expected to keep energy costs elevated. Geopark is implementing efficiency measures, including on-site gas generation, biomass energy contracts, and grid connections to reduce costs long-term. Geopark is highly interested in both conventional and unconventional opportunities in Colombia under the new administration, and plans to leverage its Vaca Muerta expertise to develop Colombia's domestic unconventional resources to address the country's 30-35% domestic gas supply deficit.