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Despite Shut-Ins, GeoPark Ups Production to 19,586 BOE/d
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GeoPark Limited reported its 1Q2015 operational update.
GeoPark's oil and gas production in 1Q2015 averaged 19,586 boepd, which represents an 18% increase from 1Q2014, led by the strong production growth in the Llanos 34 Block in Colombia which also compensated the temporary shut-in of marginal fields in Colombia and Argentina.
As announced on January 20, 2015, GeoPark has designed its 2015 plan based on an average oil price assumption of $45-50 per barrel, targeting a fully-funded $60-70 million work and investment program (reduced by 70-75% from a $238 million investment program in 2014), which can be adjusted depending on oil price performance. This program currently includes drilling 4-5 wells in Colombia, mainly in the Tua and Tigana fields during 2H2015, investments to support production in Chile and Brazil, as well as other project enhancement investments in Argentina and Peru.
GeoPark moved decisively during this period to reduce costs across the Company to both maximize the work program and preserve liquidity. Overall cost reduction efforts and results include estimated operating costs reduction of more than 20% and up to 30% reduction in drilling along with other services costs as compared to 2014 mainly derived from:
- Renegotiation and reduction of oil and gas service contracts, including drilling and civil work contractors, as well as transportation costs (trucking and pipeline)
- Deferment of some capital commitments with regulatory authority and partner agreement
- Operating cost improved efficiencies and temporary suspension of certain marginal producing oil fields
- Reduction of G&A costs through a general corporate reorganization and reduction of legal, accounting and administrative fees, including workforce reductions and an immediate voluntary salary reduction by GeoPark's senior management team and Board of Directors
- Depreciation of Latin American currencies (Colombian peso, Brazilian real, Chilean peso, Argentine peso and Peruvian sol), in connection with operating, structure and other costs established in local currencies
As a result of GeoPark's expansive organic portfolio of assets across five countries, it has the flexibility and agility to increase its work program and allocate additional capital to identified projects if conditions permit. Given the reduced costs and adjustments achieved, GeoPark may consider to potentially increase its drilling activity and other operations during 2015.
Oil and Gas Production Update
Consolidated:
Average consolidated oil and gas production increased 18% in 1Q2015 to 19,586 boepd, compared to 16,583 boepd in 1Q2014. On a proforma basis (including operations from the Manati field acquisition in Brazil in both periods), average production decreased by 3%.
Consolidated oil production accounted for 72% of total reported production, increasing to 14,101 bopd in 1Q2015 from 13,765 bopd in 1Q2014.
Colombia:
Average production in Colombia increased by 25% in 1Q2015 to 11,586 boepd from 1Q2014. This production increase is mainly the result of continued development and appraisal of the Tigana and Tua fields and the recent Tilo discovery in the Llanos 34 Block (GeoPark operated with a 45% WI). Production was also negatively impacted by the temporary shut-in of oil fields in La Cuerva Block (GeoPark operated with 100% WI), which was producing 880 bopd (La Cuerva Block is located in a more remote area, and generates higher transportation and logistics expenses).
The Llanos 34 Block represented 87% of GeoPark's Colombian production in 1Q2015.
Chile:
Average oil and gas production in Chile decreased by 38% in 1Q2015 to 4,486 boepd, compared to 1Q2014. This decrease is mainly a result of 45% lower oil production together with 28% lower gas production, both impacted by the natural decline in base production.
The Fell Block (GeoPark operated with a 100% WI) represented 96% of GeoPark's Chilean production.
Brazil:
Average gas production in Brazil amounted to 20,659 mcfpd, or 3,494 boepd, in 1Q2015. On a proforma basis, including production for both quarters, gas production decreased 5% compared to 1Q2014, mainly due to lower demand from Manati's main customers.
The Manati Field (non-operated with a 10% WI) represented 100% of GeoPark's Brazilian production.
Argentina:
Production in Argentina during the 1Q2015 amounted to 20 bpd in the 1Q2015 and was impacted by the temporary shut-in of the Del Mosquito field during the quarter.
Operational Update:
Colombia:
Llanos 34 Block (GeoPark Operated with 45% WI)
Tigana Field: Currently producing over 11,000 bopd gross from seven wells. No wells were drilled or tested during 1Q2015.
Tua Field: Currently producing over 10,000 bopd gross from nine wells. In 1Q2015:
- Appraisal well Tua 7 was successfully tested and is currently producing approximately 1,400 bopd gross
- Appraisal well Tua 9 was successfully tested and is currently producing approximately 950 bopd gross
Tilo Field: Tilo 1 well was drilled and completed to a total depth of 11,293 feet in 2014, and successfully tested in 1Q2015 with an electrical submersible pump in the Guadalupe formation, at approximately 10,707 feet. In March, Tilo 1 well initiated a long-term test, and is currently on production at a rate of approximately 850 bopd. Further technical evaluation will also be undertaken to determine if the Tilo field is potentially a northeast extension of the larger Tigana field.
Chile:
Fell Block (GeoPark Operated with 100% WI)
Ache Gas Field: Ache 1 gas discovery well was drilled and completed to a total depth of 9,694 feet in 2014. A production test through different chokes in the Tobifera formation resulted in an average gas production rate of 9.2 million standard cubic feet per day of gas and approximately 80 barrels per day of condensate of 47 degree API. The well is temporarily shut-in until surface facilities are constructed - currently targeted to be completed with production start-up in 4Q2015.
Brazil:
Manati Field (BCAM 40 Block, Non-operated with 10% WI)
Construction of a compression plant for the gas field continued with expected start-up scheduled for 2H2015.