Geopark Ltd · NYSE:GPRK
Geopark — Proxy Contest (June 2021)
39 slides from Geopark's proxy contest presentation, June 2021
Slide 1: Consistent Performance and Value Delivery
Consistent Performance and Value Delivery June 2021
Slide 2: Executive Summary
Executive Summary • Independent Directors provide robust oversight of a world-class management team executing on strategy • 18+ years of steady annual production growth, despite external volatility – from zero to 40,000 boepd Proven Team and Strategy with • Disciplined focus on efficiency – over 6 y
Slide 3: Leading Independent Latin American Upstream Company
Leading Independent Latin American Upstream Company Proven Track Record Oil and Gas Production: CAGR 18% (2009-2020) Oil and Gas Reserves: CAGR 14% (2009-2020) COLOMBIA ECUADOR Leading Oil and Gas Finders Drilling Success Rate1 75+% (2006 – 2020) BRAZIL Low-Cost Operator Operating and Structure Cost
Slide 4: Proven and Diverse Leadership Team
Proven and Diverse Leadership Team James F. Park Andrés Ocampo Augusto Zubillaga Marcela Vaca Pedro E. Aylwin Agustina Wisky Co-founder / CEO / CFO COO Asset Managing Director of Legal and Director of Capacities Board Director 11 years at GeoPark 15 years at GeoPark Director Governance and Culture 9
Slide 5: 18+ Year Track Record of Consistently Delivering Value
18+ Year Track Record of Consistently Delivering Value PRODUCTION (MBOEPD) RESERVES (2P PRMS, MMBOE) 40 40 197 36 CAGR 14% 184 CAGR 18% 175 159 28 143 122 125 22 20 20 14 70 11 57 50 50 7 8 42 6 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2020 2009 2010 2011 2012 2013 2014 2015 2016
Slide 6: Continuously Driving Down Costs
Continuously Driving Down Costs OPERATING COSTS DOWN BY 60% OPEX ($/boe) PRODUCING AND MANAGING (2020) 60% Decrease ~70,000 Gross Barrels 16 ~40,000 Net Barrels 11 7 7 8 8 7 PARTNER OF CHOICE PERCENTAGE PRODUCTION OPERATED 2014 2015 2016 2017 2018 2019 2020 BY GEOPARK Brent 99 54 45 55 72 64 45 ($/b
Slide 7: Consistently Beat Peer Cost Benchmarks
Consistently Beat Peer Cost Benchmarks 1Q2021 OPERATING COST AGAINST PEERS 1Q2021 PEERS COMPARABLES OPEX ($/boe) GeoPark 15 PRODUCTION (BOEPD)1 38,131 10 Peers’ Avg. 11 PRODUCTION MIX (%) 86% Oil 9 8 Latam Peers Average PRODUCTION (BOEPD)1 35,833 PRODUCTION MIX (%) 98% Oil GeoPark Average Latam LatA
Slide 8: Outperforming Peers in Every Scenario
Outperforming Peers in Every Scenario PRE-PANDEMIC PERFORMANCE (2016-2019) PRODUCTION REVENUE CASH FLOW FROM OPERATIONS CAGR (%) CAGR (%) Average Margin (%) 48.3 % 46.5 % 41.5 % 38.7 % 33.5 % 21.4 % 21.0 % 25.4 % 20.6 % 7.8 % (3.8)% (0.7)% GeoPark Parex1 Peer Gran Tierra Peer 2 Frontera Peer 3 GeoPa
Slide 9: Execution on Strategy Delivers High Margins Even at Low Oil Prices
Execution on Strategy Delivers High Margins Even at Low Oil Prices COST EFFICIENCIES INCREASE ADJUSTED EBITDA AND MARGINS Adjusted EBITDA ($mm) Adjusted EBITDA Margin 35% 41% 53% 55% 58% 55% 363 331 218 176 74 78 2015 2016 2017 2018 2019 2020 Brent 54 45 55 72 64 45 ($/bbl) Source: Bloomberg LOW COS
Slide 10: Board-Led Strategy Delivers Sustainable Shareholder Value
Board-Led Strategy Delivers Sustainable Shareholder Value 10
Slide 11: Disciplined Capital Allocation Strategy
Disciplined Capital Allocation Strategy CAPITAL ALLOCATION PRINCIPLES 90% OF PRODUCTION IS CASH FLOW POSITIVE ✓ Funded from internally generated cash AT $20-30 /BBL OIL PRICE • CAPEX and other outflows funded from assets’ own cash flow 100% generation Oil ($40-50 /bbl) 90% ✓ Flexible work program Oi
Slide 12: Board-Led Strategy Results in Superior Returns on Capital Invested
Board-Led Strategy Results in Superior Returns on Capital Invested EVERY $1 INVESTED GENERATES $2 TO $3 OF TOTAL OPERATING RETURNS (in $mm) 3.5x Peers: 3.2x Peers: 2.2x 1.6x 447 3.7x Peers: 398 2.2x 2.2x Peers: 1.9x 3.1x 276 Peers: 2.4x Peers: 228 1.3x 2.0x 118 122 125 126 106 75 49 39 2015 2016 201
Slide 13: Board Implemented Effective Portfolio Optimization Strategy
Board Implemented Effective Portfolio Optimization Strategy Production (boepd) 40,000 BOARD-DISCUSSED AND APPROVED LONG-TERM GROWTH AND PORTFOLIO OPTIMIZATION STRATEGY Ecuador: Amerisur Perico, Espejo ACQUISITIONS - COMPANY GROWTH UNDERPINNED BY CONTINUOUS MONITORING, PURSUIT AND Colombia: LL-86, 87
Slide 14: Disciplined Debt Management Recognized By Capital Markets
Disciplined Debt Management Recognized By Capital Markets CONSERVATIVE BUSINESS APPROACH WELL-STRUCTURED, LONG MATURING DEBT Net Leverage (Net Debt / Adjusted EBITDA) Debt Amortization Profile ($mm)1 Before and After Strategic 4.0 Deleveraging (April 2021) 500 Covenant: 3.6 425 Long-term Objective:
Slide 15: Hedging as Risk Management Tool Against Oil Price Volatility
Hedging as Risk Management Tool Against Oil Price Volatility RIGOROUS BOARD–APPROVED HEDGING FRAMEWORK • Oil prices subject to significant volatility • Hedges provide oil price stability consistent with base budget assumptions BRENT OIL PRICE VOLATILITY • Secure price floor while retaining exposure
Slide 16: Focused Execution is Driving Superior Returns
Focused Execution is Driving Superior Returns Performance 5 Years 3 Years 1 Year GeoPark 365.2% (28.6)% 37.5% Peer 1 (75.9) (62.5) 72.1 Peer 2 (77.9) (78.1) 76.4 Peer 3 70.5 (10.1) 52.8 1 BEST PERFORMING E&P STOCK (NYSE 2017-2019) GeoPark nominated Maria +415% Fernanda Suarez for election as new SHA
Slide 17: Fit-for-Purpose Board and Governance Structure Ensure Protection of Shareholder Interests
Fit-for-Purpose Board and Governance Structure Ensure Protection of Shareholder Interests 17
Slide 18: Highly Experienced, Independent, and Accountable Board Slate
Highly Experienced, Independent, and Accountable Board Slate SYLVIA JAMES F. PEDRO E. ROBERT A. ESCOVAR GÓMEZ PARK AYLWIN BEDINGFIELD Independent Chair CEO & Director Director Independent Director • Brings valuable mix of private • Co-founder of GeoPark and CEO • Brings legal expertise, particularly
Slide 19: New Independent Board Members Added to Support Colombia Strategy
New Independent Board Members Added to Support Colombia Strategy PROACTIVE REFRESHMENT AND INDEPENDENT CHAIR AND GOVERNANCE IMPROVEMENT 2 NEW INDEPENDENT DIRECTORS • GeoPark has put itself on a clear path to achieve best SYLVIA ESCOVAR GÓMEZ corporate governance practices with an independent chair a
Slide 20: Independent Board Tailored to Drive Success
Independent Board Tailored to Drive Success Tenure as GeoPark Geoscience Director Oil & Gas Accounting / Government & Age (years) Industry Legal M&A / Finance Audit Affairs Engineering Diversity ESG 1 Sylvia Escovar Gómez Chair 60 1 ✓ ✓ ✓ ✓ ✓ James F. Park CEO 65 19 ✓ ✓ ✓ ✓ Pedro E. Aylwin 61 8 ✓ ✓
Slide 21: Commitment to ESG Remains Foundational to Our Success
Commitment to ESG Remains Foundational to Our Success 21
Slide 22: Culture Based on Trust and Mutual Respect
Culture Based on Trust and Mutual Respect 22 Horizontal and Bottom-Up Approach with Autonomy to Propose, Innovate and Execute Company Plan All Employees Share in Company Success 22
Slide 23: SPEED = ESG Plus
SPEED = ESG Plus FOUNDING PRINCIPLES SINCE DAY ONE IN 2002 ZERO STRONG VEHICLE ACCIDENTS COMMUNITY IN 10 MM KM1 SUPPORT 371% TOTAL SHAREHOLDER RETURNS OVER PAST 5 YEARS ZERO 100% SANCTIONS EMPLOYEES ARE SHAREHOLDERS 1Apr. to Dec. 2020 23
Slide 24: Environment Plus = Leading the Way to the Energy Transition
Environment Plus= Leading the Way to the Energy Transition LEADING LOW CARBON INTENSITY IN LLANOS 34 ENVIRONMENT (kg CO2e/boe) 25 GHG Intensity (KgCO2e/boe) 20 Carbon Intensity Well Below 25-30% BELOW 15 INDUSTRY AVERAGE Industry 10 Another 20-30% Carbon Reduction Plan is Being 5 Executed for 2022 0
Slide 25: Social Plus = Community Alignment
Social Plus = Community Alignment IS Neighbor of Choice SAFETY COMMUNITY DEVELOPMENT • Findeter 1.08 bbls of Oil Spilled for Every $3.9 million Economic Development Million Barrels Produced Investments in Social Program Programs • Road Improvement Casanare • Rural Elementary School • First Oil & Gas
Slide 26: Governance Plus = Following Best Governance Practices
Governance Plus = Following Best Governance Practices STRONG OVERSIGHT GOVERNANCE IMPROVEMENTS 2021 Majority Independent Directors in • Adoption of Corporate Governance Guidelines, including executive sessions of independent directors and an overboarding policy for Directors 2021 • Creation of a Ris
Slide 27: Why the Independent Directors Asked Mr. O'Shaughnessy to Step Down as Chair
Why the Independent Directors Asked Mr. O’Shaughnessy to Step Down as Chair Concerns about his ability to execute his fiduciary duties on behalf of all shareholders on account of the conflict of interest created by his pledged shares Exhibited conduct unbecoming of a Chair toward the Company and its
Slide 28: Setting the Record Straight on Numerous Baseless Claims
Setting the Record Straight on Numerous Baseless Claims False and Misleading Claims Pushed by Mr. GeoPark Providing the FACTS to Correct the Record O’Shaughnessy Management Performance ✓ Completely restructured portfolio in 2020, divesting assets in Peru and Brazil Strategic Board is unwilling to ✓
Slide 29: Key Takeaways
Key Takeaways Proven Team and Strategy with Track Record of Growth and Operational Efficiency Board-Led Strategy Delivers Sustainable Shareholder Value Fit-for-Purpose Board and Governance Structure Ensures Protection of Shareholder Interests Commitment to ESG Remains Foundational to Our Success Mr.
Slide 30: Vote FOR Your Highly Qualified Board Nominees Today!
Vote FOR Your Highly Qualified Board Nominees Today! If you have any questions, please call our proxy solicitor: Innisfree M&A Incorporated 501 Madison Avenue, 20th Floor New York, NY 10022 Stockholders may call: (877) 750-8166 Banks and Brokers may call: (212) 750-5833 30
Slide 31: Appendix
APPENDIX 31
Slide 32: Glossary
Glossary Bbl Barrel Boe Barrels of oil equivalent Boepd Barrels of oil equivalent per day Bopd Barrels of oil per day CAPEX Refers to the “Purchase of PP&E” line in the Consolidated Statement of Cash Flow. It does not include purchase of businesses, disposals or divestments D&M DeGolyer and MacNaugh
Slide 33: Income Statement
Income Statement ($MM) 2015 2016 2017 2018 2019 2020 Total Revenues 210 193 330 601 629 394 Operating Income (232) (29) 79 256 211 (111) Operating Margin % (111%) (15%) 24% 43% 34% -28% Income Before Taxes (302) (49) 25 209 170 (185) Net Income (285) (61) (18) 103 58 (233) Net Margin % (136%) (31%)
Slide 34: Cash Flow Statement
Cash Flow Statement ($MM) 2015 2016 2017 2018 2019 2020 (+) Net Cash From Operations 26 83 142 256 235 169 (−) Investing Activities* (49) (39) (106) (165) (119) (347) (+/−) Financing Activities (18) (51) 24 (97) (132) 271 Net Change In Cash (41) (7) 60 (6) (16) 93 *Considers Purchase of PP&E, Acquis
Slide 35: Balance Sheet
Balance Sheet ($MM) 2015 2016 2017 2018 2019 2020 Total Assets 704 640 786 863 852 960 Total Debt 379 359 426 447 437 785 (-) Cash and cash equivalents (83) (74) (135) (128) (111) (202) Net Debt 296 285 291 319 326 583 Total Liabilities 504 499 659 720 719 1,069 Shareholders’ Equity 147 106 85 143 1
Slide 36: Reconciliation of Adjusted EBITDA to Profit Before Tax
Reconciliation of Adjusted EBITDA to Profit Before Tax ($MM) 2015 2016 2017 2018 2019 2020 Adjusted EBITDA for Reportable 74 78 176 331 363 218 Segments Unrealized Gain (Loss) on Commodity Risk Management − (3) (13) 42 (26) (13) Contracts Depreciation(1) (106) (76) (75) (92) (106) (118) Share-based
Slide 37: Operating Netback Definitions
Operating Netback Definitions Operating netbacks used in the presentation taken from company filings. Definitions may differ between companies: GeoPark: • Revenue, less production and operating costs (net of depreciation charges and accrual of stock options and stock awards, the effect of IFRS 16),
Slide 38: Disclaimer
Disclaimer The information contained herein has been prepared by GeoPark Limited (“GeoPark“, “we” or “us”) solely This presentation includes Adjusted EBITDA, which is a supplemental non-IFRS financial measure that is for informational purposes. Nothing contained herein should be relied upon as a pro
Slide 39: GeoPark
GEOPARK