GeoPark Limited - Earnings Call - Q1 2025

Transcript

Operator (participant)

Good morning and welcome to the GeoPark Limited Conference Call following the results announcement for the first quarter ended March 31st, 2025. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question at this time, press star one on your telephone keypad. If you would like to withdraw your question, press star two. If you do not have a copy of the press release, it is available at the Invest with Us section on the company's corporate website at www.geopark.com. A replay of today's call may be accessed through this webcast in the Invest with Us section of the GeoPark corporate website.

Before we continue, please note that certain statements contained in the results press release and on this conference call are forward-looking statements rather than historical facts and are subject to risks and uncertainties that could cause actual results to differ materially from those described. With respect to such forward-looking statements, the company seeks protections afforded by the Private Securities Litigation Reform Act of 1995. These risks include a variety of factors, including competitive developments and risk factors listed from time to time in the company's SEC report and public releases. Those lists are intended to identify certain principal factors that could cause actual results to differ materially from those described in the forward-looking statements, but are not intended to represent a complete list of the company's business. All financial figures, included herein, were prepared in accordance with the IFRS and as stated in U.S. dollars and as otherwise noted.

Reserved figures correspond to PRMS standards. On the call today from GeoPark is Andrés Ocampo, Chief Executive Officer, Jamie Caballero, Chief Financial Officer, Martín Terrado, Chief Operating Officer, Rodrigo Dalle Fiore, Chief Exploration and Development Officer, and Maria Catalina Escobar, Shareholder Value and Capital Markets Director. I will now turn the call over to Mr. Andrés Ocampo. Mr. Ocampo, you may begin.

Andrés Ocampo (CEO)

Good morning, everyone, and thank you for joining us to review our first quarter 2025 results. Our performance highlights the strength and resilience of the company we've built together: disciplined in operations, focused in strategy, and financially robust. Despite persistent market volatility and Brent fluctuations, we delivered solid results while preserving flexibility to pursue value-accretive opportunities. Proforma consolidated production averaged 36,000 barrels a day, exceeding our base case guidance of 35,000 barrels a day. This strong delivery was driven by stable output across our core assets in Colombia and Ecuador, and another record-breaking quarter from the new Argentina assets. These acquired Vaca Muerta blocks continue to demonstrate their transformative potential within our portfolio, with gross production reaching a record high of over 17,000 barrels a day in February.

In the Mata Morá Norte block, our partner Phoenix completed pad nine, drilled pad number 12, and began the construction of new central processing facilities targeting 40,000 barrels a day gross capacity by mid-2026. Drilling also began on the second exploration pad in the Confluencia Sur block, following last year's pivotal Río Negro discovery. First quarter financial results do not yet consolidate production, revenue, or costs from these assets, pending the completion of regulatory approvals by provincial authorities. We continue to work diligently to advance the approval process. We acknowledge that the delay in obtaining this approval has created material uncertainty around the timing and successful completion of this transaction. The agreement includes an outside date of May 13th, 2025, marking one year since signing, a standard milestone in transactions of this kind.

After that date, either party has the right under the terms of the agreement to withdraw from the transaction. Unless a termination notice is given, the agreement remains fully in place and continues without change. Within this framework, the parties may also explore potential strategic alternatives, taking into account the information and context available at such time. We remain committed to pursuing a positive outcome while we continue focused on protecting value and maintaining flexibility for GeoPark. Regarding exploration in Colombia, the Curucutú One well encountered approximately 70 ft of net pay in the Barco Formation and tested production of around 1,300 barrels a day gross, and boosted block output to nearly 5,000 barrels a day, a new record. Financially, we delivered a just dividend of $88 million, up 13% from the previous quarter, with operating costs decreasing to $12.3 per barrel, in line with our full-year guidance.

Net income reached $13 million despite one-time costs related to the debt refinancing, which extended our average debt maturity to almost five years. We invested $23 million in our core assets and an additional $24 million pro forma in Vaca Muerta, supporting development, infrastructure, and our exploration campaign. We closed the quarter with over $308 million in cash and net leverage ratio of 0.9 times, preserving our financial flexibility and balance sheet strength. Our proactive hedging program remains highly effective, covering approximately 70% of our 2025 production, with floors of $68-$70 per barrel. We continued our decisive cost reductions and efficiency drivers during the quarter. In Llanos 34, our new next-generation rig has already reduced cycle times by 20%, generating meaningful cost savings.

Our drilling team has recently set a new record in the block, reaching total depth of 11,000 ft in just 6.1 days on the Tigui 53 well. This represents more than 25% reduction on the cost of the well. Even more impressively, the team has already taken on the challenge of breaking its own record again, with the next well, Tigui 56, aiming to reach TD in just under six days. This relentless focus on operational excellence embodies who we are as an operator and represents one of the most effective ways to enhance returns while expanding our ability to reinvest in growth. We also took decisive steps to streamline our portfolio by divesting our interest in the Llanos 32 block and the Manatee Gas Field, aligned with our strategy to focus on high-impact material assets.

Our efficiency program is on track, having already captured 90% of the targeted $5 million-$7 million in annual savings. Reflecting our strong financial position and consistent cash generation, we declared a quarterly dividend of $0.15 per share, reinforcing our ongoing commitment to shareholder returns, targeting an annualized $30 million dividend or approximately 9% dividend yield. Looking ahead, we're fully committed to executing our 2025 work program, with seven wells in Colombia and four in Argentina during the second quarter. Our vision remains clear: build a more valuable and sustainable GeoPark focused on big assets in big basins with the right partners and the right strategy. Finally, as I prepare to hand over the leadership of GeoPark to Felipe Bayón, I do so with deep pride and immense gratitude. Helping to build GeoPark over these past 15 years has been the most rewarding chapter of my professional life.

I've had the privilege of working alongside an exceptional group of women and men whose passion, integrity, and resilience have made everything possible. Together, we turn bold ambitions into real achievements, always guided by our core values, our responsibility to stakeholders, and our unwavering commitment to putting GeoPark first. Our culture and our shared belief in doing things the right way have been the foundation of our success. I am deeply proud of what we have built and equally excited for all that lies ahead. I will continue to support GeoPark, its board, and its team as a long-term shareholder and as a friend. Thank you for your trust, your partnership, and for walking this journey together. We will now take any questions you may have. Thank you.

Operator (participant)

If you would like to ask a question on today's call, please press star followed by one on your telephone keypad to enter the queue. Our first question today comes from Alejandro Demichelis from Jefferies. Alejandro, your line is open. Please go ahead.

Alejandro Demichelis (Managing Director of Latin America Equity Research)

Yes, good morning, guys. Thank you very much for taking my question. First, Andrés, best of luck in your new endeavors. It has been really a privilege to have you as a CEO. It has not always been plain sailing, but you have done very well with the challenges. The first question, Andrés, is how you're seeing the situation about CapEx, production growth in the current kind of oil price environment. Obviously, you have touched part of your production, but kind of looking at a bit more kind of medium term. That's the first question. The second question is, you touched on the process of closing the deal in Argentina. Maybe you can give us some kind of more color on how these cashes are kind of going with both your partner and also with the province.

Andrés Ocampo (CEO)

Hey, good morning, Alejandro. Thank you for your comments and also for your questions. If you want, I will start with your second question, and then I will leave Jaime to address the production CapEx outlook and oil prices. As I said in the introduction, the results for the first quarter do not include pro forma production revenues or costs related to this transaction because it is still pending the approval. These assets were effectively acquired on July 1st, 2024, and as of today, the transaction has not been closed and remains subject to the completion of these approvals. We, as a company, remain focused on closing the transaction and continue working diligently to advance the approval process. I personally have also agreed with the board that, as part of the CEO transition, I will continue supporting personally this process as long as required.

I think it was you that mentioned in your report, "No one finished business." That is my commitment to the company on top of others. The agreement that we have with our partner includes an outside date, as we mentioned before, which is on May 13th this year. That marks one year since signing, and it is basically a standard milestone in transactions of this kind. After that date, either party has the right under the terms of the agreement to withdraw from the transaction. Unless a termination notice is given, the agreement remains fully in place and continues without any change. Within this framework, the parties may also explore potential strategic alternatives, taking into account the information and the context available at such time.

GeoPark made a decision to enter Vaca Muerta following a long-term strategic growth plan of expanding our footprint in big basins and in big plays, which Vaca Muerta is obviously one of them. As part of that decision, we've made already significant investments. We're committed to do and to make more investments in the future. We believe that our long-term relationship and partnership with Argentina, in particular with the provinces of Neuquén and Río Negro, will continue to bring significant economic and social benefits to the country, the provinces, and their communities. I think this is a good opportunity for me also to add some comments about several social media comments, declarations, or statements regarding our process and regarding this transaction's regulatory approval.

GeoPark and we are not associated with or we do not endorse in any way any comments or any publications on social media or any other media that could be interpreted as conflicting with the authorities of the jurisdictions in which we invest. None of those comments reflect in any possible way our way, GeoPark's way of conducting business and our long-term approach with respect to partnering with authorities and communities. We have already issued a public statement about this, and we have taken additional actions to separate ourselves and GeoPark from these unfounded allegations. I think it is important for us to reiterate our disrespect to government institutions, to the regulatory processes, the timings. For over 22 years, GeoPark has operated internationally throughout the entire region in Latin America and a number of different countries.

As you follow us in Argentina, Colombia, Brazil, Chile, Ecuador, and Peru, we have a track record of transparency, commitment, and mutual benefit. Our business model is based on constructive, collaborative, long-term relationships with partners, authorities, and local communities, always following our motto of creating value back. I know this was a long answer, Alejandro, but I think it's important for us to make very clear that we remain focused on closing the transaction, and we continue working very diligently to advance the approval process.

Alejandro Demichelis (Managing Director of Latin America Equity Research)

Oh, that's great. Thank you.

Jaime Uribe (CFO)

I'm going to take your question on the outlook. It's Jaime here. Good morning. I think on outlook, I would basically tell you that our outlook remains unchanged when we think from a work program standpoint. The basis for that is that we basically created a plan for 2025 that was built around a capital allocation criteria of everything being economic, value-accretive, and cash-positive at $60 a barrel. That was the key principles of the plan, right? With that, it actually means that our capital deployment is designed, by design, to work at the current price environment that we're seeing. Further to that, as you rightly mentioned, we hedge actively, and 70% or so of our volumes for this year are hedged. We are well covered. Our average Brent realizations are currently in a nine-type Brent price. For that 70%, that's hedged.

There's a 30% that is not hedged that is at kind of spot market prices, more or less. When you look at the average, it actually puts us in a very comfortable position. Further, it's important to note that our entry point into this price decline is a very solid set of results that we delivered: strong EBITDA, leaner cost structure, very strong cash position. We have more than $300 million of cash in the balance. Where I'm going at this is that we don't see any reason whatsoever to change our capital allocation for this year in this price environment. We remain committed to the program that we announced earlier this year, and that's what we intend to execute.

Alejandro Demichelis (Managing Director of Latin America Equity Research)

That's great. Thank you, Jaime. Thank you, Andrés.

Andrés Ocampo (CEO)

Thank you, Alejandro.

Operator (participant)

The next question comes from Daniel Guardiola from BTG. Daniel, your line is open. Please go ahead.

Daniel Guardiola (Executive Director of Equity Research)

Yeah, thank you. Thank you, Andrés, and Jaime. First of all, I wanted to wish you, Andrés, all the best in your future endeavors. It was truly a pleasure to get to meet you and to know you and to do all the insightful meetings we did in the past. I truly appreciate that. Going to the questions, I just wanted to do a follow-up on Argentina. I just wanted to confirm what you just mentioned on the contract with Phoenix. I just wanted to confirm that if on May 13th, each party decides to walk away, if they can do it freely without penalties. If that's the case, if you believe that scenario is a realistic scenario that could happen in the next days. That's my first question.

The second one is, I do not know if you can share with us what are the requirements that are preventing this transaction from getting closed. Just a third one, if I may, it would be great if you can share with us if you are considering—I know you are very well hedged for the next 9 months-12 months—but it would be great to know if you are considering right now to take some measures to further streamline the company in terms of OpEx and CapEx to better weather the current uncertain storm that we are going through. Those are my questions, guys. Thank you.

Andrés Ocampo (CEO)

Hey, good morning, Daniel. Thank you for your comments. Likewise, it has been a great run. I appreciate all the multiple million meetings and trips together. It was certainly really fun and great for me. I will start again. I'll just try to address your points on Argentina. I think I've said a lot, and I've covered most of it in my previous response. Specifically, you're asking about if there's anything specific, any requirements. We've complied with all the requisites, and we've presented all the requirements. At this stage, there's no specific requirement that is impeding us to close the transaction. Whether your second point about what happens on the outside date, as I said, each party has the right to withdraw from the contract. Yes, that's under with no penalty.

The reality is that I cannot comment on what each party is going to do with whatever rights they acquired at any point at this stage. That is the factual reality of the contract today. I do not know if I missed anything else with respect to Argentina. Otherwise, I leave it to Jaime.

Jaime Uribe (CFO)

Daniel, on your question around weathering the current volatility, I think the key elements I already described them in the previous answer. I think, obviously, not ignore market context. We are in a very solid position to face this market context. What I can tell you at this stage is that the sort of things that we're looking into, given the market context, is probably three things, I'd say, in terms of what's changed. We are in an ongoing conversation about capital allocation priorities. We are always in that conversation. It's to anticipate stuff, right? In the context of that conversation, what we're seeing is that our willingness and ability to deploy capital is unchanged. It's unchanged. For instance, in organic agenda, we're actually seeing the current price environment actually as an opportunity. We have an important cash position right now.

It gives us flexibility. It gives us flexibility. It allows us to react to different outcomes that we might find along the way, right, given the uncertainties that we have. For instance, Andrés has spoken about the uncertainty around Vaca Muerta, and we believe that having the cash position that we have right now actually puts us in a good position to face that uncertainty. That is one thing that I would say in terms of how we are thinking about weathering the current environment. The other thing that I would say is around costs. As you probably saw in the results, we delivered some important cost efficiencies in the first quarter relative to the fourth quarter. I would say that we have already started to change our trajectory in terms of cost.

The way that we're thinking about it is a broader conversation about total cash cost that has four elements to it. There is an element around OpEx. There is an element that Martin—I'm actually going to ask Martin to talk about it in a moment. There is an element around structure, our G&A, and you saw our announcements that we did a few weeks ago, interventions that we did in that area. There is an element around tax efficiency. You probably saw that relative to 4Q, we're starting to see a lower tax-effective rate, and that's something that we're tackling too going into the future to see if there's more opportunities. Of course, there is a last component around cost, which is related to the midstream and transportation costs. Where I'm trying to go here is we are looking at all of them. We are working.

I can't say at this time that we have changed our guidance or targets around any of this because we believe that our plan remains solid and we don't need to. We're actively looking at all of these to see if there's more opportunities that can be captured. That's where we are, Daniel.

Daniel Guardiola (Executive Director of Equity Research)

Perfect. Thank you very much to both of you for your thorough answers.

That's it.

Operator (participant)

Next question comes from Joaquim Verde from Balance Capital. Joaquim, your line is now open. Please go ahead.

Joaquim Verde (Analyst)

Great. Thank you. Can you hear me, guys?

Andrés Ocampo (CEO)

Yes, great. Hi, Joaquim.

Joaquim Verde (Analyst)

Okay. Thank you for the space. My first question is, you have secured a solid hedge position for 2025, providing some protection against current oil price volatility. Are you planning a similar approach for 2026? If so, at what price levels would you feel comfortable locking in hedges, and how much of your price scenario are you looking to hedge?

Jaime Uribe (CFO)

Hi, Joaquim. Good morning. Yes. To your question around hedging, we have a long-standing policy around hedging. I would say that hedging is an integral part of our financial framework, and we do not see any reason to change it. As a matter of fact, what we are seeing right now is the value of the hedges and the benefit that it brings to the company and the strategic flexibility that it brings to the company. We do not intend to change that as a general rule. The way that I would frame it is that we want sufficient hedging coverage to ensure that our capital programs remain unchanged in the midst of market volatility. That is what we aim for. That is how we are thinking about it, and that is how we are monitoring 2026, right?

It's still early days to give you a specific number around that because there are some market realities that we need to navigate. Right now, if you try and obtain hedges for the sort of prices that you're going to get, are prices that are heavily impacted by the existing uncertainty that we're seeing right now. It's a bit of a timing thing. Our view is to see how market conditions develop, which is what we've done historically. This is no different to what we've done in the past, which is we monitor the market actively, and then we make decisions around what are the floors and what seem acceptable and competitive for ensuring a consistent delivery of our plan.

Too early to give you a number on what price frame we're going to hedge 2026, what I can say at this time is that we do intend to hedge. We are monitoring that. As market conditions evolve, if we see good opportunities to capture price continuity of our programs, we will execute on that.

Joaquim Verde (Analyst)

Great. Thank you for your answer. My second question would be, we noted that net leverage increased to 0.9x following the 2030 issuance. What level of leverage do you consider comfortable, and what is your target cash position for the year?

Jaime Uribe (CFO)

On the leverage side, I'd say that we are in the way-too-comfortable box right now. It's a very low ratio, 0.9. I do take in your comment that you see that it's growing, but it's actually quite marginal. I think our general guidance is that we intend to maintain a leverage ratio over the long term of around 1.5. We're well below that. That view of 1.5 being a long-term kind of gravitational pull is unchanged. It's unchanged. We believe that still makes sense for the company. Of course, we always monitor changing market conditions, right? If market conditions change dramatically, right, dramatically to the point of stress testing our financial framework, we might take a second look at that.

As you can see, the assets that we have, the low breakevens, the cash position that we have, the nature of our debt profile, which is pushed into the long term, the healthy cash contribution that our assets are making, environments, all those elements put us in a position where we're sailing comfortably the current environment. Thanks, Joaquim.

Joaquim Verde (Analyst)

Great. Thank you very much.

Operator (participant)

The next question comes from Christian Ferrer from K&G Securities. Christian, your line is open. Please go ahead.

Christian Ferrer (Analyst)

Hey, hey, everyone. Good afternoon. I have two questions. First one is if you could please share any updates or revisions to the guidance for the Colombian operations. In that regard, we would appreciate your view on the Brent price assumptions and differentials. Thanks.

Jaime Uribe (CFO)

Hi, Christian. So let me recap your question. So it's an outlook on Brent, right?

Christian Ferrer (Analyst)

Brent and differential.

Jaime Uribe (CFO)

Brent and differentials. Okay. Great.

Christian Ferrer (Analyst)

Yeah. Yeah.

Jaime Uribe (CFO)

So.

Guidance,

Christian Ferrer (Analyst)

The Colombian operations plus Brent including differentials.

Jaime Uribe (CFO)

Okay. Great. Let me give you some general comments on guidance on both aspects. Then perhaps Martin can give us a little bit more color around specifics in the Colombian operations. The big frame for our guidance is what we said when we launched 2025 was we were aiming for a pro forma production of 35,000 barrels a day, right? That was our guidance from a production standpoint. CapEx expenditures of between $275 million and $310 million. Lifting costs in the $12-$14 per barrel and adjusted EBITDA in the $70-$80 type price range of between $340 million-$420 million. Those are, if you will, the goalposts. What has changed since then?

I'd say basically that there are two things that I would say do not change the guidance but need to be incorporated in understanding the outlook and what you are actually going to see in our consolidated results, right? Because that was a pro forma guidance. The first component, right? As you know, we announced a couple of divestments in the first quarter that have an impact on production. They make a lot of sense from a portfolio standpoint and from a cash standpoint and from a capital allocation standpoint and the like. From a volumetric standpoint, they do have an impact, and it is an impact of about 1,000 barrels a day on an annual basis. That 35,000 barrel guidance becomes 34,000 when you make that adjustment, right? That is the first point of note.

The second point of note is the timing of the Vaca Muerta closing because we cannot consolidate results until the closing occurs, right? As Andrés explained previously, from an economic standpoint, there is no change because this transaction has been effective since last year. Economically, there is no change on this, but from a financial consolidation standpoint, the number that you're going to see posted is subject to the timing of when the transaction closes. Right now, if we close the transaction, if we close Vaca Muerta in May, what we would be looking at would be a consolidated number for production that would be around 32,000 barrels a day, right? That's what we would be consolidating on an annual basis. This is in line with that pro forma number. Pro forma guidance is unchanged. Consolidated numbers, this is what you can expect.

Last but not least, to your point of Colombia on a standalone basis, what we are seeing for Colombia—and again, I am giving you the umbrella numbers here—what we are seeing for this business without Vaca Muerta is a production number that is in the 26,000 barrels-27,000 barrels a day on an annual basis. Those are the headline numbers. We do not see important changes in CapEx. We do not see important changes in EBITDA or in lifting costs. What we expect is to fall within that guidance firmly. Over to Martin.

Martín Terrado (COO)

Yeah. Hello, Christian. I'll go a little bit on the key assets that we have. When we look at Llanos 34, as we mentioned in the past, Llanos 34 is a more mature field. With our activity, we are expecting decline rates in the order of 15%-18%. The first quarter of the year was well within that guideline. We feel in Llanos 34 that we will be delivering the plan that we have. We have a couple of updates in Llanos 34. Like Andrés mentioned, we were expecting the drilling activity to start in January, and it took us a little bit longer to socialize the incorporation of the rig. The results have been doing very well, actually slightly better than what we expected.

About a year and a half ago, we said the strategy that we needed—this is a mature asset—we need to do things different. We brought a rig that is the newest generation rigs that are available, and we set a target to drill and complete the wells at 25% less. That is basically for the wells from $4.1 million to go to around $3 million. We have four wells that we drilled, and we have the first one that we drilled and completed, and it was done at $2.75 million. We feel good about that. Fresh production is coming. The result from the well is producing around 450 barrels of oil per day. In our plan, we had less than that. This is a program. It is a six-well program. So far, the results are doing very well. We are drilling the well safely.

The last one that we finished reaching the bottom depth, the total depth, we are about to check, but we believe it is a record for the Llanos basin at 4.5 days getting to 11,000 ft. When we think about fresh production from that perspective, we are on plan. When we think about a component of the fresh production, which is workovers, year to date, we have done several workovers, which is part of our arresting the decline and bringing some fresh production from other zones. It is on track. When we think about that asset, we feel that it is going to deliver what we have in the plan. When we look at the next asset, CPO-5, our program was basically to replace natural flowing wells for pumps as the water was increasing. We have done that very successfully. Three wells, we did workovers.

We got around 2,300 barrels per day gross of incremental production. CPO-5 is delivering according to the plan. Again, this is an asset that we expect water to be reaching, but it is delivering as we expected. When we look at, like Andrés mentioned in his statement remarks, what we call Channels Exploration, which is basically Llanos 123 block, on that block, we were really close to 5,000 barrels of oil per day, record levels. We recently drilled an exploration well, Curucutú One, that started producing in the order of 1,300 barrels of oil per day. A fraction comes in those assets. We feel that, again, to give you a flavor of that, we are within our guideline. As you saw in the first quarter, actually higher. When we look at Argentina, I will just reiterate the message from Andrés.

We had record levels in February, higher than 17,000 barrels of oil per day. We are right now drilling in the Confluencia Sur pad, four wells. From production, that's kind of high level where we are. At the same time, we're working really diligent and focused on our OpEx. Late last year, we had a third-party review with a well-known consulting company. We're working on some additional things. As you saw, we're on the low part of the range of OpEx at $12.3 when we set goal to $14. On that front as well, we are working really strong on the work activity. We're working on how we can reduce more and optimize our OpEx without compromising safety. I'll give you a flavor of a couple of things we're looking at in terms of how we can optimize maintenance costs further.

We're also looking at how we can optimize some additional cooling and artificial lift. For those of you that live in Colombia, you see that it's raining a lot. That is good for the country because the hydroelectric started to have too much water. Energy costs are helping us. That's another component of our OpEx being at the level that we are.

Jaime Uribe (CFO)

Christian, time to hear again. I recognize that I didn't address your point on Brent, so I'm going to do that really quickly. Basically, our Brent outlook, let me give you three numbers. The first number is our plan. Our plan was done at $68 a barrel. Obviously, as I said before, we do sensitivities at $60, and we do capital allocation at $60. This sort of price environment is by no means a surprise to us. Two, our outlook. Our internal view is that crude prices are going to gravitate towards $63-$68.

Operator (participant)

Apologies, Jaime. Apologies for the interjection. We do need to swap to a backup line.

Martín Terrado (COO)

Hello. Can you hear us now?

Operator (participant)

Right.

Martín Terrado (COO)

Is that okay?

Operator (participant)

Yes. Back on. Yes. You're back live, but it's sounding good. You continue when you're ready.

Martín Terrado (COO)

Yeah. Okay. Yeah.

Jaime Uribe (CFO)

Great. Fantastic. On Brent, I was saying three numbers. One, our plan has been developed at $68, and capital allocation has been done at $60. No fundamental changes from that standpoint. Two, our outlook, our internal outlook around full year prices for 2025 is that they're going to be in the $66-$68 range. This is by no means precise, but directionally, what it suggests is that the prices that we saw in 1Q, which were higher, price realizations were in the $72-$73 type range for that quarter, will compensate some of the softer prices that we're going to see over the next three quarters. Again, remember here that we are hedged, and the effect of that on us is very limited. Last but not least, differential. The Vasconia differential is actually offsetting part of this fall in Brent prices.

What we have been seeing is an important compression in the Vasconia differential. Historically, we've seen that differential in the $5-$6 range. It's actually currently in the $2.5 a barrel type spot price right now. It has become very competitive, and it is offsetting part of the declines that we're seeing in the headline Brent price. Hope that helps, Christian. Thank you.

Christian Ferrer (Analyst)

Perfect. Thank you very much. Just to recap a couple of numbers. Excluding Argentina, you would expect around 30,000 barrels-32,000 barrels per day, roughly for the year. That is consistent with an EBITDA, assuming some OpEx normalization, between, let's say, $330 million or maybe $360 million for the year. Would you be comfortable with that figure?

Jaime Uribe (CFO)

I did not pick up the $330 million, $360 million point. What I can tell you is that consolidated production closing, if we close the Vaca Muerta transaction in May, is of 32,000 barrels-33,000 barrels a day. That is true. That would be the consolidated number that we would be posting on a full year basis. The $330 million number, I am not sure where you are coming out from.

Christian Ferrer (Analyst)

Okay. Okay. That would be including Vaca Muerta, you were saying?

Martín Terrado (COO)

Yes.

Jaime Uribe (CFO)

Yes.

Christian Ferrer (Analyst)

Okay. Okay. Okay. Perfect. My second question is, if the acquisition Argentina is not approved, how are you thinking about potential cash uses considering the strong position that you have at the moment? My additional question is, if you could clarify this deadline date that you have. You said it is May 13th. That would be next week. Starting that date, either party can leave the contract. That is correct? Thank you.

Jaime Uribe (CFO)

Okay. So a couple of things. Let me take first your first point around how we would think about capital allocation in a scenario of not closing, right, Vaca Muerta. Right now, a couple of things to note, right? The first thing is, upon closing the transaction, which continues to be what we are actively working on, which is closing the transaction, what we see is a capital disbursement, which is in the area of $230 million-$240 million. That is a combination of $152 million or $155 million or so of the original acquisition cost and a balance of around $80 million-$90 million of the interim period. The interim period is what has occurred, the activities that have occurred between July 1 of last year and the actual closing, right?

That's the money that's going out the door if we close Vaca Muerta right now, $230 million-$240 million, right? That's the first consideration. If we do not close and the transaction does not close for any reason, we do not have to allocate that money, basically, right? The way that we're thinking about it is probably a three-tier structure, which is consistent with our strategy, which is, one, we will continue to pursue growth opportunities for the company. We have a pipeline associated to that that we can have continued to work on. We would prioritize that. The intent is to bring reserves and production to the company consistent with the long-term aspiration that we have. That would be the first capital allocation priority.

The second capital allocation priority is, I would say, would be around optionalities, strategic optionality, and things that we could consider around perhaps looking at our debt and reviewing those debt levels. Although we are comfortable with the existing debt levels, we could review them if the market conditions are appropriate for that. That is optionality, right? Buybacks also are optionality that we would be considering. That is there. If I have to tell you a firm view, I would say two things. First, ensuring continuity of our organic plan. Two, ensuring that we have the ability to pursue the inorganic pipeline that we have been actively working on. Again, these are options. We remain focused on closing the transaction, and we continue to work diligently to advance that approval process.

With regards to your question on the outside date, Andrés already made a long statement around that, which I do not think we need to repeat. Thank you.

Operator (participant)

Thanks. The next question comes from Isabella Peniche from Bank of America. Isabella, your line is open. Please go ahead.

Isabella Peniche (Analyst)

Hi, team. Thank you for taking my question. First of all, I would like to congratulate Andrés on your trajectory and the impact you've had on GeoPark these past years. I think that most of my questions have been already answered. I just have one specific question around production in Colombia. I know that Llanos 34 is facing natural decline, but I would like to know if there were any other operational disruptions that led to lower production levels. If possible, could you please break down production by key assets and explain where the shortfall came from? Thank you.

Martín Terrado (COO)

Hi, Isabella. This is Martin. Again, I'll go back to high level, and then we can go into the details. Overall, in the first quarter, we had no surprises. Our guideline was exceeded. If we just focus on the Colombia assets, basically we are delivering according to our plan. Yes, every now and then there are some one-offs. For example, we had around 12 days of blockages in CPO-5, but that was within our guidelines, something that we learned from last year. When we did our downtime estimations for 2025, we put a range, and those days are within the range that we put. I'll stay in CPO-5, and then I'll go to the other assets. In CPO-5, we are delivering according to the plan and actually exceeding.

The exceeding is basically because, like I mentioned before, the plan for the first part of the year was to do workovers on wells, which by natural flow, they were getting to low production levels. So we put a pump. That is something that is normal in the maturity of the reservoir, and it was successful. We got incremental production from that. CPO-5 is delivering according to the plan. I will go now to Llanos 34. In Llanos 34, we've been delivering in the order of 94%-95% production efficiency. What that means is that it's within the plan that we had. The only thing that did not deliver exactly according to the plan was the infield drilling campaign, which in our program, we had it starting in January. It took us a little bit longer to socialize.

Like I mentioned before, we got this rig running in the month of March. It is a latest generation rig. Like Andrés mentioned, we had a target, and we are aiming for 25% reduction in completion and drilling cost. These wells with previous rigs and previous procedures were costing us $4.1 million. We are targeting three. The first well ended up being at $2.75 million. We feel good about that. It is a campaign, so we need to look at the whole campaign results. The well is delivering 450 barrels of oil per day, and that is higher than expected. When you look at Llanos 34, it is the normal decline, and we had that offsetting of when the rig came in.

Finally, when you look at Llanos exploration, which is basically the block Llanos 123, we are on track on our production guideline for that particular block, working really well with our non-operating partner, looking at how Curucutú well delivers. From that perspective, maybe what you saw, there's a little bit of down production in Llanos because of the divestment of Llanos 32. That happened in the middle of March. That was producing around 1,000 barrels of oil per day net to GeoPark. Finally, when we move outside of the Llanos basin, Platanillo is an asset that we shut in due to the high OpEx. We're working to see with our supply chain group if we can do some additional ideas on how to reopen that asset at lower OpEx so that we can make money. I hope that answers the question, Isabella.

Isabella Peniche (Analyst)

Thank you very much.

Andrés Ocampo (CEO)

Thank you for your comments, Isabella. Andrés here. Thanks very much. Appreciate it.

Operator (participant)

We have some questions from the webcast. Vincent Falange from Berdesco asks, "How much more cost efficiency can the company achieve?

Jaime Uribe (CFO)

Vincent, we share a lot of color, I think, around how we're approaching cost. I guess what I could add, the further color that I could add on this is that it's around flexibility, right? I cannot give you a number on technical limits, but what we've done is we look at our peer group, we look at our operating environments, both in Colombia and in Argentina, and we're regularly monitoring and testing ourselves to ensure that in those peer comparisons, we show up well. That's one of our key approaches towards that. A second approach that we've had is we actually bring outsiders to look under the hood and kick the tires. We did such exercise with BCG late last year, and it gave us these.

On one hand, it told us that we have an extremely efficient operation, but at the same time, it illuminated a few medium and long-term opportunities that we're looking into, right? Probably Martin can give us a little bit of color around that. We also look at the cost chain from an integrated standpoint. We do not just focus on one specific point of the cost, but the totality of how we approach developments. For instance, when we look at Argentina, it is not just about the lifting costs, which are extremely competitive in the $5-$6 range per barrel, but we actually look at the development decisions that we're making with Phoenix to ensure that over the long run, that remains efficient. I know I am not giving you a specific number because we do not have it.

I think it's more of an approach, and our approach is we want to be as competitive as we can possibly be, right? Obviously, ensuring safety, integrity, and the reliability of our operation. Within those constraints, we look to be as best as we can, and those are the things that we're working on. Yeah. Vincent, I'll just add to Jaime's that, again, reiterate that we're in the low side of our range on the $12-$14 per barrel guidance. Like Andrés mentioned in the first pool, we were at $12.3. Our men and women working in the field, but also supporting those field guys here in the office, are all very aligned that number one is to have safe operations, but we know that to be competitive, and we have done it historically, we have to have low OpEx.

I'll give you a couple of examples of the things that we've done and the ones that we're working. I think that the connection got cut when we were talking about that. We've done things together with Jaime's group on reviewing our contracts and looking at long-term contracts. A portion of the numbers that you see are related to that. We have looked at staffing. In the field, we have looked at things that we can optimize. Reducing the number of trucks that move around by innovatively the pump so that the bottoms from the tanks doesn't mean that we're having 15 trucks going out of the field every three days. Now we only have one. That is not only OpEx savings, but we're reducing the chance of somebody getting hurt. We're reducing our emissions.

Those are examples of the things that we already did. Example of the things that are coming, we're looking in very detail at our maintenance strategy. How are we doing our maintenance? It is integrated. Not only the contracts that we have, but are we doing the maintenance properly and can we optimize even further depending on what kind of criticality the equipment has? We feel that with that, we're going to probably optimize a little bit more. Chemicals, artificial lift and pooling. I mean, we have done a very good job. The guys in the field have done a very good job from facilities to artificial lift to have really reliable energy. With that, it means that our pumps do not fail that often. If the pumps do not fail, it means that our OpEx and pooling go down.

When we look at the benchmark, our days between failures in Llanos 34 are actually top-ranked, not only in Colombia, but worldwide. That is the philosophy and what our teams are working on day to day.

Martín Terrado (COO)

I think I would not like to end the call without making just one highlight, and I think a special mention to Martin's team because we made some comments, and I am not sure if they were very well captured. The fact that we drilled the last well in Tigui in 6.1 days. I mentioned that in my introduction, and as we were in the call, we got the report for the following well, which is the Tigui 56 well. We reached TD in four and a half days. That has to be some record in the basin, not only in the block, and we are checking that.

This means that we spot a well on Monday, and we reached TD before the end of Friday. That is a huge saving. The team was targeting to reach wells that we drilled last year for $4.1 million to drill them and completing them this year at $3 million, and the first one has already come in at less than $2.75 milliom. This one is obviously going to come cheaper than that. That relentless effort in finding efficiencies, breaking paradigms, and making sure that we make the most out of each dollar that goes to the ground is what motivates this team. I think they are doing an incredible job. Thanks very much for your question. I think that is the end of the call. There are no more questions. I would like to thank everybody for your interest in and your support of GeoPark.

The team is always here to answer any questions. Please reach out, give us a call, or even better, please visit our operations. Thank you and have a good day.

Operator (participant)

This concludes today's call. Thank you very much for your attendance. You may now disconnect your line.