GeoPark Announces Major Strategic Entry Into Venezuela
GeoPark Limited (“GeoPark” or the “Company”) (NYSE: GPRK), a leading independent energy company with more than two decades of operating experience across Latin America, has announced a major strategic expansion into Venezuela through the Bare Block, a large-scale producing heavy oil asset located in the Orinoco Heavy Oil Belt, one of the largest known hydrocarbon accumulations in the world.
The transaction represents a potentially transformative development in GeoPark’s long-term growth strategy. Through the redevelopment of the mature Bare asset, the Company aims to establish a meaningful operating position in Venezuela while expanding its production base, reserve potential and long-term cash flow opportunities across Latin America.
Bare is a large-scale brownfield redevelopment opportunity with an extensive production history, substantial existing infrastructure and considerable remaining recovery potential. GeoPark believes that the redevelopment of the field could generate significant value over the long term while supporting increased investment and production activity in Venezuela’s energy sector.
The Company expects its participation in the project to contribute to the reactivation of Venezuela’s oil industry and support broader economic rebuilding efforts through capital investment, production acceleration, infrastructure rehabilitation and long-term reserve development. GeoPark views the opportunity as a long-duration platform that could complement its existing operations and growth plans in Colombia and Argentina.
The Bare opportunity was led by Grupo Gilinski, whose strategic presence and engagement in Venezuela played an important role in securing a 25-year Production Participation Contract (“CPP”) framework with PDVSA Petróleo S.A. (“PPSA”).
The transaction has been financed using GeoPark equity, a structure intended to preserve the Company’s financial strength and maintain its existing cash position. The arrangement is expected to result in Grupo Gilinski indirectly acquiring control of GeoPark.
According to the Company, the Board believes that the transaction terms provide immediate and material value accretion for GeoPark shareholders. Under the transaction structure, GeoPark shares will be issued to Grupo Gilinski at a premium. A tender offer mechanism is also expected to provide existing shareholders with an opportunity for liquidity.
Beyond the financial terms of the transaction, the agreement creates a pathway for GeoPark to enter the Venezuelan market at a time when the country’s energy sector is seeking renewed investment and operational activity.
Strategic Entry Into a Large-Scale Brownfield Asset
GeoPark described the Bare opportunity as a transformational addition to its long-term regional strategy. The asset provides the Company with exposure to Venezuela while building on its existing operational platforms in Colombia and Argentina.
The timing of the investment is particularly significant because GeoPark believes the Venezuelan oil sector is entering a period of renewed momentum. The Company sees an opportunity to apply its experience operating in complex Latin American environments to a mature heavy oil field with significant volumes of hydrocarbons already identified but only partially recovered.
The potential incorporation of production from Bare, combined with anticipated growth at GeoPark’s Vaca Muerta operations in Argentina, could substantially change the Company’s production profile over the coming years.
GeoPark expects that these combined growth initiatives could potentially increase total Company production to between 75,000 and 85,000 barrels of oil equivalent per day by 2030. That level would represent approximately 2.7 times the Company’s current production.
The scale of the Bare asset is central to GeoPark’s investment thesis.
The block contains approximately 15.7 billion barrels of original oil in place. Despite its significant resource base, historical recovery from the field remains relatively limited compared with the total volume of hydrocarbons originally contained in the reservoir.
The field has already produced more than 700 million barrels of oil cumulatively. At its historical peak, production exceeded 100,000 barrels of oil per day, demonstrating the asset’s ability to support substantial output.
Today, gross production is approximately 11,000 barrels of oil per day. GeoPark believes that, with redevelopment investment, production could potentially reach peak levels of between 85,000 and 95,000 barrels per day.
The asset also includes approximately 1,100 existing wells, providing a significant operational base for redevelopment activities. Existing infrastructure and well inventory are expected to support a phased approach designed to restore production, improve field performance and increase the recovery of hydrocarbons over time.
GeoPark expects the project could support more than 10 years of potential plateau production in a range of approximately 55,000 to 62,000 barrels of oil per day net to the Company.
The redevelopment plan agreed under the CPP framework contemplates cumulative net production of approximately 400 million barrels for GeoPark. Achieving that objective would require a meaningful increase in the field’s recovery factor.
The current recovery factor is estimated at approximately 4% to 5%. GeoPark’s redevelopment plan aims to increase recovery into a range of approximately 8% to 9%.
Even at those improved recovery levels, substantial additional volumes could remain in the reservoir, creating the possibility for further production and resource development beyond the independently assessed base case.
Applying GeoPark’s Heavy Oil Experience
GeoPark believes it brings a combination of technical expertise, operational experience and capital discipline that is particularly relevant to the redevelopment of Bare.
The Company has developed extensive experience operating hydrocarbon assets in Latin America and managing complex technical and operating environments. Its capabilities include experience in mature basins, reservoir management, production optimization and disciplined investment planning.
GeoPark also has personnel with relevant experience in Venezuela, which the Company believes could provide an additional advantage as it develops the Bare opportunity.
The project will rely on a phased redevelopment strategy rather than a single large-scale development program. The Company expects to build on the existing well inventory and installed infrastructure while applying reservoir knowledge and operational improvements to progressively increase production and recovery.
GeoPark stated that its technical assumptions regarding the project have been supported by field visits and direct engagement with PPSA. These activities have provided the Company with additional information and operational insight that form part of the foundation for its redevelopment plans.
The ability to leverage existing infrastructure could also be important from a capital efficiency perspective. Brownfield redevelopment projects can benefit from wells, facilities and transportation systems already in place, reducing the amount of new infrastructure that may be required compared with developing an entirely new oil field.
However, infrastructure rehabilitation and additional investment will remain key components of the project as GeoPark seeks to increase production and improve long-term field performance.
Significant Additional Value Potential
GeoPark has identified several potential sources of value beyond the assumptions incorporated into the current redevelopment plan.
One potential upside is the possibility of accelerating recovery rates beyond the base-case assumptions. Improvements in Venezuela’s operational environment could support additional investment, increased activity and faster production development.
A second potential source of value relates to Venezuela’s country risk profile. GeoPark believes that successful progress in the reactivation of the country’s energy sector could potentially result in an upward reassessment of Venezuela’s investment environment.
Such a development could positively affect the value attributed to oil and gas assets operating in the country.
The third potential source of additional value involves the large quantity of hydrocarbons remaining in place at Bare. With approximately 15.7 billion barrels of original oil in place and a current recovery factor estimated at only 4% to 5%, the field remains substantially underdeveloped relative to its total resource base.
GeoPark believes that additional resources could be identified beyond the independently assessed base case as technical knowledge improves and redevelopment activities progress.
The combination of existing production, substantial original oil in place, historical production performance and remaining recovery potential is what makes Bare a significant strategic opportunity for the Company.
GeoPark believes the asset can provide large-scale, long-duration reserves while supporting meaningful growth in production and EBITDA generation.
The Company sees the Venezuelan platform as complementary to its existing portfolio rather than separate from its broader Latin American strategy. Its operations in Colombia and Argentina provide established production and growth opportunities, while Bare introduces the potential for another major long-term development platform.
Production Participation Contract Framework
The redevelopment of Bare will be advanced through the CPP contractual framework with PPSA.
The CPP structure operates within the framework established by Venezuela’s Organic Hydrocarbons Law and recently issued regulations.
Under the agreement, GeoPark will serve as operator of the project and will fund 100% of capital expenditures associated with approved work programs.
The Company will hold a 65% net working interest in the project.
As operator, GeoPark is expected to have rights to directly commercialize and monetize hydrocarbons produced under the CPP framework. The contractual arrangement also includes access to critical infrastructure and operational control provisions relevant to the management and redevelopment of the asset.
In addition, the framework includes economic rebalancing mechanisms and compensation protections intended to mitigate the impact of certain operational disruptions.
These provisions are important to the overall investment structure because the redevelopment of a large-scale brownfield asset requires substantial capital commitments over an extended period.
The CPP effective date remains subject to applicable approvals, authorizations, regulatory requirements and sanctions-related compliance requirements.
GeoPark estimates that the maximum period associated with these remaining conditions could be approximately 120 days.
The Company’s entry into Venezuela will therefore depend on the completion of the required processes and compliance with applicable regulatory and sanctions-related requirements.
Financial Capacity to Support Growth
GeoPark said it has approximately US$700 million of liquidity and committed or negotiated financing sources available to support its investment plans.
This includes approximately US$310 million of cash on hand.
The Company believes this financial position provides a strong foundation for the progressive development of Bare while continuing to fund growth and operating activities across its existing portfolio.
Maintaining financial flexibility was a key consideration in the transaction structure. By financing the transaction through GeoPark equity, the Company aims to preserve its balance sheet strength and cash position for investment in operations and future development.
The capital requirements associated with Bare are expected to be deployed progressively under approved work programs rather than through a single immediate investment.
This approach is intended to allow the Company to align capital spending with operational progress, production development and the evolving conditions surrounding the project.
At the same time, GeoPark continues to pursue growth in its established Latin American operations, including its activities in Colombia and the Vaca Muerta development in Argentina.
The addition of Bare could therefore provide GeoPark with another major source of production growth while diversifying the Company’s portfolio across multiple important hydrocarbon regions.
A Transformational Long-Term Opportunity
GeoPark’s proposed entry into Venezuela marks one of the most significant strategic developments in the Company’s history.
The Bare Block combines the characteristics of a mature producing asset with the potential for extensive long-term redevelopment. Its historical production, existing infrastructure, large well inventory and substantial remaining oil in place provide a foundation for a phased investment and production growth strategy.
If the redevelopment plan progresses as anticipated, Bare could become a major contributor to GeoPark’s future production and reserve base.
The Company’s potential production target of 75,000 to 85,000 barrels of oil equivalent per day by 2030, supported by Bare and increased production from Vaca Muerta, illustrates the scale of GeoPark’s long-term growth ambitions.
The transaction also reinforces GeoPark’s strategy of focusing on Latin America, where the Company has accumulated more than 20 years of operating experience.
With established positions in Colombia and Argentina and the potential addition of a large-scale Venezuelan heavy oil asset, GeoPark is seeking to build a broader regional portfolio capable of generating production growth, reserve expansion and enhanced long-term cash flow.
The success of the strategy will depend on the completion of the required approvals, the implementation of the CPP framework, ongoing compliance with applicable requirements and the execution of the Bare redevelopment program.
Nevertheless, GeoPark believes the opportunity offers a significant combination of scale, production potential and long-duration resource development.
Through increased investment, infrastructure rehabilitation, reservoir management and production optimization, the Company intends to establish a long-term commitment to Venezuela while pursuing value creation for shareholders and supporting the redevelopment of one of the country’s major producing heavy oil assets.
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