GeoPark Extends Offtake and Prepayment Partnership With Vitol, Strengthening Colombia Operations
GeoPark Limited (“GeoPark” or the “Company”) (NYSE: GPRK), a leading independent oil and gas company with more than two decades of successful operations across Latin America, has announced the renewal of its long-term offtake and prepayment agreement with Vitol. The renewed arrangement extends the existing partnership, enhances commercial terms, and broadens collaboration across GeoPark’s core asset base in Colombia’s Llanos basin, one of the country’s most prolific hydrocarbon regions.
The renewed offtake agreement underscores the strategic alignment between GeoPark and Vitol and reflects the strong operational performance and delivery reliability GeoPark has demonstrated in Colombia. Under the new terms, GeoPark will sell and deliver 100% of its crude oil production from three key blocks in the Llanos basin: Llanos 34, where GeoPark is the operator with a 45% working interest; Llanos 123, also operated by GeoPark with a 50% working interest; and the CPO-5 block, a non-operated asset in which GeoPark holds a 30% working interest.
This agreement extends the duration of the existing offtake arrangement beyond its original expiration date of June 2027 through December 31, 2028, providing nearly two additional years of commercial certainty. Deliveries under the renewed contract will commence in January 2026 for production from Llanos 34, while crude deliveries from the CPO-5 and Llanos 123 blocks are expected to begin in May 2026. The agreement will remain in effect through the end of 2028, supporting GeoPark’s medium-term production and cash-flow outlook.
One of the most significant outcomes of the renewed agreement is the improvement in GeoPark’s realized pricing and netbacks. The updated commercial terms restore the Company’s weighted-average netbacks to single-digit levels, comparable to benchmarks achieved in 2020. This improvement effectively offsets the cumulative impact of higher midstream tariffs and inflationary pressures that have affected the energy sector over the past five years. As a result, GeoPark expects portfolio realizations to improve by approximately US$0.33 per barrel on a weighted-average basis compared with the Company’s average realizations over the past six months.
These enhanced economics are expected to translate into stronger operating margins, improved cash-flow visibility, and greater resilience against market volatility. The new pricing structure will take effect in January 2026, aligning with the start of deliveries under the renewed agreement and reinforcing GeoPark’s financial performance over the 2026–2028 period.
In addition to improved offtake terms, the renewed agreement includes access to a substantial prepayment facility provided by Vitol. The facility offers total potential availability of up to US$500 million, consisting of a firm committed amount of US$330 million, with an option to increase the available funding by up to an additional US$170 million through prepaid future oil sales over the life of the offtake contract. This expanded facility builds on the successful execution and track record of the prior agreement between the two companies.
The prepayment facility is structured to provide flexibility rather than impose mandatory funding requirements. GeoPark is not obligated to draw on the facility, and any amounts that are drawn may be repaid either through future oil deliveries or prepaid at any time without penalty. This structure gives GeoPark discretion to optimize its capital allocation and financing strategy based on market conditions and operational priorities.
The interest cost associated with any drawn amounts is linked to the one-month Secured Overnight Financing Rate (SOFR), plus a margin of 3.50% per annum. This represents a 25-basis-point reduction compared to the margin applied under the previous prepayment agreement with Vitol. Combined with the recent decline in SOFR, the effective interest rate would currently equate to approximately 7.15% to 7.25%, further enhancing the attractiveness of the facility as a source of liquidity. Funds committed by Vitol will remain available through June 30, 2027, subject to customary conditions.
Management views the prepayment facility as a core element of the enhanced commercial framework agreed with Vitol. By improving access to flexible, competitively priced capital, the facility strengthens GeoPark’s financial resilience and supports the execution of its strategic objectives. The additional funding optionality is expected to help finance development activities, optimize working capital, and provide balance-sheet support as the Company advances its growth plans in Colombia and across its broader Latin American portfolio during the 2026–2028 period and beyond.
The renewed agreement also reflects the depth of the relationship between GeoPark and Vitol, one of the world’s largest and most diversified energy and commodity trading companies. Vitol has a significant presence in Colombia and across Latin America, with extensive logistics, marketing, and trading capabilities. Its established footprint in the region and long-standing commercial relationship with GeoPark have been instrumental in supporting reliable crude offtake, efficient market access, and competitive pricing.
For GeoPark, Colombia remains a cornerstone of its regional strategy. The Llanos basin, in particular, continues to offer attractive development opportunities, supported by established infrastructure and proximity to export markets. The extended offtake agreement with Vitol enhances visibility across GeoPark’s Colombian production base, reduces commercial risk, and reinforces the Company’s ability to generate sustainable cash flows in a challenging global energy environment.
Source Link: https://www.businesswire.com/
