GeoPark Limited (NYSE:GPRK) has experienced a decline in its share price, dropping 43% over three years, despite a market return of about 37%. This underwhelming performance has left long-term shareholders disappointed.
Key Highlights:
- Share Price Decline: 43% drop in share price over three years, with a 29% decline in about a quarter.
- Earnings Per Share (EPS) Growth: 23% annual improvement in EPS during the same period, indicating a disparity between business performance and shareholder returns.
- Market Sentiment: Share prices reflect investor sentiment, not just underlying business performance, suggesting that market expectations may have been misaligned with the company's actual performance.
Analysis:
The disconnect between GeoPark's EPS growth and share price decline warrants further examination. Possible explanations include:
- One-off Loss or Gain: A non-recurring event may have impacted EPS, leading to a mismatch between business performance and shareholder returns.
- Over-Hyped Expectations: The company may have been overvalued in the past, resulting in disappointing growth and a subsequent decline in share price.
A closer look at other metrics is necessary to understand the underlying factors driving GeoPark's share price performance.
Release Date: March 06, 2025
- Total Oil and Gas Production: Averaged almost 34,000 barrels a day equivalent in 2024, a 7% decrease from 2023.
- Vaca Muerta Production: Over 15,000 barrels a day gross in Q4 2024, 19% higher than Q3 2024.
- Vaca Muerta EBITDA: Approximately $25 million net to GeoPark in Q4 2024, $100 million net on a full year pro forma basis.
- Pro Forma 2P Reserves: Nearly over 160 million barrels, a 41% year-on-year increase.
- 1P Reserves: 102 million barrels, extending reserve life index to 8.2 years.
- Adjusted EBITDA: $416 million for 2024, an 8% decrease compared to 2023.
- Capital Expenditures: $191 million in 2024.
- Net Income: $96.4 million for 2024, 13% lower than 2023.
- Cash Balance: $276.8 million at year-end 2024.
- Net Leverage: 0.9 times, below the long-term target of under 1.5 times adjusted EBITDA.
- Shareholder Returns: Almost $74 million through dividends and buybacks in 2024, a 14% yield.
- Outstanding Shares: Reduced by 8% to 51.2 million through a Dutch auction tender.
- Quarterly Dividend: $0.15 per share declared, payable on March 31.
Positive Points
- GeoPark Ltd achieved a game-changing acquisition in Vaca Muerta, significantly extending its reserves life.
- The company delivered the highest annual shareholder cash return in its history, with a record 14% yield.
- GeoPark Ltd maintained a strong capital efficiency ratio of 2.2 times adjusted EBITDA.
- The company concluded the year with $276.8 million in cash, enhancing financial flexibility.
- GeoPark Ltd was recognized for its sustainability efforts, maintaining an AA rating in the MSCI Index and being included in the S&P sustainability yearbook.
Negative Points
- Total oil and gas production for 2024 averaged 7% less than 2023 due to temporary production disruptions and natural decline in Colombia.
- Full year 2024 adjusted EBITDA decreased by approximately 8% compared to 2023.
- Net income for the year was 13% lower than 2023, mainly due to lower production, lower revenues, and higher effective tax rates.
- The closing of the acquisition in Argentina is taking longer than expected, affecting the reporting of consolidated production and financial figures.
- There are challenges in Vaca Muerta, including well cost pressures and the parent-child effect impacting well productivity.
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Disclaimer
The user WaneInvestmentHouse holds no position in NYSE:GPRK. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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