BOGOTA - GeoPark Limited (NYSE:GPRK), an independent Latin American oil and gas explorer and operator, has announced its binding offer to acquire a non-operated working interest in unconventional blocks located in Argentina's Neuquen Basin. The offer, which has been accepted by the seller, is part of the company's strategy to expand its presence in proven oil and gas basins across Latin America.
The acquisition, valued at approximately $200 million, with an additional carry of $110 to $120 million over two years for exploration activities, is expected to enhance GeoPark's production by over 5,000 net barrels of oil equivalent per day (boepd). The company plans to finance the purchase through existing cash reserves, credit facilities, and potential new financing, aiming to maintain a net debt to adjusted EBITDA ratio below 1.1x.
The parties are currently working exclusively towards the execution of definitive agreements, with GeoPark anticipating the signing of the final documentation in the coming weeks. If all goes as planned, the transaction is slated for completion in the third quarter of 2024. However, GeoPark has cautioned that there can be no certainty that the transaction will be finalized, as it is subject to regulatory approvals and other customary conditions.
GeoPark has not disclosed further details due to confidentiality terms of the agreement but will provide additional information once the final documentation is signed or if the agreement is terminated.
This news is based on a press release statement from GeoPark Limited.
InvestingPro Insights
As GeoPark Limited (NYSE:GPRK) positions itself for expansion in Argentina's Neuquen Basin, the company's financial health and strategic maneuvers are key factors for investors to consider. According to real-time data from InvestingPro, GeoPark boasts a market capitalization of $546.94 million USD, underlining its mid-sized stature in the oil and gas industry. The company's aggressive approach to shareholder value is reflected in its share buyback strategy, as noted in one of the InvestingPro Tips, which suggests management's confidence in the company's prospects.
Another aspect that may be of interest to investors is GeoPark's consistent dividend growth, with dividends having been raised for five consecutive years. This commitment to returning value to shareholders is coupled with an impressive dividend yield of 5.46% as of the latest data, potentially making it an attractive choice for income-focused investors.
On the valuation front, GeoPark's price-to-earnings (P/E) ratio stands at 5.1, with an adjusted P/E ratio for the last twelve months as of Q4 2023 at an even lower 4.66. This indicates the stock is trading at a low earnings multiple compared to some of its peers, which might suggest an undervaluation. Additionally, the company's gross profit margins are notably high at 69.86%, reflecting efficient operations and cost management.
While the InvestingPro Tips highlight that the stock's Relative Strength Index (RSI) suggests it is in overbought territory, investors may want to balance this technical analysis with the fundamental strength demonstrated by the company's profitability over the last twelve months and analyst predictions for continued profitability this year.
For those interested in exploring further, GeoPark has additional insights available on InvestingPro, where users can find more comprehensive analysis and data. There are six more InvestingPro Tips related to GeoPark for subscribers, providing a deeper dive into the company's financials and market performance. To access these insights and more, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. The offer could help investors stay ahead of market trends and make informed decisions about their investments in GeoPark and other companies.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.