GeoPark Limited GPRK recently announced its accord with Repsol Exploración S.A. and Repsol E&P S.A.R.L to acquire Repsol, S.A.’s REPYY upstream oil and gas assets in Colombia.

An Insight Into GPRK’s Sale and Purchase Agreement

As a leading energy company in Latin America, GPRK’s prospective accord is to purchase some high-quality assets in one of the most productive oil regions of Colombia called the Llanos Basin. In this region, GPRK has a track record of successfully discovering oil and is also a deep-rooted operator of above- and below-ground operations.

GPRK, carrying a Zacks Rank #4 (Sell) at present,would acquire Repsol Colombia O&G Limited, which holds a 45% working interest in the CPO-9 Block in the Meta Department and would also acquire a 25% working interest of Repsol in SierraCol Energy Arauca LLC. The operator of the CPO-9 Block is Ecopetrol S.A. EC, which holds the remaining 55% working interest in that block. As of September 2024, these assets produced about 16,000 barrels of oil equivalent per day for Repsol.

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GPRK’s Acquisition to Align With Its “North Star” Strategy

The acquisition aligns firmly with the company’s growth strategy, “North Star,” which targets high-valued and advantaged assets in the Llanos Basin and aims to deliver a highly profitable and sustainable portfolio across Latin America. The new portfolio would boost the company’s production levels, reserves and cash flow while maintaining a low capital investment. The acquisition also complements the company’s recent expansion into Argentina's Vaca Muerta play, enabling its risk diversification strategy.

GPRK’s Financial Structure to Support the Deal

The $530 million deal is planned to be financed through cash and a $345 million non-recourse debt facility arranged by Macquarie Bank Limited. This financing is supported by a strong hedging strategy that ensures price protection and reliable debt servicing.

Since the deal is subject to regulatory approvals and certain conditions, its completion is not assured by the company.

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Ecopetrol S.A. (EC) : Free Stock Analysis Report

Repsol SA (REPYY) : Free Stock Analysis Report

Geopark Ltd (GPRK) : Free Stock Analysis Report

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