GeoPark Holdings Limited announced the acquisition of Winchester Oil and Gas S.A. and La Luna Oil Company Limited S.A. (collectively "Winchester Luna"), privately-held exploration and production companies operating in Colombia, for a $30 million cash consideration, adjusted for working capital. The agreement also provides for certain contingent payments from production revenues as a result of successful future exploration.
GeoPark is acquiring the Winchester Luna assets to form a nucleus around which it plans to build a meaningful long-term business in Colombia and to complement its expanding upstream business in Chile and Argentina. GeoPark currently operates 9 blocks in Chile and Argentina (approximately 4 million gross acres) with current oil and gas production of approximately 9,200 barrels of oil equivalent per day (boepd). GeoPark's 2012 work program of $100-120 million in Chile includes the drilling of 17-20 wells and the carrying out of 232 square kilometers (600 square kilometers) of 3D and 91 miles (147 kilometers) of 2D seismic surveys. (Three new blocks in Chile are subject to regulatory approval.)
The acquisition of Winchester Luna provides GeoPark with the following upstream platform in Colombia:
GeoPark is actively working to develop and acquire other oil and gas business opportunities in Colombia to further expand this platform.
GeoPark will fund the acquisition and investment program from its existing cash resources. In the 9 months to September 30, 2011, the Winchester Luna assets generated revenues of approximately $27 million and EBITDA of approximately $10.5 million (unaudited).
Commenting, James F. Park, CEO of GeoPark, said, "The acquisition of Winchester Luna is an important first step for GeoPark into Colombia and into a region with exciting growth and consolidation opportunities. A position in Colombia, with its big subsurface oil and gas potential and its inviting political and regulatory environment, is key to building a successful Latin American oil and gas project portfolio. GeoPark's successful business model is to establish an initial platform in a country, understand the broader set of opportunities and then build up and out from that foundation into a more meaningful and valuable business. We believe the Winchester Luna asset mix and its active current drilling program provide the opportunity for GeoPark to grow and add value through both the drill bit and additional acquisitions in the short and intermediate term. We believe the Colombian assets are also an excellent complement to our successful and growing Chile portfolio."
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