GeoPark to 'Pounce' on Deals as Cheap Oil Creates Bargains

Bloomberg) - GeoPark Ltd. is considering buying assets from other oil producers in Latin America and could close a deal by year-end as an industry downturn is leaving many of its rivals strapped for cash.

The Santiago, Chile-based driller plans to more than quadruple production to 100,000 barrels a day of oil equivalent within five years, with development of current assets taking output to about 50,000 barrels a day, according to Chief Executive Officer James Park. The rest should come from purchases in Latin America, likely ranging between $100 million and $600 million in size, Park said.

The worst crude market in a generation has left producers worldwide short of funds for drilling, dividend payouts and debt servicing, with regional producers including Colombia’s Ecopetrol SA, Petroleo Brasileiro SA and Petroleos Mexicanos among those looking to sell assets. GeoPark, which has also been subject to concerns about its ability to keep up with  debt payments, would raise financing for deals from existing investors including LG International and the World Bank’s International Finance Corporation, Parks said.

“This is an environment where you can build businesses,” Park said in an interview at Bloomberg’s New York office on Thursday. “We feel we’ve got the platform and the partners to pounce."

The company, with a market value of about $156 million, is looking to buy producing and non-producing acreage in Mexico, Brazil, Colombia, Peru, Argentina and Chile. It’s also in talks with other backers to help fund deals, Park said, declining to disclose names. Shares in GeoPark rose 1.1 percent to $2.65 at 2:15 p.m. in New York.

GeoPark produced an average 22,518 barrels a day in the first quarter, with the bulk coming from Colombia. Other drillers in the Andean nation targeting counter-cyclical investments include Gran Tierra Energy Inc. and Parex Resources Inc.

To contact the reporters on this story: Matthew Monks in New York at mmonks1@bloomberg.net ;Andrew Willis in Bogota at awillis21@bloomberg.net To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net; David Marino at dmarino4@bloomberg.net Joe Richter, Anne Riley

Copyright 2016 Bloomberg News.

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