?

Embargoed for release at 7:00 am

25 January 2013

GEOPARK HOLDINGS LIMITED

RESULTS FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2012

GeoPark Holdings Limited ("GeoPark" or the "Company"), the Latin American oil and gas explorer, operator and consolidator with operations and producing properties in Chile, Colombia and Argentina (AIM: GPK), is pleased to announce its third quarter results for the nine months ended 30 September 2012. This represents the first set of quarterly results to be released by GeoPark. The intention is to issue unaudited quarterly results from now on.   

Summary

During the first nine months of 2012, GeoPark continued to execute its business plan and grow its key performance measures of oil and gas production, revenues, EBITDA and net income. The results achieved are leading GeoPark to register its seventh consecutive year of overall growth in 2012.

Operational Highlights

·     49.8% increase in Oil and Gas Production:Total oil and gas production increased 49.8% to 10,806 barrels of oil equivalent per day ("boepd") in 9M2012 compared to 7,216 boepd in 9M2011. Total crude oil production increased 214% to 6,532 barrels per day ("bopd") in 9M2012, (or 4,123 bopd in 9M 2012 excluding the contribution of 2079 bopd from the new blocks acquired in Colombia) as compared to 2,079 bopd in 9M2011. The like-for-like increase in production from Chile reflects an improvement in GeoPark's production balance towards oil. Current oil and gas production is 13,200 boepd.

·     Drilling of 34 Wells: In line with the guidance and description of results provided in GeoPark's Quarterly Operations Update, GeoPark drilled and/or participated in 34 new wells in 9M2012 (on a proforma basis), including 15 wells in Chile and 19 wells in Colombia. GeoPark has now completed its 2012 work program of drilling 44 new wells (gross).

·     New Oil and Gas Discoveries in Colombia and Chile: From its exploration drilling program in Colombia and in Chile, GeoPark made the following new discoveries during 9M2012:

1.   Max Oil Field / Block 34, Colombia (45% WI, GeoPark operated): The Max 1 well was GeoPark's first oil discovery in Colombia and is currently on production by electrical submersible pump ("ESP") from the Guadalupe formation. An appraisal well Max 2 is currently being drilled.

2.   Tua Oil Field / Block 34, Colombia (45% WI, GeoPark operated): The Tua 1 well was GeoPark's second discovery in Colombia and is currently on production by ESP from the Mirador formation. Two additional appraisal wells, Tua 2 and Tua 3, have been drilled and are now on production from the Guadalupe and Mirador formations respectively.

3.   Maniceño Oil Field / Block 32, Colombia (10% WI, GeoPark non-operated): Maniceño was tested and put into production from the Mirador formation.

4.   Azor Oil Field / Arrendajo Block, Colombia (10% WI, GeoPark non-operated): Azor was tested and put into production from the Carbonera C5 formation.

5.   Kosten Gas Field / Fell Block (100% WI, GeoPark operated), Chile: Kosten 1 was tested and put into production from the Springhill formation by natural flow.

6.   Kiuaku Gas Field / Fell Block, Chile (100% WI, GeoPark operated): Kiuaku 1 was tested and put into production from the Springhill formation by natural flow.

·     Seismic Surveys:In Chile, GeoPark carried out 67 km of 2D seismic in the Otway and Tranquilo Blocks and 289 km2 of 3D seismic in the Flamenco Block - one of GeoPark's newly acquired blocks in Tierra del Fuego. In Colombia, GeoPark carried out 111 km2 of 3D seismic work in the Llanos 62 Block.

·     Unconventional Resource Potential Assessment: In Chile, GeoPark's acreage position in the Magallanes Basin contains the Estratos con Favrella shale formation which has previously tested and produced oil. GeoPark initiated a program of diagnostic fracture injection tests (DFITs) on a selection of six to eight wells on the Fell Block to determine the fracability and reservoir properties of the shale.

Financial Highlights

·     Revenues Up 147%: Total revenues increased to US$182.1 million in 9M2012 from US$73.9 million in 9M2011, mainly as a result of a significant increase in oil production and the incorporation of new production from Colombia. Oil revenues from Chilean operations increased by 111% to US$93.4 million and Colombian operations incorporated additional oil revenues for US$63.9 million. Oil revenues represented 86.9% of total revenues.

·     Adjusted EBITDA Up 130%:Adjusted EBITDA (adjusted earnings before interest, tax, depreciation, amortization and certain non-cash items such as write offs and share based payments) increased to US$94.8 million in 9M2012 compared to US$41.2 million in 9M2011. In addition, cash flow from operating activities in 9M2012 increased by 103% to US$101.2 million from US$49.9 million in 9M2011.

·     Netbacks Up 54%:Netback per boe produced increased to US$32.1 per boe in 9M2012 compared to US$20.9 per boe in 9M2011 reflecting a higher weighting of oil in GeoPark's production mix, as well as the incorporation of Colombian operations into the portfolio.

·     Net Income Up Significantly:Net income for 9M2012 increased to US$24.4 million, compared to US$1.4 million reported in 9M2011. The growth in net results is mainly associated with an improvement in operating results which increased to US$35.9 million in 9M2012 (including US$5.2 million from our new Colombian operations) compared to US$14.6 million in 9M2011. In addition, a gain of US$8.6 million was recognized related to the acquisition of the Colombian subsidiaries.

·     Total Equity Up 57%:Total Equity attributable to shareholders increased to US$244.9 million as of 30/09/12 compared to US$156.2 million as of 30/09/11.

·     Available Cash Resources:GeoPark had US$75.5 million in cash and cash equivalents at the end of 9M2012 (US$64.9 million net of overdrafts), with a liquidity ratio of 1.55x (current assets divided by current liabilities), and total financial debt of US$195.8 million.

Strategic and New Project Highlights

·     Colombian Platform Acquisition: GeoPark acquired a solid growth platform in Colombia consisting of interests in 10 blocks with a balanced mix of production, development and exploration opportunities, through two acquisitions closed during 1Q2012.

·     Tierra del Fuego Operations Start-Up: GeoPark initiated works in the recently acquired Tierra del Fuego Blocks in Chile (consisting of the Isla Norte, Campanario and Flamenco blocks), through the registration of 289 sq. km of 3D

seismic in the Flamenco Block. Preliminary interpretation of processed data suggests hydrocarbon prospects. GeoPark will initiate its drilling campaign in Tierra del Fuego during the first half of 2013.

·     Business Development: Along with its strategic partner, LG International Corporation ("LGI"), GeoPark is continuing its efforts to build a risk-balanced oil and gas asset portfolio throughout Latin America by acquiring upstream properties and interests in Colombia, Brazil, Argentina, Peru, and Chile. As part of this alliance, in December 2012 LGI has joined GeoPark's operations in Colombia through the acquisition of a 20% interest in the Colombian business.

Commenting, James F. Park, CEO of GeoPark, said: "As evidenced by our positive results for the first nine months of 2012, GeoPark is continuing its steady upward growth. Our combined businesses, consisting of Chile and Colombia, are now providing robust cash flows, allowing us to continue to invest in and create value from our assets - as well as to help support new projects. As we continue to invest in our team, capabilities and properties, and to undertake new operations, funding and strategic initiatives, we look forward to accelerating the growth of our business in the coming years - both organically by our success in developing new oil and gas reserves on our current properties and through the acquisition of new projects which we can convert into value-adding assets."

In accordance with the AIM Rules, the information in this report has been reviewed by Salvador Minniti, a geologist with 32 years of oil and gas experience and Director of Exploration of GeoPark.

For further information please contact:

GeoPark Holdings Limited


Andres Ocampo (Buenos Aires)

Pablo Ducci (Chile)

+54 11 4312 9400

+56 2 2242 9600



Oriel Securities - Nominated Adviser and Joint Broker


Michael Shaw (London)

+44 (0)20 7710 7600

Tunga Chigovanyika (London)




Macquarie Capital (Europe) Limited - Joint Broker


Jeffrey Auld (London)

+44 (0)20 3037 2000

Steve Baldwin (London)


GEOPARK HOLDINGS LIMITED

THIRD QUARTER 2012 and 2011

INTERIM REPORT

INTERIM CONSOLIDATED FINANCIAL REPORT

FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2011 and 2012



CONTENTS

Page


3

Consolidated Statement of Income and Statement of Comprehensive Income

4

Consolidated Statement of Financial Position

5

Consolidated Statement of Changes in Equity

6

Consolidated Statement of Cash Flow

7

Selected explanatory notes











CONSOLIDATED STATEMENT OF INCOME

Amounts in US$  ´000

Note

Nine-months period ended 30 September 2012

Nine-months period ended 30 September 2011

Year ended
31 December 2011

NET REVENUE

2

182,139

73,867

111,580

Production costs


(88,656)

(36,726)

(54,513)

GROSS PROFIT


93,483

37,141

57,067

Exploration costs


(21,742)

(7,932)

(10,066)

Administrative costs


(20,910)

(13,224)

(18,169)

Selling expenses


(15,650)

(1,704)

(2,546)

Other operating income / (expense)


681

295

(502)

OPERATING PROFIT


35,862

14,576

25,784

Financial income

4

364

362

162

Financial expenses

5

(14,185)

(10,935)

(13,678)

Gain on acquisition of subsidiaries

10

8,624

-

-

PROFIT BEFORE TAX


30,665

4,003

12,268

Income tax


(6,266)

(2,599)

(7,206)

PROFIT FOR THE PERIOD/YEAR

24,399

1,404

5,062

Attributable to:




Owners of the parent

17,833

129

54

Non-controlling interest

6,566

1,275

5,008

Earnings per share (in US$) for profit attributable

to owners of the Company. Basic


0.4198

0.0031

0.0013

Earnings per share (in US$) for profit attributable

to owners of the Company. Diluted


0.3973

0.0024

0.0012

STATEMENT OF COMPREHENSIVE INCOME

Amounts in US$  ´000


Nine-months period ended 30 September 2012

Nine-months period ended 30 September 2011

Year ended
31 December 2011

Profit for the period / year


24,399

1,404

5,062

Other comprehensive income 


-

-

-

Total comprehensive Income for the period / year


24,399

1,404

5,062



CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Amounts in US$  ´000

Note

At 30 September
 2012

At 30 September
 2011

Year ended 31 December 2011

ASSETS





NON CURRENT ASSETS





Property, plant and equipment

6

429,639

200,680

224,635

Prepaid taxes


3,208

3,263

2,957

Other financial assets


6,813

5,226

5,226

Deferred income tax


19,451

488

450

Prepayments and other receivables


556

38

707

TOTAL NON CURRENT ASSETS


459,667

209,695

233,975

CURRENT ASSETS





Other financial assets


-

-

3,000

Inventories


10,641

660

584

Trade receivables


21,924

19,367

15,929

Prepayments and other receivables


43,120

3,929

24,984

Prepaid taxes


11,036

1,967

147

Cash and cash equivalents


75,539

139,616

193,650

TOTAL CURRENT ASSETS


162,260

165,539

238,294


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


Attributable to owners of the Company



Amount in US$ '000

Share Capital

Share Premium

Other Reserve

Translation Reserve

Retained (Losses) Earnings

Non -  controlling

Interest

Total

Equity at 1 January 2011

42

107,858

3,025

894

(19,527)

-

92,292

Profit for the nine month period

-

-

-

-

129

1,275

1,404

Total comprehensive income for the period ended 30 September 2011

-

-

-

-

129

1,275

1,404

Proceeds from transaction with Non-controlling interest

-

-

58,743

-

-

11,257

70,000

Shared-based payment

-

734

-

-

4,280

-

5,014


-

734

58,743

-

4,280

11,257

75,014

Balance at 30 September 2011

42

108,592

61,768

894

(15,118)

12,532

168,710









Balance at 31 December 2011

43

112,231

114,270

894

(18,549)

41,763

250,652

Profit for the nine month period

-

-

-

-

17,833

6,566

24,399

Total comprehensive income for the period ended 30 September 2012

-

-

-

-

17,833

6,566

24,399

Proceeds from transaction with Non-controlling interest (1)

-

-

14,432

-

-

7,134

21,566

Share-based payment

-

71

-

-

3,664

-

3,735


-

71

14,432

-

3,664

7,134

25,301

Balance at 30 September 2012

43

112,302

128,702

894

2,948

55,463

300,352

(1)  The proceeds from transactions with Non-controlling interest represent additional consideration receivables in respect of the investment made into GeoPark Chile S.A. in 2011 by LG International. Of the total consideration, US$ 17.6 million is recognised as a receivable within Prepayments and other receivables as at 30 September 2012.


CONSOLIDATED STATEMENT OF CASH FLOW

Amounts in US$ '000

Nine-months period ended 30 September 2012

Nine-months period ended 30 September 2011

Year ended
 31 December, 2011

Cash flows from operating activities




Profit for the period/year

24,399

1,404

5,062

Adjustments for:




Income tax for the period/year

6,266

2,599

7,206

Depreciation of the period/year

36,228

16,761

26,408

Loss on disposal of property, plant and equipment

455

1,040

2,010

Write-off of unsuccessful efforts

20,298

5,458

5,919

Amortisation of other long-term liabilities

(1,993)

-

(1,038)

Impairment loss

-

-

1,344

Accrual of borrowing's interests

11,471

8,387

11,130

Unwinding of discount

630

484

350

Accrual of stock awards

3,735

5,014

5,298

Exchange difference generated by borrowings

39

(48)

(15)

Gain on acquisition of subsidiaries (Note 10)

(8,624)

-

-

Changes in working capital

8,286

8,760

89

Cash flows from operating activities - net

101,190

49,859

63,763

Cash flows from investing activities




Purchase of property, plant and equipment

(147,200)

(62,679)

(98,651)

Acquisitions of subsidiaries, net of cash acquired (Note 10)

(105,303)

-

-

Purchase of financial assets

-

-

(2,625)

Deferred income

5,550

-

5,000

Cash flows used in investing activities - net

(246,953)

(62,679)

(96,276)

Cash flows from financing activities




Proceeds from borrowings

38,883

1,237

9,668

Proceeds from transaction with Non-controlling interest

10,019

70,000

142,000

Principal paid

(16,297)

(8,876)

(9,150)

Interest paid

(5,552)

(5,598)

(10,779)

Cash flows from financing activities - net 

27,053

56,763

131,739

Net (decrease) increase in cash and cash equivalents

(118,710)

43,943

99,226

Cash and cash equivalents at 1 January

183,622

84,396

84,396

Cash and cash equivalents at the end of the period/year

64,912

128,339

183,622

Ending Cash and cash equivalents are specified as follows:




Cash in banks

75,515

139,610

193,642

Cash in hand

24

6

8

Bank overdrafts

(10,627)

(11,277)

(10,028)

Cash and cash equivalents

64,912

128,339

183,622



SELECTED EXPLANATORY NOTES

Note 1

General information

GeoPark Holdings Limited (the Company) is a company incorporated under the law of Bermuda. The Registered Office address is Cumberland House, 9th Floor, 1 Victoria Street, Hamilton HM11, Bermuda. The Company is quoted on the AIM market of London Stock Exchange plc.

This consolidated interim financial report has been reviewed by the Company's auditors. It was authorised for issue by the Board of Directors on 21 January 2013.

The consolidated interim financial report of GeoPark Holdings Limited is presented in accordance with IAS 34 "Interim Financial Reporting". It does not include all of the information required for full annual financial statements, and should be read in conjunction with the annual financial statements as at and for the years ended 31 December 2010 and 2011, which have been prepared in accordance with IFRSs.

The consolidated interim financial report has been prepared in accordance with the accounting policies applied in the most recent annual financial statements. For further information please refer to GeoPark Holdings Limited's consolidated financial statements for the year ended 31 December 2011.

Subsidiary undertakings

Details of the subsidiaries and jointly controlled assets of the Company are set out below:


Name and registered office



Ownership interest

Subsidiaries

GeoPark Argentina Ltd. - Bermuda



100%


GeoPark Argentina Ltd. - Argentine Branch



100% (a)


Servicios Southern Cross Limitada (Chile)



100% (b)


GeoPark Latin America



100%


GeoPark Latin America - Chilean Branch



100% (a)


GeoPark S.A. (Chile)



100% (a) (b)


GeoPark Chile S.A. (Chile)



80% (a) (c)


GeoPark Fell S.p.A. (Chile)



80% (a) (c)


GeoPark Magallanes Limitada (Chile)



80% (a) (c)


GeoPark TdF S.A. (Chile)



69% (a) (d)


GeoPark Colombia S.p.A. (Chile)



100% (a) (e)


GeoPark Luna SAS (Colombia)



100% (a) (e)


GeoPark Colombia SAS (Colombia)



100% (a) (e)


GeoPark Llanos SAS (Colombia)



100% (a) (e)


La Luna Oil Co. Ltd. (Panama)



100% (a) (e)


Winchester Oil and Gas S.A. (Panama)



100% (a) (e)


GeoPark Cuerva LLC (United States)



100% (a) (e)


Sucursal La Luna Oil Co. Ltd. (Colombia)



100% (a) (e)


Sucursal Winchester Oil and Gas S.A. (Colombia)



100% (a) (e)

(a)   Indirectly owned.

(b)   Dormant companies.

(c)   Since 20 May 2011, LG International acquired 20% interest.

(d)   LG International has 20% interest through GeoPark Chile S.A. and a 14% direct interest.

(e)   During the first quarter of 2012, the Company entered into a business combination acquiring 100% interest  in each entity (see Note 10).

(f)    On 14 April 2011 following Governmental approval the new ownership of the Tranquilo Block was confirmed. The other partners in the JVs are Pluspetrol (29%), Methanex (17%) and Wintershall (25%).

(g)   After participating in a farm-in process organized by ENAP, GeoPark was awarded 3 blocks in Tierra del Fuego, Chile (Isla Norte Block, Flamenco Block and Campanario Block). GeoPark will be the operator in all blocks with a share of 60% for Isla Norte Block and 50% for the other 2 blocks (See Note 12).

(h)   Raven Pipeline Company LLC had no movements during 2012.

Note 2

Net revenue

Amounts in US$ '000

Nine-months period ended 30 September 2012

Nine-months period ended 30 September 2011

Year ended
31 December
 2011





Sale of crude oil

158,309

45,464

73,508

Sale of gas

23,830

28,403

38,072


182,139

73,867

111,580

Note 3

Segment Information

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the strategic steering committee. This committee is integrated by the CEO, Managing Director, CFO and managers in charge of the Geoscience, Drilling, Operations and SPEED departments. This committee reviews the Group's internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on these reports.

The committee considers the business from a geographic perspective.

The strategic steering committee assesses the performance of the operating segments based on a measure of adjusted earnings before interest, tax, depreciation, amortisation and certain non cash items such as write offs and share based payments (Adjusted EBITDA). This measurement basis excludes the effects of non-recurring expenditure from the operating segments, such as impairments when it is result of an isolated, non-recurring event. Interest income and expenditure are not included in the result for each operating segment that is reviewed by the strategic steering committee. Other information provided, except as noted below, to the strategic steering committee is measured in a manner consistent with that in the financial statements.

Note 3 (Continued)

Segment Information (Continued)

Nine-months period ended 30 September 2012

Amounts in US$ '000

Total

Argentina

Chile

Colombia

Corporate

NET REVENUE

182,139

972

117,244

63,923

-

GROSS PROFIT

93,483

302

68,314

24,867

-

OPERATING PROFIT / (LOSS)

35,862

(5,628)

41,767

5,230

(5,507)

Adjusted EBITDA

94,793

(808)

76,721

24,265

(5,385)

Nine-months period ended 30 September 2011

Amounts in US$ '000

Total

Argentina

Chile

Colombia

Corporate

NET REVENUE

73,867

1,144

72,723

-

-

GROSS PROFIT

37,141

516

36,625

-

-

OPERATING PROFIT / (LOSS)

14,576

(3,763)

23,244

-

(4,905)

Adjusted  EBITDA

41,239

28

44,334

-

(3,123)

Total Assets

Total

Argentina

Chile

Colombia

Corporate

30 September 2012

621,927

8,619

411,354

200,567

1,387

31 December 2011

472,269

10,895

453,384

-

7,990

30 September 2011

375,234

9,634

363,008

-

2,592

A reconciliation of total Adjusted EBITDA to total profit before income tax is provided as follows:



Nine-months period ended 30 September 2012


Nine-months period ended 30 September 2011

Adjusted EBITDA for reportable segments

94,793

41,239

Depreciation

(36,228)

(16,761)

Accrual of stock awards

(3,664)

(4,280)

Write-off of unsuccessful efforts

(20,298)

(5,458)

Others

1,259

(164)

Operating profit

35,862

14,576

Financial results

(13,821)

(10,573)

Gain on acquisition of subsidiaries (Note 10)

8,624

-

Profit before tax

30,665

4,003



Note 4

Financial income

Amounts in US$ '000


Nine-months period ended 30 September 2012


Nine-months period ended 30 September 2011


Year ended 31 December

2011

Exchange difference

17

248

32

Bank interest

347

114

130


364

362

162

Note 5

Financial expenses

Amounts in US$ '000 

Nine-months period ended 30 September 2012

Nine-months period ended 30 September 2011

Year ended 31 December
 2011

Bank charges and other financial costs

1,038

1,216

1,856

Exchange difference

2,994

716

496

Unwinding of long-term liabilities

630

484

350

Interest and amortisation of debt issue costs

10,520

8,805

11,573

Less: amounts capitalised on qualifying assets

(997)

(286)

(597)


14,185

10,935

13,678



Note 6

Property, plant and equipment

Amounts in US$'000

Oil & gas properties

Furniture, equipment

and vehicles

Production facilities and machinery

Buildings

and improve-ments

Construction  in progress

Exploration and evaluation assets

TOTAL

Cost at 1 January 2011

126,626

1,445

38,142

2,076

16,197

23,412

207,898

Additions

1,269

542

513

-

21,909

39,703

63,936

Disposals

(227)

(156)

(657)

-

-

-

(1,040)

Write-off and impairment

-

-

-

-

-

(1)(5,458)

(5,458)

Transfers

19,354

79

5,519

358

(5,549)

(19,761)

-

Cost at 30 September 2011

147,022

1,910

43,517

2,434

32,557

37,896

265,336









Cost at 1 January 2012

171,956

2,175

47,102

2,437

32,896

42,140

298,706

Additions

12,034

627

19,397

-

52,769

62,781

147,608

Disposals

(438)

-

(17)

-

-

-

(455)

Write-off and impairment

-

-

-

-

-

(1)(20,298)

(20,298)

Transfers

73,024

-

7,623

595

(37,266)

(43,976)

-

Acquisitions of subsidiaries (Note 10)

63,942

482

10,865

-

9,359

29,729

114,377

Cost at 30 September 2012

320,518

3,284

84,970

3,032

57,758

70,376

539,938









Depreciation and write-down at 1 January 2011

(33,508)

(851)

(13,308)

(514)

-

-

(48,181)

Depreciation

(12,824)

(212)

(3,590)

(135)

-

-

(16,761)

Disposals

-

61

225

-

-

-

286

Depreciation and write-down at 30 September 2011

(46,332)

(1,002)

(16,673)

(649)

-

-

(64,656)









Depreciation and write-down at 1 January 2012

(53,604)

(1,123)

(18,628)

(716)

-

-

(74,071)

Depreciation

(29,631)

(495)

(5,866)

(236)

-

-

(36,228)

Depreciation and write-down at 30 September 2012

(83,235)

(1,618)

(24,494)

(952)

-

-

(110,299)





(1)       Corresponds to write-off of Exploration and evaluation assets in Colombia US$ 4,727, Chile US$ 13,627
(US$ 5,458 in 2011) and Argentina US$ 1,944 (nil in 2011).

Note 7

Share capital

Issued share capital

Nine-months period ended 30 September 2012

Nine-months period ended 30 September 2011

Year ended 31 December  2011

Common stock (US$ ´000)

43

42

43

The share capital is distributed as follows:




Common shares, of nominal US$ 0.001

42,476,576

42,474,274

42,474,274

Total common shares in issue

42,476,576

42,474,274

42,474,274





Authorised share capital




US$ per share

0.001

0.001

0.001





Number of common shares (US$ 0.001 each)

5,171,969,000

5,171,969,000

5,171,969,000

Amount in US$

5,171,969

5,171,969

5,171,969

Note 8

Borrowings

The outstanding amounts are as follows:

Amounts in US$ '000

At

30 September 2012

At

30 September 2011

Year ended

31 December
 2011

Bond (a)

131,720

130,768

128,315

Methanex Corporation (b)

8,036

18,280

18,068

Banco de Crédito e Inversiones (c)

7,881

426

8,845

Overdrafts (d)

10,627

11,277

10,028

Banco Itaú (e)

37,500

-

-


195,764

160,751

165,256

Classified as follows:

Current

30,873

26,088

30,613

Non-Current

164,891

134,663

134,643



Note 8 (Continued)

Borrowings (Continued)

(a) Private placement of US$ 133,000,000 of Reg S Notes on 2 December 2010. The Notes carry a coupon of 7.75% per annum and mature on 15 December 2015. The Notes are guaranteed by the Company and secured with the pledge of 51% of the shares of GeoPark Fell. In addition, the Note agreement allows for the placement of up to an additional US$ 27,000,000 of Notes under the same indenture, subject to the maintenance of certain financial ratios.

(b) The financing obtained in 2007, for development and investing activities on the Fell Block, is structured as a gas pre-sale agreement with a six year pay-back period and an interest rate of LIBOR flat. In each year, the Group will repay principal up to an amount equal to the loan amount multiplied by a specified percentage. Subject to that annual maximum principal repayment amount, the Group will repay principal and interest in an amount equal to the amount of gas specified in the contract at the effective selling price.

In addition on 30 October 2009 another financing agreement was signed with Methanex Corporation under which Methanex have funded GeoPark's portions of cash calls for the Otway Joint Venture for
US$ 3,100,000. The loan has been fully repaid during 2012. The purpose was to finance the exploration of natural gas from the Otway Block. This financing did not bear interest.

(c) Facility to establish the operational base in the Fell Block. This facility was acquired through a mortgage loan granted by the Banco de Crédito e Inversiones (BCI), a Chilean private bank. The loan was granted in Chilean pesos and is repayable over a period of 8 years. The interest rate applicable to this loan is 6.6%. The outstanding amount at 30 September 2012 is US$ 372,000.

During the last quarter of 2011, GeoPark TdF obtained short-term financing from BCI. This financing is structured as letter of credit with a pledge of the seismic equipment acquired to start the operations in the new blocks. The maturity is May 2013 and the applicable interest rate ranging from 4.45% to 5.45%. The outstanding amount at 30 September 2012 is US$ 7,509,000.

(d) The Group has been granted with credit lines for approximately US$ 46,000,000.

(e) GeoPark Holdings Limited has executed a loan agreement with Banco Itaú BBA S.A., Nassau Branch for US$ 37,500,000. GeoPark will use the proceeds to finance the acquisition and development of the La Cuerva and Llanos 62 blocks. These blocks represent two of the ten production, development and exploration blocks, which GeoPark currently owns in Colombia (see Note 10).

The loan, which has a maturity of five years, amortising from month 21 in 14 equal quarterly instalments, is ring-fenced by and secured against 100% of the capital of GeoPark Llanos SAS, the owner of the La Cuerva and Llanos 62 blocks. Interest on the loan is accrued at LIBOR + 4.55%.

Note 9

Provision for other liabilities

The outstanding amounts are as follows:

Amounts in US$ '000

At

30 September 2012

At

30 September 2011

Year ended

31 December
 2011

Assets retirement obligation and other environmental liabilities

20,039

4,668

5,450

Royalties and other taxes

9,146

992

611

Deferred income

7,518

3,468

3,962

Salaries and payroll taxes

4,716

2,145

3,858

Other

3,829

80

649


45,248

11,353

14,530

Classified as follows:

Current

17,551

3,217

5,118

Non-Current

27,697

8,136

9,412

Note 10

Acquisitions in Colombia

In February 2012, GeoPark acquired two privately-held exploration and production companies operating in Colombia, Winchester Oil and Gas S.A. and La Luna Oil Company Limited S.A. ("Winchester Luna").

In March 2012, a second acquisition occurred with the purchase of Hupecol Cuerva LLC ("Hupecol"), a privately-held company with two exploration and production blocks in Colombia.

The combined Hupecol and Winchester Luna purchases (acquired for a total consideration of
US$ 105,000,000, adjusted for working capital) provide GeoPark with the following in Colombia:

·      Interests in 10 blocks (ranging from 5% to 100%), with license operations in four of them, located in the Llanos, Magdalena and Catatumbo Basins, covering an area of approximately 220,000 gross acres.

·      Risk-balanced asset portfolio of existing reserves, low risk development potential and attractive exploration upside.

·      Successful Colombian operating and administrative team to support a smooth transition and start-up in Colombia together with Associations and JVs with principal Colombian operators.

Note 10 (Continued)

Acquisitions in Colombia (Continued)

Under the terms of the sale and purchase agreement entered into in 2012 in respect of the acquisition of Winchester Luna, the Company has to make certain payments to the former owners arising from the production and sale of hydrocarbons discovered by exploration wells drilled after 25 October 2011 on the working interests of the companies at that date.  These payments which involve both, an earnings based measure and an overriding revenue royalty, equate to an estimated 4% carried interest on the part of the vendor.  As at the balance sheet date and based on preliminary internal estimates of additions of 2P reserves since acquisition, the Company's best estimate of the total commitment over the remaining life of the concession is a range of US$ 35 million - US$ 42 million (assuming a discount rate of 9.7% and oil price of US$ 94 pbl).

In Colombia, royalties on production are payable to the Columbian Government and are determined at a rate of 8%.

The purchase price allocation performed is preliminary, since the valuation process is ongoing. This process will be completed during the first quarter of 2013. In accordance with the acquisition method of accounting, the acquisition cost was allocated to the underlying assets acquired and liabilities assumed based primarily upon their estimated fair values at the date of acquisition. We used an income approach (being the net present value of expected future cash flows) to determine the fair values of the mineral interest. Estimates of expected future cash flows reflect estimates of projected future revenues, production costs and capital expenditures based on our business model. The excess of acquisition cost, if any, over the net identifiable assets acquired represents goodwill.

The following table summarises the combined consideration paid for Winchester Luna and Hupecol, the preliminary fair value of assets acquired and liabilities assumed for these transactions:

Amounts in US$ '000

Hupecol

Winchester Luna

Total

Cash (including working capital adjustments)

79,630

32,243

111,873

Total consideration

79,630

32,243

111,873

Cash and cash equivalents

976

5,594

6,570

Property, plant and equipment (including mineral interest)

76,885

37,492

114,377

Trade receivables

4,402

4,098

8,500

Prepayments and other receivables

7,045

5,247

12,292

Deferred income tax assets

12,321

7,404

19,725

Inventories

7,586

1,680

9,266

Trade payables and other debt

(20,899)

(12,380)

(33,279)

Deferred income tax liabilities

(3,467)

(4,412)

(7,879)

Borrowings

-

(1,368)

(1,368)

Provision for other long-term liabilities

(5,219)

(2,488)

(7,707)

Total identifiable net assets

79,630

40,867

120,497

Gain on acquisition of subsidiaries

-

8,624

8,624

Note 10 (Continued)

Acquisitions in Colombia (Continued)

In accordance with disclosure requirements for business combinations, the Company has calculated its net revenue and profit, considering as if the mentioned acquisitions had occurred at the beginning of the reporting period. The following table summarises both results:

Amounts in US$ '000

Total

Net revenue

206,712

Profit for the period

26,838

Note 11

Agreement with Methanex

In March 2012, the Company and Methanex signed a third addendum and amendment to the Gas Supply Agreement to incentivise the development of gas reserves. Through this new agreement, the Company is undertaking a programme consisting of drilling a minimum of five new gas wells during 2012. Methanex will contribute to the cost of drilling the wells in order to improve the project economics. As of 30 September, the Company has already fulfilled the minimum drilling commitment for 2012.

The Agreement also includes monthly commitments of delivering certain volume of gas; in case of failure, the Company could make up it with future deliveries without penalties during a period of three months. Otherwise, the Company has to recognise the corresponding liability. As of 30 September 2012, the accrued penalty amounts to US$ 1.2 million.

Note 12

Subsequent events

GeoPark TdF S.A. CEOPs signature

On 6 November 2012, the Chilean Government signed the CEOPs related to Flamenco and Isla Norte blocks. Subsequently, on 9 January 2013, the Chilean Government also signed the CEOP for Campanario block.

Expansion of LG International - GeoPark partnership into Colombia

LG International, has joined GeoPark's operations in Colombia through the acquisition of a 20% interest in GeoPark Colombia S.A., a company that holds GeoPark's Colombian assets and which includes interests in 10 hydrocarbon blocks. The total consideration for this transaction amount to US$ 20.1 million in cash.

In addition, GeoPark and LGI announced their agreement to extend, in March 2013, their strategic alliance to build a portfolio of upstream oil and gas assets throughout Latin America through 2015.

Note 12 (Continued)

Subsequent events (Continued)

Relinquishment Del Mosquito

In Argentina, on 22 November 2012 the Group relinquished 85.57% of the remaining area of the Del Mosquito Block back to the government in accordance with the terms of the Del Mosquito license. The remaining area is 70 sq km. The seismic surveys included in the relinquished area were written-off as of 30 September 2012 for a total amount of US$ 1.9 million and have not affected the current productive area.

Directors' Dealings

On 23 November 2012, the Company granted options over ordinary shares of US$ 0.001 each to James Park, Chief Executive of the Company, and Gerald O'Shaughnessy, Chairman of the Company, according to the following table:

Director

Number of Options Awarded

Option Exercise Price

Vesting date

James Park

450,000

US$ 0.001

23 November 2015

Gerald O'Shaughnessy

270,000

US$ 0.001

23 November 2015

The above options were granted pursuant to the GeoPark Group Stock Awards Plan.


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