When everyone talks about YPF, Vista either Pampas Every time it is mentioned to Muerta Vaca, A new company wants to steal attention: Geopark. Is it a good investment idea?
Geopark He was born in 2002 in Colombia and in two decades it expanded through Latin America. Its forte was always exploration and production of oil and gas, with relevant operations in Colombia, Brazil and Ecuador. Today more than 90% of its income comes from Colombia, but the company is looking to grow in other markets.
After some years of productive stagnation, the company decided to hire Felipe Bayón, That was CEO of Ecopetrol, to grow again.
The company has not managed to grow years, and this is reflected in the price of its shares, which are worth the same as 5 years ago.
This week there was an announcement that generated expectations. Geopark announced the purchase of 100% of the participation of Pluspetrol in two blocks in Vaca Muerta: Loma Jarillosa Este and Silva West.
They are strategic areas: more than 12,300 acres, with a potential of 60 million recoverable barrels and concession for 30 years. The operation was closed for USD 115m.
That is Geopark was left with the operational control of two Top blocksin one of the best unconventional formations in the world. Today they produce about 1,700/2,000 equivalent barrels/day, but the plan is to take that production to 20,000 by 2028.
And is your valuation attractive? Let’s see:
To compare valuations in oil companies we use the EV/EBITDA (Enterprise Value on Ebitda), which basically says how many times the market pays the company’s operating box generation. It is very useful because it isolates the impact of debt and allows comparing companies with different structures.
Let’s look at the ratio of comparable companies:
Geopark quote only 2.2 times EBITDA, A multiple that seems very low if we compare it with companies in the sector. Clearly Geopark’s valuation is attractive and that gives him margin so that his price rises.
The key is now to execute the development plan, drill successfully and climb production without leaving the budget. If you succeed, the market should begin to recognize the hidden value.
Of course, not everything is pink: the company accumulates years of stagnation. But its new reality looks attractive: a lot of cash in cash, manageable debt, newly incorporated quality assets and a valuation multiple that discounts very little optimism.
For an investor looking for valu plants in Latin American energy, Geopark It looks like an interesting alternative, with a good risk/return relationship.
If you manage to execute the plan and expand production in Muerta Vaca, The market should recognize it with a multiple closer to that of its competitors, so it has a route.
Analyzing the graph, for now the trend is far from being bullish. But this week he began to wake up (+12%)
Risks? The usual in the sector: oil prices, execution, local policy. Potential? That the company begins to grow seriously and that the market is excited and validated a higher valuation multiple.
If you are interested in continuing to deepen, see analysis, videos and exclusive content, I leave you here all together so that you choose what serves you most: Investor Club.
Note: The material contained in this note should not be interpreted under any point of view as an investment council or recommendation for the purchase or sale of a particular asset. This content has only educational ends and represents only an opinion of the author. In all cases it is advisable to advise with a professional before investing.
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Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
