GeoPark, an energy company operating in Latin America, has announced it will not increase its offer for Frontera Energy’s Colombian exploration and production assets.
The company’s Board of Directors ruled that raising the bid would not align with its capital allocation principles or long-term value objectives, especially after evaluating the revised terms following a competing proposal from Parex Resources.
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GeoPark had previously agreed in January to acquire all of Frontera’s Colombian oil and gas assets for $375m (1.4tn pesos). Last month, Parex Resources revealed plans to acquire the same assets for $500m.
Frontera’s board informed GeoPark that Parex Resources had submitted a “superior proposal” under the existing arrangement agreement, prompting a contractual matching period.
During this period, GeoPark reassessed the economics of the acquisition and decided that increasing the offer would not meet its risk-adjusted return criteria. As a result, GeoPark will receive the return of $75m held in escrow, along with interest, and a $25m break-up fee as stipulated by the agreement terms.
GeoPark indicated it remains focused on optimising operations at its Llanos 34 block and across its Colombian portfolio. A recent certification reported a 22% increase in 2P original oil in place at Llanos 34, which expands the resource base for the company.
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By GlobalDataProduction in Colombia is expected to continue generating free cash flow and support further initiatives, said the company.
In Argentina, GeoPark is advancing its unconventional platform in the Neuquén Basin following the integration of Loma Jarillosa Este and Puesto Silva Oeste.
The company plans to accelerate drilling activity in Vaca Muerta. It predicts that these assets could reach approximately 20,000 barrels of oil equivalent per day (boepd) of gross production in 2028 and contribute $300–350m of gross adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) at a Brent oil price of $70 per barrel.
By opting not to raise its offer for Frontera’s Colombian assets, GeoPark retains financial flexibility for alternative investments in Venezuela, Argentina, Colombia and other regional opportunities.
The company stated that it will continue to evaluate potential projects that meet its strategic criteria and support long-term shareholder returns.
GeoPark CEO Felipe Bayon said: “GeoPark’s Board of Directors takes seriously its responsibility to be good stewards of shareholder value, and our decision not to increase our offer for Frontera’s assets reflects our commitment to a highly disciplined approach to capital allocation.
“GeoPark evaluates every investment opportunity against strict financial, strategic and risk-adjusted criteria. At the revised terms, increasing our offer would not represent the best use of capital relative to the opportunities within our existing portfolio and pipeline.
“We remain fully committed to executing our two-fold strategy: maximising our Colombian platform and scaling Vaca Muerta as a core growth engine. With a strengthened balance sheet, aligned long-term capital and preserved flexibility, GeoPark is well positioned to pursue disciplined growth and deliver sustainable long-term value.”
Last year, GeoPark announced the divestment of non-core assets and the implementation of cost efficiency initiatives. As part of this move, the company sold its non-core Llanos 32 Block in Colombia and the Manati gas field in Brazil for a total price of $20m.
