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A hybrid electric grid is answer for today's energy woes

A hybrid electric grid is answer for today's energy woes

The Hill27-07-2025
U.S. electricity demand is rising rapidly, and all the while the electric system is operating closer to its physical limits, causing more frequent system disturbances. These problems will increase in number and severity if we continue down our current path.
Most national attention has focused on the need for additional generation. However, the power produced by these generators cannot be delivered to the trillions of devices that use this energy without a robust network of transmission lines that links generators to local distribution networks throughout the country.
The current patchwork legacy system of jurisdictional responsibilities and competing state interests bottlenecks the needs of the 21st century electric economy. Transmission siting approvals are shared among many redundant decisionmakers based on laws enacted when interstate transmission was in its infancy. The result is that sub-regional decisions are made that fail to take full consideration of the advantages, economies of scale and the best new technologies that benefit the interconnection as a whole.
A high-voltage direct current (or DC) transmission system, for example, can overlay the alternating current or AC grid, providing significantly more capacity to move power large distances to users. High-voltage DC, however, can only be optimized by studying the electric network as a whole.
The average age of our transmission lines is between 40 and 50 years. Obtaining required approvals of new projects can take decades, and lines proposed to meet minimum reliability requirements are often rejected for political reasons or abandoned by their proponents as costs and delays accumulate. As the grid is stretched closer to its physical limits, lower-cost generators operating below their full capability cannot help regions in distress because of the delivery limitations of the AC system.
As recently observed, the Northeast operated near critical limits during an extended heat wave, while generation in neighboring areas couldn't be delivered to alleviate the concern. NERC, the national agency responsible for reliability of the high voltage electric system, stated in its 2024 Reliability Report that 35 GWs of additional transfer capability was needed throughout the national grid.
Electricity does not flow over transmission lines like water or natural gas through pipes. Changes in supply or demand and other system conditions instantaneously impact power flows across the entire Eastern (600GWs), Western (160GWs) and Texas (95 GWs) AC interconnections based on physical laws unique to electricity.
This speed-of-light delivery must be kept in balance between power sources and uses at all times, while maintaining a constant frequency of 60 hertz and ensuring that the amount of energy transmitted does not exceed the capacity of any individual transmission line in the interconnection. Every second, complex computer programs surveil every source, line and use to identify limitations that result from system changes so that operators can respond effectively.
Because every change affects the entire AC network, complex, protracted studies must be made for all system additions, slowing down the ability to keep up with requests to connect to the system.
The Chinese and Europeans have long recognized these same problems.
In 2005, the Chinese began to overlay their 1300 GW AC grid with an high-voltage DC system, creating a hybrid grid that currently consists of 55 HVDC lines with a combined 170 GWs of transfer capacity. Another 27 GWs is under construction. Many of China's high-voltage DC lines are more than 1,500 miles long, and a new 12 GW line is over 2,100 miles long, which is like connecting California to the MidAtlantic.
The Europeans formed a consortium, ' Friends Of The Supergrid,' in 2006 to consider a high-voltage DC supergrid over their 540 GW AC grid. Europe also established ENTSOe, a group of all transmission owners, to study their collective transmission needs and coordinate a unified plan with the European Union.
But the U.S. has not taken full advantage of high-voltage DC capability and other important new technologies. In 2016, Alexander Macdonald published a study based on 10 years of NOAA supercomputer analysis of system conditions and weather patterns, which concluded that every dollar of high-voltage DC investment would produce $3 of benefits while also substantially reducing carbon emissions.
Opportunities also exist to replace existing conductors with composite core conductors, which would substantially increase the carrying capacity of existing lines. And a new technology known as grid-forming inverters can detect system anomalies in milliseconds, providing immediate benefits to real time grid reliability. This capability is especially important as more 'rotating iron' is reaching the end of its useful life.
If these matters are not addressed, America will not have the energy to meet the needs of a growing economy. We need a program to upgrade the national electric grid, which should include three critical elements.
First, like the establishment of the transcontinental railroad and interstate highway system, America needs to build a national, preferably buried, network of high-voltage DC lines that overlays the existing AC network. In addition to the physical security and environmental advantages, buried high-voltage DC lines can be placed in the same Right of Way as existing AC transmission lines.
Second, the transfer capacity of the existing AC network should be improved by hot line conversion, without taking any line outages, to composite core conductors on crucial circuits.
Third, the advantages of grid-forming inverters to real-time grid reliability are intuitively obvious; installation of these devices should be a priority.
With rapidly rising demand, the future is coming at us quickly, and we are not ready for it. These three priorities, effectively implemented, would assist in ensuring that there is sufficient reliable energy to meet the growth needs of the American economy.
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With focus, agility, and the right decisions, I'm confident we can write GeoPark's next growth chapter.' 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Shareholders of record as of June 10, 2025, will continue to be entitled to vote at the reconvened meeting ___________________ 1 For reconciliations, see 'Reconciliation of Adjusted EBITDA to Profit Before Income Tax' table below. 2 The agreement includes an additional contingent consideration of $750,000, payable upon the Perico Block achieving cumulative gross production of two million barrels as from January 1, 2025. The total firm consideration is subject to working capital and other customary adjustments. The divested assets had 1.6 million barrels of net 2P reserves as of year-end 2024 (2% of GeoPark's 2P reserves) and delivered an average gross production of ~2,000 boepd during July (~1,000 boepd net), or 4% of GeoPark's production. 3 Reported in the 2Q2025 Operational Update. 4 ROACE is defined as last twelve-month operating profit divided by average capital employed. Capital employed is calculated as total assets minus current liabilities and adjusted for excess cash. Excess cash corresponds to the portion of cash and cash equivalents that exceeds the amount required to cover current liabilities with current assets. The non-recurring impairment charge related to the divestment of assets in Ecuador was excluded from operating profit for the purpose of this calculation. Expand Key performance indicators: Key Indicators 2Q2025 1Q2025 2Q2024 1H2025 1H2024 Oil production a (bopd) 27,151 28,972 35,504 28,056 34,880 Gas production (mcfpd) 1,371 624 623 999 3,964 Average net production (boepd) 27,380 29,076 35,608 28,223 35,540 Brent oil price ($ per bbl) 66.8 74.9 85.0 70.8 83.4 Combined realized price b ($ per boe) 57.4 62.8 72.0 60.2 68.6 ⁻ Oil c ($ per bbl) 57.5 65.3 74.9 61.5 72.3 ⁻ Gas ($ per mcf) 5.8 — 8.9 5.8 5.7 Sale of crude oil ($ million) 114.2 137.1 187.2 251.4 349.4 Sale of purchased crude oil ($ million) — 0.4 2.4 0.4 4.2 Sale of gas ($ million) 0.7 — 0.6 0.7 4.1 Commodity risk management contracts ($ million) 4.9 (0.2 ) — 4.7 (0.1 ) Revenue ($ million) 119.8 137.3 190.2 257.1 357.6 Production & operating costs d ($ million) (32.6 ) (35.4 ) (41.4 ) (68.0 ) (80.0 ) G&G, G&A e ($ million) (12.1 ) (11.5 ) (16.0 ) (23.6 ) (28.7 ) Selling expenses ($ million) (3.0 ) (2.2 ) (4.4 ) (5.1 ) (8.5 ) Operating profit ($ million) 7.1 50.4 90.3 57.5 174.3 Adjusted EBITDA ($ million) 71.5 87.9 127.9 159.5 239.4 Adjusted EBITDA ($ per boe) 34.3 40.2 48.4 37.3 45.9 Net (loss) profit ($ million) (10.3 ) 13.1 25.7 2.7 55.9 Capital expenditures ($ million) 23.9 22.6 49.2 46.6 98.0 Cash and cash equivalents ($ million) 266.0 308.0 66.0 266.0 66.0 Short-term financial debt ($ million) 30.8 19.0 12.5 30.8 12.5 Long-term financial debt ($ million) 594.8 638.4 490.2 594.8 490.2 Net debt ($ million) 359.5 349.4 436.7 359.5 436.7 Dividends paid ($ per share) 0.147 0.147 0.147 0.294 0.283 Shares repurchased (million shares) — — 4.369 — 4.369 Basic shares – at period end (million shares) 51,568 51,318 51,163 51,568 51,163 Weighted average basic shares (million shares) 51,529 51,281 52,246 51,405 53,787 Expand a) Includes royalties and other economic rights paid in kind in Colombia for approximately 4,236 bopd, 4,869 bopd, and 6,956 bopd in 2Q2025, 1Q2025 and 2Q2024, respectively. No royalties were paid in kind in other countries. Production in Ecuador is reported before the Government's production share. b) After the effect of earn-out to ex-owners of certain blocks. c) Before the effect of earn-out to ex-owners of certain blocks. d) Production and operating costs include operating costs, royalties and economic rights paid in cash, share-based payments and purchased crude oil. e) G&A and G&G expenses include non-cash, share-based payments for $0.9 million, $1.4 million, and $1.3 million in 2Q2025, 1Q2025 and 2Q2024, respectively. These expenses are excluded from the Adjusted EBITDA calculation. Expand All figures are expressed in US Dollars and growth comparisons refer to the same period of the prior year, except when specified. Definitions and terms used herein are provided in the Glossary at the end of this document. This press release and its supplementary information do not contain all the Company's financial information and the Company's consolidated financial statements and corresponding notes for the period are available on the Company's website. 1H2025 (In millions of $) Colombia Ecuador Brazil Other (a) Total Adjusted EBITDA 161.3 5.3 (2.4 ) (4.8 ) 159.5 Depreciation (56.6 ) (4.1 ) (0.2 ) — (61.0 ) Write-offs (5.9 ) — — — (5.9 ) Impairment — (31.0 ) — — (31.0 ) Share based payment (0.4 ) (0.0 ) (0.0 ) (2.1 ) (2.6 ) Lease Accounting - IFRS 16 2.5 0.0 0.5 — 2.9 Others 0.4 (0.3 ) (0.6 ) (4.0 ) (4.4 ) OPERATING PROFIT (LOSS) 101.3 (30.1 ) (2.8 ) (10.9 ) 57.5 Financial costs, net (31.5 ) Foreign exchange charges, net (3.3 ) PROFIT BEFORE INCOME TAX 22.8 1H2024 (In millions of $) Colombia Ecuador Brazil Other (a) Total Adjusted EBITDA 238.9 6.5 (0.8 ) (5.2 ) 239.4 Depreciation (59.1 ) (3.0 ) (0.9 ) (0.0 ) (63.0 ) Write-offs (3.4 ) — — — (3.4 ) Share based payment (0.6 ) (0.0 ) (0.0 ) (2.6 ) (3.2 ) Lease Accounting - IFRS 16 3.2 0.0 0.5 — 3.6 Others 0.9 0.1 0.0 (0.3 ) 0.8 OPERATING PROFIT (LOSS) 179.9 3.6 (1.2 ) (8.0 ) 174.3 Financial costs, net (17.8 ) Foreign exchange charges, net 6.1 PROFIT BEFORE INCOME TAX 162.6 Expand (a) Includes Chile (in 1H2024), Argentina and Corporate business. Expand CONFERENCE CALL INFORMATION GeoPark management will host a conference call on Wednesday, August 6, 2025, at 10:00 am (Eastern Daylight Time) to discuss the 2Q2025 financial results. To listen to the call, participants can access the webcast located in the Invest with Us section of the Company's website at or by clicking below: Interested parties may participate in the conference call by dialing the numbers provided below: United States Participants: +1 404-975-4839 Global Dial-In Numbers: Passcode: 553033 Please allow extra time prior to the call to visit the website and download any streaming media software that might be required to listen to the webcast. An archive of the webcast replay will be made available in the Invest with Us section of the Company's website at after the conclusion of the live call. NOTICE Additional information about GeoPark can be found in the Invest with Us section of the website at Rounding amounts and percentages: Certain amounts and percentages included in this press release and its supplementary information have been rounded for ease of presentation. Percentage figures included in this press release and its supplementary information have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. In addition, certain other amounts that appear in this press release and its supplementary information may not sum due to rounding. This press release and its supplementary information contain certain oil and gas metrics, including information per share, operating netback, reserve life index and others, which do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies. Such metrics have been included herein to provide readers with additional measures to evaluate the Company's performance; however, such measures are not reliable indicators of the future performance of the Company and future performance may not compare to the performance in previous periods. CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION This press release and its supplementary information contain statements that constitute forward-looking statements. Many of the forward-looking statements contained in this press release can be identified by the use of forward-looking words such as ''anticipate,'' ''believe,'' ''could,'' ''expect,'' ''should,'' ''plan,'' ''intend,'' ''will,'' ''estimate'' and ''potential,'' among others. Forward-looking statements that appear in a number of places in this press release include, but are not limited to, statements regarding the intent, belief or current expectations, regarding various matters, including liability management initiatives, hedging of expected production, full year net leverage figures, strategic initiatives, growth and capital allocation, and the divestment transaction in Ecuador. Forward-looking statements are based on management's beliefs and assumptions, and on information currently available to the management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors. Forward-looking statements speak only as of the date they are made, and the Company does not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances, or to reflect the occurrence of unanticipated events. For a discussion of the risks facing the Company which could affect whether these forward-looking statements are realized, see filings with the U.S. Securities and Exchange Commission (SEC). Oil and gas production figures included in this press release and its supplementary information are stated before the effect of royalties paid in kind, consumption and losses. Annual production per day is obtained by dividing total production by 365 days. Non-GAAP Measures: The Company believes Adjusted EBITDA, free cash flow and operating netback per boe, which are each non-GAAP measures, are useful because they allow the Company to more effectively evaluate its operating performance and compare the results of its operations from period to period without regard to its financing methods or capital structure. The Company's calculation of Adjusted EBITDA, free cash flow, and operating netback per boe may not be comparable to other similarly titled measures of other companies. Adjusted EBITDA: The Company defines Adjusted EBITDA as profit for the period before net finance costs, income tax, depreciation, amortization and certain non-cash items such as impairments and write-offs of unsuccessful exploration and evaluation assets, accrual of stock options and stock awards, unrealized results on commodity risk management contracts and other non-recurring events. Adjusted EBITDA is not a measure of profit or cash flow as determined by IFRS. The Company excludes the items listed above from profit for the period in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, profit for the period or cash flow from operating activities as determined in accordance with IFRS or as an indicator of our operating performance or liquidity. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure and significant and/or recurring write-offs, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDA. For a reconciliation of Adjusted EBITDA to the IFRS financial measure of profit, see the accompanying financial tables and the supplementary information. Operating Netback per boe: Operating netback per boe should not be considered as an alternative to, or more meaningful than, profit for the period or cash flow from operating activities as determined in accordance with IFRS or as an indicator of the Company's operating performance or liquidity. Certain items excluded from operating netback per boe are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure and significant and/or recurring write-offs, as well as the historic costs of depreciable assets, none of which are components of operating netback per boe. The Company's calculation of operating netback per boe may not be comparable to other similarly titled measures of other companies.

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