GeoPark is a privately owned company headquartered in Buenos Aires and is engaged in the exploration, exploitation, development and production of oil and gas in Argentina and Chile. The Company was founded in 2002 by Gerald O’Shaughnessy and James F. Park, who own about 67 percent of GeoPark. The remaining 33 percent is owned by friends and business acquaintances of the founders. O’Shaughnessy and Park have combined oil and gas experience of over 55 years in countries such as Russia, Guatemala, Yemen, China and the United States.

The total project cost is currently estimated at $80 million. IFC’s investment is up to $30 million to further develop GeoPark’s properties in Argentina and Chile.

30.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	20.0
Equity	10.0

* These investment figures are indicative

The company’s fields are located in the provinces of Santa Cruz and Mendoza (Argentina) and in the Magallanes region (Chile). GeoPark is managed from its main office in Buenos Aires, with field offices in Rio Gallegos (Argentina) and Punta Arenas (Chile).

- Fit with World bank Group Strategy The World Bank Group’s (“WBG”) current program in Argentina focuses on sustained growth, coupled with enhanced equity, social inclusion and improved governance. IFC has shifted its strategic focus from short-term lines where there is good liquidity at reasonable prices, to providing long-term financing both for its own account and through its syndication program. IFC’s priorities for its direct investments will be to provide long-term financing and structured finance products to companies and projects in strategic sectors with a focus on groups expanding on a South-South basis and export-oriented or export facilitating projects. Strategic focus sectors are oil, gas, mining, agribusiness, forestry and the financial sector. In Chile, the WBG’s priorities are sustaining economic growth and social progress, heightening inclusion, especially of rural populations and vulnerable groups, and modernizing the state. IFC is focusing on high impact areas, sectors where the Government has requested IFC support, and areas where local financial markets do not satisfy long-term financing needs such as private provision of infrastructure. As the proposed Project seeks to support the expansion of a regional company in an area which is predominantly agrarian, it is consistent with this strategy. - Project Development Impact The Project will support the continuing development and growth of a small South American company and will promote South-South investments. Through the development of its existing blocks and acquisition of further acreage in adjacent blocks, the company will help meet domestic oil and gas requirements, and help Argentina and Chile maximize the use of their respective natural resources by developing much needed oil and gas reserves and increasing the recovery factor of marginal fields. Specifically, the Project is anticipated to have the following developmental impacts: Direct and indirect employment opportunities for local communities: It is expected that the Project will provide full-time employment to about 50 people during operations in the provinces of Santa Cruz and Mendoza in Argentina, and in the Magallanes region in Chile. During drilling and construction operations, a significantly larger number of people are expected to be hired through local and regional contractors. Supporting local communities and suppliers: The company is highly committed to the local communities in which it operates, as evidenced by its successful employment and procurement efforts in the region. Furthermore, GeoPark is committed to establishing a more comprehensive local community development plan in the future. Benefits to the national and local economies: The estimated net present value of future revenues to the Argentine and Chilean governments are expected to be about $25 million and $30 million, respectively, over the life of the proposed IFC investment. Indicators that will be used to monitor the development impact of the project over its life include: - number of employment opportunities created; - purchases from local and national suppliers; - payments from the Project to governments; - investments in community development programs. - Governance Context As mentioned above, the project is expected to generate benefits in a variety of forms. Besides employment and local supplier linkages, it is expected that a large share of net project benefits will accrue to the Argentine and Chilean governments in the form of royalties and taxes. Aggregate data on payments made in each country will be available from the respective government accounting offices. The Company has also agreed to make its annual payments available to the local communities in which GeoPark operates, and on its corporate website. Based on the prevailing governance situations in Argentina and Chile, the project’s anticipated development benefits and IFC’s role and contribution, IFC believes that this is a project in which it should invest. - IFC Role and Expected Contributions IFC’s participation will support a small South American oil and gas company in its early stage of development. IFC will help strengthen and refine the company’s corporate governance systems and identify potential community linkages programs. Second, IFC will strengthen the company’s capital base and provide debt financing with a sufficient tenor to help GeoPark reach positive net cash flow. Third, IFC will mobilize parallel bank lending in its continued effort to encourage commercial institutions to extend longer maturities to local companies. Finally, IFC will play an important role in helping the company establish an Environmental, Health, Safety and Social Management System (“ESMS”), in line with WBG and international best practices. The ESMS will govern how GeoPark will operate its existing fields, in addition to properties the company may acquire in the future.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of appraising technical, environmental and social information, in addition to appraising the operations of the company. The following corporate systems and potential environment, health, safety and social impacts of the projects were analyzed:

- Establishing an integrated Environmental, Health, Safety and Social Management System;
- The company’s capacity to manage multiple projects and implement the integrated Management System;
- Impacts from construction, including transportation of materials;
- Air emissions;
- Greenhouse gas emissions;
- Water supply and disposal;
- Liquid and solid waste disposal;
- Noise from drilling operations;
- Contamination from past or present operations;
- Public and worker safety;
- Emergency response plans including oil spill response;
- Land acquisition, resettlement and compensation;
- Community development;
- Public consultation and disclosure;
- Cultural heritage; and
- Labor issues.
Location of environmental documents in locally affected community
Environmental documentation will be made available at the following locations: Rio Gallegos, Argentina Sr. John Gleadell Pasaje Enrique Prado 74 9400 Rio Gallegos, Provincia de Santa Cruz Punta Arenas, Chile Sr. Segundo Alvarez Bernardo O’Higgins 758 Punta Arenas Region de Magallenes