Note 6

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 Executive Committee. This committee is integrated by the CEO, COO, CFO and managers in charge of the Geoscience, Operations, Corporate Governance, Finance and People 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 Executive Committee assesses the performance of the operating segments based on a measure of Adjusted EBITDA. Adjusted EBITDA is defined as profit for the period before net finance cost, income tax, depreciation, amortization, certain non-cash items such as impairments and write-offs of unsuccessful efforts, accrual of share-based payment, unrealized result on commodity risk management contracts and other non recurring events. Operating Netback is equivalent to Adjusted EBITDA before cash expenses included in Administrative, Geological and Geophysical and Other operating expenses. Other information provided, except as noted below, to the Executive Committee is measured in a manner consistent with that in the financial statements.

Segment areas (geographical segments):

Amounts in US$ '000	Chile		Brazil		Colombia		Peru		Argentina		Corporate		Total
2017
Revenue		32,738		34,238		263,076		-		70		-		330,122
Sale of crude oil		15,873		910		262,309		-		70		-		279,162
Sale of gas		16,865		33,328		767		-		-		-		50,960
Realized loss on commodity risk management contracts		-		-		(2,148)		-		-		-		(2,148)
Production and operating costs		(20,999)		(10,737)		(66,913)		-		(338)		-		(98,987)
Royalties		(1,314)		(3,134)		(24,236)		-		(13)		-		(28,697)
Transportation costs		(1,211)		-		(1,678)		-		(80)		-		(2,969)
Share-based payment		(170)		(39)		(248)		-		-		-		(457)
Other costs		(18,304)		(7,564)		(40,751)		-		(245)		-		(66,864)
Operating (loss) profit		(19,675)		4,434		116,290		(3,850)		(3,430)		(14,773)		78,996
Operating netback		11,222		23,540		194,013		-		(467)		-		228,308
Adjusted EBITDA		4,070		20,166		168,303		(3,505)		(2,183)		(11,075)		175,776

Depreciation		(23,730)		(10,809)		(40,010)		(139)		(159)		(38)		(74,885)
Write-off		(546)		(2,978)		(1,625)		-		(685)		-		(5,834)
Total assets		301,931		91,604		288,429		22,099		30,924		51,176		786,163

Employees (average)		102		12		164		13		88		-		379
Employees at year end		102		12		180		19		92		-		405

Amounts in US$ '000	Chile		Brazil		Colombia		Peru		Argentina		Corporate		Total
2016
Revenue		36,723		29,719		126,228		-		-		-		192,670
Sale of crude oil		18,774		688		125,731		-		-		-		145,193
Sale of gas		17,949		29,031		497		-		-		-		47,477
Realized gain on commodity risk management contracts		-		-		514		-		-		-		514
Production and operating costs		(22,169)		(8,459)		(36,607)		-		-		-		(67,235)
Royalties		(1,495)		(2,721)		(7,281)		-		-		-		(11,497)
Transportation costs		(1,170)		-		(1,111)		-		-		-		(2,281)
Share-based payment		(138)		(71)		(413)		-		-		-		(622)
Other costs		(19,366)		(5,667)		(27,802)		-		-		-		(52,835)
Operating (loss) profit		(44,969)		(645)		31,463		(3,147)		370		(11,685)		(28,613)
Operating netback		13,696		21,356		87,523		41		(378)		(91)		122,147
Adjusted EBITDA		5,159		17,487		66,921		(2,607)		1,848		(10,487)		78,321

Depreciation		(31,355)		(12,974)		(31,148)		(130)		(150)		(17)		(75,774)
Reversal of impairment losses		-		-		5,664		-		-		-		5,664
Write-off		(19,389)		(4,583)		(7,394)		-		-		-		(31,366)
Total assets		317,969		99,904		182,784		5,020		6,071		28,792		640,540

Employees (average)		102		10		138		11		80		-		341
Employees at year end		102		10		146		10		77		-		345

Amounts in US$ '000	Chile		Brazil		Colombia		Peru		Argentina		Corporate		Total
2015
Revenue		44,808		32,388		131,897		-		597		-		209,690
Sale of crude oil		29,180		955		131,897		-		597		-		162,629
Sale of gas		15,628		31,433		-		-		-		-		47,061
Production costs		(28,704)		(8,056)		(48,534)		-		(1,448)		-		(86,742)
Royalties		(1,973)		(2,998)		(8,150)		-		(34)		-		(13,155)
Transportation costs		(2,441)		-		(2,068)		-		(2)		-		(4,511)
Share-based payment		(132)		-		(234)		-		(197)		-		(563)
Other costs		(24,158)		(5,058)		(38,082)		-		(1,215)		-		(68,513)
Operating (loss) profit		(180,264)		6,639		(37,227)		(6,719)		(2,350)		(12,570)		(232,491)
Operating netback		15,254		24,393		80,355		44		(1,732)		(287)		118,027
Adjusted EBITDA		(183)		20,460		66,736		(6,520)		(684)		(6,022)		73,787

Depreciation		(39,227)		(13,568)		(52,434)		(129)		(199)		-		(105,557)
Impairment loss		(104,515)		-		(45,059)		-		-		-		(149,574)
Write-off		(25,751)		-		(4,333)		-		-		-		(30,084)
Total assets		381,143		114,974		153,071		4,287		3,181		47,143		703,799

Employees (average)		153		11		130		16		93		-		403
Employees at year end		106		12		133		11		90		-		352

Approximately 76% of capital expenditure was incurred by Colombia (67% in 2016 and 66% in 2015), 10% was incurred by Chile (20% in 2016 and 22% in 2015), 8% was incurred by Argentina (4% in 2016 and nil in 2015), 3% was incurred by Brazil (9% in 2016 and 12% in 2015) and 3% was incurred by Peru (nil in 2016 and 2015).

A reconciliation of total Operating netback to total profit (loss) before income tax is provided as follows:

Amounts in US$ '000	2017		2016		2015
Operating netback		228,308		122,147		118,027
Administrative expenses		(38,937)		(32,323)		(30,590)
Geological and geophysical expenses		(13,595)		(11,503)		(13,650)
Adjusted EBITDA for reportable segments		175,776		78,321		73,787
Unrealized loss on commodity risk management contracts		(13,300)		(3,068)		-
Depreciation ^(a)		(74,885)		(75,774)		(105,557)
Share-based payment		(4,075)		(3,367)		(8,223)
Impairment and write-off of unsuccessful exploration efforts		(5,834)		(25,702)		(179,658)
Others ^(b)		1,314		977		(12,840)
Operating profit (loss)		78,996		(28,613)		(232,491)
Financial expenses		(53,511)		(36,229)		(36,924)
Financial income		2,016		2,128		1,269
Foreign exchange (loss) profit		(2,193)		13,872		(33,474)
Profit (Loss) before tax		25,308		(48,842)		(301,620)

^(a)

Net of capitalised costs for oil stock included in Inventories.

^(b)

In 2015 includes termination costs (see Note 36). Also includes internally capitalised costs.