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Parex Resources Inc. is making a habit of reporting hefty jumps in Colombian oil reserves each July.

The Calgary-based company beat expectations for the second time in as many years with data showing an 80 per cent increase in proved plus probable reserves in six months to 58 million barrels of oil equivalent.

That prompted investors to drive Parex shares to a new high of $14.33 on the Toronto Stock Exchange, more than triple the price of a year ago.

"It's far and above what the market was expecting, or even hoping for," said FirstEnergy Capital Corp. analyst Darren Engels, who raised his one-year target price to $20 from $17.

"It's not one field specifically. It's based on a history of success on multiple fields."

The company is known for exploration and development in Colombia's Llanos Basin, where it has stakes in such blocks as Cabrestero, Cebucan, Tigana and Los Ocarros.

Along with the reserve additions, Parex boosted its production targets for the year to an average of 22,250 barrels a day, more than 23 per cent above the last projection, with gains coming from the Akira, Tigana and Tua fields.

Mr. Engels forecast 2015 output of 30,000 barrels a day.

The company has budgeted capital spending at $365-million this year. The spending is funded solely from cash flow, chief executive Wayne Foo said.

To deal with the region's high well decline rates following initial production, Parex sets output at specific targets rather than pumping full out, Mr. Foo said.

"That is how we can maintain the flexibility and give the market a reliable production forecast. That was one of the strategic decisions we made a few years back, because Colombia had a reputation for 'spiky' production volumes," he said.

"Now, through about two years of quarters, I think the market's getting confident that we actually can do that."

The company's plan is to remain a pure-play Colombian producer, Mr. Foo said.

It recently signed an agreement with state oil producer Ecopetrol S.A. for the Capachos Block in the Llanos Basin's northern foothills, where it will drill two wells to earn 50 per cent interest and operatorship. It aims to drill there early next year.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 4:00pm EDT.

SymbolName% changeLast
EC-N
Ecopetrol S.A. ADR
+4.5%11.84
PXT-T
Parex Resources Inc
+0.56%21.64

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