09:32:13 EDT Fri 29 Mar 2024
Enter Symbol
or Name
USA
CA



Parex Resources Inc
Symbol PXT
Shares Issued 108,367,982
Close 2023-03-08 C$ 23.24
Market Cap C$ 2,518,471,902
Recent Sedar Documents

Parex earns $611.36-million (U.S.) in 2022

2023-03-08 18:52 ET - News Release

Mr. Imad Mohsen reports

PAREX RESOURCES ANNOUNCES RECORD 2022 FULL-YEAR RESULTS

Parex Resources Inc. has released its financial and operating results for the three- and 12-month periods ended Dec. 31, 2022. All amounts herein are in U.S. dollars unless otherwise stated.

"Reflecting on my second year at Parex, I am extremely proud of our team's ability to deliver another year of record results. In 2022, we hit new corporate milestones, generating record cash flow, repurchasing 10 per cent of the public float for the fourth consecutive year while materially increasing the regular dividend, and growing production per share by 23 per cent year over year," commented Imad Mohsen, president and chief executive officer.

"We have positioned the company to deliver a step change in capital efficiency and have outsized exploration potential from a world-class portfolio. Through optimization efforts, implementation of proven technology and calculated exposure to transformational opportunities, we have built the strategic foundation for sustainable growth that should drive shareholder value in 2023 and beyond."

2022 key highlights:

  • Realized record net income of $611-million or $5.38 per share basic;
  • Generated record annual funds flow provided by operations (FFO) of $725-million, up 26 per cent from 2021;
  • Achieved full-year average production of 52,049 barrels of oil equivalent per day, up 11 per cent from 2021;
  • Production per share increased by 23 per cent compared with 2021;
  • Completed the 2022 normal course issuer bid (NCIB), marking the fourth consecutive year where Parex has purchased the maximum allowable shares per annum under its NCIB programs;
  • Cumulatively, returned over $1.3-billion (Canadian) to shareholders over the past five years through dividends and share repurchases, representing over 50 per cent of the company's current market capitalization;
  • Strategically deployed working capital to complete a voluntary, internal corporate entity restructuring that increases 2023 FFO and free funds flow guidance by $65-million (midpoint), as well as provides the company with an increased outlook through 2027;
  • Increased reserves per share (on a boe basis) across proven developed producing reserves (PDP), proven reserves (1P) and proven plus probable reserves (2P) for the 12th consecutive year;
  • Achieved 112-per-cent PDP, 128-per-cent 1P and 110-per-cent 2P reserves replacement ratios.

Key highlights subsequent to the quarter:

  • Started gas reinjection at the VIM-1 block (50-per-cent working interest), enabling the approximate doubling of liquids production to roughly 4,000 barrels per day in March, 2023;
  • Spudded the Chirimoya well on the VIM-43 block (100-per-cent WI) in the Magdalena basin, which is currently drilled to a depth of approximately 12,000 feet or roughly 66-per-cent-completed drilling; this well represents the first of three wells in Parex's 2023 big E exploration program;
  • Spudded the first well of a material, multiyear drilling campaign at the Arauca block (50-per-cent WI) in the Northern Llanos;
  • Parex's board of directors declared a first quarter 2023 regular dividend of 37.5 Canadian cents per share or $1.50 (Canadian) per share annualized, representing a 50-per-cent increase from the company's fourth quarter 2022 regular dividend;
  • Repurchased approximately 1.6 million shares year-to-date 2023 under the current NCIB.

Full-year 2022 results:

  • Annual average oil and natural gas production was 52,049 boe/d, up 11 per cent over 2021;
  • Production per share increased by 23 per cent compared with 2021, supported by development drilling and the reduction of 10 per cent of outstanding shares through the completed 2022 NCIB;
  • Realized record net income of $611-million or $5.38 per share basic;
  • Generated record annual FFO of $725-million, up 26 per cent from 2021;
  • FFO per share of $6.38, up 38 per cent from 2021, including the cost of the voluntary corporate restructuring;
  • Produced an operating netback of $59.06 per boe and an FFO netback of $38.50 per boe from an average Brent price of $99.04 per bbl;
  • Incurred $512-million of capital expenditures, participating in the drilling of 66 gross (48.9 net) wells;
  • Paid $75-million or 89.0 Canadian cents per share in regular dividends;
  • Delivered on record of shareholder returns by completing the 2022 NCIB, repurchasing the maximum allowable shares (11.8 million shares in 2022) for the fourth consecutive year;
  • Strategically deployed $100-million of working capital to complete a voluntary, internal corporate entity restructuring that increases 2023 FFO and free funds flow guidance by $65-million (midpoint), as well as provides the company with an increased outlook through 2027.

Fourth quarter 2022 results:

  • Quarterly average oil and natural gas production was 54,257 boe/d, an increase of 9 per cent over fourth quarter 2021 and 6 per cent over third quarter 2022;
  • Net income of $250-million or $2.29 per share basic;
  • FFO of $85-million, down by 49 per cent from Q4 2021 as a result of the corporate restructuring, which has a cost, in the form of an increased current tax expense for Q4 2022, of $100-million, and FFO per share of 78 cents down by 44 per cent from Q4 2021; adjusting for the effect of the voluntary restructuring, adjusted FFO was $185-million and 10 per cent higher than Q4 2021; adjusted FFO per share of $1.70 was 22 per cent higher than Q4 2021;
  • Produced an operating netback of $51.29 per boe and an adjusted FFO netback of $37 per boe from an average Brent price of $88.63 per bbl;
  • Incurred $148-million of capital expenditures, participating in the drilling of 20 gross (14.35 net) wells;
  • Paid a 25.0-Canadian-cent-per-share regular dividend;
  • Working capital surplus was $85-million, which decreased by $145-million from Q3 2022 mainly related to the corporate restructuring, which had a cost, in the form of an increased current tax expense for Q4 2022, of approximately $100-million.

Production update

Northern Llanos -- Arauca and Capachos blocks (50-per-cent WI) update:

  • In the Northern Llanos, on Jan. 21, 2023, the company pro-actively shut in its Capachos block (50-per-cent WI) and halted drilling operations at the Arauca block (50-per-cent WI), due to heightened security concerns related to peace talks at the federal government level in Colombia.
  • The company is supportive of the peace process and is pro-actively working to resume operations by engaging stakeholders at all levels. Recent actions taken by Parex to address the current situation include:
    • Participating in continuing meetings and discussions with federal and regional authorities;
    • Continuing engagement with local communities and leadership;
    • Maintaining business and operational readiness to resume activities once it is safe to do so.
  • The company's top priority remains the safety of its employees and contractors. If a timely resolution does not ensue, mitigation plans will be implemented, and updated corporate guidance would be provided in due course.

2023 corporate guidance update:

  • For the period of Jan. 1, 2023, to Feb. 28, 2023, estimated average production was approximately 50,700 boe/d; production was affected by the current suspension of operations in the Northern Llanos, specifically Capachos (approximately 6,500 boe/d net impact), and less-than-expected production from LLA-34 (55-per-cent WI), as well as delays in the start of rig activity at VIM-1 (50-per-cent WI) and LLA-26 (100-per-cent WI).
  • In March, 2023, excluding the Northern Llanos (Arauca and Capachos blocks) area, the company expects to bring 3,000 to 5,000 boe/d of incremental net production on stream from LLA-26 (100-per-cent WI), VIM-1 (50-per-cent WI) and LLA-34 (55-per-cent WI).
  • Parex's average production guidance of 57,000 to 63,000 boe/d for fiscal 2023 had been widened relative to previous years to better account for above ground factors that can at times impact Colombian operations.
  • Parex's 2023 activity plan continues to progress strongly, and thus, the company expects to be within its 2023 annual average production guidance range in second quarter 2023 and, for the fiscal 2023, assuming a timely resolution at Northern Llanos.

Big E program -- Magdalena -- VIM-43 (100-per-cent WI) -- Chirimoya well update

"The Chirimoya prospect is in an area where there are stacked reservoirs that we believe highly increase the chance of success and is a transformational prospect that could be one of the most potentially impactful in our big E exploration portfolio," commented Ryan Fowler, senior vice-president of exploration.

Chirimoya was spudded in January, 2023, and is drilling to plan. The well has been drilled to a depth of roughly 12,000 feet, on track to its target depth of approximately 18,000 feet. Initial results are expected in Q2 2023.

Return-of-capital update

50-per-cent increase to the first quarter 2023 dividend

As previously announced, Parex's board of directors has approved a Q1 2023 regular dividend of 37.5 Canadian cents per share to be paid on March 31, 2023, to shareholders of record on March 15, 2023, representing a 50-per-cent increase from the company's Q4 2022 regular dividend of 25 Canadian cents per share. The company first initiated a regular dividend at 12.5 Canadian cents per share quarterly in 2021.

This quarterly dividend payment to shareholders is designated as an eligible dividend for purposes of the Income Tax Act (Canada).

Active share buyback program under current normal course issuer bid

As at March 7, 2023, Parex has repurchased approximately 1.6 million shares under its NCIB at an average price of $22.35 (Canadian) per share for total consideration of roughly $36-million (Canadian). Over and above the increased regular dividend, the company intends on continuing to utilize its current NCIB to return free funds flow back to shareholders.

Sustainability update

Parex continues to have an uncompromising commitment to environmental, social and governance. Throughout 2022, it has continued to progress its sustainability strategy and drive ESG leadership, and is being recognized as a top-tier ESG performer. Recent highlights include:

  • Consistent third party recognition for Parex's leadership in ESG:
    • Recognized as a best-performing ESG company rated by Sustainalytics;
    • Inclusion in the Jantzi Social Index;
    • One of three Canadian-listed exploration and production companies included in the 2023 Bloomberg Gender-Equality Index;
    • Upgraded rating of AA through Morgan Stanley Capital International Inc;
  • Progressed the company's commitment to diversity, equity and inclusion, achieving a board diversity target of 30 per cent ahead of the company's May, 2023, aspiration;
  • Completed the company's first ever solar farm project, which is located on the Cabrestero block (100-per-cent WI) in the Southern Llanos; the system projects to avoid approximately 3,500 tonnes carbon dioxide equivalent per year through the utilization of renewable power.

Q4 2022 results -- conference call and webcast

Parex will host a conference call to discuss the fourth quarter 2022 and full-year 2022 results on Thursday, March 9, 2023, beginning at 8 a.m. MT (10 a.m. ET). To participate in the conference call or webcast, please see the access information below.

Toll-free dial number (Canada/United States):  1-800-806-5484

International dial-in numbers are available.

Passcode:  8807145 followed by the number sign

A webcast will be available.

2022 annual general meeting

Parex anticipates holding its annual general and special meeting of shareholders on Thursday, May 11, 2023.

About Parex Resources Inc.

Parex is the largest independent oil and gas company in Colombia, focusing on sustainable, conventional production. Parex's corporate headquarters is in Calgary, Canada, and the company has an operating office in Bogota, Colombia. Parex is a member of the S&P/TSX Composite ESG Index, and its shares trade on the Toronto Stock Exchange under the symbol PXT.

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