Download PDF

1. Company Snapshot

1.a. Company Description

Parex Resources Inc.engages in the exploration, development, production of oil and natural gas in Colombia.The company holds interests in onshore exploration and production blocks totaling approximately 6,521,632 gross acres.


As of December 31, 2021, it had proved plus probable reserves of 198,825 million barrels of oil equivalent.The company was incorporated in 2009 and is headquartered in Calgary, Canada.

Show Full description

1.b. Last Insights on PXT

Negative drivers behind Parex Resources' recent performance include production challenges in Q4 2024, as highlighted during the Q4 2024 earnings call. Despite robust free funds flow and strategic advancements, the company faced production difficulties. Additionally, Scotiabank analyst Kevin Fisk lowered the firm's price target to C$14 from C$17, citing weak global oil prices that are expected to weigh on Canadian oil benchmarks in 2025 and 2026. This downward revision may have contributed to the company's recent performance.

1.c. Company Highlights

2. Parex Resources' Q3 2025 Earnings: Strong Operational and Financial Performance

Parex Resources reported a strong financial performance in Q3 2025, with earnings per share (EPS) coming in at $0.724, beating analyst estimates of $0.613. The company's funds flow provided by operations grew to $105 million, and its FFO netback was $26.07 per BOE, reflecting the strength of its operating model despite a softer price environment. Revenue growth is expected to be negative next year, with analyst estimates at -1.9%.

Publication Date: Nov -29

📋 Highlights
  • Production Growth:: October production surged to 49,300 BOE/day, a 12% increase from September's 43,953 BOE/day average.
  • Block 32 Performance:: Production from newly acquired Block 32 rose to 12,000 BOE/day, up from 4,000 BOE/day at operatorship.
  • FFO Netback Strength:: Achieved $26.07 per BOE netback, reflecting operational efficiency despite weaker price conditions.
  • Funds Flow:: Generated $105 million in funds flow from operations, driven by strong production and cost management.
  • Capital Allocation:: Spent $80 million on Q3 capital projects, with similar expenditures expected through year-end.

Operational Highlights

Parex Resources' production averaged 43,953 BOE per day in Q3 2025, in line with expectations, and October production reached 49,300 BOE per day, a 12% increase from September. The company's core assets, Cabrestero and LLA-34, continue to show strong reservoir performance, and the recently acquired Block 32 has exceeded expectations with production now over 12,000 BOE per day, up from 4,000 BOE per day when Parex took operatorship.

Valuation and Outlook

With a P/E Ratio of 10.2 and an EV/EBITDA of 3.08, Parex Resources' valuation multiples suggest that the market is pricing in a relatively stable outlook for the company. Additionally, the company's Dividend Yield is 8.32%, indicating an attractive return for income investors. The company's strong balance sheet and ample liquidity position it well for future growth opportunities, including its proposed acquisition of GeoPark.

Cost Structure and Capital Spending

Parex Resources' unit operating costs are expected to be around $12 to $13 per barrel in Q4, driven by flush production from operated fields and normalized power costs. The company's capital spending for the quarter was $80 million, and it expects expenditures to remain at similar levels through year-end, indicating a commitment to maintaining its production levels and investing in its assets.

3. NewsRoom

Card image cap

Did Parex’s Deeper Ecopetrol Alliance and 50-50 Output Split Just Shift Parex Resources' (TSX:PXT) Investment Narrative?

Dec -06

Source:

Card image cap

Parex Resources Expects to Hit Midpoint of 2025 Production Guidance

Dec -05

Source:

Card image cap

Parex Resources Announces Llanos Foothills Strategic Alliance, Operational Strength, and Timing of 2026 Guidance

Dec -05

Source:

Card image cap

RBC Names Suncor Energy, Canadian Natural Resources as Top Picks in Integrated Oil, Exploration and Production Cos

Nov -24

Source:

Card image cap

Investors Can Find Comfort In Parex Resources' (TSE:PXT) Earnings Quality

Nov -11

Source:

Card image cap

Is Parex Resources Attractively Priced After Recent Production Milestone and 54% Share Surge?

Nov -05

Source:

Card image cap

Will Q3 Results and New Dividend Reshape Parex Resources' (TSX:PXT) Growth Story?

Nov -05

Source:

Card image cap

Parex Resources (TSX:PXT): $80M One-Off Loss and Margin Drop Challenge Value Narrative

Nov -05

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.66%)

6. Segments

Crude Oil

Expected Growth: 4.65%

Parex Resources Inc.'s 4.65% growth in Crude Oil is driven by increased production from its Colombian assets, improved operational efficiency, and a favorable oil price environment. Additionally, the company's strategic acquisitions and exploration activities have contributed to the growth, along with a strong balance sheet and disciplined capital allocation.

Royalties

Expected Growth: 4.65%

Parex Resources Inc.'s 4.65% royalty growth is driven by increasing oil production in Colombia, successful drilling campaigns, and strategic acquisitions. Additionally, favorable crude oil prices, efficient operations, and a strong balance sheet contribute to the company's ability to generate higher royalties.

Natural Gas

Expected Growth: 4.83%

Parex Resources Inc.'s 4.83% growth in Natural Gas is driven by increasing demand from power generation and industrial sectors, coupled with strategic acquisitions and exploration activities in Colombia. Additionally, the company's focus on operational efficiency and cost reduction initiatives has contributed to the growth.

Other

Expected Growth: 8.37%

Parex Resources Inc.'s 8.37% growth is driven by increasing oil production, successful exploration and development activities, and strategic acquisitions. Additionally, favorable oil prices, efficient cost management, and a strong balance sheet contribute to the company's growth momentum.

7. Detailed Products

Light and Medium Crude Oil

Parex Resources Inc. produces high-quality light and medium crude oil, suitable for refining into various petroleum products such as gasoline, diesel, and jet fuel.

Natural Gas

Parex Resources Inc. extracts natural gas, a clean-burning fossil fuel, used for power generation, heating, and industrial processes.

Natural Gas Liquids (NGLs)

Parex Resources Inc. produces NGLs, a group of hydrocarbons that include ethane, propane, butane, and pentane, used as feedstocks for petrochemicals and fuels.

Condensate

Parex Resources Inc. produces condensate, a type of light oil, used as a diluent for heavy oil and as a feedstock for refineries.

8. Parex Resources Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Parex Resources Inc. operates in the oil and gas industry, which has a moderate threat of substitutes. While there are alternative energy sources, the demand for oil and gas is still high, and the company's products are not easily substitutable.

Bargaining Power Of Customers

Parex Resources Inc. has a diverse customer base, and no single customer has significant bargaining power. The company's customers are mostly large oil and gas companies, which reduces their bargaining power.

Bargaining Power Of Suppliers

Parex Resources Inc. relies on a few key suppliers for equipment and services. While the company has some bargaining power, the suppliers also have some leverage, which makes the bargaining power of suppliers moderate.

Threat Of New Entrants

The oil and gas industry has high barriers to entry, including significant capital requirements and regulatory hurdles. This makes it difficult for new entrants to join the market, reducing the threat of new entrants.

Intensity Of Rivalry

The oil and gas industry is highly competitive, with many established players competing for market share. Parex Resources Inc. faces intense competition from other companies, which increases the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 4.67%
Debt Cost 3.95%
Equity Weight 95.33%
Equity Cost 11.70%
WACC 11.34%
Leverage 4.90%

11. Quality Control: Parex Resources Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Parex Resources

A-Score: 7.6/10

Value: 8.6

Growth: 6.2

Quality: 7.0

Yield: 10.0

Momentum: 8.5

Volatility: 5.3

1-Year Total Return ->

View Full Report
Stock-Card
Cardinal Energy

A-Score: 7.1/10

Value: 6.8

Growth: 4.2

Quality: 6.9

Yield: 10.0

Momentum: 6.5

Volatility: 8.0

1-Year Total Return ->

View Full Report
Stock-Card
Kiwetinohk Energy

A-Score: 6.9/10

Value: 7.9

Growth: 9.1

Quality: 6.9

Yield: 0.0

Momentum: 9.5

Volatility: 8.3

1-Year Total Return ->

View Full Report
Stock-Card
Freehold Royalties

A-Score: 6.9/10

Value: 5.1

Growth: 5.4

Quality: 7.2

Yield: 9.0

Momentum: 5.0

Volatility: 9.7

1-Year Total Return ->

View Full Report
Stock-Card
MorningStar Partners

A-Score: 6.4/10

Value: 6.4

Growth: 6.6

Quality: 4.8

Yield: 10.0

Momentum: 5.5

Volatility: 5.3

1-Year Total Return ->

View Full Report
Stock-Card
VAALCO Energy

A-Score: 5.7/10

Value: 8.1

Growth: 6.7

Quality: 5.9

Yield: 8.0

Momentum: 1.0

Volatility: 4.7

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

19.17$

Current Price

19.17$

Potential

-0.00%

Expected Cash-Flows