Parex Resources (TSX:PXT) held its first-quarter earnings conference call on Tuesday. Below is the complete transcript from the call.
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Access the full call at https://events.q4inc.com/attendee/409805475
Summary
PXT executed strategic transactions including a $725 million acquisition of Frontera, adding 37,000 barrels of production and aiming to become Colombia’s largest independent E&P company.
The company expanded its partnership with Ecopetrol in the Magdalena Basin, committing $250 million over five years, increasing production potential by optimizing mature fields.
First quarter production averaged under 45,000 boe/day, with expected improvements by the end of the second quarter. Exploration in the Putumayo region is progressing with successful well results.
PXT reports Q1 funds flow from operations at $114 million, with expectations of incremental free cash flow from strategic transactions and a focus on maintaining a strong credit profile.
The company anticipates 3-5% base growth with potential for higher returns, maintaining a stable dividend, and prioritizing debt reduction. Long-term strategic partnerships and acquisitions are central to future growth.
Full Transcript
OPERATOR
Hello everyone. Thank you for joining us and welcome to Parex Resources Q1 2026 Operational and Financial Results. After today’s prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Mike Crookton, Senior Vice President, Capital Markets and Corporate Planning. Mike, please go ahead.
Mike Crookton (Senior Vice President, Capital Markets and Corporate Planning)
Good morning. On the call with me today our President, and Chief Executive Officer, Imad Molson, our Chief Financial Officer Cam Granger and our Chief Operating Officer, Eric Furlan. Please note that at any time telephone, participants on the call can press star one to submit a question. As a reminder, this conference call includes forward looking statements as well as non-GAAP and other financial measures with the associated risks outlined in our news release and MD&A which can be found on our website or at sedarplus.ca. Note that all amounts discussed today are US dollars unless otherwise stated. I’ll now turn the call over to Ahmad. Please go ahead.
Ahmad
Thank you Mike and good morning everyone. Over the first half of 2026, Parex executed a series of strategic transactions that have positioned us to become Colombia’s largest independent E&P company. These transactions were designed to add complementary assets that enhance our scale, deepen our portfolio, strengthen the profitability and duration of our business for long term growth. Starting with the Frontera transaction for $725 million. This $725 million acquisition adds roughly 37,000 barrels equivalent today of highly accretive production with strong industrial logic and compelling synergies. It materially increases our reserves inventory and strengthens long term production visibility while being secured at an attractive valuation. Importantly, we are bringing in a deep bench of core technical talent and operational capabilities that will further strengthen our organization and enhance our ability to execute across the large asset base. The transaction also supports more efficient capital allocation across the portfolio enabling us to direct free cash flow from mature assets toward our highest return development and exploration opportunities. Secondly, the expanded partnership with Ecopetrol with Magdalena and the Magdalena Basin we have entered into an agreement with ecpatrol that allows Parex to earn a 50% participating interest in the Casabe and Jannito blocks in Colombia’s Magdalena basin through $250 million gross capital investment commitment over five years with with no upfront acquisition cost. The transaction further expands our strategic partnership with Ecopetrol and reinforces our long standing collaboration in Colombia. These mature fields currently produce approximately 15,000 barrels a day and offer significant long term upside through enhanced oil recovery, water flood optimization and development drilling initiatives. The transaction provides a proven operating base with clear path to incremental production growth. Leveraging PARCS established track record of enhancing recovery through the application of proven technologies. Upon completion of these strategic transactions, PARCS is expected to become the largest independent Colombian focused exploration and production company with average production of 82,000 to 92 to 91,000 boe a day, nearly doubling corporate production alongside a land position exceeding 7.9 million acres and significant long life reserves. This expanded business provides a scale, inventory depth and financial capacity to drive superior long term returns while enabling more disciplined allocation toward our highest return opportunity. With that, I’ll now turn it over to Eric to speak on our current operations. Eric, please go ahead.
Eric Furlan (Chief Operating Officer)
Thanks Ahmad in the first quarter production averaged just under 45,000 boe per day while current production levels are below Q1 averages. We expect standalone production to improve throughout the remainder of the second quarter and exit at or above 45,000 boe per day. This growth will be supported primarily in our Putumayo operations and the continued advancement of our exploration success at block 111. With the constructive commodity price environment, our base plan continues to advance. High value opportunities are being accelerated on an opportunistic basis to enhance returns and free cash flow. Our operations in the Puta Mayo continue to progress with particular excitement around the Orito block. Our walls are demonstrating strong performance and are nearly finished. Our multilateral pilot which we expect to start testing in the coming weeks in Block 111 parks has drilled six exploration wells to date with delivering positive results across separate areas. One well has already commenced initial production at approximately 1500 barrels per day of oil. The remaining wells have shown encouraging indicators including oil on logs with testing expected to start in the coming days. All exploration wells were delivered on budget at approximately 2 million all in including drilling pad and mobilization representing an approximate 65% reduction versus typical exploration well costs of around 6 million per well. This improvement was driven by a fast moving rig and streamlined well and pad design reflecting the strong execution coordination of our teams. …
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