Parex Resources's second-quarter results followed several transactions that expanded the company's production base, reserves, and operating footprint in Colombia. The company, which engages in the exploration, development, and production of crude oil, officially closed its acquisition of Frontera.
Parex Resources President and CEO Imad Mohsen said the transactions completed during the first half of the year made the company Colombia's largest independent exploration and production company. He stated that these transactions nearly doubled the company's production guidance to a midpoint of approximately 86,000 barrels per day and expanded its land position to more than 7.9 million acres.
Parex Resources' updated production guidance midpoint following recent transactions.
The acquisition of Frontera added technical personnel, long-term reserves, and stable production to Parex Resources, according to management. Chief Operating Officer Eric Furlan said the company produced more than 54,000 barrels of oil equivalent per day during the second quarter, whereas current production is averaging more than 83,000 BOE per day.
Parex Resources also closed its Magdalena Basin partnership with Ecopetrol and received associated regulatory approvals. Imad Mohsen said the company expects participation in those blocks to begin once the first wells are drilled, noting that the blocks currently provide access to about 15,000 barrels per day of production.
The company plans to drill up to 20 exploration and development wells in the Eastern Llanos area over the next 12 months. Eric Furlan noted that seasonal weather constraints are temporarily limiting output at Block 111 and stated the first rig for the drilling campaign is expected to begin moving shortly.
Operational Priorities and Financial Outlook
Imad Mohsen identified advancing high-impact foothills exploration as one of the company's three near-term priorities. The identified priorities include advancing foothills exploration, building a new operating area in the Eastern Llanos, and integrating recent acquisitions to capture operating synergies. The company is also preparing to spud its Piedemonte exploration prospect in the Llanos Foothills during the fall.
Regarding financial performance, Chief Financial Officer Cam Grainger said the second-quarter results included $59 million in realized hedging losses and one-time transaction fees. He stated that the results position the company for higher cash generation as contributions from the expanded business take effect.
Cam Grainger also noted that production-cost pressure is increasing due to the appreciation of the Colombian peso and elevated energy prices, with costs trending toward the upper end of the company's guidance range. During the quarter, the company also released a pro forma reserves evaluation, which showed both proved reserves and proved developed producing reserves increasing by more than 80%.
In addition to operational updates, Parex Resources published its 12th annual sustainability report regarding its operations in Colombia.
