Parex Resources (PXT) Q2 2024 earnings summary

Executive summary

• Achieved an 80% year-over-year increase in free funds flow in Q2 2024, driven by strong pricing and reduced capital spending.

• Q2 2024 average production was 53,568 boe/d (99% oil), steady sequentially and down 1% year-over-year due to downtime at key blocks, offset by new production at Capachos and Arauca.

• Net income for Q2 2024 was $3.8 million, down from $101.4 million in Q2 2023, mainly due to higher deferred tax expense.

• Operational challenges at Arauca led to a pause in drilling and capital reallocation to Capachos and Block 32.

• Core assets at Cabrestero and Block 34 delivered stable production and significant free funds flow.

Financial highlights

• Funds flow from operations was $181 million, including a $21 million one-time FX gain from Colombian tax settlement.

• Q2 2024 oil and gas sales were $364.9 million, up 11% year-over-year, mainly due to higher oil prices.

• EBITDA for Q2 2024 was $195.9 million; adjusted EBITDA was $230.5 million, both up year-over-year.

• Quarterly capital expenditures were $98 million, lower than forecast due to paused Arauca activity.

• Working capital surplus of $34 million and cash of $119 million at quarter end.

Outlook and guidance

• FY 2024 production guidance of 54,000–60,000 boe/d and capex of $390–$430 million are trending to the lower end of ranges due to underperformance at Arauca and temporary shut-ins.

• Q3 2024 production expected to remain in line with Q2, with growth anticipated in Q4 and into year-end.

• CapEx for the second half of 2024 expected to be slightly higher than the first half but below full-year guidance midpoint.

• Management expects to meet long-term capital allocation targets: 33% of FFO to dividends and buybacks, 66% or less to spending.

• Effective current tax rate expected to range from 19–21% at $75/bbl Brent and 25–27% at $85/bbl Brent.