Parex Resources (PXT) Q2 2024 earnings summary

Executive summary

• Q2 2024 funds flow from operations reached $181 million, up 17% year-over-year, with FFO per share at $1.77, a 22% increase from Q2 2023, driven by strong pricing and reduced capital spending.

• Achieved an 80% year-over-year increase in free funds flow in Q2 2024.

• Core assets at Cabrestero and Block 34 delivered stable production and significant free funds flow, with combined output over 42,000 bbl/d in Q2 2024.

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

• Production averaged 53,568 BOE per day in Q2 2024, stable compared to Q1 2024 and Q2 2023, with production per share up 3% year-over-year.

Financial highlights

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

• Net income for Q2 2024 was $4 million ($0.04 per share basic), reduced by higher deferred tax expense due to exchange rate movements.

• Quarterly capital expenditures were $98 million, mainly allocated to Arauca, LLA-34, LLA-32, and LLA-122, and lower than forecast due to paused Arauca activity.

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

• EBITDA for Q2 2024 was $195.9 million; adjusted EBITDA was $230.5 million.

Outlook and guidance

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

• FY 2024 average production guidance of 54,000–60,000 boe/d and capital expenditure guidance of $390–$430 million are trending toward the lower end.

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

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

• Production growth into year-end expected from workovers at Arauca-8, new wells at Arauca and Capachos, and multiple wells at LLA-32.