Parex Resources (PXT) AI Stock Analysis

464 Followers

Top Page

Parex Resources

(OTC:PXT)

70Outperform

Parex Resources exhibits strong financial stability and cash flow generation, bolstered by positive earnings call sentiment and attractive valuation. However, current technical indicators suggest caution due to bearish momentum, and the company faces challenges in revenue growth and profitability. The overall score reflects a balanced outlook, with significant strengths in financial health and valuation countered by short-term technical pressures.

Positive Factors

Earnings Guidance

With Q4 earnings, the company reaffirmed 2025 guidance, allowing investors to move forward with confidence.

Shareholder Returns

Parex is well-positioned to balance strong per share growth metrics with meaningful shareholder return of capital initiatives in 2025 and beyond.

Valuation

Current valuation appears quite attractive and should bring in new investors as the company reiterates consistent results.

Negative Factors

Geopolitical Risks

Colombia hasn't been kind to Canadian-listed E&P names. Government regulation, drilling exploration risk, and social unrest have historically warranted caution.

Past Production Challenges

Underwhelming production results this past summer had upended multiple successful years.

Production Performance

Underwhelming production results this past summer had upended multiple successful years for Parex.

Parex Resources (PXT) vs. S&P 500 (SPY)

Market Cap

C$1.19B

Dividend Yield12.8%

Average Volume (3M)565.77K

Price to Earnings (P/E)10.6

Beta (1Y)1.05

Revenue Growth-9.92%

EPS Growth-78.49%

CountryCA

Employees448

SectorEnergy

Sector Strength49

IndustryOil & Gas Exploration & Production

Share Statistics

EPS (TTM)1.15

Shares Outstanding97,994,130

10 Day Avg. Volume529,706

30 Day Avg. Volume565,769

Financial Highlights & Ratios

PEG Ratio-0.19

Price to Book (P/B)0.49

Price to Sales (P/S)0.00

P/FCF Ratio2.53

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$17.43

Price Target Upside36.52% Upside

Rating ConsensusHold

Number of Analyst Covering3

Parex Resources Business Overview & Revenue Model

Company DescriptionParex 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.

How the Company Makes MoneyParex Resources generates revenue primarily through the exploration, extraction, and sale of crude oil and natural gas. The company's key revenue streams include the sale of produced hydrocarbons, which are marketed and distributed to various domestic and international markets. Parex Resources leverages strategic partnerships and joint ventures to enhance its exploration capabilities and maximize output. The company benefits from its focus on operational efficiency and cost management, which contributes to its profitability. Additionally, Parex Resources' earnings are influenced by global oil prices, production volumes, and its ability to optimize its asset portfolio.

Parex Resources Financial Statement Overview

Summary

Parex Resources shows strong cash flow and balance sheet stability with low leverage, providing a cushion against market volatility. However, challenges in revenue growth and profitability necessitate strategic adjustments to enhance margins and growth.

Income Statement

Positive

Parex Resources has shown fluctuating revenue trends with recent decline in gross profit margins from 54.1% in 2022 to 42.6% in 2023. The net profit margin also decreased from 37.2% in 2022 to 4.7% in 2023, indicating a significant contraction in profitability. However, the company managed to maintain a positive EBITDA margin of 41.1% in 2023, despite the absence of EBIT, which is a concern. Revenue decreased by 21.4% from 2022 to 2023, indicating a need for growth strategies.

Balance Sheet

Positive

The company maintains a solid equity position with an equity ratio of 85.0% in 2023, suggesting low leverage and strong financial stability. The debt-to-equity ratio remained low at 0.05 in 2023, indicating conservative use of debt. However, the return on equity (ROE) dropped significantly from 35.6% in 2022 to 3.3% in 2023, reflecting reduced profitability on shareholder investments.

Cash Flow

Very Positive

Parex Resources demonstrated significant operating cash flow generation, with $569.9 million in 2023, resulting in a strong operating cash flow to net income ratio of 9.39. Free cash flow grew substantially from $26.1 million in 2022 to $343.9 million in 2023, indicating improved cash generation efficiency. The free cash flow to net income ratio of 5.67 highlights a robust cash flow position despite lower net income.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
1.29B	1.17B	1.64B	1.06B	587.52M
	Gross Profit
549.07M	889.83M	1.02B	659.64M	302.59M
	EBIT
0.00	454.24M	889.24M	529.14M	192.26M
	EBITDA
529.40M	659.18M	952.60M	625.22M	287.16M
	Net Income Common Stockholders
60.68M	459.31M	611.37M	303.11M	99.32M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
98.02M	140.35M	419.00M	378.34M	330.56M
	Total Assets
2.16B	2.42B	2.31B	1.78B	1.54B
	Total Debt
64.62M	95.74M	6.08M	4.51M	1.82M
	Net Debt
-33.40M	-44.62M	-412.92M	-373.83M	-328.74M
	Total Liabilities
323.74M	459.90M	599.38M	390.53M	200.60M
	Stockholders Equity
1.83B	1.96B	1.71B	1.39B	1.34B
Cash Flow		Free Cash Flow
343.89M	26.11M	453.36M	322.15M	173.10M
	Operating Cash Flow
569.91M	376.47M	983.60M	534.30M	290.02M
	Investing Cash Flow
-392.24M	-535.51M	-638.10M	-229.04M	-179.80M
	Financing Cash Flow
-214.90M	-130.63M	-291.98M	-252.35M	-168.44M

Parex Resources Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price12.77

Price Trends

50DMA

12.17

Positive

100DMA

13.04

Negative

200DMA

13.29

Negative

Market Momentum

MACD

-0.08

Negative

RSI

62.65

Neutral

STOCH

91.17

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:PXT, the sentiment is Neutral. The current price of 12.77 is above the 20-day moving average (MA) of 11.42, above the 50-day MA of 12.17, and below the 200-day MA of 13.29, indicating a neutral trend. The MACD of -0.08 indicates Negative momentum. The RSI at 62.65 is Neutral, neither overbought nor oversold. The STOCH value of 91.17 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:PXT.

Parex Resources Peers Comparison

Overall Rating

UnderperformOutperform

Sector (56)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CJ	78 Outperform	C$968.78M	8.48	12.42%	11.96%	3.79%	3.87%
PXT	70 Outperform	C$1.19B	10.59	4.22%	12.80%	-9.92%	-78.49%
Sector *	56 Neutral	$7.19B	3.84	-4.29%	5.74%	0.33%	-52.26%

* Energy Sector Average

Performance Comparison

TSE:PXT

Parex Resources

12.77

-8.65

-40.39%

VET

Vermilion Energy

7.04

-4.51

-39.05%

CDDRF

Headwater Exploration

4.53

-0.72

-13.71%

AOIFF

Africa Oil

1.34

-0.36

-21.18%

KELTF

Kelt Exploration

4.52

0.38

9.18%

TSE:CJ

Cardinal Energy

6.18

<0.01

0.16%

Parex Resources Earnings Call Summary

Earnings Call Date:May 08, 2025

(Q4-2024)

% Change Since: 20.93%|

Next Earnings Date:Jul 30, 2025

Earnings Call Sentiment Positive

The earnings call outlined a strong financial and operational performance with significant progress in reserves and strategic initiatives. Tax and pricing improvements, alongside a robust plan for shareholder returns, further contribute to a positive outlook. Despite a minor decrease in PDP reserves, the overall sentiment is optimistic.

Q4-2024 Updates

Positive Updates

Strong Financial Performance

Generated $275 million in free funds flow, the third highest in the company's history, and $141 million in funds flow provided by operations for the quarter.

Positive Reserves Report

Grew 1P and 2P reserves per share in 2024, with strategic application of technology leading to increased recovery factors in key assets like LLA-34 and Cabrestero.

Operational Progress

Production averaged 45,297 BOE per day, meeting the revised guidance. Significant progress in waterflood and polymer activities and gas exploration plans.

Tax and Pricing Improvements

Achieved a $6 million current tax recovery, with an expected lower effective tax rate of 3% to 6% in 2025. Vasconia differential improved to below $2 per barrel.

Shareholder Returns

Returned C$1.5 billion to shareholders over the past five years, more than the current market cap, with plans to continue strengthening returns.

Best Safety Performance

2024 marked the company's best safety performance, highlighting employee dedication.

Negative Updates

Slight Decrease in PDP Reserves

While 1P and 2P reserves per share grew, PDP reserves per share decreased slightly.

Company Guidance

During Parex Resources' 2024 year-end conference call, the company reported robust financial and operational performance despite facing headwinds throughout the year. Key metrics highlighted include generating $275 million in free funds flow, achieving a quarterly funds flow of $141 million, and maintaining a production average of 45,297 BOE per day. Their 2024 results also saw a growth in 1P and 2P reserves per share, although PDP per share decreased slightly. Operational efforts included advancing waterflood and polymer injection techniques at key blocks, contributing to improved recovery factors. The company anticipates a reduced effective tax rate of 3% to 6% for 2025 at $70 per barrel Brent, alongside a Vasconia differential currently below $2 per barrel, down from the 2024 average of $5 per barrel. Looking forward, Parex plans to ramp up to four rigs in the second quarter of 2025 and focus on low-risk activities to enhance shareholder returns, which have amounted to C$1.5 billion over the past five years.

Parex Resources Corporate Events

Executive/Board ChangesShareholder MeetingsBusiness Operations and Strategy

Parex Resources Secures Shareholder Approval at Annual Meeting

Positive

May 8, 2025

Parex Resources Inc. announced the successful approval of all matters presented at its annual general meeting of shareholders, including the election of nine directors and a non-binding advisory resolution on executive compensation. This approval reflects strong shareholder support and positions the company to continue its strategic focus on sustainable oil and gas production in Colombia.

Spark’s Take on TSE:PXT Stock

According to Spark, TipRanks’ AI Analyst, TSE:PXT is a Neutral.

Parex Resources demonstrates strong financial stability and cash flow generation, supporting long-term resilience. However, recent profitability challenges and bearish technical indicators weigh on the stock’s performance. The optimistic sentiment from the earnings call and attractive valuation, particularly the high dividend yield, provide a balanced outlook.

To see Spark’s full report on TSE:PXT stock, click here.

DividendsBusiness Operations and StrategyFinancial Disclosures

Parex Resources Reports Strong Q1 2025 Results and Declares Q2 Dividend

Positive

May 8, 2025

Parex Resources reported its Q1 2025 financial results, highlighting a funds flow of $122 million and a net income of $81 million. The company announced a Q2 2025 dividend of C$0.385 per share and provided an operational update, including increased drilling activity and a strategic acquisition to boost production. Parex is on track to meet its 2025 production guidance and is closely monitoring commodity prices to optimize shareholder value.

Spark’s Take on TSE:PXT Stock

According to Spark, TipRanks’ AI Analyst, TSE:PXT is a Neutral.

To see Spark’s full report on TSE:PXT stock, click here.

Executive/Board ChangesDividendsBusiness Operations and StrategyFinancial Disclosures

Parex Resources Reports Strong 2024 Results and Strategic Advancements

Positive

Mar 5, 2025

Parex Resources announced its 2024 financial results, highlighting a strong performance with $622 million in funds flow and a net income of $61 million. The company declared a Q1 2025 dividend and appointed a new CFO, Cameron Grainger. Parex achieved strategic milestones, including successful waterflood implementations and polymer injection pilots, and expanded its exploration activities in the Llanos Foothills. The company aims to maintain steady production and shareholder returns while preparing for future exploration opportunities.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.