Mining & Metals
Parex Resources Down 4% As Reports Big Drop In Q1 Net Income; But Unhedged For 2026, Completing Frontera E&P Buy
Parex Resources (PXT.TO) was at last look down 4% on the TSX after reporting Tuesday a big drop in net income in the first quarter, but the company said it is currently unhedged for 2026, "with full exposure to higher commodity prices in the process", and added it is "positioned to become Colombia's largest independent oil & gas producer" while it nears completing the acquisition of Frontera E&P.For the three months ended March 31, 2026, the company reported net income of US$4.6 million or $0.05 per basic share compared with net income of $80.6 million or $0.82 per share basic, a year earlier.Parex said the decrease is primarily attributed to unrealized losses on commodity risk management contracts, an increase in deferred tax expense, higher cash settled share-based compensation expense, and the recognition of one-time costs, partially offset by lower current income tax.Among other highlights, average production in the quarter was 44,735 barrels of oil equivalent per day (boe/d), compared with 43,658 boe/d in Q1 2025. The company flagged 2026 production guidance 82,000 to 91,000 boe/d, up 93% at the midpoint compared to Q1 2026 average production.Previously, the company had hedged brent crude oil prices for Q2 2026 on approximately 25% of its planned net production. In early Q2 2026, these hedging positions were unwound at a cost of $29 million. The company is currently unhedged for 2026, with full exposure to higher commodity prices.Parex said it is completing the final stages of the Frontera E&P transaction, which will add roughly 37,000 boe/d of "highly" accretive barrels with "compelling synergies". It is adding new producing assets in the Magdalena Basin, where Parex will gain 50% production participation on roughly 15,000 boe/d in second half 2026 following the commencement of initial activity in both the Casabe and Llanito blocks.Current guidance was given for second half 2026, after accounting for the Frontera transaction, and the addition of the new producing assets in the Magdalena Basin.The company added it completed the LLA-111 exploration program, with four of six wells delivering positive results and early-stage production now underway, and is continuing to progress Llanos Foothills exploration, where it is preparing to spud its Piedemonte exploration well in Fall 2026.It declared a Q2 2026 regular dividend of C$0.385 per share, or C$1.54 per share annualized."Over the first half of 2026, Parex executed a series of strategic transactions that have positioned us to be Colombia's largest independent E&P, while adding complementary assets that enhance scale, deepen the portfolio, and strengthen our platform profitability for long-term growth," said Imad Mohsen, President & Chief Executive Officer."This transformed version of Parex is positioned to deliver an unparalleled portfolio of development and exploration opportunities, generate substantial free cash flow, unlock new world-class reserves, and establish the company as one of the leading growth opportunities in the global oil and gas sector, creating meaningful value for all stakeholders."Shares of the company were at last look down 4%, after closing up 1.2% on Monday.Price: $27.03, Change: $-1.21, Percent Change: -4.28%
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