Q3 2022 Parex Resources Inc Earnings Call

All participants thank you for sending Baidu, California, she is ready to begin with.

Morning, everyone and welcome to Parex resources third quarter, 2022 conference call and webcast.

No debt at any time participants on the webcast can submit their questions on there to ask a question tab at the top.

Top of the webcast interface.

Participants on the phone can press star one.

I'd now like to turn the call over to my question.

<unk> President of capital markets and corporate planning at Barrick's. Please go ahead Mike.

Thank you operator, and good morning, everyone on the call with me today are Mike Morton, President and Chief Executive Officer, Ken Pinsky, CFO and Eric Furlan.

<unk> operating officer as a reminder, this conference call includes forward looking statements.

non-GAAP and other financial measures and associated risks outlined in our news release, and MD&A, which can be found on our website SEDAR dot com.

As discussed today are in U S dollars unless otherwise stated.

Please go ahead Marc.

Thank you, Mike and good morning, everyone.

Production for the quarter was pre leased.

Okay.

I'll beg for Central Goldberg, a quota in 2021.

With production.

Everybody says up 19% over the same.

We are in the process of optimizing and maximizing okay.

By making significant investments.

Uh huh.

That was a lot of ourselves as long as I've said.

34, and got us there.

As well as long as I'm Lucky goggles infrastructure.

We expect to lower our long term corporate decline rate.

Our sustaining lower capital expenditure requirements.

This is expected to maximize our reserves as well generate sustainable.

Michigan's free funds flow that can be used for both reimbursement there Josh.

We are also showing new growth.

Yes.

Recently announced.

Successful drilling efforts today it does translate discoveries.

A multiple of our blocks.

And the others.

We have a positive drilling results.

Noodles.

Newfield disclosure discovery, a new play in southern yellow.

I didn't make the list.

And what we are seeing encouraging results.

We are learning to cycle the gas one.

Condensate recovery at the first quarter.

I will now turn the call over to Scott to discuss some of our fine.

Those are the highlights starting have kept them on the proposals for changes in Texas, even Colombia before I.

Make some further remarks. Please go ahead.

Thanks for that and the third quarter, we generated funds from operations.

You asked $206 million, which was up 35% over the comparative quarter and our funds flow from operations per share was U S $1, which was up 49% over the third quarter.

As planned in the third quarter, we decreased our working capital surplus and acceleration of our share buyback program and the purchase of long lead capital expenditure items, such as changing in gas turbines.

That will support our 2023 capital expenditure program.

At the end of the quarter, we had a working capital surplus of $230 million U S and are still debt free.

Have an undrawn credit facility of $200 million.

And in quarter, three we completed the 202022 normal course issuer bid or in CIB, which marks the fourth consecutive year with parks has purchased a full 10% of common shares available for purchase under the program. Since 2017, we have returned over $1 1 billion.

It to shareholders via share repurchases, which I am proud to say is nearly half of our current market capitalization today.

With a normal course issuer bid complete for 2022, and a fourth quarter dividend of Canadian <unk> 25 per share.

But the board of directors, we expect to return roughly Canadian $385 million to shareholders in 2022 meeting our goal of returning more than one third of our annual funds flow from operations.

And 100% of free funds flow.

Our holders.

Turning to 2023 and the Colombian government's tax reform.

Yesterday, our proposal passed into Columbia incentives.

Onto the Colombian Chamber Representatives, although it is expected that this proposal will become law and order will receive final approval. It is still subject to change currently we are assessing and evaluating the current proposal.

Talk to parks and once finalized.

We expect to provide a clear outline of the impacts of the parts specific specifically our funds from operations and FX sensitivity.

So it is final we will not have any specific comments on the proposed changes and their impact.

We have operated in Colombia, since 2009 and continue to see the country of a strong stable and profitable environment for long term investment.

The energy sector is a vital sector.

Now I'd like to turn the call back to Chris.

Some final remarks. Please go ahead. Thank you Joe.

Looking ahead to the fourth quarter over the past two weeks of October we have been working with localized okay.

Where the impact was roughly 4000 barrels a day.

As we actively work with communities localized locates I've been.

Lifting and full production is being brought back a lot.

Even allows us up until our successes to date, we still expect to achieve our guidance.

Our guidance.

First before.

Southern view of your day.

And are focused on executing our 60000 barrels a day.

Milestone.

This is a credit to our staff who are modest navigated many twists and turns this year and the overall depth.

The list of our portfolio.

As Ken mentioned Columbia Pictures, one was being finalized.

Currently working through our budget.

Budget process.

<unk> released our 'twenty three guidance.

In early December .

With this release, we also plan to provide some corporate updates that outlines our long term vision strategy operations and future opportunities.

I would like to confirm.

Commitment to Colombia, and culture was amazing Amazing resource base.

Dependable institutions.

And.

Following the tax reform will continue to provide very competitive Cisco.

And that box.

With that.

Thank everyone for their continued support of cars.

The hard work our employees.

Alternative for us.

Every day.

Oh closeout four of them in his remarks.

I would now like to turn the call back to the operator.

To start the Q&A session before Covid.

Thank you.

Thank you to ask a question over the phone. Please press star one at this time.

We have a question from Christopher Jones from Haywood Securities. Please go ahead.

Hey, guys. Thanks for taking my call I know you are in the midst of the budgeting process for 2023, just wondering what level of inflationary impacts.

You are expecting next year, and maybe provide us with some preliminary high level thought on 2023 activity.

Spending levels. Thank you.

We expect.

Year on year inflation like for like of roughly 10% and that's credit to our program where we.

Preordered a good number of them also have long lease Uh huh.

Previous prices, but also because of the effects of the.

Exchange rates.

Uh huh.

Our goals in Colombia for labor.

Yes, Chris will release the budget.

Hey, guys.

In December we will give you some we'll give the guidance.

Okay. That's helpful and then just on 2022 Capex.

Sitting here in early November are you able to give us a sense of where capex should sort of settle out within the range provided at year end are you guys.

Pointing to the low end mid range or high end.

Yeah, It will be.

Right within our guidance range. So once you exclude the long lead items have been purchased we should be in that $525 million to $550 million.

Thank you.

Thank you you May press star one to ask question.

The next question is from Orient that.

Cobalt from balance. Please go ahead.

Hi, Good afternoon. This is Terry Nichols with balance I have two brief questions. The first is that we heard over there a week some themes that minister Ocampo regarding the exploration agenda suggests.

If you could perhaps provide more detail so I thought it was.

BK reactivation of unused licensed and how would this impact.

Impact Perry programs in the in the upcoming year.

So I'd like to.

Highlight the fact that before this election last year.

<unk> managed to acquire.

Acquire 18 blocks, which is basically quadrupled our.

Our Atlanta area.

In Colombia.

With that with the number of active licenses.

Oh portfolio.

We don't see any change whatsoever.

Decade, plus.

Our running room in terms of exploration.

So with that in mind, we are observing.

The government's views on opening blocks or reactivating them or not but we don't see any impact given that we already are ones that we have.

More than most affected drilling.

Got it. Thank you and just one final one final one understanding that you were not discussing the impact on the reform I'm. Just if you have any details or information that you could share with regard to the sliding scale on income charge haney beyond there.

Social impact.

Are you seeing from this drop in terms of when would this five to 10, 15% killed start impacting in reference prices.

Yeah like I said once the proposals are lives will come out with a full description of how it affects us and how it works.

We've seen six maybe seven proposals since we started talking about it. So we just don't feel that it's worthwhile to go through the seventh or eighth well wait here because we're very close we think to the end up getting a final documents in place.

And that's that's perfectly clear thanks again for taking my question, saying congratulations on the quarter.

Thank you.

Thank you once again, you May press star one he's got a question.

Okay.

There are no further questions at this time on the phone that would like to turn the meeting back over to Mr question.

Thank you very much for everyone joining our call today, if you have any questions feel free to contact me at parks have a great day.

Yeah.

Thank you. The conference has now ended please disconnect your lines at this time and thank you for your participation.

Yeah.