Q4 2024 Parex Resources Inc Earnings Call
Thank you for standing by. My name is Karen, and I will be the conference operator today. At this time, I would like to welcome everyone to the Parex Resources 24-year-end results.
Speaker Change: All lines have been placed unmute to prevent any background noise. [inaudible]
Speaker Change: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star followed by the number one on your telephone keyboard. To withdraw your question, press star followed by the number one game.
Speaker Change: I will now turn the call over to you, Mike Kruchten. Please go ahead.
Michael Kruchten: Good morning, and welcome to Parex Resources 4th quarter of 2024 conference call and web test.
Michael Kruchten: My name is Mike Kruchten, Senior Vice President of Capital Markets and Corporate Planning, and on the call with me today are our President and Chief Executive Officer Imad Mohsen, our Chief Financial Officer, Kevin Grainger, and our Chief Operating Officer, Eric Furlan.
Michael Kruchten: Please note that at any time, tell both participants on the phone to press star 1 to submit a question.
As a reminder, this conference call includes four different statements.
Michael Kruchten: as well as non-CAP and other financial measures with the associated risks outlined in our news release in MD&A, which can be found on our website, or at cdartplus.ca
Know that all amounts that's got to pay are US dollars. [inaudible]
Unless otherwise stated. [inaudible]
Emad Mohsen: I will now turn the call over to Imad. Please go ahead.
Thank you, Mike and good morning, everyone.
Emad Mohsen: In 2024, we achieved strong financial results from our underlying asset base.
Despite headwinds we face during the year. [inaudible]
Emad Mohsen: By maintaining capital discipline and optimizing our commercial assets, we generated $275 million and free funds flow, making the third highest result in Berk's history.
Emad Mohsen: Alongside our strong financial performance, we made significant progress on several strategic
Emad Mohsen: and our research reports stated. Our core assets at Channel 34 in Cabastero are performing at or above our expectation.
Thank you.
Emad Mohsen: This performance has been supported by progression of our water flood levels at both blocks to maximize reds of our performance.
Emad Mohsen: In addition, our polymer injection pilots at Capstero are demonstrating Capstero's success.
Emad Mohsen: I'm building on that. We are moving forward to the full deployment there in addition to a plan pilot, at the end of 34 and 25.
and the Potomayo. We see a significant development opportunity.
It's formed by a multi-billion barrels of oil in place volumes.
Emad Mohsen: Today, the area has produced over 350 million barrels through primary recovery methods and limited recent drilling.
Emad Mohsen: We see substantial potential to increase recovery factors by applying lower risk strategies. We should provide long-term running rule for us in terms of inventory, production and reserves.
Emad Mohsen: And the others for tilt, we have made significant progress on our gas and exploration plans.
Emad Mohsen: We have aligned our land positions with our strategic partner, Eck Petrol, in a term that boasts word class of service prevention.
and became the Operator.
Emad Mohsen: Our near-term focus is preparing to drill the Fire Jonas Exploration while in 2026, which is currently the top-ranked prospect in our portfolio.
This strategic milestone support our long-term sustainability.
Emad Mohsen: We remain committed to Colombia and the current portfolio with sustainable base, combining the steps, change, and exploration abstract.
Before moving on, I would like to introduce Cam Grainger. [inaudible]
Our Chief Financial Officer.
Ed Sheer, Ed Sheer, Ed Sheer,
Speaker Change: With over 15 years of growing responsibility at Parex and an extensive in-depth understanding of post-Colombia in our portfolio.
Speaker Change: Cameron's uniquely positioned to make a significant impact and play a key role in driving our success moving forward.
Speaker Change: Additionally, I want to recognize the years of service and contributions from directors.
Speaker Change: Lisa Colnet, Robert Englou, who have announced they are retiring from the board and may.
Speaker Change: In preparation to their upcoming retirement and consistent with our board renewal process, we are pleased to recommend Mona Jassinski and Jeff Lausson.
Speaker Change: To stand for election at our upcoming AGM. Both of whom have energy sector experience and will bring the refreshed perspectives.
Speaker Change: With that, I'll now turn it over to Eric to provide additional details on our recent operational performance and results report. Please go ahead, Eric.
Eric Furlan: Thanks, Amad. For Q4, 2024, production average 45,297 BoE per day, which allows us to meet our revised four-year guidance range of 49,000 to 50,000 BoE per day.
Speaker Change: Operationally, we are currently running two rigs and expect a ramp up to four in the second quarter. This activity aligns with our plan to grow our production profile in the second half of 2025 with operations progressing within our expectations. [inaudible]
Keep priorities for delivering our 2025 plan included.
Speaker Change: Continuing to progress water, flood and polymer activity in Block 34 in Cabristero.
Starting our Block 32 Drilling Campaign.
Advancing our near-field exploration for small e-programmed.
Speaker Change: and finishing the groundwork needed to begin our operational activity in the Pudamaya, which is set to begin in the second quarter.
Speaker Change: Turning to our reserves report, in 2024, we grew our 1P and 2P reserves per share, while PDP per share decreased slightly. In the report, the strategic application of technology is leading to tangible benefits. [inaudible]
Speaker Change: At LLA-34, we saw positive technical redefinitions from our water-fledging orientation, which increased their recovery factor. And the Cabastero, we improved recovery through the successful implementation of polymer injection.
Speaker Change: Moving on to the Pudamayo, as previously announced, we've added 10 million barrels of 1P and 18 million barrels of 2P.
Speaker Change: of Reserves. As Imad mentioned, as we start off races in the base, we believe there's additional upsides that can capture.
Speaker Change: Across the portfolio, our Outlook for 2025 is possible with optimism for further exploration and technology success in conjunction with successful exploration efforts.
With that, I invite Cam to please go ahead.
Speaker Change: Thanks, Eric. As Imad mentioned, we generated strong financial results in 2024, inclusive of an adjusted capital plans in the second half of the year. [inaudible]
For the quarter, Funflow provided by operations was 141 million. [inaudible]
Speaker Change: Supported by a rent oil price of $74 per barrel, as well as a recovery of current tax. Notably in the quarter we had a current tax recovery of 6 million, which compares to a 9 million expense in the previous quarter.
Speaker Change: This reduction in current taxes is mainly a result of opportunistic tax-driven transactions in Q4 2024, along with tax strategies deployed in recent years.
Speaker Change: For 2025, we expect a lower effective tax rate will remain.
Speaker Change: which our current guidance is 3-6% at $70 per barrel threat. This is supportive of our FFO network and contributes to a stronger dividend pay-over ratio.
Speaker Change: Also supporting our FFO net back at the moment is the Vasconia differential which is currently below $2 per barrel. This contracts with the 2024 average of approximately $5 per barrel. [inaudible]
Speaker Change: This price improvement is likely due to ongoing care of tensions that are affecting global crew prices and likely increasing the demand for clubbing crews.
Speaker Change: This could be a differentiator for Parex relative to other energy companies, where tariffs are currently having a negative impact.
Speaker Change: Capital expenditures for the quarter were 82 million, which was at the lower end of guidance. Lower capital supported three funds flow, which for the quarter was 59 million.
Speaker Change: As Eric mentioned, currently operations are progressing within our expectations and that's our 2025 guidance is unchanged as a result. With that, I'll pass it over to Imad for some final remarks.
Thank you, Cam. I'm very confident about our 2025 plan.
Speaker Change: which is focused on lower-risk activities and high-grade set of opportunities.
Speaker Change: By delivering steady results, as we unlock our Colombian word for you, which we think has a compelling risk and reward profile for investors.
Thank you.
Speaker Change: In parallel, we plan to continue strengthening our track record of shareholder returns. The dividends have had them in our ship, current plans and for any excess cash flow.
Speaker Change: We expect to see to use it for share buybacks about sheet tracks and ink for purposes.
Speaker Change: Over the past five years, we have been able to return 1.5 billion Canadian dollars to share orders.
which is more than our current market cap. [inaudible]
Speaker Change: I'm confident that we will continue building on that track record in 2025 and beyond.
It's closed.
Speaker Change: I want to thank our employees, shareholders, and partners for their occult sport.
Speaker Change: In particular, I want to emphasize and thank all our employees for their unleavened dedication to safety.
Speaker Change: Thank you to your, thanks to your daily commitment, 2024 mark our company's best safety performance yet.
Speaker Change: This concludes our formulary remarks. I would now like to turn the call back to the operators to start the Q&A session for the investment community.
Thank you.
Speaker Change: At this time, I would like to remind everyone in order to ask a question, press star then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster.
Speaker Change: Again, Judy have a question, kindly pressed or followed by the number one.
Speaker Change: If there are no questions, I will now conclude the Q&A session. I will turn the call over to Mike Kruchten for closing remarks.
Michael Kruchten: Thank you very much for joining us. If you have any additional questions, please feel free to contact us at Parex. Have a good day.
Michael Kruchten: Ladies and gentlemen, that concludes today's call. Thank you all for joining and you may now disconnect.