Canada's Parex Resources Q1 prelim net income drops, hurt by unrealized hedging losses

Overview

• Canada oil and gas producer's preliminary Q1 net income dropped sharply yr/yr on one-time costs

• Preliminary Q1 production rose to 44,735 boe/d from 43,658 boe/d a year earlier

• Company incurred $17 mln in one-time Q1 costs, including Colombian wealth tax and site restoration

Outlook

• Company is currently unhedged for 2026, with full exposure to commodity price movements

Result Drivers

• UNREALIZED HEDGING LOSSES - Co said net income fell largely due to unrealized loss on commodity risk management contracts

• ONE-TIME COSTS - Co incurred $17 mln in one-time Q1 costs, including Colombian wealth tax, site restoration, and project G&A expenses

• INCREASED CAPITAL SPENDING - Capital expenditures rose due to ramping up activity at Orito, Occidente, LLA-32, and LLA-111 blocks

Company press release: ID:nGNX7LzyJG

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 3 "strong buy" or "buy", 4 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the oil & gas exploration and production peer group is "buy."

• Wall Street's median 12-month price target for Parex Resources Inc is C$27.00, about 6.4% below its April 29 closing price of C$28.84

• The stock recently traded at 9 times the next 12-month earnings vs. a P/E of 10 three months ago

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