Parex Resources Inc. (TSX-V: PXT) is a Calgary, Alberta based oil and gas exploration company with 16 onshore projects in Colombia and Trinidad and Tobago. Using technology and experience gleaned from executive experience in the Western Canadian Sedimentary Basin, Parex is assertively pursuing oil prone hydrocarbon rich areas in comparatively untouched countries with stable political climates. Seeking a diverse portfolio, Parex exhibits strong preference for projects with short cycle times.
President and CEO Wayne Foo is an fuel industry veteran, having spent more than 30 years working in the fields of oil and gas. Nearly half of that time has been in senior management roles with companies ranging from start ups to senior producers.
For the six years prior to the birth of Parex, Foo founded and later became CEO and President of Petro Andina, the company that evolved into Parex. Petro Andina was a significant player in Argentina’s oil industry. His maiden posting was with Chevron where he served in various roles throughout western Canada and Alaska. In 1996 he moved on to Archer Resources Ltd. as President and COO. Retained as President following Archer’s sale to Dominion Resources in 1998, Foo oversaw a tripling of the company’s size before leaving to create Petro Andina in 2002.
Like Foo, Vice President Operations and COO Barry Larson has more than three decades of experience in oil and gas. With 15 of those years coming in foreign operations, Larson comfortably operates in foreign climes. Two such positions, Founder of Aventura Energy and Vice President of Vermillion Oil and Gas, placed Larson in Trinidad and Tobago. For four additional years Larson lived and worked in Argentina. His working relationship with Foo goes back to at least 2005, giving Parex excellent stability in senior management.
Parex was formally established in 2009, starting with four exploration blocks in Colombia and two in Trinidad and Tobago. 2010 and 2011 marked their first discoveries at Kona and Sulawesi, which helped them go on stream and fund their looming growth spurt. 2012 can best be described as a discovery frenzy, with 12 finds resulting in ten significant oil producers that enabled Parex to more than double their 2011 output to 11,400 barrels of oil per day.
2012 was a charmed year for Parex. Their exploration success rate was 87% and proved reserves more than doubled from 4.9 million barrels of light oil to 10.1 million. Proved plus probable reserves (PPPR)increased by 50% to 16.1 million barrels of light oil, with PPPR growth per share of 29%. Proved plus probable net present value increased by $122 million (27%) to $576 million. Finding, developing and acquisition costs sat at $39.64 per barrel for the year. Monthly production at year end increased to 13,500 bopd.
As 2012 came to a close, Parex boasted 16 properties, Central Range Shallow/Deep and Moruga in Trinidad and Tobago, and Guariques, Morpho, Cabrestero, El Eden, Los Ocarros, and nine numbered sites in Colombia. All Colombian sites are either due east or northeast of Bogota.
Parex Resources has quickly grown into a company that displays an excellent combination of prudence and assertiveness, as they move quickly once certain conditions are in place. In four years they amassed an undrawn bank facility of $75 million, allowing them to self finance future projects. Their hallmarks are a focus on light oil projects with quick turnaround times.
One area to watch is the Los Ocarros site, where Parex has a 50% interest and which is Parex’s largest producer at 8,000 bopd. Parex will continue to operate in three zones (Mirador, Gacheta and Une) while exploring in a fourth. They are also investing in facilities at this location.
The novice investor with a casual knowledge of world events might question a company with such an intense focus on Colombia, a country with a bad reputation for crime. While crime is a concern in Colombia, the national government has taken serious steps to combat criminal organizations, whose forays into illegal gold mining have resulted in that activity overtaking cocoa production as the main funder of crime syndicates in one quarter of Colombia’s 32 states.
Late in 2012 Colombian President Juan Manuel Santos introduced a package of measures designed to seriously curb illegal mining which he personally blamed for fueling much of the violence in his country. Once passed, illegal mining will become a crime under the Colombian Penal Code. One step already enacted gives authorities the right to confiscate illegal mining equipment while a pending move places import restrictions on extracting and processing technology.
Even before these measures the World Bank named Colombia as the safest country in the region in which to conduct business. The fifth largest economy in Latin America, Colombia’s has grown four times as fast as Canada’s for the past decade. Foreign investment increased fourfold between 2002 and 2008, a sure sign that Parex’s decision to concentrate on Colombia is a sound one.