Caesars Entertainment misses Q2 earnings expectations, shares edge lower
Parex Resources reported a significant earnings miss for Q4 2024, with EPS coming in at -0.7 compared to the forecast of 1.15. Despite this, the company’s stock price experienced a modest increase of 0.73%, closing at $12.39, reflecting investor confidence in its strategic initiatives and strong free funds flow of $275 million for the year. According to InvestingPro data, the company maintains a robust financial health score of 3.05 (rated as "GREAT"), suggesting strong underlying fundamentals despite the earnings miss.
Key Takeaways
- Parex Resources reported a substantial EPS miss for Q4 2024.
- The stock price rose slightly by 0.73% post-earnings announcement.
- The company generated $275 million in free funds flow in 2024.
- Production guidance for the year was met, averaging 49,000-50,000 BOE per day.
- Strategic exploration and technology initiatives are underway.
Company Performance
Despite the earnings miss, Parex Resources demonstrated strong operational performance in 2024. The company generated $275 million in free funds flow, supported by a Brent oil price of $74 per barrel. Production averaged 45,297 BOE per day in Q4, meeting the full-year guidance range. These factors indicate robust operational capabilities amid market challenges. The company’s strong balance sheet, with more cash than debt and an impressive dividend yield of 12.52%, further reinforces its financial stability. InvestingPro analysis reveals the company has raised its dividend for 4 consecutive years.
Financial Highlights
- Revenue: Not specified
- Earnings per share: -0.7 (missed forecast of 1.15)
- Free funds flow: $275 million for 2024
- Q4 funds flow from operations: $141 million
Market Reaction
Following the earnings announcement, Parex Resources’ stock price increased by 0.73%, closing at $12.39. This movement suggests that investors are focusing on the company’s strategic initiatives and operational strengths rather than the earnings miss. The stock remains close to its 52-week low, indicating broader market pressures. InvestingPro technical indicators suggest the stock is currently in oversold territory, with management actively buying back shares to support shareholder value.
Outlook & Guidance
Parex Resources plans to focus on lower-risk activities in 2025, with production growth targeted for the second half of the year. The company is preparing to drill the Farajones exploration well in 2026 and is continuing its exploration and technology implementation efforts. Potential share buybacks and balance sheet strengthening are also on the agenda.
Executive Commentary
Eric Furlan, Chief Operating Officer, stated, "We are currently running two rigs and expect to ramp up to four in the second quarter." Ken Grainger, Chief Financial Officer, noted, "We generated strong financial results in 2024, inclusive of an adjusted capital plan in the second half of the year." Ahmad Walton, President and CEO, emphasized, "We are dedicated to rebuilding market confidence by delivering steady results as we unlock our Colombian portfolio."
Risks and Challenges
- The significant EPS miss could impact investor confidence.
- Lower capital expenditures may signal cautious spending.
- Global crude price tensions pose a risk to future performance.
- Market saturation and geopolitical risks in Colombia could affect operations.
- Potential supply chain disruptions may hinder production growth.
The absence of a Q&A session in the earnings call limits insights into analysts’ perspectives and concerns.
Full transcript - Parex Resources Inc (PXT) Q4 2024:
Karen, Conference Operator: 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 twenty twenty four Year End Results. All lines have been placed on mute to prevent any background noise. I will now turn the call over to Mike Crookton.
Please go ahead.
Mike Currington, Senior Vice President of Capital Markets and Corporate Planning, Parex Resources: Good morning, and welcome to Parks Resources’ fourth quarter twenty twenty four conference call and webcast. My name is Mike Currington, Senior Vice President of Capital Markets and Corporate Planning. And on the call with me today are our President and Chief Executive Officer, Ahmad Walton our Chief Financial Officer, Ken Grainger and our Chief Operating Officer, Eric Furlan. Please note that at any time, telephone participants on the phone can press star one to submit a question. As a reminder, this conference call includes forward looking statements as well as non GAAP and other financial measures with the associated risks outlined in our news release and MD and A, which can be found on our website or at sedarplus.ca.
Note that all amounts discussed today are in U. S. Dollars unless otherwise stated. I will now turn the call over to Matt. Please go ahead.
Ahmad Walton, President and Chief Executive Officer, Parex Resources: Thank you, Mike, and good morning, everyone. In 2024, we achieved strong financial results from our underlying asset base despite headwinds we faced during the year. By maintaining capital discipline and optimizing our commercial assets, we generated $275,000,000 in free funds flow making the third highest result in Berg’s history. Alongside our strong financial performance, we made significant progress on several strategic fronts. As our results report stated, our core assets at Tiano thirty four and Capastero are performing at or above our expectations.
This performance has been supported by progression of our waterflood labs at both blocks to maximize reservoir performance. In addition, our polymer injection pilot at Capstero is demonstrating Sacre. And building on that, we are moving forward to the full deployment there in addition to a planned pilot AN-thirty four and AN-twenty five. In the Putumayo, we see a significant redevelopment opportunity, supported by multi billion barrels of oil in place volumes. To date, the area has produced over three fifty million barrels through primary recovery methods and limited recent drilling.
We see substantial potential to increase recovery factors by applying lower risk strategies. We should provide long term running room for us in terms of inventory, production and reserves. In the Yamas Foothills, we have made significant progress on our gas and exploration plan. We have aligned our land positions with our strategic partner Ecpetrol in a trend that boasts world class subsurface potential and became the operator. Our near term focus is preparing to drill the Farajones exploration well in 2026, which is currently the top ranked prospect in our portfolio.
These strategic milestones support our long term sustainability. We remain committed to Colombia and see our current portfolio as a sustainable base combined with the steps change in exploration upside. Before moving on, I would like to introduce Cam Grainger, our Chief Financial Officer. With over fifteen years of growing responsibility at Parex and an extensive in-depth understanding of Post Colombia and our portfolio, CAM is uniquely positioned to make a significant impact and play a key role in driving our success moving forward. Additionally, I want to recognize the years of service and contributions from directors, Lisa Colnet and Robert Enzo, who have announced they are retiring from the Board in May.
In preparation to their upcoming retirements and consistent with our Board renewal process, we are pleased to recommend Monae Jaczynski and Jeff Lauzon to stand for election at our upcoming AGM, both of whom have energy sector experience and will bring refreshed perspectives. With that, I’ll now turn it over to Erik to provide additional details on our recent operational performance and reserves reports. Please go ahead, Erik.
Eric Furlan, Chief Operating Officer, Parex Resources: Thanks, Ahmad. For Q4 twenty twenty four, production averaged 45,297 BOE per day, which allowed us to meet our revised full year guidance range of 49,000 to 50,000 BOE per day. Operationally, we are currently running two rigs and expect to ramp up to four in the second quarter. This activity aligns with our plan to grow our production profile in the second half of twenty twenty five with operations progressing within our expectations. Key priorities for delivering our 2025 plan include: continuing to progress waterflip and polymer activity in Block 34 in Capistaro starting our Block 32 drilling campaign advancing our near field exploration or Small E program and finishing the groundwork needed to begin our operational activity in the Putumaya, which is set to begin in the second quarter.
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. At LLA thirty four, we saw positive technical revisions from our waterflood implementation, which increased the recovery factor. And the Cabistero, we improved recovery through the successful implementation of polymer injection.
Moving on to the Putumayo. As previously announced, we’ve added 10,000,000 barrels of 1P and 18,000,000 barrels of 2P of reserves. As Ahmad mentioned, as we start operations in the basin, we believe there’s additional upside that can be captured. Across the portfolio, our outlook for 2025 is possible with optimism for further exploration of technology success in conjunction with successful exploration efforts.
Ken Grainger, Chief Financial Officer, Parex Resources: With that, I’d invite Cam to please go ahead. Thanks, Eric. As Ahmad mentioned, we generated strong financial results in 2024, inclusive of an adjusted capital plan in the second half of the year. For the quarter, funds flow provided by operations was AUD 141,000,000, supported by Brent oil price of AUD 74 per barrel as well as a recovery in current tax. Notably in the quarter, we had a current tax recovery of $6,000,000 which compares to a $9,000,000 expense in the previous quarter.
This reduction in current taxes is mainly a result of opportunistic tax driven transactions in Q4 twenty twenty four along with tax strategies deployed in recent years. For 2025, we expect a lower effective tax rate will remain, which our current guidance is 3% to 6% at $70 per barrel Brent. This is supportive of our FFO netback and contributes to a stronger dividend payout ratio. Also supporting our FFO netback 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.
This price improvement is likely due to ongoing tariff tensions that are affecting global crude prices and likely increasing the demand for Colombian crude. This could be a differentiator for Parex relative to other energy companies where tariffs are currently having a negative impact. Capital expenditures for the quarter were $82,000,000 which was at the lower end of guidance. Lower capital supported free funds flow, which for the quarter was $59,000,000 As Eric mentioned, currently operations are progressing within our expectations and thus our 2025 guidance is unchanged as a result. With that, I’ll pass it over to Ahmad for some final remarks.
Ahmad Walton, President and Chief Executive Officer, Parex Resources: Thank you, Caron. I’m very confident about our 2025 plan, which is focused on lower risk activities and high graded set of opportunities. Right now, our team is dedicated to rebuilding market confidence by delivering steady results as we unlock our Colombian portfolio, which we think has compelling risk and reward profile for investors. In parallel, we plan to continue strengthening our track record of shareholder returns. The dividend has hedged on our current plans and for any excess cash flow, we expect to see to use it for share buybacks and balance sheet strengthening purposes.
Over the past five years, we have been able to return CAD 1,500,000,000.0 to shareholders, which is more than our current market cap. I’m confident that we will continue building on that track record in 2025 and beyond. To close, I want to thank our employees, shareholders and partners for their ongoing support. In particular, I want to emphasize and thank all our employees for their unwavering dedication to safety. Thank you to your thanks to your daily commencement.
2024 marked our company’s best safety performance yet. This concludes our formal remarks. I would now like to turn the call back to the operator to start the Q and A session for the investment community. Thank you.
Karen, Conference Operator: If there are no questions, I will now conclude the Q and A session. I will turn the call over to Mike Crocton for closing remarks.
Mike Currington, Senior Vice President of Capital Markets and Corporate Planning, Parex Resources: Thank you very much for joining us. If you have any additional questions, please feel free to contact us at Parx. Have a good day.
Karen, Conference Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining and you may now disconnect.
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