Parex Resources Inc. (TSX: PXT) reported robust financial and operational results for the second quarter ended June 30, 2026, showcasing a significant production increase largely attributed to the successful integration of Frontera E&P assets. The Calgary-based company also highlighted strong July production figures, reaffirmed its ambitious ‘step-change’ guidance for the latter half of 2026, and declared a Q3 2026 regular dividend of C$0.385 per share, signaling confidence in its expanded operational footprint.
Strategic Expansion Drives Transformative Growth
The successful closure of the Frontera E&P transaction on June 1, 2026, has fundamentally reshaped Parex, positioning it as Colombia’s largest independent oil and gas producer. Imad Mohsen, President & Chief Executive Officer, emphasized the seamless integration, stating, “The integration of the Frontera assets and its talented team has exceeded our expectations, with a seamless transition and strong execution across the combined organization.” This strategic move has significantly enhanced Parex’s scale, resilience, and capital allocation flexibility. The updated independent reserves reports underscore this transformation, with indicative combined Company PDP, 1P, and 2P reserves increasing by 82%, 83%, and 71% respectively from year-end 2025 figures, incorporating both Frontera and new Magdalena Basin assets. Parex expects to earn 50% production participation on approximately 15,000 bbl/d in the Magdalena Basin during H2 2026, following initial activity at the Casabe & Llanito blocks.
Accelerated Production and Reaffirmed Outlook
Parex’s Q2 2026 average production reached 54,121 boe/d, a notable increase from 44,735 boe/d in Q1 2026, primarily driven by the Frontera acquisition. This positive momentum continued into July 2026, with average production climbing to approximately 83,500 boe/d. Building on this performance, the Company reaffirmed its H2 2026 average production guidance of 82,000 to 91,000 boe/d. Exploration successes are also contributing to future growth, particularly at LLA-111, where current production averages over 5,000 bbl/d and is projected to increase by an additional 2,000 to 3,000 bbl/d in Q4 2026 as the dry season facilitates further development.
Robust Financial Performance Amid Integration
Financially, Parex reported a net income of $444 million, or $4.62 per basic share, for Q2 2026. This compares significantly to a net income of $49 million, or $0.50 per basic share, in the comparative quarter of 2025, with the substantial increase primarily attributed to a gain on acquisition. Adjusted funds flow provided by operations (FFO) for the quarter stood at $191 million, translating to an adjusted FFO per share of $1.99. These figures incorporate one-time costs of approximately $59 million, comprising $28 million in nonrecurring transaction-related costs and $31 million in realized losses on hedging contracts. The company also generated an adjusted EBITDA of $192 million. An operating netback of $45.14/boe and an adjusted FFO netback of $37.26/boe were realized, based on an average Brent crude oil price of $96.68/bbl.
Capital Discipline and Shareholder Returns
Capital expenditures for Q2 2026 totaled $134 million, primarily directed towards activities at LLA-111, LLA-34, VIM-1, and Capachos. Demonstrating financial prudence, Parex repaid $175 million of bank debt during the quarter. The company maintains a strong liquidity position, with access to $459 million via cash, marketable securities, and an available $240 million undrawn credit facility at quarter-end. In line with its commitment to shareholder returns, Parex declared a Q3 2026 regular dividend of C$0.385 per share, which annualizes to C$1.54 per share. This follows the payment of a regular quarterly dividend of C$0.385 per share in Q2 2026.
Mohsen concluded by stating that “Strong performance across our portfolio, together with contributions from the Frontera assets and new production from Eastern Llanos discoveries, positions us well to deliver our step-change 2026 guidance and supports a strong outlook underpinned by multiple growth engines.” The company’s strategic expansion, coupled with robust operational execution and disciplined financial management, sets a clear trajectory for sustained growth and value creation in the coming periods.
