Parex Resources Inc. (PXT-T)

Company spent too much money on recent oil play. Major disaster. Company will have to find a new strategy going forward. NAV = $16/share. Would not recommend investing at this time. Dividend appears safe. 

PXT EPS was $4.32, vs estimates $4.19; revenue of $1.17B missed estimates of $1.26B. But production guidance was lowered. Parex's disappointing operational performance again in 2Q  was caused by flooding at LLA-34 and lower-than-expected results at Arauca. Still, solid financial results suggest free-cash-flow momentum may extend into 2H amid a constructive oil price backdrop. Suppressed 1H volume indicates full-year production may be at or below the low end of guidance of 54,000-60,000 barrels a day, amid an operational halt at Arauca. Climbing operating cash should cover capital outlays, which will likely be at the lower end of $390-$430 million range this year. A 32% surge in 2Q free cash underscores Parex's cash-generative profile and should accommodate its annual dividend payout of $115 million (8% yield), suggesting scope for share buybacks in 3Q. But the CFO resignation adds uncertainty, and investors will probably start questioning the dividend. The stock is VERY cheap, but it was cheap three months ago as well. Operational performance needs to improve. We think, while it is generally OK due to the revised valuation and balance sheet, buyers can wait for this to shake out some more. 
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Yield is 8.8%, sustainable for the time being, watching very closely. He also writes calls for a really juicy premium. Sold off because nothing but disappointing news. New drilling required to backfill shortfalls. If you want dividends, this is not the one. Try FRU instead.

If you invest in Colombia, you just have to be cognizant that small communities will shake them down for payoffs from time to time. Likely to be a value trap for that reason. Very cheap, but challenged to see what the catalyst for capital appreciation is. He owns it in an income fund, for a yield of 7.2%. You can also write calls.

Doesn't own shares currently, but is familiar with the company. Performance has been frustrating. Production located in Colombia (~60,000 boe/d). Dividend consistent with share buybacks well executed. Colombia very unstable - geopolitical tensions are putting pressure on company. Current share price is cheap, but better names available - too risky. 

It remains a value trap and doesn't see this changing. A Colombian strike took production offline. Management faces other troubles, like exploration risk. 

It is a great Canadian success story but is at a new low due to concern about being in Columbia. However Columbia needs Parex for its technology. Although it didn't hit production levels in the fourth quarter it is adding production and there is a big exploration upside. It is very profitable and is buying back 30% of its shares over the next few years.

Buy on the dip. Price of crude oil commodity is out of company control, affecting share price. Getting spikey with Red Sea transportation disruption. Low cost, debt free. Returns most capital to shareholders. Share buybacks. Financially disciplined, quality assets. 

Doing the right things: modest growth, maximum free cashflow, pays a dividend, aggressively buying back stock. Would be a core holding if it weren't for the jurisdiction. Compelling value, trading below 3x with free cashflow yield 16%. There are better opportunities for capital appreciation.

OPEC meetings are reactive, not pro-active. With all their data, for instance, they cut production if that data foretells weak demand. So, a cut is not a good thing. That said, he would buy quality oil stocks like Parex and Tourmaline.

Share buybacks total 35-40% in the last 4-5 years. Likes that. 

Frustrating. NAV is above $30/share, and shares lag this. Continues to like it though; they are doing the right things by growing cash flow. Margins are tremendous because the costs of producing oil in Colombia is low. Plus, they're getting better routes to market with pipelines. Are exposed to Brent Oil instead of WCS, so prices they get are better. They are buying 10% of outstanding shares each year, a big amount. Happy to hold.