Gran Tierra Energy Inc.(NYSEMKT:GTE)’s production growth seem to be on the right path. The company just announced very good drilling results from Peru and expanded its core acreage in Brazil by acquiring three onshore blocks in the recently completed Brazil Bid Round. This year, Gran Tierra Energy Inc.(NYSEMKT:GTE)’s production is expected to average 20,000 boepd (96% light oil) net after royalty.
2.) In 2012, Partnerre Ltd (TSX:PRE) acquired Petromagdalena for $225 million, or ~$62,500/boepd (95% oil and liquids).
3.) In 2012, Pacific Rubiales Energy also acquired C&C Energia for ~$620 million through a combined offer, paying ~$54,000/bopd for production of 11,500 bopd (100% light oil) and ~$33.7/bbl for 18.4 MMbbl 2P reserves.
Pacific Rubiales is Colombia’s biggest independent oil producer. It has gone from extracting 14,000 boepd in 2008 to 128,000 boepd in Q1 2013, and production is going to rise further in coming years. As part of this production growth plan, Pacific Rubiales recently expanded its acreage in Brazil where it was awarded three offshore blocks.
4.) In 2012, Canacol Energy Ltd. (TSX:CNE) acquired Shona Energy, paying $158 million for 2,300 boepd production (100% natural gas) or ~$68,700/boepd. Canacol Energy Ltd. (TSX:CNE) plans to spend CapEx of $67 million in calendar 2013 on drilling, work-overs, seismic, production facilities, and pipelines in Colombia and Ecuador, anticipating net average production before royalties of between 7,500 and 8,500 boepd by year’s end.
Looking ahead
Parex guides for full-year 2013 average production to be approximately 15,000 bopd, which can be achieved within the existing 2013 capital expenditure budget of $210 million. The company’s annual CapEx is fully funded out of cash flow. In Q1 2013, Parex enjoyed strong operating net-backs and generated $60 million in fund flows from operations.
This helps Parex maintain a strong balance sheet without increasing its leverage. Parex will retain the annualized long-term debt/cash flow (D/CF) ratio well below 1x, which is quite controllable.
A normal course issuer bid is also ongoing, as Parex believes that its current valuation doesn’t adequately reflect its value given its production, reserves and growth prospects.
Foolish round up
After all, I am just stating the obvious. Parex sells at a big discount and merits a move upward. It is also one of the Colombian producers that is well positioned to capitalize on the strengthening political stability and operational security in Colombia. However, patience might be required when investing in Parex because nobody can predict how long this stock will keep flying under the radar.
Nathan Kirykos has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Nathan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article This South American Oil Play Flies Under the Radar originally appeared on Fool.com is written by Nathan Kirykos.
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