February 16, 2012 / 3:48 PM / in 6 years

Parex Resources slides on lacklustre reserves estimate

Feb 16 (Reuters) - Shares in Parex Resources Inc fell as much as 17 percent to their lowest in nearly two months on Thursday, after the oil and gas company’s year-end reserve estimates disappointed investors.

The lacklustre reserve estimates prompted Dundee Capital Markets to downgrade the stock, while TD Securities cut its price target on the stock. Both brokerages said that the reserve results showed very little growth excluding acquisitions.

The Calgary-based company reported proved plus probable reserves growth of 83 percent, but this was mostly fuelled by the acquisition of the remaining 50 percent stake in four blocks in Colombia’s Llanos basin.

“Parex is experiencing operational difficulties and Q1/12 production will be much lower than expectations,” Dundee Capital Markets said in a client note and cut its rating on the stock to “neutral” from “buy.”

“The exploration program to date has not been too successful ... when we factor out the acquisition, reserves are actually down year-over-year.”

Parex, which operates assets in Colombia and Trinidad and Tobago, estimated that average production for the Oct-Dec quarter was about 11,340 barrels of oil per day (bopd) and sales volumes were 10,230 bopd.

TD Securities analyst Jamie Somerville said the latest results could be viewed “as a first blemish on an otherwise impressive track record of operational execution and production growth.”

The analyst cut his price target on the stock by 50 Canadian cents to C$8.50.

Parex shares were trading down 15 percent at C$7.10, making it one of the top 5 percentage losers on the Toronto Stock Exchange. (Reporting by Aftab Ahmed in Bangalore; Editing by Viraj Nair)

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