As many here will know, Im constantly banging on about the lack of decent UK E&P plays and how Im finding more and more overseas, especially in Canada. Well, heres another one, which impressed me at the First nergy Global Energy conference last year.

Parex Resources - company website here

The group is focussed on two areas, Colombia  and Trinidad & Tobago, where it is partnered with another favourite of mine, Niko in the Central Range Block, with a 25% interest in the Shallow licence and 15% in the Deep licence. It also has 50% of the Cory Morguga block.

There is a recent (7 April 2011) presentation on the website that will give a good oversight of the company's assets and plans.

However, what this doesnt cover is the deal announced last week that is of major significance. This saw the company acquire its partner in Colombia which holds the other 50% that it doesnt already hold in the Four Llanos Basin blocks. The deal cost $255m which is funded by a bought deal (at $7) raising C$165m and a convertible for another C$85m. Note, we took part in the bought deal which was heavily oversubscribed.  

What the deal means is that the company has now increased its exit production rate for 2011 from 7,000 bopd to 14,000 bopd. The deal adds 5.2mmbbls of 2p and 3P of 9.6mmbbls. Note that this is only on the LLA-16 licence which is in production and does not include any reserves for the remaining three licences.

As an example, the other three licences (LLA 20,29 and 30)  are each estimated to have 20mmbbls unrisked resources (Wellington West figs).

The company's now prodigious cashflows will fund all capex operations in the core areas. Estimated cashflow for 2011 $129m rising to $378m in 2012, which would put the company on a very low PCF rating - 2011 est of $2 and 2012 est of $3,30 per share). Yes, that woudl be a cf/s of just 2.25x on 2012 figs.

The increased cashflow has allowed the company to increase Capex in Colombia by $30-$35M for a total of $120-$140m. Before the deal Parex was looking to drill 16-20 wells in Colombia, 6 being development and 10-14 being explo/appraisals.

The real interest is the high impact potential for Trinidad, especially the Central Range Block. The Shallow and Deep reserves estimates are…

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