Parex Resources and Geopark Shares Decline

Shares of Parex Resources and Geopark fell on Wednesday after Jefferies reported that the Colombian government is considering increasing taxes on oil and gas producers to help balance the nation’s budget.

Market Reaction

Parex Resources experienced a reduction of up to 8.3% on the Toronto Stock Exchange, marking its sharpest intraday drop since August. Geopark also saw a decline, with shares falling by as much as 2.7% on the New York Stock Exchange.

Tax Proposal Analysis

Alejandro Anibal Demichelis, an analyst at Jefferies, noted that the proposed tax increase would raise the existing surcharge tax by 200 to 500 basis points, depending on oil prices. The plan indicates that the current surcharge of 5-15% could be increased to 7-20%. Demichelis explained this tax hike as a governmental strategy to "balance its accounts."

Impact on Companies

Given the current prices of Brent crude oil, Demichelis predicts that companies like EcoPetrol, Geopark, and Parex might see a 5% increase in their tax liabilities.

Parex Resources Update

In a separate statement, Parex mentioned that it has entered a farm-in agreement with EcoPetrol. Additionally, the company reported that unplanned downtime affected its production in November and December due to "ongoing social protests," which have disrupted operations.

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