Parex and Geopark Stocks Decline Due to Colombia's Tax Hike Plans

Parex Resources and Geopark stocks fell on Wednesday following Jefferies’ announcement that the Colombian government is considering increasing taxes on oil and gas producers to balance the country's budget. Parex Resources shares dropped by up to 8.3% on the Toronto Stock Exchange, marking the sharpest intraday decline since August. Meanwhile, Geopark shares decreased by up to 2.7% on the New York Stock Exchange.

In a note published on Wednesday, Jefferies analyst Alejandro Anibal Demichelis stated that the tax proposal would increase the current extra tax by 200 to 500 basis points, depending on the actual oil price. The plan suggests raising the current extra tax, which ranges from 5% to 15%, to between 7% and 20%. Demichelis emphasized that the move to increase oil taxes is part of the government's strategy to "balance its accounts."

The analyst predicts that with current Brent crude oil prices, companies such as EcoPetrol, Geopark, and Parex could face a 5% increase in their tax obligations. In a separate announcement, Parex declared that it has entered into a farm-in agreement with EcoPetrol. Additionally, the company reported that its production in November and December has been affected by unplanned outages, which are attributed to "ongoing social protests" impacting operations.