Parex and Geopark stocks dip on Colombia's tax hike plan

Shares of Parex Resources and Geopark fell Wednesday following the announcement by Jefferies that the Colombian government is considering raising taxes on oil and gas producers to help balance the nation's budget.

Parex Resources saw its shares drop by up to 8.3% on the Toronto Stock Exchange, marking the sharpest intraday fall since August. Meanwhile, Geopark's shares decreased by as much as 2.7% on the New York Stock Exchange.

Alejandro Anibal Demichelis, an analyst at Jefferies, detailed in a note on Wednesday that the tax proposal would increase the existing surcharge tax by 200 to 500 basis points, with the actual rate contingent on the price of oil.

The plan suggests that the surcharge, which currently ranges from 5-15%, would be raised to 7-20%. Demichelis highlighted that this move to hike oil taxes is a strategy by the government to "balance its accounts."

With the current prices of Brent crude oil , the analyst anticipates that companies like EcoPetrol, Geopark, and Parex could face a 5% rise in their tax obligations.

In a separate statement, Parex disclosed that it had entered into a farm-in agreement with EcoPetrol.

Additionally, the company reported that its production in November and December was affected by unplanned downtime. This interruption was attributed to "ongoing social protests," which have impacted operations.

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Source: Investing.com