Finding decent, investable oil and gas producers on the Toronto Stock Exchange appears to become harder every day, as we continue on in this low commodity price environment. That said, there are a few cherries to be picked in the orchard that don't look to be rotten. I'm going to one gem in this article Parex Resources (TSX:PXT).
Parex Resources is a very unique company on the TSX in the sense that it really is a Colombian oil producer, with essentially zero exposure to heavy Canadian oil (Western Canadian Select) which has been hit particularly hard of late.
In fact, most of the company's oil production happens to be Brent crude (the global oil varietal), a unique operation for a North America-listed oil company, as most firms on the TSX or NYSE typically produce either WCS or WTI (West Texas Intermediate) oil varietals, which trade at a discount to Brent; WCS has a much larger discount to Brent than WTI.
This production situation has meant Parex has been able to quadruple its free cash flow over the past three years, reaping the benefit of higher Brent margins. Parex also has no net debt, making this one of the best balance sheets on the TSX, and among the most liquid.
I would encourage investors looking to cherry pick oil and gas exposure in this environment to look at companies like Parex with no net debt, solid operating fundamentals, preferably dealing in Brent production.
Invest wisely my friends.
