Canaccord increases price target to 17.00Raising target on appraisal success Estimate revisions We are increasing our target price for Parex to C$17.00/sh (from C$15.00/sh) to account for appraisal success and risked upside potential from the current drilling program. Appraisal results to date at Jacana suggest the field is potentially on par with, or larger than, current 3D mappings; to account for this, we have added 10 MMbbl of production volumes to our base NAV. Overall, our base and risked (3P) NAVs have increased 12% and 9% to C$10.45 and C$14.00, respectively. Our C$17.00/sh target incorporates risked upside from the current program, which maps to a 20% premium over our 3P NAV. We believe the company has a number of potential catalysts that could materialize through year-end, which we outline below. Exploration drilling. Prior to year-end, Parex expects to spud eight prospects targeting a variety of play types. In total, we estimate potential net unrisked resources of ~40 MMbbl for the program. Appraisal drilling. With 43 MMboe of Possible reserves, we believe a key component of Parex's growth will come from reserve upgrades. Tigana and Jacana account for ~70% of the conversion opportunity and in the near term, the Jacana-5 well will be tested. If successful, Jacana-5 could move the oil-water contact significantly down structure. In our view, this would likely result in further reserve additions. Aguas Blancas pilot. The company expects to commence its Aguas Blancas (50% WI) appraisal program in Q3. Through year-end, Parex plans to drill seven wells, including five delineation/production wells and two water-flood pilot injection wells. Pending positive results, this could result in reserve additions in early 2017. Currently, only 16% of the prospective area is booked to 2P with a 10% recovery factor. If the full area is prospective and a 30% recovery factor can be achieved, we estimate potential upside of 60 MMbbl net to Parex. Potential M&A. With no debt, $98 million in working capital and $175 million undrawn on its credit facility, Parex maintains an exceptional balance sheet. We believe this provides Parex with the opportunity to act on attractive acquisition opportunities. In our view, one of the more compelling opportunities in Colombia is joint ventures with Ecopetrol. We think these could be attractive given the limited competition, potentially low upfront costs, and likely focus on recovery factors versus exploration. Valuation With a 2017E EV/DACF multiple of 5.2x, Parex trades above the International average of 3.4x and below the Domestic average of 7.2x. We expect the stock to continue to perform well in a rising oil price environment given its torque to rising oil prices, superior balance sheet, consistent performance and exploration upside. Should commodity price fundamentals deteriorate, we believe a flight to quality trend will mitigate downside.