CALGARY, ALBERTA--(Marketwire - Aug. 11, 2011) -


Parex Resources Inc. ("Parex" or the "Company") (TSX VENTURE:PXT), a company focused on oil exploration and production in Colombia and Trinidad, is pleased to report its unaudited interim financial and operating results for the three months ended June 30, 2011 ("Second Quarter"). Copies of the Company's consolidated financial statements and the related Management's Discussion and Analysis ("MD&A") have been filed with Canadian Securities Regulatory Authorities and will be made available under the Company's profile at and on the Company's website at All amounts below are in United States dollars unless otherwise stated.

Second Quarter highlights include:

--  Closed the previously announced acquisition (the "Acquisition") of the
    remaining 50% interest Parex did not already own in four Llanos Basin
    blocks in Colombia, including the Kona light oil field on Block LLA-16,
    for approximately $253 million, net of adjustments. This transaction
    doubled the Company's reserves and production; 
--  Completed a bought deal financing, issuing 31.05 million shares at
    CDN$7.00 per share for gross proceeds of approximately CDN$217 million
    and CDN$85 million aggregate principal amount of 5.25% convertible
    unsecured subordinated debentures, for total combined gross proceeds of
    CDN$302 million; 
--  Achieved quarterly oil production of 1,619 barrels of oil per day
    ("bopd"), a 48% increase over the first quarter of 2011; 
--  Delivered June 2011 exit production rate in excess of 6,000 bopd, as a
    result of the Acquisition and continued development of the Kona field; 
--  Realized sales price in Colombia was $104.67 per barrel generating an
    operating netback of approximately $71 per barrel. Throughout the Second
    Quarter the Company increased oil delivery with reference pricing to
    Colombian Vasconia Blend (which is highly correlated with Brent
    benchmark pricing); 
--  Drilled three oil wells and one water disposal well in Colombia (4 net);
--  Commissioned and debottlenecked a 30,000 barrel of fluid per day oil
    treatment plant and water disposal facility at Kona; 
--  Fulfilled the earning commitments for the Trinidad onshore Moruga Block
    through drilling the Firecrown-1 sidetrack well; 
--  Signed Los Ocarros Block farm-in and commenced drilling Las Maracas-2
    sidetrack well; and 
--  Maintained a strong balance sheet with cash and cash equivalents of
    $115.5 million and working capital of $101.4 million at June 30, 2011.

Subsequent to the Second Quarter of 2011 highlights include:

--  Drilled the Las Maracas-2 side-track well to total depth and preparing
    to case; 
--  Spud Block LLA-16 Sulawesi-1 exploration well on July 16, 2011 and cased
    the well to the Mirador Formation; 
--  Spud Central Range Shallow Block Cribo-1 exploration well in Trinidad on
    July 22, 2011; and 
--  Increased Kona field light oil production to approximately 7,010 bopd.

Second Quarter Financial Summary

Sales volumes, net working interest before royalty, for the Second Quarter of 2011 averaged 1,125 bopd. During the Second Quarter of 2011 the realized sales price in Colombia was $104.67 per barrel generating an operating netback of $70.97 per barrel. In addition during the Second Quarter Parex entered into a new crude oil contract and delivered approximately 90,000 barrels of oil which was reflected as inventory until subsequently sold in July 2011 for proceeds of approximately $9.0 million after royalties and transportation charges. The build up in inventory was not a result of a lack of buyers or inadequate infrastructure to deliver the oil, but was a consequence of that specific contract's terms which included pricing referenced to Colombian Vasconia Blend.

For the Second Quarter of 2011, the Company's net loss was $4.7 million ($0.06 per share fully diluted) and funds flow from operations was $0.3 million ($0.00 per share fully diluted). The Company's funds flow from operations would have increased by $5.9 million ($0.07 per share fully diluted) at the end of the Second Quarter if oil inventory had been sold in the quarter. All of Parex' oil inventory in transit was subsequently sold under pricing referenced to Colombian Vasconia Blend.

As the Acquisition closed on June 29, 2011 the impact of the acquired assets on Second Quarter results were insignificant. However, the Acquisition transaction costs of $1.8 million were expensed in the Second Quarter.

The Company's capital expenditures for Second Quarter, excluding the Acquisition, were $23.3 million, with $21.8 million invested in Colombia and $1.5 million invested in Trinidad. Capital expenditures were funded from available cash and funds flow from operations.

Quarterly Highlights(1),(2)

                                   Three Months ended      Six Months ended 
                                              June 30,              June 30,
                                      2011       2010       2011       2010 
Average daily production(3)                                                 
  Oil (bbl/d)                        1,619          -      1,441          - 
  Natural gas (boe/d)                    -         11          -         12 
 Total (boe/d)                       1,619         11      1,441         12 

Average daily sales                                                         
  Oil (bbl/d)                        1,125          -      1,136          - 
  Natural gas (boe/d)                    -         11          -         12 
 Total (boe/d)                       1,125         11      1,136         12 

Operating netback ($/boe)                                                   
  Oil and natural gas revenue       104.67      29.00     100.09      30.00 
  Royalties                         (11.67)         -      (9.13)         - 
  Net revenue                        93.00      29.00      90.96      29.00 
  Production expense                 (7.97)    (20.98)     (6.01)    (18.00)
  Transportation expense            (14.06)         -     (17.93)         - 
 Operating netback                   70.97       8.02      67.02      11.00 

($000s except per share amounts)                                            
Oil and natural gas revenue         10,719         32     20,572         68 
Net loss                            (4,688)    (4,451)    (3,665)    (8,022)
 Per share basic                     (0.06)     (0.07)     (0.05)     (0.13)
 Per share diluted                   (0.06)     (0.07)     (0.05)     (0.13)
Funds flow from (used in)                                                   
 operations                            334     (2,617)     3,294     (5,942)
 Per share basic                      0.00      (0.04)      0.04      (0.09)
 Per share diluted                    0.00      (0.04)      0.04      (0.09)

Capital expenditure                                                         
 Exploration & Development -                                                
  Colombia                          21,764      6,197     36,490      8,773 
 Exploration & Development -                                                
  Trinidad                           1,539      4,265      4,927      8,303 
 Corporate Acquisition             252,993          -    252,993          - 

Total assets                       593,699    127,789    593,699    127,789 

 Working capital surplus           101,422     72,883    101,422     72,883 
 Convertible debentures             61,200          -     61,200          - 
 Bank debt                               -          -          -          - 
Total net debt (excess)            (40,222)   (72,883)   (40,222)   (72,883)

Outstanding shares (end of                                                  
 period) (000s)                                                             
 Basic                             108,215     63,870    108,215     63,870 
 Diluted                           113,783     67,857    113,783     67,857 

(1) The table above includes non-GAAP measures. Please refer to the "GAAP
    and Non-GAAP Terms" section for further discussion.
(2) The Company's average working interest during the Second Quarter was
    approximately 50 percent in its properties in both Colombia and
    Trinidad. Note that on June 29, 2011, Parex closed its Colombia Llanos
    Basin Acquisition which increased its working interest to 100 percent
    for blocks LLA-16, LLA-20, LLA-29 and LLA-30. 
(3) Includes approximately 90,000 barrels of oil inventory which was sold in
    July 2011.

Colombia Operations Update

Current production is approximately 7,010 bopd with five wells currently pending operations as discussed below. A summary of the Company's current operations is provided below:

Well                   Formation                Status          Current bopd
Kona-1                   Mirador             Producing                 1,840
Kona-2                   Gacheta             Producing                 1,420
Kona-3                   Mirador         Side-tracking                     0
Kona-4                        C7 Complete after Kona-8                     0
Kona-5                   Mirador             Producing                   860
Kona-6                        C7             Producing                 2,890
Kona-7                   Mirador    Drill after Kona-3                     0
Kona-8                   Gacheta                Casing                     0
Supremo-1                Mirador             Suspended                     0
Total                                                                  7,010

The Kona-3 well was drilled as a side-track operation to the Mirador Formation. A whipstock drilling tool failed while logging and as a result the side-track had to be abandoned. A new side-track operation has commenced and the Company expects to start production from the well by late September 2011. The Kona-7 well, targeting the Mirador Formation, is located on the same drilling pad as Kona-3 and will be drilled after the Kona-3 side-track operation.

On July 10, 2011, the Kona-5 well began producing as a twin development well to Kona-4 from the Mirador Formation. Subsequently, the Kona-4 well has been suspended in the Mirador Formation and Parex plans to move up-hole and complete the C7 Formation. As Kona-4 and Kona-8 share the same drilling pad, the Kona-4 C7 Formation completion is scheduled to immediately follow the completion of the Kona-8 well.

On July 11, 2011, the Kona-8 well was spud and was designed to evaluate the Gacheta Formation south-eastern field edge. The well was logged and is being cased for production. The logs indicated approximately 10 feet of oil pay, which was within the Company's expectations. The well is expected to be on-stream in late August 2011. A further 3 wells (Kona-9 to Kona-11) are scheduled to be drilled at Kona in 2011.

The Supremo-1 well extended production testing indicated that this well was at the Mirador Formation oil/water contact. Well logs and seismic interpretation indicate that a structurally higher oil target exists. Parex has suspended the Supremo-1 well and expects to drill Supremo-2 during the third quarter 2011 to test this prospect up structure.

Colombia Exploration

The Sulawesi-1 well on Block LLA-16 was spud on July 16, 2011. This well was drilled to a depth of 12,000 feet to test the C7 and Mirador formations and is located approximately 11 kilometers south-east of the Kona field, along the same fault trend. Based on hydrocarbon shows and well logs, Sulawesi-1 has been cased and both primary objectives are expected be completed and tested. Parex expects to immediately drill Sulawesi-2 as a follow-up appraisal well.

On June 22, 2011, Parex signed a farm-in agreement with Petroamerica Oil Corp. for the Los Ocarros Block, which is located directly south-west of Block LLA-16. Under that agreement Parex will fund the first $7 million of the drilling costs associated with the Las Maracas-2 sidetrack well. Thereafter, Parex will pay 50 percent of the Maracas-2 sidetrack well drilling or completion costs. The side track operation has been completed. Based on hydrocarbon shows and well logs, the Las Maracas-2 well is currently being prepared to case.

In addition to the appraisal and delineation activity planned for Kona, Supremo and Sulawesi, the exploration prospects scheduled to be spud prior to year-end 2011 are Kona Norte, Merida and Java on LLA-16, and Cumbre on LLA-20.

Parex has initiated a large 3-D seismic program that will cover 75 square kilometres ("km(2)") on Block LLA-16, 135 km(2) on Block LLA-20, and 165 km(2) on Block LLA-57. The seismic program is expected to be completed by year-end 2011.

At the close of the Acquisition, Parex assumed operatorship on blocks LLA-29 and LLA-30. Parex has identified several prospects and has begun the regulatory process to allow for civil work and drilling to commence during early 2012.

Colombia Llanos Basin Acquisition Update

On June 29, 2011 Parex acquired a company that held the 50 percent interest Parex did not already own in four Llanos Basin blocks in Colombia, including Block LLA-16 and the Kona field, for approximately $253 million, net of closing adjustments. The Acquisition represented a strategic fit for the Company as it doubled the Company's Colombian operating income, reserves and production.

Trinidad Update

On the Central Range Shallow Block (50 percent working interest), the Cribo-1 well was spud on July 22, 2011 and is drilling to a target depth of approximately 4,500 feet using an existing onshore Trinidad rig. Following the Cribo-1 well, the final Central Range Shallow Block earning well, Mapepire-1 is scheduled to be drilled.

In order to accommodate Parex' ongoing Trinidad exploration activity in the Central Range and Moruga blocks, the Company is continuing discussions with contractors to mobilize to Trinidad one to two modern and fit for purpose drilling rigs capable of drilling to depths of up to 12,000 feet. Contingent on mobilizing suitable rigs, Parex' 2011 capital guidance includes drilling the following wells in the fourth quarter of 2011: Central Range Deep Block prospect-1, Snowcap-2 and Firecrown-1 side-track.

2011 Guidance

Parex expects to exit 2011 with oil production of 14,000 bopd. After accounting for the closing of the Acquisition and the Los Ocarros Block farm-in, Parex' 2011 capital budget for Colombia and Trinidad has increased and is expected to be approximately $140-$160 million, of which $99-$119 million is expected to be incurred in the last six months of 2011, including approximately $20 million contingent on mobilizing up to two rigs to Trinidad. For the remainder of 2011, Parex expects to operate three drilling rigs and one service rig in Colombia.

Parex expects to fund the remainder of the 2011 capital program largely from funds flow from operations with any remaining requirements from existing working capital.

Excluding the net Acquisition purchase price, the 2011 forecast capital expenditures ("Capex") and exit rate production are:

                                                      Colombia      Trinidad
Capex: Six Month Ended June 30, 2011 ($                                     
 millions)                                                 $36            $5
Capex: July 1 - December 31, 2011 ($ millions)             $95        $4-$24
Total Forecast 2011 Capex ($ millions)                    $131        $9-$29
Forecast Exit Rate Production (bopd)                    14,000             0

Conference Call Information

Parex will host a conference call to discuss these results on Friday August 12, 2011 beginning at 10:30 am MST (12:30 pm EST). Media, analysts and investors wishing to participate in the call can access it by calling 1-866-696-5910, pass code: 3726765.

The live audio

Corporate Overview

Parex, through its direct and indirect subsidiaries, is engaged in oil and natural gas exploration, development and production in South America and the Caribbean region. Parex is conducting exploration activities on its 705,000 acre holdings in the Llanos Basin of Colombia and 223,500 acre holdings onshore Trinidad. Parex is headquartered in Calgary, Canada.

This news release does not constitute an offer to sell securities, nor is it a solicitation of an offer to buy securities, in any jurisdiction.

GAAP and Non-GAAP Terms

Effective January 1, 2011, Parex adopted International Financial Reporting Standards ("IFRS"). The Corporation's interim consolidated financial statements and the 2010 comparative information has been prepared under IFRS which are generally accepted accounting principles ("GAAP") for publically accountable enterprises in Canada.

Funds flow used in, or from operations, working capital, operating netback per barrel and total net debt may from time to time be used by the Company, but do not have any standardized meaning under GAAP and may not be comparable to similar measures presented by other companies. Funds flow used in, or from operations includes all cash generated from operating activities and is calculated before changes in non-cash working capital. Funds flow used in operations is reconciled with net earnings in the Consolidated Statements of Cash Flows. Funds flow per share is calculated by dividing funds flow used in, or from operations by the weighted average number of shares outstanding. Working capital includes current assets less current liabilities. Operating netback per barrel equals sales revenue, less royalties, production expense and transportation expense, divided by total equivalent sales volume. Total net debt is a non-GAAP measure defined as the sum of working capital less the convertible debentures (excluding the derivative financial liability associated with the convertible debentures). The principal amount of the convertible debentures is CDN$85 million. Management uses these non-GAAP measures for its own performance measurement and to provide shareholders and investors with additional measurements of the Company's efficiency and its ability to fund a portion of its future growth expenditures.

Advisory on Forward Looking Statements

Certain information regarding Parex set forth in this document contains forward-looking statements that involve substantial known and unknown risks and uncertainties. The use of any of the words "plan", "expect", "prospective", "project", "intend", "believe", "should", "anticipate", "estimate" or other similar words, or statements that certain events or conditions "may" or "will" occur are intended to identify forward-looking statements. Such statements represent Parex's internal projections, estimates or beliefs concerning, among other things, future growth, results of operations, production, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, plans for and results of drilling activity, environmental matters, business prospects and opportunities. These statements are only predictions and actual events or results may differ materially. Although the Company's management believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause Parex' actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, Parex.

In particular, forward-looking statements contained in this document include, but are not limited to, statements with respect to the performance characteristics of the Company's oil properties; supply and demand for oil; financial and business prospects and financial outlook; results of drilling and testing, results of operations; drilling plans; activities to be undertaken in various areas; capital plans in Colombia and exit rate production; plans to acquire and process 3D seismic; timing of drilling and completion; and planned capital expenditures and the timing thereof. In addition, statements relating to "reserves" or "resources" are by their nature forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the resources and reserves described can be profitably produced in the future. The recovery and reserve estimates of Parex' reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered.

These forward-looking statements are subject to numerous risks and uncertainties, including but not limited to, the impact of general economic conditions in Canada, Colombia and Trinidad & Tobago; industry conditions including changes in laws and regulations including adoption of new environmental laws and regulations, and changes in how they are interpreted and enforced, in Canada, Colombia and Trinidad & Tobago; competition; lack of availability of qualified personnel; the results of exploration and development drilling and related activities; obtaining required approvals of regulatory authorities, in Canada, Colombia and Trinidad & Tobago; risks associated with negotiating with foreign governments as well as country risk associated with conducting international activities; volatility in market prices for oil; fluctuations in foreign exchange or interest rates; environmental risks; changes in income tax laws or changes in tax laws and incentive programs relating to the oil industry; ability to access sufficient capital from internal and external sources; the risks that any estimate of potential net oil pay is not based upon an estimate prepared or audited by an independent reserves evaluator; that there is no certainty that any portion of the hydrocarbon resources will be discovered, or if discovered that it will be commercially viable to produce any portion thereof; and other factors, many of which are beyond the control of the Company. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could effect Parex's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (

Although the forward-looking statements contained in this document are based upon assumptions which Management believes to be reasonable, the Company cannot assure investors that actual results will be consistent with these forward-looking statements. With respect to forward-looking statements contained in this document, Parex has made assumptions regarding: current commodity prices and royalty regimes; availability of skilled labour; timing and amount of capital expenditures; future exchange rates; the price of oil; the impact of increasing competition; conditions in general economic and financial markets; availability of drilling and related equipment; effects of regulation by governmental agencies; receipt of all required approvals for the Acquisition; royalty rates, future operating costs, and other matters. Management has included the above summary of assumptions and risks related to forward-looking information provided in this document in order to provide shareholders with a more complete perspective on Parex's current and future operations and such information may not be appropriate for other purposes. Parex's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do, what benefits Parex will derive there from. These forward-looking statements are made as of the date of this document and Parex disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information:

Parex Resources Inc.
Michael Kruchten
Manager, Investor Relations
(403) 517-1733
(403) 265-8216 (FAX)

Parex Resources Inc.
Kenneth G. Pinsky
Vice President, Finance and Chief Financial Officer
(403) 517-1729
(403) 265-8216 (FAX)