CALGARY, AB--(Marketwired - November 07, 2017) -


Parex Resources Inc. ("Parex" or the "Company") (TSX: PXT), a company focused on Colombian oil exploration and production, announces its unaudited financial and operating results for the three months ended September 30, 2017 ("Third Quarter" or "Q3"). All amounts herein are in United States dollars ("USD") unless otherwise stated.

A conference call to discuss the Third Quarter results will be held on Wednesday November 8, 2017 beginning at 9:30 am Mountain Time.

2017 Third Quarter Financial and Operational Highlights

  • Successfully drilled the Capachos-2 well and achieved a final test rate of 3,650 barrels of oil per day ("bopd") of 39 API oil with a 1% watercut from the Guadalupe Formation;
  • Extended the Tigana/Jacana trend with the strong delineation results in the Tigana Norte area. Current production from Tigana Norte-2 is approximately 2,800 bopd and 1,200 bopd from Tigana Norte-3;
  • Quarterly production was 36,195 boe/d (99% crude oil), representing an increase of 6 percent over the previous quarter ended June 30, 2017 and an increase of 22 percent over the prior year comparative period;
  • Funds flow from operations was $66.0 million ($0.43 (or CAD$0.541) per share basic) as compared to $0.30 per share for the prior year comparative period and $0.34 per share in the previous quarter ended June 30, 2017. Funds flow was impacted by approximately $6.0 million ($0.04 per share basic) due to a voluntary tax restructuring in the quarter;
  • Earned net income of $55.5 million ($0.36 per share basic) compared to net income of $6.8 million ($0.04 basic per share) in the comparative quarter of 2016. For the first nine months of 2017 Parex has earned $99.2 million of net income;
  • Realized a sales price of $48.07/boe during the period at a $4.10/bbl discount to the average Brent price, and an operating netback of $27.90/boe;
  • For the nine months ended September 30, 2017 the Company recognized free funds flow of $39.7 million while increasing production by approximately 16 percent;
  • Capital expenditures were $51.4 million in the period compared to $26.3 million in the comparative period of 2016. 2017 year to date capital expenditures are $146.0 million. Parex expects to invest approximately $220 million in capital projects in 2017;
  • Working capital was $140.3 million at September 30, 2017 compared to $128.3 million at June 30, 2017 and $117.7 million at September 30, 2016. The Company has an undrawn syndicated bank credit facility of $100.0 million; and
  • Participated in drilling 7 wells (2) in Colombia resulting in 6 oil wells and 1 under test, for a success rate of 100 percent.

(1) Using USD -CAD Bank of Canada 2017 Q3 average rate of 1.2528

(2) Oil wells: Curucucu-1, Jacana-10, Jacana-12, Tigana Norte-2, Glauca-1, Glauca-2; and under test: Jacana-13.

   Three Months Ended   Nine months ended  
   Sept 30,   June 30   Sept 30,  
   2017   2016   2017   2017  
Average daily production                 
 Oil & Gas (boe/d)(1)  36,195   29,754   34,291   34,372  
Average daily sales of produced oil & natural gas                 
 Oil (bbl/d)  35,596   29,601   33,563   34,164  
 Gas (Mcf/d)  1,854   1,518   1,668   1,722  
 Oil & Gas (boe/d)  35,905   29,854   33,841   34,451  
Operating netback ($/boe)(1)                 
 Reference price - Brent ($/bbl)  52.17   46.98   50.87   52.55  
 Oil & natural gas revenue (excluding hedging)  48.07   40.19   46.84   47.88  
 Royalties  (3.94 ) (3.25 ) (4.03 ) (4.11 )
 Net revenue  44.13   36.94   42.81   43.77  
 Production expense  (5.51 ) (4.49 ) (5.31 ) (5.31 )
 Transportation expense  (10.72 ) (11.58 ) (10.91 ) (10.91 )
 Operating netback ($/boe)  27.90   20.87   26.59   27.55  
Funds flow provided by operations ($/boe)  19.98   16.42   16.81   19.74  
Financial (USD$000s except per share amounts)                
Oil and natural gas revenue  159,929   127,541   145,406   455,477  
Net income (loss)  55,527   6,811   3,524   99,157  
 Per share - basic  0.36   0.04   0.02   0.64  
Funds flow from operations  65,998   45,091   51,763   185,667  
 Per share - basic  0.43   0.30   0.34   1.21  
Capital expenditure  51,434   26,313   59,008   146,005  
Total assets  1,057,859   947,354   1,015,540   1,057,859  
Working capital surplus  140,292   117,747   128,347   140,292  
Long-term debt(2)  -   -   -   -  
Outstanding shares (end of period) (000s)                 
 Basic  154,556   152,666   154,377   154,556  
 Weighted average basic  154,472   152,700   154,249   154,006  
 Diluted(3)  162,706   161,534   162,720   162,706  
(1) The table above contains Non-GAAP measures. See "Non-GAAP Terms" for further discussion.
(2) Borrowing limit of $100.0 million as of September 30, 2017.
(3) Diluted shares as stated include the effects of common shares and in-the-money stock options outstanding at the period-end. The September 30, 2017 closing stock price was Cdn$15.05 per share.

Operational Update

Cabrestero (working interest ("WI") 100%): There are currently 4 Bacano wells, located to the south-west of the Jacana field, producing approximately 4,000-4,500 bopd. During November 2017 we expect to spud the Bacano-6 exploration well and then immediately spud a second exploration well prior to year-end.

Capachos (WI 50%): Parex spud the first earning well Capachos-2 on July 9, 2017 and rig released on October 18, 2017. The Capachos-2 well was drilled to a total depth of 15,748 feet and required one sidetrack before reaching the planned target depth.

The well was completed in the lower Guadalupe zone and recovered a total of 5,613 barrels of 39 API oil over a 52 hour flow period for an average flow rate of 2,590 barrels of oil per day (bopd) under natural flow. The final measured rate from the well over the last 4 hours of the test was 3,650 bopd with a wellhead pressure of 700 psi and under 1% watercut. Permanent bottom hole pressure recorders were installed in the well and measured a static reservoir pressure of 6,372 psi with a final flowing pressure of 5,045 psi indicating a drawdown of 21% at the final rate of 3,650 bopd. The final test rate and test duration was constrained by surface equipment and facilities. No pressure depletion was noted during the test and the bottom hole flowing pressure was increasing throughout the test indicating formation cleanup. Associated gas was also produced and the producing Gas/Oil ratio ("GOR") was constant throughout the entire test at approximately 900 standard cubic feet per bbl ("scf/bbl"). Additional oil storage has been installed on the Capachos location and the well will be placed on production at a restricted rate of 2,000 bopd. Based on well log analysis, we also believe that there are oil bearing sands in the upper Guadalupe and in the Mirador formation.

Encouraged by the production test rates of Capachos-2, the Company is preparing to spud the second earning well, Capachos Sur-2 which will appraise a separate compartment. The Capachos Block has multiple development locations and exploration prospects. Parex has also commenced the construction of the initial production facilities and is reviewing gas monetization strategies.

VMM-11 (WI 100%): The exploration well Niagara-1 was drilled and abandoned on October 27, 2017. Parex is moving the drilling rig to spud the exploration well Iguazu-1 during November 2017.

Llanos 34 (WI 55%): Parex continues to delineate the Jacana/Tigana trend on LLA-34.

The Tigana Norte-3 well was drilled to a total depth of 11,352 feet. The Guadalupe Formation was tested with the use of an Electric Submersible Pump ("ESP"). As of November 6, 2017, the well had produced a total of 4,360 barrels of 15 API oil at an average rate of 665 bopd and a watercut of 0.3% after recovery of completion load fluids. The test rate from the well over the last 24 hours has averaged 1,080 bopd and the current test rate is approximately 1,200 bopd. Bottom hole pressure recorders indicate a producing drawdown of approximately 40% at a rate of 1,200 bopd. The Tigana Norte-3 well is located 673 meters away from Tigana Norte-1 and 656 meters away from Tigana Norte-2 in the downdip direction and was drilled to evaluate the extent of the oil accumulation in the Tigana Norte area. The well did not encounter a water contact and performance from the well indicates additional delineation will be required. Tigana Norte-4 is currently drilling with a down-hole target 650 meters Northeast of Tigana Norte-3 and is expected to encounter the Guadalupe reservoir approximately 30-50 feet structurally lower. Tigana Norte -1 continues to produce at a rate of 2,500 bopd with a watercut of 3% while Tigana Norte-2 is producing 2,800 bopd with a watercut of 0.5%.

At present testing operations are on-going for the Jacana-13, Jacana-17 and Tigana Sur Oeste-7 wells. Prior to year-end, we expect to drill 3-5 additional wells on LLA-34, targeting the Tigana Norte and Tigana Sur Oeste areas.

2018 Guidance:

Parex released the 2018 Guidance today under a separate news release. The 2018 highlights for the full year include:

  • Production: 41,000-43,000 boe/d;
  • Capital Expenditures: $260-$290 million fully funded from cash flow; and
  • Drilling program 44-50 wells (28.4-32.5 net).

Q3 2017 Conference Call

Parex will host a conference call to discuss the Third Quarter Results on Wednesday, November 8, 2017 beginning at 9:30 am Mountain Time. To participate in the call, from Canada and the United States, dial 1-866-696-5910 then enter the passcode 7066220#.

The live audio webcast will be carried at:

Individuals located outside of Canada and the USA are invited to access this event via webcast or by calling their respective location dial-in number available at:

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.

Non-GAAP Terms
The Company discloses several financial measures herein that do not have any standardized meaning prescribed under International Financial Reporting Standards ("IFRS"). These financial measures include funds flow used in, or from operations, working capital, operating netback and funds flow netback. Management uses these non-IFRS 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 capital expenditures.

Funds flow from operations is a non-IFRS term that includes all cash generated from operating activities and is calculated before changes in non-cash working capital. Management uses funds from (used in) operations to analyze operating performance and monitor financial leverage, and considers funds from (used in) operations to be a key measure as it demonstrates the Company's ability to generate cash necessary to fund future capital investments. Funds flow from operations is reconciled with net (loss) income in the consolidated statements of cash flows.

Shareholders and investors should be cautioned that these measures should not be construed as an alternative to net income or other measures of financial performance as determined in accordance with IFRS. Parex' method of calculating these measures may differ from other companies, and accordingly, they may not be comparable to similar measures used by other companies. Please see the Company's most recent Management's Discussion and Analysis, which is available at for additional information about these financial measures.

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", "forecast", "budget" 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' 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; the Company's anticipated 2017 capital budget, including the amount thereof; the Company's forecasted 2017 average production; the Company's 2017 capital expenditure budget, including the expected allocations of such expenditures; the Company's belief that its capital budget will be fully funded from funds flow from operations; the Company's anticipated drilling, development, exploration and other growth plans and activities for its assets, including the Company's objectives at Aguas Blancas, timing of commencement of the Company's first water-flood program at Aguas Blancas, the Company's drilling plans at Aguas Blancas and the Company's drilling plans at Cabrestero; results of drilling and testing; and activities to be undertaken in various areas. In addition, statements relating to "reserves" are by their nature forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the resources 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 and Colombia; prolonged volatility in commodity prices; 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 and Colombia; 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 and Colombia; 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; changes to pipeline capacity, ability to access sufficient capital from internal and external sources; risks related to the lawsuit brought in Texas against Parex and certain foreign subsidiaries; failure of counterparties to perform under contracts; risk that Brent oil prices are lower than anticipated; risk that Parex' evaluation of its existing portfolio of development and exploration opportunities is not consistent with its expectations; that production test results may not necessarily indicative of long term performance or of ultimate recovery; 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 affect Parex' 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, among other things: current and anticipated commodity prices and royalty regimes; availability of skilled labour; timing and amount of capital expenditures; future exchange rates; the price of oil, including the anticipated Brent oil price; 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 partner, regulatory and community approvals; royalty rates, future operating costs; effects of regulation by governmental agencies; uninterrupted access to areas of Parex' operations and infrastructure; recoverability of reserves and future production rates; the status of litigation; timing of drilling and completion of wells; on-stream timing of production from successful exploration wells; operational performance of non-operated producing fields; pipeline capacity; that Parex will have sufficient cash flow, debt or equity sources or other financial resources required to fund its capital and operating expenditures and requirements as needed; that Parex' conduct and results of operations will be consistent with its expectations; that Parex will have the ability to develop its oil and gas properties in the manner currently contemplated; anticipated operating netbacks, G&A, finance expenses and tax expenses; current or, where applicable, proposed industry conditions, laws and regulations will continue in effect or as anticipated as described herein; that the estimates of Parex' reserves volumes and the assumptions related thereto (including commodity prices and development costs) are accurate in all material respects; that Parex will be able to obtain contract extensions or fulfill the contractual obligations required to retain its rights to explore, develop and exploit any of its undeveloped properties; 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' current and future operations and such information may not be appropriate for other purposes. Parex' 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. 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.

This press release and, in particular the information in respect of the Company's expected capital expenditures and funds flow from operations for 2017, may contain future oriented financial information ("FOFI") within the meaning of applicable securities laws. The FOFI has been prepared by management to provide an outlook of the Company's activities and results and may not be appropriate for other purposes. The FOFI has been prepared based on a number of assumptions including the assumptions discussed in this press release. The actual results of operations of the Company and the resulting financial results may vary from the amounts set forth herein, and such variations may be material. The Company and management believe that the FOFI has been prepared on a reasonable basis, reflecting management's best estimates and judgments. FOFI contained in this press release was made as of the date of this press release and the press release, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law.

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

Contact Information:

For more information, please contact:
Mike Kruchten
Vice President, Capital Markets & Corporate Planning
Parex Resources Inc.
Phone: (403) 517-1733