Parex Resources Inc.
TSX VENTURE : PXT

Parex Resources Inc.

March 29, 2010 19:19 ET

Parex Resources Announces Fourth Quarter 2009 and Year-End Results

CALGARY, ALBERTA--(Marketwire - March 29, 2010) -

NOT FOR DISTRIBUTION TO US NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Parex Resources Inc. ("Parex" or the "Company") (TSX VENTURE:PXT) announced today its operating and financial results for the fourth quarter and year ended December 31, 2009. Copies of the Company's consolidated financial statements for the year ended December 31, 2009 and the related Management's Discussion and Analysis (MD&A) for 2009 have been filed with Canadian Securities Regulatory Authorities and will be made available under the Company's profile at www.sedar.com and on the Company's website at www.parexresources.com. All amounts are in United States ("US") dollars unless otherwise stated.

Parex's highlights and activities for the year ended December 31, 2009 and up to and including March 29, 2010 include:

Financial:

- Parex was created through the Plan of Arrangement (the "Arrangement") executed on November 6, 2009 with our precursor company, Petro Andina Resources Inc. ("Petro Andina");

- Under the Arrangement, the Company received working capital of approximately Cdn$70 million plus exploration assets in Colombia and Trinidad & Tobago;

- The Company enhanced liquidity with concurrent financings to directors and employees, Arrangement warrants to purchase common shares of Parex, and the market at large at a price of Cdn$3.00 per share for proceeds of approximately Cdn$44 million; and

- Parex maintained a strong balance sheet with cash and cash equivalents of $101 million and working capital of $96 million at year end.

Exploration:

- Capital expenditures focused primarily on seismic exploration activity of $22 million were incurred by the Company during 2009, setting up an active exploration drilling program in 2010;

- In Colombia, Parex acquired and processed 270 square kilometres and 216 square kilometres of three-dimensional ("3D") seismic on Block LLA-16 and on Block LLA-20 respectively;

- In Trinidad & Tobago, Parex closed a farm-in arrangement to earn a working interest in the Moruga Block subject to the Republic of Trinidad & Tobago Ministry of Energy and Energy Industries approval, identified multiple exploration prospects and contracted a Trinidad-based drilling rig; and

- Lease preparation is underway for the first well on Block LLA-16 "Kona" and for the first well on the Moruga Block "Firecrown".




For the three months For the year ended
ended December 31(1) December 31(1)
2009 2008 2009 2008
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Financial ($000s except per share
amounts)
Net loss (2,316) (167) (4,729) (258)
Per share - basic $ (0.04) $ (0.00) $ (0.09) $ (0.01)
Per share - diluted $ (0.04) $ (0.00) $ (0.10) $ (0.01)
Funds flow used in operations (1,569) (167) (3,926) (258)
Per share - basic $ (0.03) $ (0.00) $ (0.08) $ (0.01)
Per share - diluted $ (0.03) $ (0.00) $ (0.08) $ (0.01)
Capital expenditure 9,480 932 22,383 4,675
Trinidad 2,214 932 12,123 4,675
Colombia 7,203 - 10,197 -
Canada 63 - 63 -
Total assets (end of period) 133,485 7,993 133,485 7,993
Working capital (end of period) 95,704 (4,723) 95,704 (4,723)
Long term debt (end of period) - - - -

Weighted average shares
outstanding(000s)
Basic 56,518 49,214 51,055 49,214
Diluted 55,833 49,214 48,178 49,214

Outstanding shares (end of period)
(000s)
Basic 63,870 49,214 63,870 49,214
Diluted 67,345 49,214 67,345 49,214

(1) Determined by using continuity-of-interest accounting as described under
"Business Continuity".


2010 Outlook

The Company estimates 2010 capital spending will be approximately $49 million, with $34 million allocated to Colombia and $15 million allocated to Trinidad & Tobago. General and administrative plus other cash costs are estimated to be $18 million.

Colombia Exploration

- The Company has continued to progress its Colombian exploration program and consistent with previous disclosure, Parex expects to begin its 2010 eight well Colombian drilling program during April 2010;

- A Parex contracted rig will be used to continuously drill the six 3D seismic defined locations on Blocks LLA-16 and LLA-20 planned in 2010. Drilling depths range from 10,000 to 14,000 feet with the average time to drill, complete, test and rig release estimated to be 45 days. Kona, the first location on Block LLA-16, is estimated to spud in April immediately upon completion of lease construction. Kona will evaluate the Carbonera (C7), Mirador and Une formations with a targeted drilling depth of 13,250 feet;

- The Company expects to acquire an additional approximately 50 square kilometres and 40 square kilometres of 3D seismic coverage for Blocks LLA-16 and LLA-20 respectively during 2010; and

- Parex, through its joint venture partner, is currently acquiring 180 square kilometres of 3D seismic coverage in Block LLA-30. The Company's joint venture partner is operating a second drilling rig that is expected to drill two wells on Blocks LLA-29 and LLA-30 during the fourth quarter of 2010.

Trinidad & Tobago Exploration

- Parex will drill two wells on the Moruga Block and one well in the Central Range Block during 2010. Firecrown, the first Moruga prospect, will be drilled to the earning depth of 10,500 feet. The average time to drill, complete, test and rig release is estimated to be 90 days. The Firecrown well is expected to spud in April immediately upon completion of lease construction.

Conference Call and Webcast

Parex will host a conference call and live webcast to discuss these results on Tuesday March 30, 2010 beginning at 10:30 am Mountain Standard Time (12:30 pm Eastern Standard Time). Media, analysts or any other interested parties wishing to participate in the call can access it by calling 1-866-696-5910 (toll free in North America). No access codes are required. The live audio webcast of the conference call will be available through Windows Media Player by following the link posted under the Investor Relations, Events section of the Company's website at www.parexresources.com. Following the conclusion of the call, a link to a replay of the webcast will also be posted on the Company's website.

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 489,000 acre (244,500 net acre) holdings in the Llanos Basin of Colombia and 223,500 acre (111,750 net acre) holdings onshore Trinidad & Tobago. 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.

Business Continuity

The Company was incorporated for the purposes of completing the Arrangement under the Business Corporations Act (Alberta) with Pluspetrol Resources Corporation N.V., its wholly owned subsidiary, 1462627 Alberta Ltd. (together "Pluspetrol") and Petro Andina. In connection with the Arrangement, through a series of transactions, Parex acquired from Petro Andina all of the issued and outstanding shares of Petro Andina (Barbados) Ltd. ("PABL"), Petro Andina (Colombia) Ltd. ("PACL") and indirectly all of the issued and outstanding shares of Petro Andina (Trinidad) Ltd. ("PATL"), as well as an inter-company loan and other receivables from PABL, PATL and PACL, working capital and other miscellaneous assets. As the shareholders of Petro Andina ultimately continued to hold their respective interests in Parex, there was no resulting change of control of PABL and PACL. Therefore, the acquisition was accounted for using continuity-of-interests accounting under the Canadian Institute of Chartered Accountants ("CICA") Emerging Issues Committee Abstract 89 "Exchanges of Ownership Interests between Enterprises Under Common Control - Wholly and Partially-Owned Subsidiaries" ("EIC-89"). Under EIC-89 no fair value adjustments were made for the assets acquired.

The consolidated financial statements of Parex reflect the assets and liabilities of PABL and PACL at their book value as reported in the financial statements of PABL and PACL for the period ended December 31, 2009. Continuity-of-interests accounting requires that the results of operations presented in the consolidated financial statements of Parex include the operations of PABL and PACL for the entire fiscal period in which the Arrangement took place. In addition, the comparative consolidated financial statements of Parex were restated to reflect the financial position and results of operations as if Parex, PABL and PACL had been combined since their inception. As a result, references to Parex incorporate the activities of Parex and its subsidiaries from their inception.

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", "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 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's 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 included 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 operations; drilling plans; activities to be undertaken in various areas; timing of drilling and completion; and planned capital expenditures, the timing thereof; the method of funding.

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 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 (www.sedar.com).

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; 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 so, what benefits that 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.

Non-GAAP Terms

Funds flow from operations or funds flow used in operations, from time to time may be used by the Company, but does not have any standardized meaning under GAAP and may not be comparable to similar measures presented by other companies. Funds flow from operations or funds flow used in 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 operations by the weighted average number of shares outstanding. Management uses non-GAAP measures for its own performance measurement and to provide shareholders and other investors with additional measurement of the Company's efficiency and its ability to fund a portion of its future growth expenditures.

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