SOURCE: Parex Resources Inc.

Parex Resources Inc.

July 06, 2015 17:02 ET

Parex Operational Update: Q2 Production Exceeds 27,000 bopd and Expansion of Rumba Oil Discovery

CALGARY, AB--(Marketwired - July 06, 2015) -

NOT FOR DISTRIBUTION OR FOR DISSEMINATION IN THE UNITED STATES

Parex Resources Inc. ("Parex" or the "Company") (TSX: PXT), a company focused on Colombian oil exploration and production, provides an operational update.

Operational Highlights

  • Grew Q2 (April 1-June 30, 2015) average oil production to 27,025 barrels of oil per day ("bopd") compared to production guidance of 26,500 bopd and an increase from the prior period production of 26,729 bopd;
    • Commenced production at the Rumba exploration discovery from the Mirador Formation on June 20, 2015 (Block LLA-26, 100% WI). The Rumba-1 well is producing at an initial restricted rate of approximately 1,000 bopd of 19 API oil with a water cut of less than 1%;
    • Drilled Rumba-2, an appraisal follow-up to Rumba-1 on June 19, 2015. Rumba-2 was programmed to evaluate the Mirador formation approximately 1 kilometer north-east of Rumba-1. Initial interpretation suggests that the primary objective Mirador formation appears to be connected and higher to Rumba-1. The drilling rig has initiated completion operations on Rumba-2 and we plan to use the current drilling rig to drill at least one additional well on the existing pad;
    • Abandoned drilling of the exploration Bazar-1 (Block LLA-26, 100% WI) due to mechanical problems in the Leon/C1 formations. Using the same drilling pad as Rumba-1, Bazar-1 targeted the Une Formation with a planned horizontal departure of 2.2 kilometers and a wellbore deviation in excess of 60 degrees. Parex has applied to have Bazar-1 classified as the second and final current phase commitment well on Block LLA-26. The Company has re-designed a new drilling program to target the deeper Une Formation and expects to drill the Bazar-2 exploration well prior to year-end 2015;
    • Drilled and abandoned the Zorro Rojo (LLA-20, WI 100%) exploration commitment well. Parex has fulfilled all outstanding work program commitments on Block LLA-20;
    • Capachos production contract ("Convenio") has been awarded to Ecopetrol S.A. by the National Hydrocarbon Authority ("ANH"), fulfilling a key condition of Parex' farm-in agreement. Subject to regulatory approval, Parex will have 50% working interest and operatorship on the Capachos Block and will pay 100% of the cost of drilling two development wells. The Company is now initiating community dialogue and civil construction with the first well expected to spud in Q4 2015;
    • Sanctioned Adalia field (LLA-30, 100% WI) secondary recovery project with water-flood injections commencing in Q4 2015;
    • Accelerated 2015 exploration program. Three drilling rigs are currently working on three blocks: LLA-32 (mobilizing), LLA-34 (drilling Chachalaca-1) and LLA-26 (completing Rumba-2); and
    • Approved a 405 square kilometer 3D seismic program for Lower Magdalena Basin Block VIM-1 (100% WI). The work program is to begin in Q4 2015 and is expected to define the 2016 drillable prospects. Accelerating the 3D seismic program into 2015 allows Parex to acquire seismic information at approximately a 50% lower cost on a per unit basis than in 2014.

2015 Drilling Operations Schedule:

A summary of the current drilling/testing program* is provided:

    
# Prospect/Well Block Timing / Status
1 Rumba-1 LLA-26 Producing at a restricted rate
2 Rumba-2 LLA-26 Currently completing as a Rumba-1 follow-up
3 Taringa-1 Cebucan Following LLA-26
4 Tautaco-1 LLA-10 Following Cebucan
5 Capachos-1 Capachos Contract signed. Q4 Spud
6 Rumba-3/Bazar-2 LLA-26 Q3/4 Spud
7 Guepardo-1 LLA-32 Following LLA-20
8 Carcayu-1 LLA-32 Following LLA-32
9 Appraisal Well LLA-32 Q3 Spud (contingent)
10 Jacana-1 LLA-34 Q4 Spud (South of Tigana field)
11 Tilo-2 LLA-34 Q3 Spud (new)
12 Chachalaca-1 LLA-34 Q3 Spud (new)
13 Appraisal Well LLA-34 Q4 Spud (new)
14 Appraisal Well LLA-34 Q4 Spud (new)
15 Exploration Prospect VMM-11 Q4 Spud (new)

Note: *Subject to partner and/or regulatory approvals

Parex remains well capitalized with no bank debt and cash reserves in excess of $US 90 million.

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.

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' 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 annual production; plans to acquire and process 3-D 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 and Colombia; 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; 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 affect 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; 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. 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 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 Corporate Planning and Investor Relations
    Parex Resources Inc.
    Phone: (403) 517-1733
    Investor.relations@parexresources.com