Parex Resources Inc.

TSX : PXT


Parex Resources Inc.

January 09, 2014 16:45 ET

Parex Resources Achieves Record Production of 18,000 bopd

CALGARY, ALBERTA--(Marketwired - Jan. 9, 2014) -

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, is pleased to provide an operational update.

Production: Average production for the periods below was approximately:

  • October 1-December 31, 2013 (Q4): 17,285 bopd, an increase of 35% over the fourth quarter of 2012 and 7% greater than the prior quarter production;
  • December 1-December 31: 18,000 bopd with the addition of Tigana-1, Tigana Sur-1 and La Casona-2 test volumes; and
  • Full year 2013: 15,850 bopd, an increase of 39% over the full year of 2012; and
  • Preliminary analysis indicates that crude oil inventory remained relatively flat from the prior quarter to December 31, 2013. Accordingly we expect Q4 crude oil sales to be in-line with Q4 crude oil production.

Tigana & Tigana-Sur (Non-Operated, Block LLA-34, WI 45%): On December 11, 2013 Parex reported the initial Tigana-1 test rates from the Guadalupe Formation as approximately 1,600 bopd of 15°API oil with a water-cut of 0.8%, prior to shutting the well in for pressure build-up.

The service rig was moved to the Tigana Sur-1 well, located 1,200 meters southwest of Tigana-1, to test the Guadalupe Formation. Tigana Sur-1 commenced production with an Electric Submersible Pump (ESP) on December 13, 2013 and was produced for a period of 144 hours prior to shut in for a 10 day build-up test. A total of 7,800 barrels of oil was recovered during the test at an average rate of 1,300 bopd. On December 30, 2013 the well resumed production and was tested at peak rates in excess of 2,800 bopd with final measured water-cut of 0.5%.

The service rig was then moved back to the Tigana-1 well to test one of five potential zones in the Mirador Formation. Using an ESP, the well was tested for 141 hours and a total of 14,554 barrels of oil was recovered for an average test rate of 2,477 bopd of field measured 20°API oil. The final measured water-cut in the well was 0.1% prior to shut-in for pressure build-up. The Tigana Sur-1 well is also prospective in four potential zones in the Mirador Formation and we plan to test these zones in 2014.

The drilling rig is currently drilling a delineation well at Tua-6. Following rig release, the rig will return to the Tigana/Tigana Sur pad to drill one or two delineation wells, while waiting on the construction of new pads that will enable additional delineation of the Tigana-1 and Tigana Sur-1 discoveries.

Akira (Operated, Cabrestero Block, WI 100%): The Akira-5 well was drilled 1,300 meters west of the Akira-2 well and 150 feet below the lowest known oil as defined by the Akira-2 well. Parex is currently testing the Akira-5 well. As previously reported, the Akira-6 well was cased and will be completed to coincide with the commissioning of the oil treatment plant in March 2014.

Adalia (Operated, Block LLA-30, WI 100%): The Adalia-3 well was drilled approximately 600 meters west of the Adalia-1 location and encountered pay in the C5 interval. A limited swab test was conducted with the drilling rig on location and the final rate from the well was 250 bopd of 38 API oil at a 1% watercut with a total of 43 barrels of oil recovered during the test. Bottom hole pressure recorders indicated that the swabbing operation resulted in a drawdown of only a few percent and analysis of the pressure recorder data indicates that the well has capability in excess of 1,000 bopd at moderate producing drawdown. An ESP pump is being installed in the well to allow for continuous testing of the well which will be produced into the existing Adalia facilities. The drilling rig will move off of the location after initial testing of Adalia-3 and a service rig will be moved to location to test the Adalia-2 well which was cased for potential C5 Formation pay.

La Casona (Operated, El Eden Block, WI 60%): The La Casona-2 well was drilled approximately 700 meters northeast of the La Casona-1 well. The well was completed in the Mirador Formation and over a 7 day test, a total of 3,903 barrels of 47°API condensate and 25.5 MMCF of gas was recovered at an average flowing pressure of 2,800 psi, equating to a daily rate of 545 bopd and 3.6 MMSCFD. Final measured water-cut from the test was 1.9%. Parex plans to produce the La Casona- 2 well into the same production facility as the La Casona-1 well. Total field sales are governed by a facility-restricted amount of approximately 2.5 MMCFD of compressed gas. After analyzing the pressure build-up of La Casona-2, the gas compression facility may be upgraded.

Rumi (Operated, El Eden Block WI 60%): The Rumi-1 exploration well was drilled to a total depth of 14,620 feet. A total of 26 feet of reservoir was perforated in four separate sands in the Une Formation. The top three sands were initially swab tested at a rate of approximately 350 bopd, based on the average of the last 12 hours of swabbing, with a final watercut of 1%. All four zones were then tested under natural flowing conditions at an average rate of 740 bopd, with peak rates of 1,000 bopd achieved, during the 31 hour test prior to shutting in the well for buildup. The final measured watercut during the test was 32% and a total of 968 bbls of oil was recovered during the test. The measured API from both tests was 15°API based on field measurements. An ESP pump is being installed in the well to continue the short term test.

Aruco (Non-Operated, Block LLA-34, WI 45%): The Aruco-1 well was drilled to a total depth of 10,705 feet and cased for testing. It was drilled from the same pad as the Tua-6 well which is currently drilling. Aruco-1 testing operations will commence after the drilling rig has been moved off location.

2013 Reserve Report Release Date

We expect to release our 2013 year-end independent reserves evaluation on February 12, 2014.

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'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, expected impairment of exploration and evaluation assets to be recognized in Parex' third quarter financial statements; the focus of the Company's operations in Colombia; financial and business prospects; and activities and capital expenditures to be undertaken in various areas.

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; that the Company 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 the Company's conduct and results of operations will be consistent with its expectations; that the Company will have the ability to develop the Company's oil properties in the manner currently contemplated; that the estimates of the Company's reserves volumes and the assumptions related thereto (including commodity prices and development costs) are accurate in all material respects; 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.

Any references in this press release to test production rates are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will commence production and decline thereafter. These test results are not necessarily indicative of long-term performance or ultimate recovery. Readers are cautioned not to place reliance on such rates in calculating the aggregate production for the Company.

The TSX has not received and does not accept responsibility for the adequacy or accuracy of this news release.

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