Parex Resources Inc.
TSX VENTURE : PXT

Parex Resources Inc.

September 12, 2011 16:50 ET

Parex Resources Announces Two Light Oil Discoveries and Current Oil Production Over 9,300 bopd

CALGARY, ALBERTA--(Marketwire - Sept. 12, 2011) -

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

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 announce that light oil discoveries have been made on the Sulawesi and Las Maracas prospects and that net working interest production has exceeded 9,300 barrels of oil per day ("bopd").

Recent Highlights (post August 11, 2011):


--  Successfully drilled and tested four oil wells: Sulawesi-1, Las Maracas-
    2 side track, Kona-4 and Kona-8; 
--  Within seven weeks of the spud date, the exploration well Sulawesi-1
    (100 percent working interest) had been drilled to 12,000 feet; tested
    over 4,000 bopd from two formations; was on production at a facility
    restricted rate of 1,300 bopd and drilling an appraisal well had begun; 
--  Fulfilled Los Ocarros Block work commitments to earn a 50 percent
    working interest in the Las Maracas discovery; 
--  Continued successful delineation of the Kona field with Kona-4 and Kona-
    8 brought on-stream at a total production rate of approximately 2,700
    bopd; 
--  Increased current production to over 9,300 bopd.

Colombia Exploration Update

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 of the Kona field, along the same fault trend. The well encountered three prospective zones and log interpretation indicates 14 feet of net pay in the Mirador Formation, 18 feet in the Lower C7 Formation and 11 feet in the Upper C7 Formation. Drill and casing operations were finished on August 8th, 2011 and the drilling rig was then equipped to conduct completion operations. The well was tested in the Mirador Formation and produced 37 degree API light oil under natural flow at a rate of up to 1,500 bopd with 0.1 percent water cut and a drawdown of 17 percent. The Mirador Formation was then suspended with a temporary bridge plug to allow testing of the Lower C7 formation. The Lower C7 Formation was perforated and tested 30 degree API light oil at rates up to 2,600 bopd with 0.3 percent watercut with an estimated drawdown of 5 percent. The Upper C7 Formation will be tested in a future appraisal well. Completion operations were concluded and the rig was released on August 27th, 2011. The rig was immediately skidded to drill Sulawesi-3(1) from the same drilling pad. The Sulawesi-3 well was spud on August 29th, 2011 as a follow-up appraisal well to the north of Sulawesi-1.

On September 5th, 2011 the Sulawesi-1 well commenced production at a rate of 1,300 bopd from the Lower C7 Formation through a temporary, flow rate restricted facility. Parex is currently procuring equipment for the installation of a 4,000 bopd permanent facility for the Sulawesi discovery. The Company intends to drill a third well into the prospect, Sulawesi-2(1) to the south of Sulawesi-1 during the fourth quarter of 2011 to be coordinated with the facility expansion.

On June 22, 2011, Parex signed a farm-in agreement with Petroamerica Oil Corp. ("Petroamerica") for the Los Ocarros Block, which is located directly south-west of Block LLA-16. The Las Maracas-2 side track well was drilled to the Mirador Formation. The well was completed and tested under natural flow at a rate of 938 bopd with a final water cut of 1.8 percent. Pursuant to the terms of the farm-in agreement, Parex has now satisfied the work commitment to earn a 50 percent working interest of the Las Maracas discovery.

For the remainder of 2011, Parex expects to operate three drilling rigs and one service rig in Colombia on its 100 percent working interest blocks. 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.

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 beginning in early 2012.

Parex has initiated a large 3-D seismic program that will cover 75 square kilometres ("km2") on Block LLA-16, 135 km2 on Block LLA-20, and 165 km2 on Block LLA-57. The seismic acquisition program is expected to be completed by year-end 2011.

(1) Under Colombian government regulations, wells are named as they are licensed, not in the drilling order; Parex sets the drilling order according to operational optimization.

Colombia Operations Update

Current production is approximately 9,300 bopd. A summary of the Company's current production by field and operations is provided below:

Current Production


Field/Well                 Formation              Status        Current bopd
----------------------------------------------------------------------------
Kona              C7/Mirador/Gacheta           Producing               8,000
Sulawesi                          C7           Producing               1,300
----------------------------------------------------------------------------
Total Production                                                       9,300
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Current Operations



Field/Well(1)        Formation                                       Status
----------------------------------------------------------------------------
Kona-3                 Mirador                         Cased, ready to test

Kona-10                Gacheta                         Cased, ready to test

Kona-7                 Mirador                          Drill after Kona-10

Kona Norte             Mirador                   Mobilizing rig from Kona-3

Kona-9                 Mirador                       Drill after Kona Norte

Sulawesi-3             Mirador                   Drilling at approx. 10,500'
----------------------------------------------------------------------------

The Kona-3 well was drilled as a side-track operation to the Mirador Formation. The Company expects the well to be on production by late September, 2011.

On September 4, 2011, the Kona-4 well began producing approximately 1,500 bopd from the C7 Formation. As Kona-4 and Kona-8 share the same drilling pad, immediately following the completion of the Kona-4 well, the Kona-8 Gacheta Formation was completed and began producing on September 8, 2011 at approximately 1,200 bopd.

On August 22, 2011, the Kona-10 well was spud and was designed to evaluate the Gacheta Formation south-eastern field edge. The well has been cased and is awaiting completion.

Parex reiterates its previous guidance that the 2011 light oil production exit rate is expected to be 14,000 bopd and that the expected 2011 capital expenditures range is US$140 million to US$160 million.

Trinidad Exploration Update

On the Central Range Block ("CRB") Shallow (50 percent working interest), the Cribo-1 well was spud on July 22, 2011 and is drilling to a target depth of approximately 6,000 feet using an existing onshore Trinidad rig. Parex expects to reach the target depth by mid-September, 2011. Following the Cribo-1 well, the final CRB Shallow earning well, Mapepire-1 is scheduled to be drilled in the fourth quarter of 2011.

In order to accommodate Parex' ongoing deep exploration activity, the Company is advancing discussions with a contractor to mobilize to Trinidad two modern and more efficient drilling rigs. Parex anticipates mobilizing the two new rigs, and subject to receiving regulatory approval, to spud its first CRB Deep well in the fourth quarter of 2011, and drill the second CRB Shallow exploration well Mapepire-1 followed by a Moruga Block well.

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.

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 and testing activities, 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 performance of current and future wells; supply and demand for oil; financial and business prospects and financial outlook; results of drilling and testing activities; results of other operations; drilling and testing plans; activities to be undertaken in various areas; capital plans in Colombia and exit rate 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, 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 (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 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)