Parex Resources Inc.
TSX VENTURE : PXT

Parex Resources Inc.

April 21, 2011 11:18 ET

Parex Resources Increases Bought Deal Financing to $274.0 Million

CALGARY, ALBERTA--(Marketwire - April 21, 2011) -Parex Resources Inc. ("Parex" or the "Company" or "we") (TSX VENTURE:PXT) is pleased to announce that, in connection with its previously announced public offering, the Company and the syndicate of underwriters co-led by FirstEnergy Capital Corp. and Scotia Capital Inc., and including Haywood Securities Inc., CIBC World Markets Inc., Peters & Co. Limited, Raymond James Ltd., RBC Capital Markets and TD Securities Inc. (the "Underwriters"), have agreed to increase the size of the offering of subscription receipts of Parex (the "Subscription Receipts"), with the amount of the offering of 5.25% extendible convertible unsecured subordinated debentures (the "Debentures") remaining unchanged at CDN$85.0 million. Under the revised terms, the Underwriters have agreed to purchase, on a bought deal basis, an aggregate of 27.0 million Subscription Receipts (previously 23.6 million) at $7.00 per Subscription Receipt for gross proceeds of CDN$189.0 million for total combined gross proceeds, with the offering of Debentures, of CDN$274.0 million (the "Offering"). As previously announced, Parex has also granted the Underwriters an over allotment option, exercisable in whole or in part, for a period commencing at closing of the Offering and ending 30 days following closing of the Offering, to purchase an additional 4.05 million Subscription Receipts at the same Offering price which, if exercised, would increase the total gross proceeds to CDN$302.35 million.

Prior to this Offering, Parex has 77.0 million common shares issued and outstanding.

The net proceeds of the Offering will be used to fund the cash purchase price payable directly or indirectly by Parex pursuant to the previously announced acquisition (the "Acquisition") of a company which will hold the 50 percent interest Parex does not already own in four Llanos Basin blocks in Colombia, including Block LLA-16 and the Kona discovery, for total consideration of US$255 million, and for general corporate purposes. The Acquisition is expected to close no later than June 29, 2011 and is subject to customary transaction closing adjustments and the satisfaction of customary closing conditions and approvals.

The proceeds from the sale of Subscription Receipts will be held in escrow pending completion of the Acquisition, on the terms described in Parex' press release dated April 20, 2011.

This Offering is subject to certain conditions including normal regulatory approvals and specifically, the approval of the TSX Venture Exchange (the "TSX-V"). The Subscription Receipts and Debentures will be issued pursuant to a short form prospectus to be filed by Parex in each of the provinces of Canada and will also be offered for sale internationally pursuant to applicable registration or prospectus exemptions as permitted. Closing of the Offering is expected to occur on or about May 17, 2011.

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 595,000 acre holdings in the Llanos Basin of Colombia and 223,500 acre holdings onshore Trinidad. Parex is headquartered in Calgary, Canada.

The securities offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or any state securities law and may not be offered or sold in the United States absent registration or applicable exemption from those registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

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'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 contained in this document include, but are not limited to, statements concerning the Offering and the Acquisition, including the timing of closing of the Offering and the Acquisition; the Subscription Receipts and Debentures to be issued pursuant to the Offering; regulatory and other approvals required for the Offering and the Acquisition; the use of proceeds from the Offering; the performance characteristics of the Company's oil properties, including the interests to be acquired in the Acquisition; the financial metrics of the Acquisition; the financial and operational benefits to the Company of the Acquisition; that the Acquisition will be accretive to Parex on several financial measures; financial and operational prospects, outlook and guidance; results of drilling and testing; results of operations; drilling plans; activities to be undertaken in various areas; capital plans in Colombia and exit rate production; timing of drilling and completion; and planned capital expenditures and the timing thereof. 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 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; risk that the board of directors of Parex determines that it would be in the best interests of Parex to deploy the proceeds of the Offering for some other purpose; failure to receive all required regulatory and other approvals for the Offering or the Acquisition; 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: receipt of regulatory and other approvals for the Offering and the Acquisition; 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, the Acquisition and the Offering 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

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