Parex Plans to Increase Production and Re-start Capex Programs

NOT FOR DISTRIBUTION OR FOR DISSEMINATION IN THE UNITED STATES

CALGARY, Alberta, June 24, 2020 (GLOBE NEWSWIRE) -- Parex Resources Inc. (“Parex” or the “Company”) (TSX:PXT), a company headquartered in Calgary, Alberta and focused on Colombian oil exploration and production, provides an operational update. All currency amounts are in United States dollars, unless otherwise stated.

Business Update: Strong Realized Pricing Drives Increased Activity

With greater visibility to stabilizing netbacks and community safety, Parex is developing action plans to return shut-in production, resume capital activity and generate free cash flow. However, the Company’s priority remains the health and safety of its employees, partners and the communities where we operate. 

Production: As part of its response to the COVID-19 pandemic and in order to minimize the social interactions in its operating communities and maximize shareholder value during periods of low oil pricing, Parex voluntarily curtailed Q2 production volumes. The Company’s Q2 2020 average sales volumes are estimated at 42,700 barrels of oil equivalent per day (“boe/d”). The following table sets forth Q2 2020 operational estimates:

Q2 2020 Estimates
Production (average)	41,200 boe/d
Sales (average)	42,700 boe/d
Brent Oil (average posted price)	$33/bbl
Parex price differential and transportation expense	$17.25-$17.50/boe
Capital Expenditures	$10-$12 million

We expect to gradually increase production into Q4 2020 with a targeted range of 44,000-48,000 boe/d. Production is currently above 40,000 boe/d and Parex estimates Q3 2020 production to average 42,000-44,000 boe/d. To date the June 2020 Vasconia differential to Brent oil price has averaged approximately $3.50/bbl.

2020 Capital Expenditures: The Company is preparing to re-activate its development and exploration program. We estimated H1 2020 invested capital to be $80-$85 million and a potential H2 2020 capital program of $65-$70 million for a total full-year 2020 capital of $145-$155 million. 

Depending on market conditions and community safety, over the next quarter Parex is preparing to approve investment in the following development projects:

• LLA-34 and Cabrestero: Completions and work-overs (4-6 wells) plus development drilling (4-6 wells)
• Capachos: Andina field flowline completion
• Aguas Blancas: Completion of 2 drilled exploration wells

The Company will be building contingent plans to add a diverse exploration program for Q4 2020. A further capital update will be provided as part of the Q2 2020 financial results for the following projects: