Funded Within Cash Flow
Funded Within Cash Flow
CALGARY, AB--(Marketwired - November 02, 2015) -
NOT FOR DISTRIBUTION OR FOR DISSEMINATION IN THE UNITED STATES
Parex Resources Inc. ("Parex" or the "Company") (
2016 Production and Base Capital Budget Guidance
Parex has developed a robust asset portfolio that allows for a sustainable, growing and a self-funded business model in a period of low oil prices. Assuming a full year 2016 Brent oil price scenario of $50 per barrel ("bbl"), our 2016 production and capital budget guidance is as follows:
1. Full Year Production: 30,200 bopd
2. Maintenance Capital: Development $50 million
3. Development Growth Capital: Capachos Block $35 million
4. Growth Capital: Exploration Drilling $80 million
Brent Oil Price Scenario $50/barrel
|(Estimated USD millions)|
|Development Growth: Capachos Block||$35|
|2016 Base Capital||$165|
Optional Positioning Growth Capital
If Brent oil prices exceed and are sustained above the $55/bbl level, we have the flexibility to allocate additional capital expenditures and thereby invest the incremental cash flow from such higher realized oil prices in 2016 with additional drilling and seismic. A range of potential additional opportunities totaling up to $90 million in capital expenditures is as follows:
Incremental Growth Capital Scenario (Optional)
|Growth: Exploration Follow-Up (Development/Appraisal)||$40|
|Capachos Exploration Well||$10|
|Positioning: Magdalena Basin||$40|
|Optional Growth/Positioning Capital||Up to $90|
Maintaining Balance Sheet Strength
We expect that our 2016 Base Capital budget of approximately $165 million will be fully funded from funds flow from operations. As at September 30 2015, Parex had no bank debt, an undrawn credit facility of $200 million and working capital of approximately $63 million.
Assuming a Brent oil price environment of $50/bbl, we expect 2016 operating cash costs per barrel, including operating and transportation costs to be comparable to our Q3 2015 financial results. However, for 2016 we forecast a lower total cost per barrel due to:
2016 Cash Netback Estimates
We have actively managed our portfolio and assets to remain profitable in a low oil price environment. Defining our cash netbacks as the operating netback less G&A, finance expenses and tax expenses, we forecast our 2016 cash netbacks as follows:
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.
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, 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 Company's anticipated 2016 capital investment program, including the amount thereof; the Company's 2016 capital budget, including the expected allocation of such budget; the Company's forecasted 2016 average production based on certain oil prices; the Company's planned capital program and the proposed funding thereof; the Company's ability to increase its capital budget; Parex' anticipated debt levels; the Company's expected 2016 operational cash costs per barrel; the Company's anticipated operating netbacks; financial and business prospects and financial outlook; and activities to be undertaken in various areas.
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; prolonged volatility in commodity prices; 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; changes to pipeline capacity; ability to access sufficient capital from internal and external sources; risks related to the lawsuit brought in Texas against Parex and certain foreign subsidiaries; failure of counterparties to perform under contracts; 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' 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, among other things: current and anticipated commodity prices and royalty regimes; availability of skilled labour; timing and amount of capital expenditures; future exchange rates; the price of oil, including the anticipated Brent oil price; 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 partner, regulatory and community approvals; royalty rates; future operating costs; effects of regulation by governmental agencies; uninterrupted access to areas of Parex' operations and infrastructure; recoverability of reserves and future production rates; the status of litigation; timing of drilling and completion of wells; on-stream timing of production from successful exploration wells; operational performance of non-operated producing fields; pipeline capacity; that Parex 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 Parex' conduct and results of operations will be consistent with its expectations; that Parex will have the ability to develop its oil and gas properties in the manner currently contemplated; current or, where applicable, proposed industry conditions, laws and regulations will continue in effect or as anticipated as described herein; that the estimates of Parex' reserves volumes and the assumptions related thereto (including commodity prices and development costs) are accurate in all material respects; that Parex will be able to obtain contract extensions or fulfill the contractual obligations required to retain its rights to explore, develop and exploit any of its undeveloped properties; 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' current and future operations and such information may not be appropriate for other purposes. Parex' 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.
The term "Boe" means a barrel of oil equivalent on the basis of 6 Mcf of natural gas to 1 barrel of oil ("bbl"). Boe's may be misleading, particularly if used in isolation. A boe conversation ratio of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6 Mcf: 1 bbl, utilizing a conversion ratio at 6 Mcf: 1 bbl may be misleading as an indication of value.
For more information please contact:
Vice-President Corporate Planning and Investor Relations
Parex Resources Inc.
Phone: (403) 517-1733
Mon, 02 Nov 2015 23:19 GMTPrint