CALGARY, AB--(Marketwired - March 08, 2016) -
NOT FOR DISTRIBUTION OR FOR DISSEMINATION IN THE UNITED STATES
Parex Resources Inc. ("Parex" or the "Company") (
2015 Financial and Operational Highlights
1 Using USDCAD Bank of Canada 2015 annual average of 1.2787.
2 Using USDCAD Bank of Canada 2014 annual average of 1.1044.
Fourth Quarter Financial and Operational Highlights
Fourth Quarter and 2015 Financial Summary
For Q4 2015, sales volumes excluding purchased oil averaged 30,064 barrels of oil per day (working interest before royalty) and the average realized sales price in Colombia was $36.69 per barrel ("/bbl"), generating an operating netback of $15.12/bbl before crude oil hedge gains. Compared to the previous quarter, transportation and operating expenses decreased by $1.31/bbl. Parex expects to realize continued cash costs improvements during 2016 due to lower levels of industry activity and the depreciation of local currencies.
The Q4 2015 differential between Brent reference pricing and the realized sales price was $8.00/bbl. To date in 2016, Parex' realized sales price is in line with our historical differential of $5.00-7.00 on a per bbl basis.
Funds flow from operations in the Fourth Quarter of 2015 was $33.6 million ($0.22 per share diluted) compared to $13.5 million ($0.09 per share diluted) in the previous quarter which included a $30.8 million tax restructuring expense. The Q4 decrease in Brent oil prices offset the increase in quarterly production. Realizing the benefit of a Brent oil price put option increased the funds flow netback by $1.12 per bbl.
For the year 2015, funds flow from operations of $130.3 million funded capital expenditure of $125.5 million. Q4 capital expenditure program of $23.6 million included $14.5 million for drilling and completions. The level of drilling activity decreased during the Fourth Quarter of 2015 as the Company drilled 1 net well (Rumba-4) compared to 6 wells (4.2 net) in Q4 2014.
Parex had no debt at December 31, 2015 compared to a net debt (defined as total debt less working capital surplus) of $31.7 million in 2014. The Company currently has a credit facility borrowing base of $200 million ($175 million at December 31, 2014).
|Three Months ended||Year ended December 31,|
|Dec. 31,||Dec. 31,||Sep. 30,|
|Average daily production|
|Average daily sales of produced oil|
|Oil inventory - end of period (barrels)||136,184||252,031||272,002||136,184||252,031||137,000|
|Operating netback ($/bbl)|
|Reference price - Brent||44.69||77.07||51.16||53.57||99.56||108.64|
|Oil revenue (excluding hedging)||36.69||60.08||44.62||46.59||87.60||104.20|
|Financial ($000s except per share amounts)|
|Oil and natural gas revenue||107,816||160,584||123,249||521,089||752,022||636,577|
|Per share - basic||(0.02||)||(1.09||)||(0.18||)||(0.31||)||(0.90||)||0.12|
|Funds flow from continuing operations||33,628||49,759||13,448||130,271||293,853||271,670|
|Per share - basic||0.22||0.37||0.09||0.90||2.44||2.51|
|Working capital (deficit) surplus||76,708||3,261||62,689||76,708||3,261||24,005|
|Outstanding shares (end of period) (000s)|
|Weighted average basic||150,791||134,503||150,164||145,018||120,379||108,421|
|The table above contains Non-GAAP measures. See "Non-GAAP Terms" for further discussion.|
|(1)||The convertible debentures with a face value of Cdn$85 million with a conversion price of Cdn$10.15 per share were fully redeemed on September 25, 2014.|
|(2)||Borrowing limit of $200 million as of December 31, 2015, was $175 million at December 31, 2014.|
|(3)||Diluted shares as stated include the effects of common shares and in-the-money stock options outstanding at the period-end. The December 31, 2015 closing stock price was Cdn$10.16 per share.|
|Reserve Category (1)||
Dec 31, 2014
|Proved Developed Producing (PDP)||7,795||20,342||26,088||28%|
|Proved plus Probable (2P)||32,021||68,425||81,679||19%|
|Proved plus Probable plus Possible (3P)||49,949||103,981||124,453||20%|
|(1)||2015 2P Reserves are 98% crude oil. 2015 2P Reserves are 84% heavy crude oil compared to the 2014 GLJ Report of 82%. Heavy crude oil is defined as having an API greater than 10 degrees but less than or equal to 22.3 degrees. All reserves are presented as Parex working interest before royalties. Please refer to the "Reserve Advisory" section for a description of each reserve category.|
|(2)||Mboe is defined as thousand barrels of oil equivalent.|
Operations Update & 2016 Guidance:
At Brent oil prices of $35-$40/bbl, we forecast our 2016 capital budget and funds flow from operations to be approximately $40-$80 million. We anticipate first quarter 2016 production to exceed 28,700 bopd and 2016 full year production to be 29,000 bopd, above the 2015 average of 27,434 bopd. Capital expenditures for 2016 consist of both maintenance and growth capital with our 2016 drilling program starting in Q2 2016 on blocks LLA-34 and Cabrestero.
Q4 Conference Call Information
Parex will host a conference call to discuss 2015 Fourth Quarter and Year End results on Wednesday, March 9, 2016 beginning at 9:30 am MT. To participate in the call, dial 1-866-696-5910, pass code: 2615313#
The live audio will be carried at: http://bell.media-server.com/m/p/7zuqceku
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.
This report contains financial terms that are not considered measures under GAAP such as funds flow used in, or from operations, working capital, operating netback per barrel and adjusted net income, but do not have any standardized meaning under IFRS and may not be comparable to similar measures presented by other companies. Management uses these non-GAAP measures for its own performance measurement and to provide shareholders and investors with additional measurements of the Company's efficiency and its ability to fund a portion of its future capital expenditures.
Funds flow from operations is a non-GAAP term that includes all cash generated from operating activities and is calculated before changes in non-cash working capital. Management uses funds from (used in) operations to analyze operating performance and monitor financial leverage, and considers funds from (used in) operations to be a key measure as it demonstrates the Company's ability to generate cash necessary to fund future capital investments. Funds flow from operations is reconciled with net (loss) income in the consolidated statements of cash flows.
The information provided is a summary of the independent reserves report prepared by GLJ dated February 5, 2016 with an effective date of December 31, 2015 (the "GLJ 2015 Report"), with comparatives to the independent reserves report prepared by GLJ dated February 13, 2015 with an effective date of December 31, 2014 (the "GLJ 2014 Report"), and the independent reserves report prepared by GLJ dated February 20, 2014 with an effective date of December 31, 2013 ("GLJ 2013 Report", and collectively with the GLJ 2015 Report and the GLJ 2014 Report, the "GLJ Reports"). Each GLJ Report was prepared in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). Additional reserve information as required under NI 51-101 will be included in the Company's Annual Information Form which will be filed on SEDAR by March 31, 2016.
The recovery and reserve estimates of crude oil reserves provided in this news release are estimates only, and there is no guarantee that the estimated reserves will be recovered. Actual crude oil reserves may eventually prove to be greater than, or less than, the estimates provided herein. All December 31, 2015 reserves presented are based on GLJ's forecast pricing effective January 1, 2016, All December 31, 2014 reserves presented are based on GLJ's forecast pricing effective January 1, 2015. All December 31, 2013 reserves presented are based on GLJ's forecast pricing effective January 1, 2014.
"Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.
"Probable" reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.
"Possible" reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10 percent probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved plus probable plus possible reserves.
FD&A is the sum of total capital expenditures incurred in the period and the change in future development capital ("FDC") required to develop reserves. FD&A cost per bbl is determined by dividing current period net reserve additions into the corresponding period's FD&A cost. Total capital includes both capital expenditures incurred and changes in future development capital required to bring proved undeveloped reserves and probable reserves to production during the applicable period. Reserve additions are calculated as the change in reserves from the beginning to the end of the applicable period excluding production. The aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated FD&A generally will not reflect total finding and development costs related to reserves additions for that year. Changes in forecast FD&A occur annually as a result of development activities, acquisition and disposition activities and capital cost estimates that reflect our independent reserve evaluator's best estimate of what it will cost to bring the proved undeveloped and probable reserves on production.
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. 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.
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: 1Bbl, utilizing a conversion ratio at 6 Mcf: 1 Bbl may be misleading as an indication of value.
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, statements with respect to the performance characteristics of the Company's oil properties; supply and demand for oil; financial and business prospects and financial outlook; 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; 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 affect 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. 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 nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this release.
For more information, please contact:
Vice-President Corporate Planning and Investor Relations
Phone: (403) 517-1733
Tue, 08 Mar 2016 22:07 GMTPrint