CALGARY, Alberta, June 25, 2018 (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.
Production: We estimate that Q2 2018 production to average 42,500 barrels of oil equivalent per day ("boe/d") compared to the Company's Q1 2018 production of 40,586 boe/d. We expect average Q3 2018 production to exceed 44,000 boe/d.
Voluntary Tax Restructuring: Parex expects to complete a voluntary Colombia tax restructuring prior to June 30, 2018 that would increase Q2 2018 current tax expense to approximately $175 million from a forecast $35 million (transaction cost is estimated $140 million). The strategic rationale for Colombia tax restructuring is to make the Company’s tax structure more efficient. The impact of this restructuring is that the Company will incur Colombian recapture and capital gains taxes in Q2 2018 but will gain an increased tax basis for key producing assets that will provide a benefit over future years.
Assuming current Brent strip pricing and existing Colombian tax regulations, the forecast tax restructuring benefits would be:
Parex expects to fund the tax restructuring with existing working capital surplus, which was $205 million as of March 31, 2018. Further, at current Brent strip pricing, we forecast December 31, 2018 working capital surplus, prior to share repurchases (NCIB) to be approximately $150-160 million.
LLA-32 (working interest (“WI”) 87.5%): Currently drilling the exploration prospect Herradura-1.
Cabrestero (WI 100%): Following up on the Q1 2018 Totoro discovery, the Company has drilled 3 appraisal wells and is currently drilling the Totoro-5 well. All 4 appraisal wells will be completed and tested during Q3 2018.
LLA-34 (WI 55%): Parex continues to develop and delineate the Jacana/Tigana trend on LLA-34.
The Tigui-1 and Tigui Sur-1 exploration wells have been drilled and will be completed. The wells are evaluating a new, unbooked reserve area directly north of Parex’ Tortoro discovery on the Cabrestero Block.
The next exploration well that Parex anticipates drilling is Buco-1, located on a fault line between Tarotaro and Tua discoveries.
Capachos (WI 50%): The Capachos Sur-2 well was drilled to total depth of 17,800 feet. The well was drilled to appraise the Guadalupe and Une formations. Well logs indicated that the Une formation was wet. In the primary target, the Guadalupe Formation was approximately 150 feet below the productive zone in the original Capachos Sur-1 well. Capachos Sur -2 was completed in the Guadalupe Formation and produced non-economic rates of oil, confirming the oil-water contact for the Capachos Sur compartment. Following the Capachos Sur-2 test result, Parex has reinterpreted the Capachos Sur 3D seismic data and has identified a new location (Capachos Sur-3) to target the top of the structure. Following the completion of Capachos Sur-2 well, Parex has fulfilled its Capachos Block farm-in obligations.
The Capachos Block development plan requires a dedicated water disposal well and the Company plans to use the Capachos Sur-2 well as a water disposal well for future Capachos production.
On June 3, 2018 Parex spudded the Andina-1 exploration well and is drilling at approximately 9,500 feet. Andina-1 is the first well into the Andina compartment and is targeting multiple zones on a 4-way closure, similar to the Capachos Centro structure.
The Capachos-2 well is producing at a restricted rate of approximately 1,050 bopd and we expect to increase the production rate after commissioning the permanent production facilities during Q4 2018.
Aguas Blancas (WI 50%): Currently drilling 7 new development wells which will add additional water injection patterns and one step-out appraisal well into an undrilled compartment.
VIM-1 (WI 100%): Parex is currently drilling the Apure-1 exploration well. Intermediate casing has been set and the well is currently at 12,005 feet with a planned depth of 12,560 feet.
For more information, please contact:
Vice-President Capital Markets & Corporate Planning
Parex Resources Inc.
Phone: (403) 517-1733
NOT FOR DISTRIBUTION OR FOR DISSEMINATION IN THE UNITED STATES
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", "forecast", "budget" 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 drilling, development, exploration and other growth plans, including the anticipated number of wells to be drilled through 2018 and the timing of completion and testing of certain wells; the planned total drilling depths of the certain of the Company's wells and the anticipated timing of reaching such depths; the Company's plans to use the Capachos Sur-2 well as a water disposal well; the Company's expectation that the production rate of the Capachos Sur-2 well will be increased after commissioning permanent production facilities; estimated Q2 2018 average production; forecasted Q3 2018 average production; the Company's plans to complete a voluntary Colombia tax restructuring, the impact of such tax restructuring, the effect of the tax structuring on certain of the Company's financial measures and tax rates, and the anticipated benefits to the Company from the tax restructuring; anticipated source of funding for the tax restructuring; forecasted working capital surplus for the year-ended December 31, 2018; 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; failure of counterparties to perform under contracts; risk that Brent oil prices are lower than anticipated; risk that Parex' evaluation of its existing portfolio of development and exploration opportunities is not consistent with its expectations; failure to meet expected production targets; risk that the expected costs and effect of the tax restructuring on the Company's financial measures and tax rates are different than anticipated; failure to realize the anticipated benefits from the tax restructuring; 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; 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; that Parex' evaluation of its existing portfolio of development and exploration opportunities is consistent with its expectations; 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' production and 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; that the estimated impact of the tax restructuring on the Company and its financial measures and tax rates are accurate in all material respects; 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.
This press release and, in particular the information in respect of the Company's expected benefits to be realized from the proposed Colombia tax restructuring and the effect of the tax restructuring on certain of the Company's financial measures and tax rates, may contain future oriented financial information ("FOFI") within the meaning of applicable securities laws. The FOFI has been prepared by management to provide an outlook of the Company's financial results, activities and tax rates as a result of the tax restructuring and may not be appropriate for other purposes. The FOFI has been prepared based on a number of assumptions including the assumptions discussed in this press release. The actual results of operations of the Company and the resulting financial results may vary from the amounts set forth herein, and such variations may be material. The Company and management believe that the FOFI has been prepared on a reasonable basis, reflecting management’s best estimates and judgments. FOFI contained in this press release was made as of the date of this press release and Parex disclaims any intent or obligation to update publicly the press release, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law.
Oil & Gas Matters Advisory
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 conversion 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 6:1, utilizing a conversion ratio at 6:1 may be misleading as an indication of value.
Mon, 25 Jun 2018 22:34 GMTPrint