Parex Resources Increases 2P Reserves by 45% to 162 MMboe

CALGARY, Alberta, Feb. 06, 2018 (GLOBE NEWSWIRE) — Parex Resources Inc. (“Parex” or the “Company”) (TSX:PXT) is pleased to announce the results of its annual independent reserves assessment as at December 31, 2017.

The financial and operational information contained below is based on the Company’s unaudited expected results for the year ended December 31, 2017.  All currency amounts are in United States dollars (“USD”) unless otherwise stated.

2017 Year-End Corporate Reserves Report

“We continue to create shareholder value – more cash flow generated than we spend, increasing the value per share.   In 2017, our production per share on debt adjusted basis, grew 21% and our 2P reserves per share grew 47%.  With our working capital of approximately USD$160 million, no debt and a reserve life index exceeding 11 years, we have multiple opportunities for continued growth” stated Dave Taylor, Parex President & CEO.

For the year ended December 31, 2017, Parex:   

  • Increased proved plus probable (“2P”) reserves by 45 percent year-over-year; 2P reserves grew from 112 million barrels of oil equivalent (“MMboe”) at December 31, 2016 to 162 MMboe at December 31, 2017. 99% of 2P reserves are crude oil;
  • Achieved 2P finding & development costs (“F&D”) and 2P finding, development & acquisition costs (“FD&A”) of USD$4.73/boe.  The 2017 2P FD&A cash netback recycle ratio was 5.5 times using the unaudited fourth quarter 2017 funds flow from operations on a per barrel of oil equivalent (“boe”) basis of USD$26.25/boe;
  • Realized 2P reserve replacement of 488% with total 2017 gross reserve additions of 63.3 MMboe;
  • Achieved proved developed producing (“PDP”) FD&A of USD$7.50/boe resulting in the proved producing FD&A recycle ratio of 3.5 times. Replaced 224% of production (13 MMboe) with PDP reserve additions of 29.1 MMboe;
  • Increased 2P reserve life index (“RLI”) to 11.4 years, up from 9.9 years at year-end 2016, based on annualized estimated fourth quarter 2017 production of 39,007 boe per day (“boe/d”);
  • Increased 2P after tax net present value discounted at 10 percent to USD$2.5 billion (CAD$3.1 billion) compared to USD$1.6 billion (CAD$2.1 billion) at December 31, 2016;
  • Expanded gross undeveloped drilling locations to 115, 158 and 191 wells in the proved (“1P”), 2P and proved plus probable plus possible (“3P”) cases, respectively; and
  • Increased 2017 annual average production to approximately 35,540 boe/d, a 20% increase from 2016. Production for Q4 2017 averaged 39,007 boe/d compared to 36,195 boe/d in Q3 2017.

2017 Year-End Reserves Report: Discussion of Reserves

The following tables summarize information contained in the independent reserves report prepared by GLJ dated February 2, 2018 with an effective date of December 31, 2017 (the “GLJ 2017 Report”), with comparatives to the independent reserves report prepared by GLJ dated February 6, 2017 with an effective date of December 31, 2016 (the “GLJ 2016 Report”), and the independent reserves report prepared by GLJ dated February 5, 2016 with an effective date of December 31, 2015 (“GLJ 2015 Report”, and collectively with the GLJ 2017 Report and the GLJ 2016 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 30, 2018.  Consistent with the Company’s reporting currency, all amounts are in United States dollars unless otherwise noted.

The recovery and reserve estimates provided in this news release are estimates only, and there is no guarantee that the estimated reserves will be recovered. Actual reserves may eventually prove to be greater than, or less than, the estimates provided herein. In certain of the tables set forth below, the columns may not add due to rounding.

All December 31, 2017 reserves presented are based on GLJ’s forecast pricing effective January 1, 2018; all December 31, 2016 reserves presented are based on GLJ’s forecast pricing effective January 1, 2017; and all December 31, 2015 reserves presented are based on GLJ’s forecast pricing effective January 1, 2016.

Parex’ reserves are located in Colombia’s Llanos and Middle Magdalena basins. Reserve additions in the GLJ 2017 Report were primarily generated from a successful 2017 oil exploration and appraisal drilling program. 

The Company recorded material increases in all reserve categories because of the following corporate activities:

  • Exploration discovery on the Cabrestero and LLA-34 blocks; and
  • Appraisal and development drilling on the Cabrestero, Capachos and LLA-34 blocks.

2017 Year-End Gross Reserves Volumes

  December 31, Increase   
 Reserves Category 2015 
Mboe
(1) 
2016 
Mboe(1) 
2017
Mboe (1)(2) 
  over
Dec 31, 2016 
 
 Proved Developed Producing (PDP) 26,088 34,400 50,506           47 %
 Proved Developed Non-Producing 593 1,087 2,089 92 %
 Proved Undeveloped 19,325 28,285 42,930 52 %
 Proved (1P) 46,006 63,772 95,525 50 %
 Probable 35,673 48,132 66,711 39 %
 Proved + Probable (2P) 81,679 111,904 162,236 45 %
 Possible(3) 42,774 57,392 78,698 37 %
 Proved + Probable + Possible (3P) 124,453 169,297 240,934 42 %

       
(1)     Mboe is defined as thousand barrels of oil equivalent.
(2)     All reserves are presented as Parex working interest before royalties.  2017 net reserves after royalties are: PDP 43,031 Mboe, proved developed non-producing 1,907 Mboe, proved undeveloped 34,841 Mboe, 1P 79,780 Mboe, 2P 133,666 Mboe and 3P 197,842 Mboe.
(3)     Please refer to the “Reserve Advisory” section for a description of each reserve category. Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities recovered will equal or exceed the sum of proved plus probable plus possible reserves.
       

2017 Gross Reserves by Block

 Block Proved
Mboe
Proved+
Probable
Mboe
Proved + 
Probable + 
Possible(1) 
Mboe 
 Aguas Blancas 3,329 4,312 5,273 
 Cabrestero 8,612 12,675 17,831 
 Capachos 1,034 2,317 5,105 
 LLA-34 76,688 134,658 202,206 
 Other Blocks 5,862 8,274 10,519 
 Total 95,525 162,236 240,934 

       
(1)     All reserves are presented as Parex working interest before royalties. Please refer to the “Reserve Advisory” section for a description of each reserve category. Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities recovered will equal or exceed the sum of proved plus probable plus possible reserves.
       

 
2017 Gross Year-End Reserves Volumes by Product Type (1)
 Product Type Proved
Developed
Producing
Total
Proved
Total Proved
+ Probable 
Total Proved+
Probable +
Possible
 Light & Medium Crude Oil (Mbbl)(2) 2,573 6,952 11,261 16,720
 Heavy Crude Oil (Mbbl) 47,771 86,923 148,626 221,014
 Natural Gas Liquids (Mbbl) 4 21 62 151
 Conventional Natural Gas (MMcf)(3) 950 9,775 13,724 18,291
 Oil Equivalent (Mboe) 50,506 95,525 162,236 240,934

       
(1)     All reserves are presented as Parex working interest before royalties. Please refer to the “Reserve Advisory” section for a description of each reserve category. Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities recovered will equal or exceed the sum of proved plus probable plus possible reserves.
(2)     Mbbl is defined as thousands of barrels
(3)     MMcf is defined as one million cubic feet
       

Five Year Crude Oil Price Forecast – GLJ Report (January 2017 and 2018)

   
2017
2018 2019 2020 2021 2022
 ICE Brent (USD$/bbl) – January 1, 2017   57.00 61.00 66.00 70.00 74.00 77.00
 ICE Brent (USD$/bbl) – January 1, 2018       54.75(1) 65.50 63.50  63.00 66.00 69.00

       
(1)     Actual 2017 ICE Brent average price                                                                                                                                                                           
       

Reserves Net Present Value Before Tax Summary (1)(2)

 Reserves Category   NPV10 
December 
31, 2016 
(000s)(2) 
NPV10 
December 
31, 2017 
(000s)(2) 
NPV10 
December 
31, 2017
(CAD/sh)(3) 
 Proved Developed Producing (PDP) $ 765,431  1,345,509    – 
 Proved Developed Non-Producing   19,659  43,751    – 
 Proved Undeveloped   466,845  827,291    – 
 Proved (1P) $ 1,251,936  2,216,550  $ 18.01 
 Probable   1,000,543  1,401,168    – 
 Proved + Probable (2P) $ 2,252,479  3,617,718  $ 29.39 
 Possible(4)   1,183,673  1,599,977    – 
 Proved + Probable + Possible (3P) $ 3,436,152  5,217,695  $ 42.39 

       
(1)     Net present values (“NPV10”) are stated in USD and are discounted at 10 percent.  Please refer to the “Reserve Advisory” section for a description of each reserve category.  The forecast prices used in the calculation of the present value of future net revenue are based on the GLJ January 1, 2017 and GLJ January 1, 2018 price forecasts, respectively. The GLJ January 1, 2018 price forecast will be included in the Company’s Annual Information Form.
(2)     Includes future development capital (“FDC”) as at December 31, 2016 of $39 million for PDP, $246 million for 1P, $347 million for 2P and $422 million for 3P.  FDC as at December 31, 2017 of $43 million for PDP, $302 million for 1P, $432 million for 2P and $537 million for 3P. 
(3)     NPV10 is calculated by divided by 155 million basic shares outstanding as at December 31, 2017.
(4)     Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities recovered will equal or exceed the sum of proved plus probable plus possible reserves.
       

Reserves Net Present Value After Tax Summary (1)(2)

 Reserves Category   NPV10 
December 
31, 2016 
(000s)(2) 
NPV10 
December 
31, 2017 
(000s)(2) 
NAV
December 
31, 2017 
(CAD/sh)(3) 
 Proved Developed Producing (PDP) $ 615,321  1,014,189    – 
 Proved Developed Non-Producing   12,631  28,980    – 
 Proved Undeveloped   292,253  533,121    – 
 Proved (1P) $ 920,206  1,576,290  $ 14.11 
 Probable   650,740  924,898    – 
 Proved + Probable (2P) $ 1,570,945  2,501,188  $ 21.62 
 Possible(4)   776,399  1,058,206    – 
 Proved + Probable + Possible (3P) $ 2,347,344  3,559,394  $ 30.22 

       
(1)     Net present values are stated in USD and are discounted at 10 percent.  All reserves are presented as Parex working interest before royalties. Please refer to the “Reserve Advisory” section for a description of each reserve category.  The forecast prices used in the calculation of the present value of future net revenue are based on the GLJ January 1, 2017 and GLJ January 1, 2018 price forecasts, respectively. The GLJ January 1, 2018 price forecast will be included in the Company’s Annual Information Form.
(2)     Includes FDC as at December 31, 2016 of $39 million for PDP, $246 million for 1P, $347 million for 2P and $422 million for 3P.  FDC as at December 31, 2017 of $43 million for PDP, $302 million for 1P, $432 million for 2P and $537 million for 3P. 
(3)     NAV is calculated as at December 31, 2017 as after tax NPV10 plus estimated working capital of USD$160 million (converted at USDCAD=1.2573), divided by 155 million basic shares outstanding as at December 31, 2017.
(4)     Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities recovered will equal or exceed the sum of proved plus probable plus possible reserves.
       

                        

Reserve Life Index (“RLI”)

  Dec. 31, 2015(1) Dec. 31, 2016(2) Dec. 31, 2017(3)
Proved Developed Producing (PDP)
Proved (1P)
2.5 years 
4.4 years 
3.0 years 
5.6 years 
3.5 years 
6.7 years 
Proved Plus Probable (2P) 7.8 years  9.9 years  11.4 years 

       
(1)     Calculated by dividing the amount of the relevant reserves category by average fourth quarter 2015 production of 28,588 boe/d annualized.
(2)     Calculated by dividing the amount of the relevant reserves category by average fourth quarter 2016 production of 31,049 boe/d annualized.
(3)     Calculated by dividing the amount of the relevant reserves category by estimated average fourth quarter 2017 production of 39,007 boe/d annualized.
       

2017 Year-End Gross Reserves Reconciliation Company

  Total Proved   Total Proved +
Probable
  Total Proved + 
Probable + 
Possible 
 
  Mboe   Mboe   Mboe   
December 31, 2016 63,772   111,904   169,297  
Technical Revisions(1) 4,765   297   3,464  
Discoveries & Extensions(2) 39,174   61,917   79,793  
Acquisitions(3) 786   1,090   1,352  
Production    (12,972 )   (12,972 )   (12,972 )
December 31, 2017(4) 95,525   162,236   240,934  

       
(1)     Proved plus probable reserve technical revisions are primarily associated with the evaluations of Aguas Blancas.
(2)     Proved plus probable reserve discoveries are primarily associated with the evaluations of the Capachos, Cabrestero and LLA-34 blocks. 
(3)     The gross working interest 2P reserves associated with acquisitions is from the additional working interest in the LLA-32 and LLA-40 blocks.
(4)     Subject to final reconciliation adjustments. All reserves are presented as Parex working interest before royalties. Please refer to the “Reserve Advisory” section for a description of each reserve category.  Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities recovered will equal or exceed the sum of proved plus probable plus possible reserves. The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation. 
       

 Calculation of Reserve Metrics – Company Gross(1)  
      2017 3 Year 
 USD$ (‘000)     Proved
Developed
Producing
Proved Proved+ 
Probable 
Proved+ 
Probable 
             
 Capital Expenditures(1)   208,174 208,174 208,174  441,353 
 Capital Expenditures – change in FDC  4,610 56,023 85,939  6,231 
 Total Capital   212,784 264,197 294,113  447,584 
             
 Net Acquisitions     5,338 5,338 5,338  9,363 
 Net Acquisitions – change in FDC   –  65,340 
 Total Net Acquisitions   5,338 5,338 5,338  74,703 
           
             
 Total Capital including Acquisitions 218,122 269,535 299,451  522,287 
             
 Reserve Additions     28,683 43,940 62,214  122,777 
 Net Acquisition Reserve Additions   395 786 1,090  4,916 
 Reserve Additions including Acquisitions(2)(Mboe)  29,078 44,725 63,304  127,693 
             
 F&D Costs(2) ($/boe)     7.42 6.01 4.73  3.65 
 FD&A Costs(2) ($/boe)     7.50 6.03 4.73  4.09 
         
 Estimated Q4 2017 funds flow per boe(1) (3)  ($/boe) 26.25 26.25 26.25  16.27 
             
 Recycle Ratio – F&D(2)(3)     3.5x 4.4x 5.6x  4.5x 
 Recycle Ratio – FD&A(2)(3)     3.5x 4.4x 5.5x  4.0x 

       
(1)     Calculated using unaudited estimated capital expenditures and unaudited estimated funds flow from operations as at December 31, 2017. See advisory “Unaudited Financial Information”. 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)     The aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserves additions for that year.
(3)     Recycle ratio is calculated as funds flow from operations on a per boe basis divided by F&D or FD&A as applicable.  3 Year funds flow from operations on a per boe basis is calculated using weighted average sales volumes.
       

Operational Update

Cabrestero (WI 100%): The exploration well Totoro-1 has reached its target depth and is being cased for testing. The exploration well Bacano-6 was drilled and abandoned.

Capachos (WI 50%): The Capachos Sur-2 well has set intermediate casing at approximately 15,360 feet with a planned total depth of 16,700 feet.  At present, Parex has temporarily suspended drilling and production operations due to security concerns.  With the support of the local communities and federal authorities, the Company does not anticipate a long-term suspension of the project.  We continue to advance the engineering and procurement of the gas processing facility that would provide gross oil production capacity of 10,000 bpd by Q4 2018.

LLA-34 (WI 55%): The Company continues to delineate the Tigana Norte area with Tigana Norte-6 on production at approximately 1,450 bopd.  The exploration well Chachalaca Sur-1 was spud on February 4, 2018.

Production: We estimate that Q4 2017 production averaged 39,007 boe/d and the full year 2017 average production was 35,540 boe/d.  We expect Q1 2018 production average to exceed 40,000 boe/d. 

2017 year-end Results

We expect to release our 2017 year-end results on March 5, 2018.

Automatic Share Purchase Plan

The Company has entered into an automatic share purchase plan with a broker in order to facilitate repurchases of up to 3,000,000 of its common shares pursuant to the Company’s previously announced normal course issuer bid (see the Company’s press release dated September 11, 2017). Under the Company’s automatic share purchase plan, the Company’s broker may repurchase shares under the normal course issuer bid during the Company’s self-imposed blackout periods. Purchases will be made by the Company’s broker based upon the parameters prescribed by the Toronto Stock Exchange and applicable securities laws and the terms of the plan and the parties’ written agreement. The automatic share purchase plan has been approved by the Toronto Stock Exchange and will be implemented effective February 8, 2018.

For more information, please contact:

Mike Kruchten
Vice President, Capital Markets & Corporate Planning
Parex Resources Inc.
Phone: (403) 517-1733
investor.relations@parexresources.com
 

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. 

Not for distribution or for dissemination in the United States.

Reserve Advisory

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, 2017 reserves presented are based on GLJ’s forecast pricing effective January 1, 2018. All December 31, 2016 reserves presented are based on GLJ’s forecast pricing effective January 1, 2017. All December 31, 2015 reserves presented are based on GLJ’s forecast pricing effective January 1, 2016.

It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves. There are numerous uncertainties inherent in estimating quantities of crude oil, reserves and the future cash flows attributed to such reserves.

“Proved Developed Producing Reserves” are those reserves that are expected to be recovered from completion intervals open at the time of the estimate.  These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty.

“Proved Developed Non-Producing Reserves” are those reserves that either have not been on production, or have previously been on production but are shut-in and the date of resumption of production is unknown.

“Proved Undeveloped Reserves” are those reserves expected to be recovered from known accumulations where a significant expenditure (e.g. when compared to the cost of drilling a well) is required to render them capable of production.  They must fully meet the requirements of the reserves category (proved, probable, possible) to which they are assigned.

“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.

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 6:1, utilizing a conversion ratio at 6:1 may be misleading as an indication of value.

Light crude oil is crude oil with a relative density greater than 31.1 degrees API gravity, medium crude oil is crude oil with a relative density greater than 22.3 degrees API gravity and less than or equal to 31.1 degrees API gravity, and heavy crude oil is crude oil with a relative density greater than 10 degrees API gravity and less than or equal to 22.3 degrees API gravity.

With respect to finding and development costs, the aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserve additions for that year.

This press release discloses drilling locations in three categories: (i) proved locations; (ii) probable locations; and (iii) possible locations.  Proved locations, probable locations and possible locations are derived from the GLJ 2017 Report and account for drilling locations that have associated proved and/or probable and/or possible reserves, as applicable. Of the 191 drilling locations identified herein, 115 are proved locations, 43 are probable locations and 33 are possible locations.  The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital, regulatory approvals, seasonal restrictions, oil prices, costs, actual drilling results, additional reservoir information that is obtained and other factors.

This press release contains a number of oil and gas metrics, including F&D costs, FD&A costs, recycle ratio, reserve replacement and RLI. These oil and gas metrics have been prepared by management and do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies and should not be used to make comparisons. Such metrics have been included herein to provide readers with additional measures to evaluate the Company’s performance; however, such measures are not reliable indicators of the future performance of the Company and future performance may not compare to the performance in previous periods and therefore such metric should not be unduly relied upon. Management uses these oil and gas metrics for its own performance measurements and to provide security holders with measures to compare the Company’s operations over time. Readers are cautioned that the information provided by these metrics, or that can be derived from the metrics presented in this news release, should not be relied upon for investment or other purposes.

Unaudited Financial Information

Certain financial and operating results included in this news release include capital expenditures, production information, funds flow from operations and operating costs are based on unaudited estimated results. These estimated results are subject to change upon completion of the Company’s audited financial statements for the year ended December 31, 2017, and changes could be material. Parex anticipates filing its audited financial statements and related management’s discussion and analysis for the year ended December 31, 2017 on SEDAR on or before March 30, 2018.

The information contained in this press release in respect of the Company’s expected capital expenditures, funds flow from operations and operating costs for 2018, 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 activities and results 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 the press release, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law.

Funds from operations is not recognized measures under International Financial Reporting Standards (“IFRS”) and does not have a standardized meaning. Management believes that such financial measure is useful supplemental information to analyze operating performance and provide an indication of the results generated by the Company’s principal business activities. Investors should be cautioned that such measure should not be construed as an alternative to other measures of financial performance as determined in accordance with IFRS. The Company’s method of calculating funds from operations may differ from other companies, and accordingly, may not be comparable to similar measures used by other companies.

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’ internal projections, estimates or beliefs concerning, among other things, results of operations, production, future capital and other expenditures (including the amount, nature and sources of funding thereof), plans for and results of drilling activity, environmental matters, business prospects and opportunities and the date on which the automatic share purchase plan is being implemented. 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, statements relating to “reserves”, which 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 and Colombia; 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; prolonged volatility in commodity prices; risk of delay in completing or non-competition of required transfers of the applicable operating and environmental permits; failure of counterparties to perform under contracts; 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; ability to access sufficient capital from internal and external sources; failure of counterparties to perform under the terms of their 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: 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; 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; 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.