CORRECTION FROM SOURCE: Parex Resources Announces 2014 First Quarter Results
and Exploration Success
NEWS RELEASE TRANSMITTED BY Marketwired
FOR: Parex Resources Inc.
TSX SYMBOL: PXT
MAY 12, 2014
CORRECTION FROM SOURCE: Parex Resources Announces 2014 First Quarter Results
and Exploration Success
CALGARY, ALBERTA--(Marketwired - May 12, 2014) - This document corrects and
replaces the Parex Resources Inc. release that was issued May 12, 2014 at 16:56
ET. The second header of the release read, "Fourth Quarter and 2013
Financial Summary" but should have read, "First Quarter 2014
Financial Summary." The complete and corrected release follows.
NOT FOR DISTRIBUTION OR FOR DISSEMINATION IN THE UNITED STATES
Parex Resources Inc. ("Parex" or the "Company") (TSX:PXT),
a company focused on Colombian oil exploration and production, is pleased to
announce financial and operating results for the three months ("First
Quarter" or "Q1") ended March 31, 2014. All amounts herein are
in United States dollars unless otherwise stated.
Q1 2014 Financial and Operational Highlights:
-- Achieved a record quarterly oil production of 18,425 barrels per day, an
increase of 7 percent over the three months ending December 31, 2013;
-- Generated funds flow from operations of $76.7 million ($0.70 per share
-- Realized sales price in Colombia averaged $103.42 per barrel of oil and
an operating netback of $61.20 per bbl;
-- The Company participated in drilling 10 gross (6.15 net) wells in
Colombia resulting in 3 oil wells, 2 disposal wells, 4 cased and
untested and 1 dry and abandoned.(1)
First Quarter 2014 Financial Summary
For Q1 2014, sales volumes averaged 19,099 bopd (net working interest before
royalty) and the average realized sales price in Colombia was $103.42 per
barrel ("/bbl"), generating an operating netback of $61.20/bbl.
Operating plus transportation unit costs were $27.74/bbl compared to $29.13/bbl
in the previous quarter. First quarter production expenses were $9.66/bbl
comprising of $7.57/bbl in operated fields and $14.99/bbl in non-operated
Funds flow from operations in the First Quarter of 2014 of $76.7 million ($0.70
per share basic) compared to $60.3 million ($0.56 per share basic) in the
comparative period. The Company's Q1 capital expenditures were $61.4
million, which included $52.2 million for drilling and completions and $7.3
million for facilities primarily at the Akira and Tua fields.
Working capital surplus at period end was $37.0 million, including $40.3
million in cash compared to a working capital surplus of $24.0 million in the
previous quarter. The Company had bank debt of $4.0 million on a current
available facility of $125 million. Net working capital, defined as working
capital less bank debt, increased by $17.5 million over December 31, 2013 to
(1) Oil wells: Tua-6 (producing), Celtis-1 (temporarily suspended),
Kananaskis-1 (temporarily suspended); Disposal wells: Akira-5, Ardisia-1;
Untested: Akira-7, Akira-8, Tigana-2, Tigana-3; Dry & Abandoned: Urraca-1.
Three Months ended ended
March 31, Dec 31,
2014 2013 2013
Average daily production
Oil (bbl/d) 18,425 14,440 17,287
Average daily sales
Oil (bbl/d) 19,099 13,328 17,365
Oil Inventory - end of period (barrels) 73,565 196,689 137,000
Operating netback ($/bbl)
Reference Price - Brent 108.17 112.44 109.21
Oil revenue 103.42 109.63 101.64
Royalties (14.48) (15.15) (11.73)
Net revenue 88.94 94.48 89.91
Production expense (9.66) (10.78) (9.94)
Transportation expense (18.08) (16.67) (19.19)
Operating netback 61.20 67.03 60.78
Financial ($000s except per share
Oil and natural gas revenue 179,794 164,990 166,959
Net income 9,663 11,136 21,869
Per share - basic 0.09 0.10 0.20
Adjusted Net income (2) 20,099 6,538 23,201
Per share - basic 0.18 0.06 0.21
Funds flow from operations 76,746 60,226 75,818
Per share - basic 0.70 0.56 0.70
Capital expenditure 61,405 47,172 58,817
Total assets 882,306 827,821 854,808
Working capital surplus 36,957 16,972 24,005
Convertible debentures(3) 64,728 65,402 66,060
Long-term debt (4) 4,000 20,000 8,530
Outstanding shares (end of period) (000s)
Basic 109,783 108,514 108,712
Diluted(5) 118,353 112,847 118,276
(1) The table above contains Non-GAAP measures.
(2) Net income has been adjusted for the International Financial Reporting
Standards ("IFRS") accounting effects of changes in the derivative
financial liability related to the convertible debenture. Management
considers adjusted net income a better measure of the Company's
(3) Face value of the convertible debenture is Cdn$85 million with a
conversion price of Cdn$10.15 per share.
(4) Borrowing limit currently set at $125 million.
(5) Diluted shares as stated include the effects of common shares and in-
the-money stock options outstanding at the period-end. The March 31,
2014 closing stock price was Cdn$9.50 per share.
Business Development: Expanding Drilling Inventory
-- Capachos Farm-in: On May 5th, 2014 Parex has signed a farm-in agreement
with Ecopetrol S.A. for the joint development of the Capachos Block,
situated in the northern foothills of the Llanos Basin. Pursuant to the
terms of the farm-in agreement, Parex will pay 100% of the cost of two
wells in the Capachos development focus area to re-activate the field
and earn 50% working interest and operatorship. The Capachos development
area is approximately 8 kilometers long, has multi-zone potential at a
depth of approximately 16,000 feet and has produced light oil prior to
being shut-in. We expect to commence drilling operations in Q1 2015
subject to regulatory approval from the National Hydrocarbons Agency
-- Sorgenia Acquisition: Parex has purchased Sorgenia E&P Colombia B.V.
("Sorgenia") for a cash consideration of approximately $5 million. The
acquisition consolidates our working interest to 100% and removes prior
farm-in carries for LLA-24 and LLA-26. We also acquire 25% working
interest in the Llanos Basin Cerrero Block and 10% working interest in
the Balay development area.
-- Cerrero Farm-in: Parex has signed a farm-in agreement with Perenco for
the Cerrero Block which is located directly west of the Corcel and LLA- 34 blocks. Pursuant to the terms of the farm-in agreement, Parex will
pay 75% of the cost of one exploration well to earn 40% working interest
and block operatorship. Subsequent to the farm-in and Sorgenia
acquisition our Cerrero working interest will be 65%.
A summary of the current drilling/testing program plus the immediately
following locations is provided below:
# Prospect/Well Block Timing / Status
1 Akira Field Cabrestero Facility Commissioning May
2 Arlequin-1 Cebucan Casing Well
3 Begonia-1 LLA-40 Tested 2,100 bopd
4 Calona-1 LLA-32 Ready to Test
5 Carmentea-1 LLA-32 Ready to Test
6 Chacharo-1 Cerrero Casing Well
7 Celtis-1 LLA-40 Tested 600 bopd
8 Kananaskis-1 LLA-32 Tested 3,555 bopd
9 Katmandu Norte-1 Cerrero Rig mobilizing
10 Las Maracas-15 Los Ocarros Spud after Arlequin
11 Terranova-1 LLA-57 Drilling
12 Tigana Norte-1 LLA-34 Ready to Test
13 Tigana Sur Oeste-1 LLA-34 Preparing to spud
14 Tigana Sur-2 LLA-34 Spud after Tigana Sur Oeste-1
15 Tigana-2 LLA-34 Ready to Test
16 Tigana-3 LLA-34 Ready to Test
Akira (Operated, Cabrestero Block, WI 100%): Commissioning of the oil treatment
plan is underway. Akira-7 and Akira-8 which were drilled and cased during Q1
2014 are expected to be tested during Q2 2014. We also expect to re-start
production from Kitaro-1.
Arlequin (Operated, Cebucan Block, WI 100%): The Arlequin-1 exploration well
has reached its planned total depth is 15,300 feet and is being cased. This
well fulfills the current phase commitment.
Begonia (Operated, Block LLA-40, WI 50%): The Begonia-1 exploration well was
drilled to a depth of 9,458 feet. The Begonia-1 well was tested in the C7
Formation and naturally flowed 38.6 degrees API oil at a rate of 2,100 bopd
with a watercut of 0.6% and a choke of 3/8" at the end of the 6 day short
term testing period. We expect initial production to commence during Q2 2014.
The Berbena-1 exploration well, located 5 kilometers from Begonia was drilled
but did not recover commercial hydrocarbon volumes and is being converted to a
water disposal well for Begonia-1.
Chacharo (Non-Operated, Cerrero Block, WI 25%): Parex participated in the
Chacharo-1 exploration well through its acquisition of Sorgenia. The well has
reached its total depth of approximately 13,650 feet and is being cased.
Block LLA-32 (Non-Operated, WI 30%): The operator has concluded testing
operations in four zones in the Kananaskis-1 well. The Une Formation and two
zones in the Gacheta Formation were tested and each zone tested gas with minor
amounts of condensate. Parex plans to conduct further analysis to determine if
the hydrocarbons in the Gacheta Formation could be economically recovered. The
Mirador Formation tested an average of 3,555 bopd of 30 degrees API oil over an
8 hour period under natural flowing conditions with a final water-cut of 0.8%
and a total of 1,186 barrels of oil was recovered. An ESP has been installed to
start production from the Mirador Formation during Q2 2014.
The Carmentea-1 and the Calona-1 exploration wells have been drilled and cased.
Testing operations have begun on Carmentea-1 and will then proceed to Calona-1.
Block LLA-57 (Operated, WI 100%): Parex has spud Terranova-1 and plans to
immediately drill a second exploration well on the block to fulfill the block
Rumi (Operated, El Eden Block WI 60%): The Rumi-1 exploration well was drilled
in Q4 2013 and encountered oil bearing reservoirs in the Une formation. A long
term testing facility has been commissioned and production from the Une
Formation commenced in May 2014 at a rate of approximately 225 bopd. The
production performance of the Rumi-1 well will determine any future follow-up
Tigana (Non-Operated, Block LLA-34, WI 45%): Tigana-2 and Tigana-3 appraisal
wells were drilled approximately 400 meters north-west and 900 meters west of
Tigana-1. Tigana Norte-1 was drilled approximately 1,300 meters northeast of
the Tigana-1 discovery well to delineate the structure along trend and outside
of the currently mapped 3P reserves area. In all three appraisal wells, log
analysis indicated oil potential in the Mirador and Guadalupe reservoirs. Each
well has been cased and we expect testing to be completed by the end of Q2
A new pad approximately 900 meters south of the Tigana Sur 1 well has been
built to delineate the southern portion of the Tigana structure and the first
well, Tigana Sur Oeste-1 has commenced drilling operations.
Tua (Non-Operated, Block LLA-34, WI 45%): Tua-7 and Tua-8 have been approved by
partners as the next delineation wells to be drilled in the Tua field during Q3
2014 Guidance Update
To date in 2014, Parex has experienced strong appraisal and exploration
drilling results. We currently have 4 operated and 6 non-operated wells that
have either been tested and temporarily suspended, or are cased with favorable
log results and awaiting testing.(2) We have projected Q2 2014 production will
be 19,000-19,500 bopd and we anticipate continued quarterly production growth
during 2014. At the end of Q2 2014 after assessing the initial production
results of its current inventory of 10 non-producing wells, Parex expects to:
-- update and increase its full year production guidance;
-- revise its full year capital program in line with year-to-date
exploration success, production growth, strong netbacks and addition of
new properties; and
-- release a mid-year independent reserve evaluation.
(2) Operated: Akira-7, Akira-8, Begonia-1, Celtis-1; Non-operated: Tigana-2,
Tigana-3, Tigana Norte-1, Kananaskis-1, Calona-1, Carmentea-1. Additionally,
Parex expects Adalia-1 which was temporarily suspended due to community demands
to resume production during 2014.
Annual General Meeting
Parex will hold the Annual General Meeting ("AGM") on May 13, 2014 at
10:30 am (Calgary Time) at the Jamieson Place Conference Centre, third floor of
the Jamieson Place Tower, 308 - 4th Avenue S.W., Calgary, Alberta T2P 0H7. The
AGM will be webcast at http://www.gowebcasting.com/5416.
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.
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 effect 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 FURTHER INFORMATION PLEASE CONTACT:
Parex Resources Inc.
Vice-President Corporate Planning and Investor Relations
INDUSTRY: Energy and Utilities - Oil and Gas
-0- May/12/2014 22:04 GMT
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