Parex Resources Announces December 2012 Production of 13,550 bopd and 2013 Guidance Highlighted by 25% Year-Year Production G...
January 08 2013 - 4:22PM
Marketwired Canada
Parex Resources Inc. ("Parex" or the "Company") (TSX:PXT), a company focused on
oil exploration and production in Colombia and Trinidad, provides an operational
update and announces its 2013 guidance. All amounts below are in United States
dollars unless otherwise stated.
Operations Update
2012 was a successful year for Parex. In 2012 the Company participated in
drilling 33 gross wells in Colombia and 2 in Trinidad, resulting in 25 oil
wells, 6 disposal wells and 4 dry and abandoned, for a success rate of 87
percent. Furthermore, the Company began 2012 with interests in 6 blocks in
Colombia and production primarily from the Kona field, and exited 2012 with
interests in 14 blocks in Colombia and a diversified production base of ten
fields.
December 2012 average production was 13,550 barrels of oil per day ("bopd") and
fourth quarter of 2012 average production was approximately 12,800 bopd.
Production growth in December was primarily a result of additional volumes being
added at the Las Maracas and Tua fields. A summary of recent operational
activity is provided below:
-- Las Maracas-6 was brought on-stream at 1,850 bopd in December 2012. The
Las Maracas-7 well was drilled as a southern delineation well and
encountered potential pay in both the Mirador and Gacheta formations and
is currently awaiting testing. The drilling rig will move over and drill
a dedicated water disposal well off of the same pad as the Las Maracas 7
well. We expect the Las Maracas field (Parex operated; 50 percent
working interest) to produce at a rate of approximately 8,000 bopd
(gross) until the oil treatment plant is commissioned in the second
quarter of 2013;
-- The Tua field on Block LLA-34 is now producing approximately 3,600 bopd
(1,620 net) with the addition of Tua-2 producing from the Guadalupe
Formation in December, 2012. The completion of the Guadalupe Formation
is the first long term test of this zone in the Tua field and the Tua-2
well has been producing at a rate of approximately 1,800 bopd gross with
a water-cut of less than 1 percent. Also on Block LLA-34, a drilling rig
is mobilizing to the Max-2 development location;
-- Kona-Sur and Kona-16 wells were drilled from the new Kona South pad.
Kona-Sur was drilled as a southern delineation well for the Gacheta
Formation to a target depth of 13,200 feet and was cased and is
currently awaiting testing. Kona-16 was drilled as a delineation well
for both the Mirador and C7 and was drilled to a total depth of 12,000
feet and is currently awaiting testing. Parex is mobilizing the drilling
rig from the Kona field to drill additional exploration prospects in
LLA-16 during the current dry season;
-- Adalia Norte-1 is the first well to be drilled on Block LLA-30 and is
expected to be spud the week of January 7, 2013;
-- On Block LLA-32 a surface location is being prepared for the Bandola-1
well (targeting both the Mirador and Gacheta formations adjacent to the
Maniceno field) to permit drilling operations to commence in January
2013; and
-- In Trinidad a 2-D seismic program has commenced on the Central Range
Block ("CRB"), with immediate focus on firming up prospects on the east
of the block that can be drilled off existing roads.
Parex 2013 Guidance Summary
Building on our 2012 operational and exploration success, Parex plans a self
funding 2013 capital investment program of approximately $210 million balanced
between exploration and development in Colombia and Trinidad. The Company is
forecasting a 2013 average production range of approximately 14,000-14,500 bopd
as compared to the 2012 average production of approximately 11,400 bopd and the
2011 average production of 5,345 bopd.
Key highlights:
-- Balanced capital portfolio of 18 development and appraisal wells and 14
exploration wells;
-- High Colombia operating netback production provides for a self-funding
capital program and year over year production growth of 25 percent;
-- Diversified exploration portfolio across nine Colombia Llanos Basin
blocks; and
-- Focused program to fulfill exploration commitments and test onshore
Trinidad prospects.
A summary of the 2013 capital plans is provided below:
# Wells Planned Capex (Net $ million)
-----------------------------------------------------------
Gross Net Wells Facilities Seismic Total
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Colombia
Dev/Appraisal 17 10 $ 65 $ 30 - $ 95
Exploration 13 10 $ 75 $ 5 $ 10 $ 90
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Total 30 20 $ 140 $ 35 $ 10 $ 185
Trinidad
Dev/Appraisal 1 0.8 $ 3 - - $ 3
Exploration 1 0.5 $ 10 - $ 12 $ 22
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Total 2 1.3 $ 13 - $ 12 $ 25
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Parex Total 32 21.3 $ 153 $ 35 $ 22 $ 210
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Parex' 2012 exploration success has provided a number of lower risk development
opportunities and the 2013 capital program is approximately balanced between
development and exploration. We expect that activity on Las Maracas, LLA-16, Max
and Tua will anchor the 2013 development program. Further, the Company
anticipates it can generate production growth on a year over year basis solely
with development capital investment. The Company's 2013 production target range
assumes some exploration success.
Additionally, Parex could increase its 2013 capital program through accessing
its existing $75 million reserve base credit facility or by realizing higher
than forecast Brent oil prices. Although the full year capital program is
expected to be self-funded through funds flow from operations, the Company
expects to access the reserve base credit facility during periods which capital
expenditure is more heavily weighted.
Colombia 2013 Capital Program Outlook
During 2013 Parex plans to drill approximately 30 gross wells on nine blocks
across its Colombian portfolio as summarized below. The number of wells drilled
and the split between exploration and development is expected to vary depending
on realized oil prices, timing of regulatory approvals, partner operations,
seasonal variability and drilling success.
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2013 Colombia Drilling Program
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# of gross wells Operated Non-Operated Total
----------------------------------------------------------------------------
Development/ Appraisal 11 6 17
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Exploration 9 4 13
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Trinidad 2013 Capital Program Outlook
In 2013 Parex is planning a Trinidad exploration program that will further
evaluate the Moruga Block potential and fulfill the remaining CRB work
commitments. The planned 2013 exploration program is summarized below.
2013 Trinidad Drilling Program
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Parex Operated
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# of gross wells Moruga (WI 83.8%) CRB Deep (WI 50%) Total
----------------------------------------------------------------------------
Development/Appraisal 1 - 1
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Exploration - 1 1
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The planned 2013 Trinidad capital program is reduced from that of 2012 as a
result of disappointing exploration drilling results and a less competitive
fiscal regime in Trinidad as compared to Colombia.
To fulfill the CRB work commitments, the Company is currently acquiring 2D
seismic and expects to spud an exploration well during the third quarter of
2013.
2013 Outlook Key Assumptions
Key assumptions underlining the 2013 capital program are:
-- Brent oil price of approximately $105/bbl;
-- Operating netback of $55/bbl, which reflects royalties and crude oil
differentials of $18/bbl, transportation costs of $20/bbl and operating
costs of approximately $11-$13/bbl;
-- Effective cash tax rate on Colombia cash flow of less than or equal to
20 percent; and
-- Timely access to exploration and development locations.
Ramshorn Litigation Update
As announced by Parex on April 12, 2012, Parex and its wholly owned subsidiaries
Parex Resources (Bermuda) Ltd. ("Parex Bermuda") and Ramshorn International,
Limited ("Ramshorn") have been named as defendants in a lawsuit (the "Lawsuit")
filed in the 61st Judicial District Court of Harris County, Texas (the "Texas
Court") by a Texas based private company (the "Plaintiff"). The Lawsuit relates
to a share purchase agreement entered into by the Plaintiff and a third party
seller (the "Seller") (prior to the agreement entered into by Parex and the
Seller for the purchase of Ramshorn) respecting the proposed purchase by the
Plaintiff of the shares of Ramshorn, which prior agreement the Plaintiff claims
was improperly terminated by the Seller. Each of Parex, Parex Bermuda and
Ramshorn specially appeared in the Lawsuit to challenge the jurisdiction of the
Texas Court and to seek dismissal of the claims against them.
A hearing on the jurisdictional aspects of the case took place on November 19
and 20, 2012 and the decision of the Texas Court on these jurisdictional matters
has now been received. The Texas Court found that it does not have jurisdiction
over Parex Bermuda and ordered that all of the Plaintiff's claims against Parex
Bermuda be dismissed. The Texas Court overruled Parex and Ramshorn's
jurisdictional challenges such that the Plaintiff's claims against Parex and
Ramshorn have not been dismissed. Parex and Ramshorn intend on filing a Notice
of Appeal of the Texas Court's rulings in this regard and will be requesting
that all future proceedings in the Lawsuit, including discovery, be stayed
pending the outcome of the appeal on these jurisdictional matters. Parex and
Ramshorn believe that the Lawsuit and the Plaintiff's claims against it are
baseless and without merit and will continue to vigorously defend the Lawsuit,
including by way of appealing the Texas Court's recent jurisdictional rulings
against Parex and Ramshorn.
Corporate Overview
Parex, through its direct and indirect subsidiaries, is engaged in oil and
natural gas exploration, development and production in South America and the
Caribbean region. Parex is conducting exploration activities on its 1,349,000
gross acre holdings primarily in the Llanos Basin of Colombia and 219,000 gross
acre holdings onshore Trinidad. Parex is headquartered in Calgary, Canada.
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
there from. 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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Parex Resources Inc.
Michael Kruchten
Manager, Investor Relations
(403) 517-1733
(403) 265-8216 (FAX)
Parex Resources Inc.
Kenneth G. Pinsky
Vice President, Finance and Chief Financial Officer
(403) 517-1729
(403) 265-8216 (FAX)
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