CALGARY, Alberta, Aug. 08, 2018 (GLOBE NEWSWIRE) — Parex Resources Inc. (“Parex” or the “Company”) (TSX:PXT), a company focused on Colombian oil exploration and production, announces its unaudited financial and operating results for the three months ended June 30, 2018 (“Second Quarter” or “Q2”). All amounts herein are in United States dollars (“USD”) unless otherwise stated.

A conference call to discuss the Second Quarter results will be held on Thursday August 9, 2018 beginning at 9:30 am Mountain Time.

2018 Second Quarter Financial and Operational Highlights

• Quarterly production was 42,625 barrels of oil equivalent per day ("boe/d") (99% crude oil), representing an increase of 5 percent over the previous quarter ended March 31, 2018 and an increase of 24 percent over the three months ended June 30, 2017;
• Earned net income of 8.6 million (.21 per share basic) compared to a net income of .5 million ({$content}.02 per share basic) in the three months ended June 30, 2017;
• A voluntary tax restructuring with a cost of 7.5 million was completed in the quarter generating additional income of 9.2 million for a net income benefit in the quarter of 1.7 million. For the first six months of 2018, Parex has earned 0.1 million of net income;
• Generated adjusted funds flow from operations of 1.7 million ({$content}.78 (or CAD .01)¹ per share basic) which has been adjusted to exclude the 7.5 million ({$content}.88 per share basic) previously released cost of a voluntary tax restructuring completed in June 2018 which will be funded from existing working capital;
• Including the 7.5 million voluntary tax restructuring cost, funds flow from operations was $(15.8) million ({$content}.10 loss per share basic) as compared to {$content}.34 per share for the three months ended June 30, 2017 and {$content}.65 per share for the three months ended March 31, 2018;
• Capital expenditures were 0.6 million in the period compared to .0 million in the three months ended June 30, 2017. 2018 year to date capital expenditures are 8.8 million;
• Working capital was .1 million (3.1 million cash and cash equivalents) at June 30, 2018 compared to 5.8 million at March 31, 2018 and 8.3 million at June 30, 2017. The Company has an undrawn bank credit facility of 0.0 million; and
• Participated in drilling 18 wells² in Colombia resulting in 10 oil wells, 1 disposal well and 7 untested wells.

⁽¹⁾ Using USD-CAD Bank of Canada 3-month average exchange rate of 1.291
⁽²⁾ Oil wells: Bacano-7, Coyote-2, Coyote-3, Jacana-22, Tigana Norte-8, Tigana Suroeste-4, Tigana Suroeste-6, Tigana Suroeste-8, Tigui-1 & Tigui Sur-1; Disposal well: Capachos Sur-2; and Untested wells: Totoro-2, Totoro-3, Totoro-4, AB-13, AB-16, AB-17 & AB-BA.

(1) The table above contains Non-GAAP measures.  See “Non-GAAP Terms” for further discussion.
(2) Borrowing limit of 0.0 million as of June 30, 2018.
(3) Diluted shares as stated include the effects of common shares and in-the-money stock options outstanding at the period-end. The June 30, 2018 closing stock price was Cdn.82 per share.
(4) Adjusted to exclude a 7.5 million cost of the voluntary tax restructuring during the three months ended June 30, 2018 and a .0 million one time legal settlement during the three months ended June 30, 2017.

Guidance Update: Q4 2018 Production to Average 48,000 boe/d

Q3 2018 production is expected to average above 44,000 boe/d and Q4 2018 production is forecast to average 48,000 boe/d, an increase of 2,000 bopd from the original guidance.  The full year 2018 capital expenditures mid-point forecast has been increased to approximately 5 million from prior guidance of 0 million.  The increase in capital expenditures is primarily due to:

• the drilling of 16 additional gross oil wells and injection wells on blocks LLA-34 and Cabrestero in 2018, and
• drilling/seismic on the newly acquired CPO-11 Block (see operational update below).

Increased production in Q4 2018 does not reflect production response due to injection wells drilled at Cabrestero in 2018 and which is expected to increase production in Q1 2019.

Operational Update:

Aguas Blancas (WI 50%):  Parex continues to expand the existing development.  We have drilled 2 injectors and 3 producers to enhance the existing waterflood pattern.  Additionally, we drilled the exploration well AB-36 into a previously un-booked compartment.  The next steps are to continue expanding the waterflood pattern by drilling 2 additional wells and then complete all the standing wells during August and September 2018.  A 2 mmscfd gas plant is also being commissioned for Q4 2018.

VIM-1 (WI 100%): The Apure exploration prospect was drilled and tested. Although numerous indications of hydrocarbons were encountered during drilling, the initial testing did not produce any hydrocarbons.  Parex is currently analyzing the formation cuttings and completion fluid to determine if an alternative optimized completion process is required.  We plan to drill a separate gas play, the La Belleza-1 exploration well, targeting the Porquero Formation beginning in November 2018.

Capachos (WI 50%): The Company is currently drilling the Andina-1 exploration prospect.  The well is currently running intermediate casing at 15,550 feet.  We expect to reach the target depth of 17,500 feet at the end of August 2018.

Cabrestero (WI 100%): Based on the exploration success on Totoro and Bacano, we have drilled 2 additional water injection wells and 4 producing wells. We expect the water injection response to positively impact 2019 production.

LLA-34 (WI 55%): We have increased the planned 2018 wells from 18 to 28 wells, of which 14 are to be drilled in H2 2018.  The additional wells will also be managed to provide surplus production capacity.

LLA-32 (working interest (“WI”) 87.5%): The Herrradura exploration prospect was drilled and abandoned.

CPO-11 Farm-in (WI 50%):  Parex has signed a farm-in agreement with Hupecol Meta LLC for the exploration area of Block CPO-11 in the Llanos Basin of Colombia. Pursuant to the terms of the farm-in agreement, Parex will pay 100% of two explorations wells and acquire 108 kilometers of 2D seismic to earn 50% working interest.  We expect the total work commitment capital to be approximately million.  Parex will act as de-facto operator under a technical services agreement during the earning phase and subsequent operatorship will be jointly agreed. The Block farm-in agreement includes approximately 570,000 gross acres subject to a royalty of approximately 30% which is calculated on a net basis. We expect to commence drilling operations with the Anacaona-1 exploration well in early Q4 2018, subject to regulatory approvals, with the primary target being the Guadalupe Formation.

Q2 2018 Conference Call

Parex will host a conference call to discuss the Second Quarter Results on Thursday, August 9, 2018 beginning at 9:30 am Mountain Time.  To participate in the call, from Canada and the United States, dial 1-866-696-5910 then enter the passcode 5890209#.

The live audio webcast will be carried at: https://bell.media-server.com/m6/p/odpoxov5

Individuals located outside of Canada and the USA are invited to access this event via webcast or by calling their respective location dial-in number available at:

https://www.confsolutions.ca/ILT?oss=7P1R8666965910

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.

For more information, please contact:

Mike Kruchten

Vice President, Capital Markets & Corporate Planning

Parex Resources Inc.

Phone: (403) 517-1733

[email protected]

NOT FOR DISTRIBUTION OF FOR DISSEMINATION IN THE UNITED STATES

Non-GAAP Terms

The Company discloses several financial measures ("non-GAAP Measures") herein that do not have any standardized meaning prescribed under International Financial Reporting Standards ("IFRS"). These financial measures include operating netback per boe, funds flow from operations, funds flow from operations per boe, adjusted funds flow from operations and adjusted funds flow from operations per boe. 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.

The Company considers operating netbacks per boe to be a key measure as it demonstrates Parex’ profitability relative to current commodity prices. The following is a description of each component of the Company’s operating netback per boe and how it is determined:

• Oil and natural gas sales per boe is determined by sales revenue excluding risk management contracts less non-cash oil revenue from overlifted Ocensa pipeline volumes divided by total equivalent sales volume including purchased oil volumes;
• Royalties per boe is determined by dividing royalty expense by the total equivalent sales volume and excludes purchased oil volumes;
• Production expense per boe is determined by dividing production expense by total equivalent sales volume and excludes purchased oil volumes; and
• Transportation expense per boe is determined by dividing transportation expense by the total equivalent sales volumes including purchased oil volumes.

Funds flow from operations per boe or funds flow netback per boe, is a non-GAAP measure that includes all cash generated from operating activities and is calculated before changes in non-cash working capital, divided by produced oil and natural gas sales volumes.

Adjusted funds flow from operations is funds flow provided by operations adjusted to exclude a 7.5 million one time voluntary tax restructuring during the three months ended June 30, 2018 and a .0 million one time legal settlement during the three months ended June 30, 2017.

Adjusted funds flow from operations per boe is adjusted funds flow from operations divided by produced oil and natural gas sales volumes.

Free funds flow is determined by funds flow provided by operations less capital expenditures.

Shareholders and investors should be cautioned that these measures should not be construed as an alternative to net income or other measures of financial performance as determined in accordance with IFRS. Parex’ method of calculating these measures may differ from other companies, and accordingly, they may not be comparable to similar measures used by other companies. Please see the Company’s most recent Management’s Discussion and Analysis, which is available at www.sedar.com for additional information about these financial measures.

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 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.

This press release contains a number of oil and gas metrics, including operating netbacks. These oil and gas metrics have 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.

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”, “guidance”, “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, 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; expected average production for Q3 2018 and Q4 2018 and total average annual production for 2018; the Company’s expected capital expenditures, including mid-point forecast, for 2018; the Company’s expectation that production will increase in Q1 2019 as a result of the injection wells drilled at Cabrestero in 2018; the Company’s anticipated drilling, completion, development, exploration and other growth plans and activities for its assets, including, but not limited to, the Company’s drilling and completion plans and the commissioning of a gas plant at Aguas Blancas (including the anticipated timing thereof), an additional well to be drilled at VIM-1 (including the anticipated timing thereof), the expected timing of reaching targeted drilling depth of the Andina-1 prospect at Capachos, the expectation that the Company’s water injection wells drilled at Cabrestero will impact 2019 production, and the expected number of wells to be drilled at LLA-34 (including the anticipated timing thereof); terms of the farm-in agreement for the exploration area of Block CPO-11, including the total expected amount of the work commitment capital, expected royalty, and anticipated timing of commencement of drilling operations; 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; 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; risk that Parex’ evaluation of its existing portfolio of development and exploration opportunities is not consistent with its expectations; that production test results may not necessarily indicative of long term performance or of ultimate recovery; failure to reach production targets; 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 anticipated Brent oil prices; the impact of increasing competition; conditions in general economic and financial markets; availability of drilling and related equipment; receipt of partner, regulatory and community approvals; 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; 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; 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 and production 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 fulfil 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.

This press release and, in particular the information in respect of the Company’s expected capital expenditures 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 financial results and activities 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.

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.