Parex Resources (Parex), a company focused on Colombian oil exploration and production, announces its unaudited financial and operating results for the three months ended June 30, 2016 (Q2).
2016 Second Quarter Financial and Operational Highlights
Quarterly oil production averaged 28,913 barrels of oil per day ("bbl/d"), a slight increase from the previous quarter and a seven percent increase year-over-year. Combined oil and natural gas production for the quarter was 29,136 barrels of oil equivalent per day (boe/d);
Quarterly oil sales were 1,472 bbl/d less than quarterly oil production due to a build in crude oil inventory;
Generated funds flow from operations of $31.8 million [$0.21 (CAD $0.27)(1) per share basic] as compared to $0.10 per share for the prior period. Funds flow was up 106 percent from the previous quarter primarily due to a 34 percent increase in crude oil prices quarter-over-quarter;
Brent referenced sales price in Colombia averaged $39.74 per boe, resulting in $20.14 per boe operating netback and a $13.29 per boe funds flow netback(2);
Reduced combined operating and transportation unit costs by 25 percent ($5.47/boe) to $16.27 per boe from the prior year comparative quarter and by three percent from 2016 first quarter;
Participated in drilling 3 gross wells(3) (net 2.55). Capital expenditures for Q2 were $13.9 million compared to $37.2 million in the second quarter of 2015. As a result, Parex added to future development and appraisal drilling inventory with the 2016 oil discovery at Jacana-3; and
Maintained balance sheet strength and financial flexibility. Parex remains debt free and exited the Second Quarter with $97.5 million in working capital and a $175 million undrawn bank credit facility.
During the first half of 2016 Brent oil prices averaged approximately $41.21/bbl, while our funds flow from operations of $47.2 million exceeded capital expenditures by $28.8 million and the Company increased production from Q4 2015. Parex anticipates it will continue to increase quarter-over-quarter oil production through ongoing optimization of existing wells, facilities de-bottlenecking and development/appraisal drilling.
Operational Update: H2 2016 Drilling Focus
On Block LLA-34 in the Llanos Basin, the Jacana-4 (WI 55%) development well began producing oil on July 18, 2016 and is producing approximately 2,000 barrels of oil per day and a water-cut of 1%. We have drilled and cased the Jacana-5 appraisal well, located approximately 780 meters north of Jacana-3, to test the down-dip extent of the Jacana field. We expect Jacana-5 to be tested during August 2016.
In the Middle Magdalena Basin, Parex has the majority of the approvals required to begin the appraisal of the Aguas Blancas field (WI 50%). We are currently conducting civil works and upon receipt of certain regulatory approvals, we plan to drill 5 delineation/production wells plus 2 water-flood pilot injection wells by year-end, increasing our firm 2016 capital budget by $20 million.
Prior to the end of Q3 2016, Parex expects to begin its Magdalena Valley Basin drilling on the VMM-11, Playon and DeMares blocks as well as a seismic acquisition program on the VIM-1 block.