Press release

Parex Resources Announces Third Quarter Results, Arauca Drilling Success and Declaration of Q4 2023 Dividend

CALGARY, Alberta, Nov. 07, 2023 (GLOBE NEWSWIRE) -- Parex Resources Inc. ("Parex" or the "Company") (TSX:PXT) is pleased to announce its financial and operating results for the three-month period ended September 30, 2023, and the declaration of its Q4 2023 regular dividend of C$0.375 per share.

All amounts herein are in United States Dollars ("USD") unless otherwise stated.

"With our inaugural well in Arauca, I take pride in our team's remarkable achievement in drilling the deepest onshore well in Colombia's history. This milestone not only serves as a testament to our operational capability, but also solidifies Parex's leading position as an operator capable of confidently exploiting higher productivity, deeper targets. In addition to Arauca, we are seeing a series of positive developments from exploitation and near-field exploration that are driving record quarterly production, which make us optimistic for the upcoming fourth quarter and the year ahead," commented Imad Mohsen, President & Chief Executive Officer.

Key Highlights

  • Generated Q3 2023 funds flow provided by operations ("FFO")(1) of $158 million and FFO per share(2)(3) of $1.49.
  • Drilled the inaugural well on the Arauca Block (50% W.I.), Arauca-15, to a total depth of 22,350 feet; it is the deepest onshore well in Colombia's history and is expected to commence production following multi-zone testing.
  • Spud the Arauca-8 big ‘E' exploration well in late Q3 2023, which is at roughly 17,500 feet and expected to total depth in late Q4 2023.
  • Reached all-time production rates of over 15,000 bbl/d(8) of heavy crude oil from the Cabrestero Block (100% W.I.), supported by successful exploration efforts and continued success from waterflood injection.
  • Recently drilled a well at Cabrestero (100% W.I.) that discovered a new oil pool, which is expected to begin production imminently.
  • Declared a Q4 2023 regular dividend of C$0.375 per share(7) or C$1.50 per share annualized; current dividend yield is roughly 5.4%(7).
  • Repurchased 4.95 million shares YTD 2023, fulfilling approximately 5% of the public float under the Company's current normal course issuer bid ("NCIB").
  • Delivering strong production growth; current rates are approximately 59,000 boe/d(8).

Q3 2023 Results

  • Record quarterly average oil & natural gas production was 54,573 boe/d(6), an increase of 7% from Q3 2022, and a 1% increase from the prior quarter.
  • Increased production per share(3)(7) by 13% compared to Q3 2022, from higher production and the reduction of outstanding shares through the current NCIB.
  • Realized net income of $120 million or $1.13 per share basic(3).
  • Generated quarterly FFO(1) of $158 million, a 24% decrease from Q3 2022, and FFO per share(2)(3) of $1.49, a 19% decrease from Q3 2022, which was primarily driven by lower crude oil pricing and increased tax, offset by higher production.
  • Increased current taxes by $14 million as the Company moved from an estimated 10% surtax to a projected 15% surtax with the appreciation of global oil prices in Q3 2023; Colombia has an income surtax, which is linked to the historical Brent oil price.
  • Generated an operating netback(2) of $48.97/boe and an FFO netback(2) of $31.28/boe from an average Brent price of $85.92/bbl. The FFO netback(2) was impacted by higher current taxes, and increased production costs from workovers and higher energy input costs.
  • Incurred $157 million of capital expenditures(5) while participating in the drilling of 16 gross (10.95 net) wells. Capital expenditures were higher than prior quarters in 2023, primarily driven by starting activity at Arauca (50% W.I.) where Parex agreed with its joint venture partner to solely fund the initial work plan in exchange for a 50% interest in the Arauca and LLA-38 blocks. Management expects Q4 2023 capital expenditures to be lower as the Company's costs associated with drilling at Arauca revert to a 50% working interest share per the farm-in agreement, as well as overall corporate activity being reduced with a lower rig count.
  • Working capital deficit(1) was $58 million, which increased by $55 million from Q2 2023, primarily as a result of the timing of certain capital expenditures. Management expects working capital in Q4 2023 to be positive and build throughout 2024, with forecast production growth, declining capital expenditures and inventory deployment, subject to commodity prices remaining in line with Q3 2023.
  • Paid a C$0.375 per share regular quarterly dividend and repurchased 1,239,500 shares.

(1) Capital management measure. See "Non-GAAP and Other Financial Measures Advisory."
(2) Non-GAAP ratio. See "Non-GAAP and Other Financial Measures Advisory."
(3) Based on weighted-average basic shares for the period.
(4) See "Operational and Financial Highlights" for a breakdown of production by product type.
(5) Non-GAAP financial measure. See "Non-GAAP and Other Financial Measures Advisory."
(6) See "Operational and Financial Highlights" for a breakdown of production by product type.
(7) Supplementary financial measure. See "Non-GAAP and Other Financial Measures Advisory."
(8) Estimated average production for the six-day period of November 1, 2023 to November 6, 2023.

Operational and Financial Highlights Three Months Ended Nine Months Ended  
(unaudited) Sep. 30,   Sep. 30,   Jun. 30,   Sep. 30,  
  2023   2022   2023   2023  
Average daily production        
Light Crude Oil and Medium Crude Oil (bbl/d) 8,837   6,903   7,982   7,984  
Heavy Crude Oil (bbl/d) 44,779   43,063   45,644   44,624  
Crude Oil (bbl/d) 53,616   49,966   53,626   52,608  
Conventional Natural Gas (mcf/d) 5,742   6,750   2,964   4,470  
Oil & Gas (boe/d)(1) 54,573   51,091   54,120   53,353  
Operating netback ($/boe)        
Reference price - Brent ($/bbl) 85.92   97.70   77.84   81.98  
Oil & natural gas sales(4) 75.98   88.13   67.26   70.96  
Royalties(4) (13.72 ) (17.92 ) (11.15 ) (12.38 )
Net revenue(4) 62.26   70.21   56.11   58.58  
Production expense(4) (9.73 ) (7.40 ) (9.14 ) (9.25 )
Transportation expense(4) (3.56 ) (3.35 ) (3.51 ) (3.39 )
Operating netback ($/boe)(2) 48.97   59.46   43.46   45.94  
Funds flow provided by operations netback ($/boe)(2) 31.28   45.07   31.86   32.44  
Financial ($000s except per share amounts)        
Net income 119,736   65,632   101,415   325,526  
Per share - basic(6) 1.13   0.59   0.95   3.05  
Funds flow provided by operations(5) 157,839   206,412   154,842   474,405  
Per share - basic(2)(6) 1.49   1.85   1.45   4.44  
Capital expenditures(3) 156,747   127,353   121,309   391,924  
Free funds flow(3) 1,092   79,059   33,533   82,481  
EBITDA(3) 221,271   185,911   139,881   539,711  
Other long-term asset expenditures(long-lead material & equipment inventory) (374 )

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