Quarterly / Earnings Reports | Third Quarter (3Q) Update | Drilling Activity

Parex Resources Reports Q3 2019 Results

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Parex Resources Inc. reported its Q3 2019 results.

Highlights:

• Funds flow provided by operations ("FFO") of $142.7 million ($0.99 (or CAD $1.31)⁽¹⁾ per share basic);
• Capital expenditures were $48.6 million in the period and $149.9 million year to date. Capital expenditures were funded from FFO. Parex expects to invest approximately $220-230 million in capital projects in 2019;
• Utilized a portion of free cash flow of $94.1 million to purchase 3,150,000 of the Company's common shares for a total cost of $50.2 million (average price of CAD$21.11/share) pursuant to the Company's normal course issuer bid program ("NCIB");
• Quarterly production was 53,045 barrels of oil equivalent per day ("boe/d")(98% crude oil), representing a production per share increase of 5% over the previous quarter ended June 30, 2019 and an increase of 27% on a per basic share basis  over the prior year comparative period;
• Earned net income of $57.3 million ($0.40 per share basic) compared to net income of $101.5 million ($0.69 per share basic) in Q2 2019;
• Generated an operating netback of $36.21 per boe and FFO netback of  $29.61 per boe from an average Brent price of $62.03 per barrel ("bbl");
• Working capital was $279.9 million (CAD $2.58 per share basic)⁽²⁾ at September 30, 2019 compared to $240.1 million at June 30, 2019 and $143.2 million at September 30, 2018. The Company has an undrawn syndicated bank credit facility of $200.0 million; and
• Participated in drilling 9 gross (5.30 net) wells⁽³⁾ in Colombia resulting in 8 oil wells and 1 well under test, for a success rate of 100%

Operational Update

Production:  We expect Q4 2019 production average to exceed 53,500 boe/d.

Capachos: (WI Parex 50%, Ecopetrol S.A. 50%): A service rig is currently performing a work-over on the Capachos-2 (Centro pad) well and will be moving to the Andina-3 development well in November 2019 for completion and production activities.

Q4 2019 Exploration program:

2020 Netback Sensitivity Estimates

 (1) Effective tax rate is the expected current tax effective rate on funds flow from operations.
 (2) Assumes Brent/Vasconia crude differential less than $3/bbl.

Share Repurchases: On December 21, 2018, Parex began a NCIB with the intent to repurchase for cancellation approximately 15.0 million shares (10% of public float).   As at October 11, 2019, the Company repurchased the maximum amount of shares under its NCIB (approximately 15.0 million shares) at an average cost of C$20.21 per share for a total of C$304 million. Basic shares outstanding as at November 6, 2019 were 142.9 million compared to 155.0 million as at December 31, 2018.  The total cost of the NCIB program was funded from free cash flow. As at September 30, 2019, Parex' cash balance was USD$350 million and working capital was USD$280 million (December 31, 2018 USD$219 million).