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.
