Parex Resources Inc. (PXT), a company headquartered in Calgary, Alberta and focused on Colombian oil exploration and production, provides an operational update, highlighted by the testing of the Capachos Block Andina-2 well in the Guadalupe Formation.
Capachos (WI Parex 50%, Ecopetrol S.A 50%): As previously reported (please refer to September 10, 2018 and October 10, 2018 press releases), Parex, as the operator drilled the Andina-1 exploration well to a total depth of 17,500 feet and encountered potential oil bearing reservoirs in the Une, Guadalupe and Mirador formations. The Une Formation was first tested and had a final production rate during the test period of 2,545 barrels of oil per day (“bopd”) and 8.7 million cubic feet per day (“MMCFD”) of natural gas. Subsequently Parex completed and tested the Lower Guadalupe Formation over an 88-hour period under natural flow conditions, recovering a total of 8,826 barrels of 35 API oil and 3.9 million cubic feet (“MMCF”) of natural gas (gas-oil-ratio (“GOR”) of 442 scf/stb) with an average production rate from the Lower Guadalupe Formation during the test of 2,407 bopd.
Based on the positive test results of the Andina-1 well, the Andina-2 well was drilled 400 meters south-east from the Andina-1 well to a total depth of 16,450 feet with the objective of delineating the discovery and allowing more thorough testing of the multiple reservoirs encountered at the Andina-1 well.
The Andina-2 well first evaluated an untested Lower Guadalupe zone over a 48 hour period under natural flowing conditions and recovered a total of 4,171 barrels of 35 API oil with a final water cut of 3% which included some remaining completion fluids. The final test rate over the last 12 hours was 2,195 bopd at a GOR of 430 scf/stb. Pressure recorders installed in the Andina-1 well confirmed the connectivity and continuity of the lower Guadalupe reservoir between the wells.
Next, the Lower Guadalupe reservoir was isolated, and the Upper Guadalupe reservoir was tested in Andina-2. Over a 36 hour period under natural flowing conditions this zone recovered a total of 2,164 barrels of 35 API oil with a final watercut of 1.5%. The final test rate over the last 12 hours was 1,606 bopd at a GOR of 525 scf/stb. Pressure recorders installed in the Andina-1 well indicate no communication between the Lower and Upper Guadalupe reservoirs, suggesting a separate oil column.
Following the tests, the drilling rig was skidded on the same pad and the Andina Norte-1 exploration well was spud to evaluate another undrilled compartment on the Capachos structure. The well is currently drilling at approximately 7,500 feet.
At present, the Capachos block gross production is restricted at approximately 2,100 bopd (net 1,050 bopd). During 2019 we expect to increase the field’s productive capability in stages to 10,000 boe/d by Q4 2019 with the commissioning of a central gas plant and field flowlines.
Production: Parex’ Q4 2018 average production is estimated at 49,290 barrels of oil equivalent per day ("boe/d") compared to the Company's Q3 2018 average quarterly production of 45,020 boe/d. We expect full year 2018 production to average 44,400 boe/d which is a 25% year-over-year increase. Current production is approximately 50,500 boe/d.
Share Repurchases: On December 21, 2018 Parex began a normal course issuer bid (“NCIB”) with the intent to repurchase for cancellation approximately 15 million shares (10% of public float). As at January 10, 2019 the Company has repurchased 2,235,665 shares at an average cost of C$16.82 per share for a total of C$37.6 million. The total cost of this program will be funded from existing working capital and/or free cash flow.
