Gulf Oil and Gas accountACCOUNT

Increased Working Capital to US$339 mm, Debt Free and Repurchased 1.1 mm Shares

Source: www.gulfoilandgas.com 8/5/2020, Location: South America

Parex Resources Inc., a company focused on Colombian oil exploration and production, announces its unaudited financial and operating results for the three months ended June 30, 2020 (“Second Quarter” or “Q2”). All amounts herein are in United States Dollars (“USD”) unless otherwise stated.

2020 Second Quarter Highlights: Best-in-Class Balance Sheet
- Quarterly average production was 40,858 barrels of oil equivalent per day ("boe/d") (consisting of 39,664 barrels per day ("bbls/d") of crude oil and 7,164 thousand cubic feet per day ("mcf/d') of conventional natural gas (97% crude oil), a decrease of 18% on a per basic share basis over the prior year comparative period;

- Recognized a net income of $19.3 million ($0.14 per share basic) compared to a net loss of $3.8 million ($0.03 per share basic) in the previous quarter ended March 31, 2020 and net income of $101.5 million ($0.69 basic per share) in the comparative quarter of 2019;

- Generated an operating netback of $9.95 per barrel of oil equivalent ("boe") and funds flow provided by operations ("FFO") netback of $9.96 per boe from an average Brent price of $33.39 per barrel ("bbl");

- FFO of $38.8 million ($0.28 (or CAD $0.39)(1) per share basic) as compared to $151.0 million ($1.03 (or CAD $1.38)(1) per share basic) for the prior year comparative period. Q2 FFO was positively impacted due to a deferred tax recovery, a realized foreign exchange gain and an inventory reduction;

- Capital expenditures were $5.3 million in the period;

- Utilized free funds flow of $33.5 million to purchase 1,075,000 of the Company's common shares for a total cost of $12.6 million (average price of CAD$15.30/share) pursuant to the Company's normal course issuer bid program;

- Working capital was $339.3 million (CAD $3.33 per share basic)(2) at June 30, 2020 compared to $330.4 million at March 31, 2020 and $240.1 million at June 30, 2019. The Company has an undrawn syndicated bank credit facility of $200.0 million; and

- No wells were drilled in Colombia compared to 11 gross (7.10 net) wells in the comparative period of 2019 in response to the significant decline in realized oil prices and the ongoing uncertainty in market conditions resulting from the COVID-19 pandemic.

(1) Using USD-CAD Bank of Canada 2020 Q2 average rate of 1.3853 and 2019 Q2 average rate of 1.3377.
(2) Using USD-CAD Bank of Canada June 30, 2020 rate of 1.3628 and outstanding shares as at June 30, 2020. Credit Facility Renewed at $200 mm
The Company’s bank syndicated credit facility has been renewed at $200 million, of which Parex is undrawn. Including the Company’s working capital surplus of $339 million, Parex has available liquidity exceeding $500 million and expects to generate free funds flow over and above planned capital expenditures in 2020.

2020 Corporate Outlook
Due to the significant decline in realized oil prices and the ongoing uncertainty in market conditions resulting from the COVID-19 pandemic, on April 2, 2020, Parex announced the withdrawal of its fiscal year 2020 guidance.

As set in the June 24, 2020 press release, Parex plans to increase production from current levels and re-start capital expenditure programs due to the greater visibility to stronger netbacks. However, the Company's H2 2020 work program is dependent on ensuring the health and safety of staff and the communities where Parex operates.

For the remainder of 2020, Parex’ outlook is:

Production
- Q3 2020 average approximately 42,000-44,000 boe/d;
- Q4 2020 range of 44,000-48,000 boe/d, contingent on safely resuming development drilling programs and community access

Capital Expenditures
- Total second half 2020 capital expenditures are estimated at approximately $65-70 million
- Parex will continue to be responsive to changes in commodity prices by managing its production volumes, capital budget and cash costs, further protecting its balance sheet and shareholder value.

Operational Update
Considering the COVID-19 pandemic, Parex will continue to assess and monitor its ability to safely operate a capital expenditure program. The Company is preparing to conduct a diverse capital expenditure program in H2 2020 with key activities being:

LLA-34 and Cabrestero: Completions and work-overs (4-6 wells) plus development drilling (4-6 wells)
Capachos: Andina field flowline construction completion
Aguas Blancas: Completion of 2 drilled exploration wells
La Belleza (VIM-1 Block): Advance initial works for 2021 drilling
Boranda: 1 appraisal well
Fortuna: Drill exploration well

Share Buy-Back
To date, the Company has repurchased for cancellation 5,650,000 common shares, under the normal course issuer bid that commenced on December 23, 2019, at an average cost of CAD$17.85 per share. As of July 31, 2020, Parex has 138,466,772 basic shares outstanding.

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