Parex Resources Announces Record 2021 Full-Year Results

Source: www.gulfoilandgas.com 3/1/2022, Location: South America

Parex Resources Inc. announced its financial and operating results for the three- and twelve-month periods ended December 31, 2021. All amounts herein are in United States dollars (“USD”) unless otherwise stated.

Highlights
“Reflecting on my first year at Parex, I am extremely proud of our team’s ability to deliver record results and consistently execute our strategy. In 2021, we built on our first-mover advantage and nearly quadrupled the Company’s land position through the Colombia Bid Round and our strategic partnership with Ecopetrol, reinforcing our Colombia-focused strategy,” commented Imad Mohsen, President and Chief Executive Officer.

“Leveraging our 2021 momentum, I am excited about our 2022 business plan. We have already grown the base dividend and expect to repurchase 10% of our stock in the year, while executing a substantial exploitation and exploration program for the potential of a step change in long-term production.”

2021 Full-Year Results
- Annual oil and natural gas production averaged 46,998 barrels of oil equivalent per day ("boe/d") (96% crude oil and 4% natural gas), starting the year at an approximately 45,000 boe/d average production rate (in January 2021) and exiting the year at an approximately 51,700 boe/d average production rate (in December 2021).
- Recognized net income of $303 million.
- Generated record annual funds flow provided by operations ("FFO")(1) of $578 million or $4.61 per basic share(2).
- Returned CAD$334 million to shareholders through dividends and share repurchases; implemented a regular quarterly dividend, paid a CAD$0.25 per share special dividend and repurchased 10% of the Company’s public float (12.9 million shares) via normal course issuer bid (“NCIB”).
- Acquired 18 new blocks in the 2021 Colombia Bid Round as well as expanded the strategic partnership with Ecopetrol S.A. for a 50% interest in the Arauca and LLA-38 blocks. Including these additions, Parex is now the largest independent acreage holder in Colombia.

2021 Fourth Quarter Results
- Quarterly oil and natural gas production averaged 49,779 boe/d (96% crude oil and 4% natural gas), an increase of 7% over the fourth quarter of 2020.
- Generated record quarterly FFO(1) of $168.3 million or $1.39 per basic share.
- Paid a CAD$0.25 per share special dividend in addition to the regular quarterly dividend of CAD$0.125 per share, as well as repurchased 1.5 million shares via NCIB.
- Generated an operating netback(2) of $46.79/boe and an FFO netback(2) of $36.41/boe from an average Brent price of $79.66/bbl.
- Participated in drilling 15 gross (11.40 net) wells(3) in Colombia, resulting in 10 oil wells, 3 injector wells and 2 wells under test.

Outlook
- This year, Parex expects to be able to execute an ambitious capital investment plan that is balanced across development, exploitation, and exploration programs to build long-term Company sustainability.
- Production volume and total capital expenditure guidance for 2022 remain unchanged(1). At the mid-point of guidance, Parex forecasts to grow production by 13% year-over-year.
- In addition to the capital investment plan, Parex anticipates that it will repurchase 10% of the Company’s float (11.8 million shares) through its NCIB, while also having upside base dividend growth potential. Combined with the Company’s planned share repurchases, Parex is forecasting production per share growth of 23% year-over-year.
- All Parex guidance does not include any potential volume from Magdalena basin exploitation as well as the overall exploration program.
- Year-to-date February 2022 average production is estimated to be approximately 51,600 boe/d.
- By year-end 2022, Parex is aiming to grow its net operated production by 50%, with its current operational focus being on traditional near-field exploration in the Llanos basin and advancing conventional oil in place exploitation projects in the Magdalena basin.

Return of Capital Update
- From 2017 to February 28, 2022, Parex has returned over CAD$1 billion to shareholders through share repurchases pursuant to its NCIBs as well as dividends.
- As previously disclosed, on February 2, 2022, Parex’s Board of Directors declared a first quarter 2022 regular dividend of CAD$0.14 per share to be paid on March 30, 2022 to shareholders of record on March 15, 2022, representing a 12% dividend increase from the prior quarter dividend.
- Building on the Company's track record of returning capital to shareholders, Parex targets to return at least one third of FFO to shareholders through share repurchases and dividends. The remaining FFO will be invested to grow the company over the long term and replenish development inventory to support future return of capital activity.
Being fully debt free and 100% unhedged to commodity pricing is unique to Parex. At current strip prices, the Company expects to return approximately 40% of 2022 annual FFO to shareholders.


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