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Press release from Parex Resources
Parex Resources Inc. ("Parex" or the "Company") (TSX:PXT), a company headquartered in Calgary, Alberta and focused on Colombian oil exploration and production, provides an operational update.
Production: We estimate that Q2 2018 production to average 42,500 barrels of oil equivalent per day ("boe/d") compared to the Company's Q1 2018 production of 40,586 boe/d. We expect average Q3 2018 production to exceed 44,000 boe/d.
Voluntary Tax Restructuring: Parex expects to complete a voluntary Colombia tax restructuring prior to June 30, 2018 that would increase Q2 2018 current tax expense to approximately $175 million from a forecast $35 million (transaction cost is estimated $140 million). The strategic rationale for Colombia tax restructuring is to make the Company's tax structure more efficient. The impact of this restructuring is that the Company will incur Colombian recapture and capital gains taxes in Q2 2018 but will gain an increased tax basis for key producing assets that will provide a benefit over future years.
Assuming current Brent strip pricing and existing Colombian tax regulations, the forecast tax restructuring benefits would be:
Parex expects to fund the tax restructuring with existing working capital surplus, which was $205 million as of March 31, 2018. Further, at current Brent strip pricing, we forecast December 31, 2018 working capital surplus, prior to share repurchases (NCIB) to be approximately $150-160 million.
LLA-32 (working interest ("WI") 87.5%): Currently drilling the exploration prospect Herradura-1.
Cabrestero (WI 100%): Following up on the Q1 2018 Totoro discovery, the Company has drilled 3 appraisal wells and is currently drilling the Totoro-5 well. All 4 appraisal wells will be completed and tested during Q3 2018.
LLA-34 (WI 55%): Parex continues to develop and delineate the Jacana/Tigana trend on LLA-34.
The Tigui-1 and Tigui Sur-1 exploration wells have been drilled and will be completed. The wells are evaluating a new, unbooked reserve area directly north of Parex' Tortoro discovery on the Cabrestero Block.
The next exploration well that Parex anticipates drilling is Buco-1, located on a fault line between Tarotaro and Tua discoveries.
Capachos (WI 50%): The Capachos Sur-2 well was drilled to total depth of 17,800 feet. The well was drilled to appraise the Guadalupe and Une formations. Well logs indicated that the Une formation was wet. In the primary target, the Guadalupe Formation was approximately 150 feet below the productive zone in the original Capachos Sur-1 well. Capachos Sur -2 was completed in the Guadalupe Formation and produced non-economic rates of oil, confirming the oil-water contact for the Capachos Sur compartment. Following the Capachos Sur-2 test result, Parex has reinterpreted the Capachos Sur 3D seismic data and has identified a new location (Capachos Sur-3) to target the top of the structure. Following the completion of Capachos Sur-2 well, Parex has fulfilled its Capachos Block farm-in obligations.
The Capachos Block development plan requires a dedicated water disposal well and the Company plans to use the Capachos Sur-2 well as a water disposal well for future Capachos production.
On June 3, 2018 Parex spudded the Andina-1 exploration well and is drilling at approximately 9,500 feet. Andina-1 is the first well into the Andina compartment and is targeting multiple zones on a 4-way closure, similar to the Capachos Centro structure.
The Capachos-2 well is producing at a restricted rate of approximately 1,050 bopd and we expect to increase the production rate after commissioning the permanent production facilities during Q4 2018.
Aguas Blancas (WI 50%): Currently drilling 7 new development wells which will add additional water injection patterns and one step-out appraisal well into an undrilled compartment.
VIM-1 (WI 100%): Parex is currently drilling the Apure-1 exploration well. Intermediate casing has been set and the well is currently at 12,005 feet with a planned depth of 12,560 feet.