The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from Marketwire

Parex Resources Announces Kitaro Light Oil Discovery With 2,385 bopd Test

Tuesday, May 22, 2012

Parex Resources Announces Kitaro Light Oil Discovery With 2,385 bopd Test17:57 EDT Tuesday, May 22, 2012CALGARY, ALBERTA--(Marketwire - May 22, 2012) -NOT FOR DISTRIBUTION TO US NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES Parex Resources Inc. ("Parex", the "Company") (TSX:PXT), is pleased to announce an oil discovery at the Kitaro-1 exploration well. An update of the Company's operations is also provided below. Cabrestero Block (Farm-in 50% Working Interest)Kitaro-1 was spud on April 16, 2012 and was drilled to a target depth of 10,800 feet. The well encountered prospective oil pay in the Mirador and Une formations. The Une Formation is interpreted to have approximately 25 feet of net pay and the top 10 feet of the zone was perforated and tested under natural flowing conditions over a 15 hour period. The initial 3 hour flow period tested at an average rate of 2,385 barrels of oil per day ("bopd") with a 32/64th choke and a surface flowing pressure of 400 psi. The measured oil gravity from the Une reservoir was 32° API and the average BS&W during the 3 hour period was 0.7 percent. Due to surface testing equipment limitations, the well had to be restricted to a 16/64th choke for the remainder of the testing period and during this period the well flowed at an average rate of 1,082 bopd at a surface pressure of 580 psi. Final BS&W from the well was recorded at 0.5 percent and a total of 864 barrels of 32° API oil was recovered during the test. Initial production test results should be viewed as preliminary until pressure analysis and well test interpretation are completed.The drilling rig on location will be de-mobilized from the location as soon as possible to allow further civil work to permit drilling of additional wells and construct the long term testing facility. Parex expects that the Kitaro-1 well will remain as an Une production well and that the Mirador formation will be tested in a follow up well, subject to regulatory and partner approval.Block LLA-16 (100% Working Interest)The Malawi-1 well located immediately south of the Sulawesi field was spud on May 1, 2012 and is approaching its target depth of approximately 13,100 feet in the Une Formation. To date the well has encountered prospective oil pay in the C7, Mirador and Gacheta formations and Parex expects to case and test these zones, following the completion of drilling activities.Block LLA-17 (Operated 40% Working Interest)The Mapora-1 well was spud on May 13, 2012 and is expected to be drilled to a target depth of 12,000 feet.Block LLA-20 (100% Working Interest)The Cumbre-3 well was spud May 11, 2012 and has reached its target depth of approximately 9,500 feet. The well encountered prospective oil pay in the C7 and Gacheta formations and Parex expects to immediately case and test the well.The Morocoto-1 well is located on the south-east corner of the block and was spud on May 12, 2012 and drilled to a target depth of approximately 7,700 feet. Log analysis indicated that the well did not encounter oil pay and will be abandoned. The work commitment program on Block LLA-20 has now been satisfied. Additional prospects are being developed in conjunction with regional geological interpretations on blocks LLA-17, LLA-40 and LLA-57.Block LLA-32 (Non-Operated 30% Working Interest)As previously reported (May 10, 2012), the Maniceño-1 well encountered approximately 50 feet of net pay in the Mirador Formation and over a 6 hour production test period the well flowed naturally at an average rate of 3,036 bopd of 27° API oil with water cut of less than 5 percent. Currently, the operator is working towards placing the well on a short-term test to further evaluate the reservoir properties.The drilling rig has been mobilized to Samaria, the second and final commitment well on Block LLA-32. The well has a target drilling depth of 11,000 feet.Block LLA-34 (Non-Operated 45% Working Interest)The Max-1 prospect was drilled and cased during the first quarter of 2012. Testing operations at Max-1 have recently commenced with four zones approved for testing.Tua-1, the next exploratory well on the block, was spud on May 6, 2012 and is expected to drill to a target depth of 11,000 feet. The well has reached a depth of approximately 9,500 feet and is setting intermediate casing above the Mirador Formation.Colombia Production UpdateAverage production to date for May 2012 was approximately 10,500 bopd. The second quarter 2012 exit rate production is expected to range between 10,000-12,000 bopd dependent upon partner and regulatory approval, on-stream timing of the Maniceño-1 and Kitaro-1 wells, and testing results and on-stream timing for the Malawi-1, Cumbre-3 and Max-1 wells.Parex Resources Annual General and Special Meeting of ShareholdersParex will be holding its Annual General and Special Meeting of Shareholders on Wednesday, May 23, 2012 at 10:30 a.m. (Calgary time) at the Jamieson Place Conference Centre located on the 3rd floor of Jamieson Place, 308 - 4th Avenue S.W., Calgary, Alberta.Corporate OverviewParex, through its direct and indirect subsidiaries, is engaged in oil and natural gas exploration, development and production in South America and the Caribbean region. Parex is conducting exploration activities on its 1,410,000 acre holdings in Colombia and its 219,000 acre holdings onshore Trinidad. Parex is headquartered in Calgary, Canada.Advisory on Forward Looking StatementsCertain information regarding Parex set forth in this document contains forward-looking statements that involve substantial known and unknown risks and uncertainties. The use of any of the words "plan", "expect", "prospective", "project", "intend", "believe", "should", "anticipate", "estimate" or other similar words, or statements that certain events or conditions "may" or "will" occur are intended to identify forward-looking statements. Such statements represent Parex's internal projections, estimates or beliefs concerning, among other things, future growth, results of operations, production, future capital and other expenditures, plans for and results of drilling activity, business prospects and opportunities. These statements are only predictions and actual events or results may differ materially. Although the Company's management believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause Parex' actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, Parex.In particular, forward-looking statements contained in this document include, but are not limited to, statements with respect to the performance characteristics of the Company's oil properties and wells; results of drilling and testing; results of operations; drilling plans; activities to be undertaken in various areas; capital plans in Colombia and exit rate production; expected production in 2012; quarter over quarter growth; timing of drilling and completion; planned capital expenditures, the timing thereof and the source of funding for such capital expenditures; and details of the Company's exploration drilling and testing program. In addition, statements relating to "reserves" or "resources" are by their nature forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the resources and reserves described can be profitably produced in the future. The recovery and reserve estimates of Parex' reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered.These forward-looking statements are subject to numerous risks and uncertainties, including but not limited to the impact of general economic conditions in Canada, Colombia and Trinidad & Tobago; industry conditions including changes in laws and regulations including adoption of new environmental laws and regulations, and changes in how they are interpreted and enforced, in Canada, Colombia and Trinidad & Tobago; competition; lack of availability of qualified personnel; the results of exploration and development drilling and related activities; obtaining required approvals of regulatory authorities in Canada, Colombia and Trinidad & Tobago; risks associated with negotiating with foreign governments as well as country risk associated with conducting international activities; volatility in market prices for oil; fluctuations in foreign exchange or interest rates; environmental risks; changes in income tax laws or changes in tax laws and incentive programs relating to the oil industry; ability to access sufficient capital from internal and external sources; the factors described under "Risk Factors" in the Company's annual information form for the year ended December 31, 2011; and other factors, many of which are beyond the Company's control. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could effect Parex' operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).Although the forward-looking statements contained in this document are based on assumptions which management believes to be reasonable, the Company cannot assure investors that actual results will be consistent with these forward-looking statements. With respect to forward-looking statements contained in this document, Parex has made assumptions regarding: current commodity prices and royalty regimes; availability of skilled labour; timing and amount of capital expenditures; future exchange rates; the price of oil; the impact of increasing competition; conditions in general economic and financial markets; availability of drilling and related equipment; effects of regulation by governmental agencies; royalty rates, future operating costs, and other matters. Management has included the above summary of assumptions and risks related to forward-looking information provided in this document in order to provide shareholders with a more complete perspective on Parex' current and future operations and such information may not be appropriate for other purposes. Parex' actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do, what benefits Parex will derive. These forward-looking statements are made as of the date of this document and Parex disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.In addition, the well test results are not necessarily indicative of long-term performance or of ultimate recovery.This news release does not constitute an offer to sell securities, nor is it a solicitation of an offer to buy securities, in any jurisdiction.FOR FURTHER INFORMATION PLEASE CONTACT: Michael KruchtenParex Resources Inc.Manager, Investor Relations403.517.1733Investor.relations@parexresources.comORKenneth G. PinskyParex Resources Inc.Vice President, Finance and Chief Financial Officer403.517.1729