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Parex - News, Div, Production Guidance, Etc.Parex has no debt, and a large cash balance. It has majority interest in prolific fields in the LLA-34 concession in Colombia that generate a ton of free cash. It's strategy has been to use some of that cash to buyback shares. I think they've purchased about 10% of the outstanding float each of the past 3 years or so, effectively increasing the per share measurements. However, they really haven't been rewarded in the share price appreciation department so much. So I take interest in an apparent change of strategy with the declaration of a dividend of $.125 per share. However they don't make any assurance they will continue with it, which to mind negates the potential impact. Anyway, copy and pasted the news. Parex Announces Ecopetrol Block Partnership, GHG Emissions Intensity Reduction Targets & Implements Quarterly DividendCALGARY, Alberta, July 07, 2021 (GLOBE NEWSWIRE) -- Parex Resources Inc. (“Parex” or the “Company”) (TSX:PXT) is a company headquartered in Calgary that focuses on sustainable, profitable, and conventional oil and gas production. All amounts herein are in United States dollars (“USD”) unless otherwise stated. Strategic Partnership Agreements with Ecopetrol in Colombia’s Arauca Province: Accessing High Quality Llanos Basin Development & Exploration Opportunities Parex is pleased to be expanding its strategic partnership with Ecopetrol S.A. (“Ecopetrol”), Colombia’s premier, integrated oil and gas producer. Parex and Ecopetrol have executed agreements whereby Parex will earn an operated, 50% interest in two blocks, the Arauca and LLA-38 blocks (the “Blocks”), located in the proven and highly prolific Llanos basin in the Arauca province of north-eastern Colombia. Collectively, the Blocks contain proved reserves along with development and drill ready exploration prospects. The agreements are consistent with Parex’ corporate strategy of acquiring assets with near term development potential, industry leading netbacks and significant exploration and appraisal opportunities in the Llanos Basin where Parex has a proven track record of success. The Blocks are situated approximately 40 kilometers north of Parex’ operated, Capachos producing block (Ecopetrol partnered). In developing the Blocks, Parex expects to be able to leverage its proven operating capabilities at Capachos and replicate similar partnerships and mutual benefits with the nearby communities. The Arauca block is a production reactivation opportunity. Parex plans to immediately commence working with local authorities and communities with the objective of initiating operations in late 2021. On the adjacent LLA-38 exploration block, initial activity will focus on the drill ready, 3D seismic defined, Califa-1 exploration prospect. Further, Parex will acquire additional 3D seismic to evaluate multiple exploration leads on the block. Parex intends to commence drilling of the Califa-1 exploration prospect in 2022. Parex’ independent qualified reserve evaluator, GLJ Ltd. ("GLJ"), has recognized Company interest proved plus probable reserves of 7.8 million barrels of light & medium crude oil and future development capital of approximately $70 million associated with the Arauca block as of January 1, 2021. The foregoing reserves information is obtained from information contained in the independent reserves report prepared by GLJ dated January 20, 2021 with an effective date of December 31, 2020. Such report was prepared in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook and National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities. The reserves presented in this press release are based on GLJ's forecast pricing effective January 1, 2021. The report did not include the LLA-38 block. A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/d2f0366a-ff57-45c8-9c20-65a218a077f4 Arauca Block Oil Field History The Arauca block is a proven, shut-in oil field which has undergone partial development dating back to the 1980s, with cumulative light oil (34-41° API) production of approximately 10 million barrels from the Mirador formation. Peak production rates from the Arauca block exceeded 4,000 bbl/d under restricted rates associated with infrastructure limitations. (Source: IHS Markit). Existing pads, facilities, and infrastructure along with oil export optionality support a broad range of both development and exploration opportunities on the Arauca block. Arauca & LLA-38 Blocks Initial Work Plan Parex and Ecopetrol have agreed to an initial work plan for the Blocks, funded solely by Parex, that consists of the drilling of 2 development wells, 1 exploration well and a further capital program of $75.8 million. The overall timing and activities of the capital program, across both the Blocks, will be determined based on partner consultation, customary regulatory approvals, surface access and exploration success, among other factors. Parex’ Ongoing Dedication and Integrated ESG Strategy As part of Parex’ ongoing dedication to its ESG strategy, Parex will continue to investigate opportunities to integrate and complement its growing operations with carbon reduction initiatives. Although preliminary in nature, Parex recognized the high subsurface reservoir temperatures in the region that may be amenable to geothermal power generation in the future. Parex, along with its partner Ecopetrol, will continue to evaluate the Arauca Block going forward for technical and economic viability for geothermal power while leveraging the expertise and findings from its inaugural pilot and South America’s first geothermal power generation project in the Las Maracas field in Casanare, Colombia. Production Update Parex released a production update dated May 17, 2021 regarding production curtailments due to transportation blockades throughout Colombia and withdrawing Q2 2021 guidance and updating H2 2021 production guidance. Most of the civil disturbances have been resolved and the transportation blockades have been lifted, and Parex expects Q2 2021 production will average approximately 43,975 boe/d. Currently, production is approximately 47,000 boe/d (see disclaimers at the end of this press release for the breakdown of production into its constituent product types). Parex is updating its H2 2021 production guidance set forth in the press release dated May 17, 2021 at 44,000-50,000 boe/d, with Parex expecting H2 2021 production to average 46,000-50,000 boe/d. The lower end of the range incorporates the possibility of additional disturbances. Operational Update – Upcoming Activity Parex has resumed its drilling activities following the transportation blockades being lifted, and provides the below update on our exploration and growth activities:
Environmental, Social and Governance (“ESG”) Update Over the last 3 years, Parex has made significant progress to advance ESG disclosure and integrate relevant ESG factors into the Company’s governance and management structure, enterprise risk management, and compensation programs. In particular, since 2018 Parex has transparently disclosed its practices and performance related to greenhouse gas (“GHG”) emissions through its response to the annual CDP (formerly Carbon Disclosure Project) climate change questionnaire. The Company’s sustainability performance is reflected in its above industry average ESG ratings with CDP (B score) and other rating agencies such as Sustainalytics (ranked 6th percentile or 9 out 172 among oil and gas E&Ps)1. Parex has taken substantial steps to reduce its carbon footprint, investing in initiatives such as the construction of pipelines to displace oil trucking, gas plants to limit flaring volumes, and a geothermal power generation unit to replace carbon intensive fuels. In 2020, the Company’s operational scopes 1 and 2 GHG emissions intensity per boe declined by 23.9% to 22.8 kg CO2e/boe from 30.0 kg CO2e/boe in 2019. Building upon this achievement, and in support of the Paris Agreement’s goals to address climate change and to align with key stakeholders’ calls for corporate climate action, Parex is dedicated to continue lowering GHG emissions intensity per boe from operated assets. As a result, the Company is dedicated to:
Parex’ emission reduction strategy, in the short- to mid-term, will focus on optimizing carbon footprint, displacing carbon intensive power sources, and increasing power generation from renewable sources. The Company’s long-term low-carbon strategy will gradually emerge as Parex evaluates the uncertainties it could face during the energy transition and outlines sustainable pathways to achieving its net-zero ambition. Parex will remain transparent, providing regular disclosure on performance related to GHG emissions intensity targets and updates on the evolving climate strategy. It is Parex’ aspiration to be among the least carbon intensive oil and gas E&P companies while continuing to deliver shareholder value and meet ongoing global energy demand. For more information on Parex’ performance on ESG matters, visit the corporate sustainability webpage, with the Company’s next annual sustainability report being expected in August 2021. Initiation of Quarterly Dividend Parex is pleased to announce the implementation of a quarterly dividend program with respect to its common shares (the “Common Shares”). The Board of Directors (the “Board”) has approved the initiation of a dividend program pursuant to which the Company expects to pay a regular quarterly cash dividend. If declared, the quarterly dividend is expected to be paid in each of March, June, September and December of each year. The Board has approved the payment of a dividend for the third quarter of 2021 in the amount of CAD$0.125 per Common Share, which will be payable on September 30, 2021 to shareholders of record as of September 15, 2021. The dividend is designated as an “eligible dividend” for the purpose of the Income Tax Act (Canada). The decision to declare any quarterly dividend and the amount of such dividend, if any, will be subject to the discretion and determined by the Board taking into account, among other things, business performance, financial condition, growth plans and expected capital requirements as well as any contractual restrictions and compliance with applicable law. There can be no assurance that dividends will be paid at the intended rate or at any rate in the future. “The decision by the Board to initiate a dividend represents a meaningful milestone in Parex’ history and demonstrates confidence in our strong operating performance, significant free cash flow and earnings generation, attractive cash balance and positive long-term financial outlook,” said Imad Mohsen, Parex’ Chief Executive Officer and President. 2021 Share Buy-Back Program – 60% Complete – CAD$165 Million Repurchased Parex will continue to maximize shareholder value through its normal course issuer bid (“NCIB”) program, in which the Company plans to purchase the maximum allowable 12.9 million Common Shares, prior to the NCIB’s expiry on December 22, 2021. As of June 30, 2021, the Company has repurchased for cancellation 7.7 million Common Shares (for an aggregate purchase price of approximately CAD$165 million) under its current NCIB, which commenced on December 23, 2020. As of June 30, 2021, Parex has approximately 124.9 million basic Common Shares outstanding. The aggregate 2021 budgeted amount for Common Share purchases under the current NCIB is approximately CAD$275 million (of which approximately CAD$165 million has been incurred) or approximately 12% of Parex’ current enterprise value. Parex continues to have no commodity price hedges in place such that any increases in Brent oil prices would contribute to increases in Parex’ 2021 funds flow provided by operations. For more information, please contact: Mike Kruchten |
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