Parex to Explore Potential Strategic Repositioning CALGARY,

CALGARY, Alberta, July 17, 2018 (GLOBE NEWSWIRE) -- Parex Resources Inc. (“ Parex ” or the “ Company ”) (TSX: PXT ), a company headquartered in Calgary, Alberta and focused on Colombian oil exploration and production, announces that its Board of Directors (" Board ") has determined it is timely, prudent and in the best interests of the Company to initiate a formal process to explore, review and evaluate strategic repositioning alternatives with a view to enhancing shareholder value. Parex' Board and management team believe that the Company is ideally placed, given its strong financial position and the stage of development of its assets, to undertake this process.

The strategic repositioning review will focus on the potential sale of the Company’s long life Southern Casanare (“ SoCa ”) assets (LLA-32, LLA-34 and Cabrestero), the retention of its high impact exploration assets and the return of the net sale proceeds to shareholders, potentially resetting Parex as an exploration driven, industry leading, high growth Colombia focused junior oil company.  Consideration will also be given to a corporate sale or other strategic actions that would result in the creation of additional value for shareholders.  This review of strategic repositioning alternatives may result in no specific transaction being pursued, with the Company continuing its operations as they currently exist with a focus on sustainable self-funded growth.

Parex believes it is in a unique position to evaluate a potential strategic repositioning to enhance shareholder value because the Company has two asset platforms: its long life development stage SoCa asset base plus a growing suite of early stage, higher impact exploration assets supported by Parex’ balance sheet.  As the SoCa assets offer ongoing production growth and significant free cash flow, Parex believes there may exist opportunities for strategic repositioning that could enhance shareholder value.

The following tables summarize certain production and reserves information regarding the SoCa assets and the remaining high impact exploration assets:

1. As per GLJ Petroleum Consultants Ltd. (" GLJ ") Reserve Report effective December 31, 2017 (the " 2017 GLJ Report ") including GLJ's forecast pricing effective January 1, 2018. (5 Year ICE Brent Forecast:  2019 $63.50/bbl, 2020 $63.00/bbl, 2021 $66.00/bbl, 2022 $69.00/bbl, 2023 $72.00/bbl).  Please refer to Parex' February 6, 2018 news release entitled “Parex Resources Increases 2P Reserves by 45% to 162 MMboe” and the Company's Annual Information Form dated March 5, 2018, as available on www.sedar.com .  
2. All dollar amounts are in United States Dollars.

The SoCa assets consist of 3 contiguous blocks that will be offered in a separate wholly owned subsidiary:

Parex jointly discovered the SoCa assets and we continue with the exploration, delineation and development program that has taken Parex working interest production from these assets from zero in 2012 to over 38,500 boe/d. Parex believes that the SoCa assets are well suited for acquisition by an entity wishing to access the meaningful oil production, reserve base of the assets and the associated significant current and forecasted free cash flow generation, as shown below:

1. As per 2017 GLJ Report including GLJ's forecast pricing effective January 1, 2018.  Please refer to Parex' February 6, 2018 news release entitled “Parex Resources Increases 2P Reserves by 45% to 162 MMboe” and the Company's Annual Information Form dated March 5, 2018 as available on www.sedar.com.  MMBoe refers to millions of barrels of oil equivalent.
2. Parex internal estimate using Brent oil at $75/bbl. Operating Netback is calculated as working interest revenue less royalties, transportation expenses and operating expenses and excluding corporate tax.
3. Parex internal estimate. Free Cash Flow is calculated as Operating Netback less future development capital and excluding corporate tax.
4. Free Cash Flow as set out in the 2017 GLJ Report and using GLJ's forecast pricing effective January 1, 2018 is $2.9 billion for 2P reserves and $3.9 billion for 3P reserves. Note that the average Brent oil price in the 2017 GLJ Report for 2019-2023 period is $66.70/bbl.
5. All dollar amounts are in United States Dollars.

Throughout its review of strategic repositioning alternatives, the Company will continue to execute its business strategy of leveraging its South American experience and capability to create shareholder value through increased production, reserves and cash flow.

A Special Committee of the Board led by Wayne Foo will work with management and the Corporation’s external advisors to supervise the review of strategic repositioning alternatives. The Special Committee has a mandate to solicit, review and consider all strategic repositioning alternatives and to consider and recommend to the Board whether any transaction is in the best interests of Parex. 

The Company has engaged Scotia Capital Inc. ("Scotia") as financial advisor in connection with this broad and comprehensive review and analysis of strategic repositioning alternatives. Parex and Scotia are currently compiling information for a corporate data room, which will be available for review by interested parties upon execution of a confidentiality agreement in connection with the process. In addition, the Special Committee has retained Peters & Co. Limited to act as financial advisor to the Special Committee in respect of the strategic repositioning alternatives review process.

Parex has not set a definitive schedule to complete its identification, examination and consideration of strategic repositioning alternatives or made a decision to pursue any particular strategic repositioning alternative. The review process has not been initiated as a result of receiving any transaction proposal. Given the nature of the process and the need for confidentiality during this process, the Company does not intend to provide updates until such time as the Board approves a definitive transaction or strategic repositioning alternative, or otherwise determines that further disclosure is necessary or appropriate. The Company cautions that there are no guarantees that the review of strategic repositioning alternatives will result in a transaction, or, if a transaction is undertaken, as to its terms, timing or conditions or approvals required to implement such transaction. 

As a result of the strategic repositioning alternatives review process, Parex has elected to terminate its automatic share purchase plan to purchase up to 3,000,000 of its common shares pursuant to the Company's normal course issuer bid. Effective as of the date hereof, the Company will deliver a notice of termination to the broker under the automatic share purchase plan and the Company confirms that it does not possess any material nonpublic information about Parex.

Since Parex’ 2009 inception as a pure exploration focused spin-out of the Argentina based Petro Andina Resources Inc., the Company has demonstrated its ability to identify and acquire large prospective resources, develop those resources and materially increase reserves and production, engage stakeholders and focus on being a low-cost operator to generate growth in cash flow per share and overall shareholder value. The Company is in a strong financial position, with no long-term debt, an undrawn $100 million bank credit facility and $320 million of cash on hand as at June 30, 2018. Planned capital expenditures for the remainder of 2018 are expected to be fully funded by funds flow from operations, with working capital being retained for future opportunities.

For more information, please contact:

Mike Kruchten Vice-President Capital Markets & Corporate Planning Parex Resources Inc. Phone: (403) 517-1733 investor.relations@parexresources.com

NOT FOR DISTRIBUTION OR FOR DISSEMINATION IN THE UNITED STATES

Advisory on Forward Looking Statements

Certain 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", "intend", "believe", "anticipate" 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' internal beliefs concerning, among other things, future growth, results of operations, 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, 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 expected details and possible benefits of the Company's review of strategic repositioning alternatives, the potential outcome of the Company's review of strategic repositioning alternatives, the anticipated focus of the Company's review of strategic repositioning alternatives and the five-year profile of the SoCa assets. These forward-looking statements are subject to numerous risks and uncertainties, including but not limited to, the impact of general economic conditions in Canada and Colombia; prolonged volatility in commodity prices; 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 and Colombia; competition; the results of exploration and development drilling and related activities; obtaining required approvals of regulatory authorities in Canada and Colombia; 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; changes to pipeline capacity; ability to access sufficient capital from internal and external sources; failure of counterparties to perform under contracts; risk that Parex' evaluation of its existing portfolio of development and exploration opportunities is not consistent with its expectations; failure to meet expected production targets; risk that the review of strategic repositioning alternatives will not result in a transaction; and other factors, many of which are beyond the control of the Company.  Readers are cautioned that the foregoing list of factors is not exhaustive.  Additional information on these and other factors that could affect Parex' operations 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 upon 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, among other things: current and anticipated commodity prices and royalty regimes; availability of skilled labour; timing and amount of capital expenditures; future exchange rates; the price of oil, including the anticipated Brent oil price; the impact of increasing competition; conditions in general economic and financial markets; availability of drilling and related equipment; effects of regulation by governmental agencies; receipt of partner, regulatory and community approvals; royalty rates; future operating costs; uninterrupted access to areas of Parex' operations and infrastructure; recoverability of reserves and future production rates; the status of litigation; timing of drilling and completion of wells; on-stream timing of production from successful exploration wells; operational performance of non-operated producing fields; pipeline capacity; that Parex will have sufficient cash flow, debt or equity sources or other financial resources required to fund its capital and operating expenditures and requirements as needed; that Parex' conduct and results of operations will be consistent with its expectations; that Parex will have the ability to develop its oil and gas properties in the manner currently contemplated; that Parex' evaluation of its existing portfolio of development and exploration opportunities is consistent with its expectations; current or, where applicable, proposed industry conditions, laws and regulations will continue in effect or as anticipated as described herein; that the estimates of Parex' production and reserves volumes and the assumptions related thereto (including commodity prices and development costs) are accurate in all material respects; that Parex will be able to obtain contract extensions or fulfill the contractual obligations required to retain its rights to explore, develop and exploit any of its undeveloped properties; that the benefits of initiating a review of strategic repositioning alternatives; and other matters.

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.

Future Oriented Financial Information Advisory

The information contained in the chart entitled "SoCa Assets Five Year (2019-2023) Profile" contains future oriented financial information (" FOFI ") within the meaning of applicable securities laws. The FOFI has been prepared by Parex' management to provide an outlook of the Company's activities and results and has been prepared based on a number of assumptions including the assumptions set forth herein and in the 2017 GLJ Report.  The actual results of operations of the Company and the resulting financial results will likely vary from the amounts presented in the above mentioned chart, and such variation may be material. The Company and its management believe that the FOFI has been prepared on a reasonable basis, reflecting management's best estimates and judgments. However, because this information is subjective and subject to numerous risks it should not be relied on as necessarily indicative of future results. Except as required by applicable securities laws, Parex undertakes no obligation to update such FOFI.

Oil & Gas Matters Advisory

Boe: The term "Boe" means a barrel of oil equivalent on the basis of 6 Mcf of natural gas to 1 barrel of oil (" bbl "). Boe’s may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion ratio at 6:1 may be misleading as an indication of value.

This press release contains a number of oil and gas metrics, including operating netbacks and free cash flow. These oil and gas metrics have been prepared by management and do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies and should not be used to make comparisons. Such metrics have been included herein to provide readers with additional measures to evaluate the performance of the SoCa assets; however, such measures are not reliable indicators of the future performance of the SoCa assets and future performance may not compare to the performance in previous periods and therefore such metric should not be unduly relied upon. Readers are cautioned that the information provided by these metrics, or that can be derived from the metrics presented in this news release, should not be relied upon for investment or other purposes.

Non-GAAP Terms Advisory

The Company discloses financial measures herein that do not have any standardized meaning prescribed under International Financial Reporting Standards (" IFRS "). These financial measures include operating netback and free cash flow.

Operating Netback:   Parex calculates operating netback as working interest revenue less royalties, transportation expenses and operating expenses and excluding corporate tax.

Free Cash Flow:   Parex calculates free cash flow as Operating Netback less future development capital and excluding corporate tax. 

Shareholders and investors should be cautioned that these measures should not be construed as an alternative to operating profit, net income, cash from operations or other measures of financial performance as determined in accordance with IFRS. Parex' method of calculating these measures may differ from other companies, and accordingly, they may not be comparable to similar measures used by other companies.

Reserves Advisory

The recovery and reserve estimates of crude oil reserves provided in this news release are estimates only, and there is no guarantee that the estimated reserves will be recovered. Actual crude oil reserves may eventually prove to be greater than, or less than, the estimates provided herein. All December 31, 2017 reserves presented are based on GLJ's forecast pricing effective January 1, 2018. The 2017 GLJ Report was prepared in accordance with the 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.  It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves. There are numerous uncertainties inherent in estimating quantities of crude oil, reserves and the future cash flows attributed to such reserves. The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation.

"Proved" or "1P" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.

"Probable" reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.

“Possible” reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10 percent probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved plus probable plus possible reserves.

"2P" means Proved plus Probable reserves.

"3P" means Proved plus Probable plus Possible reserves.