Parex Announces Discovery At Andina Norte-1 Well, Test Of 2,900 B/D

(Parex, 10.Jun.2019) — Parex Resources Inc. highlighted testing of the Capachos Block Andina Norte-1 well in the Guadalupe Formation.

Source: Parex, May 2019 presentation

Capachos (WI Parex 50%, Ecopetrol S.A 50%): Parex, as the operator drilled the Andina Norte-1 exploration well to a total depth of 18,852 feet and encountered oil bearing reservoirs in the Une and Guadalupe formations.

The primary objective, the Guadalupe reservoir was completed following a cement remediation and production testing commenced on June 5, 2019. A total of 9,398 barrels of 40 API oil, 488 barrels of water and 14 million cubic feet (“MMCF”) of natural gas have been recovered to date. Over a 81 hour period the average production test rate for the well was 2,785 barrels of oil per day, 4.3 million cubic feet per day (“MMCFD”) of natural gas under natural flowing conditions with a wellhead pressure of 1,420 psi. The facility restricted measured rate during the last 12 hours of testing has been 2,892 BOPD and 4.6 MMCFD of gas with a watercut of 2%. The water production from the well is believed to be remaining completion fluids as less than one third of the completion fluid has been recovered to date. Bottom hole pressure recorders in the well indicate a drawdown of approximately 15% and a pressure buildup and analysis will be conducted at the end of the test. Parex expects to produce the Guadalupe Formation in the Andina Norte-1 well.

The Andina Norte-1 well also evaluated a secondary objective, the Une Formation. The Une was tested over a 63 hour period under natural flowing conditions and recovered a total of 1,631 Barrels of 37 API Oil, 1,173 barrels of water and 3.9 MMCF of natural gas. Average production during the test was 621 barrels of oil per day, 446 barrels of water per day and 1.5 million cubic feet of gas per day. Parex believes remediation of the Une Formation would be required to isolate the water production. As the Une Formation was a secondary well objective, this zone was suspended to allow testing of the up-hole Guadalupe Formation. Parex expects that the Une reservoir will be produced later along with the Une reservoir discovered in the Andina field.

The drilling rig will be skidded on the same pad to drill the Andina-3 appraisal well. 

Currently the Capachos block gross production is restricted at approximately 5,100 bopd (net 2,550 bopd).

Production: Parex’ Q2 2019 average production is estimated to exceed 52,000 barrels of oil equivalent per day (“boe/d”) compared to the Company’s Q2 2018 average quarterly production of 42,052 boe/d. 

Share Repurchases: On December 21, 2018 Parex began a normal course issuer bid (“NCIB”) with the intent to repurchase for cancellation approximately 15 million shares (10% of public float). As at June 7, 2019 the Company has repurchased 10,454,355 shares at an average cost of C$19.90 per share for a total of C$208 million. The total cost of this program will be funded from existing working capital and/or free cash flow.

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