CALGARY, Alberta, April 11, 2024 (GLOBE NEWSWIRE) -- Parex Resources Inc. ("Parex" or the "Company") (TSX: PXT) and its strategic partner Ecopetrol S.A. ("Ecopetrol"), are pleased to announce that they have entered into definitive agreements to consolidate their position along the Llanos Foothills trend in alignment with current Colombian government objectives to secure gas supply and support energy transition initiatives.
Parex and Ecopetrol are now strategically positioned with eight blocks, along with the creation of a mutual area of interest ("AMI"), to capitalize on the approximately 500-kilometer geological trend and explore for new sources of domestic gas and liquids. This trend boasts world-class discoveries at both ends, which cumulatively have produced over 1.4 million barrels of oil(1), and roughly 4 trillion cubic feet of natural gas(1), with the middle of the trend largely unexplored.
The agreements signify progress in Parex's long-term gas strategy to pursue underexplored liquids-rich plays, which are within an area that has existing infrastructure that can be leveraged to accelerate exploration and development following new regulations that have been approved by the Colombian government.
"After extensive joint efforts, Parex and Ecopetrol are proud to announce the execution of definitive agreements to explore the high-potential Foothills of Colombia and harmonize our respective land positions. On behalf of Parex, I want to express my gratitude to Ecopetrol for their trust in our company, while reaffirming our commitment to the respectful treatment of community and stakeholder rights. This collaboration not only supports Colombia's energy position and the current administration's initiatives, but also marks a transformative frontier for Parex as we advance our gas strategy alongside our strategic partner," commented Imad Mohsen, President & Chief Executive Officer.
"Over the last three years, Parex has strategically strengthened our asset portfolio, such as carrying out the Arauca & LLA-38 farm-in and acquiring 18 new blocks in the 2021 Colombia bid round. This further partnership with Ecopetrol is a continuation of those efforts to expand and high-grade our portfolio as we focus on executing near-field exploration prospects – while concurrently drilling high-impact targets with step-change potential."
Key Highlights
Assumed operatorship in all exploration and future development activities where Parex holds a newly acquired working interest ("W.I.")(2).
Harmonized the LLA-4-1, LLA-16-1, and LLA-121 blocks(2) to become 50-50 joint venture partners as well as the option to jointly participate in two additional blocks within the trend is under evaluation.
Received a 50% participation share in the form of exploratory rights within the Sirirí Convenio(2), where the producing Gibraltar field is located, in exchange for drilling the Gibraltar Profundo exploration well and further capital investments of $11 million (gross).
The Gibraltar field is currently producing from the Mirador formation(3)(4), which is excluded from the definitive agreements(2) and will remain 100% Ecopetrol W.I.
Gibraltar Profundo is a 3D-defined exploration prospect targeting gas and condensate below the Mirador formation, and becomes one of the highest-ranking prospects in Parex's high-impact big 'E' exploration portfolio; with expected results in 2025, the prospect is located within the existing facilities of the Gibraltar field where a discovery could be fast-tracked to existing pipeline infrastructure.
Created an AMI within the Foothills trend that includes the Niscota exploration area, whereby if either party acquires the rights within an area, each party has the right to acquire a 50% W.I. of the acquired area(5)(6).
The Niscota area is on trend to the producing fields of Cusiana, Cupiagua, Floreña, and Pauto Sur, which together produced over 23,000 bbl/d of oil(4) and roughly 1 bcf/d of natural gas(4) in 2023 from discoveries made in the 1980s and 1990s; peak average production from the combined fields was approximately 450,000 bbl/d of oil(1) and roughly 3 bcf/d of natural gas(1).
Continuing to work jointly to unlock transportation via recent changes in regulations that allow for the conversion of existing oil pipelines to multiphase pipelines, minimizing the need for new independent treatment facilities for each block, and accelerating commercial onstream time for successful gas production.
(1) Source: IHS – S&P Global.
(2) See "Block & Working Interest Summary" for additional information.
(3) The Gibraltar field currently produces approximately 37,000 mcf/d of natural gas and roughly 700 barrels of light crude oil from the Mirador formation (January 2024).
(4) Source: National Hydrocarbons Agency of the Republic of Colombia ("ANH").
(5) Excludes the extension of the existing discoveries from the Piedemonte Convenio, where Ecopetrol will keep 100% rights over such area.
(6) Subject to government approval.
Llanos Foothills Block & Working Interest Summary
Block | Parex | Ecopetrol |
Updated | ||
Sirirí Convenio | 50% W.I. in Future Exploration(1)(4) | 100% W.I. in Current Producing Area(3) |
LLA-4-1 | 50% W.I.(2)(4) | 50% W.I. |
LLA-16-1 | 50% W.I.(2)(4) | 50% W.I. |
LLA-121 | 50% W.I.(1)(4) | 50% W.I. |
Existing Partnerships | ||
Capachos | 50% W.I.(2) | 50% W.I. |
Arauca | Parex 50% Participating Share(2)(5) | 50% W.I. |
LLA-38 | 50% W.I.(2) | 50% W.I. |
LLA-122 | 50% W.I.(2) | 50% W.I. |
(1) New Parex operatorship.
(2) Pre-existing Parex operatorship.
(3) Parex receives 50% participating share in future exploration; Ecopetrol retains 100% W.I. and operatorship of current production, with 50% participating share in future exploration.
(4) Subject to government approval.
(5) Business Collaboration Agreement with Ecopetrol (Parex 50% Participating Share); Ecopetrol currently holds 100% of the W.I. in the Convenio Arauca while the assignment procedure is pending.