Parex Resources to suspend 2020 drilling program

Parex Resources Inc., Calgary, has suspended all remaining 2020 drilling programs and expects a capital program of $25-30 million for the balance of 2020 as long as oil prices remain at current levels, the company said Apr. 2.  In the year’s first quarter, the company invested $75-80 million of its expected total full-year 2020 capital of $100-110 million.

Depending on market conditions and community safety, Parex has an option to invest $15-20 million for the drilling of an appraisal well and up-front infrastructure on its VIM-1 Block La Belleza discovery. In February, the company and block partner Frontera Energy Corp., Toronto, were set to evaluate options to drill one or two additional delineation wells in the Lower Magdalena Valley block in Colombia after encountering 179 ft total MD of potential hydrocarbon bearing reservoir in the Cienaga De Oro formation (OGJ Online, Feb. 7, 2020).

Average production for the first quarter is estimated at 54,290 boe/d compared to the company's fourth-quarter 2019 average quarterly production of 54,221 boe/d (53,086 b/d of crude oil and 6,810 mcf/d of conventional natural gas) (98% crude oil). 

For the year’s second quarter, the company plans to reduce production and expects April production to be 45,000-50,000 boe/d. The company expects 2020 base corporate production decline of 15-18% per annum.    

Debt-free, the company has a cash position of $390 million and an undrawn credit facility of $200 million, it said. As of Dec. 31, 2019, the company’s working capital was $344 million.