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by Stockwatch Business Reporter

West Texas Intermediate crude for September delivery added $1.33 to $44.74 on the New York Merc, while Brent for October added $1.24 to $47.20 (all figures in this para U.S.). Western Canadian Select traded at a discount of $14.35 to WTI ($30.39), up from a discount of $14.40. Natural gas for September added four cents to $2.59. The TSX energy index added 1.05 points to close at 198.89.

Colombia-focused Parex Resources Inc. (PXT) lost 60 cents to $14.75 on 854,400 shares, giving back some of the $1.57 it added yesterday after releasing its second quarter financials and expanding this year's drill program. The company had already provided an operations update in July that pegged the second quarter production at around 29,200 barrels of oil equivalent a day (99 per cent oil), so the financials were relatively unsurprising, although cash flow of 21 U.S. cents a share exceeded analysts' predictions of 19 U.S. cents a share. This was in part thanks to lower transportation costs, which fell to $11.76 (U.S.) a barrel from $14.24 (U.S.) a barrel a year earlier. Oil production in Colombia has been falling, which means that available pipeline capacity has been rising, and Parex is reaping the benefits. The depreciation of the Colombian peso has also helped. On the drilling front, Parex had a mixed quarter, drilling three wells but achieving success at just one of them. The success, however, was notable. It took place in the Jacana field at the LLA-34 block (with LLA referring to the Llanos basin), which is owned 55 per cent by Parex and 45 per cent by operator GeoPark. As Parex and GeoPark announced in early July, the successful well, Jacana-3, was drilled to a depth of about 11,000 feet without finding an oil-water contact (the lowest point at which hydrocarbons occur). Eleven thousand feet is roughly the depth at which Parex's reserve evaluators had pegged the contact, so the fact that none was found indicates potential for reserve additions. Parex and GeoPark then drilled the Jacana-4 and Jacana-5 wells. Jacana-3 and Jacana-4 are now both on production and have extended the overall field to the west, while Jacana-5 is being prepared for testing this month. GeoPark says Jacana-5 went farther downdip and showed preliminary indications of hydrocarbons; this too bodes well for potential reserve additions. The two companies now plan to drill eight wells at LLA-34 this year, up from the original level of five.

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