Mr. Mike Kruchten reports

PAREX ANNOUNCES COLOMBIAN OIL DISCOVERIES AND INCREASED 2015 OIL PRODUCTION GUIDANCE

Parex Resources Inc. has made three new Colombian oil discoveries on blocks LLA-26 and LLA-34 and has increased oil production guidance for 2015.

(All amounts herein are in U.S. dollars unless otherwise stated.)

Operational update

Rumba/Bazar (operated, block LLA-26 and working interest of 100 per cent)

Parex spudded the Bazar-2 exploration well on July 28, 2015, to test the Mirador and Une formations on a separate structural closure along the same fault trend as the recent Rumba discovery. The bottom hole co-ordinates of the well are approximately 2.2 kilometres northeast of the Rumba-1 discovery well and 1.1 kilometres northeast of the Rumba-2 appraisal well. Bazar-2 reached the Mirador formation target depth on Aug. 23, 2015, and encountered potential oil-bearing zones with electric log characteristics and hydrocarbon shows suggesting oil pay. The Bazar-2 well appears to share the same oil water contact in the Mirador formation as the Rumba discovery, suggesting the Mirador pool is continuous along the fault from Rumba-1 to Bazar-2. The well is currently drilling ahead to final target depth to test the deeper potential in the Une formation. The well is expected to be tested later in September.

Chachalaca (non-operated, block LLA-34 and working interest of 55 per cent)

The Chachalaca-1 well was the first well to be drilled on an untested fault trend located northwest of the Tigana fault trend and was drilled to a depth of 12,270 feet. The well encountered three potential oil zones in the Mirador formation. The initial test of the Chachalaca-1 well in the upper Mirador was only 63 hours in duration as an electric submersible pump failure necessitated a workover on the well. During the initial 63-hour test, a total of 2,743 barrels of 31-degree API oil were recovered for an average production rate of 1,045 barrels of oil per day. The measured water cut from the zone at the end of the test period was 6 per cent with some workover fluid yet to be recovered. Failure in the ESP sensor did not allow the producing bottom hole pressure to be estimated, but this information will be obtained during the final well test. Testing of the well has now resumed and will continue for the allowed seven-day test period. The well also encountered potential oil pay in the Guadalupe formation, but it tested wet.

Jacana (non-operated, block LLA-34 and working interest of 55 per cent)

The Jacana-1 well was drilled to a depth of 10,900 feet along the same fault trend as the Tigana field approximately six kilometres southwest of the southernmost Tigana well. The well encountered potential oil-bearing zones in the Mirador and Guadalupe formations and was tested in the deeper Guadalupe formation. After 151 hours of a short-term test, a total of 10,746 barrels of 14.9-degree API oil were recovered for an average rate of 1,710 bopd. At the end of the test, the well was producing at approximately 1,900 bopd, which represents the limit of the current test facilities. After recovery of workover fluids, the water cut dropped to 0.4 per cent, and subsurface pressure recorders measuring the producing pressure indicate a drawdown of approximately 18 per cent. Testing the Jacana-1 well has been terminated, and the drilling rig will be skidded to drill the Jacana-2 appraisal well, which is to be located approximately 800 metres northeast of Jacana 1 toward the Tigana pool. Parex expects that the Jacana-1 well will be placed on long-term production test in the Guadalupe formation after drilling the Jacana-2 well. The Mirador formation is expected to be tested in future Jacana appraisal wells.

Following the Jacana-1 oil discovery, the presence of oil in the Mirador and Guadalupe formations has now been confirmed along the entire fault trend a distance of approximately 15 kilometres from Tilo-1 to Jacana-1. The interpreted oil column height at Jacana-1 in the Guadalupe formation is in excess of the mapped structural closure, which suggests that the discovery may potentially extend beyond the southern end of the fault and is trapped stratigraphically to the south of Jacana-1.

Tilo (non-operated, block LLA-34 and working interest of 55 per cent)

The Tilo-2 delineation well was drilled 740 metres southwest of the Tilo-1 well to delineate the Guadalupe reservoir. The Tilo discovery is located along the same fault trend as Tigana with the Tilo-2 well bottom hole co-ordinates approximately 3.5 kilometres from the Tigana Norte well. The well has been cased and encountered potential oil pay in the Guadalupe formation. The drilling rig is being mobilized off of the location after which a completion rig will be mobilized to test the Tilo-2 well later in the year.

Guepardo (operated, block LLA-32 and working interest of 70 per cent)

Guepardo-1 well was drilled and encountered good-quality sands in the Mirador and Guadalupe formations, but they were both interpreted to be water bearing. The well was abandoned without testing. Further exploration drilling on LLA-32 had been planned for 2015 but has been deferred to 2016 in light of the exploration drilling success on blocks LLA-26 and LLA-34 and allocating additional capital to those areas.

Guidance update for 2015

Parex forecasts 2015 production to be approximately 27,400 bopd as compared with the original 2015 oil production guidance of 26,500 bopd. The revised production forecast represents an increase of 22 per cent compared with the 2014 annual average oil production of 22,526 bopd. Fourth quarter 2015 oil production is forecast to be 28,500 bopd, an increase of 7 per cent from production of 26,544 bopd for the fourth quarter of 2014.

Capital expenditures for 2015 are estimated to now range between $140-million and $145-million dependent upon oil prices as Parex will continue to review its discretionary exploration capital programs in the context of its funds flow from operations given the lower oil price environment.

Parex plans to drill the Taringa-1 and Tautaco-1 wells back to back to increase drilling rig efficiencies and accordingly does not expect to commence drilling the Taringa-1 well until surface negotiations are complete for the Tautaco prospect on block LLA-10, which is anticipated to be late 2015. Accordingly for the rest of 2015, capital expenditures will likely be limited to drilling the Jacana-2 appraisal well on LLA-34, commencement of drilling the Taringa-1 exploration well, Tautaco prospect civil construction, and finishing facilities work on LLA-34, Rumba and LLA-32.

Parex is committed and able to maintain its strong balance sheet and cash reserves notwithstanding the lower oil price environment. At June 30, 2015, Parex had drawn no bank debt on its $200-million (U.S.) syndicated credit facility and had working capital of approximately $90-million (U.S.), including approximately $104-million (U.S.) of cash.

We seek Safe Harbor.