Mr. Mike Kruchten reports

PAREX ANNOUNCES EXPANDED GROWTH CAPEX PROGRAM

Parex Resources Inc. has provided an update on its 2021 capital expenditure program. All currency amounts are in U.S. dollars, unless otherwise stated.

Operational update -- applying free cash flow to accelerate Colombian appraisal and exploration portfolio

Higher Brent oil prices to date in 2021 and Parex's unhedged oil price exposure are expected to contribute to a significant increase to Parex's 2021 funds flow provided by operations (FFO), compared with the 2021 budget guidance released on Nov. 4, 2020. With estimated higher FFO, an increasing cash position and a debt-free balance sheet, Parex is strategically accelerating assessment of its portfolio of operated assets, through increasing exploration and appraisal activity to provide for a strengthened future development inventory. Highlights of the capital expenditure increase are provided below:

• Cabrestero block (100-per-cent working interest, operator): Continue the Bacano field development and appraisal drilling program, and expand the water injection pressure support program;
• Boranda block (50-per-cent WI, operator): The Boranda Sur-2 appraisal well, located 2.6 kilometres to the southwest of the Boranda-3 discovery, is currently producing approximately 200 barrels of oil per day (bopd) in a new horizon. Testing of the main target will begin in approximately two weeks. Parex is also completing the Boranda Centro-1 well, which is the second well in the appraisal program, located 840 metres from Boranda-3 and structurally down dip. The company believes a successful oil test at Boranda Centro-1 would confirm a significant areal extent of the block;
• VIM-1 block (50-per-cent WI, operator): In Q2 2021 Parex anticipates commencing a two-well exploration drilling program to further assess the VIM-1 block. The wells, Basilea and Planadas, are located 2.6 kilometres and 6.3 kilometres, respectively, from the La Belleza-1 discovery. The company is currently evaluating development plans for the La Belleza discovery that include the possible reinjection of gas to increase liquids recovery and maximize the project value, subject to partner approval;
• Fortuna block (100-per-cent WI, operator): Parex drilled the horizontal exploration well Cayena-1 to a depth of 8,560 feet and logged potential oil-bearing zones in multiple formations. The company then successfully drilled 3,042 feet horizontally in the shallower Galembo formation, resulting in a current medium oil (24 API) production rate of approximately 340 bopd and approximately 54,900 cumulative barrels of oil. Building on the success of Parex's first horizontal well, the company plans to drill two new horizontal wells targeting the Salada and Olini formations.

The 2021 capital expenditure budget increase targets operated assets and is summarized in the attached table.

Block             Capex increase 2021                                              Activity description

Cabrestero                $25-million              Drill four to six producer and water injection wells
Boranda                   $10-million    New civil works and drill one to two appraisal wells targeting
                                                the proven Lisama formation subject to partner approval
Fortuna                   $15-million              Drill two appraisal wells into two prospective zones
VMM-46                    $15-million                Acquire 3-D seismic on the block directly adjacent
                                                                                   to Boranda discovery
VIM-43                     $5-million         Commence 3-D seismic on block directly north of the VIM-1
                                                           La Belleza discovery with completion in 2022
Capachos                   $5-million       ESG: additional power generation turbines to reduce flaring
Various                   $10-million                Regulatory, permitting, preaccess, long-lead items
Total                     $85-million                                         Additional capex for 2021 
Original guidance     $165-million to
                         $185-million                  Released on Nov. 4, 2020, based on $45/bbl Brent 
New capex guidance    $250-million to
                         $270-million                                         Based on $55 to $60 Brent

The increased 2021 capital expenditure program, along with the share buyback program discussed below, is expected to be fully financed from funds flow provided by operations.

Q1 2020 update:

• Production: Q1 2021 average production is estimated at 46,775 barrels of oil equivalent per day (boe/d) compared with Parex's guidance of 46,500 to 47,500 boe/d. Q1 2021 production rates were negatively impacted approximately 1,000 bopd by LLA-34 downtime averaging 6 per cent compared with a historic average of 3 per cent. The increase in downtime is primarily related to electrical system reliability. Parex expects LLA-34 downtime to average 4 per cent for the remainder of 2021. It expects Q2 2021 production to average 47,000 to 48,000 boe/d. With the increase in 2021 capex, Parex expects second half 2021 production rates to be 48,000 to 50,000 boe/d. The additional Cabrestero oil wells are being drilled to capture the higher Brent pricing and the reduced transportation costs from the planned Cabrestero field pipeline tie-in.
• Crude quality discount: Parex continues to realize strong crude oil pricing. The Brent/Vasconia differential is currently approximately $3.00/bbl.
• Integrated ESG strategy -- Colombia's first geothermal project: Demonstrating Parex's commitment to the environment and sustainable operations, the company commissioned a geothermal unit at the Las Maracas field that utilizes hot produced water to generate power and reduce emissions. Parex is currently installing a second geothermal unit in the Rumba field.
• Industry-leading balance sheet: Parex unaudited cash position at March 31, 2021, was approximately $365-million. The company remains debt free with an undrawn credit facility of $200-million.

Share buyback -- committed to another 10-per-cent repurchase in 2021

Since 2017 Parex has repurchased an aggregate of 35 million shares, returning $667-million to shareholders. Under the current NCIB, which began on Dec. 23, 2020, Parex has purchased 3.4 million shares of the maximum amount of 12.9 million shares. As of March 31, 2020, Parex had 128.6 million basic shares outstanding. Parex expects to purchase the maximum allowable 12.9 million shares under the NCIB, prior to its expiry in late December, 2021.

We seek Safe Harbor.