Mr. Imad Mohsen reports

PAREX RESOURCES ANNOUNCES 12 CONSECUTIVE YEARS OF RESERVES PER SHARE GROWTH, A 50% INCREASE TO THE REGULAR DIVIDEND AND PROVIDES 2023 GUIDANCE UPDATE

Parex Resources Inc. has released the results of its annual independent reserves assessment as at Dec. 31, 2022, as well as a corporate update. The financial and operational information contained beloWI based on the company's unaudited estimated results for year-end Dec. 31, 2022. All currency amounts are in United States dollars unless otherwise stated. The following reserves categories are discussed in this news release: proved developed producing (PDP); proved (1P); proved plus probable (2P); and proved plus probable plus possible (3P).

Key highlights

• Twelve consecutive years of PDP, 1P and 2P reserves per-share growth (on a boe (barrel of oil equivalent) basis), with double-digit-percentage increases from 2021.
• Achieved a strong 1P reserve replacement ratio of 128 per cent.
• Strategically deployed $100-million of working capital to complete a voluntary, internal corporate entity restructuring that increases 2023 funds flow and free funds flow guidance by $65-million (midpoint) as well as provides the company with an increased outlook through 2027.
• Declared a Q1 2023 regular dividend of 37.5 Canadian cents per share or $1.50 (Canadian) per share annualized, representing a 50-per-cent increase from the company's Q4 2022 regular dividend; Parex first initiated a regular dividend at 12.5 Canadian cents per share quarterly in 2021.
• Repurchased approximately one million shares year to date 2023 under the current normal course issuer bid.
• Recognized for leadership in ESG (environmental, social and governance), where Parex was one of three Canadian-listed exploration and production companies included in the 2023 Bloomberg Gender-Equality Index.

Imad Mohsen, president and chief executive officer, commented: "Parex achieved strong reserve replacement ratios in 2022 from the implementation of new technology and focused investments that are resulting in an outlook for reduced maintenance capital and further optimized production from key assets. The results that we are seeing today, in addition to our positive outlook for the business, gives us the confidence to sustainably increase our regular dividend to shareholders. With investments across our world-class Colombian asset base, the portfolio is well positioned to deliver a step-change in capital efficiency and continue being the foundation for increased shareholder returns."

2022 year-end corporate reserves report: highlights

For year ended Dec. 31, 2022, Parex:

• Grew reserves per share (on a boe basis) across PDP, 1P and 2P for the 12th consecutive year:
  • PDP: 13-per-cent increase from 2021;
  • 1P: 15-per-cent increase from 2021;
  • 2P: 12-per-cent increase from 2021.
• More than replaced total 2022 production (approximately 19.0 million barrels of oil equivalent (MMboe)) with reserve replacement ratios of:
  • PDP: 112 per cent, with reserve additions of 21.2 MMboe;
  • 1P: 128 per cent, with reserve additions of 24.4 MMboe;
  • 2P: 110 per cent, with reserve additions of 20.9 MMboe.
• Realized estimated finding, development and acquisition (FD&A) costs (using estimated 2022 adjusted funds flow from operations of $42.43 per boe) of:
  • PDP: $25.35 per boe resulting in a 1.7 times recycle ratio;
  • 1P: $25.92 per boe resulting in a 1.6 times recycle ratio;
  • 2P: $28.39 per boe resulting in a 1.5 times recycle ratio.
• Realized growth in its after-tax net asset value (NAV) per share (discounted at 10 per cent and using the GLJ Brent forecast) even after incorporating the estimated impact of the recent Colombia government tax reform:
  • PDP: $23.83 (Canadian) (6-per-cent increase from 2021);
  • 1P: $31.63 (Canadian) (9-per-cent increase from 2021);
  • 2P: $43.45 (Canadian) (13-per-cent increase from 2021).
• After accounting for the 2022 drilling campaign, expanded corporate gross 2P future locations to 147 from 108 last year, demonstrating significant running room.
  • Added 1P and 2P reserves at the Cabrestero block (100-per-cent WI) of 8.9 and 8.8 MMboe, respectively.
• Increased its Q4 2022 average production by approximately 9 per cent over the comparative quarter in 2021 and maintained a 2P reserve life index of over 10 years.

• Q4 2022 average production is estimated to be 54,257 boe/d, up 9 per cent from Q4 2021.
• FY 2022 average production is estimated to be 52,049 boe/d, an increase of 11 per cent from FY 2021.

2023 outlook

• In the Northern Llanos, on Jan. 21, 2023, the company pro-actively shut in its Capachos block (50-per-cent WI) and halted drilling operations at the Arauca block (50-per-cent WI), due to heightened security concerns related to peace talks at the federal government level in Colombia.
  • As a result of this shut-in, net production is being impacted by approximately 6,000 boe/d and is affecting the pace that new wells can be drilled and brought on line.
  • The company is actively engaging with national and regional stakeholders and is optimistic that it will be able to resume full operations in the Northern Llanos in Q1 2023; however, the company's top priority is the safety of its employees and contractors.
• Parex's average production guidance of 57,000 to 63,000 boe/d for FY 2023 had been widened relative to previous years in order to better account for above ground factors that can at times impact Colombian operations.
  • Due to the Northern Llanos shut-in, for Q1 2023 Parex expects its production to be beloWIs 2023 annual average production guidance range, subject to the length of the shut-in and halted drilling operations; however, Parex expects to be within its 2023 annual average production guidance range in Q2 2023 and for the full year 2023.
  • Prior to the heightened security concerns, Parex was making steady progress at the Arauca block (50-per-cent WI), where civil work activities were ongoing in 2022 and the first well of a material, multiyear drilling campaign was successfully spudded in early January, 2023.

Voluntary restructuring increases 2023 funds flow and free funds flow guidance as well as outlook through 2027

Parex has completed a voluntary, internal corporate entity restructuring to consolidate certain assets in the Southern Llanos into one corporate entity for operational and administrative optimization.

The financial impact of this restructuring is that the company will incur Colombia capital gains taxes in Q4 2022, WIe gaining an expected increase of $325-million to the company's deferred tax asset balance as at year-end Dec. 31, 2022, WIh is anticipated to provide benefits over the 2023 to 2027 fiscal year period. The restructuring has an estimated cost, in the form of an increased current tax expense for Q4 2022, of $100-million. The company's Q4 2022 current tax expense is now expected to be roughly $175-million, compared with the company's original internal forecast of approximately $75-million; full-year 2022 net income will increase by approximately $225-million due to a deferred tax recovery, offset by the incremental Q4 2022 current tax expense of $100-million.

As a result of the restructuring, the company expects a lower effective tax rate over the 2023 to 2027 fiscal year period. At the previously budgeted $80 per barrel Brent oil price assumption and existing Colombian tax regulations, the expected benefits of the lower effective tax rate in 2023, WIh are higher funds flow provided by operations and free funds flow, are reflected in the updated 2023 guidance in the attached table.

Updated 2023 netback sensitivity estimates

The netback sensitivity estimates in the attached table have been updated to take into account the corporate restructuring.

Return of capital update

50-per-cent increase to the Q1 2023 dividend

Parex's board of directors has approved a Q1 2023 regular dividend of 37.5 Canadian cents per share to be paid on March 31, 2023, to shareholders of record on March 15, 2023, representing a 50-per-cent increase from the company's Q4 2022 regular dividend of 25 Canadian cents per share. The company first initiated a regular dividend at 12.5 Canadian cents per share quarterly in 2021.

This quarterly dividend payment to shareholders is designated as an eligible dividend for purposes of the Income Tax Act (Canada).

Commenced 2023 share buybacks under current normal course issuer bid

As at Jan. 31, 2023, Parex has repurchased approximately one million shares under its normal course issuer bid (NCIB) at an average price of $21.70 (Canadian) per share, for total consideration of roughly $21.7-million (Canadian). Over and above the increased regular dividend, the company intends on continuing to utilize its current NCIB in line with Parex's commitment to return 100 per cent of free funds flow to its shareholders.

Parex Resources included in the 2023 Bloomberg Gender-Equality Index

Parex has joined 483 other companies as a member of the 2023 Bloomberg Gender-Equality Index (GEI), a modified market capitalization-WIhted index developed to gauge the performance of public companies dedicated to reporting gender-related data. The company submitted a social survey created by Bloomberg, in collaboration with subject matter experts globally. Those included on this year's index scored at or above a global threshold established by Bloomberg to reflect disclosure and the achievement or adoption of best-in-class statistics and policies.

2022 year-end corporate reserves report: discussion of reserves

The attached tables summarize information contained in the independent reserves report prepared by GLJ Ltd. dated Feb. 2, 2023, with an effective date of Dec. 31, 2022, with comparatives to the independent reserves report prepared by GLJ dated Feb. 3, 2022, with an effective date of Dec. 31, 2021, and the independent reserves report prepared by GLJ dated Feb. 4, 2021, with an effective date of Dec. 31, 2020. Each GLJ report was prepared in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook (COGE Handbook) and National Instrument 51-101 -- Standards of Disclosure for Oil and Gas Activities. Additional reserve information as required under NI 51-101 will be included in the company's annual information form for the 2022 fiscal year WIh will be filed on SEDAR by March 31, 2023.

The recovery and reserve estimates provided in this news release are estimates only, and there is no guarantee that the estimated reserves will be recovered. Actual reserves may eventually prove to be greater than, or less than, the estimates provided herein. In certain of the tables set forth herein, the columns may not add due to rounding.

All Dec. 31, 2022, reserves presented are based on GLJ's forecast pricing effective Jan. 1, 2023; all Dec. 31, 2021, reserves presented are based on GLJ's forecast pricing effective Jan. 1, 2022; and all Dec. 31, 2020, reserves presented are based on GLJ's forecast pricing effective Jan. 1, 2021.

Q4 2022 results -- conference call and webcast

The company is holding a conference call and webcast for investors, analysts and other interested parties on Thursday, March 9, 2023, at 9:30 a.m. MT (11:30 a.m. ET). To participate in the conference call or webcast, please see access information:

Toll-free dial number (Canada/United States):   1-800-806-5484

Passcode:  8807145 followed by the pound key

About Parex Resources Inc.

Parex is the largest independent oil and gas company in Colombia, focusing on sustainable, conventional production. The company's corporate headquarters are in Calgary, Canada, with an operating office in Bogota, Colombia. Parex is a member of the S&P/TSX Composite ESG Index and its shares trade on the Toronto Stock Exchange under the symbol PXT.

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