Mr. Imad Mohsen reports

PAREX RESOURCES ANNOUNCES 2023 FULL-YEAR RESULTS & RESERVES, RESUMPTION OF NORTHERN LLANOS OPERATIONS, AND DECLARATION OF Q1 2024 DIVIDEND

Parex Resources Inc. has released its financial and operating results for the three- and twelve-month periods ended Dec. 31, 2023, as well as the results of its independent reserves assessment as at Dec. 31, 2023. Additionally, the company announces that it has resumed full operations at its Capachos and Arauca blocks in the Northern Llanos, as well as the declaration of its Q1 2024 regular dividend of 37.5 Canadian cents per share. All amounts herein are in United States dollars unless otherwise stated.

"In 2023, we achieved record production, successfully replaced 100 per cent of PDP reserves, and delivered excellent safety performance -- thanks to the collective efforts of the Parex team," commented Imad Mohsen, president and chief executive officer.

"While we encountered some headwinds during the year, we approach 2024 with confidence in base production from our core SOCA assets, optimism about near-term growth and upside potential in Arauca, and continue to be focused on high grading our portfolio and delivering meaningful exploitation and exploration volumes."

Key highlights

• Generated annual funds flow provided by operations (FFO) of $668-million and free funds flow (FFF) of $184-million in 2023.
• Achieved record production per share, up 12 per cent compared with 2022.
• Replaced approximately 100 per cent of proved developed producing (PDP) reserves and grew PDP reserves per share (on a boe (barrel of oil equivalent) basis) by 5 per cent over 2022.
• Resumed full operations at Capachos and Arauca on Feb. 25, 2024; FY 2024 average production guidance midpoint of 57,000 boe/d (barrels of oil equivalent per day) is unchanged.
• Returned $224-million to shareholders in 2023; cumulatively, returned over $1.5-billion (Canadian) to shareholders over the past five years through dividends and share repurchases.
• Declared a Q1 2024 regular dividend of 37.5 Canadian cents per share or $1.50 (Canadian) per share annualized; current dividend yield is roughly 6.8 per cent.
• Commenced a current normal course issuer bid (NCIB) on Jan. 22, 2024; in 2023, the company repurchased roughly 5 per cent of its outstanding shares.

2023 fourth quarter results

• Record average production of 57,329 boe/d, an increase of 6 per cent over Q4 2022 and 5 per cent over Q3 2023.
• Realized net income of $134-million or $1.28 per share basic.
• Generated FFO of $193-million and FFO per share of $1.85.
• Produced an operating netback of $41.79/boe and an FFO netback of $36.81/boe from an average Brent price of $82.90/bbl.
• Incurred $91-million of capital expenditures, participating in the drilling of 11 gross (8.30 net) wells.
• As at Dec. 31, 2023, cash was $140-million and working capital surplus $79-million; working capital was supplemented by the company's secured credit facility that had $90-million drawn as at year-end due to the timing of vendor payments and oil sale collections at the end of the quarter.

2023 full-year results

• Record average production of 54,356 boe/d, up 4 per cent over 2022.
• Realized net income of $459-million or $4.32 per share basic.
• Generated FFO of $668-million and FFO per share of $6.29.
• Produced an operating netback of $44.84/boe and an FFO netback of $33.59/boe from an average Brent price of $82.18/bbl.
• Incurred $483-million of capital expenditures, participating in the drilling of 59 gross (43.6 net) wells.
• Paid $119-million or $1.50 (Canadian) per share in regular dividends and repurchased $105-million worth of shares.

2023 year-end corporate reserves report: highlights

For the year ended Dec. 31, 2023, the company:

• Generated a PDP reserves replacement ratio of approximately 100 per cent, with 2023 production of approximately 19.8 mmboe (million barrels of oil equivalent) and reserve additions of 19.7 mmboe.
• Grew PDP reserves per share (on a boe basis) by 5 per cent compared with 2022.
• Attained growth in PDP after-tax net asset value (NAV) per share to $22.40 (Canadian), which was 5 per cent higher than 2022.
• Increased Q4 2023 average production by approximately 6 per cent over the comparative quarter and maintained a year-over-year PDP reserve life index of approximately four years.
• Proved (1P) and proved plus probable (2P) reserve volumes were down 14 per cent and 16 per cent, respectively, compared with 2022.
  • Reserves were lower primarily due to technical revisions, which were focused on asset impairment on non-core blocks in the middle Magdalena, as well as LLA-34 on delineation underperformance.
• Added approximately four million of 2P reserves from the Arauca-8 well; in 2024, Parex plans to test the remaining zones of the well and conduct appraisal drilling on the block to better understand the extent of the reservoir.
• Grew PDP, 1P and 2P after-tax NAV per boe by 2 per cent, 8 per cent and 6 per cent, respectively, when compared with 2022.

Guidance update

Parex's FY 2024 average production guidance of 54,000 to 60,000 boe/d (57,000 boe/d midpoint) and capital expenditures of $390-million to $430-million ($410-million midpoint) remain unchanged.

Operational update

Northern Llanos -- Capachos and Arauca update

Parex has resumed activity in the Northern Llanos following social protests that required the company to shut in its Capachos block and halt drilling and testing operations at the Arauca block. Full operations are proceeding with:

• Arauca-8 well currently testing the remaining zones in the Guadalupe formation;
• Drilling the Arauca-15 sidetrack;
• Capachos average production is roughly 3,800 boe/d (net) and is expected to further increase throughout the remainder of the current quarter.

Corporately, the shut-ins were limited to the Capachos and Arauca blocks, and are expected to affect Parex's Q1 2024 results. The net production of Capachos was approximately 5,000 boe/d before the suspension of operations. Additionally, there is an Arauca impact from the delayed pace of drilling and testing operations.

1. Capachos: 50 per cent W.I.
2. Arauca: Business collaboration agreement with Ecopetrol S.A. (Parex 50-per-cent participating share); Ecopetrol S.A. currently holds 100 per cent of the working interest in the Convenio Arauca while the assignment procedure is pending.

Cabrestero and LLA-34 -- waterflood injection performance and polymer pilot update

The waterflood injection programs are advancing successfully at both Cabrestero and LLA-34, affirming their effectiveness in improving reservoir recovery. So far in 2024, the blocks are demonstrating strong base production and outperforming management's expectations.

In late 2023, polymer injection began at Cabrestero. The polymer injection process has been successfully completed and the company has implemented a comprehensive monitoring program for two well patterns. This program is designed to capture the reservoir response and validate the technology's efficacy in accelerating oil production and enhancing sweep efficiency. The company expects preliminary results in H2 2024.

1. Cabrestero: 100 per cent W.I.
2. LLA-34: 55 per cent W.I.

Big E exploration -- high-impact targets with transformational potential

The Arantes well at LLA-122 is targeting gas and condensate in the high-potential Foothills trend of Colombia, where historical pool sizes have been significant. This prospect was spudded in early January, 2024, and is expected to reach a total depth of approximately 18,000 feet in Q2 2024.

Parex continues to progress the predrill work for the Hydra well at VIM-1, which is expected to spud mid-year 2024.

1. LLA-122: 50 per cent W.I.
2. VIM-1: 50 per cent W.I.

Sustainability update

Parex continues to be recognized as a top-tier ESG (environmental, social and governance) performer:

• ESG industry top-rated company by Sustainalytics;
• In the Jantzi Social Index;
• One of three Canadian-listed exploration and production companies included in the 2024 Bloomberg Gender-Equality Index;
• Maintained a rating of AA through Morgan Stanley Capital International (MSCI).

Notably in 2023, the company made significant social investments through both direct community investment and the Colombian national government's Work for Taxes program. The Work for Taxes program enables corporations to undertake infrastructure projects for a direct reduction in their tax liabilities to support local communities and to date, Parex has been granted approximately $70-million of projects under this program. In 2023, over $15-million was invested through the Work for Taxes initiative, with an additional approximately $5-million invested directly in communities.

Parex plans to issue its 10th annual sustainability report, alongside its third integrated Task Force on Climate-Related Financial Disclosures (TCFD), in early Q3 2024.

Tax update

Starting with the 2023 tax year, Colombia introduced an income surtax that is linked to the historical Brent oil price over 10 years. Following Dec. 31, 2023, the income surtax to be used for the 2023 tax year was confirmed. For Parex's 2023 current tax expense, the company's forecast and tax provisions were completed at 15 per cent, and came in lower than expected at 10 per cent, which positively benefited 2023 current tax expense.

For 2024, the company is currently assuming a 10-per-cent income surtax based on current commodity prices.

Return of capital

Q1 2024 dividend

Parex's board of directors has approved a Q1 2024 regular dividend of 37.5 Canadian cents per share to be paid on March 28, 2024, to shareholders of record on March 15, 2024.

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

Normal course issuer bid update

As at Feb. 28, 2024, Parex has repurchased approximately 500,000 shares under its current NCIB at an average price of $21.88 (Canadian) per share, for a total consideration of roughly $12-million (Canadian).

In 2023, Parex repurchased 5.6 million shares, representing approximately 5 per cent of the public float and a return of $142-million (Canadian) to shareholders.

2023 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. 29, 2024, with an effective date of Dec. 31, 2023 (the GLJ 2023 report). All Dec. 31, 2023, reserves presented are based on GLJ's forecast pricing effective Jan. 1, 2024; all Dec. 31, 2022, reserves presented are based on GLJ's forecast pricing effective Jan. 1, 2023, and all Dec. 31, 2021, reserves presented are based on GLJ's forecast pricing effective Jan. 1, 2022. GLJ pricing is available on its website.

All reserves are presented as Parex working interest before royalties and in certain tables set forth herein, the columns may not add due to rounding. Additional reserve information as required under National Instrument 51-101 will be included in the company's annual information form for the 2023 fiscal year, which will be filed on SEDAR+ by March 1, 2024.

Q4 2023 and FY 2023 results -- conference call and video webcast

Parex will host a conference call and video webcast to discuss its Q4 2023 and FY 2023 results on Friday, March 1, 2024, beginning at 9:30 a.m. MT (11:30 a.m. ET). To participate in the conference call or video webcast, please see the access information:

Conference ID:   1 335 335

Participant toll-free dial-in number:  1-888-550-5584

Participant international dial-in number:  1-646-960-0157

2023 annual general meeting

Parex anticipates holding its annual general and special meeting of shareholders on Thursday, May 9, 2024.

About Parex Resources Inc.

Parex is the largest independent oil and gas company in Colombia, focusing on sustainable, conventional production. Parex's corporate headquarters are in Calgary, Canada, and the company has 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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