Parex Resources Inc. press release

Parex Resources Positioned to Become Colombia's Largest Independent Oil & Gas Producer, Provides Step-Change Guidance, Reports Q1 2026 Results, and Declares Q2 2026 Dividend

2026-05-12

TSX - Toronto Stock Exchange · Oil · Natural Gas · Canada · Corporate Finance

Parex Resources Positioned to Become Colombia’s Largest Independent Oil & Gas Producer, Provides Step-Change Guidance, Reports Q1 2026 Results, and Declares Q2 2026 Dividend

CALGARY, Alberta, May 12, 2026 (GLOBE NEWSWIRE) -- Parex Resources Inc. (“Parex” or the “Company”) (TSX: PXT) is pleased to announce that the Company is poised to become Colombia’s largest independent oil and gas producer and to provide new corporate guidance. Additionally, the Company reports its financial and operating results for the three-month period ended March 31, 2026, and the declaration of its Q2 2026 regular dividend of C$0.385 per share. All amounts herein are in United States Dollars (“USD”) unless otherwise stated.

“Over the first half of 2026, Parex executed a series of strategic transactions that have positioned us to be Colombia’s largest independent E&P, while adding complementary assets that enhance scale, deepen the portfolio, and strengthen our platform profitability for long-term growth,” said Imad Mohsen, President & Chief Executive Officer.

“This transformed version of Parex is positioned to deliver an unparalleled portfolio of development and exploration opportunities, generate substantial free cash flow, unlock new world-class reserves, and establish the Company as one of the leading growth opportunities in the global oil and gas sector, creating meaningful value for all stakeholders.”

Key Highlights

H2 2026 production guidance 82,000 to 91,000 boe/d, up 93% at the midpoint compared to Q1 2026 average production(1). Completing the final stages of the Frontera E&P Transaction, which will add roughly 37,000 boe/d of highly accretive barrels with strong industrial logic and compelling synergies(2). Adding new producing assets in the Magdalena Basin, where Parex will gain 50% production participation on roughly 15,000 boe/d in H2 2026 following the commencement of initial activity in both the Casabe and Llanito blocks(3). Successfully completed the LLA-111 exploration program, with four of six wells delivering positive results and early-stage production now underway. Continuing to progress Llanos Foothills exploration, where the Company is preparing to spud its Piedemonte exploration well in Fall 2026. Generated Q1 2026 funds flow provided by operations ("FFO")(4)of $114 million and FFO per share(4)(5)of $1.18. Declared Q2 2026 regular dividend of C$0.385 per share(5)(C$1.54 per share annualized).

(1) See "H2 2026 Guidance" section. (2) As previously announced on March 10, 2026. (3) As previously announced on May 4, 2026. (4) Capital management measure. See “Non-GAAP and Other Financial Measures Advisory." (5) Based on weighted average basic shares for the period.

Recent Transformational M&A and Step-Change H2 2026 Guidance

Transformational M&A

Parex has executed a series of strategic transactions in the first half of 2026 that meaningfully enhance the Company’s scale, depth, and long-term growth profile in Colombia.

The addition of the Frontera E&P assets materially increases Parex’s reserve inventory, strengthens the Company’s long-term production visibility and has been secured at an attractive valuation. This transaction not only deepens the production base providing enhanced stability, but also enables capital allocation optionality across the portfolio, positioning the allocation of free funds flow from more mature assets into Parex’s best development and exploration prospects.

Complementing this, the addition of the new producing assets in the Magdalena Basin adds stable, cash-generating base production and introduces another new core operating area for Parex, with similar characteristics to the prior Putumayo transaction completed with Ecopetrol in late 2024. This provides a proven platform with a clear path to generate incremental production, where Parex can build on its established track record of driving incremental recovery through proven technology.

Upon completion of these strategic transactions, Parex expects to:

Be the largest independent, Colombian-focused exploration & production company with average production of 82,000 to 91,000 boe/d; Have material size and scale, with over 7.9 million acres of land and significant, long-life reserves; and Offer a compelling total return proposition, with disciplined allocation of free funds flow to growth plus shareholder returns through dividends and debt reduction.

2026 Guidance

For H2 2026, after accounting for the Frontera Transaction, and the addition of the new producing assets in the Magdalena Basin, the current guidance is:

| Category | H2 2026 Guidance (May 12, 2026) | | Brent Crude Oil Average Price | $90/bbl | | Average Production(1) | 82,000-91,000 boe/d | | Funds Flow Provided by Operations Netback(1)(2) | $30-33/boe | | Funds Flow Provided by Operations(1)(3) | $475-525 million | | Capital Expenditures(4) | $275-295 million | | Free Funds Flow(4) | $215 million (midpoint) |

(1) H2 2026 assumptions: operational downtime: ~5%; Vasconia differential: ~$4.00/bbl; production expense: $16.00-20.00/bbl; transportation expense: ~$7.50/bbl; G&A expense: ~$5.00/bbl; finance expense: ~$2.50/bbl, effective tax rate: 12-15%; see “Non-GAAP and Other Financial Measures Advisory”. (2) Non-GAAP ratio. See “Non-GAAP and Other Financial Measures Advisory”. (3) Capital management measure. See “Non-GAAP and Other Financial Measures Advisory”. (4) Non-GAAP financial measure. See “Non-GAAP and Other Financial Measures Advisory”.

For FY 2026, after accounting for the Frontera Transaction, and the addition of the new producing assets in the Magdalena Basin, average production is expected to be 63,000 to 67,000 boe/d alongside capital expenditures of $495 to $515 million(1).

The aforementioned H2 2026 and FY 2026 guidance reflects the ongoing nature of integration efforts and the inherent uncertainty around timing, including the expected close of the strategic transactions and the pace at which synergies may be realized.

Furthermore, the Company anticipates that its outlook for the next few quarters will factor in non-recurring costs, including those related to integration, transition, and financing activities, which could impact FFO.

(1) For the Frontera Transaction, Parex expects to receive the financial benefits from the effective date of January 1, 2026, to the expected close in Q2 2026. Following close, Parex will incorporate the Frontera E&P assets into its financial statements, including the related average production and capital expenditures.

Frontera E&P Acquisition Update

On March 10, 2026, Parex announced that it had entered into a definitive agreement (the “Arrangement Agreement”) with Frontera Energy Corporation (“Frontera”) (TSX: FEC), whereby Parex would acquire 100% of Frontera Petroleum International Holdings B.V. (“Frontera E&P”), for upfront cash consideration of $500 million, the assumption of $225 million of net debt, and a contingent payment of $25 million (the “Transaction”).

On April 30, 2026, the resolution was approved by 99.95% of the votes cast by the shareholders of Frontera, and on May 4, 2026, Frontera obtained a final order from the Supreme Court of British Columbia approving the Transaction by way of a plan of arrangement.

To fund the cash portion of the consideration for the Frontera Transaction, on May 11, 2026, the Company issued $500 million aggregate principal amount of senior unsecured notes due 2031 in a private placement offering. The notes were priced at par and will bear an interest rate of 8.50% per annum and mature on May 11, 2031.

Subject to the satisfaction or waiver of the remaining conditions to implement the arrangement, as set out in the arrangement agreement, the Transaction is expected to close in Q2 2026.

In anticipation of closing, the Company has initiated integration planning to ensure a smooth transition. Following completion of the Transaction, Parex will review the acquired portfolio to optimize development and enhanced oil recovery opportunities, while prioritizing safe, reliable operations.

The Transaction is also expected to generate synergies focused on marketing and tax, in addition to other areas, supporting enhanced efficiency and long-term value creation.

With an effective Transaction date of January 1, 2026, free funds flow generated prior to closing is expected to directly reduce the net consideration paid.

Addition of Producing Assets in the Magdalena Basin

Previously, on May 4, 2026, Parex announced that the Company had executed an agreement with its strategic partner Ecopetrol S.A., whereby Parex expects to earn a 50% participating share in the Casabe and Llanito blocks in the Magdalena Basin of Colombia.

Combined, the blocks currently produce approximately 14,900 bbl/d(1)of medium crude oil (gross) and have an estimated original oil in place ("OOIP") of over 3 billion barrels(2)with an average recovery factor of less than 15%.

Upon the satisfaction of certain conditions, including regulatory approval, Parex will commit to a gross capital program of $250 million ($125 million carry capital) over five years, in exchange for 50% participating interest in each block’s existing base and incremental production from the start date of investment activities. Parex’s entry into production participation begins upon spudding the first well on each block, which Parex expects to achieve during H2 2026.

(1) Based on Q1 2026 average production; rounded for presentation purposes; source: National Hydrocarbons Agency of the Republic of Colombia (ANH). (2) Source: Ecopetrol S.A.; see “Oil & Gas Matters Advisory.”

Operational Update

For the period of April 1, 2026, to April 30, 2026, estimated average production was 40,900 boe/d(1). Lower near-term production was primarily driven by LLA-32 from natural declines as well as suboptimal drilling results and subsequent remediation efforts on the block.

The Company expects its standalone average production to grow gradually, exiting Q2 2026 at or greater than 45,000 boe/d. This initial production growth is being driven primarily by the continued scaling of Putumayo operations, and the advancement of recent near-field exploration successes at LLA-111.

Following recently announced transactions and a preliminary review of its expanded portfolio, the Company is refining its 2026 program to reflect year-to-date performance and anticipated activity surrounding acquisitions. Supported by a constructive commodity price environment, Parex is accelerating capital deployment toward its highest-value opportunities to maximize free funds flow.

The Company’s focus for the remainder of the year is expected to center on the following key priorities:

Successful integration of the Frontera E&P assets and people; Completing initial work to drill the first wells of the Casabe and Llanito programs; Continued development of the Putumayo, with a focus on Orito; Progressing new exploration discoveries in the eastern Llanos (LLA-111); and Preparing to spud the Piedemonte Foothills well in Fall 2026.

Putumayo Update

The Company continues to advance operations across multiple blocks in the Putumayo basin.

Notably, meaningful progress is being made in the Orito block, where the initial appraisal horizontal well continues to demonstrate strong performance. The Company is also advancing its development strategy, including drilling a multilateral well to test the applicability of this approach in the area. Drawing on proven development strategies from North American plays such as the Clearwater formation, the Company is designing optimized producer and injector well patterns.

Management believes that the combination of horizontal and multilateral wells, alongside reservoir repressurization via waterflooding, could meaningfully expand the block’s production profile, reserves base, and inventory runway.

LLA-111 Exploration Success

Parex has drilled six exploration wells to date, with four wells across separate areas demonstrating positive results. One well has begun initial production at approximately 1,500 bbl/d of medium crude oil(2), while the remaining wells have shown encouraging indicators, including oil on logs, with testing expected in the near term.

All six wells were delivered on budget at approximately $2 million per well, approximately 65% lower than exploration wells that cost roughly $6 million each, driven by a fast-moving rig as well as streamlined well and pad design.

LLA-111 is subject to seasonal wet weather that can impact access timing, underscoring strong execution in the initial exploration phase. Supported by a constructive commodity price environment, the Company is advancing a multi-well development program across three of the four fields. Additional development activity in the fourth area as well as further exploration on the block is expected to resume during the next dry season in early 2027.

With encouraging results, capital is now increasing to support civil works for reliable year-round operations and the drilling of larger-diameter and horizontal wells to enhance production potential. While production has begun, sustained production across the three fields is expected in late Q2 2026. Looking ahead, up to seven development and appraisal wells are planned for H2 2026 to drive further growth from the block.

Llanos Foothills Update

Parex continues to prioritize Foothills exploration, targeting leading global onshore prospects with transformational upside potential.

Civil works for the Piedemonte prospect is expected to begin this quarter as Parex advances toward a fall 2026 spud.

Parex is also advancing early-stage activity at Farallones, the second planned Foothills prospect, which remains on track to begin civil works in H2 2026.

(1) Estimated average production; light & medium crude oil: ~12,782 bbl/d, heavy crude oil: ~26,760 bbl/d, conventional natural gas: ~8,152 mcf/d; rounded for presentation purposes. (2) Short-term production rate. See “Oil & Gas Matters Advisory.”

Target Total Return Framework and Capital Allocation

Parex’s focus is on optimizing capital allocation across its diversified portfolio, targeting 3-5% base production growth, maintaining a stable dividend, and deploying excess free funds flow primarily toward debt reduction, while advancing high-impact exploration opportunities with outsized potential, underpinning a compelling total return proposition.

Capital allocation principles include:

Stable dividend: core to the total return framework; expected to be sustainable under varying commodity price environments. Balance sheet strength and flexibility: maintain a strong credit profile with a high level of liquidity and a medium-term target net debt to EBITDA of ≤0.5x. Reinvestment: drive self-funded, sustainable business model in the short- and medium-term, while strategically advancing high-impact, transformational exploration prospects in the Llanos Foothills. Excess free funds flow: primarily directed towards debt reduction.

Q1 2026 Highlights

Average production was 44,735 boe/d(1), compared to 43,658 boe/d(1)in Q1 2025. Recognized net income of $5 million or $0.05 per share basic(2) compared to net income of $81 million or $0.82 per share basic(2)in the comparative quarter of 2025. The decrease is primarily attributed to unrealized losses on commodity risk management contracts, an increase in deferred tax expense, higher cash settled share-based compensation expense, and the recognition of one-time costs, partially offset by lower current income tax. Previously, the Company had hedged Brent crude oil prices for Q2 2026 on approximately 25% of its planned net production. In early Q2 2026, these hedging positions were unwound at a cost of $29 million. The Company is currently unhedged for 2026, with full exposure to higher commodity prices. Generated FFO(3)of $114 million and FFO per share(2)(3)of $1.18. One-time costs in Q1 2026 total approximately $17 million, comprised of: a Colombian temporary corporate wealth tax of $7 million; site restoration costs of $7 million, with a significant portion expected to be recovered through insurance; and $3 million of project and other G&A costs. Realized adjusted EBITDA(4)of $133 million. Produced an operating netback(5)of $39.16/boe and an FFO netback(5)of $28.35/boe from an average Brent crude oil price of $78.38/bbl. Incurred $91 million of capital expenditures(4), primarily from activities at the Orito and Occidente blocks in the Putumayo, and LLA-32 and LLA-111 in the Llanos. Generated $23 million of free funds flow(4); working capital surplus(3)was $136 million, bank debt was $175 million, and cash $45 million at quarter end. Paid a C$0.385 per share(2)regular quarterly dividend.

(1) See "Operational and Financial Items" for a breakdown of production by product type. (2) Based on weighted average basic shares for the period. (3) Capital management measure. See “Non-GAAP and Other Financial Measures Advisory.” (4) Non-GAAP financial measure. See “Non-GAAP and Other Financial Measures Advisory.” (5) Non-GAAP ratio. See “Non-GAAP and Other Financial Measures Advisory.”

Q2 2026 Dividend

Parex’s Board of Directors have approved a Q2 2026 regular dividend of C$0.385 per share to shareholders of record on June 8, 2026, to be paid on June 15, 2026. This regular dividend payment to shareholders is designated as an “eligible dividend” for purposes of the Income Tax Act (Canada).

| Q1 2026 - Operational and Financial Items | Three Months Ended | | | | | | | (unaudited) | Mar. 31, | | Mar. 31, | | Dec. 31, | | | | 2026 | | 2025 | | 2025 | | | Operational | | | | | | | | Average daily production | | | | | | | | Light Crude Oil and Medium Crude Oil (bbl/d) | 13,980 | | 10,650 | | 14,835 | | | Heavy Crude Oil (bbl/d) | 29,269 | | 32,207 | | 32,267 | | | Crude Oil (bbl/d) | 43,249 | | 42,857 | | 47,102 | | | Conventional Natural Gas (mcf/d) | 8,916 | | 4,806 | | 9,024 | | | Oil & Gas (boe/d)(1) | 44,735 | | 43,658 | | 48,606 | | | | | | | | | | | Operating netback ($/boe) | | | | | | | | Reference price - Brent ($/bbl) | 78.38 | | 74.98 | | 63.08 | | | Oil & gas sales price ($boe/d)(4) | 67.67 | | 67.29 | | 57.05 | | | Royalties(4) | (9.17 | ) | (9.22 | ) | (6.57 | ) | | Net revenue(4) | 58.50 | | 58.07 | | 50.48 | | | Production expense(4) | (14.29 | ) | (14.41 | ) | (13.09 | ) | | Transportation expense(4) | (5.05 | ) | (4.26 | ) | (5.29 | ) | | Operating netback ($/boe)(2) | 39.16 | | 39.40 | | 32.10 | | | | | | | | | | | Funds flow provided by operations netback ($/boe)(2) | 28.35 | | 30.90 | | 28.19 | | | | | | | | | | | Financial ($000s except per share amounts) | | | | | | | | | | | | | | | | Net income | 4,589 | | 80,629 | | 74,865 | | | Per share - basic(6) | 0.05 | | 0.82 | | 0.78 | | | | | | | | | | | Funds flow provided by operations(5) | 113,702 | | 121,944 | | 122,922 | | | Per share - basic(2)(6) | 1.18 | | 1.24 | | 1.28 | | | | | | | | | | | Capital expenditures(3) | 91,043 | | 57,054 | | 84,620 | | | | | | | | | | | Free funds flow(3) | 22,659 | | 64,890 | | 38,302 | | | | | | | | | | | EBITDA(3) | 95,830 | | 139,032 | | 104,764 | | | Adjusted EBITDA(3) | 132,684 | | 135,407 | | 128,653 | | | | | | | | | | | Long-term inventory expenditures, net of sales | (6,817 | ) | (4,648 | ) | (7,678 | ) | | | | | | | | | | Dividends paid | 26,937 | | 26,365 | | 26,853 | | | Per share - Cdn$(4)(6) | 0.385 | | 0.385 | | 0.385 | | | | | | | | | | | Shares repurchased | — | | 5,239 | | 7,644 | | | Number of shares repurchased (000s) | — | | 525 | | 580 | | | | | | | | | | | Outstanding shares (end of period) (000s) | | | | | | | | Basic | 96,115 | | 97,814 | | 95,974 | | | Weighted average basic | 95,991 | | 98,115 | | 96,239 | | | Weighted average diluted | 96,174 | | 98,115 | | 96,374 | | | | | | | | | | | Working capital surplus(5) | 135,506 | | 69,040 | | 28,027 | | | Bank debt(7) | 175,200 | | 50,000 | | 33,000 | | | Cash | 44,775 | | 81,025 | | 58,328 | |

(1) References to crude oil or natural gas in the above table and elsewhere in this press release refer to the light and medium crude oil and heavy crude oil and conventional natural gas, respectively, product types as defined in National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities. (2) Non-GAAP ratio. See “Non-GAAP and Other Financial Measures Advisory”. (3) Non-GAAP financial measure. See "Non-GAAP and Other Financial Measures Advisory". (4) Supplementary financial measure. See "Non-GAAP and Other Financial Measures Advisory". (5) Capital management measure. See "Non-GAAP and Other Financial Measures Advisory". (6) Per share amounts (with the exception of dividends) are based on weighted average common shares. Dividends paid per share are based on the number of common shares outstanding at each dividend record date. (7) Borrowing limit of $240.0 million as of March 31, 2026.