Parex Resources Inc. provided an operational update. Parex has completed the drilling of the first 4 wells of an initial 15 well drilling program at Aguas Blancas. Two development wells (AB-26 and AB-32) and two appraisal wells (AB-9 and AB-14) have been drilled, logged and have indications of oil in the Mugrosa B and Mugrosa C formations. The AB-9 well was completed and tested in two stages in the Mugrosa C Formation. The first completion and test was from 400 feet of perforations over the entire Mugrosa C interval. The well was tested over a 29 hour period and delivered average oil production of 130 bopd (40-50 API) with associated gas production of 2.3 MMCFD and final water-cut of 5%. Bottom hole pressure recorders indicated an average reservoir pressure of 3,400 psi and a drawdown of 50% during the flow test. The second test isolated the upper 200 feet of perforations. The upper sands were swab tested at a rate of approximately 40-50 BOPD with a final water-cut of 1.5% and a gas rate of 0.3-0.5 MMCFD. Bottom hole pressure recorders indicated drawdown of approximately 85% during this swab test with 35 API oil recovered during the test. The well is now being equipped with artificial lift for further production testing. The light oil and gas produced from the first test appear to be producing from a high quality basal sand that has not been previously encountered in the field and provides a potential new productive zone on the block. The AB-26, 14 and 32 wells will be tested in first quarter of 2017. Parex plans to operate a continuous 10 well drilling program through first quarter and second quarter of 2017 at Aguas Blancas, and upon receiving the environmental permits for new drilling pads, Parex plans to drill an additional 5-8 other wells prior to year-end 2017. The Bacano-2 exploration well has been drilled to a total depth of 13,680 feet to test the Guadalupe Formation, which is productive to the north on block LLA-34. The well is located 3.8 kilometers southwest of the Jacana oil field on LLA-34 and 2 kilometers west of the Akira oil field on the Cabrestero block.

For the fourth quarter, production was approximately 31,000 boe/d (99% crude oil) compared to 29,754 boed/d in the prior quarter.

For the full year 2016, production was approximately 29,700 boe/d, representing 8% year-over-year production growth.

For first quarter of 2017, the company expects production to average 32,000 boe/d.

For 2017, the company reaffirms production and capital expenditure guidance. The company expects production of 34,000 boe/d-36,000 boe/d; capital expenditures of $200 million to $225 million fully funded from cash flow, including drilling 39-44 wells.