Parex Resources announces Kitaro light oil discovery with 2,385 bopd test
Wednesday, May 23, 2012
Parex Resources Inc. ("Parex", the "Company") (TSX:PXT), is pleased to announce an oil discovery at the Kitaro-1 exploration well. An update of the Company's operations is also provided below.

Cabrestero Block (Farm-in 50% Working Interest)

Kitaro-1 was spud on April 16, 2012 and was drilled to a target depth of 10,800 feet. The well encountered prospective oil pay in the Mirador and Une formations. The Une Formation is interpreted to have approximately 25 feet of net pay and the top 10 feet of the zone was perforated and tested under natural flowing conditions over a 15 hour period. The initial 3 hour flow period tested at an average rate of 2,385 barrels of oil per day ("bopd") with a 32/64th choke and a surface flowing pressure of 400 psi. The measured oil gravity from the Une reservoir was 32 degrees API and the average BS&W during the 3 hour period was 0.7 percent. Due to surface testing equipment limitations, the well had to be restricted to a 16/64th choke for the remainder of the testing period and during this period the well flowed at an average rate of 1,082 bopd at a surface pressure of 580 psi. Final BS&W from the well was recorded at 0.5 percent and a total of 864 barrels of 32 degrees API oil was recovered during the test. Initial production test results should be viewed as preliminary until pressure analysis and well test interpretation are completed.

The drilling rig on location will be de-mobilized from the location as soon as possible to allow further civil work to permit drilling of additional wells and construct the long term testing facility. Parex expects that the Kitaro-1 well will remain as an Une production well and that the Mirador formation will be tested in a follow up well, subject to regulatory and partner approval.

Block LLA-16 (100% Working Interest)

The Malawi-1 well located immediately south of the Sulawesi field was spud on May 1, 2012 and is approaching its target depth of approximately 13,100 feet in the Une Formation. To date the well has encountered prospective oil pay in the C7, Mirador and Gacheta formations and Parex expects to case and test these zones, following the completion of drilling activities.

Block LLA-17 (Operated 40% Working Interest)

The Mapora-1 well was spud on May 13, 2012 and is expected to be drilled to a target depth of 12,000 feet.

Block LLA-20 (100% Working Interest)

The Cumbre-3 well was spud May 11, 2012 and has reached its target depth of approximately 9,500 feet. The well encountered prospective oil pay in the C7 and Gacheta formations and Parex expects to immediately case and test the well.

The Morocoto-1 well is located on the south-east corner of the block and was spud on May 12, 2012 and drilled to a target depth of approximately 7,700 feet. Log analysis indicated that the well did not encounter oil pay and will be abandoned. The work commitment program on Block LLA-20 has now been satisfied. Additional prospects are being developed in conjunction with regional geological interpretations on blocks LLA-17, LLA-40 and LLA-57.

Block LLA-32 (Non-Operated 30% Working Interest)

As previously reported (May 10, 2012), the Maniceno-1 well encountered approximately 50 feet of net pay in the Mirador Formation and over a 6 hour production test period the well flowed naturally at an average rate of 3,036 bopd of 27 degrees API oil with water cut of less than 5 percent. Currently, the operator is working towards placing the well on a short-term test to further evaluate the reservoir properties.

The drilling rig has been mobilized to Samaria, the second and final commitment well on Block LLA-32. The well has a target drilling depth of 11,000 feet.

Block LLA-34 (Non-Operated 45% Working Interest)

The Max-1 prospect was drilled and cased during the first quarter of 2012. Testing operations at Max-1 have recently commenced with four zones approved for testing.

Tua-1, the next exploratory well on the block, was spud on May 6, 2012 and is expected to drill to a target depth of 11,000 feet. The well has reached a depth of approximately 9,500 feet and is setting intermediate casing above the Mirador Formation.

Colombia Production Update

Average production to date for May 2012 was approximately 10,500 bopd. The second quarter 2012 exit rate production is expected to range between 10,000-12,000 bopd dependent upon partner and regulatory approval, on-stream timing of the Maniceno-1 and Kitaro-1 wells, and testing results and on-stream timing for the Malawi-1, Cumbre-3 and Max-1 wells.

Parex Resources Annual General and Special Meeting of Shareholders

Parex will be holding its Annual General and Special Meeting of Shareholders on Wednesday, May 23, 2012 at 10:30 a.m. (Calgary time) at the Jamieson Place Conference Centre located on the 3rd floor of Jamieson Place, 308 - 4th Avenue S.W., Calgary, Alberta.

Corporate Overview

Parex, through its direct and indirect subsidiaries, is engaged in oil and natural gas exploration, development and production in South America and the Caribbean region. Parex is conducting exploration activities on its 1,410,000 acre holdings in Colombia and its 219,000 acre holdings onshore Trinidad. Parex is headquartered in Calgary, Canada.

Source: Marketwire

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