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Trinidad 2013 Capital Program Outlook
In 2013 Parex is planning a Trinidad exploration program that will further evaluate the Moruga Block potential and fulfill the remaining CRB work commitments. The planned 2013 exploration program is summarized below.
2013 Trinidad Drilling Program---------------------------------------------------------------------------- Parex Operated----------------------------------------------------------------------------# of gross wells Moruga (WI 83.8%) CRB Deep (WI 50%) Total----------------------------------------------------------------------------Development/Appraisal 1 - 1----------------------------------------------------------------------------Exploration - 1 1----------------------------------------------------------------------------
The planned 2013 Trinidad capital program is reduced from that of 2012 as a result of disappointing exploration drilling results and a less competitive fiscal regime in Trinidad as compared to Colombia.
To fulfill the CRB work commitments, the Company is currently acquiring 2D seismic and expects to spud an exploration well during the third quarter of 2013.
2013 Outlook Key Assumptions
Key assumptions underlining the 2013 capital program are:
-- Brent oil price of approximately $105/bbl;-- Operating netback of $55/bbl, which reflects royalties and crude oil differentials of $18/bbl, transportation costs of $20/bbl and operating costs of approximately $11-$13/bbl;-- Effective cash tax rate on Colombia cash flow of less than or equal to 20 percent; and-- Timely access to exploration and development locations.
Ramshorn Litigation Update
As announced by Parex on April 12, 2012, Parex and its wholly owned subsidiaries Parex Resources (Bermuda) Ltd. ("Parex Bermuda") and Ramshorn International, Limited ("Ramshorn") have been named as defendants in a lawsuit (the "Lawsuit") filed in the 61st Judicial District Court of Harris County, Texas (the "Texas Court") by a Texas based private company (the "Plaintiff"). The Lawsuit relates to a share purchase agreement entered into by the Plaintiff and a third party seller (the "Seller") (prior to the agreement entered into by Parex and the Seller for the purchase of Ramshorn) respecting the proposed purchase by the Plaintiff of the shares of Ramshorn, which prior agreement the Plaintiff claims was improperly terminated by the Seller. Each of Parex, Parex Bermuda and Ramshorn specially appeared in the Lawsuit to challenge the jurisdiction of the Texas Court and to seek dismissal of the claims against them.
A hearing on the jurisdictional aspects of the case took place on November 19 and 20, 2012 and the decision of the Texas Court on these jurisdictional matters has now been received. The Texas Court found that it does not have jurisdiction over Parex Bermuda and ordered that all of the Plaintiff's claims against Parex Bermuda be dismissed. The Texas Court overruled Parex and Ramshorn's jurisdictional challenges such that the Plaintiff's claims against Parex and Ramshorn have not been dismissed. Parex and Ramshorn intend on filing a Notice of Appeal of the Texas Court's rulings in this regard and will be requesting that all future proceedings in the Lawsuit, including discovery, be stayed pending the outcome of the appeal on these jurisdictional matters. Parex and Ramshorn believe that the Lawsuit and the Plaintiff's claims against it are baseless and without merit and will continue to vigorously defend the Lawsuit, including by way of appealing the Texas Court's recent jurisdictional rulings against Parex and Ramshorn.
