Wayne Foo - CEO Ken Pinsky - CFO

Shahin Amini - TD Securities Jenny Xenos - Canaccord Genuity

Thank you, operator and thank you all for joining us today for Parex’s annual earnings conference call. With me today is Ken Pinsky, our Chief Financial Officer; and Mike Kruchten, our Vice President of Corporate Planning and Investor Relations.

The format for today’s conference call will be a question-and-answer session with our audience. So, we’re opening the line to questions right away.

Operator, over to you.

Hi. Good morning.

Shahin from TD Securities. Just wonder if you could provide a bit more color on your Playon exploration well, which is currently being tested, and any color in terms of the play type and recoverable resource potential will be much appreciated.

And then a quick question on Aguas Blancas, just wanted to confirm, did AB-9 use pump as well? And if you can make perhaps some high level comparisons between AB-9 and AB-26, just trying to educate me on how that is progressing and what are the technical breakthroughs between the two wells so far?

Thank you.

All right. I can try to take those.

The Playon block is testing stratigraphic trapping concept a long trend from a couple of wells that Ecopetrol drilled two decades ago. The well was drilled through a section; it was exploratory long step, it wasn’t structurally located.

And we’ve been going through testing program attempting to isolate zones and determine really what the results are. At this point, we don’t have anything definitive.

We have water out of the lower zone, and then we’re working to isolate and continue testing. When we have definitive test results, we’ll report on them.

In terms of Aguas Blancas 9, we are -- that was the first well for which we conducted testing operation. The Aguas Blancas is being initially investigated using all drilling pads that are approximately an acre in size, they are 50 years old, were aerially limited.

So, we’ve been drilling with the drilling rig multiple wells and then moving the drilling rig off to test. We had a window to test in early January.

The well at Aguas Blancas 9 was tested; it was a highly deviated well, and it had been taken to a deeper part of the section than had been tested in earlier wells. We encountered a gas zone at the bottom of the well, deeper than zones have been tested in earlier wells.

We disposed that gas rate when we shut that off of the packer and moved up all, we have trouble isolating zones. We did test it with pump.

We didn’t feel that the rates that we have in the upper zones were necessarily reflective of what we get from a clean test of the near vertical well comparable to the older wells. Aguas Blancas 26 is approximately 400 feet from Aguas Blancas 5.

So, it’s a direct comparison A2A, and the results are in line with what we’re -- what we had with Aguas Blancas 5 in the 1960s. And that well I believe tuned approximately 250,000 barrels of oil plus whatever gas it produced, so in the range of 250,000 to 300,00 reservoir barrels with the flow -- the initial pump rate of something in the order of 110 barrels a day.

So, we’re happy with the rates that we’re getting at 26. We will be moving the drilling rate back to the Aguas Blancas 5 pad shortly, and that will allow us to test additional wells from the Aguas Blancas 3 pad, which will allow us to get better rates in that area.

Does that cover the sequence of operations and how we deal with those testing to-date?

No, that’s very helpful. Yes.

Thank you.

Thanks for taking my call. Guys, would you say that waterflood is going to be available on or could start Q2, but that’s not always when oil production starts, can you kind of give some clarification as to when like oil or waterflood starts and then when production response might happen?

The reason we run a pilot is to find that out. And I’ll go back to history to when we ran a similar project with our prior company in Argentina.

Our initial waterflood drilled up nine wells on waterflood pilot and we commenced injection and we had pressure response in a manner of months, and breakthrough on those patterns took a long, long time; the displacement was very effective. We would anticipate being in place to start operating a pilot middle of the year and we would hope that we would see pressure response in due course after that.

We know from the Aguas Blancas 26 injectivity test that we can get enough water into the reservoir to reasonably expect a pressure response in a relatively short time.

So, that would be like, we’re taking weeks or couple of months, definitely within one quarter?

Nothing definite when you do a pilot, but it would be reasonable with the volumes that we’re able to put away, then we would see some kind of response by the end of the year, it might be faster, it might be slower.

Hi. Thanks for taking my call.

I wanted to, one, thank Wayne for his excellent tenure and wish him well in the future and congratulations to Dave on the promotion to CEO. Just curious, Dave, as you take over the reins, I know you’ve been integral with the team for a long time, but just curious if you see doing anything differently on a go forward basis/

Neil, it’s Ken. Dave’s not here.

He’s in New York.

Got it. I didn’t hear who is on the call earlier.

I’m sorry.

Yes. It’s Wayne, Ken and Mike, and happy to hook you up and link you up with Dave here later on.

What we can note is that Dave has been VP Exploration and Business Development for the life of the Company and he’s been the one who’s been the primary steering party and determinant of the development of the asset base. So, I think you’ll see pretty steady hands.

The Board has confidence in Dave, and we’re certainly expecting things to continue as they have.

Great. Well, congrats again, Wayne, and thanks for the past number of year.

Well, thank you for the kind words.

Hey, guys. Any comments around the testing of the connectivity between Jacana and Tigana this year and when we could possibly see results?

Mike, I think we laid that out reasonably well. And in terms of the forecast of operations, I’ll just comment on in general terms, we have two rigs working on block 34 on the GeoPark operated block, one is current -- one is drilling Jacana-7, which is in the -- close by to the Jacana complex.

So, there is average [ph] production. The other one has finished drilling Jacana-11 and will be drilling the Jacana-3 well.

So, we’re trying these -- those two rigs push to the south and west, the extent of oil along the Jacana trend. We also have a rig that’s been mobilized to our new pad to follow up on Bacano and it’ll drill at least two delineation wells on our operated Cabrestero block.

We anticipate having that program at that activity level for much of the year. The pace of testing will be determined by whether we drill multiple wells from the pads and then move in a completion rig or whether we drill and test with the drilling rig which is a little slower operation but where we see significant, potentially material results.

We sometimes do that in order to get those results in front of the market, more quickly. So, it’ll be a busy time.

The wells take typically about two weeks to drill. If we defer testing until the completion rig comes in, it can be a month or two months before we start completion operations.

If we complete with the drilling rig, begins immediately but it’s about a 10-day operation. So, you can anticipate a flow of information that’s fairly steady through the year.

Good morning, gentlemen. Congratulations on another operationally and financially strong quarter.

I have a question on Aguas Blancas. I’m wondering where you’re at with regards to getting community and environmental approvals to expand your footprint in the area?

As we said, we are operating on two pads currently and we’re currently also in the process of working on getting permit to build three more pads, which is more in the south end of the block. And these pads actually are outside the current forest reservation area.

So, we’re just working on the regular permits to acquire the leases. And this work will happen -- it’s starting now on the permit and we expect several works to commence in late Q2.

Are there any updates on Capachos, the timing of commencement of drilling there?

We’ve been moving along with the socialization; we’re in the final stages of community meetings, I’d anticipate, but we’ll be in a position to commence construction forklift. And we still have that as an opportunity to commence drilling about midyear.

So, we would hope that we’ll be in the field with the drilling rig at mid-year soon as long as things continue as they are.

So, on track with our original expectations.

Okay, on track. And how is the FARC camp affecting you, is affecting you at all?

Doesn’t really affect us there. They do have their treaty.

The FARC is in the process of gathering at their dedicated lands. We haven’t seen anything that affects yet, not saying that it couldn’t.

But right now, we are not getting any reports. And in our meetings we’re not being told there is an issue with our operations there.

Great. Thank you so much.

Okay. Thank you, operator.

We have a couple of questions on the website, one relates to the describing the nature of our partnership with GeoPark LLA-34. I would characterize it as a strong partnership at all levels.

It’s both collegial and constructive. We benefited from the opportunity to work with them and they’ve benefited from the opportunity to work with us.

It’s been a great success story. And in terms of the ability to move forward, we continue to grow the operation there and we don’t see it as problematic.

There is another question about the projected growth from Block 34 and how much for another blocks? We don’t forecast individual block production.

We tend to set out what we see as a very high confidence production number and we work with delivering that to the market. And if we’re going to hear we always try to hear a little on the positive side.

So, we’re not going to project individual blocks, but we have a guidance number that we think is very strong at this point for the rest of the year. So that would be my comment on the online questions.

If there is nothing more that’s come on queue operator, I’d just like to thank everyone for the opportunity to speak to you. This is my last annual earnings conference call.

And I greatly enjoyed the contact with all the investors and Company. Thank you for your continued support of the Company.

And for further information, I invite you to visit our website or to call us. Thank you again.

Have a good day. Operator?