May 26, 2010 20:17 ET

Parex Resources Provides Exploration Update and Releases First Quarter Results

CALGARY, ALBERTA--(Marketwire - May 26, 2010) -

NOT FOR DISTRIBUTION TO US NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Parex Resources Inc. ("Parex" or the "Company") (TSX VENTURE:PXT) provides an exploration update for Colombia and Trinidad and announces its operating and financial results for the three months ended March 31, 2010. Copies of the Company's consolidated financial statements for the quarter ended March 31, 2010 and the related Management's Discussion and Analysis (MD&A) have been filed with Canadian Securities Regulatory Authorities and will be made available under the Company's profile at www.sedar.com and on the Company's website at www.parexresources.com. All amounts below are in United States dollars unless otherwise stated.

During the first quarter of 2010 the Company continued to advance exploration in Colombia and Trinidad by acquiring an additional 180 square kilometres of three-dimensional seismic, obtaining drilling permits and building drilling locations. Subsequently, in the second quarter of 2010, Parex has commenced drilling its first two operated exploration wells as part of a planned 11 well 2010 program.

Colombia Exploration Update

On May 16, 2010, drilling operations began at the Kona well location (Parex 50 percent working interest) on Block LLA-16 in the Llanos Basin. Parex estimates that the well will reach total depth in 25 days with logging, casing, completion and testing anticipated to take an additional 15 days. The Kona well has a targeted drilling depth of 13,250 feet and will be evaluating the Carbonera (C7), Mirador and Une formations. As of today, the Kona well has reached a drilling depth of approximately 6,950 feet.

Immediately after drilling Kona, drilling operations are expected to begin at the second location on Block LLA-16 named Goroka (Parex 50 percent working interest). Lease construction for Goroka is nearing completion and the well has all-season access. Goroka will evaluate the Carbonera (C7), Mirador and Une formations with a targeted drilling depth of 12,000 feet. Subsequent drilling on the Parex operated Colombian exploration blocks is expected to be conducted on a continuous basis. Parex has budgeted to drill eight wells in Colombia in 2010 of which Parex will operate the drilling of six wells.

Trinidad Exploration Update

On April 16, 2010, drilling operations began at the Firecrown well location on the Moruga Block. Firecrown is the first exploration well of Parex's three well 2010 Trinidad exploration program. To date, intermediate casing has been set and the rig is drilling the main hole. The Firecrown well is expected to reach a total depth of 10,500 feet by the end of the second quarter 2010. As of today, the Firecrown well has reached a drilling depth of approximately 7,000 feet. Immediately after drilling Firecrown, the rig will remain on the Moruga Block and begin drilling the next Parex operated exploration well, Snowcap, to an estimated depth of 8,600 feet. Lease construction for Snowcap is nearing completion. Parex will earn a 50 percent working interest on the Moruga Block by paying 95 percent of drilling costs of both wells to a maximum of $13.3 million. The Firecrown and Snowcap wells will be testing the hydrocarbon potential of the Herrera Formation.

First Quarter Results

Parex ended the first quarter of 2010 with working capital of $86.5 million, cash and cash equivalents of $91.9 million and no long term debt. The Company's capital expenditure for the first quarter 2010 was $6.6 million, split between Colombia with $4.6 million and Trinidad with $2.0 million. The Company's net loss for the first quarter of 2010 was $3.6 million ($0.06 per share fully diluted), compared to $0.3 million ($0.01 per share fully diluted) for the first quarter 2009.

                                                 For the three months ended 
                                                            March 31 
(Unaudited)                                             2010         2009(1)
----------------------------------------------------------------------------
Financial ($000s except per share amounts)                                  
Net loss                                              (3,571)          (344)
 Per share basic                                   $   (0.06)         (0.01)
 Per share diluted                                 $   (0.06)         (0.01)
Funds flow used in operations                         (3,325)          (344)
 Per share basic                                   $   (0.05)         (0.01)
 Per share diluted                                 $   (0.05)         (0.01)
Capital expenditure                                    6,635          1,925 
 Trinidad                                              2,009          1,802 
 Colombia                                              4,608            123 
 Canada                                                   18              - 
Total assets (end of period)                         128,558         12,740 
Working capital (end of period)                       86,487         (1,992)
Long-term debt (end of period)                             -              - 
                                                                            
Weighted average shares outstanding(000s)                                   
 Basic                                                63,870         49,214 
 Diluted                                              63,996         49,214 
                                                                            
Outstanding shares (end of period) (000s)                                   
 Basic                                                63,870         49,214 
 Diluted                                              67,607         49,214 


(1) Determined by using continuity-of-interest accounting as described under
    "Business Continuity"

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 489,000 acre holdings in the Llanos Basin of Colombia and 223,500 acre holdings onshore Trinidad. Parex is headquartered in Calgary, Canada.

This news release does not constitute an offer to sell securities, nor is it a solicitation of an offer to buy securities, in any jurisdiction.

Business Continuity

The Company was incorporated for the purposes of completing the Plan of Arrangement ("Arrangement") under the Business Corporations Act (Alberta) with Pluspetrol Resources Corporation N.V., its wholly owned subsidiary, 1462627 Alberta Ltd. (together "Pluspetrol") and Petro Andina Resources Inc. In connection with the Arrangement, through a series of transactions, Parex acquired from Petro Andina all of the issued and outstanding shares of Petro Andina (Barbados) Ltd. ("PABL"), Petro Andina (Colombia) Ltd. ("PACL") and indirectly all of the issued and outstanding shares of Petro Andina (Trinidad) Ltd. ("PATL"), as well as an inter-company loan and other receivables from PABL, PATL and PACL, working capital and other miscellaneous assets. As the shareholders of Petro Andina ultimately continued to hold their respective interests in Parex, there was no resulting change of control of PABL and PACL. Therefore, the acquisition was accounted for using continuity-of-interests accounting under the Canadian Institute of Chartered Accountants ("CICA") Emerging Issues Committee Abstract 89 "Exchanges of Ownership Interests between Enterprises Under Common Control - Wholly and Partially-Owned Subsidiaries" ("EIC-89"). Under EIC-89 no fair value adjustments were made for the assets acquired.

The unaudited consolidated financial statements of Parex reflect the assets and liabilities of PABL and PACL at their book value as reported in the financial statements of PABL and PACL for the period ended March 31, 2010. In addition, the comparative consolidated financial statements of Parex were restated to reflect the financial position and results of operations as if Parex, PABL and PACL had been combined since their inception. As a result, references to Parex incorporate the activities of Parex and its subsidiaries from their inception.

Advisory on Forward Looking Statements

Certain information regarding Parex set forth in this document contains forward-looking statements that involve substantial known and unknown risks and uncertainties. The use of any of the words "plan", "expect", "project", "intend", "believe", "should", "anticipate", "estimate" or other similar words, or statements that certain events or conditions "may" or "will" occur are intended to identify forward-looking statements. Such statements represent Parex's internal projections, estimates or beliefs concerning, among other things, future growth, results of operations, production, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, plans for and results of drilling activity, environmental matters, business prospects and opportunities. These statements are only predictions and actual events or results may differ materially. Although the Company's management believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause Parex's actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, Parex.

In particular, forward-looking statements contained in this document include, but are not limited to, statements with respect to the performance characteristics of the Company's oil properties; supply and demand for oil; financial and business prospects and financial outlook; results of operations; drilling plans; activities to be undertaken in various areas; timing of drilling and completion; and planned capital expenditures, the timing thereof; the method of funding.
These forward-looking statements are subject to numerous risks and uncertainties, including but not limited to, the impact of general economic conditions in Canada, Colombia and Trinidad & Tobago; industry conditions including changes in laws and regulations including adoption of new environmental laws and regulations, and changes in how they are interpreted and enforced, in Canada, Colombia and Trinidad & Tobago; competition; lack of availability of qualified personnel; the results of exploration and development drilling and related activities; obtaining required approvals of regulatory authorities, in Canada, Colombia and Trinidad & Tobago; risks associated with negotiating with foreign governments as well as country risk associated with conducting international activities; volatility in market prices for oil; fluctuations in foreign exchange or interest rates; environmental risks; changes in income tax laws or changes in tax laws and incentive programs relating to the oil industry; ability to access sufficient capital from internal and external sources and other factors, many of which are beyond the control of the Company. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could effect Parex's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).

Although the forward-looking statements contained in this document are based upon assumptions which Management believes to be reasonable, the Company cannot assure investors that actual results will be consistent with these forward-looking statements. With respect to forward-looking statements contained in this document, Parex has made assumptions regarding: current commodity prices and royalty regimes; availability of skilled labour; timing and amount of capital expenditures; future exchange rates; the price of oil; the impact of increasing competition; conditions in general economic and financial markets; availability of drilling and related equipment; effects of regulation by governmental agencies; royalty rates, future operating costs, and other matters. Management has included the above summary of assumptions and risks related to forward-looking information provided in this document in order to provide shareholders with a more complete perspective on Parex's current and future operations and such information may not be appropriate for other purposes. Parex's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do, what benefits Parex will derive there from. These forward-looking statements are made as of the date of this document and Parex disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.