Parex Resources Inc. provide an update of the Company's drilling activity in Colombia and in Trinidad, highlighted by successful test results from their Colombian Llanos Basin Kona-1 oil well and the award of Block LLA-57 in the 2010 Colombia Bid Round.

Wayne Foo, the Company's President and CEO stated that "being able to start our exploration program with positive drilling results in both Colombia and Trinidad plus expand our prospect inventory with the award of a new Colombian block provides momentum to our business plan. This has also given us the opportunity to add a second drilling rig to our Llanos Basin blocks."

Colombia Exploration Update Parex's first well in its eight well 2010 Llanos Basin exploration program, Kona-1 on the LLA-16 Block (Parex 50 percent working interest), commenced drilling operations on May 16, 2010 and reached a final total depth of 13,250 feet on June 18th, 2010.

Kona-1 penetrated multiple objectives as programmed and encountered shows of hydrocarbons during drilling from the Upper C7, Mirador, and Gacheta formations at depths ranging from approximately 11,090 to 13,000 feet. Well logs indicate potential net oil pay, measured as true vertical depth, of 82 feet consisting of 35 feet in the upper C7, and 47 feet in the Mirador. Due to the well bore deviation required to drill through multiple horizons, Kona-1 could only be cased to 12,765 feet, above the top of the Gacheta Formation. As a result, subsequent testing operations were focused on the overlying Mirador Formation and were conducted using the drilling rig. The Upper C7 was not tested at this time to maintain integrity of the well bore for future use. The C7 is expected to be tested in follow up drilling.

Cement bond logs indicated that there was no cement across the pay zone and therefore the 47 feet of prospective oil pay section was not isolated from the 280 feet of underlying wet reservoirs. Even though water free production was unlikely, the Company perforated 11,552 to 11,560 feet at the top of the Mirador interval to determine oil gravity and reservoir quality while preparing for a remedial cement treatment. The well flowed naturally without pumping at a rate of up to 500 barrels of oil per day ("bopd") plus 750 barrels of water per day with a lab tested 35 degree API oil. Bottom hole pressure measurements during the test indicated a reservoir pressure of 4,750 psi and measured bottom-hole flowing pressure of 4,550 psi indicating a 5 percent drawdown. Testing was terminated after 14 hours as the water cut had stabilized at 60 percent of total fluid rates.

Internal analysis of the well test indicates that with a successful cement remediation, Kona-1 could flow from the Mirador Formation at an initial rate of up to 2,500 bopd. With the installation of a pump an initial rate of up to 3,500 bopd could be achieved while limiting bottom-hole flowing pressure drawdown for prudent reservoir management. As a result of this analysis, Parex is proceeding to install production facilities with an initial capacity to produce 3,500 bopd.

Wayne Foo commented that "in light of the mechanical difficulties caused by the casing not being able to get to the total drilled depth and the resulting poor cementing operation, this was a great outcome as we confirmed the presence of light gravity oil and high reservoir deliverability".

Tags: Parex Resources Inc.