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  • Parex Resources Inc (TSX:PXT) have released their latest COVID-19 update
  • Update reveals production will decline approximately 15 – 18 per cent for the year
  • Parex have also suspended all 2020 drilling programs for the remainder of the year
  • In light of the reductions and oil price drop, the company has pulled financial outlooks for the year
  • Parex Resources Inc (TSX:PXT) is trading up 2 per cent at $13.49 per share with a market cap of $1.8 billion

Parex Resources Inc (TSX:PXT) have announced their updated response to the COVID-19 crisis, with the company cutting production.

The Alberta oil producer has announced it will be slashing production 15 – 18 per cent, in a bid to cut costs.

Parex have made the reductions through slowdowns on their legacy oil fields, as the company attempts to comply with social distancing protocols.

All up, Parex expect to see a quarterly reduction from 54 million barrels to between 40 – 45 million barrels.

The company has also announced the withdrawal of its financial outlooks for the year, including its fiscal year 2020 Brent pricing, production, funds flow, netback and capital expenditure guidance.

In an announcement released last night Parex stated “in these challenging times, Parex continues to manage its production volumes, capital budget and cash costs in response to the current low and volatile price environment, further protecting its balance sheet and shareholder value.”

The company believes it is capable of weathering the storm assailing energy companies.

North American energy companies were smashed in March, with an oil price war leading into COVID-19 shutdowns playing havoc in the sector.

A midweek recovery this week was staged when Donald Trump announced he had secured a deal between Saudi Arabia and Russia to reduce oil production.

The speculation on what the details of that plan might be lead to an oil price spike of 71 per cent in 2 days, and a huge rally in energy company stocks.

Parex, who are debt free with an approximate cash position of $551 million and a working capital total of $486 million, believe they well placed to survive these turbulent markets.

They also have an undrawn credit facility of $200 million.

Capital expenditure for the year has been set at approximately $141 million with around $80 million of that having already been spent in Q1 of this year.

The remaining balance will be expended, assuming oil prices remain at their current levels.

Parex have the option to invest $21 million – $28 million for the drilling of an appraisal well and up-front infrastructure on its La Belleza discovery.

Parex Resources Inc (PXT) are trading up 2 per cent at $13.49 per share at 10:05 am EST.

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