About this report

This report outlines the economic, environmental, and social management of PAREX’ exploration and production operations in Colombia during 2016. For the third consecutive year, reporting has been prepared using the Global Reporting Initiative (GRI) methodology. Information provided in this report reflects the Company’s activities in all the locations where the Company operates.

LLORENTE & CUENCA, the consulting firm, conducted a series of interviews with internal and external stakeholders in Bogotá, Santander, Casanare, and Arauca. These interviews were conducted to collect information and feedback about PAREX’ sustainability management and to confirm the issues that are also important to PAREX.

Fifteen meetings were held with Company’s directors and employees from Calgary and Bogotá. Visits were also made to seven municipalities in Colombia. In total, 84 in-depth interviews with representatives from nine stakeholder groups were conducted for this sustainability report.

During the interviews, material issues that had been identified in 2015 were discussed to prioritize those issues associated with PAREX operations that are critical not only for stakeholders but also for the Company. These material issues have been given special attention in this report.

Surveyed Stakeholders

Communities 32%
Employees 31%
Authorities 14%
Contractors and suppliers 12%
Mass media 6%
Professional associations and partners 4%

PAREX’ Stakeholders

PAREX has set-up communication channels such as formal meetings, a requests/complaints/claims system, as well as on-site social managers that facilitate the establishment of a two-way constructive dialogue.

Interaction with PAREX’ stakeholders is a longterm activity.

The Company has set up channels of communication such as formal meetings, a request/complaint/claim system, and on-site social managers that facilitate ongoing two-way constructive dialogue.

Since 2011, PAREX has published annual reports about its Corporate Social Responsibility management. This report reports on a total of 73 indicators. They are part of the essential compliance criterion under the Global Reporting Initiative, GRI-G4, as well as the Oil & Gas Supplement.

The indicators presented for production and financial information are based on PAREX’ entire operation portfolio, including the operations where the Company is only a partner and not an operator. The information provided about environmental, social, occupational health, and safety issues is related to the operations where PAREX is the operator and responsible for the operational and business activities in Colombia.

Economic data report ed is calculated in Colombian pesos (COP) and converted into United States dollars (USD $).

Any observations, inquiries or requests for further information about this report:

info@parexresources.com

This report is publicly available at:

www.parexresources.com.

Material Issues

Material issues were identified in sustainability reports done in previous years as well as from surveys completed by internal and external stakeholders during the inquiry and information collection stages.

The value of working together

PAREX acknowledges that working together with stakeholders is the best way to conduct successful projects. PAREX is, therefore, committed to establishing and maintaining bonds of trust to the benefit of everyone.

PAREX’ presence in the department of Casanare for the past several years has helped the Company learn about specific community needs and to actively participate in local development.

During its operations, PAREX works to improve the development of its human talent, the industry, municipalities, and communities. The Company has established communication channels to learn about stakeholders’ concerns and needs.

“PAREX brings three innovative elements to its in-country management: first, senior management is in the country, listening and responding to concerns; second, the handling of and follow-up on requests, complaints, and claims; and third, the cooperation with Academia that contributes to the discussion on environmental and operational matters,” highlights Rafael Herz, Vice-Chairman of the Colombian Petroleum Association.

PAREX has adhered to the Territorial Hydrocarbons Strategy Guidelines, implemented by the Colombian government. The Company supports community development by learning first-hand about their needs, acting to address concerns, and supporting collective decisions that have the most positive impact on individuals’ growth and quality of life.

As stated by Andrés Camargo, Private Secretary of the Mayor’s Office of Aguazul, Casanare: “It is important to count on the support of companies like PAREX so that we can together improve the living conditions of rural populations in the municipality of Aguazul, by improving production processes, as well as housing and school infrastructure projects that encourage municipal development plans”.

By establishing transparent and cooperative relationships with local authorities and engaging every stakeholder, we are able to develop multiparty projects that meet the community’s needs such as housing improvement, productive projects, road, education; and community infrastructure improvements, among other areas of social investment.

“

PAREX brings three innovative elements to its in-country management: first, senior management is in the country, listening and responding to concerns; second, the handling
of and follow-up on requests, complaints, and claims; and third, the cooperation with Academia that contributes to the discussion on environmental and operational matters,

”

Rafael Herz
Vice-Chairman of the
Colombian Petroleum Association