Letter from the president

Strong foundations to create new opportunities

The past few years have been challenging for the Company and, in general, for the entire hydrocarbon sector in Colombia. However, PAREX has found sufficient motivation and opportunities to continue to grow with its partners, relying on the support of its human talent and the good decisions made by a corporate team that believes in Colombia and its institutions, as well as the Company’s ability to take on big challenges.

Thanks to a talented and committed team, we are growing across Colombia, a country that welcomed us seven years ago beginning in Casanare, a place where we continue to showcase the best of what we are and what we do at PAREX. In 2016, based on the Casanare experience, we extended our presence in other Colombian regions where we will have the opportunity to continue learning and showing that working together with institutions and communities is the best way to conduct our business. This step would not have been possible without the bonds of trust already in place. They have been the basis for open, constructive dialogue and cooperative implementation of different agreements in the areas where we operate. For PAREX, building trust and long-term relationships with stakeholders has been fundamental to the development of our operations in Colombia. For this reason, we always consider the requirements of our stakeholders; we strive to respond and resolve their concerns promptly and diligently.

In this report, we discuss PAREX’ management and how the Company manages its relations with its stakeholders and the environment. We are committed to continuously improve, our approach is illustrated by a 37% increase in sustainability indicators reported, going from 46 in 2015 to 72 in 2016. This achievement has taken time and effort, but we believe that sustainability is fundamental to our Company’s current and future goals.

Lee DiStefano

President of PAREX Resources
Colombia Ltd. Sucursal

Our operating results met expectations. By the end of 2016, we increased the Company’s proved plus probable reserves (2P) by 37%, reaching 112 million barrels of oil equivalent (MMboe), and net production was 29,715 barrels of oil per day (bopd). Furthermore, extending our operations into new areas such as the Middle and Lower Magdalena Valleys, and Arauca has been our most significant achievement as an organization. We have not only obtained excellent results, but also demonstrated our capabilities for dependable and sustainable growth in a challenging and uncertain environment, like the one our industry is currently experiencing.

Our achievements in safety, occupational health, and environment are a good example of such capabilities. In our first audit, we achieved the international certifications ISO 14001:2004 and OHSAS 18001:2007 in oil exploration, production, marketing, and transportation using oil tanker trucks from producing fields to several facilities in Colombia.

At PAREX, we are proud to work together with the communities that live in the areas where we operate, showing that there is a meaningful connection between succeeding in our operations and improving the quality of life and development of those communities. Our goal is and continue to be strategic partners of these areas and the country by revitalizing local economies through employment generation, goods and services procurement, and program implementation and social investment that address local needs. In 2016, approximately 22,200 individuals benefited from this commitment.

At PAREX, we are committed to creating and sharing benefits with all our stakeholders. The Company remains focused on bringing economic and social progress to regions through socially responsible management and environmentally responsible operations, meeting ongoing expectations and safeguarding the trust that has been placed in us.