2017 SUSTAINABILITY REPORT
CONVERTING BUSINESS GROWTH INTO WELL-BEING
Thanks to its human talent’s efforts and the coordinated work with stakeholders, Parex was able to meet its goals in 2017. The Company achieved greater impact in improving the quality of life of those communities influenced by its operations and helping to expand development in the regions where it operates.
As a result of our efforts in building successful relationships, based on dialogue and meeting our commitments to stakeholders, Parex began operations in the Capachos Block, located in the Arauca department. Once more we demonstrated, as we did in Casanare, that we can convert our business growth into community well-being. SUSTAINABILITY REPORT 2017
Letter from the President
PAREX RESOURCES COLOMBIA
working together to make the Capachos project an the Intergovernmental Panel on Climate Change, opportunity for the future of the municipality of IPCC, (2006). All operations including production, Tame, and Arauca. drilling, civil engineering works, facilities, marketing, administrative activities, workovers and We understand that communities are as important completions, as well as air and ground as our investors, clients and partners. For this transportation were considered in the analysis. By reason, we must demonstrate that before we extract having a Carbon Footprint baseline, our Company the very first drop of oil in a region, we need to work will be able to design and implement plans focused hard to create better living conditions for the on optimizing our performance in relation to the communities and prove that it is not about a choice environment. between hydrocarbons or water, instead it is about improving access to water by developing These are some of the topics we would like to cover mechanisms to protect water resources; it is not the in this 2017 Parex Sustainability Report, that has end of wildlife and forests, instead we learn to been prepared with the participation and 04· protect them together; and local economic and commitment of all our departments, and it is based social conditions are not impoverished, instead on the suggested Global Reporting Initiative (GRI) opportunities to improve them are created. standards.
I would like to emphasize the outcomes of the 2017 In 2018, Parex is aiming to continue strengthening Plan Padrino, an employee-driven social its presence in Casanare and in the new operating responsibility program created by Parex six years areas located in the departments of Arauca and ago. Our employees donated part of their salaries to Santander. To achieve this target, we need not only collect a record amount of money for the to increase oil production and reserves, but also to construction and delivery of a house in the area of strengthen our bonds of confidence with influence of one of our blocks. I could not be more stakeholders by fulfilling our commitments to grateful for and proud of our employees. sustainable growth.
2017 was also a key year for reinforcing a culture of self-care at Parex’ operations. We implemented programs and initiatives, such as SOS and Plan Mentor, to generate awareness on occupational 2017 was indeed a challenging year, but it was also We acknowledge that our operating results go hand health and safety; we also improved in all indicators, a successful time for Parex in Colombia. In a difficult in hand with our stakeholder communication for both employees and contractors. Additionally, by environment for the hydrocarbon industry due to low strategy that has allowed us to earn credibility with implementing "Mejorando Ando", a safe-driving crude oil prices, increased community consultations our stakeholders and their trust and support to program, we were able to reduce road accident rates and heightened opposition to oil and gas operations continue expanding our horizons and bringing involving contracted crude oil trucking companies. in different regions of the country, we delivered sustainable development to the regions where we excellent operating results in the Casanare block and operate. I would like to bring attention to the efforts made by began oil production in the Capachos Block, in the our team in preparing a greenhouse gas inventory department of Arauca. In particular, I would like to mention the start of our (GHG) or Carbon Footprint for the Company's operations in the department of Arauca in 2017, operations in accordance with Colombia's Technical During 2017, we continued delivering sustainable specifically the Capachos Block. Thanks to the Standard ISO 14064-1, based on the methodology of growth in oil production and reserves. Our steady and effective efforts by our human talent and production averaged 35,541 barrels of oil equivalent the open disposition to dialogue by the region's per day, a 20% increase over 2016. In addition, we stakeholders, we earned the confidence and support increased our proven plus probable reserves (2P) by of communities, government, businesses and unions 44.6% and we continued to strengthen our financial who became our partners and supporters; we are all position. PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
working together to make the Capachos project an the Intergovernmental Panel on Climate Change, opportunity for the future of the municipality of IPCC, (2006). All operations including production, Tame, and Arauca. drilling, civil engineering works, facilities, marketing, administrative activities, workovers and We understand that communities are as important completions, as well as air and ground as our investors, clients and partners. For this transportation were considered in the analysis. By reason, we must demonstrate that before we extract having a Carbon Footprint baseline, our Company the very first drop of oil in a region, we need to work will be able to design and implement plans focused hard to create better living conditions for the on optimizing our performance in relation to the communities and prove that it is not about a choice environment. between hydrocarbons or water, instead it is about improving access to water by developing These are some of the topics we would like to cover mechanisms to protect water resources; it is not the in this 2017 Parex Sustainability Report, that has end of wildlife and forests, instead we learn to been prepared with the participation and protect them together; and local economic and commitment of all our departments, and it is based 05· social conditions are not impoverished, instead on the suggested Global Reporting Initiative (GRI) opportunities to improve them are created. standards.
I would like to emphasize the outcomes of the 2017 In 2018, Parex is aiming to continue strengthening Plan Padrino, an employee-driven social its presence in Casanare and in the new operating responsibility program created by Parex six years areas located in the departments of Arauca and ago. Our employees donated part of their salaries to Santander. To achieve this target, we need not only collect a record amount of money for the to increase oil production and reserves, but also to construction and delivery of a house in the area of strengthen our bonds of confidence with influence of one of our blocks. I could not be more stakeholders by fulfilling our commitments to grateful for and proud of our employees. sustainable growth.
2017 was also a key year for reinforcing a culture of self-care at Parex’ operations. We implemented programs and initiatives, such as SOS and Plan LEE DISTEFANO Mentor, to generate awareness on occupational PRESIDENTE PAREX RESOURCES COLOMBIA 2017 was indeed a challenging year, but it was also We acknowledge that our operating results go hand health and safety; we also improved in all indicators, a successful time for Parex in Colombia. In a difficult in hand with our stakeholder communication for both employees and contractors. Additionally, by environment for the hydrocarbon industry due to low strategy that has allowed us to earn credibility with implementing "Mejorando Ando", a safe-driving crude oil prices, increased community consultations our stakeholders and their trust and support to program, we were able to reduce road accident rates and heightened opposition to oil and gas operations continue expanding our horizons and bringing involving contracted crude oil trucking companies. in different regions of the country, we delivered sustainable development to the regions where we excellent operating results in the Casanare block and operate. I would like to bring attention to the efforts made by began oil production in the Capachos Block, in the our team in preparing a greenhouse gas inventory department of Arauca. In particular, I would like to mention the start of our (GHG) or Carbon Footprint for the Company's operations in the department of Arauca in 2017, operations in accordance with Colombia's Technical During 2017, we continued delivering sustainable specifically the Capachos Block. Thanks to the Standard ISO 14064-1, based on the methodology of growth in oil production and reserves. Our steady and effective efforts by our human talent and production averaged 35,541 barrels of oil equivalent the open disposition to dialogue by the region's per day, a 20% increase over 2016. In addition, we stakeholders, we earned the confidence and support increased our proven plus probable reserves (2P) by of communities, government, businesses and unions 44.6% and we continued to strengthen our financial who became our partners and supporters; we are all position.
INDICADOR EC1 PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
ABOUT PAREX
06·
Parex is a company focused on oil exploration, identifying and analyzing operational and business development and production in Colombia, in the risks and opportunities, and determined to advance departments of Casanare, Arauca and in the basins projects deemed suitable. This business approach of Middle and Lower Magdalena. The Company is has allowed the Company to overcome challenging headquartered in Calgary, Alberta, Canada while the conditions, such as falling oil prices, and even administrative offices are in the city of Bogota, achieved a sustainable growth amid conditions Colombia. In 2017 the Company celebrated eight considered adverse. years of operations in Colombia, and during this time our company has shown a rapid and sustained During 2017, the Company had 279 full-time growth. employees and did not experience any major changes in size, management, stock ownership or supply Parex’ operations in Colombia are located in 20 chain. exploration and production blocks for a total of 647,5 hectares (1,6 million gross acres). Parex holds the international certifications ISO 14001:2004 and OSHAS 18001:2007, ratifying the The Company's shares are listed on the Toronto Company’s commitment to occupational health and Stock Exchange under the symbol "PXT". The safety, and environmental management in activities Company is publicly traded and has no one major related to oil exploration, production, marketing, and shareholder. As of December 31, 2017, there were transportation from producing fields to the different 154.742.134 outstanding common shares and the stations within Colombia. 2017 closing share price was CAN$ 18,16. Parex is a member of the Colombian Petroleum Parex defines itself as an organization that is Association and the Colombian-Canadian Chamber financially cautious, detailed and diligent in of Commerce. PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
07· PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
Value chain
Parex is involved in oil exploration, production, communities. We operate in different regions of marketing activities; we conduct our operations in a Colombia working together with local, national and responsible, transparent, cost-effective and safe subsidiary businesses and employing local and manner; we safeguard the environment and share regional human talent that provide their support for benefits with shareholders, contractors, suppliers, the Company to face any technical and employees, government and neighbouring environmental challenges in the different activities related to the operations.
Exploration Drilling Marketing The search for oil and The operation to enter the The commercial activities to gas using seismic data subsurface using equipment make hydrocarbon products that is acquired and to reach a target that may available to users and interpreted. be gas, water or crude. clients.
08·
Production Transportation The process through which The activity of transporting hydrocarbons (oil and gas) extracted hydrocarbons to are extracted from the rock storage sites, pumping formation to the surface. stations, marketing hubs, among others.
68%
PAREX EXPORTS A SIA 13% CARIBBEAN 24% 32% PANAMA 51% TRINID A D 12%
E XPO R T LOCAL MARKETING FOR EXPORT
LOCAL WORKFORCE
Total purchase of goods and services COP $ 48.483 (USD 16,4 million)
2525 c a s a n a r e 1141 number of contractors participating in a r a u c a 589 the value chain in 2017 459 middle magdalena valley 523 number of international contractors other 272 with subsidiaries in Colombia 33
total local workforce 2017 PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 20172 0 1 7
"Parex is a company that is actively engaged in "Parex is a very efficient operator that has been academic events and in communicating with incorporating a very efficient investment government officials. We are very proud the development strategy. Their capability to manage company is one of our members because they have different contexts allows them to make their achieved so much in so little time. It is an example operations possible. It is a company with a of the success of Canadian companies that are well-defined management structure and a highly contributing to the economic, social and competent leadership team who understands how environmental development in Colombia. Colombia's investment sector works. Their business ethics and integrity are noteworthy. It is a Liliana Villaveces, Executive Director of the company we trust". Colombian-Canadian Chamber of Commerce
Héctor Manosalva, Vice President, "Parex is a company that has found a way to build Development and Production, Ecopetrol S.A bonds of trust and trustworthiness in the region. The Company has been able to be very efficient and make a difference."
Francisco José Lloreda, President of ACP
PAREX o p e r a tio n 09·09·
MAG DAL ENA
ARAU C A ES C R U
C A S ANARE AREX RESO P PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
HIGHLIGHTS
INCREASED ANNUAL AVERAGE NET PRODUCTION BY 20% PRODUCED 35.541 BARRELS of oil equivalent per day
10·
Increased 2P reserves by 44,6% 162 MILLION BARRELS OF OIL EQUIVALENT (MMBOE)
Funds flow from operations of COP$ 826.370 BILLION USD 280 MILLION PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
Acquired 17,5% OF LLA- 3 2
50% OF LLA-40 IN THE LLANOS BLOCK
11·
Social investment
OF C O P $11 BILLION USD 3,4 MILLION
Locally procured GOODS AND SERVICES
F O R C O P $48 B ILLION U S D 16,4 MILLION PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
ABOUT THIS REPORT
12·
This sustainability report describes the economic, Amounts are expressed in United States dollars environmental, and social management outcomes of and Colombian pesos. An average USD/COP Parex’ oil exploration, development, and production exchange rate of 2.951,32 was used for this report. operations in Colombia during 2017. This report was prepared based on the information provided by As in the past three years, this report has been Parex Resources Colombia, Ltd, Sucursal, Parex prepared in accordance with the GRI-G4 core Verano Limited Sucursal, and AB Exploración y option of the Global Reporting Initiative (GRI) Producción B.V Sucursal. standards as well as the Oil & Gas Supplement. This document was published prior to July 1, 2018. Indicators related to total oil production and Parex took into consideration guidelines and financial information are based on Parex’ global recommendations from GRI standards published in activities, including the operations in which the 2016 and the Company plans to implement them in Company is only a partner and does not exercise its 2018 report. operatorship. The remaining indicators capture the operations in which the Company is the operator. PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
V 13· PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
External Parex’ Executive Management engaged the services of the Audit company Price WaterHouse Coopers to audit this sustainability report in an effort to address stakeholders' expectations as well as to ensure traceability and reliability of any information contained herein. Refer to the assurance report on pages 94 to 99.
Identifying stakeholders and material topics
Parex engaged the services of Signum Consulting for the research and reporting process of this report. By conducting an initial benchmark study of oil companies Stakeholder’s operating in Colombia, the consulting company was able to interview identify reporting trends and prevailing material topics as well as ways in which the management of those issues are being reported. 7% 14· 4% Subsequently, stakeholders previously identified in prior 1% reports were reviewed and confirmed during a workshop held at Parex’ offices in which seventeen individuals 12% participated, including the Company's Executive Management and department leads. At this meeting, we discussed a community-based map prepared by our Communications department and those stakeholders 39% identified in the 20-20 Project, an action initiated by Parex in 2015, with the purpose to ensure our continued 9% improvement and plan the Company’s future.
During this session, we established and prioritized economic, social and environmental issues relevant to Parex and we also discussed an internal and external management strategy. 28%
A semi-structured interview process was designed to undertake consultation with Parex’ internal and external stakeholders. Seventy individuals, including government officials, partners, community members, employees, Communities contractors and suppliers, unions, civil society and media, Government Officials were interviewed. The survey contained questions not only Employees to identify and assess stakeholders’ material topics related to Parex’ operations, but also to reveal how the Contractors/Suppliers stakeholders perceive the Company’s response to those Civil Society issues. The interviews took place both in the field and in Media Bogota. Partners PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 20172 0 1 7
MATERIALITY ANALYSIS
+ high 0 1
0 2
0 8 0 6 0 5
medium 0 9 0 7 15·15·
1 1 0 3 Importance for the stakeholders the for Importance
0 4 1 0 - low medium high - Importance for PAREX +
0 1 Social investment
0 2 Employment
0 3 Locally procured good and services The matrix below contains the 04 Taxes, royalties and economic rights outcomes from the analysis of 0 5 Local infrastructure material topics identified by Parex and internal and external Environmental regulation compliance 0 6 stakeholders. 0 7 Reforestation
0 8 Water management ES C
0 9 Climate change R U 1 0 Occupational health and safety
1 1 Human Rights AREX RESO PAREX RESOURCES RESOURCES PAREX P SUSTAINABILITY REPORT 2017
Material topics and internal and external boundaries
MATERIAL ISSUE INTERNAL BOUNDARY EXTERNAL BOUNDARY
Sustainability, Communities, Social investment Social Responsibility, Government Communication
Employment All Company's departments Communities, Employees and Contractors
Locally procured Facilities, Operations, good and services Production, Social Responsibility, Procurement Local businesses, and Contracts" Communities, and contractors Taxes, Royalties and Economic rights Finance, Legal, Marketing and Government Government, Communities, Shareholders Infrastructure Sustainability, Local Social Responsibility, civil engineering Government, Communities, and 1616·· contractors Environmental regulation compliance Legal, Sustainability, Environment Communities, Government, NGOs, and contractors Reforestation Sustainability and Environment Government, Communities Water management Sustainability and Environment, Operations Government, Communities, NGOs Climate change
All Company's departments Communities, Government, Contractors, Occupational health Partners, Shareholders, and safety NGOs Occupational health and safety and all Company's departments Employees, Contractors, Human Rights in general Communities
Government, Sustainability, Communities, Employees, Government, Safety and Contractors, NGOs, Social Responsibility, Legal, Ethnic groups Human Resources
In this 2017 sustainability report, Parex provides information on the management of those material topics identified herein. Please send any questions about this report to [email protected] This report is publicly available at: www.Parexresources.com.
PAREX RESOURCES RESOURCES PAREX WE GENERATE SHAREDBENEFITS 2017
PAREX RESOURCES SUSTAINABILITY REPORT 2017
18· CORPORATE GOVERNANCE PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
BORARD OF DIRECTORS PAREX
Glen McNamara Wayne Foo Member of the Finance and Audit Committee, Member President of the Board of the HSE and Reserves Committee
Curtis D. Barlett Ron Miller Member of the Corporate Governance and Nominating Committee Member of the Compensation and HR Committee, Member of the HSE and Reserves Committee Lisa Colnett Chair of the Compensation and HR Committee, Member of Carmen Sylvain the HSE and Reserves Committe Member of the Corporate Governance and Nominating Committee
Robert J. Engbloom David R. Taylor Member of the Corporate Governance and Nominating Committee President and CEO
Bob MacDougall Paul D. Wright Chair of the Compensation and HR Committee, Member of the Chair of the Finance and Audit Committee, Member of HSE and Reserves Committee the Corporate Governance and Nominating Committee
Parex Resources Inc. has a robust and effective Board of Directors 19· Corporate Governance that ensures a transparent by gender (%) performance by the Company and each one of its members with regard to all its stakeholders. As the highest governing body at Parex, the Board of men Directors monitors the Executive Management's 80% activities and strategic management through the women Committees of Finance and Audit, Corporate Governance and Nominating, Compensation and Human Resources, and HSE and Reserves.
At the annual general and special shareholders 20% meeting held on May 11, 2017, ten Board members were elected. During this meeting and in compliance with the Company's succession plan, Mr. Wayne Foo stepped down as CEO to become the Board of All Board members are over 51 years old. Directors’ President. In addition, Mr. David Taylor became the new Parex’ President and CEO while Mr. Robert Engbloom was appointed Parex’ Lead Board of Directors Director. by age (%) During the month of February 2017, Mr. Norman F. McIntyre and Mr. John Bechtold stepped down as members of Parex’ Board of Directors. 30% 50-55 10% 56-60 Mr. Lee DiStefano is the President of Parex Colombia 61-65 LTD Sucursal. 66-70 30% 30% PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
Ethics and Transparency
20·
At Parex, our Code of Ethics serves as a In 2017, the Corporate Governance and guidance for employees, workers and Nominating Committee implemented a contractors to act in compliance with confidential reporting system regarding applicable laws and the principles of Parex’ Whistleblower Policy that is managed transparency, confidentiality, integrity, fair by an independent provider, Ethics Point. treatment, equity and responsibility. On a Complaints can be reported to this regular basis we update our Anti-bribery and organization in Spanish or English, 24/7 by Anti-corruption Policy, that helps us combat phone or on line (www.ethicspoint.com). acts of bribery or corruption, safeguarding the Company's corporate reputation. In addition, the Company offers a direct telephone line [(001) 403-265-4800] and a Any questions or complaints arising from mailing address where any reports can be any possible breach of Parex’ Code of Ethics sent directly: 2700 Eight Avenue Place West are to be reported to an immediate 585-8th Avenue S.W. Calgary, Alberta T2P supervisor or, if the claimant prefers it, 1G1. All communications should be labelled directly to the Corporate Governance and "Private & Confidential" and addressed to Nominating Committee, that must ensure a any member of Management or to the Chair timely and effective response. of the Corporate Governance Committee. PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
21· PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
A timely response to petitions, complaints and claims
In 2017, in accordance with Colombian of PCCs were already resolved while the regulations, Parex continued to improve its remaining PCCs, that were received during Petitions, Complaints and Claims (PCC) December 2017, were settled in January System, a key corporate tool that helps the 2018. Company prevent operation-related risks as well as to build and promote trust with The increase in the number of PCCs during stakeholders. 2017 was associated to Parex’ entry into new regions. Contractor-related PCC During 2017, Parex received 406 PCCs, of submissions continued to decrease as a which 182 were petitions and 224 complaints result of regular audits and the ongoing and claims. By the end of 2017, 92%, or 375, support the Company provides to contractors and subcontractors.
22· PETITIONS
Petitions / various topics PCCs 24,38% for year Petitions / job opportunity 14,53%
Petition rights 5,91%
406 PCCs COMPLAINTS AND CLAIMS
347 PCCs HSEQ 6,15%
Contractor-related 22,16%
250 PCCs
Land owners 9,85%
Goods and services 5,66%
Road deterioration and maintenance 7,63%
Salaries, settlements and social benefits 1,97% 2015 2016 2017 Particulate matter 1,72% PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
INDICADOR EC1
23·
Beginning in 2018 Parex’ Legal Department will be in charge of PCC management. Our Executive Management aim is to make the TARGET Responding Company more efficient by decreasing 2018 response times and preventing PCCs to 100% become potential legal actions. Our priority of PCCs received within is to show our stakeholders that our the specified timeframe. Company is responsive and diligent.
PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
SUSTAINED ECONOMIC AND OPERATIONAL GROWTH
In 2017, oil production averaged 35.541 In 2017, our Finding, Development, and barrels of oil equivalent per day, a 20% Acquisition costs (FD&A) were COP $13.900 increase over 2016. We increased (USD 4,71) per barrel of oil equivalent for production while growing proven plus 2P reserves, including capital for future probable (2P) reserves by 44,6% over the development. By year-end 2017, net income previous year. was COP $458 billion (USD 155,1 million). 8 wells/year 30 wells/year
24· 162,2 MMBOE 5 wells/year
35.541 boe/day 13 wells/year 4 wells/year
29.715 boe/day
27.434 boe/day 7 wells/year
13.440 boe/day
18.148 boe/day 11.198 boe/day
111,9 MMBOE
2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017
Production Gross production 2P reserves Producing Non-producing (operator) wells (gross) wells
During 2017, funds flow from operations was Parex has identified operation-derived COP $826 billion (USD 280 million) and taxes, royalties and economic rights as funds flow from operations per basic share material topics because the Company was COP $5,342 (USD 1.81), representing a understands that its growth goes hand in 94% increase over the year ended December hand with creating value for Colombia. The 31, 2016. Net working capital increased to regional resources are a very important COP $482.2 billion (USD 163.4 million). driving force in the country's development PAREX exited 2017 with no debt. and progress. For this reason, at Parex, every team member works towards a higher Parex’ consolidated and audited financial purpose that goes beyond achieving statements are available at individual well-being but attaining a www.Parexresources.com . general wellness and a transparent economic performance. PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
25· PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
HUMAN TALENT THRIVING ALONG WITH THE COMPANY
26·
Human talent is one of Parex’ strengths. Through a highly competitive and capable All our employees are full-time team, our Company has been able to achieve employees with indefinite term sustained growth for the past eight years. contracts. By the end of 2017, the Company had 279 employees, 18 more employees than in the previous year.
employees by age full-time
employees 192
69 170 2015 239
84 177 261 2016 67
88 191 2017 279 20
UNDER 30 31 Y 50 OVER 51
TOTAL 279
1 In 2017 the Company hired thirty-four (34) new employees. PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
2017 New In 2017 the Company hired thirty-four new employees. 1 employees 34
by region and rate by gender and rate by age and rate
0,36% BARRANCA FIELD 1 3,94% UNDER 30 YEARS OLD 11
TAME FIELD 1 34 0,36% 34 34 9 3,23% 7,17% 31-50 YEARS OLD 20 WOMEN 1,43% YOPAL FIELD 4 OVER 51 YEARS OLD 25 1,08% 3 8,96% BOGOTA OFFICE 28 MEN TOTA L TOTA L 10,04% TOTA L 27·
departures
by age and rate by region and rate by gender and rate
0,36% BARRANCA FIELD 1
2,15% UNDER 30 YEARS OLD 6 0,00% TAME FIELD - 5 WOMEN 1,79% 31-50 YEARS OLD
9 16 3,23% YOPAL FIELD 2
16 0,72% 16 11 OVER 51 YEARS OLDAZ 1 MEN 3,94% 0,36% BOGOTA OFFICE 13 4,66% TOTA L TOTA L TOTA L
Parex is an employer committed to respecting diversity and promoting gender equality. The ratio of women in relation to the total number of employees is comparable to other oil and gas companies operating in Colombia. Job position
16 5,73% 1,79% 5 ADMINISTRATIVE 12 4,30% 10,75% 30 JUNIOR 46 16,49% PROFESSIONAL 36,20% 101
SENIOR 7 2,51% 10,75% 30
LEAD 3 1,08% 4,30% 12
MANAGER 4 1,43% 3,58% 10
VICE PRESIDENT -- 0.00% 1,08% 3 PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
Job position/age
Administrative Junior Professional Senior Lead Manager Vice President
14 5,02% -- 0,00% 7 2,51% 29 29 10,39% 2 0,72% 11 3,94% 23 8,24% 10 3,58% 114 40,86% 1 0,36 % 1 0,36% 35 12,54% -- 0,00% 2 0,72% 13 4,66% -- 0,00% 3 1,08% 11 3,94% -- 0,00% 2 0,72% 1 0,36%
UNDER 30 31 Y 50 OVER 51
Job position/region and INDEX
Administrative Junior Professional Senior Lead Manager Vice President
-- 0,00% -- 0,00% 20 7,17% 1 0,36% 29 29 0,72% -- 0,00% 32 11,47% 2 8 2,87% 3,94% 3 1,08 88 31,54% 11 45 16,13% 0,36% -- 0,00% 34 12,19% 1 2 0,72% 0,00% -- 0,00% 14 5,02% -- 1 0,36% 0,00% -- 0,00% 14 5,02% 28· -- -- 0,00% 0,00% -- 0,00% 3 1,08% -- -- 0,00%
BARRANCA FIELD TAME FIELD YOPAL FIELD BOGOTA OFFICE
In 2017 personnel turnover was 5,7%, a decrease At Parex, we have an ongoing commitment to our of 7,3 point over 2016 rates. Note: a review of the human talent; for this reason, we create career data, on which turnover rates had been calculated development plans and offer growth and in previous years, revealed that trainees from well-being opportunities. The majority of Colombia’s National Vocational Training Agency first-time managers achieved their management (or SENA, for its initials in Spanish) were included position at Parex after completing in the calculation for the 2016 Sustainability Company-sponsored training courses. Report; however, since only training agreements, and not employment contracts, are being offered The Company respects freedom of association to these students, the indicator reported in that and adheres to any related domestic and report has been amended and the adjustments are international regulations. At Parex, there are no reflected in the 2017 Sustainability Report. trade unions or unionized employees.
5,7% 2015 Turnover 2016 13% rates 2017
6%
The Act 789 of 2002 states the companies that must hire or provide training for SENA students in Colombia. PAREX complies
PAREX RESOURCES RESOURCES PAREX with this Colombian legislation by hiring SENA trainees. WE GENERATE SHARED BENEFITS 2017
Training an ongoing commitment
29·
Training investment Parex is committed to improving employees' in COP (millions) capabilities and skills by allocating significant resources to their formal and informal training and education. One of our 2015 $ 320.382.170 main commitments is for all employees to have the opportunity to learn English. $ 412.120.272 During 2017, Parex invested approximately 2016 COP $622.1 million (USD 210,798) in employee training courses, an increase of $ 622.130.790 33.75% over 2016 and an increase of 48.5% 2017 over 2015.
Average training hours Parex conducted per employee 2017 performance reviews 2015 20,75 or 100% of its employees 2016 83,25 2017 108 PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
Leadership and skills development
Parex seeks to strengthen and develop leadership 2018 PAREX skills of its executive team, leads and/or TARGET Promoting and leveraging second-line supervisors in Colombia. Our purpose is to help them develop the skills innovation capabilities within an necessary to have a positive influence on the effective process management framework. employees they supervise, effectively guiding them to achieve the Company’s strategic goals. In 2017, communication, negotiation, conflict resolution and results-oriented skills were strengthened through the executive program Outcome-based Negotiation delivered by EAFIT University.
In compliance with its Training and Development Policy, Parex continues to offer all its personnel the tools to align their performance with the Company's strategic objectives, through soft skills development, and learning and capacity strengthening.
30·
Payroll Benefits and benefits package
Z3.632 Parex offers a significant benefits package to all employees with the aim to promote employee
Bn of COP commitment, reward efforts and provide wellbeing to employees and their families. One of those benefits is
47.126 the Long-term Incentive Plan, an annual results-based 2015 bonus program, which is directly associated to targets
42.248 achieved by employees and the Company for the year. Bn of COP 2016
16.929 26.132 34.994 2017 Employees have the option to design their own benefits
Bn of COP package based on their needs or preferences.
Bn of COP Bn of COP Bn of COP
In 2017, Parex’ payroll was approximately COP $54 billion (USD 18,2 million) and employee-related benefits totalled COP $35 billion (USD 11,86 million), an increase of 25,32% over 2016. Total employee PAYROLL benefits PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
SENA trainees My first job at Parex
Every year, Parex places young trainees from fostered by the trust that the Company is placing on Colombia's National Vocational Training Agency me. I took several courses to improve my skills; I (SENA, for its initials in Spanish) in different already began my courses in Psychology and I would Company’s departments, in compliance with the like to get a diploma in Wellness. I really like my quota established by current SENA regulations. work at Parex and I see myself working there for a long time" states Laura Viviana Camargo, a SENA 31· Even though these trainees are offered a fixed-term trainee from the government-created program Forty learning arrangement, many of them, based on their Thousand First Jobs, and currently an HR assistant strong commitment and excellent performance, are at Parex. hired as full-time employees by the Company at the end of their training. The Company also connects directly or through joint ventures SENA trainees who are not part of the Forty In 2017, Laura Viviana Camargo, a Human Talent Thousand First Jobs program. In 2017, five of them Management technologist, and Janeth Johana Mesa, were offered their first full-time employment at an Administration Management technologist, went Parex. from being SENA trainees to be hired full-time with the Company. Laura and Johana participated in "Forty "In my opinion, dreams are not enough. You need to Thousand First Jobs", a government program created work hard, make an effort and get up every day to promote employment for youth between 18 and 25 focused on a clear target. Working for Parex has years old with no formal employment experience, and been a great experience and the benefits are plenty, they got their first job at Parex, where they are something I was not aware of; the working currently working as an HR assistant and an environment is great, and everyone is very friendly. I Administrative Assistant, respectively. am currently studying Environmental Engineering to advance my future career with the Company". says "Parex funded my practicum for six months and, then, Joan Sebastián Fandiño, a SENA trainee, who is they offered me a full-time job in 2017. My growth is currently working at Parex as a Documentation Technician in the Finance department. Well-being and a healthy workplace environment
Parex believes in the importance of making Developed with employees and their families in continuous improvement in the workplace. Organized mind, the Company considers that these events are by our Coexistence and Wellness Committee and in very important because they are an incentive to compliance with Colombian regulations, we have continue working with enthusiasm and an actively fostered integration courses and activities in opportunity to reinforce the employees' sense of Bogota and at several field locations that have been belonging to the organization. very well attended by our employees. We also held recreational and sporting events and celebrated milestone dates for the Company and employees. PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
SUCCESS STORY
2017
32·
PAREX IN ARAUCA VALUE IN TRUST
During 2017, as part of an agreement signed with the National Hydrocarbons Agency, Parex began operations in the Capachos Block, in the department of Arauca, and drilled the Capachos Centro and Capachos Sur wells; the first well began production by the end of November 2017. The activities associated with this operation created local employment for 282 skilled and 381 unskilled workers. PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
33· PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
Dialogue and Transparency
The first step in Parex’ strategy was to understand Tame municipalities as well as with community the region's dynamics, strengths, and potentialities, representatives of the Capachos Block's area of and to initiate a trust building process with influence. Within this framework, our stakeholders communities and national and local governments. had the opportunity not only to learn about the From the beginning, we understood that our Company, but also to identify the main community’s presence in Arauca had to be aligned with some needs and government initiatives within the social and political challenges that the country was municipal Development Plans; we developed undergoing at that time. partnerships to closely work towards the communities' environmental improvement and Parex implemented in Arauca the lessons learned quality of life. from previous operations over the past years. As Lee DiStefano, Parex’ President in Colombia, states: To demonstrate that Parex’ corporate operations "an open and transparent dialogue, and meeting our are compatible with a sustainable development, we stakeholder commitments are the basis for building invited Arauca's social leaders to visit our trust". operations in Casanare. During the visit, regional communities shared their experiences and social The Company allocated the time needed to engage leaders got a close look at the social projects we 34· in dialogue with authorities from the Arauca and are supporting.
An open and transparent dialogue and meeting stakeholder commitments are the basis for building trust PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
Supporters in Arauca 35·
Parex found key supporters for its new enterprise employment and businesses, therefore improving in the Capachos Block in Arauca: the Canadian the municipality's economy”, explains Miguel Embassy, the municipality of Tame, trade unions, Ángel Bastos, advisor to Tame's City Hall. Community Action Boards and local businesses. Colombia's security forces were also essential in During 2017, the Company offered emergency the process because communication channels response and management training to members were promoted to strengthen relations between the of the National Army. The purpose of these National Army and communities. theoretical-practical sessions, that will be offered again in 2018, was to strengthen the According to Ricardo Acevedo, Secretary of Urban Army's skills regarding prevention and control Infrastructure and Development of the municipality actions in the event of hydrocarbon incidents. of Tame: "Parex has been a partner in reaching communities and advancing many projects for "The training is very interesting because we learn which our administration does not have enough to care for the ecosystem and prevent oil spills", resources available". declares career soldier Javier Garzón, who participated in the Contingency Plan training. "Parex contributed in a different way to the municipality; it earned the community's trust by Likewise, Yair Miguel Argel, another career discussing social investment in an accurate, soldier, says: "It is something new I can learn. respectful, clear and honest way. For this reason, This knowledge is useful for the future, for the community felt at ease welcoming the helping the community and caring for the Company. Parex has contributed to local environment". PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
Respect for diversity
36·
Another key interaction in Arauca was the "Parex is important to the Angosturas reserve relationship between Parex and indigenous and because the Company has shown interest in the Afro-Colombian communities living adjacent to community. We have worked closely with them the Capachos Block. During respectful and open and received great support on several activities. It discussions, we had the opportunity to explain the is a company with a reputation of fulfilling its project scope, impact and mechanisms for an commitments. The U'wa people place their trust effective and timely management; we made clear on those who give and uphold their word of our commitment to upholding ethnic groups' honour. They have always been mindful and in rights. constant communication with us", says Juan Carlos Pérez, member of the Giraras Foundation for the U'wa people. PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
37·
Community’s priorities housing, mobility and access to water
During 2017 many of the most ambitious projects addition, the improvement of an aqueduct was initially agreed between Parex and regional completed, therefore, positively impacting three communities and authorities became a reality. Today communities that are currently enjoying a permanent the Company is pleased to see how those supply of water. commitments were completed one by one and are improving the living conditions for a large number of "Since Parex arrived here, our village has experienced people in Arauca. growth. We are very grateful because they paid attention to our needs. The aqueduct is a reality After productive discussions and an alliance-building today thanks to them", explains Hernán Buitrago, process, we advanced a housing improvement president of the Corocito's Community Action Board. program that has benefited five communities and approximately 400 individuals in villages located in our area of influence. To improve community mobility, construction works were carried out on four roads. In PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
Procuring local goods and service an opportunity for Arauca
38·
One of the initiatives that facilitated to build a our business relationship, and today we close relationship between Parex and the Arauca contribute our products and services to the communities was the procurement of local goods operation", states Jorge Iván Pérez from the and services. We have been very successful in Merchants Association of Tame, in Arauca. building strong relations with businesses in the municipality of Tame as a result of our "Parex has been welcomed in the municipality commitment to supporting their ongoing because they efficiently socialized the project. development and helping them achieve the They have always honoured their commitments highest standards to be market competitive. and are straightforward regarding guidelines and policies that we, suppliers, must comply with", "Parex brought economic relief. They took the explains Marcos Zorro, Coordinator at the Tame's time to explain their plans for the area and we Transportation Cooperative for the Capachos understood their goals; that's when we started project. PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
39· PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
HONOURING STAKEHOLDER COMMITMENTS
40· PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
41·
Human Rights; compliance with environmental identified in 2017 by both Parex and regulation; occupational health and safety; stakeholders, regarding social, economic and protection of water resources and biodiversity; environmental dimensions. reforestation; climate change; social investment on critical areas such as health, The Company presents below its education and access to water; improvement of management approach and outcomes community infrastructure as well as regarding these topics during the year employment opportunities and local covered by this report. entrepreneurship support are material topics PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
HUMAN RIGHTS
42·
As it is stated in Parex’ Code of Ethics, the status, age, family status or source of income. Company respects and fosters Human Rights. Complaints regarding potential Human Rights The Company has clearly specified this violations are dealt with at the highest commitment to all its personnel, including corporate management level, specifically directors, officers, consultants and employees. through the Finance and Audit Committee and In the same manner, the Company extends this the Corporate Governance and Nominating commitment to its contractors, through a Committee. Both committees are made up of mandatory compliance clause included in their members of the Company's Board of Directors. contracts. In 2017, no complaints of Human Rights violations were filed. Parex is committed to providing equal opportunities in all aspects of employment. At Parex has signed Cooperation Agreements Parex, abusive, harassing or offensive with Colombia's Ministry of Defense, that have conduct, whether verbal, physical or visual, is been drafted according to the country's not tolerated. Harassment may occur on the legislation and constitutional principles, and in grounds of race or religious beliefs, sexual compliance with the Ministry's Comprehensive orientation, colour, place of origin, gender, Human Rights Policy, and International physical or mental disability, ancestry, marital Humanitarian Law. PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
43·
2018 Establishing a plan to target strengthen Human Rights practices in the Company in accordance with international and domestic standards for businesses and Human Rights. PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
OCCUPATIONAL HEALTH AND SAFETY
During 2017, Occupational Health and Safety share their knowledge about safe behaviors became a priority topic at Parex. In particular with the community. we focused on implementing a strategy to engage employees in developing a culture of Furthermore, we built a strong foundation to safety. As a result of these efforts, no major promote a culture of self-care across the incidents were reported during 2017 at our organization through the creation of SOS cards operating sites. that help identify and document unsafe behaviors and conditions; the implementation Senior management conducted health and of new control mechanisms, an audit system, safety inspections at different operating sites and safety stops; and the development of new and several targets and indicators for indicators, among others. employees were set. A Mentorship Plan was 44· created to prevent employee-related accidents In 2017 Parex met its targets to reduce at our sites; in addition, it is an opportunity for accident rates to 0,59 incidents per million of our managers to assume the role of tutors and man-hours worked.
Health and Safety indicators
0,54 2015 Total 2015 1,07 Lost time recordable incident 1,33 3,8 2016 injury 2016 frequency (LTIF) frequency (TRIF) 2017 0,59 2017 2,56
Lost Time Incident Frequency (LTIF) = # Total LTI + FAT *10 6 Total Recordable Incident Frequency (TRIF) = # Total injuries *10 6 man-hours worked man-hours worked
target in 2018
Reducing LTIF rate to 0,54 Adopting SOS card program by contractors PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
45· PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
Safe transportation
46·
targets in 2018
Reducing road accident Incorporating gas transportation trucks and frequency to passenger vehicles in the control 0,92 and monitoring program Mejorando Ando
MVA = # Total of vehicle accidents Total number of km driven
Ensuring compliance with safety practices and The specific objectives of this initiative are as standards by truck companies contracted to follows: transport our crude oil is a great challenge we face at Parex. For this reason, in 2017, we implemented Reducing road accidents by generating actions Mejorando Ando, a program focused on decreasing that link actors and aspects involved in the road accidents involving crude tanker trucks transportation of crude oil by tanker trucks. through mechanisms that monitor risk factors. Creating mechanisms to identify inadequate driving habits that may potentially result in accidents.
As a result of the Mejorando Ando program, accidents related to crude oil transportation were reduced in 2017. Motor vehicle accident (MVA) frequency as of December 31, 2017 was 1,02. PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
Joint occupational health and safety committee
In 2017, Parex kept active the Joint Occupational System and its members will participate in the Health and Safety Committee (COPASST, for its following activities: initials in Spanish) and held monthly meetings, in compliance with current Colombian legislation. The Committee, made up of employees from the KPI meetings Bogota and field offices, conducted on-site Audit planning activities focused on developing and disseminating the Occupational Health and Safety Management-led inspections Management System, promoting self-care and adoption of healthy habits, and preventing Environmental measurements workplace accidents and illnesses. Road safety committee In 2018 COPASST will be part of the Management
47· PSYCHOSOCIAL risk
Parex acknowledges that stress may compromise assessment, developed activities to make workplace safety and exacerbate other employees aware of this significant issue, and workplace-related health issues in employees. In promote healthy lifestyles and healthy work. 2017, we conducted an annual stress-related risk PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
ENVIRONMENTAL LEGAL COMPLIANCE
48·
Parex’ environmental legal management is based on providing legal support in the preparation of Environmental Impact Assessments and the development and implementation of specific Management Plans for each project. We foster the participation of local communities in any environmental planning and we ensure that we comply with current regulations.
We conduct due diligence in our procurement practices to identify and assess regulatory and environmental liabilities.
In 2017, we engaged the services of external auditors to evaluate our compliance with the environmental legal requirement matrix we prepared; the audit concluded that Parex complied with 95% of existing regulations.
2018 will continue to strengthen its target PAREX Environmental Management System
as well as document traceability for each of the environmental aspects generated by the Company's activities. PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
No monetary or non-monetary 0 (zero) penalties or sanctions
for non-compliance with currently applicable Colombian environmental legislation and regulations were imposed on Parex.
49· PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
50·
800.000
764.387
700.000
(Kgs.)
600.000 Was t E 585.059 500.000 disposal (Kgs.) 400.000
300.000
175.972 2015 172.283 200.000
28.909 20.864 24.832
19.234
44.616
18.671
2016 20.083
9.094
(Kgs.) 2017 100.000 (Kgs.)
(Kgs.)
(Kgs.)
(Kgs.) (Kgs.) (Kgs.)
(Kgs.)
(Kgs.)
(Kgs.
0 Recyclable Contaminated Ordinary Organic
Waste generated by Parex’ operations are During 2017, ordinary waste increased to classified into recyclable, contaminated, 764.387 kg as a result of the removal of ordinary and organic. We sort waste at concrete structures during the cease of source and its disposal depends on the type activities at the Celeus project in Llanos 17 of material. Dangerous waste is sent to (300 m3 or 450 tons) and at Calona in Llanos independent companies that are properly 32 (182 m 3 or 273 tons); this waste was authorized for collection and proper disposal disposed by independent companies at authorized dumping sites. . PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
Drilling cuttings and sludge
107.426 (barrels) As a result of an increase in exploration 2017 wells, we experienced higher volumes of drilling cuttings and sludge in 2017. During the same period, we generated 107,426 47.689 (barrels) 2016 barrels of drilling cuttings and sludge, which were disposed according to applicable legislation and standards. The 46.402 (barrels) use of benzene and sulfur is prohibited at 2015 our operations.
Spills
Parex is making ongoing efforts to prevent and properly manage potential spills of crude, chemical substances, oils or fuels that may affect the environment or public infrastructure of the areas where it operates. As a 51· result, we experienced fewer and less significant incidents in 2017.
Number of reportable Volume spilled Aspills operations operations (barrels)
1 3 barrels 2017 2017
3,25 barrels 2016 2 2016
2015 3 2015 12,26 barrels
Number of reportables Volume spilled spills transportation transportation (barrels)
3 barrels 2017 1 2017 344,58 barrels 2016 3 2016
124,43 barrels 2015 4 2015
PAREX changed its reporting methodology to include the number of events and volume of barrels spilled in production operations and transportation PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
Climate change Carbon footprint
In 2017, Parex engaged the services of the In certain situations, it was necessary to modify consulting company Conservación & Carbono the basic equation to include other estimation S.A.S to conduct a Greenhouse Gas (GHG) parameters different from emission factors. The Emissions Inventory or Carbon Footprint of its global warming potential of each of the GHGs operations in Colombia, according to the included in the report was taken from the fourth Colombian Technical Standard ISO 14064-1. This IPCC assessment report (2007), based on the inventory will provide us with a generated Carbon radioactive capacity of each gas in the Footprint baseline that will help us develop a atmosphere for a period of 100 years. All strategy to optimize our performance. calculations were conducted based on the adopted methodology. With the support of our Environmental and Quality team and other departments, it was possible to This measurement determines a baseline to collect data related to GHG emission-associated manage the impact of Parex’ operations activities. Assuming that estimates were a (operational control) on the environment and add reasonable representation of the real world, the our contribution to the global efforts on climate consultants considered consumption data from change. each operating area, averages from simple 52· statistical data analysis, and expert opinions for The GHG inventory was prepared based on the report. working interest rates; in other words, Parex’ operated and non-operated fields were considered Emission estimates were calculated based on the for calculation purposes. Intergovernmental Panel on Climate Change, or IPCC, (2006) and the report was prepared based Scope 1, or direct source GHG emissions, include on Scopes 1, 2 and 3 (direct, indirect and other fuel burning to produce energy, gas leaks from indirect emissions, respectively). refrigerating systems, gas flaring, gas vents and other fugitive emissions (leaks from valves and According to the best practices suggested by connection points). IPCC guidelines, methodological levels 1 and 2 were employed for the calculations of each one of Scope 2, or indirect sources, refer to the use of the categories identified as emission sources. In energy in the National Interconnected System. the same way, the same guidelines were applied Scope 3, or other indirect sources or referred to to prepare emission summary charts. as other indirect emissions, include oil and gas transportation, air travel and ground The method used to calculate carbon dioxide transportation of personnel, procurement and use (CO2), methane (CH), nitrous oxide (N2O) and of paper products, solid waste management and hydrofluorocarbons (HFC) emissions was based treatment, wastewater management and disposal, on combining the information on the extent to and gas leaks associated to oil and gas which a human activity takes place (called activity transportation. data or AD) with coefficients that quantify emissions2 or removals4 per unit activity (emission2 CO2, CH4, N2O and HFC were considered for the factors or EF). EFs used were those reported by inventory. the Colombian Fuels Emission Factors and the IPCC and applied based on an arithmetic mean for EFs with asymmetric uncertainty. PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
Direct greenhouse gas emissions 80.780,71 tons/year SCOPE 1 2017 Indirect greenhouse Greenhouse gas emissions 102,52 tons/year SCOPE 2 2017 gas emissions Other indirect greenhouse equivalent CO 2 gas emissions 35.064,67 tons/year SCOPE 3 2017
3 GAS FLARING 2017 7.611,42 m *10^3 / año
Biogenic TOTAL 3.463,9 CO2 Biogenic tons TOTAL 228,0 CO2 Biogenic tons - SCOPE 1 TOTAL 3.235,9 CO2 Biogenic tons - SCOPE 2
POWER GENERATION PLANTS 1.361,0 1.132,99 228,01
GROUND TRANSPORTATION (EQUIPMENT) 429,1 429,14 -
53· GROUND TRANSPORTATION (PERSONNEL) 168,8 168,75 -
FUEL TRANSPORTATION 1505,0 1505,0 -
Electric power consumption
78.616.812 kw/hora Energy consumption 74.723.620 kw/hora
17,58 kw hora /bbl
72.685.188 kw/hora
12,13 kw hora /bbl 15,32 kw hora /bbl
2015 2016 2017 2015 2016 2017
operate the per barrels Company's sites of oil aproduced PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
WATER MANAGEMENT
54· PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
55· PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
captación de agua
At all its operations, Parex complies with Colombian water management regulations. We are always looking for ways to optimize the use of water resources because we understand the value and significance of water for a sustainable planet.
Surface water and groundwater are collected within the limits allowed by Environmental Licences. Recorded values are from readings at flow meters duly calibrated and certified; readings are recorded at different withdrawal points and at consumption registers for each operational activity.
volume 2015 2016 of water withdrawal 2017 56· 3
Total volume of water withdrawal 101.861 97.070 128.556 at the following sources:
SURFACE WATER FROM WETLANDS, RIVERS, LAKES AND OCEANS 26.427 13.534 23.631
G ROUNDWATER 62.308 59.614 59.865
RAINWATER DIRECTLY HARVESTED AND STORED BY THE COMPANY 5.104 2.148 2.740
WASTEWATER FROM OTHER COMPANY 0 0 0
WATER SUPPLY BY MUNICIPALITY OR THIRD-PARTY PROVIDER 8.022 21.773,9 42.319
UNIDAD: m3 /year reused 2015 water 2016 2017
3 TOTAL VOLUME OF WATER REUSED BY THE COMPANY 151 m3 /year 725 m /year 39,75 m3 /year
PERCENTAGE OF WATER REUSED IN RELATION TO THE TOTAL VOLUME OF WATER COLLECTED ACCORDING TO THE G4-EN8 INDICATOR 0,15 % 0,74 % 0,03 % PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
Discharges 2017 2016 Parex does not make any discharges into 2015 surface waters. Instead we employ a process that consists in injecting into wells water that PRODUCTION 71.905 barrels 149.272 barriles -- has been treated to remove the highest quantities of solids and oil that could contaminate the subsurface. DOMESTIC 70.569 barrels 43.300 barriles-- We send residential, industrial and production wastewater, which require treatment before final disposal, to an independent company to INDUSTRIAL 39.593 barrels 37.874 barriles-- ensure their proper disposal.
57·
Water reuse and purification
Parex reused 5,015 barrels of water during Days of operationa a 59-day operation in the Aguas Blancas project, located in the municipality of Reused water (barrels) Simacota, department of Santander. Purified water (barrels) Additionally, we were able to purify 25,947 barrels of water for site consumption during our 102-day operation in the AGUAS BLANCAS 759 5.015 -- Capachos Block. These efforts resulted in significant savings while at the same time a positive impact on water conservation CAPACHOS -- 25.947 was made. 102 PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
UNDERSTANDING AND PROTECTING BIODIVERSITY
58·
Parex understands that entering a new region As a result of this project, we advanced the entails a significant commitment towards publication of an illustrated primer. Our aim is communities and natural resources. It could to provoke reflection about the coexistence of have not been different in Arauca. For this humans and nature, and the shared reason, we advocated an inventory of plants responsibility we have to care for our natural and animals that inhabit the Capachos Block's resources. area of influence, in the municipality of Tame. National, departmental and municipal In 2017, we conducted inventories of protected authorities; community leaders; and the species according to the International Union Fundación Orinoquía Biodiversa also for Conservation of Nature Red List and collaborated on this joint effort. Colombian laws. The surveys helped us identify the presence of critically endangered birds, The survey identified areas of greater mammals and reptiles and other vulnerable, significance for species sustainability and threatened and near-threatened species and survival. determine proper management actions. PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
2017 Threatened species monitoring
Block Project Birds Reptiles Mammals Monitoring date
Glauca 6 2 4 January 2017 VMM-11 October 2017 IGUAZU 7 2 2
Carmentea LLANOS 32 Kananaskis 14 6 2 July 2017 Calona
Ponyo 14 7 3 March 2017 CABRESTERO Kitaro 8 7 3 September 2017
Playon Boranda 11 3 3 March 2017
Llanos 40 Begonia 14 4 3 April 2017 59·
LLANOS 16 Kona 6 5 2 September 2017
16 6 1 May 2017 LLANOS 26 Rumba 11 6 2 September 2017
LLANOS 30 Adalia 13 4 2 May 2017
May 2017 LOS OCARROS Las Maracas 22 5 4
CITES: Convention on International Trade in Endangered Species of Wild Fauna and Flora PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
REFORESTATION
60·
Building a future by sowing together
For the celebration of Earth Day and Arbor Day, Parex hosted a day of tree planting with employees on the slopes of the Adalia, Rumba, Las Maracas, Begonia, Carmentea, Kananaskis and Kitaro fields.
A special emphasis was given to the benefits that tree planting and vegetation cover recovery contribute to a balanced environment and sustainable planet. We planted 175 trees and each participant baptized a tree, assumed the commitment to caring for it for the following four months, and received a sponsorship certificate.
By hosting this type of events, our goal is to ensure workers are informed and aware of the importance of protecting the environment and conserving natural resources. PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
Protective plantations
To comply with our commitments associated to In the areas reforested by Parex, sightings of environmental offsetting actions since 2011, we wildlife have been reported and are proof that have planted 56,200 trees of 29 different native the actions promoted by the Company have a species, a great contribution to flora positive impact. Some of the animals reported biodiversity and a significant addition to wildlife were white tailed deer (Odocoileus virginianus), protection by setting up perching and feeding crab-eating foxes (Cerdocyon thous), stations. porcupines (Coendou prehensilis), turtles (Podocnemis vogli), lizards (Ameiva ameiva), In 2017, we conducted forestry maintenance iguanas (Iguana iguana), gold tegu (Tupinambis activities and planted 22,000 native trees in the teguixin), giant anteaters (Myrmecophaga Hato La Graciela location, located in La tridactyla), green-rumped parrotlets (Forpus Graciela, a village in the municipality of Aguazul passerinus), and armadillos (Dasypus species). (Casanare) to facilitate the recovery, protection and extension of tree cover on the slopes of the Cusiana river and La Graciela pond.
61· PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
62·
Schools committed to reforestation
During 2017, a vegetable garden was built and The school's vegetable garden was built as a 1,282 trees of 11 different native species were learning platform to foster environment planted on the grounds of the El Diviso La conservation and educational community's Colorada school, in the municipality of Simacota well-being. Some of the trees and vegetables (Santander). planted included Valencia orange, tangelo orange, Tahiti lemon, mandarin, Conto tomato seeds, This project was possible thanks to the large onion, peppers, and aromatic herbs, such as participation of teachers, parents and students basil, spearmint, thyme and lemon grass. who helped plant trees in the green spaces Subsequently, a series of workshops on climate surrounding the school. The participants planted change, waste management and cultivation a variety of genera and a mix of species, such as management workshops were provided. forest (1,052), ornamental (200) and citrus (30) tree species.
Parex’ environmental investment in 2017
reached a COP $ 863 million (USD 293 million). PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
63·
A new weather radar for the country
In 2017, and in response to our environmental The radar system to be donated by Parex will be investment commitment of 1%, we initiated a very located in Orinoquía and it will cover eight important project that we expect will become a departments in the country, meaning that it will reality in 2018. We are working towards the cover an area of approximately 181,404 square modernization of IDEAM's Hydro-meteorological kilometers and benefit over two million people. It is Monitoring Office in the city of Duitama (Boyacá) estimated that the radar will cover 100% of and the installation of a radar that will allow the Casanare and 51% of Meta, where the Company is collection and processing of data in real time. This advancing operations. latest project is part of the complementation agreement for the National Weather Radar System The aim of this project is to improve the country's executed between the Fondo de Adaptación and technical capability in monitoring IDEAM, that is monitoring the installation of three hydro-meteorological variables and facilitate radars in Colombia. timely and accurate data on which authorities can rely to create disaster prevention and mitigation Weather radars are used in risk management as an actions. early alert system to detect rain and study spatial . and temporal patterns of rainfall. Radars help forecast whether it will rain or hail, for example. PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
SOCIAL INVESTMENT
64·
PROGRAMS BENEFITING COMMUNITIES
Social investment is a very significant topic to both Parex and its stakeholders, in particular to those communities located where the Company operates. We were able to identify this concern based on the feedback received through the many Company-fostered communication platforms where the most important community-related problems and needs are prioritized. We partner with public organizations because we want our social investment to have a greater impact on local development. Since the communities are actively engaged in the execution and monitoring of our projects, their participation creates a positive synergy for project sustainability.
In 2017, Parex made a social investment of approximately COP $11 billion (USD 3.4 million),in the areas where the Company operates. We amended the calculation base in relation to previous years since the Value Added Tax was removed and we included expenditures from January 1 to December 31, 2017.
3 The amounts in social investment reported include social management efforts by Parex Resources Colombia, Ltd, Sucursal and Parex Verano Limited Sucursal. PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
65· PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
WATER FOR ALL
66· PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
Limited access to drinking water is one of the different organizations for this project" states issues that has a great impact on the José María Téllez, president of Buenos Aires communities where Parex operates. This Alto's Community Action Board. situation presents serious health risks and a negative impact to the population's quality of We also provided our support to improve an life. Through the "Water for All" program, our aim aqueduct in Corocito, a village in the is to show that hydrocarbon activity does not municipality of Tame, Arauca, during 2017. This necessarily impact water sources and, to the project improved the lives of 165 families and contrary, our presence entails opportunities for approximately 800 individuals, including other communities, such as access to water suitable communities from the Angosturas reserve and for consumption and substantial improvement of the village El Triunfo. In addition, a proposal living conditions. has been advanced to bring water to more users in these communities with the financing of a In 2017, the aqueduct located in Buenos Aires review and design project for the rural Alto, a village in the municipality of Villanueva, aqueduct "La Macaguana"; this project that is department of Casanare, was completed. This expected to be financed with public and private project was carried out in coordination with the funds. municipality, the Secretary of Public Works, the 67· municipal Public Services Company, the We are currently developing an ambitious plan Community Action Board, and community that aims to continue impacting communities in members. a positive way. The first beneficiaries in 2018 will be the communities of Pasacorriendo, a Parex contributed the maintenance of the water village in the municipality of Plato, and of La treatment plant. In addition, the Company Imagen and El Consuelo, both villages located supported aqueduct rehabilitation works, a in the municipality of Tenerife, in the network expansion to connect 19 new users, and department of Magdalena. the future installation of water meters. An investment of COP $210 million (USD 71,155) In these communities, people have to walk long has benefited 325 individuals. The municipality distances to reach the closest artificial pond and the Public Services Company not only and then carry the water in heavy containers invested COP $39 million (USD 13,214) in the back to their homes or schools. Furthermore, project, but also provided technical support. the water does not comply with specifications that make it suitable for human consumption. "It was a very good experience to work with To help these communities, we are planning to Parex. With this aqueduct, we improve the install three sun-powered water treatment quality of water and our health at the same time. stations. We can now prepare food safely for our children. The Company facilitated the coordination with
Continuing the improvement 2018 of access to drinking target water for communities through the "Water for All" program. PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
LOCAl INFRASTRUCTURE
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Investing in local infrastructure directly impacts the quality of life of communities and contributes to regional sustainable growth. Parex allocates resources and efforts to the construction and improvement of housing, hospitals, learning centres, community centers and sports facilities, among others. All projects are always aligned with the Development Plans of the municipalities where the Company operates. PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
V PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
Better housing
In 2017, Parex implemented a project focused on Approximately 400 individuals and 89 families improving housing conditions in the in the villages of San José de Morichal I and II, communities neighbouring its operations. These Brisas de Tamacay, Rincón de Babaica and projects were aligned with municipal Brisas del Cravo, in the municipality of Tame, Development Plans and synergies were created Arauca, were the beneficiaries of this with municipal authorities that made them Parex-driven housing improvement program. viable.
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Making dreams come true
About 18 years ago, Abel Romero, a 51-year old acted also as project manager, provided a home native of the department of Cesar, arrived in evaluation and designed a renovation plan. Palo Solo, a village in Aguazul, Casanare, to With our help, Abel built walls, installed start a new life. His first job was working in rice flooring and roofing and he is currently working fields hauling rice bags and fertilizing crops. on renovating the kitchen. With his first savings he bought some land and built a house on a wooden platform with "Now we feel safe and at ease because the canvas-made walls and a tin roof. However, house does not get flooded anymore; having every time it rained, the house flooded. our house is a dream come true thanks to Parex" declared Abel Romero who still lives in Abel and his family, six adults and four the same village. children, were the beneficiaries of Parex’ Housing Improvement Program in 2017. The Abel's house is one of the 943 housing company Duval Ltda., an Aguazul supplier who improvement projects that were completed in the department of Casanare. PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
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sponsor PLAN
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A social initiative by employees at PAREX
Six years ago, a group of our employees arrived in Colombia, Lee DiStefano, is always in Pore, located in Casanare, where the encouraging us and supporting this initiative by Company had just begun operations; there they promoting our participation", says Sandra met a family living in extreme poverty. Because Tarazona, the Plan lead at Parex. this case affected them very deeply, they decided to raise money among their coworkers To identify possible beneficiaries, we work with to help improve the family's situation. social services agencies from the municipalities where we have operations; this is the first step in This is how Plan Padrino was born; an selecting families living in extreme poverty. individual-based social responsibility initiative Then, our community liaison visits each family that has evolved with time and in which every and documents their living conditions. Members employee at Parex is currently participating. In of our Plan Padrino Committee, that consists of the past years, eight low-income families have several employees, review the information and reached their dream of living in a suitable select the family for the year. house and developing an enterprise to subsidize their needs; all thanks to the In 2017, thanks to the support of our employees solidarity of Parex’ employees. in Colombia and in Calgary, Canada, and of some of our contractors, we raised the amount of COP "Plan Padrino is a project that delights us as $65 million (USD 22,024) to build a house for the employees because volunteering to support Marulanda Toledo family in the municipality of people who are in a less privileged situation Tame, in Arauca. makes us feel proud. The Company's president PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
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Abraham's personal story
Abraham Marulanda is sixty years old and lives raised enough money to build not only a new with his wife and four children in the house but a new life project for the Marulanda community Brisas de Satena, in the Toledo family. municipality of Tame. Despite the precarious conditions of his home and significant The "little shack", as Abraham called it, became economic difficulties he was facing every day, history, and today in his property there is a having a close-knit family has been the source beautiful house, equipped with many of his happiness for the past 13 years. comfortable features.
One day he was approached by a group of "I am still not able to grasp how much happiness Parex’ employees who asked him to register on I am going to share with my family; now I have the Plan Padrino's possible beneficiary list. everything I did not have for my children in the Abraham did not even know what the Company past. Thanks to Parex and everyone who was at that time, but he agreed because he contributed their efforts, so my family can enjoy thought there was a remote possibility that his so much happiness today. No more fears or dream of giving his family a decent home would despair in my life from now on”, says Abraham come true. And this is how their lives changed, Marulanda. thanks to the efforts of our employees, who PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
Promoting learning through infrastructure
Besides being places where children can learn significant resources for the construction of a about different subject, schools are venues for new school in El Diviso, a village in the coexistence and enjoyment, where the little department of Santander in 2017. We also ones spend a good part of their days. For this contributed to improving the infrastructure of reason and because most communities believe other eight schools in the municipalities of that adequate school facilities are essential for Plato and Tenerife, in Magdalena, and one the learning process, Parex allocated school in Aguazul, Casanare.
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Encouraging children of "La Graciela"
As part of the programs to benefit communities in the reconstruction of the school health unit; our Rumba operations area of influence, we the construction of a septic tank, pedestrian supported the renovation and construction work paths, a computer room and a teacher's office; at the school Luis María Jiménez, located in La the renovation of the school cafeteria building; Graciela, a village in the municipality of Aguazul, and the rehabilitation of the electrical grid. Casanare. The school infrastructure was in very poor condition; in particular, some buildings were "The improvement of the school infrastructure built over 25 years ago and some areas, like showed a direct correlation with the motivation bathrooms, were in disuse and total neglect. of children to attend school and of teachers to teach" declares Carlos Chaparro, president of With the participation of the village's Community La Graciela's Community Action Board. Action Board and the school's teaching staff, the project included the demolition of three buildings;
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76· New learning centre in EL DIVISO
The works carried out at the rural school La fully equipped classrooms, washrooms for boys Colorada, in El Diviso, a village in the and girls, an art classroom and a computer lab department of Santander, was one of the most with more than ten computers (five of them significant projects undertaken by Parex in laptops), sports field for mini soccer and 2017. With an investment of COP $1,2 billion basketball, dining room, social lounge and (USD 406,598), it was possible to build new, housing for a living-in teacher. spacious and modern facilities and add more places for children in the area, so they can also have access to learning. The municipal There is also a vegetable garden where authorities were actively engaged in this watermelon, squash, beans, tomato, onion, initiative that benefitted more than 80 families. cilantro, basil and plantain are planted, and their crops are enjoyed by students and teachers. During the relocation and the four-month construction of the new learning centre, it was Mónica Liliana Ardila Hernández, one of the necessary to properly retrofit temporary teachers, says: "Parex is a company that came to facilities for the students to continue with their change our lives because it made possible many regular classes in a good learning environment. things and the Company has impacted our children in such a positive way that they want to The learning centre La Colorada currently spend most of their time at school". boasts a total of 470 square meters with two PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
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Better roads, greater progress
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PAREX believes that improving roads used by communities is one the greatest contributions that the Company can make to local development. In 2017, we invested COP $900 million (USD 304,948) in road improvements that were prioritized by four villages located in the Capachos Block’s area of influence, in the department of Arauca. These improvements have benefitted some 340 individuals residing in the communities of Caño Grande, Alto Cabalalía, Brisas del Cravo and the Angosturas reserve. These roads are solely for public use and not for Parex’ operations.
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CONTRIBUTING TO THE HEALTH
OF COMMUNITIES
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Improving hospitals and health centres
For many years Parex has socially invested in improving health conditions in the regions where the Company operates. In 2017, we contributed to upgrading hospital infrastructure in Tauramena and Villanueva, in Casanare. This type of projects has a positive impact on thousands of individuals living in urban areas, remote villages and neighbouring municipalities.
In addition, and in response to the needs of those communities surrounding Parex’ operations, we supported facility improvements and provided medical equipment to health centres in four villages in the municipalities of Plato, Tenerife, and Chibolo, in the department of Magdalena. PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
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Health Brigades Reaching more than 4,000 individuals
An ambitious Health Brigades program was María Constanza Vega, General Manager of the launched to bring medical attention to those Tauramena hospital, says: "Parex is like a with no access to healthcare. In collaboration guardian angel that has helped us improve this with Parex’ Partner, GeoPark, the Colombian hospital by engaging Health Brigades. It is also Civil Air Patrol and the municipal hospitals in an opportunity for us to reach people in remote Tauramena and Villanueva, Parex made possible villages and detect high-impact diseases in for a multidisciplinary team of volunteer doctors advance". (PICTURES) to travel to remote villages and provide medical services to more than 4,000 individuals of Parex also supported health brigades led by different ages. municipal authorities and/or hospital administrators in the municipalities of The services included consultations, diagnostic Tauramena and Aguazul. "We value Parex’ tests and approximately 200 different types of commitment to the community. Through surgeries. In addition, workshops on family sourcing our services to the Health Brigades, we planning, hygiene practices, healthy lifestyle, have been able to buy medical and surgical prevention of sexually transmitted diseases, and supplies for the hospital that we did not have childrearing guidelines were provided. before. We are very grateful for the support the Company provided in times when we needed it the most" says Ingrid Velandia, Manager of the Aguazul hospital. PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
BRINGING AWARENESS TO COMMUNITIES
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About the oil and gas industry
In collaboration with Colombian universities, Universidad Industrial of Santander and Universidad Nacional, Parex led a community training program about the hydrocarbon industry. Scholars from these universities shared their knowledge and answered questions related to topics such as legal aspects, current sector trends in the country and the real impact of oil and gas operations on climate change and water resources, among others. The lectures also included subjects such as alternative energy sources that are currently being developed around the world.
These training sessions were offered as workshops that included teaching tools such as models and videos. Different teaching methodologies were implemented to make the topics clear and simple for attendees. Children also had the opportunity to engage in these sessions; through age-appropriate workshops, they learned about the importance of caring for the environment and water conservation. These sessions were held in Simacota and Cimitarra (Santander), Puerto Boyacá (Boyacá) and Tame (Arauca). PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
About conservation and sustainable use of natural resources
In collaboration with SENA and ADSAMBIENTE, Parex and regulations, and to strengthen learning skills launched eleven community training programs for in developing plans, programs and projects on environmental advocates in different municipalities. sustainable development. These advocates attended the program "Environmental educators and facilitators training" Parex socialized this project with authorities and delivered by the Ministry of Environment and communities and led the initiative with the Territorial Development. participation of 268 individuals from 38 villages in the municipalities of Pore, Nunchía, San Luis de This initiative aims to train and foster citizenship Palenque, Trinidad, Orocué, Yopal, Aguazul, engagement in environmental management, planning Tauramena and Villanueva, in the department of Casanare.
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PROCURING LOCAL GOOD AND SERVICES
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Parex continues to be committed to procuring good and services from the communities where it operates. The synergies we created with local businesses have become a springboard for regional economies.
In 2017, we invested COP $48 billion (USD 16.4 million) in locally procured good and services.
Purchasing of local goods and services in 2017 $11.200.406.173 $8.906.064.316 $2.552.355.462 $6.371.573.843 $1.676.456.906 $1.073.046.875 $5.144.616.070 $5.043.601.506 $6.115.006.621 $370.000.000
Water disposal Engineering Administrative Maintenance Cargo Environment, Passenger Oil and waste Facilities Other and workover support transportation Health, and Quality transportation transportation management PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 220170 1 7
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Strengthening local entrepreneurship
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PROMOTION OF LOCAL MIGUEL ANGEL CASTILLO ENTREPRENEURSHIP 5 years of service
Miguel Ángel Castillo is the founder and general dream. Mr. Castillo's Casanare-based company manager of J&M Ingeniería S.A.S, a company has been operating for 12 years and employs 20 dedicated to civil, hydraulic, sanitary and full-time employees. environmental activities located in Aguazul, Casanare. He fondly remembers that his mother, Upon submitting his offer, J&M was selected by a teacher, was always instilling in him the Parex to carry out infrastructure renovation importance of pursuing university studies; for activities at the school in the village La this reason, he applied for a student loan from Graciela. ICETEX to study Sanitary and Environmental Engineering in the city of Tunja (Boyacá). "I would like to mention Parex’ efforts to support the children of La Graciela; I think that After completing his university degree, Miguel investing in education is the best contribution Ángel returned to Aguazul with the firm intention that a company can make. The Company gives of starting his own company and contributing to our local businesses, like mine, the chance to the region's economic development. His support the community by providing our company J&M is just the realization of that services", explains Miguel Ángel Castillo. PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
Promoting entrepreneurship through public-private partnerships
Sponsored by public-private efforts, SINERGIA is In 2017, Parex contributed seed capital for a program that advances entrepreneurial culture entrepreneurs to acquire the necessary in Casanare through the incubation and materials to develop their minimum viable acceleration of innovative, sustainable and products and start selling. Companies such as dynamic companies capable to offer their goods Helados Tailandeses, Agroinsumos Orgánicos and services to the region. and a local dinnerware company, are examples of this initiative the Company heartily Many organizations participate in this program supports. including the Secretary of Agriculture, Livestock and Environment of the Government of Casanare; "We maintain a very open communication with the Secretary of Economic Development of the Parex about the requirements of the programs municipality of Yopal; Casanare's SENA; the in which we work together. They participate in University Foundation for the American Tropics the Chamber's activities always showing a good (Unitrópico); the San Gil University Foundation disposition and the best attitude" states Carlos (Unisangil); the Amanecer Foundation; Ecopetrol; Rojas Arenas, Executive President of the and the Casanare Chamber of Commerce, the Casanare Chamber of Commerce. program administrator. 87· PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
Parex, a supporter of local businesses
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PROMOTION OF LOCAL JORGE IVÁN PÉREZ ENTREPRENEURSHIP 5 years of service PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
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Jorge Iván Pérez, president of Tame’s Jorge Iván submitted his bid to provide Merchants Association and current supplier catering services through his restaurant of catering services to the Capachos Block Krakatoa in a bidding process held by Parex, operation, is candid about his feelings of and he was awarded the contract. "Parex unease when he learned that the Company was my saviour because my 17-year old would be working in the department. "The business could have not survived if I had municipality was bouncing back from a not had the opportunity to submit my offer. difficult economic crisis because of several Instead the feeling is that since the strikes and the region had been affected by Company arrived there is economic revival foot-and-mouth disease, that negatively in the municipality that is very good", adds impacted the economic development of the the local entrepreneur. region." Jorge Iván Pérez continues to work towards However, when the Company explained to achieving his ISO 9000 certification and local entrepreneurs how they could making his restaurant more competitive in participate in the project by supplying goods the market. and services, the development of the Capachos Block began to be perceived as an opportunity. PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
LOCAL EMPLOYMENT
Finding Human Talent in the communities
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Dimas Holguín was unemployed and was living Dimas explains that "getting this job is the best with his grandmother in La Graciela, when he thing that happened to me; it changed my life. learned through SAR, a staffing service company, If it had not been for this opportunity, I would about employment opportunities at the Parex’ still be stuck. The training that I have received Rumba field. has changed my outlook on life and this company has given me many opportunities". Without hesitation, he submitted his application for the position of Field Foreman and got the job. Today he lives with his partner in Aguazul; he Before long he was promoted to Training would like to work in the fields, hopefully as a Assistant and shortly after to his current rancher, and continue living in the countryside. position as Production Assistant. Through his commitment and good performance, he has been experiencing three years of ongoing personal growth. PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
Women in the workplace
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Anayibe Perilla lives in Rio Chiquito, a village in tank trucks had their documentation in order, the municipality of Aguazul, Casanare; she is checking loading orders and scheduling 40 years old, married, and has two children. Her incoming vehicles to the Rumba field. adaptability and desire to thrive allowed her to develop skills in dressmaking, and breeding She says that many men from the community chickens and pigs. In addition, her leadership applied for the job; however, none of them skills helped her pioneer a women committee in passed the admission tests. Without a second her community. thought, she asked the Community Action Board to submit her name and, even though some She remembers that she heard at a Community members were not completely convinced, they Action Board meeting that a staffing company did. Anayibe passed the tests and got the job. was looking for unskilled workers to work at Parex. The first thought that crossed her mind She explains that she has earned the was that she could not apply because she was admiration and respect of drivers with whom a woman and the position was for a she works every day; laughingly, she adds that “scheduler”, a male-dominated job. This sometimes she confronts them when their position involved the coordination of crude documents are not in order and she does not let transportation logistics by verifying that all them enter the facilities.
"I have earned my position through my efforts, hard work, learning and accountability. I am very proud of what I do", concludes Anayibe. PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
Parex, a pioneer of the "Works for Taxes" program
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In 2017, the Colombian government launched the Our target in 2018 is to advance two other "Works for Taxes" program, a new tax modality projects included in the "Works for Taxes" through which large companies can allocate up to program. Scheduled to be completed in 2019, half of their taxes towards infrastructure these projects will improve living conditions for developments that benefit communities located in the people of Tame. The first initiative will bring the municipalities most affected by the armed drinking water to about 400 families living in rural conflict (ZOMAC zones as it is known in Spanish) areas of the municipality. To implement this in Colombia. project, we have been working closely with the communities and we are coordinating our efforts The Territorial Renewal Agency (ART, for its with the Government, ART, and the Ministry of initials in Spanish) is the institution in charge of Housing, City and Territory. The second project is implementing the "Works for Taxes" program. about bringing natural gas to more than 7,000 During 2017 and with ART's support, Parex families in urban and rural areas of the advanced the procurement of school equipment municipality; we have been working closely with working along with the Ministry of Education, the municipal authorities, state authorities, ART and Government of Arauca, the Department's the Ministry of Mines and Energy to make this Secretariat of Education, Tame’s City Hall, the project a reality. municipal Secretariat of Education, and the principals of six educational institutions in rural Angélica Leguízamo, Director of the Project Tame. Execution and Assessment for the Territory Renewal Agency, affirms that: "Parex has been one Our participation in this project will help these of the pioneering companies of this program. schools have adequate furniture, computers and They have always been very proactive and other fundamental equipment to offer a learning committed, and we are very happy with the way environment that is aligned with the standards we have advanced these projects together. It is a designed by the Ministry of Education. Planned to company that has a very clear idea of where its be implemented during the second half of 2018, contribution should go and the social impact that this initiative will benefit approximately 4,500 wants to generate". students. PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
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EXTERNAL VERIFICATION
PAREX takes a new step to meet its stakeholders’ expectations.
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GRI chart
Material aspect Strategy and Analysis Page 1 Letter from the President 4,5
Material aspect Organizational Profile Page 3 Name of the organization. 6 4 Primary brands, products, and services. 6 5 Location of the organization's headquarters. 6 Number of countries where the organization operates, and names of countries 6 where either the organization has significant operations or that are specifically relevant to the sustainability topics covered in the report. 6, 9 7 Nature of ownership and legal form. 6 Markets served (including geographic breakdown, sectors served, and types of 8 customers/beneficiaries). 6 100· Scale of the reporting organization (number of employees; number of 9 operations; net sales or net revenues; total capitalization broken down in terms 6,8,24,26 of debt and equity, and quantity of services or products provided. Number of employees by employment contract and gender; number of 10 permanent employees by employment contract and gender; workforce by 26, 27, employees, supervised workers and by gender; workforce by region and gender. 28 11 Percentage of employees covered by collective bargaining agreements. 28 12 Organization's supply chain. 8 Significant changes during the reporting period regarding size, structure, stock 13 ownership or supply chain of the organization. 6 14 Precautionary principle. 48 List of charters, principles, or other initiatives to which the organization 15 subscribes or has adopted 6 Memberships in associations and/or national/international advocacy 16 organizations to which the organization belongs. 6
Material aspect Material aspects and boundary Page 17 List of entities included in the organization's consolidated financial statements. 12, 24 18 Process to define the report content. 12, 14
19 List of material aspects identified in the process for defining report content. 15 20 Boundary within the organization for each material Aspect. 16 21 Boundary outside the organization for each material Aspect. 16 Effect of any restatements of information provided in previous reports and their 22 reasons. 28, 52 Significant changes from previous reporting periods in Scope and Aspect 23 Boundaries. 12 PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
Material aspect Stakeholder engagement Page
24 Stakeholders engaged by the organization. 14 25 Basis for selection of stakeholders. 14
26 Organization approach to stakeholder engagement. 4, 5, 34 Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, 27 including through its reporting. Report the stakeholder groups that raised each 14,22, of the key topics and concerns. 23, 41
Material aspect Report profile Page
28 Reporting period. 12 29 Date of most recent previous report (if any). 12
30 Reporting cycle. 12
31 Provide the contact point for questions regarding the report or its contents. 16 32 Type of compliance with Guidelines chosen by the organization. 12 101· Current policies and practices by the organization for external report 33 verification. 14
Material aspect Governance Page 34 Governance structure of the organization. 19
Material aspect Ethics and Integrity Page
Organization's values, principles, standards, rules, such as code of conduct or 56 code of ethics. 20 Economics
Material aspect Economic performance Page EC1 Direct economic value generated and distributed. 24
EC3 Coverage of the organization's defined benefit plan obligations. 30 Percentage of spending on locally-based suppliers at significant locations of EC9 operation: Broken down by type of goods or services. 84
Environment Material aspect Materials Page
EN1 Renewable and non-renewable materials. 50
EN2 Materials used that are recycled input materials. 50 PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
Material aspect Energy Page
EN3 Direct energy consumption. 53 EN5 Energy saved due to conservation and efficiency improvements.
Material aspect Water Page EN8 Total water withdrawal by source. 56 EN9 Water sources significantly affected by withdrawal of water. 57 Percentage and total volume of water recycled and reused. EN10 57
Material aspect Biodiversity Page
Location and size of land owned, leased, managed in, or adjacent to, protected EN11 areas and areas of high biodiversity value outside protected areas. 58 102· Description of significant impacts of activities, products, and services on EN12 biodiversity in protected areas and areas of high biodiversity value outside protected areas. 48 EN13 Habitats protected or restored. 59
Number of IUCN Red List species and national conservation list species with EN14 habitats in areas affected by operations, by level of extinction risk. 58, 59
Material aspect Emissions Page EN15 Direct greenhouse gas emissions - Scope 1. 53 EN16 Indirect greenhouse gas emissions - Scope 2. 53 EN17 Other indirect greenhouse gas emissions - Scope 3. 53 EN19 Reduction of greenhouse gas emissions. 52
Material aspect Effluents and Waste Page EN22 Total water discharge by quality and destination. 57 EN23 Total weight of waste by type and disposal method. 50 EM24 Total number and volume of significant spills. 51 Material aspect Products and Services Page EN27 Initiatives to mitigate environmental impacts of product and services. 48
Material Page aspect Regulatory Compliance Monetary value of significant fines and total number of non-monetary sanctions EN29 for non- compliance with environmental laws and regulations. 49 PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
Material aspect Overall Page EN31 Total environmental protection expenditures and investments by type. 62
Material aspect Environmental grievance mechanisms Page Number of grievances related to the environment filed, addressed and resolved EN34 through formal grievance mechanisms. 22
Social Performance
Material aspect Employment Page Total number and rate of new employee hires and employee turnover by age LA1 group, gender, and region. 27, 28 Benefits provided to full-time employees that are not provided to temporary or LA2 part- time employees, by significant locations of operation. 30 103·
Material aspect Occupational health and safety Page Percentage of total workforce represented in formal joint management–worker LA5 health and safety committees that help monitor and advise on occupational health and safety programs. 47 Rates of injury, occupational diseases, lost days, and absenteeism, and total LA6 number of work-related fatalities, by region and by gender. 44, 46
Material aspect Training and Education Page Average hours of training per year per employee by gender, and by employee LA9 category. 29
Programs for skills management and lifelong learning that support the continued LA10 employability of employees and assist them in managing career endings. 29,30 Percentage of employees receiving regular performance and career development LA11 reviews, by gender and employee category. 29
Material aspect Diversity and Equal Opportunity Page Composition of governance bodies and breakdown of employees per employee LA12 category according to gender, age group, minority group membership, and other indicators of diversity. 19
Material aspect Grievance Mechanisms for Labour practices Page Number of grievances related to labour practices filed, addressed, and resolved LA16 22 through formal grievance mechanisms. PAREX RESOURCES RESOURCES PAREX SUSTAINABILITY REPORT 2017
Material aspect Grievance Mechanisms related to Human Rights Page
HR2 Employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained. 42 Number of grievances related to human rights filed, addressed, and resolved HR12 through formal grievance mechanisms. 42
Society Material aspect Local Communities Page Percentage of operations with implemented local community engagement, SO1 impact assessments, and development programs. 64-83
Material aspect Corruption Page 104· SO4 Anti-corruption communication and training policies and procedures. 20
Material Grievance Mechanisms related Page aspect to social impact issues Number of grievances related to social impacts filed, addressed, and resolved SO11 22 through formal grievance mechanisms.
Material aspect Services on Ecosystem including Biodiversity Page OG4 Number and percentage of significant operating sites in which biodiversity risks 58-62 have been assessed and monitored.
Material aspect Effluents and Waste Page OG5 Volume of formation wastewater or produced water 57 Volume of waste extraction from drilling, sludge and cuttings, and strategies for OG7 their treatment and destruction. 51 PAREX RESOURCES RESOURCES PAREX WE GENERATE SHARED BENEFITS 2017
Advisory on Forward Looking Statements
Certain information regarding PAREX set forth in political and social uncertainties and this document contains forward-looking contingencies. Many factors could cause Parex' statements that involve substantial known and actual results to differ materially from those unknown risks and uncertainties. The use of expressed or implied in any forward-looking any of the words "plan", "expect", “prospective”, statements made by, or on behalf of, Parex. "project", "intend", "believe", "should", Forward-looking statements relating to "anticipate", "expect", "estimate", "forecast", "reserves", which are by their nature "budget" or other similar words, or statements forward-looking statements, as they involve the that certain events or conditions "may" or "will" implied assessment, based on certain estimates occur are intended to identify forward-looking and assumptions that the reserves described statements. Such statements represent Parex’ can be profitably produced in the future. internal projections, estimates or beliefs In particular, forward-looking statements are concerning, among other things, future growth, not limited to the words "target", "objective", results of operations, production, future capital "challenge", among others. and other expenditures, competitive These forward-looking statements are subject advantages, plans for and results of drilling to numerous risks and uncertainties, as 105· activity, business prospects and opportunities, contained in detail in Parex’ 2017 Annual Report environmental protection matters, safety issues as well as in other reports on file with Canadian and access to fields, and other matters. These securities regulatory authorities and may be statements are only predictions and actual accessed through the SEDAR website events or results may differ materially. (www.sedar.com). These forward-looking Although the Company’s management believes statements are made as of the date of this that the expectations reflected in the document and PAREX disclaims any intent or forward-looking statements are reasonable, it obligation to update publicly any cannot guarantee future results, levels of forward-looking statements, whether as a result activity, performance or achievement since such of new information, future events or results or expectations are inherently subject to otherwise, other than as required by applicable significant business, economic, competitive, securities laws.
Advisory on Oil and Gas matters
The term "Boe" means a barrel of oil equivalent Given the value ratio based on the current price on the basis of 6 Mcf of natural gas to 1 barrel of crude oil as compared to natural gas is of oil ("bbl"). Boe’s may be misleading, significantly different from the energy particularly if used in isolation. A boe equivalency of 6:1, utilizing a conversion ratio conversion ratio of 6 Mcf: 1 bbl is based on an at 6:1 may be misleading as an indication of energy equivalency conversion method primarily value. applicable at the burner tip and does not represent a value equivalency at the wellhead. PAREX RESOURCES RESOURCES PAREX 106·
PAREX RESOURCES 2017 Photography and ArtDirection:SAGRADO ARIOSA-Sustainable Advertising Agency Direction, research,andwritingoftheReport:SIGNUM CONSULTING Senior Corporate Communications Coordinator:AndrésMartínez Security andRisk PreventionManager: CamiloMartínez Procurement and Logistics Manager: JoséTéllez Social ResponsibilityManager:JaquelineTarazona Environment andQualityManager:Julián Carvajal Manager forRegulatoryCompliance:LeonardoBohórquez Senior ManagerforFinanceandProcurement:FedericoPaz Manager forHuman Resources/IT/ Administration: MaríaTeresaArévalo Facilities Manager:MarcosPenna Manager forProductionEngineering:DamiánFernández Development Manager:DiegoRamírez Field Administration Manager: Krys Olchowecki Drilling Manager: ErnestoMelo Manager forExploration:Gustavo Fortunato Senior ManagerforCorporateAffairs:Sandra Rodríguez Vice-president forOperationsinColombia:DanielFerreiro Vice-president forMarketingandTransportation: AnaMaría Pinzón Vice-president forRelations withtheGovernment:RafaelPinto President ParexResourcesColombiaLTDSucursal &CountryManager:LeeDiStefano President andCEO:David R.Taylor CREDITS SUSTAINABILITY REPORT WE GENERATE SHARED BENEFITS