Parex Resources Inc. (TSX: PXT) announced an agreement with Ecopetrol S.A. to acquire a 50% participating share in the Casabe and Llanito blocks in Colombia's Magdalena Basin. The Canadian oil and gas company will commit to invest $250 million over five years to earn this stake.

The blocks currently produce approximately 14,900 barrels per day of medium crude oil and contain an estimated original oil in place of over 3 billion barrels with a recovery factor of less than 15%, according to the companies.

Under the agreement structure, Parex will receive 50% of both existing base production and incremental production in exchange for executing the capital development program. The company expects to begin its base production participation upon spudding the first well on each block during the second half of 2026.

Parex will serve as executor for future drilling and capital activities, while Ecopetrol will remain the operator of current and future production. Development plans focus on infill drilling, waterflood optimization, and enhanced oil recovery initiatives.

The partnership operates in two phases. During Phase I, Parex funds the $250 million capital program while receiving 50% production participation. After Phase I completion and regulatory approval, future capital expenditures will be shared equally between the partners.

The blocks benefit from existing infrastructure including processing facilities and a direct pipeline connection to Ecopetrol's Barrancabermeja refinery. The agreement requires satisfaction of certain conditions, including regulatory approval from Colombia's National Hydrocarbons Agency.

Based on first quarter 2026 production data from Colombia's National Hydrocarbons Agency, the deal adds producing assets to Parex's portfolio in the Magdalena Basin where the company already operates.