Good morning everyone, and welcome to Parex Resources Fourth Quarter and Year-End 2021 Conference Call and Webcast. Please note that at any time, participants on the webcast can submit their questions under the Ask a Question tab at the top of the webcast interface, and participants on the phone can press star one. I would now like to turn the call over to Mike Kruchten, Senior Vice President of Capital Markets and Corporate Planning at Parex. Please go ahead, Mike.
Thank you, operator, and good morning everyone. On the call with me today are Imad Mohsen, Parex's President and CEO, Kenneth Pinsky, Chief Financial Officer, Eric Furlan, Chief Operating Officer, and Ryan Fowler, Senior Vice President of Exploration. I would like to remind you that this conference call includes forward-looking statements and non-GAAP and other financial measures with the associated risks outlined in our news release and MD&A, which can be found on our website or at sedar.com. All amounts disclosed today are in US dollars unless otherwise stated. Please go ahead, Imad.
Thanks, Mike, and good morning everyone. As we reflect on 2021, we are extremely proud of our record results and our team that's consistently executing in both Calgary and in Colombia. Looking back, we started the year at approximately 45,000 barrels a day, increased our capital budget significantly, and exited that same year at roughly 51,500 barrels a day production rate. In tandem with increasing our production, we also saw an increasingly constructive global commodity price environment that ultimately contributed to Parex generating annual funds flow from operations of $578 million, which was a record and the largest in the company's history. More to come, I would add. During the year, I'm pleased to say that we materially improved the depth and the quality of our land inventory.
We acquired 18 new blocks in 2021 Colombia bid round, as well as expanded our strategic partnership with Ecopetrol in the Northern Llanos, which combined represent a nearly four times increase in our total acreage in Colombia. Parex is now the largest independent acreage holder in Colombia. We see this development as a cornerstone to our long-term strategy and vital to our commitment to grow our Colombia-only oil and gas production. Other noteworthy achievements for the year include our corporate ESG initiatives that Mike will briefly talk about, as well as our return of capital track record that Ken will touch on. Therefore, before I make some final remarks on our outlook, as well as Parex positioning for 2021 in the long term. Please go ahead, Mike.
Thanks, Imad. In 2021, we advanced our climate-related disclosures such as our inaugural Task Force on Climate-related Financial Disclosures report, achieved above industry average ESG ratings from major providers such as Sustainalytics, CDP, and Bloomberg. Critically, during the year, we publicly committed to a 50% reduction in our greenhouse gas emissions by 2030, and Parex is actively progressing on its ambition to become one of the least greenhouse gas emissions intensive oil and gas exploration companies. In 2021, we made progress towards this commitment, reducing our greenhouse gas intensity from our operated assets by approximately 14% and a total reduction of approximately 35% from our 2019 baseline.
Moving forward, we expect to see more reductions from advancing the implementation of geothermal energy, pipelines to reduce transportation needs, gas plants to reduce flaring, and energy efficiency initiatives. Taking a step back and really looking at sustainability at its core with the current volatility that we are seeing in energy markets today and considering the follow-on effects of that, Parex is in a position where we can do our part to provide secure, reliable, and environmentally friendly energy. Plus, we can do that while continuing to improve the local communities where we operate. On that note, we look forward to 2022 and updating our stakeholders throughout the year as we look to continuing advancing our ESG story and meeting our overall sustainability objectives. I will turn it over to Ken to briefly describe our recent results and return of capital track record.
Thank you, Mike. We closed 2021 with a strong fourth quarter where we generated record funds flow from operations of $168 million. That was up 200% quarter-over-quarter. I'll add that Brent averaged in Q4 2021 approximately $80 a barrel. Imad will tell you, we remain unhedged to global oil prices. Quarterly net income was $96 million, while Q4 2021 production averaged nearly 50,000 barrels a day, and that was up 7% quarter-over-quarter. Over the full year of 2021, we generated over $300 million of free funds flow and continued to add to our return of capital track record.
We paid a special dividend as well as initiated a quarterly regular dividend last year, which was just increased by our board to 12% in February. During the year, we also repurchased 10% of our company's public float, which marked the third year in a row where we have bought back the maximum allowable shares pursuant to our Normal Course Issuer Bid programs. At the end of February 2022, Parex has now returned over CAD 1 billion to shareholders through share repurchases. Since 2017, we have reduced the fully diluted share count by over 25%, repurchasing over 47 million shares at an average price of less than CAD 20 per share, compared to our close yesterday of CAD 28.89 per share for reference.
Stating it in another way, when we started buying back shares in 2017, we had in excess of 164 million fully diluted shares outstanding, which by year-end 2022, we expect to have approximately 110 million fully diluted shares outstanding. To add, over the same period, our oil and natural gas production has grown by approximately 32%. We continue to have an unmatched balance sheet, ending the year with no debt and working capital of $326 million plus an undrawn $200 million credit facility.
As we look to 2022, even while spending on a comprehensive capital investment program, we have expanded our return to capital plan, raising the base dividend this year already, as I have mentioned, and we are on track to repurchase 10% of our stock for the fourth year in a row. I'm extremely proud of our accomplishments for 2021, and I look forward to 2022 and beyond. Now, I'd like to turn things back to Imad for some final remarks.
Thanks, Ken. 2021 was a record year for us, and I'm excited for what is to come for Parex in 2022 and the long term. For 2022, there is no change to our capital expenditure production guidance that we released this past November. We continue to invest across our development, exploitation, and exploration programs, with our current production guidance expected to generate a year-over-year absolute production growth of 13% or 23% on a per-share basis. Along with our ambitious capital expenditure program, we still expect to repurchase 10% of our stock this year via NCIB, as Ken mentioned, while also having base dividend upside growth potential.
Building on our track record of returning meaningful capital to shareholders, moving forward, we wanna be clear that we are targeting to return at least a third of free flow from operations to shareholders through share repurchases and dividends. With this philosophy, at current strip prices, Parex expects to return approximately 40% of 2022 annual FFO to shareholders. The remaining free flow from operations will be invested to grow the company and replenish development inventory to support future return of capital activities. There's an important point I'd like to comment on right now. Over the last year, we have positioned Parex to capitalize on the current market cycle. Parex is 100% unhedged and has a clear first-mover advantage in today's oil and gas markets as we move into 2022.
Firstly, we are entering the year having acquired the most extensive land base in the company's history. For a steal, I would add. Second, we have secured rigs under long-term contracts to have equipment in place to cater for our capital investment programs for years to come. It does give you some feeling of warm heart to see that the last heavy rigs in Colombia are under contract with Parex. Third, we have increased critical organization capabilities, hiring significant staff both in Calgary and Bogotá. I would recall around 30% in Calgary in 2021 increase to help us ramp up our programs. Lastly, we have placed orders for long-lead items for the foreseeable future.
That includes casings, wellheads, steel, compressors, turbines, you name it, in order to provide insulation from supply chain shortages and disruptions, and a relative hedge against cost inflation going forward. Combined, these actions put us in an extremely competitive position organically to harvest the upside opportunities that you are seeing, which is Brent pricing that could go well above $100 per barrel, which I guess is $110 today. For me, not waiting for a steal when you're drilling a well that pays back in a month or two gives you huge optionality. With that, I would like to thank everyone for their continuous support for Parex and our employees for their continuous hard work as we execute our strategy.
This concludes our formal remarks, and I would now like to turn the call back to the operator for the Q&A session for the investment community. Thank you.
Thank you. You may press star one at this time if you have a question. Thank you for your patience. Once again, you may press star one if you have a question. We have a question from Luke Davis from RBC. Please go ahead.
Hey, good morning, guys. Imad, you mentioned preorders for long lead items. I'm just curious if you can provide a little bit of commentary around what you're seeing or forecasting for kind of base inflation through the balance of the year. Wondering how long in advance you can order for. Are you just talking 2022? Does that go multi years? Just a little bit more detail there would be helpful. Thanks.
I would say something like eight months ago, I agreed with the management team that there is first for COVID, but also the way the cycle was working, there is a chance for supply disruption. What we started to do since that moment is define our needs with three years in mind, and wherever we could to place orders to fix the terms. That doesn't mean you don't get any inflation. Let's say you buy steel pipes, you will be having some indexing on steel price. That's very different than having to go into a bidding war against that same pipe sitting in somebody's yard. We can get three or four times that inflation. We're not seeing much inflation right now in Colombia just because of the local conditions on rigs and other items.
I can see some signs for inflation going up, but within numbers that doesn't affect our margins any significantly. Do you wanna add to that anything, Eric?
You know, that summarizes it quite well. I think, you know, the big things we've done is secure the rigs, especially the big rigs. Go forward, those are on long-term contracts. Imad's alluded to, we're not seeing a big inflation component. We've secured the critical equipment we need, and the pipe for the next couple of years. I think we're sitting in pretty good shape.
That also expands on surface facility equipment, where people were brave enough to say, "Let's order power generation kits or turbines or compressors or even gas treatment facilities," before the wells were put on the ground. I can tell you these things coming to deliver in the coming few months and year will be very handy as we are trying to expand and compared to our competitors.
Got it. That's really helpful. If I could just ask a follow-up to that. I'm curious to just get your general thoughts on the upcoming elections here, something that comes up a fair bit. Just, if you can go through kind of a couple potential scenarios and kind of where you guys are sitting right now, that'd be helpful.
Sure, Luke. It's Mike Kruchten. Regarding the election, you know, that's gonna play out over the next couple months up into June. Really, we're not seeing anything too different than what we saw the path in 2018. There'll be some consolidation of all the candidates that are running. We really, you know, think we're well-positioned to, you know, work with Colombia and continue investing heavily in Colombia no matter what the outcome is. We have a very strong land position that gives us lots of exploration running room and production running room over the next five years. We think it won't really change our overall strategy.
That's helpful. Thanks very much.
Thank you. Once again, you may press star one if you have a question. There are no further questions on the phone for now. I would like to turn the meeting back over to Mike.
Thank you very much for all the participants joining our call today. If you have any further questions, feel free to contact me at Parex. Have a good day.
Thank you. The conference has now ended. Please disconnect your lines at this time. We thank you for your participation.