All participants, thank you for standing by. The conference is ready to begin. Good morning, everyone, and welcome to Parex Resources third quarter 2022 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 & 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 Chief Executive Officer, Ken Pinsky, CFO, and Eric Furlan, Chief Operating Officer. As a reminder, 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 discussed today are in US dollars unless otherwise stated. Please go ahead, Imad.
Thank you, Mike, and good morning, everyone. Production for the quarter was pre-released at approximately 51,000 barrels a day, up 8% from the comparative quarter in 2021. This production on a per share basis up 19% over the same period. We are in the process of optimizing and maximizing our key assets. By making significant investments at our Southern Llanos asset, LL 34 and Cabrestero, as well as Northern Llanos infrastructure, EGRET. We expect to lower our long-term corporate decline rate and sustaining a lower capital expenditure requirement. This is expected to maximize our reserves as well as generate sustainable and significant free funds flow that can be used for both reinvestment and return to shareholders. We are also showing new growth within our portfolio.
Recently, we announced that successful drilling efforts year-to-date have translated to prove discoveries on multiple of our blocks. In Northern Llanos, we have had positive drilling results with two wells that have encountered new zones. We had a near-field exploratory discovery, a new play in Southern Llanos and in Magdalena Basin. At VIM-1, we are seeing encouraging results where we are planning to cycle the gas for and condensate recovery in the first quarter. I will now turn the call over to Ken to discuss some of our financial highlights, return of capital, and the proposals for changes in tax regime in Colombia before I make some final remarks. Please go ahead, Ken.
Thanks, Imad. In the third quarter, we generated funds from operations of $206 million, which is up 35% over the comparative quarter. Our funds flow from operations per share was $1.85, which was up 49% over the comparative quarter. As planned in the third quarter, we decreased our working capital surplus through the acceleration of our share buyback program and the purchase of long lead capital expenditure items such as well casing and gas turbines. That will support our 2023 capital expenditure program. At the end of the quarter, we had a working capital surplus of $230 million US and are still debt-free, and we have an undrawn credit facility of $200 million.
In quarter three, we completed the 2022 normal course issuer bid or NCIB, which marks the fourth consecutive year where Parex has purchased the full 10% of common shares allowable for purchase under the program. Since 2017, we have returned over CAD 1.1 billion to shareholders for these share repurchases, which I am proud to say is nearly half of our current market capitalization to date. With the normal course issuer bid complete for 2022, and the fourth quarter dividend of CAD 0.25 per share approved by the board of directors, we expect to return roughly CAD 385 million to shareholders in 2022, meeting our goal of returning more than one-third of our annual funds flow from operations and 100% of free funds flow to shareholders.
Turning to 2023 and the Colombian government tax reform, yesterday, a proposal passed in the Senate of the Republic of Colombia that will move on to the Chamber of Representatives of Colombia. Although it is expected that this proposal will become law and/or will receive final approval, it is still subject to change. Currently, we are assessing and evaluating the current proposal on its impact to Parex, and once finalized, we expect to provide a clear outline of the impacts to Parex, specifically our funds from operations and netback sensitivity. Until it is final, we will not have any specific comments on the proposed changes and their impact. We have operated in Colombia since 2009 and continue to see the country as a strong, stable and profitable environment for long-term investment and where the energy sector is a vital sector.
I would now like to turn the call back to Imad for some final remarks. Please go ahead, Imad.
Thank you, Ken. Looking ahead to the fourth quarter, over the past weeks of October, we have been working t0hrough localized blockades in Southern Llanos, where the impact was roughly 4,000 barrels a day. As we actively work with communities, these localized blockades have been lifted and full production is being brought back online. Given wells that have been drilled and successes to date, we still expect to achieve our Q4 guidance of 54,000-58 ,000 BOE a day and are focused on executing our 60,000 barrels a day exit milestone. This is credit to our staff who have managed and navigated many twists and turns this year and the overall depth and resilience of our portfolio.
As Ken mentioned, Colombian tax reform is being finalized, and we are currently working through our budget process with the plan to release our 2023 guidance in early December. With this release, we also plan to provide a full corporate update that outlines our long-term vision, strategy, operations, and future opportunities. I would like to confirm our commitment to Colombia, a country with an amazing resource base, strong, dependable institutions, and following the tax reform, will continue to provide a very competitive fiscal term and netbacks. With that, I'd like to thank everyone for their continued support of Parex and the hard work that our employees and contractors execute for us every day. This concludes our formal remarks. I would now like to turn the call back to the operator and start the Q&A session for the investment community. Thank you.
Thank you. To ask a question over the phone, please press star one at this time. We have a question from Christopher Jones from Haywood Securities. Please go ahead.
Hey, guys. Thanks for taking my call. I know you're in the midst of the budgeting process for 2023. Just wondering what level of inflationary impacts you are expecting next year, and maybe provide us with some preliminary high-level thought on 2023 activity and spending levels. Thank you.
We expect year-on-year inflation like for like of roughly 10%, and that's credit to our program where we pre-ordered a good number of amounts of long leads that at previous prices, but also because of the effects of the pesos exchange rate on our costs in Colombia for labor.
Yeah, Chris, we'll release the budget, like Imad said, in December, and we'll give you some guidance then.
Okay, that's helpful. Just on 2022 CapEx. I know we're sitting here in early November. Are you able to give us a sense of where CapEx should sort of settle out within the range provided at your end? Are you guys sort of pointing to the low end, mid-range or high end?
Yeah. We'll be right within our guidance range. Once you exclude the long lead items that have been purchased, we should be in that $525 million-$550 million.
Thank you.
Thank you. You may still press star one if you have a question. The next question is from Ariane Covil from Balanz. Please go ahead.
Hi. Good afternoon. This is Ariane Covil with Balanz. I had two brief questions. The first is that we heard over the week some themes from Minister Ocampo regarding the exploration agenda. Just if you could perhaps provide more details or thoughts in terms of the change of reactivation of unused license, and how would this impact Parex programs in the upcoming years?
I’d like to highlight the fact that before this election last year, we managed to acquire 18 blocks, which has basically quadrupled our land area in Colombia. With the number of active licenses that we have in our portfolio, we don't see any constraints whatsoever for a decade plus on our running room in terms of exploration. With that in mind, we are observing the new government's views on opening blocks or reactivating them or not, but we don't see any impact given that we have more than enough acreage to drill.
Got it. Thank you. Just one final one, understanding that you're not perhaps discussing the impact from the reform. Just if you have any details or information that you could share with regard to this sliding scale on income surcharge, beyond the potential impact, what are you seeing from these drafts in terms of when would this 5%-10%, 15% scale start impacting in reference prices?
Yeah. Like I said, once the proposal is finalized, we'll come out with a full description of how it affects us and how it works. We've seen 6, maybe 7 proposals since they started talking about it, so we just don't feel that it's worthwhile to go through the seventh or eighth. We'll wait here because we're very close, we think, to the end of getting a final document in place.
That's perfectly clear. Thanks again for taking my questions and congratulations on the quarter.
Thank you.
Thank you. Once again, you may press star one if you have a question. There are no further questions at this time on the phone. I would like to turn the meeting back over to Mr. Kruchten.
Thank you very much for everyone joining our call today. If you have any questions, feel free to contact me at Parex. Have a great day.
Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.