Parex Resources Inc. · TSX:PXT
Parex Resources — Investor Presentation (November 2021)
31 slides from Parex Resources's investor presentation, November 2021
Slide 1: Optimizing Shareholder Value
PAREX RESOURCES INC. OPTIMIZING SHAREHOLDER VALUE NOVEMBER 2021 CORPORATE PRESENTATION | NOVEMBER 2021 1
Slide 2: Corporate Snapshot
CORPORATE SNAPSHOT 2021E(1) 2022E(1) Operating Results Capital Structure Brent ($/bbl) $72 $70 Cash - US$ million(4) Production (boe/d) 47,000 53,000 ~$361 DAPS Growth(2) 10% 15% Net Working Capital - US$ million(4) Capital Expenditures – US$ MM $280 $425 ~$350 Funds Flow Provided by Operations – US
Slide 3: Forward Strategic Goals
FORWARD STRATEGIC GOALS Demonstrate sustainability • Unlock deep Colombian portfolio Build inventory of exploitation & exploration Maintain balance sheet strength Disciplined capital allocation • Provide; dividend growth, share buy-back & per share metrics growth Leading ESG performance in LATAM COR
Slide 4: 2022 Outlook and Guidance
2022 OUTLOOK AND GUIDANCE • 13 % year-over-year production growth CAPEX ALLOCATION (MID-POINT) driven by: o Cabrestero $25 MM o Capachos o Arauca o Fortuna (horizontals) $130 $180 Development Activity MM US $425 MM Development Facilities Appraisal & Exploration MM Seismic Activity 2022E Funds Flow N
Slide 5: Parex' Strategy: Building a Balanced Portfolio
PAREX’ STRATEGY: BUILDING A BALANCED PORTFOLIO Uncompromised Commitment Disciplined Capital Allocation Sustainable Business Model Investigate New Core Areas to ESG Excellence Advancement of key ESG initiatives Profitable reserves conversion Validating Colombian discoveries Leveraging existing core c
Slide 6: Current ESG Priorities
CURRENT ESG PRIORITIES Environment Social Governance Water for All - increase community Introduce GHGs emissions 2023 diversity target — reductions targets (July 2021) access to clean water 30% women on the Board Invest in geothermal and solar energies to Clean Energy Program — 30% of 2021 variable
Slide 7: ESG Performance – 2020 Highlights & Ratings
ESG PERFORMANCE – 2020 HIGHLIGHTS & RATINGS(1)(2) Environment Social ESG Risk Rating – 28.5 23% reduction in scopes 1 & 2 GHG emissions intensity Strong safety records – improvements in LTI (↓93%) th (8 percentile among E&Ps, 1=lowest risk) to 23 Kg CO2e/boe from 30 Kg CO2e/boe in 2019 and TRIF (↓93
Slide 8: Building a Sustainable Low Carbon Future
BUILDING A SUSTAINABLE LOW CARBON FUTURE Parex aspires to become one of the least carbon intensive E&P companies 35 Reduce Scopes 1 & 2 GHG 30 Zero routine flaring by 2025 emissions intensity from operated assets by: 25 o Reducing flaring volumes, KG CO2E/BOE(1) 20 o Achieving operational efficienci
Slide 9: Emission Free Geothermal Energy Powers Parex Production
EMISSION FREE GEOTHERMAL ENERGY POWERS PAREX PRODUCTION Parex installed Colombia’s first geothermal power unit that captures the heat from hot water by-product from oil production. The first pilot unit is on the Las Maracas’ field and the second pilot unit is under test on the Rumba field. Benefits
Slide 10: 2022 Capital Allocation – Options to Grow Shareholder Returns
2022 CAPITAL ALLOCATION – OPTIONS TO GROW SHAREHOLDER RETURNS Industry leading Cash Flow generation provides optionality for: o Growth Capex o Resilient Dividend Program o Flexible Share Buy-Back Remaining FFO provides optionality for: • Additional growth (CAPEX) • Share repurchases • Dividend growt
Slide 11: Why Invest in Parex?
WHY INVEST IN PAREX? Production (MBOE/D) Current Shares Outstanding Working Capital 1. No Debt & Positive Q3’21 Working Capital of US $350 MM o Debt Free since Q2 2015 166% 2. High Margins o Q3’21 operating netback → US $44.12/boe at Brent $73.23/bbl o Q3’21 FFO netback → US $35.46/boe FACTOR OF 201
Slide 12: Delivering Consistent Shareholder Value
DELIVERING CONSISTENT SHAREHOLDER VALUE RESERVE LIFE INDEX PRODUCTION PER SHARE (DEBT ADJUSTED) 18 500 BOE/MILLION WA BASIC SHARES 450 16 400 14 350 12 300 10 YEARS 250 8 200 6 150 4 100 2 50 0 - 2015 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2021E PDP RLI 1P RLI 2P RLI 3P RLI FUNDS FLOW PER
Slide 13: Parex Funds Flow Netback
PAREX FUNDS FLOW NETBACK(1) $80 $73.23 $75 $69.08 $70 $64.21 $65 $61.32 ($13.45) $60 $55 ($9.67) $50 $43.30 ($5.99) $45 USD/BOE ($2.50) $40 ($6.16) $35 $30 $25 $20 $15 $10 $5 $29.61(2) $17.52(2) $29.98(2) $32.02(2) $35.46(2) $0 2019 2020 Q1 2021 Q2 2021 Q3 2021 Cash Netback Tax G&A-Finance Opex Roya
Slide 14: Conventional Oil Reserves Generate Value
CONVENTIONAL OIL RESERVES GENERATE VALUE $9 $8.45 Proved Proved+ $8 $7.57 $7.58 $7.29 Developed Proved + Probable+ $7 2020YE Producing Proved Probable Possible 2P FD&A (USD/BOE)(1) $6.15 FD&A USD/boe(1) $7.73 $12.33 $8.45 $4.02 $6 $5.03 $5 Recycle Ratio (FD&A)(1) 2.5x 1.6x 2.3x 4.8x $4 After Tax NPV
Slide 15: Building a Sustainable Business – 2021 Activities
BUILDING A SUSTAINABLE BUSINESS – 2021 ACTIVITIES VIM-43 VIM-43 VMM-46 Acquisition of 215 sq km of 3D Commence 3D seismic VIM-1 seismic VIM-1 Fortuna Planadas-1 exploration well. Start Drilling horizontal & multilateral wells. oil and CNG production at La Testing Galembo & Olini formations Belleza F
Slide 16: Foundation for Long-Term Production
FOUNDATION FOR LONG-TERM PRODUCTION NET WORKING INTEREST PRODUCTION (LLA-32, LLA-34 & Cabrestero) 50,000 40,000 30,000 BOE/D 20,000 10,000 0 2016 2017 2018 2019 2020 2021E • Tigui LLA-34 • Two new pads to be built early 2022 • Waterflood • Cabrestero: Continued drilling & monitoring of edge Tigui in
Slide 17: Fortuna
FORTUNA Fortuna (100% WI, Operator) Fortuna • Acquired in Q4 2018; No drilling since 2012 • Targeting three stacked formations • Acquired 3D seismic in 2019 Midas (Acordianero) • 2021 Plan: Drill horizontal appraisal wells o Galembo: Drilled Colombia’s longest horizontal Boranda o Olini: Drilled mul
Slide 18: Strategic Partnership with Ecopetrol
STRATEGIC PARTNERSHIP WITH ECOPETROL • On Strategy: Partnership with Ecopetrol in Regional Arauca Map the highly prolific Llanos Basin in Arauca • Meaningful Portfolio Additions: Near term, proven production potential and reserves plus drill ready exploration prospects and future exploration leads.
Slide 19: Asset Overview – Potential for Sustainable Development
ASSET OVERVIEW – POTENTIAL FOR SUSTAINABLE DEVELOPMENT Arauca Block – Reactivation, Existing Infrastructure Arauca Block & LLA-38 Map • Partially developed, proven light oil field • Leveraging existing 3D seismic & infrastructure accelerates timeline to production and cash flow • High deliverability
Slide 20: VIM-1: La Belleza Discovery
VIM-1: LA BELLEZA DISCOVERY Gas fields VIM-1 (50% WI, Operator) Oil fields • Main target is a Cienaga De Oro formation draped over a basement Gas pipeline high Oil Pipeline • Analogue fields at Cicuco, Boquete and El Dificil River • Advancing La Belleza discovery with civil works and long-lead items
Slide 21: Expanding Llanos Inventory
EXPANDING LLANOS INVENTORY CPO-11 (50% WI, Operator) LLA-32 • Additional leads and prospects being evaluated LLA-34 • Shallow drilling targets testing stratigraphic prospects Cabrestero LLA-94 (50% WI, Operator) LLA-94 Rubiales • Multiple play types identified on 3D seismic data LLA-134 • Short turn
Slide 22: Boranda & VMM-46
BORANDA & VMM-46 Boranda (50% WI, Operator) • Exploration discovery at Boranda-1 • Field currently producing 500 BOPD from four Boranda stacked pay intervals • Drilling operations estimated to start in December Boranda-1 Boranda Centro-1 for the following: Boranda Sur-2 o Drill & evaluate Sur-3 targ
Slide 23: Colombia - Current Land Base
COLOMBIA - CURRENT LAND BASE # Block Working Interest Gross Acres(1) 1 VIM-1 50% 139,575 2 VIM-43 100% 90,457 3 Fortuna(2) 100% 26,205 Cartagena 4 Boranda(2) 50% 43,367 5 De Mares(2) 50% 174,387 6 Aguas Blancas(2) 50% 13,386 Covenas 7 VMM-9 100% 152,412 8 VMM-46 100% 111,026 9 Capachos(2) 50% 64,073
Slide 24: Appendix - Industry Leading Performance Metrics
APPENDIX - INDUSTRY LEADING PERFORMANCE METRICS 2018 2019 2020 Production growth % 25 19 -12 2P Reserves growth % 14 7 -2 3-Year TSR % 61 43 -4 ROACE(1) % 45 31 10 CROIC(2) % 31 28 13 EBITDA(3) US$ MM 641 663 309 Net income (loss) per share – basic $ 2.59 2.24 0.72 Cash flow per share – basic $ 2.58
Slide 25: Appendix – Summary of Quarterly Results
APPENDIX – SUMMARY OF QUARTERLY RESULTS(1) (Unaudited Results) 2021 2020 2019 2018 Q3 Q2 Q1 FY Q4 Q3 Q2 Q1 FY Q4 Q3 Q2 Q1 FY Q4 Q3 Q2 Q1 Operating Production (thousands of boe/d) 47.5 43.9 46.8 46.5 46.6 44.3 40.9 54.3 52.7 54.2 53.1 52.3 51.2 44.4 49.3 45.0 42.6 40.6 Brent Price ($/bbl) 73 69 61 43
Slide 26: Advisories
ADVISORIES This presentation is provided for informational purposes only as of November 3, 2021, is not complete and may not contain certain material information about Parex Resources Inc. ("Parex" or the "Company"), including important disclosures and risk factors associated with an investment in P
Slide 27: Advisories
ADVISORIES outlook; the Company’s ESG initiatives and the benefits to be derived therefrom; and activities to be undertaken in various areas. Statements relating to "reserves" or "resources" are forward-looking statements, as they involve the implied assessment, based on estimates and assumptions th
Slide 28: Advisories
ADVISORIES • This document also contains a financial outlook, in particular the information set forth on slides 2, 4, 5, 6, 8, 17, 19 and 23. Such financial outlook has been prepared by Parex' management to provide an outlook of the Company's activities and results. The financial outlook has been pr
Slide 29: Advisories
ADVISORIES • This presentation contains certain oil and gas metrics, including F&D, FD&A, FD&A/boe, reserves life index (or RLI), operating netbacks, cash netbacks, funds flow from operations netback, CAGR, replacement ratio, and recycle ratios, which do not have standardized meanings or standard me
Slide 30: Advisories
ADVISORIES • All of Parex’ crude oil reserves disclosed herein are located in Colombia. The Company has light, medium and heavy crude oil, natural gas liquids and conventional natural gas product types. The recovery and reserve estimates of reserves provided in this document are estimates only, and
Slide 31: CORPORATE PRESENTATION | NOVEMBER 2021
CORPORATE PRESENTATION | NOVEMBER 2021 31
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