Parex Resources Inc. · TSX:PXT
Parex Resources — Investor Presentation (February 2023)
32 slides from Parex Resources's investor presentation, February 2023
Slide 1: Parex Resources Investor Presentation – February 2023
Parex Resources Investor Presentation – February 2023
Slide 2: TSX:PXT
TSX:PXT • Largest Independent Oil & Gas Company in Colombia • Deep Portfolio with Transformational Exploration Opportunities • Debt-Free Balance Sheet • Commitment to Return 100% of Free Funds Flow to Shareholders • Top-Tier ESG Performance Shares Outstanding(1) 108.4 million Market Capitalization(2
Slide 3: Strategy: Strategic Levers to Grow
Strategy: Strategic Levers to Grow Outsized Exploitation Onshore Exploration & Technology Gas Potential Potential ▪ Unlocking extensive ▪ Targeting liquid-rich ▪ Focusing on land base using gas fields transformational big proven technology ▪ Pursuing longer-term, ‘E’ exploration targets ▪ Step chang
Slide 4: Strategy: Business Fundamentals
Strategy: Business Fundamentals LEVERAGE DRIVE STRATEGIC DELIVER Colombia Safe & Big ‘E’ Advantage Return of Sustainable Transformational & ESG Capital Operations Upside Performance
Slide 5: Three-Year Plan: Grow Production and Reduce Capex
Three-Year Plan: Grow Production and Reduce Capex(6) (boe/d) BASE DEVELOPMENT PLAN(1) (Excludes Exploration Upside) Exploration Strategy 80,000 ▪ Approach: ~$50MM per Magdalena year on high-impact 60,000 prospects for step-change Northern Llanos exposure Southern Llanos 40,000 ▪ Upside: ~15 identifi
Slide 6: 2023 Guidance
2023 Guidance Total Funds Capital 57,000-63,000 $705-780(1)(2) $425-475(3) Production ~15% growth vs. 2022 Flow $80/bbl Brent Expenditures ~18% lower than 2022 boe/d $ millions $ millions Lower Magdalena 2023F CAPITAL DISTRIBUTION VIM-43 Arauca & Capachos ~5 wells 1 Big ‘E’ well 1 Big ‘E’ well Seism
Slide 7: Track Record of Growth
Track Record of Growth PRODUCTION PER SHARE(1) PDP RESERVES PER SHARE(2)(3) 0.17 0.76 16% (2017-2022F) CAGR 18% (2017-2022) CAGR 0.67 0.14 0.13 0.12 0.55 0.10 0.50 0.08 0.40 0.33 2017A 2018A 2019A 2020A 2021A 2022F 2017A 2018A 2019A 2020A 2021A 2022A 36 52 51 83 Absolute Production Growth CAGR: 8% A
Slide 8: Track Record of Returning Capital
Track Record of Returning Capital RETURN OF CAPITAL TRACK RECORD (CAD MM)(1) SIGNIFICANTLY REDUCED OUTSTANDING FLOAT SINCE ‘17 ~$400 ~$1,700 164 162 148 ~$385 134 122 $334 ~110 $230 $300 $55 2018A 2019A 2020A 2021A 2022F 2023F(2) Total 2017A 2018A 2019A 2020A 2021A 2022F Share Repurchases Dividends
Slide 9: Reinforcing the Capital Allocation Framework in 2023
Reinforcing the Capital Allocation Framework in 2023 2023F CAPITAL ALLOCATION(1) Focused on ($ millions) efficient capital allocation $900 ▪ Treatment of Excess FFF(6) $100 ▪ 100% to shareholder $80 returns $600 ▪ Capital Flexibility ▪ Below sustained $60/bbl Brent, option to reduce $60/bbl $425-475
Slide 10: Key Takeaways
Key Takeaways ▪ Transitioned from a single asset company to a Colombia-wide operator ▪ Flattening our decline, leading to lower maintenance capital requirements ▪ Building a sustainable base for production growth while delivering a step change in capital efficiency ▪ Exposure to outsized returns dri
Slide 11: Appendix
Appendix
Slide 12: Parex's Competitive Advantages in Colombia
Colombia Substantial Emerging Stable Resource Industry Environment COLOMBIA ENERGY Undeveloped Basins Minimal Industry Competition Committed OECD Country SPACE HAS A Capture Entire Play With Discovery Lagging Technology Application Focused on Energy Transition DISPROPORTIONATE, Forecast Gas S/D Imba
Slide 13: Colombia Tax Reform – 2023 Impact
Colombia Tax Reform – 2023 Impact New Government Surtax & Change to Royalty Deductions ▪ Government has established an income surtax of up to 15% linked to Brent crude oil price ▪ Indexed to 120-month (10 years) historical Brent crude oil price ▪ Government will prevent the deduction of base royalti
Slide 14: Long-Term Capital Allocation Framework
Long-Term Capital Allocation Framework(1) 1. Invest ~2/3 of FFO(2) back into the business 2. Return ≥1/3 to shareholders Dividends + Near-Field Investments Big ‘E’ Share Buybacks ▪ Drive sustainable business model ▪ Quarterly base dividend ▪ Invest in long-term growth ▪ Target dividend growth ▪ Repl
Slide 15: Strategically Investing in 2023 and Beyond
Strategically Investing in 2023 and Beyond Northern Llanos Basin Diversified Portfolio (Operated) ▪ SOCA (Southern Casanare): Reduce Magdalena Basins decline rate & future (Operated) capital requirements ▪ Northern Llanos & Mag: Foundation for Southern Llanos Basin high capital efficiency (Operated)
Slide 16: Cabrestero: Waterflood & Exploitation
Cabrestero: Waterflood & Exploitation Basin: Southern Llanos Operator: PXT W.I.: 100% Focused on pressure management, minimizing decline & near-field exploration ▪ Current development plan includes down spacing and waterflood injection ▪ Flattens decline rate and accelerates oil recovery ▪ Facility
Slide 17: Cabrestero: Waterflood & Exploitation Delivering Success
Cabrestero: Waterflood & Exploitation Delivering Success Basin: Southern Llanos Operator: PXT W.I.: 100% Waterflood Performance & Forecast Water Injection (bbl/d) Production (bbl/d) 50,000 Production 15,000 Bests 2P YE2021 40,000 12,000 Injection Begins Ramp Up 30,000 9,000 Started 20,000 Original 6
Slide 18: LLA-34: Replicating Success from Cabrestero
LLA-34: Replicating Success from Cabrestero Basin: LLA-34 (Llanos) Non-Operator W.I.: 55% Focused on accelerating production, minimizing decline and delineation ▪ Current development plan includes down spacing and waterflood injection ▪ Down spacing to ~40 acres and waterflood injection pattern ▪ Ma
Slide 19: Capachos & Arauca: Northern Llanos Future Growth Engine
Capachos & Arauca: Northern Llanos Future Growth Engine Basin: Northern Llanos Operator: PXT W.I.: 50% Accelerating development with high growth potential in the future ▪ Historically difficult to access and challenging to drill ▪ Operating successfully in Capachos since 2018 ▪ First Arauca well spu
Slide 20: Capachos: Leveraging Multi-Zone Potential
Capachos: Leveraging Multi-Zone Potential Basin: Northern Llanos Operator: PXT W.I.: 50% Andina-1 Depth Sur-3 Sur-4 2ST Andina -2 Andina-3 Andina Norte-1 Well: Andina-1 Recent ~6,800 bopd (gross) Testing 30% Drawdown Success(1) First test of the Mirador in the Andina field Zone 1 Key Takeaways Mirad
Slide 21: Arauca: Building Off of Capachos to Drive Future Growth
Arauca: Building Off of Capachos to Drive Future Growth Basin: Northern Llanos Operator: PXT W.I.: 50% Arauca-8 Depth Arauca-15 Arauca-81 (Big ‘E’) Historical Capability Historical >5,000 bbl/d Zone 1 Wells Utilizing PXT production practices Barco Tested(1) ~10MM bbl produced from three wells Zone 2
Slide 22: Using Proven Technology to Increase Efficiency
Using Proven Technology to Increase Efficiency Key Takeaways 0 2,000 VIM-1 Vaduz-1 well delivered Well Depth (feet) in ~22 days ▪ Synthetic mud has created step 4,000 change in ability to drilling 6,000 challenging formations 8,000 ▪ E.g., VIM-1 and Capachos 10,000 12,000 ▪ Only Colombian company th
Slide 23: VIM-1: Steppingstone that Diversifies the Portfolio
VIM-1: Steppingstone that Diversifies the Portfolio Basin: Magdalena Operator: PXT W.I.: 50% Growing long-term liquids recovery through reinjecting gas ▪ Liquids-rich gas condensate reservoir ▪ Original discovery (La Belleza-1) has been on steady production at a facility restricted rate of ~1,600 bb
Slide 24: VIM-1: Exceptional Well Results Driving Facility Expansion
VIM-1: Exceptional Well Results Driving Facility Expansion Basin: Magdalena Operator: PXT W.I.: 50% Depth La Belleza-1 La Belleza-2 Vaduz-1 La Belleza-2 Vaduz-1 Testing ~38.5 mmcf/d gas (gross) Testing Q4 2022 Update(1) ~7,500 bbl/d oil (gross) Porquero Zone 10% Drawdown 2,500 feet Key Takeaways ▪ G
Slide 25: Transformational Exploration Opportunities: Oil & Gas Risk & Reward
Transformational Exploration Opportunities Strategy Targets Prospects ~15 High-impact exploration >20,000 prospects in portfolio boe/d Asymmetric Diversified across both Oil & Gas Risk & opportunities Reward Expect to deliver roughly one catalyst per quarter
Slide 26: Arauca (Arauca-8): Multi-Zone, High-Impact Exploration Target
Arauca (Arauca-8): Multi-Zone, High-Impact Exploration Target Basin: Northern Llanos Operator: PXT W.I.: 50% Arauca 3D Seismic Proven light-oil reservoir with high chance of success ▪ Previous development was on 2D seismic and halted due to social issues Arauca-8 Target ▪ What success looks like: de
Slide 27: VIM-43 (Chirimoya): Transformational Exploration Prospect
VIM-43 (Chirimoya): Transformational Exploration Prospect Basin: Magdalena Operator: PXT W.I.: 100% VIM-43 Seismic Stacked reservoir highly increases chance of success ▪ Identified three potential Chirimoya reservoirs Chirimoya Target ▪ Others tried to drill for the target in the 1940’s & 70’s; did
Slide 28: High-Potential Foothills Trend
High-Potential Foothills Trend Memorandum of Understanding (MOU) MOU Coverage Area with Ecopetrol S.A. Gibraltar Arauca ▪ MOU signed with Ecopetrol, Colombia’s national oil company ▪ Building on existing, successful relationship with Ecopetrol Capachos ▪ Area of coverage spans 13 blocks in the high-
Slide 29: Contact Information
Contact Information Mike Kruchten Senior Vice President, Capital Markets & Corporate Planning 403-517-1733 investor.relations@parexresources.com Steven Eirich Investor Relations & Communications Advisor Parex Resources Inc. 587-293-3286 2700 Eighth Avenue Place, West Tower investor.relations@parexre
Slide 30: Advisory
Advisory This presentation is provided for informational purposes only as of February 13, 2023, 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 Pa
Slide 31: Advisory: Forward-Looking Statements and Financial Outlook (Continued)
Advisory Forward-Looking Statements and Financial Outlook (Continued) Management does not have firm commitments for all of the costs, expenditures, prices or other financial assumptions used to prepare the financial outlook or assurance that such operating results will be achieved and, accordingly,
Slide 32: Advisory: Market, Independent Third Party and Industry Data
Advisory Market, Independent Third Party and Industry Data Certain market, independent third party and industry data contained in this presentation is based upon information from government or other independent industry publications and reports or based on estimates derived from such publications an
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