Parex Resources Inc. · TSX:PXT
Parex Resources — Investor Presentation (April 2021)
29 slides from Parex Resources's investor presentation, Apr 8, 2021
Slide 1: Optimizing Shareholder Value
Optimizing Shareholder Value CORPORATE PRESENTATION APRIL 2021 CORPORATE PRESENTATION | APRIL 2021 1
Slide 2: Corporate Snapshot
CORPORATE SNAPSHOT Operating Results 2020 2021E(1) Capital Production (boe/d) FY Average 46,518 48,000 Structure DAPS Growth(2) -3% 20% Net Working Capital - US$ million(4) Drilling Program (# wells) 30 ~35 ~$320 Capital Expenditures – US$ MM $141 $175 US$200 MM Undrawn Credit Facility(4) Funds Flow
Slide 3: ESG Performance Highlights
ESG PERFORMANCE HIGHLIGHTS Environment Social Governance ISS Quality Score Create ISS Quality Score ISS Quality Score GHG emissions disclosure Board of Directors + 3rd party data verification local employment opportunities + 22% women representation + Transparent responses to CDP in Colombia. + 89%
Slide 4: Why Invest in Parex?
WHY INVEST IN PAREX? DEBT-ADJUSTED PRODUCTION PER SHARE (DAPS) PPS DAPS Share Price (QE) 1. No Debt & Positive 2020YE Working Capital of US $320 MM 0.50 $25 2. High Margins o 2020YE operating netback → US $20.84/boe at Brent 0.40 $20 $43.30/bbl BOE/D PER 1,000 SHARES SHARE PRICE (C$) o 2020YE FFO ne
Slide 5: 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 PDP RLI 1P RLI 2P RLI 3P RLI FUNDS FLOW PER BASIC
Slide 6: Strong Reserve Per Share Growth
STRONG RESERVE PER SHARE GROWTH PDP RESERVES PER SHARE DEBT ADJUSTED 1P RESERVES PER SHARE DEBT ADJUSTED 0.8 140% 1.4 RESERVES (BOE/BASIC SHARE) RESERVES (BOE/BASIC SHARE) 0.7 120% 1.2 0.6 100% 1.0 0.5 80% 0.8 0.4 60% 0.3 0.6 40% 0.2 0.4 20% 0.1 123% 27% 28% 49% 30% 24% 18% 0.2 34% 52% 33% 25% 7% 99
Slide 7: Increasing Production While Returning FCF to Shareholders
INCREASING PRODUCTION WHILE RETURNING FCF TO SHAREHOLDERS 300 PRODUCTION (MBOE/D) Since 2017: CURRENT SHARES OUTSTANDING • Production increased by 43% (67% prior to 250 WORKING CAPITAL COVID-19 in Q1 2020). +145% • Working Capital increased from $131 MM to FACTOR OF 2017 BASE VALUES $320 MM. 200 o D
Slide 8: Industry Leading Share Buy-Back Program
INDUSTRY LEADING SHARE BUY-BACK PROGRAM Parex Resources is committed to returning capital # Shares Bought Back Cost of Share Buybacks to shareholders through the NCIB and share buy- 8 120 back program. 7 100 Since the first NCIB in 2017, PXT has repurchased 6 roughly 35 MM shares and has returned C$
Slide 9: Balance Sheet Strength Provides Optionality
BALANCE SHEET STRENGTH PROVIDES OPTIONALITY ANNUAL PRODUCTION CAPITAL RETURNED TO SHAREHOLDERS 60,000 $6 $250 16 Brent: ANNUAL AVERAGE PRODUCTION (BOE/D) 55,000 $64/Bbl DEBT-ADJUSTED CASH FLOW PER SHARE (US$) 14 Brent: CAPITAL RETURNED (US$ MILLIONS) 50,000 Brent: $5 $200 BUYBACK (MILLIONS OF SHARES
Slide 10: Parex Funds Flow Netback
PAREX FUNDS FLOW NETBACK(1) $75 $71.59 $70 $64.21 $65 $60 $54.75 $55 $50 $43.30 $45 $40 USD/BOE $35 $30 $25 $20 $15 $10 $5 $22.29(2) $24.65(2) $29.61(2) $17.52(2) $0 -$5 2017 2018 2019 2020 Cash Netback Tax G&A-Finance Opex Royalties Differential & Transportation Brent Price (1) Funds flow netback i
Slide 11: Industry Leading Profitability
INDUSTRY LEADING PROFITABILITY 2020 Operating Netback(1)(2) 2020 Net Income for E&Ps with Market Cap > $1B(2)(3) $25 $500 Parex Parex $- $20 $(500) $15 $(1,000) USD/BOE USD MM $(1,500) $10 $(2,000) $(2,500) $5 $(3,000) $- $(3,500) Despite a year of volatility and record low oil prices, Parex was abl
Slide 12: Conventional Oil Reserves Generate Value
CONVENTIONAL OIL RESERVES GENERATE VALUE $9 $8.48 Proved Proved+ Developed Proved + Probable+ $8 $7.57 $7.58 $7.29 2020YE Producing Proved Probable Possible $7 2P FD&A (USD/BOE)(1) FD&A USD/boe(1) $7.73 $12.33 $8.45 $4.02 $6.15 $6 Recycle Ratio (FD&A)(1) 2.5x 1.6x 2.3x 4.8x $5.03 $5 After Tax NPV10%
Slide 13: Foundation for Growth: Appraise & Develop
FOUNDATION FOR GROWTH: APPRAISE & DEVELOP 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 NET WORKING INTEREST RESERVES* - LAST 5 YEARS (LLA-32, LLA-34 & Cabrestero ) 250 RESERVES (MMBOE) Faults 200 GLJ 3P (2019YE) Pip
Slide 14: Asset Replenishment for Future Growth
ASSET REPLENISHMENT FOR FUTURE GROWTH Trucking Parex Blocks 1. ANH Bid Round Pipeline o In 2020, acquired 2 blocks (LLA-134 and VIM-43) VIM-43 River o Awarded 5 blocks in 2019 Cartagena o 9% Royalty, No Cash Payments VIM-1 (1) 2. CPO-11 o Acquired Q4 2018 Terminal Covenas 3. Merecure o Acquired Q1 2
Slide 15: 2020 ANH Bid Round - Awarded Blocks
2020 ANH BID ROUND - AWARDED BLOCKS LLA-134 Block (WI 100%) VIM-43 Block (WI 100%) • Targeting stratigraphic plays in the same • Targeting an undrilled 4-way closure mapped on reservoirs as LLA-34 2D seismic in the Plato subbasin to the NE of La Belleza. LLA-32 LLA-34 VIM-43 Cabrestero LLA-94 CPO-11
Slide 16: 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 Gas pipeline Oil Pipeline a basement high River • Analogue fields at Cicuco, Boquete and El Dificil • Advancing La Belleza discovery with civil works and VIM-1 El Difici
Slide 17: 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 18: Boranda & VMM-46
BORANDA & VMM-46 Boranda (50% WI, Operator) • Exploration discovery at Boranda-1 Boranda • Testing has begun on Boranda Sur Boranda-1 o In the process of testing multiple formations Boranda Centro-1 Boranda Sur-2 VMM-46 • Testing has started at the Boranda Centro-1 appraisal location • Producing at
Slide 19: Fortuna
FORTUNA Fortuna (100% WI, Operator) Fortuna • Acquired in Q4 2018 • No drilling since 2012 • Target conventional oil prospects in Midas Lisama and La Luna Formations (Acordianero) • Acquired 3D seismic in 2019 • Drilled Cayena-1 exploration well into Boranda Galembo Cayena-1 VMM-46 CORPORATE PRESENT
Slide 20: Summary
SUMMARY Self-funded industry leading production growth Grow & develop Llanos Blocks Prove play concepts in Middle & Lower Magdalena Basins Expand portfolio through business development CORPORATE PRESENTATION | APRIL 2021 20
Slide 21: 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 4 Boranda(2) 50% 43,367 Cartagena 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 22: 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 12 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 23: Appendix - Summary of Quarterly Results
APPENDIX – SUMMARY OF QUARTERLY RESULTS(1) (Unaudited Results) 2020 2019 2018 FY Q4 Q3 Q2 Q1 FY Q4 Q3 Q2 Q1 FY Q4 Q3 Q2 Q1 Operating Production (thousands of boe/d) 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) 43 45 43 33 51 64 63 62 69 64 72 68 76 7
Slide 24: Advisories
ADVISORIES This presentation is provided for informational purposes only as of April 5, 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 Pare
Slide 25: 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 26: Advisories
ADVISORIES • This document also contains a financial outlook, in particular the information set forth on slides 2 and 4. 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 prepared based on a num
Slide 27: 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 28: 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 29: CORPORATE PRESENTATION | APRIL 2021
CORPORATE PRESENTATION | APRIL 2021 29