Slide 1: Optimizing Shareholder Value
Optimizing Shareholder Value CORPORATE PRESENTATION AUGUST 2020 CORPORATE PRESENTATION | AUGUST 2020 1
Slide 2: Corporate Snapshot
CORPORATE SNAPSHOT Capital Structure Operating results 2019 2020 YTD(1) Production (boe/d) FY Average 52,687 47,573 Net Working Capital - US$ million(4) DAPS Growth(2) 34% - ~$339 Drilling Program (# wells)(2) 43 20 US$200 MM Undrawn Credit Facility(4) Capital Expenditures - US$ million $208 $77 No
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 + 20% women representation + Transparent responses to CDP in Colombia. + 90%
Slide 4: Why Invest in Parex?
WHY INVEST IN PAREX? DEBT-ADJUSTED PRODUCTION PER SHARE (DAPS) 1. No Debt & Positive Q2’20 Working Capital of US$339 MM PPS DAPS Share Price (QE) 0.50 $25 2. High Margins o Q2’20 FFO netback→ US$9.96/boe at Brent $33/bbl 0.40 $20 BOE/D PER 1,000 SHARES 4. Capital Allocation Discipline SHARE PRICE (C
Slide 5: Delivering Consistent Shareholder Value
DELIVERING CONSISTENT SHAREHOLDER VALUE PRODUCTION PER SHARE (DEBT ADJUSTED) 2P RESERVE PER SHARE (DEBT ADJUSTED) 500 1,800 BOE/MILLION WA BASIC SHARES MBOE/MILLION WA BASIC SHARES 450 1,600 400 1,400 350 1,200 300 1,000 250 800 200 150 600 100 400 50 200 - - 2015 2016 2017 2018 2019 2015 2016 2017
Slide 6: Balance Sheet Strength Provides Optionality
BALANCE SHEET STRENGTH PROVIDES OPTIONALITY ANNUAL PRODUCTION CAPITAL RETURNED TO SHAREHOLDERS 60,000 $6 $250 16 Brent: ANNUAL AVERAGE PRODUCTION (BOE/D) 55,000 DEBT-ADJUSTED CASH FLOW PER SHARE (US$) $64/Bbl 14 CAPITAL RETURNED (US$ MILLIONS) 50,000 Brent: $5 $200 BUYBACK (MILLIONS OF SHARES) 45,00
Slide 7: Parex Cash Netback
PAREX CASH NETBACK(1) $75 $71.59 $70 $64.21 $65 $60 $54.75 $53.57 $55 $51.05 $50 $45.12 $45 $40 $33.39 USD/BOE $35 $30 $25 ($16.47) $20 ($1.99) $15 ($4.98) $10 ($1.75) $5 $13.20(2) $13.70(2) $22.29(2) $24.65(2) $29.61(2) $20.62(2) $9.96(2) $0 $1.76 -$5 2015 2016 2017 2018 2019 2020 Q1 2020 Q2 Cash N
Slide 8: Conventional Oil Reserves Generate Value
CONVENTIONAL OIL RESERVES GENERATE VALUE Proved Proved+ $8 Developed Proved + Probable+ $7 2019YE Producing Proved Probable Possible 2P FD&A (USD/BOE)(1) FD&A USD/boe(1) $7.63 $7.50 $7.57 $12.44 $6 Recycle Ratio (FD&A)(1) 3.9x 3.9x 3.9x 2.4x $5 $4 After Tax NPV10% - C$/sh(2) $12.45 $19.36 $25.72 $32
Slide 9: Foundation for Growth: Appraise & Develop
FOUNDATION FOR GROWTH: APPRAISE & DEVELOP NET WORKING INTEREST PRODUCTION (LLA-32, LLA-34 & Cabrestero) LLA-32 50,000 Kananaskis Azogue 40,000 LLA-34 Max 30,000 Tilo BOE/D Chachalaca Chiricoca 20,000 10,000 Guaco Tigana Tarotaro 0 2015 2016 2017 2018 2019 Tua Faults GLJ 3P (2019YE) NET WORKING INTER
Slide 10: Capachos Development and Exploration Potential
CAPACHOS DEVELOPMENT AND EXPLORATION POTENTIAL Guadalupe depth structure Capachos (50% WI, Operator) • Producing at restricted rate of 5,000 - 6,000 gross bopd ANDINA NORTE-1 • Flowline expected to be in service by the end of 3Q20 ANDINA-3 o Construction commenced in January ANDINA-1 • Commissioned
Slide 11: Asset Replenishment for Future Growth
ASSET REPLENISHMENT FOR FUTURE GROWTH Trucking Parex Blocks 1. ANH Bid Round (July & December 2019) Cartagena Pipeline o Acquired 5 blocks (VSM-25, VSM-36, LLA-94, LLA-122 & VMM-46) River o 9% Royalty, no Cash Payments Terminal Covenas 2. CPO-11(1) o Acquired Q4 2018 3. Merecure VMM-46 o Acquired Q1
Slide 12: VIM-1: La Belleza Discovery
VIM-1: LA BELLEZA DISCOVERY Gas fields Oil fields VIM-1 (50% WI, Operator) Gas pipeline Oil Pipeline • Main target is a Cienaga De Oro formation River draped over a basement high • Analogue fields at Cicuco, Boquete and El El Dificil Field Dificil VIM-1 Discovered: 1943 *Cum Production = 12 MMBO, 35
Slide 13: Expanding Llanos Inventory
EXPANDING LLANOS INVENTORY LLA-32 CPO-11 (50% WI, Operator) LLA-34 • Additional leads and prospects being evaluated Cabrestero • Shallow drilling targets testing stratigraphic prospects LLA-94 CPO-11 Rubiales LLA-94 (100% WI, Operator) • Multiple play types identified on 3D seismic data • Short turn
Slide 14: Fortuna, Boranda & VMM-46
FORTUNA, BORANDA & VMM-46 Fortuna Fortuna (100% WI, operator) • Acquired in Q4 2018 • No drilling since 2012 • Target conventional oil prospects in Lisama and La Luna Formations • Acquired 3D seismic in 2019 Midas (Acordianero) • 2020 Plan: drill exploration well Boranda (50% WI, operator) Boranda •
Slide 15: Where Do We Go From Here?
WHERE DO WE GO FROM HERE? 2019 2020 - 2022 Our focus Is on Profitable Production growth Deliver top quartile Future Growth & Delivering & free cash flow per share growth Shareholder Returns New growth: Replenish & exploration & tight oil diversify portfolio Shareholder return: Return free cash Share
Slide 16: 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 | AUGUST 2020 16
Slide 17: Colombia - Current Land Base
COLOMBIA - CURRENT LAND BASE # Block Working Interest Gross Acres(1) 1 VIM-1 50% 223,651 2 Fortuna(2) 100% 26,206 Cartagena 3 Boranda2) 50% 43,200 4 De Mares(2) 50% 174,387 5 Aguas Blancas(2) 50% 13,386 Coveñas 6 VMM-9 100% 152,412 LOWER 7 VMM-46 100% 110,029 MAGDALENA 8 Capachos(2) 50% 64,073 9 VSM
Slide 18: Appendix - Industry Leading Performance Metrics
APPENDIX - INDUSTRY LEADING PERFORMANCE METRICS 2017 2018 2019 Production growth % 20 25 19 2P Reserves growth % 45 14 7 3-Year TSR % 140 61 43 ROACE(1) % 23 45 31 CROIC(2) % 18 32 29 EBITDA(3) US$ MM 314 640 663 Net income (loss) per share – basic $ 1.01 2.59 2.24 Cash flow per share – basic $ 1.81
Slide 19: 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) 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) 33 51 64 63 62 69 64 72 68 76 75 67 Average realized pr
Slide 20: Advisories
ADVISORIES This presentation is provided for informational purposes only as of August 5, 2020, 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 Par
Slide 21: 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 22: Advisories
ADVISORIES • This document also contains a financial outlook, in particular the information set forth on slides 2-3, 6 and 8. 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
Slide 23: 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 24: 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 25: CORPORATE PRESENTATION | AUGUST 2020
CORPORATE PRESENTATION | AUGUST 2020 25