Canacol Energy Ltd. · BVC:CNEC
Canacol Energy — Investor Presentation (June 2016)
21 slides from Canacol Energy's investor presentation, June 2016
Slide 1: Growth From A Focused Portfolio
June 2016 Growth From A Focused Portfolio
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation may include certain forward looking statements. All statements other than statements of historical fact, included herein, including, without limitation, statements regarding future plans and objectives of Canacol Energy Ltd. Canacol or the Corporation , a
Slide 3: Focused E&P Portfolio
Focused E&P Portfolio Supply-scarce Caribbean • Dual-listed TSX and BVC natural gas market • Enterprise value US $723 MM • Exploration success 8→) 65% • Insider ownership ~25% Natural Gas • e guidance 16 – 17,000 boepd $58 MM capex $135 MM ebitdax • YE 2015 2P reserves 79 MMboe Light Oil • Pre-tax N
Slide 4: Focused E&P Portfolio: Large gas reserves underpin production and cash flow
Focused E&P Portfolio Large gas reserves underpin production and cash flow for a decade +52% CAGR in 2P reserves(1) • Dry natural gas – [stable cash flow] 2P reserves in MMboe • and 2 acquisitions oil gas 79 • → present 3 large discoveries 14 • 2P reserves 372 BCF (65 MMboe) • Exploration resource >
Slide 5: Strong Sales Growth
Strong Sales Growth +45% projected CAGR in corporate sales guidance and sales mix Expressed in boepd 40,000+ Natural gas 80% 88% insensitive Tariff oil ~20,000 to oil volatility 8% 16,500 Light oil 10,933 12% 1Q '16 '16e avg. Current Mid '18 - after pipeline • Produced >20 MMboe since inception • Re
Slide 6: The Road Ahead…
The Road Ahead… Pursuit of dry natural gas that features stable pricing Benchmark gas prices declined 64% vs. Canacol 18% gain Fixed-price gas contracts erase oil volatility Quarterly average MMbtu Realized gas price and gas netback per boe Realized price Gas netback $12 $32 $31 +18% >80% $27 $27 op
Slide 7: Canacol-Gas Ranks #1
Canacol-Gas Ranks #1 Mid-cycle break even costs - $50/bbl WTI, $2.75/Mcf $/bbl Mckenzie/Williams Three Forks oil $65 Williams County Bakken oil $63 Permian Delaware Basin Bone Spring oil $59 • Captured ~ 40% of all E&P capital Permian Midland Basin Wolfcamp (shallow) oil $58 invested from 9 to prese
Slide 8: A Leader In E&P Capital Efficiency
A Leader In E&P Capital Efficiency Participate in our capex-light growth → cumulative capex $MM Canacol-gas Peer avg. Capex, x-acquisitions $97 $807 ($ MM) $807 Production increase (boe/d) 10M 10M Wells drilled 8 73 Q netback $27 $12 ($/boe) outlook $/boe) Stable $26 Volatile $9 - $28(1) • Peers spe
Slide 9: Natural Gas Demand Greater Than Supply
Natural Gas Demand Greater Than Supply • Supply decreasing 20% / yr. from coastal fields Chuchupa 1 2 Ballena Caribbean Sea • Three mature fields in blow-down Barranquilla [-100 MMcf/d per year decline](1) 1 Chuchupa 2 Ballena 3 La Creciente 2018 2016 pipeline pipeline • Demand increasing 3% / yr. f
Slide 10: Epic Gas Deficit On Colombia's Coast
Epic Gas Deficit On Colombia s Coast Plan to boost gas production to solve supply shortfall Solving Colombia s gas supply deficit • The Caribbean Coast had a balanced gas Gas supply-demand forecast in MMcf/d supply-demand profile for decades 600 582 • 3 mature fields in blow-down Supply shortfall •
Slide 11: Canacol's Cluster Of Gas Discoveries
Canacol s Cluster Of Gas Discoveries Robust reserves + the quest for exploration upside La Creciente 4 blocks: 3 of 4 fields booked • 2P reserves 372 BCF • ~50 prospects / leads • Oboe to be booked at • >3 TCF exploration 3D seismic the end of June VIM 19 100% >3 TCF(1) 4 fields 3 new discoveries 10
Slide 12: Gas Opportunities Continue To Multiply
Gas Opportunities Continue To Multiply Potential new pool at Nelson field – Porquero formation Nelson-5 Middle Porquero petrophysical interpretation A NELSON-6 B Gross Thickness 153 ft Net Pay 62 ft Porosity 31% GWC- TVDSS AVO Events Nelson Field (Porquero Fm.) Area 640 acres Nelson-5 Avg. Porosity
Slide 13: Large Resource Potential At Esperanza
Large Resource Potential At Esperanza Reduce exploration risk with the application of AVO technology Top CDO depth structure map AVO extraction: Top CDO (magenta marker) to Top CDO +25ms ESPERANZA VIM-5 N 3D seismic image • Using 3D seismic data, S N A NISPERO-1 B Canacol is mitigating Sucre-2 explo
Slide 14: Successful Exploration on Block LLA-23
Successful Exploration on Block LLA-23 With a lot more running room Las Maracas Gross Unrisked EUR LLA 23 ~12 MMbls Leono Prospect/Leads Wells (MMbbl) 91% WI Pantro >110k acres 3D prospects 13 20 Cravo S Tigro ~9 MMbls Leads 5 16 Cravo E ~8 MMbls Total 18 36 Macarenas • Five light oil discoveries ma
Slide 15: Pumara Prospect
Pumara Prospect On Pumara-1 well success case, targeting 5k bopd from 3 wells Ubaque TVDSS map Inline 197 over Pumara C1 NW C7 BARCO SE UBAQUE PALEOZOIC NW 500 m SE • Fault dependent anticlinal closure • Mapped on 3D seismic • Primary targets: Ubaque & Gacheta Pumara-1 (Exploration location) • Secon
Slide 16: Shale Oil Opportunity In Colombia
Shale Oil Opportunity In Colombia • World class shale oil • Source rock to 2.3 trillion barrels discovered in Ecuador, Colombia and Venezuela(1) • Comparable or superior characteristics to the Orinoco heavy oil belt Venezuela Bakken and Eagle Ford (thickness, porosity, TOC pressure gradients) Colomb
Slide 17: Fractured Shale Potential To Be Tested On VMM-2
Fractured Shale Potential To Be Tested On VMM 2 Top La Luna Structural Map • 3D-seismic defined naturally fractured La Totumal Field (producing from Luna Shale fractured shale) • Mono Araña-1 well test • IP 590 bbl/d • Oil demonstrated to flow naturally (unstimulated) from 230 ft net pay Mono Araña-
Slide 18: Oil Exploration Upside
Oil Exploration Upside Light oil production upside forecast (unrisked) (bbl/d) • Large light oil prospects and leads 30,000 inventory 25,000 • Dial up or down with oil price environment 20,000 • Light oil forecast • 3x production from drill ready prospects 15,000 • >2x production from remaining pros
Slide 19: Projecting 60%+ Drop In Debt Multiple
Projecting 60%+ Drop In Debt Multiple Debt profile Lower debt multiple to unlock Canacol s equity? Debt multiple to trailing 12-month EBITDAX Apollo 3.8x 3.4x BNP 2.8x Start: Eight equal 2.6x installments ● ● ● ● ● ● ● ● 2.1x 1.4x '16 Dec '17 '18 Sep '19 Dec '19 Dec '15 Mar '16 Jun '16e Sep '16e Dec
Slide 20: A Rare Dislocation in Equity Value
A Rare Dislocation in Equity Value You re buying Canacol at a discount to the Advantage Canacol vs. five Colombian peers value of our existing gas contracts Potential ~2x increase in share price (C$3.95) BT NPV-10, US $MM US $2,124 CDN $/share 25 Stable production under LT contracts 20 US $193 US $1
Slide 21: Investment Opportunity
Investment Opportunity Measuring 2015 – 2016e Canacol Peer avg. North America Production +63% +17% +11% growth Capex $ growth -29% +15% +6% Natural gas $5.64 fixed ~$5.00 volatile $1.58 volatile pricing ($/MMbtu) Sensitivity to oil 12% >90% 88% volatility Gas netback $26 $12 $9 ($/boe) EBITDAX growt