Parex Resources Inc. · TSX:PXT
Parex Resources — Investor Presentation (December 2021)
31 slides from Parex Resources's investor presentation, December 2021
Slide 1: Unlocking Colombia
PAREX RESOURCES INC. Unlocking Colombia DECEMBER 2021 UNLOCKING COLOMBIA | DECEMBER 2021 1
Slide 2: Corporate Snapshot Highlights
CORPORATE SNAPSHOT Highlights Operational and Financial Highlights 2020 2021E(1) 2022E(1) Brent ($/bbl) $43 $70 $70 Production (boe/d) 46,518 47,000 53,000 Net Working Capital(4) Production Growth -12% 1% 13% ~US$350 Million PPS Growth(2) -7% 12% 24% US$200 MM Undrawn Credit Facility(4) CFPS – Basic
Slide 3: ESG Performance – Highlights
ESG PERFORMANCE – HIGHLIGHTS(1)(2) TSX Composite ESG Index Member Bloomberg ESG Disclosure Top Score Among Canadian E&Ps - 72 Environment (E&Ps average – 51) December 8, 2021 23% reduction in scopes 1 & 2 GHG emissions intensity to 23 Kg CO2e/boe from 30 Kg CO2e/boe in 2019 67,124 Mt CO2e emissions
Slide 4: Current ESG Priorities
CURRENT ESG PRIORITIES Environment Social Governance Introduced GHGs emissions intensity Water for All - increase community reduction targets (mid-term target: 50% 2023 diversity target reduction by 2030 from a 2019 baseline) access to clean water 30% women on the Board Investing in geothermal and s
Slide 5: Delivering Consistent Shareholder Value
DELIVERING CONSISTENT SHAREHOLDER VALUE PRODUCTION PER SHARE RESERVE LIFE INDEX 18 BOE/MILLION WA BASIC SHARES 500 16 450 14 400 350 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 BASIC SHARE FFO
Slide 6: Free Funds Flow and Return to Shareholders
FREE FUNDS FLOW AND RETURN TO SHAREHOLDERS Free Funds Flow Provided by Operations Return to Shareholders >US$950MM >US$715MM Cumulative free funds flow since 2017 Return of capital since 2017 $974 $290 $156 $362 $98 $67 2017 2018 2019 2020 2021E Total Brent Brent Brent Brent Brent Dividend Share Buy
Slide 7: Conventional Oil Reserves Generate Value
CONVENTIONAL OIL RESERVES GENERATE VALUE Proved Proved+ Developed Proved + Probable+ 2020YE Producing Proved Probable Possible Reserves Volumes (mmboe) 72 128 195 281 FD&A US$/boe(1) $7.73 $12.33 $8.45 $4.02 Recycle Ratio (FD&A)(1) at Brent $65 3.9x 2.4x 3.5x 7.5x After Tax NPV10% - C$/sh(2) $18.00
Slide 8: 2022 Outlook and Guidance
2022 OUTLOOK AND GUIDANCE • 13% year-over-year production growth OPERATIONAL GUIDANCE(1) driven by: Brent crude average price ($/bbl) $70 o Development ▪ Southern Llanos Annualized Production - (boe/d) 52,000-54,000 ▪ Northern Llanos *Excludes Exploration Upside o Exploitation ▪ Magdalena CAPEX ALLO
Slide 9: 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 Dividend Program o Share Buy-Back – Targeting 10% $900 $800 $90/bbl $700 $80/bbl $600 $70/bbl ~$210 ~$350 $500 USD MM $75 $400 $300 $60/bbl Brent $350 $200 $
Slide 10: Building a Sustainable Business – 2022 Activities
BUILDING A SUSTAINABLE BUSINESS – 2022 ACTIVITIES Southern Llanos VIM-43 Drill 20-25 wells on LLA-34 VIM-1 Drill 8-11 wells on Cabrestero Drill 4-6 exploration wells Northern Llanos Fortuna Drill first development well on Arauca Northern Boranda Drill first exploration well on LLA-38/Califa VIM-1 VM
Slide 11: Unlocking Potential Through Technology
UNLOCKING POTENTIAL THROUGH TECHNOLOGY Airborne Geophysical Vertical Multistage Surveys Stimulation Pinpoint and Stryde Multilateral Drilling Seismic Acquisition Synthetic Mud Radial Drilling Advancements Source: GroundEffects.org UNLOCKING COLOMBIA | DECEMBER 2021 11
Slide 12: Three Year Plan Drives Business Sustainability
THREE YEAR PLAN DRIVES BUSINESS SUSTAINABILITY Production - Excluding Exploration (1) Exploitation Gas Exploration Utilize Development Unlock Future Technology to & Production Unlock Exploration Opportunities Colombia’s Strategy Resources Funds Flow Allocation(1)(2) (1) 2023 and beyond provided for
Slide 13: 2021 Production – Gaining Momentum
2021 PRODUCTION – GAINING MOMENTUM 14 Day Moving Average Production - H2 2021 54,000 52,000 Net Production (boed) 50,000 48,000 46,000 44,000 42,000 40,000 Announced in Q2 $85MM Capex Increase and Technology Implementation UNLOCKING COLOMBIA | DECEMBER 2021 13
Slide 14: Foundation for Long-Term Production
FOUNDATION FOR LONG-TERM PRODUCTION LLA-34 vs Southern Llanos (Net Production) 34 LLA-34 Southern LLA 15 33 14 32 13 Southern Llanos (mboed) 31 LLA-34 (mboed) 30 12 29 11 28 10 27 9 26 25 8 LLA-34 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21* * Current producti
Slide 15: Strategic Partnership with Ecopetrol
STRATEGIC PARTNERSHIP WITH ECOPETROL • On Strategy: Partnership with Ecopetrol in the highly prolific Llanos Basin in Arauca. Regional Arauca Map • Meaningful Portfolio Additions: Near term, proven production potential and reserves plus CANO LIMON drill ready exploration prospects and future explora
Slide 16: Asset Overview – Proven Oil Field Development
ASSET OVERVIEW – PROVEN OIL FIELD DEVELOPMENT Illustrative Log & Arauca Block – Reactivation, Existing Infrastructure Arauca Fault Trend Structure Map Prospective Horizons • Under explored, partially developed, proven light oil fault trend • High deliverability wells from up to three productive zone
Slide 17: Fortuna
FORTUNA Fortuna (100% WI, Operator) o Acquired in Q4 2018; No drilling since 2012 o Targeting three stacked formations Perla Negra-1 o Six previously drilled vertical wells with ~800 mbbl recovered(1) Cayena-1 o 2021 Drilled Cayena-1 ~15,000-foot multi lateral 2022 Plan: o Drill follow-up multi late
Slide 18: VIM-1: La Belleza Discovery
VIM-1: LA BELLEZA DISCOVERY Gas fields VIM-1 (50% WI, Operator) Oil fields • La Belleza; early production of 2,400 boe/d gross in Gas pipeline Oil Pipeline November 2021 River • Main target is a Cienaga De Oro formation draped over a VIM-1 El Dificil Field Discovered: 1943 *Cum Production = 12 MMBO,
Slide 19: Boranda & VMM-46
BORANDA & VMM-46 Boranda (50% WI, Operator) • Field currently producing 500 bbl/d of oil from vertical wells Boranda • Appraisal plan includes horizontal drilling and Boranda-1 optimized completion techniques Boranda Centro-1 Boranda Sur-2 • Drilling operations estimated to start in December VMM-46
Slide 20: 2021 Bid Round – Preliminarily Awarded Blocks
2021 BID ROUND – PRELIMINARILY AWARDED BLOCKS Parex Land • In the December 2021 Colombia bid round, Parex has preliminarily won 18 Parex Bid Round Blocks Lower Magdalena blocks in both the Llanos and Magdalena basins. 1 Block • The blocks, if awarded increase Parex’ land position to 5.9 million net
Slide 21: 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 22: 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 23: Colombia - Current Land Base
COLOMBIA - CURRENT LAND BASE # Block Parex Area Working Interest Gross Acres(1) 1 VIM-1 Magdalena 50% 139,575 2 VIM-43 Magdalena 100% 90,457 3 Fortuna(2) Magdalena 100% 26,205 Cartagena 4 Boranda(2) Magdalena 50% 43,367 5 De Mares(2) Magdalena 50% 174,387 6 Aguas Blancas(2) Magdalena 50% 13,386 Cove
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 December 10, 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
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: UNLOCKING COLOMBIA | DECEMBER 2021
UNLOCKING COLOMBIA | DECEMBER 2021 31
Parex Resources — Investor Presentation (December 2021) on 6ix