Disciplined Growth + Shareholder Returns www.parexresources.com | TSX:PXT | Corporate Presentation | February 2019 1 Corporate Presentation | February 2019 Corporate Presentation | March 2017 1
CORPORATE SNAPSHOT 2019E (1) Operating results 2017 2018E Production (boe/d) FY Average 35,541 ~44,400 ~53,000 Capital Expenditures (2) - US$ million $212 ~$320 ~$215 Drilling Program (# wells) 38 55-60 ~45 Reserves (2018 Year-End) 2P Reserves (Dec. 31) (3) - Mmboe 185 2P Reserve Life Index - years 10.3 Capital structure Net Working Capital (4) ~US$215MM US$200 MM Undrawn Credit Facility No Debt Market Capitalization (5) ~C$3Bn Common Shares Basic Outstanding (TSX listed) 155MM (1) 2019E mid-point production guidance (2) Mid-point guidance assuming Brent oil price: US$72/bbl for 2018 and US$60/bbl for 2019 (3) Parex’ working interest, as per the independent reserve report prepared by GLJ Petroleum Consultants effective Dec. 31, 2018 (4) 2018 year-end net working capital estimate (5) $19 share price See “Advisories” at the end of this presentation 2 Corporate Presentation | February 2019 Corporate Presentation | March 2017 2
WHY INVEST IN PAREX? 1. No debt and positive 2018 WC estimated at ~US$215MM $700 $650 2. High margins $600 Working Capital $550 o Q4’18E Operating Netback → ~US$32/boe @ Brent ~$68/bbl $500 CFO at $60/bbl $450 3. Ability to grow within cash flow: $400 CFO at $55/bbl o 2017 Production Growth: 20% self-funded $350 Returning Capital $300 (Shares Repurchases) o 2018E Production Growth: ~25% self-funded $250 Bus. Dev $200 CFO at $50/bbl o 2019E Production Growth: ~20% self-funded Exploration $150 BRENT $100 Development 4. Focused management $50 Maintenance o Ability to grow within a single country → Colombia $- Cash Sources Cash Uses Delivering Shareholder Value 3 Corporate Presentation | February 2019 Corporate Presentation | March 2017 3
WHERE DO WE GO FROM HERE? 2019 2020 - 2022 Production New Shareholder Deliver Top Replenish & Return Free Growth & Growth: Return: Quartile Per Diversify Cash Flow to Free Cash Tight Oil NCIB Share Portfolio Shareholders Flow & Growth Exploration Our focus is on profitable future growth & delivering shareholder returns 4 Corporate Presentation | February 2019 Corporate Presentation | March 2017 4
DELIVERING CONSISTENT SHAREHOLDER VALUE PRODUCTION PER SHARE (DEBT ADJUSTED) 2P RESERVES PER SHARE (DEBT ADJUSTED) 350 1,600 BOE/MILLION WA BASIC SHARES 1,400 300 MBOE/MM BASIC SHARES 1,200 250 1,000 200 800 150 600 100 400 50 200 - - 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 FUNDS FLOW PER SHARE (BASIC) PXT VS. S&P/TSX X ENERGY INDEX X (TTEN) PXT S&P/TSX Energy Index FUNDS FLOW PER SHARE (USD/BASIC SHARE) BRENT (USD/BBL) $4.00 $120 80% $3.50 60% $100 FUNDS FLOW PER SHARE 66% BRENT PRICE (USD/BBL) $3.00 (USD/BASIC SHARE) TOTAL RETURN $80 40% $2.50 40% 34% $2.00 $60 20% 15% 7% $1.50 0% $40 -11% -10% $1.00 -16% -20% -25% $20 -29% $0.50 $- $0 -40% 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018E* 2018E FFO/share adjusted to exclude cost of the voluntary tax restructuring See advisories at the end of this presentation 5 Corporate Presentation | February 2019 Corporate Presentation | March 2017 5
BUSINESS IS STRONG – PRODUCTION GROWTH AND FREE CASH FLOW 550 55,000 Production Debt Adjusted Production Per Share BOE/MILLION BASIC WA SHARES 500 50,000 450 45,000 400 40,000 350 35,000 300 30,000 250 25,000 200 20,000 150 15,000 100 10,000 50 5,000 - - E 2019E* Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Base assets (LLA-34/Cabrestero) growing production & exploration adds new resource Q2 2018 adjusted to exclude a $137.5 million one-time voluntary tax restructuring during the three months ended June 30, 2018 2019E DAPS assumes 14.2 million shares repurchased (NCIB) 6 Corporate Presentation | February 2019 Corporate Presentation | March 2017 6
GUIDANCE: CASH FLOW FUNDED GROWTH Capex by Type Capex By Block ASSUMPTIONS Bus. Dev Other 2019FY (1) 2018FY Bus. Dev Oil (Brent)(US/bbl) $72 $60 DeMares/Playon Exploration Fortuna FFO netback (2)(3)(4) (US/boe) $32 $25 Capachos Production (Boe/d) 44,400 53,000 Aguas Blancas Development Capex (midpoint)(US$ MM) $320 $215 FFO (midpoint)(US$ MM) (4) $525 $475 SoCa Maintenance YOY Production growth/share 25% 25% (1) Mid-point 2019 guidance Capex Capex (2) FFO netback is defined as Funds Flow From Operations (“FFO”) per bopd. (3) Netback is a non-GAAP Measure. (4) Excluding decommissioning/environmental liabilities. 2018FY adjusted to exclude a $137.5 million cost of the voluntary tax restructuring during Q2 2018 7 Corporate Presentation | February 2019 Corporate Presentation | March 2017 7
2019 PLAN: HIGH NETBACKS ENABLE SHAREHOLDER RETURNS $700 $650 $600 Working OPTIONALITY $550 Capital (1) $500 $450 CFO at $60/bbl ~$215 (2) CFO at $400 $55/bbl Capex: ~$215 $350 $300 CFO at $250 ~$15 $50/bbl ~$75 $200 $150 ~$50 BRENT $100 ~$75 $50 $0 Sources of Cash Maintenance Development Exploration Bus Dev. NCIB Column1 (2) (1) Estimated working capital of ~$215MM at December 31, 2018 (2) Normal issuer course bid assumes up to ~14.2 million shares repurchased at ~$20/share on average using a 2019E USD-CAD average rate of 1.32 8 Corporate Presentation | February 2019 Corporate Presentation | March 2017 8
PAREX CASH NETBACK (1) 2019 TARGET CASH NETBACKS (2) $80.00 $75.84 $74.97 $75.00 $70 $68.32 $67.27 $70.00 $65 ($14.15) $65.00 $60 $60.00 $55 ($9.30) $55.00 $50.00 ($5.40) USD/BOE ($2.58) $45.00 ($1.76) $40.00 ($5.97) $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 (3) Cash Netback $31.62 $36.68 $31.75 $24-26 $28.10 $22-23 $27-29 $30-32 $0.00 2019 Guidance Q1 2018 Q2 2018 Q3 2018 Q4 2018E Cash Netback Tax G&A-Finance Transportation Opex Royalties Differential Brent Price (1) Cash netbacks are a non-GAAP measure defined as funds flow from operations per barrel of oil (2) 2019 target cash netbacks are based on production guidance mid-point excluding hedges and decommissioning & environmental liabilities. (3) Q2 2018 tax and cash netback adjusted to exclude a $137.5 million one-time voluntary tax restructuring during the three months ended June 30, 2018 See advisories at the end of this presentation 9 Corporate Presentation | February 2019 Corporate Presentation | March 2017 9
2019 DRILLING PROGRAM: 45 GROSS WELLS PLANNED VIM-1 VIM-1: Lower Magdalena o La Belleza well Fortuna Llanos Basin # wells Playon DeMares o Capachos 1 Middle Magdalena # wells Capachos Aguas Blancas o SoCa 21 o Aguas Blancas 15 o CPO-11 1 o DeMares/Playon 3 o Fortuna 3 SoCa CPO-11 COLOMBIA 10 Corporate Presentation | February 2019 Corporate Presentation | March 2017 10
SOLID FOUNDATION SUPPORTS GROWTH TRACK RECORD OF PROGRESSING RESERVES* FROM 3P TO CASH FLOW Dec. 31, Proved + Probable+ Proved + Proved Annual 2P Reserve Life Possible Probable Production Index Based on Annualized Millions of Barrels of Oil Equivalent Q4 Production 2014 104 68 40 8 7 years 2015 125 82 46 10 8 years 2016 169 112 64 11 10 years 2017 241 162 96 13 11 years 2018 262 185 122 16 10 years 262 Mmboe → ~ 72,000 boe/d & ~10 yr RLI *Per the independent reserve reports prepared by GLJ Petroleum Consultants Ltd. effective December 31 of the reported year. Future development capital (FDC) included in the 2018 GLJ Report are: 1P US$297 mm, 2P US$412 mm & 3P US$518 mm See advisories at the end of this presentation 11 Corporate Presentation | February 2019 Corporate Presentation | March 2017 11
CONVENTIONAL OIL RESERVES GENERATE VALUE $9.00 Proved+ $8.00 Proved + Probable+ Total Company - 2018YE Proved Probable Possible $7.00 (1) FD&A USD/boe (1) $7.04 $7.29 $7.60 2P FD&A (USD/BOE) $6.00 Recycle Ratio (FD&A) (1) 4.5x 4.4x 4.2x $5.00 $4.00 After Tax NPV10% - CAD/sh (2) $21.25 $30.18 $40.69 $3.00 Working Capital - CAD/Sh (3) $1.89 $1.89 $1.89 $2.00 Total CAD/Sh (3) $23.14 $32.07 $42.59 $1.00 (1) Per the independent reserve reports prepared by GLJ Petroleum Consultants Ltd. effective Dec. 31 of the reported year, including $0.00 Future Development Cost. Recycle Ratio is calculated using estimated Q4 2018 Funds Flow From Operations per barrel divided by 2016 2017 2018 annual F&D or FD&A as applicable. (2) Based on GLJ Petroleum Consultants Ltd. price forecast, as at January 1, 2019, which assumes $70.30/bbl over 2019-2023 1 Year $/boe 3 Year $/boe (3) Working Capital of US$215 million (CAD 293 million) and 155 million shares at December 31, 2018 See advisories at the end of this presentation 12 Corporate Presentation | February 2019 Corporate Presentation | March 2017 12
SOCA: FOUNDATION FOR GROWTH LLA-34 Max Tilo Chiricoca Chachalaca Explore core Tarotaro position, appraise & Tigana develop discoveries, Tua and leverage Parex’ Aruco costs & exploration Jacana strengths Curucucu Tigui Jacamar 2019 Plan: ~21 wells Totoro Cabrestero Bacano Faults Akira GLJ 3P (2018YE) Upcoming Wells Exploration Wells As per the independent reserve report prepared by GLJ Petroleum Consultants Ltd. effective Dec. 31/18 13 Corporate Presentation | February 2019 Corporate Presentation | March 2017 13
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