DISCIPLINED GROWTH + SHAREHOLDER RETURNS OUR 10 YEAR JOURNEY CORPORATE PRESENTATION OCTOBER 2019 1 CORPORATE PRESENTATION | OCTOBER 2019
CORPORATE SNAPSHOT Capital Structure 2018 2019E (1) Operating results 2017 Production (boe/d) FY Average 35,541 44,408 ~53,000 Net Working Capital - US$ million (5) $240 DAPS Growth (2) 21% 26% ~33% Capital Expenditures (3) - US$ million $212 $302 ~$230 US$200 MM Undrawn Credit Facility (5) No Debt Drilling Program (# wells) 38 54 ~46 Reserves (2018 Year-End) Market Capitalization (6) ~C$2.9 Billion 2P Reserves (Dec. 31) (4) - Mmboe 185 2P Reserve Life Index - years 10.3 Common Shares Basic Outstanding (6) (1) 2019E mid-point production guidance (TSX: PXT) (2) Debt-adjusted production per share (DAPS) 143.3 MM (3) Assuming Brent oil price: US$60/bbl for 2019 (4) Parex’ working interest, as per the independent reserve report prepared by GLJ Petroleum Consultants (“GLJ”) effective Dec. 31, 2018 (5) As at June 30, 2019 (6) As at September 30, 2019 Share Buyback (Shares/d) See “Advisories” at the end of this presentation 50,000 2 CORPORATE PRESENTATION | OCTOBER 2019
WHY INVEST IN PAREX? 1. No Debt & Positive Q2’19 Working Capital of US$240 MM DEBT-ADJUSTED PRODUCTION PER SHARE (DAPS) 0.50 $25 2. High Margins o Q2’19 FFO netback → US$32/boe at Brent $69/bbl 0.40 $20 BOE/D PER 1,000 SHARES 3. Ability to Grow Within Cash Flow: SHARE PRICE (C$) 0.30 $15 o 2017 Production growth: 20% self-funded o 2018 Production growth: 25% self-funded 0.20 $10 o 2019E Production growth: ~20% self-funded 0.10 $5 4. Capital Allocation Discipline o Balanced capital program and return of capital 0.00 $0 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 5. Focused management PPS DAPS share price o Ability to grow within a single country → Colombia Source: CIBC’S Morning Summary, August 28, 2019 Delivering Shareholder Value 3 CORPORATE PRESENTATION | OCTOBER 2019
DELIVERING CONSISTENT SHAREHOLDER VALUE PRODUCTION PER SHARE (DEBT ADJUSTED) 2P RESERVE PER SHARE (DEBT ADJUSTED) 350 1,600 BOE/MILLION WA BASIC SHARES 1,400 MBOE/MM BASIC SHARES 300 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 BASIC SHARE PAREX VS. TSX ENERGY INDEX FFO/SHARE Brent Oil Price PXT S&P/TSX Energy Index FUNDS FLOW PER SHARE (USD) $3.00 110 80% BRENT OIL PRICE (USD/BBL) $2.50 90 60% TOTAL RETURN $2.00 70 40% $1.50 50 20% $1.00 30 0% $0.50 10 2015 2016 2017 2018 2019YTD* -20% $0.00 -10 2014 2015 2016 2017 2018 -40% See advisories at the end of this presentation * 2019YTD total return as of August 31, 2019 4 CORPORATE PRESENTATION | OCTOBER 2019
BUSINESS IS STRONG – PRODUCTION GROWTH AND FREE CASH FLOW Brent: Production DACF/Share DEBT-ADJUSTED CASH FLOW PER SHARE ~$65/Bbl 55,000 $5.50 Brent: ANNUAL PRODUCTION (BOE/D) 50,000 $5.00 $72/Bbl 45,000 $4.50 Brent: 40,000 $4.00 $55/Bbl Brent: 35,000 $3.50 $45/Bbl 30,000 $3.00 25,000 $2.50 20,000 $2.00 15,000 $1.50 10,000 $1.00 5,000 $0.50 - $- 2016 2017 2018 2019E* * Based on mid-point production guidance and DACF/Share assumes $575 million FFO at $60-65/bbl and 146 million WA basic shares 5 CORPORATE PRESENTATION | OCTOBER 2019
PAREX CASH NETBACK (1) 2019 Target Cash Netbacks (2)(3) $80 $71.59 $75 $68.52 $70 $68.32 $70 $65 $63.83 $65 $60 ($13.79) $60 $55 $55 ($7.97) $50 USD/BOE $45 ($5.51) $40 ($2.59) $35 ($6.74) $30 $25 $20 $15 $10 $5 $29.16 (4) $31.92 (4) Cash Netback $23.56 $31.39 $23-25 $26-28 $29-31 $32-34 $0 2018FY Q4 2018 Q1 2019 Q2 2019 2019 GUIDANCE Cash Netback Tax G&A-Finance Opex Royalties Differential & Transportation Brent Price (1) Cash netback or funds flow netback is a non-GAAP measure that includes all cash generated from operating activities and is calculated before changes in non-cash working capital, divided by produced oil and natural gas sales volumes (2) 2019 target cash netbacks are based on production guidance mid-point excluding hedges and decommissioning & environmental costs (3) Assuming Brent/Vasconia crude differential of less than $3/bbl (4) In Q2 2019, Parex changed how it presents funds flow provided by (used in) operations to present a more comparable basis to peer presentation. See advisories at the end of this presentation 6 CORPORATE PRESENTATION | OCTOBER 2019
2019 PLAN: HIGH NETBACKS ENABLE SHAREHOLDER RETURNS $800 2019 FY Guidance Optionality … $750 • Production 53,000 boe/d 2018YE $700 • Capex U$230 MM Working $650 Capital • FFO netback US$30/Bbl US$219 $600 • Dec. 31 Shares 142.5 MM $550 CFO at $65/bbl MILLIONS (USD) $500 CFO at $60/bbl $450 $400 ~$220 (1)(2) Capex: ~$230 $350 $300 CFO at $250 ~$20 ~$85 $55/bbl $200 BRENT ~$50 $150 ~$75 $100 $50 $0 (1) SOURCES OF CASH MAINTENANCE DEVELOPMENT EXPLORATION BUS DEV. SHARE BUY-BACK COLUMN1 (1) Assumes up to ~14.2 million shares repurchased in 2019 at ~$20.50/share on average using a 2019E USD-CAD average rate of 1.33 (2) As of October 2, 2019 the Company has purchased 13.95 million shares 7 CORPORATE PRESENTATION | OCTOBER 2019
2019 DRILLING PROGRAM: 46 GROSS WELLS PLANNED VIM-1: Lower Magdalena Expl. Wells Dev. Wells o La Belleza well 1 - Middle Magdalena Lower Magdalena VIM-1 o Aguas Blancas 2 12 o DeMares/Boranda 3 - o Fortuna 2 - Fortuna Boranda DeMares Llanos Basin Aguas Blancas Capachos LLA-10 o LLA-10 Middle Magdalena 1 - Merecure o Capachos 1 1 o Merecure 1 - SoCa Llanos Basin o SoCa 4 17 CPO-11 o CPO-11 1 - COLOMBIA Total Wells Planned 16 30 8 CORPORATE PRESENTATION | OCTOBER 2019
CONVENTIONAL OIL RESERVES GENERATE VALUE $9 Proved+ Proved + Probable+ $8 2018YE Proved Probable Possible $7 2P FD&A (USD/BOE)(1) FD&A USD/boe (1) $7.03 $7.29 $7.59 $6 Recycle Ratio (FD&A) (1) 4.5x 4.3x 4.1x $5 NAV at Brent $60 flat – C$/sh (2) $19.53 $26.35 $34.19 $4 After Tax NPV10% - C$/sh (3) $21.25 $30.18 $40.69 $3 Working Capital – C$/sh (4) $1.92 $1.92 $1.92 $2 NAV – C$/Sh (2)(4) $23.17 $32.10 $42.61 $1 (1) Per the independent reserve reports prepared by GLJ Petroleum Consultants Ltd. effective Dec. 31 of the reported year, $0 including Future Development Cost. Recycle Ratio is calculated using Q4 2018 Funds Flow From Operations. per barrel divided by annual F&D or FD&A as applicable. 2016 2017 2018 (2) Calculated by GLJ Petroleum (3) Based on GLJ Petroleum Consultants Ltd. price forecast, as at January 1, 2019, which assumes $70.30/bbl over 2019-2023. (4) Working Capital of US$219 million (CAD 298 million) and 155 million shares at December 31, 2018. 1 Year $/boe 3 Year $/boe See advisories at the end of this presentation 9 CORPORATE PRESENTATION | OCTOBER 2019
FOUNDATION FOR GROWTH: APPRAISE & DEVELOP Faults GLJ 3P (2018YE) NET WORKING INTEREST PRODUCTION Exploration Wells (LLA-32, LLA-34 & Cabrestero) Pipeline LLA-34 50 Max 40 Tilo Chachalaca Chiricoca MBOE/D 30 20 Tarotaro Tigana 10 GUACO - 2014 2015 2016 2017 2018 Tua NET ET WORKING INT INTEREST RE RESERVES* - LAS LAST 5 5 YE YEARS (LLA-32, LLA (LL LLA-34 & Ca Cabrestero) Aruco 250 Jacana RESEVES (MMBOE) Curucucu 200 Jacamar 150 Tigui 100 50 Totoro Cabrestero Bacano 0 Akira 2014 2015 2016 2017 2018 1P 2P 3P *Per the independent reserve reports prepared by GLJ Petroleum Consultants Ltd. effective Dec. 31 of the reported year. As per the independent reserve report prepared by GLJ. effective Dec. 31/18 See advisories at the end of this presentation Generation of Significant Free Cash Flow 10 10 CORPORATE PRESENTATION | OCTOBER 2019
CAPACHOS DEVELOPMENT AND EXPLORATION POTENTIAL Guadalupe depth structure Capachos (50% WI, Operator) • Producing at restricted rate of ~5,500 gross bopd ANDINA NORTE-1 o Capachos-2: Guadalupe on production ANDINA-3 o Andina-1: Guadalupe on production ANDINA-1 o Andina-2: Guadalupe on production ANDINA-2 o Andina Norte-1: Guadalupe to be placed on production • Drilling Andina-3 appraisal well CAPACHOS-2 • Commissioned Phase-1 gas processing facility CAPACHOS SUR-2 Legacy well Parex wells Appraisal Facility/Pad Planned Flowline 11 11 CORPORATE PRESENTATION | OCTOBER 2019
CAPACHOS: ANDINA WELLS • Drilling Andina-3 appraisal well Andina Norte Andina 1 Prospective Andina-1 Andina-2 Andina 1 2 3 Zones Norte-1 Mirador Untested Untested Untested Mirador Producing - To be placed on Guadalupe Mirador 1,000 bopd(restricted) production Guadalupe Upper Guad. Untested 1,606 bopd & 2,892 bopd & Guadalupe 0.8 MMcf/d 4.6 MMcf/d (gross) (gross) Tested (1) Lower Guad. 2,570 bopd & 2,195 bopd & Une 1.2 MMcf/d (gross) 0.9 MMcf/d (gross) Une Une 2,545 bopd & Untested 621 bopd & 1.5 8.7 MMcf/d (gross) MMcf/d (gross) (1) See Upper Guadalupe test rate 12 12 CORPORATE PRESENTATION | OCTOBER 2019
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