DISCIPLINED GROWTH + SHAREHOLDER RETURNS OUR 10 YEAR JOURNEY AGM PRESENTATION MAY 8, 2019 1 AGM PRESENTATION | MAY 2019
WHAT PAREX HAS ACCOMPLISHED IN 10 YEARS Parex as of: Inception Today Since inception Production(boe/d) Nil ~52,000 Parex has delivered 2P Reserves (MMboe) (1) Nil 186 Material growth and Working Capital (US$ MM) (2) $105 $207 Value creation Bank Debt (US$MM) (2) Nil Nil while maintaining Financial discipline Market Capitalization (C$MM) (3) $175 ~$3,039 (1) Parex’ working interest, as per the independent reserve report prepared by GLJ Petroleum Consultants effective Dec. 31, 2018 (2) As at March 31, 2019 (3) Assuming C$20.63 share price and 147.3 outstanding shares at May 7, 2019 November 2019 is our 10 year anniversary 2 AGM PRESENTATION | MAY 2019
WHAT PAREX HAS ACCOMPLISHED IN 10 YEARS PRODUCTION PER SHARE (DEBT ADJUSTED) 2P RESERVES PER SHARE (DEBT ADJUSTED) 450 1600 BOE/MILLION WA BASIC SHARES 400 1400 MBOE/MM BASIC SHARES 350 1200 300 1000 250 800 200 150 600 CFO at $65/bbl 100 400 CFO at $60/bbl 50 200 CFO at $55/bbl 0 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019E Returning capital 2010 2011 2012 2013 2014 2015 2016 2017 2018 (Shares repurchases) PAREX ACREAGE PR PRIC ICE PE PERFORMANCE Spin-out Bid Round Farm-in Acquisition Divested/Relinquished Farm-out Parex TSX TTEN 2,500 CFO at $50/bbl Parex 509 600 BRENT 2,000 Exploration 500 NET ACRES (000) 1,500 400 Development 300 1,000 200 500 Maintenance 100 - 0 (500) (1,000) 2009 2010 2012 2013 2014 2015 2016 2017 2018 2019YTD Delivered Shareholder Value 3 AGM PRESENTATION | MAY 2019
WHERE ARE WE TODAY? 1. 50,000 bopd milestone achieved 2. 3 rd largest producer in Colombia 3. No debt and positive Q1’19 WC of US$207MM 4. High margin operation o Q1’19 funds flow netback → US$28/boe @ Brent $64/bbl CFO at $60/bbl CFO at $55/bbl 5. Ability to grow within cash flow: Returning capital (Shares repurchases) o 2017 Production growth: 20% self-funded o 2018 Production growth: 25% self-funded CFO at $50/bbl o 2019E Production growth: ~20% self-funded BRENT Exploration 6. Capital allocation discipline Development o Balanced capital program and return of capital Maintenance 7. Focused management o Ability to grow within a single country → Colombia Continue to Deliver Shareholder Value 4 AGM PRESENTATION | MAY 2019
OUR BUSINESS IS LOW COST Parex Cash Netback (1) 2019 Target Cash Netbacks (2) $80 $75.84 $74.97 $75 $75 $70 $68.32 $67.27 $70 $65 $63.83 $65 $60 $60 ($11.50) $55 $50 ($6.39) $45 USD/BOE ($5.71) $40 ($4.06) $35 ($3.18) $30 ($5.34) $25 $20 $15 $10 (3) $5 Cash Netback $31.62 $36.68 $24-26 $28.10 $31.39 $27.65 $27-29 $30-32 $33-35 $0 2019 GUIDANCE Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 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 5 AGM PRESENTATION | MAY 2019
2019 PLAN: HIGH NETBACKS ENABLE SHAREHOLDER RETURNS $900 $850 $800 2018YE $750 Working Capital $700 Optionality $650 (+/- ~$400) CFO at $75/bbl MILLIONS (USD) $600 CFO at $70/bbl $550 $500 CFO at $65/bbl ~$226 (1) CFO at $60/bbl $450 $400 Capex: ~$215 CFO at $55/bbl $350 $300 ~$15 ~$75 CFO at $250 $50/bbl $200 ~$50 BRENT $150 ~$75 $100 $50 $0 (1) SOURCES OF CASH MAINTENANCE DEVELOPMENT EXPLORATION BUS DEV. NCIB COLUMN1 (1) Normal issuer course bid assumes up to ~14.2 million shares repurchased at ~$21/share on average using a 2019E USD-CAD average rate of 1.32 6 AGM PRESENTATION | MAY 2019
INDUSTRY LEADING FREE CASH FLOW RETURN Capital allocation strategy for “optionality” ~27% o Projects must “compete” for capital internally o Returning capital to shareholder o Investment/capital strategy has not changed just because we have significant FCF In 2019, we plan to grow production by 20%, drill 16 exploration wells, buy-back 15 mm shares AND remain debt free with increased working capital 7 AGM PRESENTATION | MAY 2019
FINDING & DEVELOPING CONVENTIONAL OIL RESERVES CREATES VALUE $9 Proved+ $8 Proved + Probable+ 2018 Year-End Proved Probable Possible $7 FD&A USD/boe (1) $7.03 $7.29 $7.59 $6 2P FD&A (USD/BOE) (1) Recycle Ratio (FD&A) (1) 4.5x 4.3x 4.1x $5 $4 After Tax NPV10% - CAD/sh (2) $21.25 $30.18 $40.69 $3 Working Capital - CAD/Sh (3) $1.92 $1.92 $1.92 $2 Total CAD/Sh (3) $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, 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. $0 (2) Based on GLJ Petroleum Consultants Ltd. price forecast, as at January 1, 2019, which assumes $70.30/bbl over 2019-2023 (3) Working Capital of US$219 million (CAD 298 million) and 155 million shares at December 31, 2018 2016 2017 2018 See advisories at the end of this presentation 1 Year $/boe 3 Year $/boe Solid Reserve Base 8 AGM PRESENTATION | MAY 2019
DIVERSIFIED 2019 DRILLING PROGRAM 46 Gross Wells Planned Llanos Basin Expl. Wells Dev. Wells Lower Magdalena o Merecure 1 - o Capachos 1 - VIM-1 o SoCa 4 17 o CPO-11 1 - Fortuna Playon Middle Magdalena DeMares Middle Magdalena Capachos o Aguas Blancas 3 12 Aguas Blancas o DeMares/Playon 3 - Merecure o Fortuna 2 1 SoCa Llanos Basin VIM-1: Lower Magdalena CPO-11 o La Belleza 1 COLOMBIA Total Wells Planned 16 30 9 AGM PRESENTATION | MAY 2019
FOUNDATION FOR GROWTH: APPRAISE, DEVELOP & GENERATE FCF ODL Offloading Faults GLJ 3P (2018YE) LLA-32 NET WORKIN ING INT INTEREST PRODUCTIO ION Exploration Wells Carmentea Pipeline (SO (SOCA ARE REA) 50 Calona 45 Kananaskis AZOGUE LLA-34 40 Max Chachalaca Tilo Chiricoca 35 Tarotaro Tigana GUACO 30 MBOE/D Tua 25 Aruco 20 Jacana Curucucu Jacamar 15 Tigui Totor Cabrestero Bacano 10 Faults GLJ 3P (2018YE) 2019 Exploration o Akira 5 SoCa Area - Llanos Basin 2012 2013 2014 2015 2016 2017 2018 Q1 2019 As per the independent reserve report prepared by GLJ. effective Dec. 31/18 3-5 Years of Significant FCF Generation 10 AGM PRESENTATION | MAY 2019
CAPACHOS DEVELOPMENT AND EXPLORATION POTENTIAL Guadalupe depth structure Capachos (50% WI, Operator) • Located in the Arauca District near the Venezuelan border ANDINA NORTE-1 • Producing at restricted rate of ~5,000 gross bopd o Capachos-2: Guadalupe on production ANDINA-1 o Andina-1: Guadalupe on production ANDINA-2 o Andina-2: Guadalupe on production • Phase-1 gas processing facility on line in Q2/19 CAPACHOS-2 • Drilling Andina Norte-1 exploration well CAPACHOS SUR-2 Legacy well Parex wells Exploration Facility/Pad Flowline Successful Operation in a Challenging Area 11 AGM PRESENTATION | MAY 2019
CAPACHOS EXPLORATION POTENTIAL • Andina Norte prospect drilled the northern Andina Norte Prospect Andina-2 Andina-1 fault compartment o Well is cased and currently testing Mirador Prospective Zones Andina-1 Andina-2 Mirador Untested Untested Mirador Guadalupe Guadalupe Producing ~1,000 bopd - (restricted) Guadalupe Upper Guad. Untested 1,606 bopd & 0.8 MMcf/d (gross) Une Lower Guad. 2,570 bopd & 2,195 bopd & Une 1.2 MMcf/d (gross) 0.9 MMcf/d (gross) Une 2,545 bopd & Untested 8.7 MMcf/d (gross) 12 AGM PRESENTATION | MAY 2019
WE GIVE BACK TO THE COMMUNITIES WHERE WE OPERATE What we do and how we impact the community At Capachos, we established open dialog with stakeholders • Arauca’s leaders visited our Casanare operations to assess our performance record (social initiatives, economic impact & environmental stewardship) • We targeted our social investments towards Community priorities (e.g. water access & housing) • Garnered local support from community leaders and formed key partnerships with institutions US$400,000 funding the upgrade of the rural aqueduct system to • Committed to uphold ethnic groups’ rights provide clean water supply coverage for ~1,200 people • Built strong relationships through the procurement of local goods & services Open Dialog + Transparency + Partnerships = Tailored Initiatives & Community Buy-in 13 AGM PRESENTATION | MAY 2019
CORPORATE ESG INITIATIVES Water for All (US$1.6 Million) Home Improvement (US$4.9 Million) Projects for Taxes (US$340,000) • Invest in clean water supply infrastructure • Align with local development plans • Government of Colombia program to rebuild rural areas •Ministry of Mines & Energy’s and ANH awarded initiative • Parex supplies building materials • Companies invest up to 50% of taxes in projects • Parex was the 1 st program participant • Show O&G projects contributing to clean water provision • Communities provide assurance of good use of materials US$15 million invested in projects since 2014 Investments focused on economic development and improvement of local infrastructure/services. 14 AGM PRESENTATION | MAY 2019
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