Bogotá RESULTADOS FINANCIEROS 2Q - año fiscal 2015 Febrero 16 de 2015, Bogotá
STRATEGY Main Objectives: 1) Development activity and Infrastructure on Esperanza & VIM-5 From 20 MM scfpd to 83MM scfpd by year-end calendar 2015 2) Negotiation of additional gas contracts Development and commercialization of the Clarinete discovery 2 new wells: Clarinete-2 & Oboe-1 3) Infrastructure spending and seismic acquisition/interpretation on LLA-23 Cost reductions and firming up future exploration leads 4) Ecuador CAPEX 2015 US$84 MM Guidance 10,000 – 12,000 boepd
Guidance 2015 10,000 – 12,000 boepd Average Quarterly Production Ecuador Gas LLA23 RH & Others Before royalties Netback $37,70 13.256 boepd Netback $44,70 Netback $25,14 12.212 boepd 11,822 boepd Netback $43,57 Netback $20,56 10.893 boepd 10,950 boepd 2,273 1,884 1,967 1,704 1,700 3,334 48% WTI 2,941 insensitive to oil 3,236 2,633 prices 3,502 60% 5,675 estimated 5,774 4,685 4,953 calendar year 4,512 2015 1,875 1,974 1,666 1,613 1,232 Mar 31 2014 Jun 30 2014 Sep 30 2014 Dec 31 2014 Mar 31 2015 Quarterly production, data from Financial Statements and MD&A report for each of the periods
ADJUSTED INCOME Three months Nine months 3Q F2014 US$ 62,4 MM 3Q F2014 US$ 161,9 MM 3Q F2015 US$ 32,8 MM 3Q F2015 US$ 144,1 MM -11% -47% ---------------------- -------------------------- Variation US-$29,6 MM US -$ 17,8 MM ADJUSTED FUNDS FROM OPERATIONS Three months Nine months 3Q F2014 US$ 33,2 MM 3QF 2014 US$ 74,9 MM -67% -5% 3Q F2015 US$ 10,9 MM 3QF 2015 US$ 71,0 MM ---------------------- ----------------------- Variation US-$ 22,3 MM US-$ 3,9 MM
OPEX AND G&A OPTIMIZATION As a result of cost-cutting initiatives and currency devaluation: Q3 2014 Q3 2015 OPEX & Transportation US$16,8 MM US$11,8 MM -30% $16,33/boe $11,82/boe -28% G&A US$5,7 MM US$4,9 MM -15% $4,86/boe -12% $5,52/boe Initiatives for additional cost reductions: Centralization of the Facilities from LLA-23 to Pointer Platform by mid calendar 2015
Total revenues* & Opex + Transportation in thousands of U.S. Dollars ($) *Includes IPC of Ecuador Revenues Production and transportation expenses Amounts expressed in millions of U.S. dollars ($) Quarterly volumes. Data from the Financial Statements and MD&A for each of the periods.
Net loss US$ 15,6 MM “Non – Cash Items ” Deferred tax expense $4,7 million Depletion and depreciation expense $12,3 million Attributable to: Equity tax $1,5 million
EBITDA March 31 2015 2014 Net income (loss) (15.638) 19.438 Adjusted for: Income tax 7.116 12.882 Equity tax 1.519 Net finance expense 5.262 2.416 Depletion and depreciation 12.289 9.015 Stock-based compensation and restricted share units 1.737 2.454 Loss on derivatives and financial instruments 145 (1.311) Unrealized foreign exchange gain and other (3.186) (2.657) Pre-license and exploration costs 98 3.405 Impairment of assets - - Other incomes 585 386 Change in provision (10.545) EBITDA 9.927 35.483
FINANCING New senior term loan Replaces Corporation’s existing credit agreement of US$176 millon US$200 MILLION Matures: Sept 30 of 2019 Interest payable: Libor + 4,75% No principal payments: Until Dec´2017 Quarterly interest Relaxed financial covenants (Debt / EBITDAX 3.50:1 )
ACQUISITION 25% VIM5 – VIM19 Issuance of 8,749,424 common shares valued at $2.06 per share $ 5 million dollars due on September 11, 2015 Payable in either cash or common shares Offset of $ 15 million of receivables Pay a 1% royalty on net revenues from gas sales Excluding Clarinete Discovery Capped at a cumulative total of US$10 million $1.13 million per BCF for 25% of 2P reserves booked to the Clarinete discovery: Reserves report for the period ending June 2016 Capped at a maximum of $13 millon Payable 15 days after the reserves report Payable in either cash or common shares
Bogotá RESULTADOS FINANCIEROS 2Q - año fiscal 2015 Febrero 16 de 2015, Bogotá
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”), are forward- looking statements that involve various risks, assumptions, estimates, and uncertainties. These statements reflect the current internal projections, expectations or beliefs of Canacol and are based on information currently available to the Corporation. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. All of the forward looking statements contained in this presentation are qualified by these cautionary statements and the risk factors described above. Furthermore, all such statements are made as of the date this presentation is given and Canacol assumes no obligation to update or revise these statements. Barrels of Oil Equivalent Barrels of oil equivalent (boe) is calculated using the conversion factor of 5.7 Mcf (thousand cubic feet) of natural gas being equivalent to one barrel of oil. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 5.7 Mcf:1 bbl (barrel) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. 13
Proven oil & gas finders in Colombia and Ecuador Paid ~$230 MM Value created >$1 B Exploration 15-for-24 wells (63%) ‘08 ‘11 ‘12 ‘14 Discovered >50 MMboe in 2P reserves OIL GAS Development 50-for-53 wells (94%) +54% CAGR in 2P gas reserves Gas focus until oil rebounds CY ‘15 guidance (1) 10-12,000 avg. boepd (60% WTI insensitive) $84 MM E&D capex Gas 61 43 2P reserves Gas 345 BCF (61 MMboe) / $852 MM (2) 35 Oil 23 MMbls / $556 MM (3) 18 Oil 11 23 EV $571 MM 8 7 '09 '10 '11 '12 '13 '14 _ (1) Based on $60/bbl WTI average price for calendar ‘15 (2) As of Feb ‘15 reserve reports. Represents pre -tax NPV-10. (3) As of Jun ‘14 reserve reports. Represents pre -tax NPV-10. 14
$84 MM E&D budget for ‘15 ~63% development $32 MM spent YTD / $52 MM remaining Light oil Oriente $8 MM Llanos Dry gas 4 x production starting in Dec ‘15 $33 MM Lower Magdalena ↑ production from 20 → 83 MMcf/d $43 MM ↑ gas ebitda from $30 → $150 MM (1) 49% 2 wells and 1 workover left in ‘15 Dry gas Starting CY 3Q‘15, 2 wells at Clarinete Pipeline to Jobo Light oil Up to 4 workovers Flow line and facilities New 3D; firm-up exploration leads (1) Annualized 15
$500 Projected > 10x ↑ in gas revs & ebitda $400 Each gas contract is locked-in, take-or-pay contracts: Customers (yrs.) 5-15 $300 Volumes (MMcf/d) 118 Gas sales price range (MMbtu) $5-$8 $200 Price escalation (/yr.) 2-3% $100 $ MM $- / yr. ‘15e → ‘ 20e gas activities '15e '16e '17e '18e '19e '20e Spend ~$300 MM to generate $1.6 B ebitda 70,000 60,000 50,000 Growth from a diverse portfolio Base 2P reserves and deemed volumes 40,000 Dry gas 345 BCF (61 MMboe) (1) 30,000 Light oil 23 MMbls (2) 20,000 Net acres 23 contracts / 2.6 MM Resource potential >280MMboe (3) 10,000 Avg. boepd 0 '15e '16e '17e '18e '19e '20e (1) As of Feb ‘15 reserve reports. Represents pre -tax NPV-10. (3) Mgmt. estimate 16 (2) As of Jun ‘14 reserve reports. Represents pre -tax NPV-10.
Colombia’s gas demand is set to Demand for gas in Canacol’s target increase 9x faster than world demand market (Caribbean coast) is set to accelerate 1.7x faster than country demand +15% MMcf/d 1,200 Thermoelectric +0% 1,000 Transport +10% -3% 800 +3% Ecopetrol 600 Petrochemical Bogota +2% Industrial 400 +3% 200 Commercial Residential 0 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15e '16e '17e '18e Source UPME 17
Ballena Chuchupa 3 Guajira fields -20% y/y Riohacha Caribbean Sea Caribbean coast Barranquilla Demand ~575 MMcf /d in ‘18e 7 gas fired ‘ 14 → ‘18e CAGR +15% power plants Supply ~501 MMcf /d in ‘14 Lower Mag 3 Guajira fields declined ~20% y/y (blow-down) Basin Cartagena Supply options were limited in the Lower Mag <5 gas fields (only 6% of Colombia’s production) Canacol is the new supply source Late ‘14 performance 2 discoveries tripled 2P reserves y/y to 345 BCF La Creciente +58 MMcf/d Signed gas contracts to boost production by 6x to 118 MMcf/d over the next 3 yrs. Clarinete Upside Palmer Nelson ~785k gross acres, ~15% of basin >2 TCF gross unrisked prospective resources Gas field Cerro Compressor Matoso TGI pipeline Promigas pipeline 18
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