DISCIPLINED GROWTH + SHAREHOLDER RETURNS OUR 10 YEAR JOURNEY CORPORATE PRESENTATION JANUARY 2020 1 CORPORATE PRESENTATION | JANUARY 2020
CORPORATE SNAPSHOT Capital Structure 2019E (1) 2020E (1) Operating results 2018 Production (boe/d) FY Average 44,408 52,750 55,375 Net Working Capital - US$ million (6) $280 DAPS Growth (2) 26% 31% 23% Drilling Program (# wells) 54 43 59 US$200 MM Undrawn Credit Facility (6) No Debt Capital Expenditures (3) - US$ million $302 $225 $225 FFO- US$ million (3) $383 ~$555 $535 Market Capitalization (7) ~C$3.5 Billion $506 (4) EBITDA $649 Reserves (2018 Year-End) Common Shares Basic Outstanding (7) 2P Reserves (Dec. 31) (5) - Mmboe 185 (TSX: PXT) 143.3 MM 2P Reserve Life Index - years 10.3 (1) Mid-point production guidance (2) Debt-adjusted production per share (DAPS) Share Buyback (8) (3) Mid-point capex assumes Brent oil prices of US$63/bbl for 2019 and US$60/bbl for 2020 ~ 14 MM shares (4) For the nine months ending September 30, 2019 (5) Parex’ WI per the independent reserve report prepared by GLJ Petroleum Consultants (“GLJ”) effective Dec. 31, 2018 (6) As at September 30, 2019 (7) As at December 31, 2019 (8) Pursuant to the Normal Course Issuer Bid which commenced on December 23, 2019 See “Advisories” at the end of this presentation 2 CORPORATE PRESENTATION | JANUARY 2020
WHY INVEST IN PAREX? DEBT-ADJUSTED PRODUCTION PER SHARE (DAPS) 1. No Debt & Positive Q3’19 Working Capital of US$280 MM 0.50 $25 2. High Margins o Q3’19 FFO netback → US$30/boe at Brent $62/bbl 0.40 $20 BOE/D PER 1,000 SAHRES SHARE PRICE (CAD) 4. Capital Allocation Discipline 0.30 $15 o Balanced capital program and return of capital 0.20 $10 5. Focused Shareholder Return o 2018 CROIC (1) → 32% 0.10 $5 o Share buy-back funded from free cash flow 0.00 $0 ▪ 14.7 million shares repurchased in 2019 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015 Q3 2015 Q1 2016 Q3 2016 Q1 2017 Q3 2017 Q1 2018 Q3 2018 Q1 2019 Q3 2019 ▪ Plan to buy back 10% of public float PPS DAPS Share Price (QE) Source: CIBC’S Morning Summary, August 28, 2019 & Company’s data Delivering Shareholder Value (1) Cash return on invested capital calculated (CROIC), a non-GAAP measure, is calculated as EBITDA divided by average carrying value of exploration and evaluation assets and property, plant and equipment assets, excluding accumulated DD&A 3 CORPORATE PRESENTATION | JANUARY 2020
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 2019 -20% $0.00 -10 2014 2015 2016 2017 2018 -40% See advisories at the end of this presentation 4 CORPORATE PRESENTATION | JANUARY 2020
BUSINESS IS STRONG – PRODUCTION GROWTH AND FREE CASH FLOW ANNUAL PRODUCTION CAPITAL RETURNED TO SHAREHOLDERS $300 16 60,000 $6 Brent: Brent: ANNUAL PRODUCTION (BOE/D) ~$60/Bbl DEBT-ADJUSTED CASH FLOW PER SHARE (US$) 55,000 ~$63/Bbl 14 $250 CAPITAL RETURNED (US$ MILLIONS) 50,000 $5 Brent: BUYBACK (MILLIONS OF SHARES) $72/Bbl 12 45,000 $200 40,000 $4 Brent: 10 $55/Bbl 35,000 Brent: $45/Bbl 30,000 $3 $150 8 25,000 6 20,000 $2 $100 15,000 4 10,000 $1 $50 2 5,000 - $0 $0 0 2016 2017 2018 2019E (1) 2020E (2) 2017 2018 2019 2020E Production DACF/Share Capital Returned Share Buyback (1) 2019E based on mid-point production guidance and DACF/Share assumes $555 million FFO at $63/bbl and 146.5 million WA basic shares (2) 2020E based on mid-point production guidance and DACF/share assumes $535 million FFO at $60/bbl and 136.5 million WA basic shares 5 CORPORATE PRESENTATION | JANUARY 2020
PAREX CASH NETBACK (1) 2020 Target Cash Netbacks (2)(3) $80 $71.59 $75 $68.52 $68.32 $70 $65 $63.83 $62.03 $65 $60 $60 $55 ($12.95) $55 $50 ($6.72) $45 USD/BOE $40 ($6.15) ($0.16) $35 ($6.44) $30 $25 $20 $15 $10 $5 $29.16 (4) $31.92 (4) Cash Netback $29.61 $23.56 $31.39 $28-30 $23-25 $26-28 $0 2018FY Q4 2018 Q1 2019 Q2 2019 Q3 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) 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 | JANUARY 2020
2020 DRILLING PROGRAM: 59 GROSS WELLS PLANNED Llanos Basin Expl. Wells Dev. Wells o SoCa 3 33 o CPO-11 Fortuna 2 - o LLA-94 2 - Boranda o Merecure 1 - Aguas Blancas Middle Magdalena Basin o Aguas Blancas - 12 o Boranda Merecure 3 - Middle Magdalena o Fortuna 3 - SoCa LLA-94 Llanos Basin Total Gross Wells Planned 14 45 CPO-11 59 Gross Wells 2020 Drilling No 2020 Drilling 7 CORPORATE PRESENTATION | JANUARY 2020
2020 PLAN: HIGH NETBACKS ENABLE SHAREHOLDER RETURNS $950 $900 $850 Optionality … 2019E $800 Working $750 Capital $700 ~US$320 $650 MILLIONS (USD) $600 CFO at $65/bbl $550 CFO at $60/bbl $500 $450 CFO at $55/bbl Capex: ~$210-$240 $400 ~$200 (1) $350 $300 CFO at ~$65-$75 $250 $50/bbl ~$30-$40 $200 BRENT ~$115-$125 $150 Operated $100 $50 LLA-34 $0 (1) SOURCES OF CASH MAINTENANCE DEVELOPMENT EXPLORATION SHARE BUY-BACK COLUMN1 (1) Assumes that 10% of the public float is repurchased in 2020 8 CORPORATE PRESENTATION | JANUARY 2020
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 $5 After Tax NPV10% - C$/sh (2) $17.61 $24.43 $32.27 $4 Working Capital – C$/sh (3) $1.92 $1.92 $1.92 $3 NAV at Brent $ 60 flat - C$/Sh (2) $19.53 $26.35 $34.19 $2 (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. $1 per barrel divided by 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. (3) Working Capital of US$219 million (CAD 298 million) and 155 million shares at December 31, 2018. $0 See advisories at the end of this presentation 2016 2017 2018 1 Year $/boe 3 Year $/boe 2019YE Reserves Update Expected – Early February 9 CORPORATE PRESENTATION | JANUARY 2020
FOUNDATION FOR GROWTH: APPRAISE & DEVELOP NET WORKING INTEREST PRODUCTION (LLA-32, LLA-34 & Cabrestero ) LLA-32 50 Kananaskis Azogue 40 LLA-34 Max MBOE/D 30 Chachalaca Tilo Chiricoca 20 10 Tarotaro - Tigana 2014 2015 2016 2017 2018 Faults NET WORKING INTEREST RESERVES* - LAST 5 YEARS Tua GLJ 3P (2018YE) (LLA-32, LLA-34 & Cabrestero) Exploration Wells 250 Aruco Pipeline RESEVES (MMBOE) 200 Jacana Curucucu 150 Jacamar 100 Tigui 50 Totoro Cabrestero 0 Akira Bacano 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 December 31, 2018 See advisories at the end of this presentation Generation of Significant Free Cash Flow 10 10 CORPORATE PRESENTATION | JANUARY 2020
CAPACHOS DEVELOPMENT AND EXPLORATION POTENTIAL Guadalupe depth structure Capachos (50% WI, Operator) • Producing at restricted rate of 5,000 - 6,000 gross bopd ANDINA NORTE-1 • Flowline expected to be in service by mid-2020 ANDINA-3 o Construction commenced in January ANDINA-1 • Commissioned Phase-1 gas processing facility ANDINA-2 CAPACHOS-2 CAPACHOS SUR-2 Legacy well Parex wells Facility/Pad Planned Flowline 11 11 CORPORATE PRESENTATION | JANUARY 2020
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