DISCIPLINED GROWTH + SHAREHOLDER RETURNS OUR 10 YEAR JOURNEY CORPORATE PRESENTATION FEBRUARY 2020 1 CORPORATE PRESENTATION | FEBRUARY 2020
CORPORATE SNAPSHOT Capital Structure 2019E (1) 2020E (1) Operating results 2018 Production (boe/d) FY Average 44,408 52,687 55,375 Net Working Capital - US$ million (6) $280 DAPS Growth (2) 26% 34% ~20% 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$3.0 Billion $506 (4) EBITDA $649 Reserves (2019 Year-End) Common Shares Basic Outstanding (7) 2P Reserves (Dec. 31) (5) - Mmboe 198 (TSX: PXT) 142.3 MM 2P Reserve Life Index - years 10 (1) Mid-point production guidance (2) Debt- adjusted production per share (“DAPS”) growth 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, 2019 (6) As at September 30, 2019 (7) As at January 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 | FEBRUARY 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 (2018-2019) 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 (2019-2020) 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 | FEBRUARY 2020
DELIVERING CONSISTENT SHAREHOLDER VALUE PRODUCTION PER SHARE (DEBT ADJUSTED) 2P RESERVE PER SHARE (DEBT ADJUSTED) 500 1,800 BOE/MILLION WA BASIC SHARES MBOE/MILLION WA BASIC SHARES 450 1,600 400 1,400 350 1,200 300 1,000 250 800 200 600 150 400 100 200 50 - - 2015 2016 2017 2018 2019E 2015 2016 2017 2018 2019 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) $4.00 80 80% BRENT OIL PRICE (USD/BBL) $3.50 70 60% $3.00 60 TOTAL RETURN $2.50 50 40% $2.00 40 20% $1.50 30 0% $1.00 20 2015 2016 2017 2018 2019 $0.50 10 -20% $0.00 0 2015 2016 2017 2018 2019E -40% See advisories at the end of this presentation 4 CORPORATE PRESENTATION | FEBRUARY 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(3) 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 $60/bbl and 136.5 million WA basic shares (3) Assumes US$ 200-240 capital returned to shareholders 5 CORPORATE PRESENTATION | FEBRUARY 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 2020 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 sales volumes for the period (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 | FEBRUARY 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 | FEBRUARY 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 ~$240 (1)(2) $350 $300 CFO at ~$65-$75 $250 $50/bbl ~$30-$40 $200 BRENT ~$115-$125 $150 Operated $100 $50 LLA-34 $0 SOURCES OF CASH MAINTENANCE DEVELOPMENT EXPLORATION SHARE BUY-BACK (1) COLUMN1 (1) Pursuant to the NCIB, Parex may purchase for cancellation up to an aggregate of 13,986,994 common shares prior to December 22, 2020. (2) Assumes US$ 200-240 capital returned to shareholders . As of January 31, 2020, Parex repurchased 1.35 million shares at an average cost of C$23.59. 8 CORPORATE PRESENTATION | FEBRUARY 2020
CONVENTIONAL OIL RESERVES GENERATE VALUE $8 Proved+ Proved + Probable+ $7 2019YE Proved Probable Possible 2P FD&A (USD/BOE)(1) $6 FD&A USD/boe (1) $7.50 $7.57 $12.44 Recycle Ratio (FD&A) (1) 3.9x 3.9x 2.4x $5 $4 After Tax NPV10% - C$/sh (2) $19.37 $25.72 $32.73 $3 Working Capital – C$/sh (3) $3.08 $3.08 $3.08 NAV at Brent $ 60 flat - C$/Sh (2) $22.45 $28.80 $35.81 $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 2019FY 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, 2020. At Parex’ request, the GLJ 2019 Report was calculated using a constant $60/bbl Brent oil price. $0 (3) Working Capital of US$340 million (CAD 442 million) and 143 million shares at December 31, 2019. 2017 2018 2019 See advisories at the end of this presentation 1 Year $/boe 3 Year $/boe 9 CORPORATE PRESENTATION | FEBRUARY 2020
FOUNDATION FOR GROWTH: APPRAISE & DEVELOP NET WORKING INTEREST PRODUCTION LLA-32 (LLA-32, LLA-34 & Cabrestero) 50,000 Kananaskis Azogue LLA-34 40,000 Max Tilo 30,000 BOE/D Chachalaca Chiricoca 20,000 Tarotaro 10,000 Guaco Tigana 0 2015 2016 2017 2018 2019E Tua Faults GLJ 3P (2019YE) NET WORKING INTEREST RESERVES* - LAST 5 YEARS Aruco Exploration Wells (LLA-32, LLA-34 & Cabrestero) Jacana Pipeline 250 Curucucu RESEVES (MMBOE) Jacamar 200 Tigui 150 Totoro 100 Cabrestero Bacano Akira 50 0 2015 2016 2017 2018 2019 As per the independent reserve report prepared by GLJ. effective December 31, 2019 1P 2P 3P *Per the independent reserve reports prepared by GLJ Petroleum Consultants Ltd. effective Dec. 31 of the reported year. See advisories at the end of this presentation Generation of Significant Free Cash Flow 10 10 CORPORATE PRESENTATION | FEBRUARY 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 | FEBRUARY 2020
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