Parex Resources Inc.
Annual General Meeting
May 12, 2015
2014 Achievements
1. Expanded Core Llanos Position
–
Verano acquisition: increased working interest on LLA-32 & LLA-34
2. Added 2nd Core Area: Magdalena Basin
–
VMM-9 & VIM-1
3. Strengthened Balance Sheet
–
Redeemed convertible debentures $85 mm
4. Built Sustainable Resource Base
–
–
–
Doubled 2P reserves from 32 to 68 mmbbls
Expanded RLI to 7 years
Achieved 2P FD&A $13.79/bbl
5. Converted resources into cash
–
Produced 22,526 bopd and generated $294mm in cash flow
2015 Annual General Meeting
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Re-visit: Are we adding value?
2012
2013
2014
11,407
15,854
22,526
2P Reserves mmboe
16
32
68
FD&A (2P Incl. FDC)
(USD)
$39.64
$15.75
$13.79
3.5
5.1
7.1
Grow in low prices?
2P NPV10 AT/share (GLJ)
(CAD)
$4.11
$8.12
$9.46
Using December 31
FX rate*
Liquidity – PXT
annual volume & turnover
68,656,434
(0.63x)
79,062,221
(0.73x)
Production bopd
RLI (years)
Notes
Q1’15 26,729 bopd
3P =104 mmboe
Recycle Ratio
>1.5x
218,995,260
Providing Liquidity
(1.8x)
*FX of USD to CAD: 0.9949 at Dec. 31/12; 1.0636 at Dec 31/13 & 1.1601 at Dec 31/14.
2015 Annual General Meeting
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Monthly Rate of Return
PXT vs. TSX Composite/Energy Index (Total Returns)
400%
PXT
350%
300%
250%
200%
150%
100%
S&P TSX
50%
0%
S&P Energy Index
-50%
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
*Initial PXT Share Price : C$3.00
2015 Annual General Meeting
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Annual Themes
Year
Theme
Delivery
2010
Find Oil
Kona
2011
Build Cash Flow & Production
Q4: Production 11,342 bopd &
operating netback $71.24/bbl
2012
Exploration Success
Discover Las Maracas + Akira
2013
Achieve Sustainability
2P RLI > 5 years
2014
Building The Runway
3P 104 mmbbls & RLI 10.7 years
2015 Leveraging Portfolio Flexibility Financial Strength & Growth Options
2015 Annual General Meeting
5
Leveraging Portfolio Flexibility
1. Large Conventional, Early Stage of Development Oil Fields
– Minimal maintenance capital
– Significant development drilling inventory
• 2P 62 locations
• 3P 86 locations
– 2P FDC of $5.28/bbl
2. Significant 2015 Exploration Program
– Material prospects over 22 blocks
3. Financial Strength
– Business Development targets opportunities for the 3-5 year horizon
2015 Annual General Meeting
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5 year Plan: Strategic Intents
1. Provide Consistent Growth of:
– Reserves, Production and Cash flow
– Absolute and per share
2. Maintain or Improve Sustainability
– RLI target 6-9 years
– Maintain development inventory 2+ years
– Sustain exploration prospect inventory 2-3 years
3. Develop New Concepts, Acquire New Core Areas
– 3-5 new plays in hopper
– Apply developed concepts to Colombia
– Each has multi-year development potential
2015 Annual General Meeting
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Portfolio Supports the Path to Growth
 Track record of progressing reserves* from 3P to cash flow
Proved +Probable
+ Possible
(mmboe)
Proved +
Probable
(mmboe)
Proved
(mmboe)
Annual
Production
(mmbbls)
2P
Reserves
Life Index
-
-
-
-
31-Dec -09
-
31-Dec -10
10.4
5.8
1.1
0.3
-
31-Dec-11
17.6
10.7
4.9
2.0
2.6 years
31-Dec-12
23.1
16.1
10.1
4.2
3.5 years
31-Dec-13
49.9
32.0
17.4
5.8
5.1 years
31-Dec-14
104.0
68.4
40.4
8.2
7.1 years
104 mmboe & 7 year RLI
 40,000 bopd
*Source: GLJ at December 31, 2014
2015 Annual General Meeting
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Parex Model – Foundation
Assets
Shareholder
Value
Capabilities
Balance Sheet
2015 Annual General Meeting
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Parex Model – Core Strategy
Assets
 Reserve Report
 Exploration Portfolio
 Business Development
Shareholder
Value
Balance Sheet
Capabilities
2015 Annual General Meeting
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Parex Model – Core Strategy
Balance Sheet
 $80 MM Net WC
 >$200 MM FFO
 $200 MM Bank Facility
Shareholder
Value
Capabilities
Assets
2015 Annual General Meeting
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Parex Model – Core Strategy
Capabilities




Executive Commitment
Bench Strength
Rigorous Process
Core Competencies
Shareholder
Value
Assets
Balance Sheet
2015 Annual General Meeting
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Parex Exploration Life Cycle
Develop
Concept
Acquire
Land
Test
Concept
Initial
Development
Traditional
3-Ways
Expand
Land
Exploitation
LLA-26, Cebucan
Low Side
Closures
Cabrestero, LLA-34, LLA-10
Stratigraphic
Traps
LLA-30, LLA-32, Akira, Tigana
New Plays
Magdalena Basin, Llanos Deep, Capachos
Fully demonstrated in the Llanos Basin;
Apply same process in Magdalena Basin
2012 AGM
2015 Annual General Meeting
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Exploration Life
Cycle is Repeatable
BARRANQUILA
CARTAGENA
SANTA MARTA
LOWER MAGDALENA(2)
No. Fields: 43
EUR: 547 mmboe
Prod.: 15 mboe/d
LEGEND
VIM-1
PXT Land/Block
COVENAS
Pipeline
Ports
Apply same
portfolio approach
in Colombia’s
Magdalena Basin
Refineries
Off-loading station
Selected oil fields
MIDDLE
MAGDALENA(2)
No. Fields: 102
EUR: 3,919 mmboe
Prod.: 168 mboe/d
Capachos
VMM-9
MEDELLIN
VMM-11
Ocensa
LLANOS (2)(3)
No. Fields: 297
EUR: 9,720 mmboe
Prod.: 832 mboe/d
Morpho
LLA-10
LLA-16 LLALLA-40
-17
LLA-57
Los
Ocarros LLA-20
El Eden LLA-24
Cebucan
LLA-26
LLA-29
LLA-30
BOGOTA
LLA-32
Cerrero
LLA-34
Cabrestero
NOTES
(1) Certain lands are subject to farm-in-agreement earnings terms and/or regulatory approval
(2) Source – 2014 IHS Data
(3) Colombia data only, excludes Venezuela’s Llanos
2015 Annual General Meeting
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Leveraging Portfolio Flexibility
What’s New for Parex?
1.
2.
3.
4.
Cash cost reductions & improved netbacks
$80 mm net WC
$200 mm bank facility
Rumba oil discovery
Going forward plan?
1. Expand Rumba
2. Leverage LLA-32/34 success
3. Repeat Exploration Life Cycle in Magdalena Basin
2015 Annual General Meeting
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2015 Exploration Drilling Program
#
Prospect/Well
Block
Timing / Status
1
Rumba-1
LLA-26
Tested 2,158 bopd from Mirador
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Bazar-1
Rumba-2
Taringa-1
Tautaco-1
Capachos
Zorro Rojo
Guepardo-1
Carcayu-1
Appraisal Well
Exploration Prospect
Jacana-1
Tilo-2
Exploration Prospect
Appraisal Well
Appraisal Well
Exploration Prospect
LLA-26
LLA-26
Cebucan
LLA-10
Capachos
LLA-20
LLA-32
LLA-32
LLA-32
Cabrestero
LLA-34
LLA-34
LLA-34
LLA-34
LLA-34
VMM-11
Drilling (exploration satellite to Rumba)
Rumba / Bazar follow-up
Following LLA-26
Following Cebucan
Q4 Spud
Mobilizing rig. Spud May
Following LLA-20
Following LLA-32
Q3 Spud (contingent)
Q4 Spud
Q2 Spud** (South of Tigana field)
Q3 Spud (new)
Q3 Spud (new)
Q4 Spud (new)
Q4 Spud (new)
Q4 Spud (new)
Targeting 12 exploration prospects
Note: Subject to partner and regulatory approval; **Parex has applied for regulatory approval to transfer its existing exploratory drilling commitment from Block LLA-17 to Block LLA-34.
2015 Annual General Meeting
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Rumba – Key Take-aways
Core Competencies
1. Identify large potential
resources
2. Social engagement 
boots on the ground
3. Be a low cost operator
Rumba oil sales
2015 Annual General Meeting
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Rumba – Case Study
1. Background
– 2008 Bid Round
– Suspended operations
2. Community
– Engagement
– Development plan
3. Rumba-1 Drilling
– Operational plan
4. Lessons Learned
– Identify large resources
– Social engagement
– Be a low cost operator
2015 Annual General Meeting
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Rumba – Background (1)
Background
1. Block LLA-26 had the highest
commitment value in 2008 Bid
Round at $40.2 mm
2. Original Operations
– Drilling exploration well Chirinola-1
– Community halted drilling March
2012
– Farm-out to Parex in Q3 2013
2015 Annual General Meeting
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Rumba – Community (2)
Key Steps to Community Support
1. Explain the project plan and its local benefits
2. Educate and overcoming communities negative
biases towards drilling impacts and environment
oil activities
3. Engage local politicians, community leaders and
land owners
4. Provide clear and timely information through
multiple meetings
5. Two-way communication: providing access to
Parex decision makers
6. Earn trust with stakeholders  delivering on
promises
Critical success factor: engaged & accessible
Parex Management
2015 Annual General Meeting
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Rumba – Engaging Stakeholders
Meetings with local stakeholders:
Topics – environmental impact
and paved road
Meetings:
environment,
local employment
and services
Civil Works
Dec-Jan
2015 Annual General Meeting
Drill
Mar 25-Apr 21
21
Rumba – Operations Plan (3)
1. Rumba-1
–
–
–
–
Spud Mar. 25, 2015
Tested oil 2 zones
Mirador 19 API
Final rates
• 2,158 bopd
• Natural flow
2. Bazar-1
– Drilling
– Une target
3. Build LTT
4. Appraisal Well
2015 Annual General Meeting
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2015 Exploration: Building on Success
1. Explore where we have a
track record of finding oil…
CARMENTEA
LLA32
Carcayú
CALONA
2. LLA-32: 2 exploration wells
Guepardo
KANANASKIS
LLA34
Chenchena
Xorop
MAX
TILO
3. LLA-34
–
–
–
–
Jacana: Tigana trend?
Tilo-2: connected to Tigana?
Chenchena: new fault
2 appraisal wells
TAROTARO
TIGANA
TUA
ARUCO
Jacana
AKIRA
CABRESTERO
Exploration Pads Built
2015 Appraisal/Development
GLJ 3P
Mirador Incised Valley
Fault
2015 Annual General Meeting
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Magdalena Basin:
Opportunity to Accelerate
Growth Options:
1. VIM-1
VIM-1
– Acquire 3D seismic
– Drill in 2016
Cesar
Rancheria
Lower
Magdalena
2. VMM-9
– EIA underway
Catatumbo
3. VMM-11
– Leverage 3D seismic acquired
in 2014
– Accelerate drilling into 2015
Middle
Magdalena
4. Morpho
– Light oil, tight sand
– Warehouse for higher oil prices
VMM-9
VMM-11
Morpho
2015 Annual General Meeting
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Lower Magdalena: VIM-1
1. Take advantage of the lower
cost environment to acquire
3D seismic in VIM-1
2. Block provides exposure to:
– Light oil play
(e.g. El Dificil field 44-47API)
– The Porquero Turbidite
Gas/Condensate play
3. Anticipate 2016 Drill
– Targets at 12,000’–14,000’
2015 Proposed 3D
4. Low Transportation costs
Prospective Area
2015 Annual General Meeting
– 105 km to Covenas export
terminal
25
Middle Magdalena Basin: New Play
Concepts
VMM-9 & VMM-11 (100% WI, Operator)
1. Testing of new play concepts:
– Cold heavy oil production (CHOPS)
– Conventional structure/sub-thrust
– La Luna unconventional play
2. Build on management’s success with Petro
Andina in Argentina’s Neuquén Basin
3. VMM-11 3D acquired and being assessed.
1. Tertiary
Structure
Fairway
(CHOPS)
2. Subcrop
Plays
OPON
4. La Luna
Resource Play
VMM 11 3D
Play Types
1. Tertiary Structure (CHOPS/Hztl Drills)
2. Subcrop Plays (CHOPS/Hztl Drills)
3. Foothills/Subthrust (Light Oil)
4. La Luna Unconventional (Hztl Multi-Fracs)
2. Foothills/Subthrust
Plays
New Play Concepts: applying proven technology in Colombia
2015 Annual General Meeting
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Capachos Farm-in
Cano Limon
1.
2.
3.
4.
Ecopetrol partnership
ANH royalty contract
Large structure, light oil
Leverage our strengths:
– low cost drilling
– strong operator
– working with communities
2015 Annual General Meeting
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Wrap-Up: What We Do
Core Competencies
1. Identify and acquire
large prospective
resources
2. Engage stakeholder
3. Focus on being a
low cost operator
2015 Annual General Meeting
Rumba-1 Location
28
Thank you for your support
2015 Annual General Meeting
29
Legal Advisory
Parex Resources Inc.
Certain statements in this document are “forward-looking statements”. Forward-looking statements are frequently
characterized by words such as “prospective”, “plan”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “forecast”,
or other similar words, or statements that certain events or conditions “may” or “will” occur. Forward-looking statements are not
based on historical facts but rather on the expectations of management of the Company ("Management") regarding the
Company's future growth, results of operations, production, plans for and results of drilling activity, business prospects and
opportunities. Such forward-looking statements reflect Management's current beliefs and assumptions and are based on
information currently available to Management. In particular, this document contains forward-looking statements regarding, but
not limited to, the Company's expected production rates and Parex' drilling plans. Forward-looking statements involve
significant known and unknown risks and uncertainties. A number of factors could cause actual results to differ materially from
the results discussed in the forward-looking statements including the risks associated with negotiating with foreign
governments as well as country risk associated with conducting international activities, competition, the ability to generate
revenue and exploit operating margins, capital resources, the use of certain technologies and materials, annual impairment
tests, labour relations, insurance, damage from weather and other disasters, operating and maintenance risks and
environmental risks, new information regarding reserves, changes in demand for and volatility of commodity prices of oil and
natural gas, failure to receive all required regulatory approvals for acquisition, the risk that the acquisition may not be
completed as contemplated or at all, legislative, regulatory and political changes, the risks discussed under "Risk Factors" in
Parex' annual information form for the year ended December 31, 2013 and other factors, many of which are beyond the control
of the Company. The risks outlined should not be construed as exhaustive. Although the forward-looking statements contained
in this document are based upon assumptions which Management believes to be reasonable, the Company cannot assure
investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are
made as of the date hereof, and the Company assumes no obligation to update or revise them to reflect new events or
circumstances, except as required by law.
Statements relating to “reserves” are by their nature forward-looking statements, as they involve the implied assessment,
based on certain estimates and assumptions that the reserves described can be profitably produced in the future.
With respect to forward-looking statements contained in this presentation, the Company has made assumptions regarding:
future exchange rates; the price of oil and natural gas; the impact of increasing competition; conditions in general economic
and financial markets; availability of equipment; availability of skilled labour; current technology; cash flow; commodity prices;
production rates; timing and amount of capital expenditures; royalty rates; effects of regulation by governmental agencies;
future operating costs; receipt of all required regulatory approvals for the acquisition; successful completion of the acquisition;
and the Company's ability to obtain financing on acceptable terms. Management has included the above summary of
assumptions and risks related to forward-looking information provided in this presentation in order to provide shareholders
with a more complete perspective on the Company's future operations and such information may not be appropriate for other
purposes.
2700 Eighth Avenue Place, West Tower
585 8th Av SW
Calgary AB T2P 1G1
Canada
Tel: 403-265-4800
Fax: 403-265-8216
Email: [email protected]
www.parexresources.com
Mike Kruchten
Vice President, Investor Relations & Corporate Planning
This is not an offer to sell or a solicitation of an offer to purchase securities by Parex. Before making an investment,
investors should refer to the Offering Documents for more complete information, including investment risks, fees and expenses
and should also thoroughly and carefully review Parex' public disclosure documents available on SEDAR at www.sedar.com
with their financial, legal and tax advisors to determine whether an investment is suitable for them.
2015 Annual General Meeting
30