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Parex 2016 Playbook – Parex Resources, Inc.

Parex Resources, Inc. · Jun 30, 2016 · 72 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Parex 2016 Playbook – Parex Resources, Inc. – slide 1
    Parex 2016 Playbook Calgary, Canada www.parexresources.com TSX:PXT SUSTAINED PERFORMANCE EXPANDING POTENTIAL
  2. Parex 2016 Playbook – Parex Resources, Inc. – slide 2
    Agenda 1. Introduction 2. Corporate Overview 3. 2015 Reserve Report 4. Operating in a Low Price 5. Drilling 6. Exploration PAREX PLAYBOOK March 2016 5
  3. Parex 2016 Playbook – Parex Resources, Inc. – slide 3
    Parex Vision 1. Generate long-term shareholder value 2. Build a portfolio of assets to allow for consistent growth 3. Develop an organization with bench strength to allow Parex to evolve into the leading LATAM independent E&P…
  4. Parex 2016 Playbook – Parex Resources, Inc. – slide 4
    Parex Leadership Team Wayne Foo CEO Stu Davie Ken Pinsky Dave Taylor Vice President CFO President HR & Admin Mike Kruchten Ryan Fowler Eric Furlan VP Corporate Planning VP Exploration VP Engineering & IR Cam Grainger…
  5. Parex 2016 Playbook – Parex Resources, Inc. – slide 5
    Demonstrating Portfolio Flexibility Operating Results(1) 2014 2015 Production (bopd) Full Year 22,526 27,434 Capital Expenditures (million) US 297 US 126 Exploration Drilling ( of prospects) 16 5 Discoveries 7 3 Appraisal ( wells)…
  6. Parex 2016 Playbook – Parex Resources, Inc. – slide 6
    Consistent Performance 32 28 Average Production (000 bopd) 24 20 16 12 8 4 0 2011 2012 2013 2014 2015 2016E(1) 15 consecutive quarters of production growth (1) See Advisories on slides 2-4 PAREX PLAYBOOK…
  7. Parex 2016 Playbook – Parex Resources, Inc. – slide 7
    Annual Finding, Development & Acquisition Costs(1) Profitability = Cash Netbacks F&D Total Company 2015 2015 3 Year 45 1P 2P 2P 40 F&D /bbl 2.00 0.88 9.35 FD&A /bbl 2.00 3.57 10.86 35 Recycle Ratio F&D /bbl 6.2x 14.0x 3.1x 30…
  8. Parex 2016 Playbook – Parex Resources, Inc. – slide 8
    Portfolio Supports the Path to Growth Track record of progressing reserves* from 3P to cash flow(1)(2) Proved +Probable Proved + Probable Proved Annual 2P Reserves + Possible (mmboe) (mmboe) Production Life Index based on annualized…
  9. Parex 2016 Playbook – Parex Resources, Inc. – slide 9
    2016 Guidance Flexibility : to Adjust Scenario 1: November 2, 2015(1) Assuming Brent oil price averages 50/bbl in 2016, we are targeting full year: 165MM cash flow 15/bbl cash netback 165MM Capex 30,200 bopd production (10% y-y…
  10. Parex 2016 Playbook – Parex Resources, Inc. – slide 10
    Our view of 2016 Netbacks (H1) (1) Based on flat production 29,000 bopd Q415 Brent US/bbl 25 30 35 40 45 44.69 Discount 6.50 6.50 6.50 6.50 6.50 8.00 transport 12.00 12.00 12.25 12.25 12.50 12.46 royalty 1.75 2.00 2.25 2.50 2.75…
  11. Parex 2016 Playbook – Parex Resources, Inc. – slide 11
    2015 Reserve Report Summary PAREX PLAYBOOK March 2016 14
  12. Parex 2016 Playbook – Parex Resources, Inc. – slide 12
    Annual Reconciliation (1)(2) Oil & Gas1 (MBOE) Total Total Proved Proved plus Probable Opening Balance - December 31, 2014 40,424 68,425 Technical Revisions2 10,305 6,759 Discoveries & Extensions3 6,779 15,481 Extensions and Improved…
  13. Parex 2016 Playbook – Parex Resources, Inc. – slide 13
    Future Development Capital (1)(2) 2P Future Development Capital Reconciliation USD (000) FDC December 31, 2014 360,865 New Discoveries 65,584 Aguas Blancas (farm-in acquisition) 65,340 December 31, 2014 FDC Spent in 2015 (18,855)…
  14. Parex 2016 Playbook – Parex Resources, Inc. – slide 14
    Undeveloped Locations 160 Gross Undeveloped Locations(1)(2) 1P Undeveloped 140 2P Undeveloped 3P Undeveloped 120 100 Number of Wells 80 60 40 20 0 2012 2013 2014 2015 Locations in 2015 are in Rumba (2),…
  15. Parex 2016 Playbook – Parex Resources, Inc. – slide 15
    Breakdown of 2015 Reserves (1) 2P Reserves Volume (MMBOE)(2) 3P Reserves Volume (MMBOE) 6.0 9.7 1.8 Tigana 2.3 Tigana 1.8 2.2 2.1 Jacana 3.9 Jacana 2.6 Tua 3.3 Tua 3.3 Akira/Kitaro 5.0 Akira/Kitaro Rumba Rumba 4.7 37.2 Aguas…
  16. Parex 2016 Playbook – Parex Resources, Inc. – slide 16
    Comments On 2015 Reserves Strong exploration results with discoveries at Jacana, Rumba and Chachalaca. Significant reserve additions by converting 3P to 2P to 1P. Integration of geologic, geophysical, engineering and performance data…
  17. Parex 2016 Playbook – Parex Resources, Inc. – slide 17
    Reserves Additions Adding Reserves in Existing Pools PAREX PLAYBOOK March 2016 20
  18. Parex 2016 Playbook – Parex Resources, Inc. – slide 18
    Ability to Understand Reserves Tua Lookback Most of the pools in the Llanos basin have an active water drive. This means water is pushing the oil to the producers updip from the edge. The time to water breakthrough for a producer is…
  19. Parex 2016 Playbook – Parex Resources, Inc. – slide 19
    Tua Field Rates Two distinct periods of relatively flat production with no new wells. In 2015 a facility expansion allowed production to be increased. PAREX PLAYBOOK March 2016 22
  20. Parex 2016 Playbook – Parex Resources, Inc. – slide 20
    Tua Reality 2015-12-31 Used in Simulation: -9489 ft TVDSS Parex simulation models incorporate all of the static (geology) and dynamic (performance) information. GLJ Mapping is in the cases which are very close to the Parex high…
  21. Parex 2016 Playbook – Parex Resources, Inc. – slide 21
    Existing Pool Adds: Recovery Factors Most pools in the Llanos basin have recovery factors that vary from 35% to 60%. High recovery factors are typical in the Llanos basin due to the very active aquifer and very hot reservoir…
  22. Parex 2016 Playbook – Parex Resources, Inc. – slide 22
    Existing Pool Adds: Conversion Opportunities A large number of Parex fields have reserves conversion opportunities but the most significant opportunities exist at Jacana and Tigana in LLA-34. Jacana was drilled in 2015 has been…
  23. Parex 2016 Playbook – Parex Resources, Inc. – slide 23
    Jacana Discovery GLJ 2015 Year End(1) Oil Gross Pay(2) Oil Gross Pay(2) GLJ Low Case GLJ High Case The Guadalupe reservoir has only been penetrated by two wells, therefore the range of pay in the low to high case is very wide.…
  24. Parex 2016 Playbook – Parex Resources, Inc. – slide 24
    Tigana GLJ and Parex Source: GLJ GLJ has adopted much of the reservoir architecture from the modeling work Parex has completed. Remaining differences between Parex and GLJ modelling mapping are largely in the placement of the oil…
  25. Parex 2016 Playbook – Parex Resources, Inc. – slide 25
    Converting Reserves - Summary Opportunities to convert 3P to 2P to 1P remain as pools are not fully delineated and uncertainties remain. The main uncertainty in most of the LLA 34 pools is the level of the oil/water contact which…
  26. Parex 2016 Playbook – Parex Resources, Inc. – slide 26
    Operating in a Low Price Environment PAREX PLAYBOOK March 2016 29
  27. Parex 2016 Playbook – Parex Resources, Inc. – slide 27
    Low Maintenance Capital Requirement Why Conventional oil wells in large fields typically have a long, flat producing life. In fields where multiple reservoirs are encountered in a single well, this flat life is extended even further…
  28. Parex 2016 Playbook – Parex Resources, Inc. – slide 28
    Tigana Field Rates With no new wells, Tigana has been producing flat (or increasing) for 16 months PAREX PLAYBOOK March 2016 31
  29. Parex 2016 Playbook – Parex Resources, Inc. – slide 29
    Multi Zone Abilities Most of the wells encountered in LLA 34 have multi zone potential. Mirador The ability to recomplete new uphole zones provides for long term production from the well. Guadalupe PAREX PLAYBOOK March…
  30. Parex 2016 Playbook – Parex Resources, Inc. – slide 30
    LLA-34: IP 30 Day Rates (1) The mean rate of 1,000 bopd is skewed to the low-side because higher productivity wells are never produced at their capability. (1) See Advisories on slides 2-4 PAREX PLAYBOOK March 2016 33
  31. Parex 2016 Playbook – Parex Resources, Inc. – slide 31
    Akira Field Rates Swing Producer Akira is used as a 100% W.I. swing field for Parex to stabilize and maintain Corporate production. The field has been produced in a range of 1,000 to 4,000 bopd as required. PAREX PLAYBOOK March…
  32. Parex 2016 Playbook – Parex Resources, Inc. – slide 32
    How to Keep Maintenance Capital Low 1. Drill wells in areas that deliver over 1,000 bopd initial rate and have low decline due to active acquifer support. 2. Have back up zones in existing wells that can be recompleted to supplement…
  33. Parex 2016 Playbook – Parex Resources, Inc. – slide 33
    Drilling PAREX PLAYBOOK March 2016 36
  34. Parex 2016 Playbook – Parex Resources, Inc. – slide 34
    Improved Well Costs Parex has reduced Well Cost year over year through o Operating Efficiencies o Well Design o Contractual Negotiations In the years 2010-2012 Parex Reduced Drilling Cost on average by 30% In the years 2013-2015…
  35. Parex 2016 Playbook – Parex Resources, Inc. – slide 35
    Exploration The Future of Parex in Colombia PAREX PLAYBOOK March 2016 38
  36. Parex 2016 Playbook – Parex Resources, Inc. – slide 36
    The Llanos Basin Foreland - Exploration Perspective Cano Limon High deliverability reservoirs Arauca Arauca Oily basin Natural aquifer pressure support Relatively secure operations Foreland Reasonable royalty Foreland ANH…
  37. Parex 2016 Playbook – Parex Resources, Inc. – slide 37
    Llanos Basin Foreland Discovery History Source: IHS Data 2015 Parex accounts for about 25% of 2P reserves additions Historical Production Plus Current 2P Reserves (MMBO) since 2010 while drilling about 18% of 500 MMBO…
  38. Parex 2016 Playbook – Parex Resources, Inc. – slide 38
    Becoming Llanos Basin Experts The Evolution of Parex Understanding Initial Perceptions o High Rates o Oily Basin o Active Natural Water Drive o Structural Play Types Small Pools Learning Along The Way o Edge water has higher…
  39. Parex 2016 Playbook – Parex Resources, Inc. – slide 39
    Progressively Larger Discoveries Structural Traps Median Llanos Kona Las Maracas Rumba fits Tua 100 acres 300 acres 300 acres in here at 1000 acres 600 -700 ac 1. Size 200m 300m 300m 1km 2. Drive Bottom water drive Edge…
  40. Parex 2016 Playbook – Parex Resources, Inc. – slide 40
    Progressively Larger Discoveries Combination Traps Akira Tigana Trend 1000 1500 acres 3000+ acres 1. Size Stratigraphic Stratigraphic element 1km element 1km Structural Closure Structural Closure 2. Drive Traps Exceed…
  41. Parex 2016 Playbook – Parex Resources, Inc. – slide 41
    Rumba Field: 2015 Discovery and Development PAREX PLAYBOOK March 2016 44
  42. Parex 2016 Playbook – Parex Resources, Inc. – slide 42
    Rumba High quality prospect identification La Gloria The Rumba Prospect was Norte identified by Parex prior to the 2008 Bid Round on LLA-26 o Block was acquired by competitor La Gloria There are significant fields to the north and…
  43. Parex 2016 Playbook – Parex Resources, Inc. – slide 43
    Rumba Reserves Year End 2015 (1) (2) CI = 10 Bazar 2 GLJ 2P = 5.1 MMBO(2)(3) GLJ 3P = 6.8 MMBO(2)(3) Production = 4000 bopd (capable of 5000 Rumba 2 bopd) Rumba 4 Rumba 1 Capital Invested = 43MM (plus 9MM FDC) Six…
  44. Parex 2016 Playbook – Parex Resources, Inc. – slide 44
    Southern Casanare PAREX PLAYBOOK March 2016 47
  45. Parex 2016 Playbook – Parex Resources, Inc. – slide 45
    Southern Casanare Fields & Exploration Targets FAULTS GLJ 3P (YE 2015) N2016 Exploration Carmentea Future Exploration Calona LLA32 Kananaskis Chachalaca Max LLA34 Tilo Tarotaro Tigana Tua Aruco Jacana…
  46. Parex 2016 Playbook – Parex Resources, Inc. – slide 46
    Between Exploration & Development Appraisal of The Tigana Trend There are numerous stratigraphic elements that act as traps in the Southern Casanare area o Pinch outs, Onlaps, Subcrops, Sealing Unconformities The faults in the area…
  47. Parex 2016 Playbook – Parex Resources, Inc. – slide 47
    Expanding the Llanos Basin PAREX PLAYBOOK March 2016 50
  48. Parex 2016 Playbook – Parex Resources, Inc. – slide 48
    Llanos Basin Foreland Exploration (1) Cano Limon 2016 Program 2 Wells: o Jaruki Arauca o Curucucu Este (or alternate LLA 34 well) Future Focus: o Combination & Stratigraphic Traps Current Portfolio: Foreland o 41 Gross…
  49. Parex 2016 Playbook – Parex Resources, Inc. – slide 49
    Llanos Basin Foothills Area (1) Cano Limon High deliverability Capachos reservoirs Arauca Arauca Mixed Oil & Gas Area Large Pool Sizes High cost drilling Difficult access Foreland Current Parex Portfolio: Casanare Capachos…
  50. Parex 2016 Playbook – Parex Resources, Inc. – slide 50
    Capachos Block: Arauca Regional Context Arauca Cano Limon Caricare Capachos ARUACA LLA 10 Llanos DEM PAREX PLAYBOOK March 2016 53
  51. Parex 2016 Playbook – Parex Resources, Inc. – slide 51
    Capachos Guadalupe Potential(1) 2 earning wells are planned between old producers that cummd 1 mm bbls/well Additional exploration upside exists in 6 undrilled prospect areas Development earning well locations Prospective…
  52. Parex 2016 Playbook – Parex Resources, Inc. – slide 52
    Middle Magdalena Basin PAREX PLAYBOOK March 2016 55
  53. Parex 2016 Playbook – Parex Resources, Inc. – slide 53
    The Middle Magdalena Basin Characteristics Lower deliverability reservoirs in some cases caused by reservoir damage o Modern fracs have improved deliverability Oily basin World Class dormant unconventional play in the La Luna…
  54. Parex 2016 Playbook – Parex Resources, Inc. – slide 54
    Mid Mag Basin Discovery History Source: IHS Data 2015 Historical Production Plus Current 2P Reserves (MMBO) Nare Norte Teca-Nare Provincia Velasquez Cantagallo Casabe La Cira Infantas PAREX PLAYBOOK March…
  55. Parex 2016 Playbook – Parex Resources, Inc. – slide 55
    Parex Mid Mag Exploration Portfolio (1) Llanito Lisama Future Focus: Casabe Velasquez style structures & La Cira Infantas stratigraphic pinch outs Current Parex Portfolio: 5 Gross Leads (VMM9 requires 3D seismic) 4 Gross…
  56. Parex 2016 Playbook – Parex Resources, Inc. – slide 56
    Aguas Blancas Development PAREX PLAYBOOK March 2016 59
  57. Parex 2016 Playbook – Parex Resources, Inc. – slide 57
    How Mid Mag Basin Geology & History = Growth Opportunity ECP is the dominant land holder in the Mid Mag basin o Low oil prices have caused ECP to look for low cost/risk alternatives to increase production farm outs Significant…
  58. Parex 2016 Playbook – Parex Resources, Inc. – slide 58
    La Cira Infantas Aguas Blancas Area Map LISAMA: 51.86 MM OCUM CASABE: 333 MMB OCUM LA CIRA-INFANTAS: 813 MMB OCUM NUTRIAS: 6.55 MM OCUM PEROLES: 1.8 MM OCUM COLORADO 8.66 MMB OCUM AGUAS BLANCAS 0.93 MMB OCUM IHS…
  59. Parex 2016 Playbook – Parex Resources, Inc. – slide 59
    La Cira Infantas Production History Source: SPE 120794 PAREX PLAYBOOK March 2016 62
  60. Parex 2016 Playbook – Parex Resources, Inc. – slide 60
    Infantas Field Analog La Cira The southern end of the Infantas Field is covered by the Aguas Blancas 3D. Direct analog for the Footwall accumulation. W E W E Infantas Mugrosa Oil Accumulation PAREX PLAYBOOK March 2016…
  61. Parex 2016 Playbook – Parex Resources, Inc. – slide 61
    La Cira Infantas to Aguas Blancas La Cira Field Infantas Field AGUAS BLANCAS BLOCK SUBSURFACE FAULT Aguas Blancas-2 TRENDS PAREX PLAYBOOK March 2016 64
  62. Parex 2016 Playbook – Parex Resources, Inc. – slide 62
    La Cira to Aguas Blancas Correlation AB -7 AB -2 AB -5 Infantas La Cira La Cira SPE 121854 SPE 121854 Universidad Industrial De Santander 2013 PAREX PLAYBOOK March 2016 65
  63. Parex 2016 Playbook – Parex Resources, Inc. – slide 63
    Aguas Blancas Current Reserves (1) (2) (2) 790 acre 266 acre GLJ reserves booking in Aguas Blancas is limited to blocks where there is some well control. In the footwall (left) the compartment has been filled from the…
  64. Parex 2016 Playbook – Parex Resources, Inc. – slide 64
    Aguas Blancas: Phase 1 Development Current Status(1)(2) Target Areas(1)(2) Phase 1a drills from existing pads Phase 1b drills from new pads. Drill additional infill Reserves Areas wells. Prospective Resource Area Water-flood…
  65. Parex 2016 Playbook – Parex Resources, Inc. – slide 65
    Current Activities Performed a classification of the existing pads, according to surface conditions and feasibility of utilization. Pads type A (activity planned for first part of Phase I) Under certain surface limitations and…
  66. Parex 2016 Playbook – Parex Resources, Inc. – slide 66
    Phase 2: Value Realization Phase 2. Goal: Section Field Development Objectives: Implement Development Optimized Capex Plan (Well Cost / Facilities) Optimized Opex Plan (LOE, Power, Well Maintenance, Water Management). Implement…
  67. Parex 2016 Playbook – Parex Resources, Inc. – slide 67
    PetroAndina past experience. Back in 2004 Looking for oil North of Rio Colorado Source: Petro Andina, company presentation PAREX PLAYBOOK March 2016 70
  68. Parex 2016 Playbook – Parex Resources, Inc. – slide 68
    PetroAndina past experience / similarities (1) Parex plan for Aguas Blancas is similar in scope and magnitude to the appraisal and development of Block CNQ7-A (and nearby ones) in the Neuqun Basin, North of Ro Colorado. Large discovery…
  69. Parex 2016 Playbook – Parex Resources, Inc. – slide 69
    Petro Andina +200 wells/year drilled Reached 30,000 BOPD gross Source: IHS Data PAREX PLAYBOOK March 2016 72
  70. Parex 2016 Playbook – Parex Resources, Inc. – slide 70
    If Colombia Focused, Where Next PAREX PLAYBOOK March 2016 73
  71. Parex 2016 Playbook – Parex Resources, Inc. – slide 71
    The Future of Exploration in Colombia The Future According to the USGS Source: IHS Data 2015 Colombia Discovery History Cumulative Reserves by Basin Parex Arrival Historical Production Plus Current 2P Reserves (MMBO) Worst…
  72. Parex 2016 Playbook – Parex Resources, Inc. – slide 72
    Wrap-Up Balance sheet and financial strength positioned to capture new opportunities High quality assets provide the foundation for growth in next 3-5 years, even in a lower-for-longer world Organization in place (management,…

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