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March 2017 Analyst Update – Parex Resources, Inc.

Parex Resources, Inc. · Mar 28, 2017 · 72 slides

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Slides

  1. March 2017 Analyst Update – Parex Resources, Inc. – slide 1
    Analyst Update March 28, 2017 www.parexresources.com TSX:PXT Analyst Day Presentation March 28, 2017 Analyst Day Presentation March March Corporate Presentation 20172017 11
  2. March 2017 Analyst Update – Parex Resources, Inc. – slide 2
    AGENDA 1. Welcome 2. Corporate Overview 3. 2016 Reserve Report 4. Major Assets 5. Wrap-Up Analyst Day Presentation March March Corporate Presentation 20172017 22
  3. March 2017 Analyst Update – Parex Resources, Inc. – slide 3
    Overview Analyst Day Presentation March March Corporate Presentation 20172017 33
  4. March 2017 Analyst Update – Parex Resources, Inc. – slide 4
    CORPORATE SNAPSHOT Operating results 2016 2017E Production (boe/d) FY Average 29,715 34,000-36,000 Capital Expenditures(1) (million) US 112 US 200-225 Exploration Drilling ( prospects) 7 14 Appraisal Drilling ( wells) 4 15-20 Development…
  5. March 2017 Analyst Update – Parex Resources, Inc. – slide 5
    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…
  6. March 2017 Analyst Update – Parex Resources, Inc. – slide 6
    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…
  7. March 2017 Analyst Update – Parex Resources, Inc. – slide 7
    TOTAL SHAREHOLDER RETURN PXT, TTEN & BRENT OIL PRICE PXT*, TSX Energy Index & Brent Oil: Breaking the Link 0.25 14 700 PXT: 530 12 ANNUAL PPS (PRODUCTION/SHARE) & DAPS 600 0.20 10 500 VWA SHARE PRICE RETURN…
  8. March 2017 Analyst Update – Parex Resources, Inc. – slide 8
    OUR VIEW OF 2017 CASH NETBACKS (1)(2) Based on 2017 estimated mid-point production 35,000 bopd 2017 Target Cash Netbacks Brent Oil /bbl 30 40 50 55 Short-term hedges in place for 45-50/bbl downside protection 3 10 17 21 FFO 35…
  9. March 2017 Analyst Update – Parex Resources, Inc. – slide 9
    CONVENTIONAL OIL RESERVES: INDUSTRY LEADING RESULTS 18 15 Profitability = Cash Netbacks F&D 12 2P FD&A (USD/BOE) Total Company* 2016 3 Year 9 PDP 1P 2P 2P FD&A /boe 6.47 6.99 3.40 7.69 6 Recycle Ratio (FD&A) 2.9x 2.7x 5.5x…
  10. March 2017 Analyst Update – Parex Resources, Inc. – slide 10
    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…
  11. March 2017 Analyst Update – Parex Resources, Inc. – slide 11
    SPRING 2014: CHARTING THE PATH TO 50,000 BARRELS 35 30 AVERAGE DAILY PRODUCTION (MBOE/D) 25 20 15 10 5 * - Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1E 2013 2014 2015 2016 2017 RLI 5 7 8 10 n.a *…
  12. March 2017 Analyst Update – Parex Resources, Inc. – slide 12
    LOOK BACK AT 2015 PRESENTATION Analyst Day Presentation March March Corporate Presentation 20172017 12 12
  13. March 2017 Analyst Update – Parex Resources, Inc. – slide 13
    CONSISTENT & SUSTAINABLE GROWTH: PATH TO 50,000 BARRELS 48,000 38,500-43,500 AVERAGE DAILY PRODUCTION (BOE/D) 44,000 40,000 34,000-36,000 36,000 32,000 RLI 10 yr Q1 RLI 8 yr 28,000 29,715 RLI 7 yr 27,434 24,000 20,000 RLI…
  14. March 2017 Analyst Update – Parex Resources, Inc. – slide 14
    TRACK RECORD OF RESERVE PROGRESSION Expanded reserves, production and sustainability Proved + Probable 2P Reserve Life Index Proved + Probable Proved Annual Production + Possible (mmboe) (mmboe) (mmboe) based on annualized (mmboe)…
  15. March 2017 Analyst Update – Parex Resources, Inc. – slide 15
    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…
  16. March 2017 Analyst Update – Parex Resources, Inc. – slide 16
    PAREX LEADERSHIP TEAM Wayne Foo CEO Stu Davie Ken Pinsky Dave Taylor VP HR & Admin CFO President Mike Kruchten Ryan Fowler Eric Furlan VP Corporate VP Exploration VP Engineering Planning & IR Cam Grainger Ron MacDonald…
  17. March 2017 Analyst Update – Parex Resources, Inc. – slide 17
    2017 STRATEGIC THEME Global Oil Production is heading towards more oil on oil competition where producers with lower costs, better capital efficiencies and healthy balance sheets are the ultimate survivors. WTI (USD/BBL) Real Price…
  18. March 2017 Analyst Update – Parex Resources, Inc. – slide 18
    2017 Plan Analyst Day Presentation March March Corporate Presentation 20172017 18 18
  19. March 2017 Analyst Update – Parex Resources, Inc. – slide 19
    2017 GUIDANCE: CASH FLOW FUNDED GROWTH Maintenance Capex 12 wells 30,000 boe/d 45-55MM Exploration Capex Assumptions 14 wells Oil (Brent) US 50/bbl 2,000-3,000 boe/d 85-90MM FFO netback* US 17/boe CAPEX Production 34,000-36,000…
  20. March 2017 Analyst Update – Parex Resources, Inc. – slide 20
    2017 DRILLING PROGRAM Basin & Block H1/2017 H2/2017 Total Wells Exploration Dev/Appraisal Exploration Dev/Appraisal LLANOS LLA-34 5 4 2 8 19 Capachos - 1 - 2 3 Other Llanos 3 2 - - 5 MAGDALENA Aguas Blancas - 9 - 1-6 10-15…
  21. March 2017 Analyst Update – Parex Resources, Inc. – slide 21
    2017 DRILLING PLAN 1. Llanos o Development 12 wells VIM-1 TERMINAL COVENAS o Appraisal 5 wells o Exploration 10 wells 2. Magdalena Basin Trucking Parex Blocks o Appraisal 10-15 wells Pipeline o Exploration 4 wells Playon DeMares…
  22. March 2017 Analyst Update – Parex Resources, Inc. – slide 22
    TRANSPORTATION ROUTES 1. Export Cargo: a) Infield Trucking/ Pipeline Cusiana/Vasconia (60% volume) Tender process 2. Magdalena River Trafigura (Truck/Barge (35% Volume) Wellhead sales 3. Casanare Refinery: (5% volume)…
  23. March 2017 Analyst Update – Parex Resources, Inc. – slide 23
    SPARE CAPACITY IN PIPELINES. When Bicentenario pipeline is not working, volumes are transported via Ocensa pipeline (as happened in Jul Sept). When both pipelines are online, there is an spare capacity in Ocensa of 90,000 bpd. This…
  24. March 2017 Analyst Update – Parex Resources, Inc. – slide 24
    MARKETING COSTS TRENDING DOWNWARD 20 18 16 14 12 /boe 10 8 6 4 2 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Transportation Brent Differential Analyst Day Presentation March…
  25. March 2017 Analyst Update – Parex Resources, Inc. – slide 25
    EXPORT CARGO TENDER PROCESS Examples of Parex tender counterparties: o Traders: Vitol, Trafigura, Gunvor, Cargill o Refiners: P66, Valero, Noble, Tersoro o Integrated: BP, Chevron, Shell, Petrochina Process: 1. 45 days before…
  26. March 2017 Analyst Update – Parex Resources, Inc. – slide 26
    Reserves Analyst Day Presentation March March Corporate Presentation 20172017 26 26
  27. March 2017 Analyst Update – Parex Resources, Inc. – slide 27
    2016 GLJ REPORT SUMMARY Field 1P 2P 3P Tigana 24,514 42,870 65,072 Jacana 19,408 33,224 49,242 Drilling Location () Aguas Blancas 3,026 7,529 12,192 1P 2P 3P Tua 4,681 6,120 7,224 Aguas Blancas 27 84 103 Akira/Kitaro 4,221 5,255…
  28. March 2017 Analyst Update – Parex Resources, Inc. – slide 28
    ANNUAL RECONCILIATION Oil/Gas (MBOE) Total Proved Total Proved plus Probable Opening Balance Dec 31, 2015 46,006 81,679 Discoveries1 2,858 9,171 Extensions 16,124 22,142 Technical Revisions2 9,223 9,219 Acquisition3 437 570…
  29. March 2017 Analyst Update – Parex Resources, Inc. – slide 29
    2015 TO 2016 2P RESERVE BRIDGE 140 120 8.2 3.0 26.4 100 10.9 4.3 80 5.2 2P mmboe 60 112 40 82 20 0 31-Dec-15 Production Bacano Aguas Blancas Jacana Tigana Other 31-Dec-16 Parex net working interest, as per the…
  30. March 2017 Analyst Update – Parex Resources, Inc. – slide 30
    Major Assets Analyst Day Presentation March March Corporate Presentation 20172017 30 30
  31. March 2017 Analyst Update – Parex Resources, Inc. – slide 31
    Southern Casanare Analyst Day Presentation March March Corporate Presentation 20172017 31 31
  32. March 2017 Analyst Update – Parex Resources, Inc. – slide 32
    THE LLANOS BASIN Cano Limon Arauca High deliverability reservoirs Arauca Oily basin Natural aquifer pressure support Relatively secure operations High historical exploration success Basin Mean Well IP Mean Field Size (bopd)…
  33. March 2017 Analyst Update – Parex Resources, Inc. – slide 33
    FIELD SIZES: LLA-34 VS. CASANARE FIELDS Casanare Region Field Sizes 100 90 Casanare Region IHS EUR (MMBO) Arauca 80 70 Parex Fields: Original 2P Reserves 60 MMBO 50 40 Foreland 30 Casanare 20 10 0 LLA 34 &…
  34. March 2017 Analyst Update – Parex Resources, Inc. – slide 34
    LLA-34 & CABRESTERO: 2016 RESERVES UPDATE CHIRICOCA 2017 Exploration 2017 Appraisal 2017 Dry Season Pads Tarotaro Guadalupe Stratigraphic Edge Field GLJ 3P Reserves GLJ 2P Reserves Tigana (Parex WI) (MMBO) (MMBO) SINSONTE Tua…
  35. March 2017 Analyst Update – Parex Resources, Inc. – slide 35
    LLA-34 & CABRESTERO RESERVES CONVERSION, APPRAISAL & EXPLORATION Continuing Production & Reservoir Modeling o Existing 2P & 3P Areas are similar 2017 Appraisal & Delineation Drilling o Determine sand distribution and pool…
  36. March 2017 Analyst Update – Parex Resources, Inc. – slide 36
    TIGANA & JACANA GUADALUPE: TRANSITION FROM 3P TO 2P RESERVES CHIRICOCA Tarotaro 2017 target is 40 MMBO 2P Additions Tigana 7 Well 2017 Appraisal Plan SINSONTE Tua Ongoing production and reservoir modeling Jacana Aruco 2017…
  37. March 2017 Analyst Update – Parex Resources, Inc. – slide 37
    UNDERSTANDING THE GUADALUPE: STRATIGRAPHIC TRAPPING Structurally Trapped Oil MIRADOR Oligocene Paleocene FLUVIAL/ESTUARINE GUADALUPE GUADALUPE MARINE GUADALUPE Cretaceous GACHETA Erosional Truncation = Fluvial…
  38. March 2017 Analyst Update – Parex Resources, Inc. – slide 38
    JACANA & BACANO: GUADALUPE RESERVES PROGRESSION Drilled Jacana-1 & 2 in 2015 2015 GLJ 2P/3P Outlines o GLJ 2015 YE 2P = 8.4 MMBO 2016 GLJ 2P/3P Outlines PXT Prospective Area o GLJ 2015 YE 3P = 18.6 MMBO Jacana Drilled Jacana-3,5,4…
  39. March 2017 Analyst Update – Parex Resources, Inc. – slide 39
    UNDERSTANDING THE GUADALUPE: JACANA RESERVOIR GEOMETRY 2015 GLJ 3P Outlines 2016 GLJ 3P Outlines There are at least two cycles of fluvial sands in the area with multiple sand bodies separated by non-reservoir interfluves or highs…
  40. March 2017 Analyst Update – Parex Resources, Inc. – slide 40
    TIGANA GUAD TREND PRODUCTION HISTORY 5,000 IP Range: 500-3,500 bopd 4,500 Flat production profile Tigana-4 Low decline 4,000 Jacana-1 Jacana-5 PRODUCING DAY BOPD 3,500 Tigana Sur-1 3,000 Tigana Norte-1 Jacana-4 2,500…
  41. March 2017 Analyst Update – Parex Resources, Inc. – slide 41
    LLA 34 DRILLING COST HISTORY 11.0 Spud to RR: 28 Days Drill, Case, and 10.0 Spud to RR: 24 Days Equip costs are 9.0 trending towards 8.0 Long Reach Wells 3MM 7.0 Spud to RR: 18 Days Drill, case & equip (Gross Millions) 6.0…
  42. March 2017 Analyst Update – Parex Resources, Inc. – slide 42
    Northern Llanos (Capachos & LLA-10) Analyst Day Presentation March March Corporate Presentation 20172017 42 42
  43. March 2017 Analyst Update – Parex Resources, Inc. – slide 43
    LLANOS BASIN 2017 EXPLORATION Capachos First Llanos Foothills Wells at Capachos Northern Llanos Exploration begins in 2017 at Tautaco Tautaco on LLA 10 Large pool sizes with light oil Analyst Day Presentation March March…
  44. March 2017 Analyst Update – Parex Resources, Inc. – slide 44
    CAPACHOS DEVELOPMENT AND GUADALUPE DEPTH STRUCTURE EXPLORATION POTENTIAL 2017 PLAN NORTESTE-1 EXPLORATION NORESTE Legacy Wells NORTE-1 EXPLORATION 2017 Development NORTE Future Exploration Drill 2 firm development wells…
  45. March 2017 Analyst Update – Parex Resources, Inc. – slide 45
    NORTHERN LLANOS & FOOTHILLS EXPLORATION & APPRAISAL Prospects are defined by structural closures mapped on 3D seismic Numerous follow up prospects exist in success case Arauca Cano Limon Stratigraphic elements could greatly enhance…
  46. March 2017 Analyst Update – Parex Resources, Inc. – slide 46
    Magdalena Basin Analyst Day Presentation March March Corporate Presentation 20172017 46 46
  47. March 2017 Analyst Update – Parex Resources, Inc. – slide 47
    FIELD SIZE & PRODUCTIVITY BY BASIN Guajira Basin Basin Average Well IP Average Field Size (bopd) (Expected Ultimate Cesar Rancheria Basin Recovery MMBO) Llanos 1994 30 Lower Maracaibo Magdalena Basin Llanos Foothills 2401 137…
  48. March 2017 Analyst Update – Parex Resources, Inc. – slide 48
    Magdalena: Appraisal & Exploration Analyst Day Presentation March March Corporate Presentation 20172017 48 48
  49. March 2017 Analyst Update – Parex Resources, Inc. – slide 49
    VIM-1 MAGDALENA BASIN: NEXT GROWTH PLATFORM 2017 ACTIVITIES AGUAS BLANCAS(1) PLAYON(1) Light oil opportunity Boranda-1: drilled & cased; Drill 10-15 appraisal wells ongoing testing PLAYON VIM-1 VMM-9 Pipeline Interpreting 525…
  50. March 2017 Analyst Update – Parex Resources, Inc. – slide 50
    VMM FAULT TRENDS: STRUCTURAL TRENDOLOGY PLAYON Majority of Middle Magdalena resources are associated with structural accumulations along strike slip fault trends Significant strike slip faults have been identified on both VMM 11 and…
  51. March 2017 Analyst Update – Parex Resources, Inc. – slide 51
    VMM STRATIGRAPHIC EXPLORATION PLAYON Numerous Stratigraphic trapping configurations can be mapped in the Eocene and Paleocene Testing ongoing at Boranda-1 on the Playon Block Boranda-1 1 Exploration Well Planned at Niagara-1 on…
  52. March 2017 Analyst Update – Parex Resources, Inc. – slide 52
    VIM - REGIONAL FRAMEWORK Existing Oil Fields The Lower Mag Basin (VIM) is a gas dominated basin VIM 1 is located on the NW margin of the VIM 1 Plato Sub-Basin The Plato Sub-Basin has all of the VIM oil accumulations around its…
  53. March 2017 Analyst Update – Parex Resources, Inc. – slide 53
    Middle Magdalena: Aguas Blancas Analyst Day Presentation March March Corporate Presentation 20172017 53 53
  54. March 2017 Analyst Update – Parex Resources, Inc. – slide 54
    AGUAS BLANCAS SUMMARY Middle Magdalena o Middle Magdalena fields are generally lower productivity and larger in size. Llanos Basin o Very high productivity fields but generally smaller size. Sanctioning development in the…
  55. March 2017 Analyst Update – Parex Resources, Inc. – slide 55
    AGUAS BLANCAS EXTENSION OF THE LA CIRA/INFANTAS FAULT TREND The Aguas Blancas field area La Cira 582 MMBO* is located to the south of the Recovered La Cira/Infantas complex, along the La Cira Thrust. Cantagallo Provincia…
  56. March 2017 Analyst Update – Parex Resources, Inc. – slide 56
    AGUAS BLANCAS THREE PILLAR APPROACH IN EVALUATION 1. Delineate the pool to understand the original oil in place. 2. Assess productivity from both stimulated and unstimulated wellbores. 3. Evaluate waterflood feasibility to increase…
  57. March 2017 Analyst Update – Parex Resources, Inc. – slide 57
    AGUAS BLANCAS The Aguas Blancas Field is associated with the La Cira Thrust fault. There are accumulations in both the Hanging Wall and Foot Wall of the thrust fault. A A AB-2 AB-5 527k bbl AB-26 228k bbl Hanging Wall A A…
  58. March 2017 Analyst Update – Parex Resources, Inc. – slide 58
    AGUAS BLANCAS STATUS As of March 28, Parex has drilled: Footwall: 1 appraisal well AB-9 AB-27 2 waterflood pilot wells AB-26 AB-5 Existing Well Injection Well AB-26 & AB 27 Producing WF Pilot Well AB-9 Delineation Wells…
  59. March 2017 Analyst Update – Parex Resources, Inc. – slide 59
    AGUAS BLANCAS FOOTWALL DELINEATION PLAN Within the GLJ 2016 Year End 2P Area Drill 1 Appraisal Well AB 8 Drill 2 Waterflood wells o Finishing Pilot Pattern AB-27 Start Proof of Concept New Pilot 1 AB-5 Existing Well o 5 Spot…
  60. March 2017 Analyst Update – Parex Resources, Inc. – slide 60
    AB EXPECTED VS ACTUAL FOOT WALL AB-9 Expected Mugrosa C Foot Wall* Found Mugrosa C Foot Wall* AB-5 Gross: 590 - 700 Gross: 692 709 Net Pay: 118 - 266 Net Pay: 142 253 Net/Gross: 0.2 - 0.38 Net/Gross: 0.2 0.35 700 Porosity:…
  61. March 2017 Analyst Update – Parex Resources, Inc. – slide 61
    AB-9 PRODUCTION TEST AB-9 Production test was inconclusive as wellbore conditions did not allow for a complete test. Marginal Cement Poor or marginal cement throughout the interval does not allow for selective testing. An…
  62. March 2017 Analyst Update – Parex Resources, Inc. – slide 62
    AB-26 PRODUCTION TEST AB-26 was previously production tested at an average rate of 122 BOPD recovering 2,930 barrels of 35 API oil. (1) Refer to Parex March 7, 2017 Press Release Parex Announces 2016 Fourth Quarter and Full…
  63. March 2017 Analyst Update – Parex Resources, Inc. – slide 63
    AB-26: FIRST STEP IN WATERFLOOD ADVANCEMENT AB-26 Water Injection Test 900 2500 800 Water injection into AB-26 indicated rates of +500 BWPD should be Barrels of Water Injected per Day BWIPD Injection Pressure 2000 700 600…
  64. March 2017 Analyst Update – Parex Resources, Inc. – slide 64
    AGUAS BLANCAS HANGING WALL DELINEATION PLAN Within the GLJ 2016 Year End 2P Area Drill 2 Additional Pilot Producing Wells o Existing AB-3 well completes the pattern Start Proof of Concept o 5 Spot waterflood AB 13 353 ac…
  65. March 2017 Analyst Update – Parex Resources, Inc. – slide 65
    AB-32 AB-15 AB RESULTS HANGING WALL The Mugrosa C reservoir section encountered in the hanging wall wells is consistent with Parex expectations based on log data. Testing operations are underway. Net Sand: 205 Net Sand: 180…
  66. March 2017 Analyst Update – Parex Resources, Inc. – slide 66
    WELL COST AND PRODUCTION OPTIMIZATION Initial drilling optimization indicating well costs trending towards 1.6 MM for a drilled, completed and equipped well. Expectation to reduce costs another 20%-40% in a large scale continuous…
  67. March 2017 Analyst Update – Parex Resources, Inc. – slide 67
    CONTINUOUS PERFORMANCE IMPROVEMENT Technical Limit o Spud to Total Depth: 4 days o Target wells: AB27 and AB29 o Spud to Rig Release: Reduce to 7 days by removing open hole logging Technical Limit Source: Company…
  68. March 2017 Analyst Update – Parex Resources, Inc. – slide 68
    NEAR TERM SCHEDULE OF ACTIVITY Injection into AB-32 Injection into AB-26 Today Analyst Day Presentation March March Corporate Presentation 20172017 68 68
  69. March 2017 Analyst Update – Parex Resources, Inc. – slide 69
    STRONG NETBACKS: LIGHT OIL & GOOD ACCESS Initial test indicate 35 API oil Good access to Magdalena River barge and pipelines 45% increase compared to 2017 netbacks targets(1) Parex Corporate Aguas 2017 Target Blancas Brent US/bbl…
  70. March 2017 Analyst Update – Parex Resources, Inc. – slide 70
    SUMMARY OF THE AGUAS BLANCAS OPPORTUNITY 1. Increase Field Size: o Total delineated YE 2016 2P Area 2,400 acres (30% of total area) o Remaining area to delineated 5,400 AB 13 acres 353 ac AB 17 410 ac 2. Demonstrate development…
  71. March 2017 Analyst Update – Parex Resources, Inc. – slide 71
    Solid Foundation Southern Casanare low risk growth Building New Platforms Magdalena Basin Large resource opportunity Premium netbacks Progressing Aguas Blancas Financial Strength No debt, cash on hand Position BD opportunities…
  72. March 2017 Analyst Update – Parex Resources, Inc. – slide 72
    Analyst Day Presentation March March Corporate Presentation 20172017 77 77

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