Growth From A Focused Portfolio. June 2016

Transcription

1 Growth From A Focused Portfolio June 2016

2 Forward Looking Statements This presentation may include certain forward looking statements. All statements other than statements of historical fact, included herein, including, without limitation, statements regarding future plans and objectives of Canacol Energy Ltd. Canacol or the Corporation, are forward-looking statements that involve various risks, assumptions, estimates, and uncertainties. These statements reflect the current internal projections, expectations or beliefs of Canacol and are based on information currently available to the Corporation. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. All of the forward looking statements contained in this presentation are qualified by these cautionary statements and the risk factors described above. Furthermore, all such statements are made as of the date this presentation is given and Canacol assumes no obligation to update or revise these statements. Barrels of Oil Equivalent Barrels of oil equivalent (boe) is calculated using the conversion factor of 5.7 Mcf (thousand cubic feet) of natural gas being equivalent to one barrel of oil. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 5.7 Mcf:1 bbl (barrel) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Acres Acres represents gross acres Production and Reserves Production represents net before royalty Reserves represent 2P reserves and before tax NPV-10 as of December 31, 2015 Exploration Resource Potential Exploration resource potential represent management s estimate of net unrisked recoverable resource potential, unless indicated otherwise USD All dollar amounts are shown in US dollars, unless indicated otherwise 2 2

3 Focused E&P Portfolio Supply-scarce Caribbean natural gas market Natural Gas Dual-listed TSX and BVC Enterprise value US $723 MM Exploration success 8 ) 65% Insider ownership ~25% e guidance 16 17,000 boepd $58 MM capex $135 MM ebitdax S. Pacific Ocean Shale Oil Colombia Light Oil YE P reserves 79 MMboe Pre-tax NPV-10 US $1.3 B Value/share CDN $7.96 Y/Y reserves replacement 1,103% 2P F&D cost $2.85/boe Long reserves life ~10 yrs. Light Oil Substantial exploration 1,045 MMboe Ecuador Canacol resource potential(1) 13x 2P reserves Blocks / gross acres 23 / 3.4 MM Km (1) Management s estimate of net unrisked recoverable resource potential 3

4 Focused E&P Portfolio Large gas reserves underpin production and cash flow for a decade +52% CAGR in 2P reserves(1) Dry natural gas [stable cash flow] 2P reserves in MMboe and 2 acquisitions oil gas 79 present 3 large discoveries 14 2P reserves 372 BCF (65 MMboe) Exploration resource >3 TCF potential(2) % gas Light oil optionality [flexible approach] Track record 2P reserves LLA 23 exploration resource potential(2) 65% exploration 96% development 14 MMbls 33 MMbls '09 '11 '13 '15 (1) Includes 3.5 MMboe of production since inception (2) Management s estimate of net unrisked recoverable resource potential (3) DeGolyer & MacNaugton unrisked mean prospective oil resources, effective June 4 Large shale oil opportunity [call option] Exploration resource 458 MMbls potential(3) 4

5 Strong Sales Growth +45% projected CAGR in corporate sales Expressed in boepd 40,000+ guidance and sales mix Natural gas 80% 10,933 16,500 ~20,000 88% insensitive to oil volatility Tariff oil 8% Light oil 12% 1Q '16 '16e avg. Current Mid '18 - after pipeline Produced >20 MMboe since inception Operator of all production and facilities in Colombia Natural gas 100% avg. WI Light oil 91% avg. WI Recent, large natural gas discoveries driving shift from oil to natural gas 5

6 The Road Ahead Pursuit of dry natural gas that features stable pricing Benchmark gas prices declined 64% vs. Canacol 18% gain Quarterly average MMbtu Fixed-price gas contracts erase oil volatility Realized gas price and gas netback per boe Realized price Gas netback $12 $31 $32 $9 $27 +18% $27 >80% operating margins $26 $6 LT gas contracts with price escalation +18% $19 +40% $135 MM EBITDAX Canacol -57% $3 US Canada -62% -74% $0 Mar '14 Jun '14 Sep '14 Dec '14 Mar '15 Jun '15 Sep '15 Dec '15 Mar ' e Mar '14 Mar ' e 6

7 Canacol-Gas Ranks #1 Mid-cycle break even costs - $50/bbl WTI, $2.75/Mcf $/bbl Mckenzie/Williams Three Forks oil $65 Williams County Bakken oil Permian Delaware Basin Bone Spring oil Permian Midland Basin Wolfcamp (shallow) oil $59 $58 $63 Captured ~ 40% of all E&P capital invested from 9 to present Tuscaloosa Marine Shale oil $56 McKenzie County Bakken oil $55 SCOOP Woodford oil Eagle Ford Black oil STACK Maramec / Woodford Oil $50 $52 $54 N.A. shale oil and gas now largely uneconomic Ft. Berthold Bakken / Three Forks oil $47 Permian Delaware Basin Wolfcamp (tier 1) oil $44 Permian Midland Basin Wolfcamp (deep) oil Ferguson Bakken/Exshaw oil Sanish and Parshall Bakken oil $42 $41 $43 Enter Canacol Breakeven < $5.00/boe E. Pembina Cardium oil $39 Gordondale Motney oil $38 Tower Motney oil $36 SE SK Viewfield Bakken oil $36 Karnes Trough Eagle Ford condensate $32 Source: Scotia Capital Playbook, October 2015 Barclays North American E&P research Canacol-gas < $5.00/boe 7

8 A Leader In E&P Capital Efficiency Participate in our capex-light growth cumulative capex $MM Canacol-gas Peer avg. $807 Capex, x-acquisitions ($ MM) $97 $807 Production increase (boe/d) 10M 10M Wells drilled 8 73 Q netback ($/boe) $27 $12 outlook $/boe) Stable $26 Volatile $9 - $28(1) Peers spent 8x more money to generate the same production increase Peers drilled 9x more wells $97 Canacol-gas Peer Avg. Canacol is a leader in capital efficiency One well / yr. to maintain current gas production $4.6 MM D&A cost per well e: spend $ MM to generate $ MM EB)TDAX (1) Range based on Brent oil price sensitivity: $35/Bbl to $55/Bbl 8

9 Natural Gas Demand Greater Than Supply Caribbean Sea Chuchupa 1 2 Ballena Supply decreasing 20% / yr. from coastal fields Three mature fields in blow-down Barranquilla [-100 MMcf/d per year decline](1) 1 Chuchupa 2 Ballena 3 La Creciente 2018 pipeline Cartagena 2016 pipeline Demand increasing 3% / yr. for the past 10-yrs. and projected to grow at 3-4% through MMcf/d Clarinete Jobo facility Cerro Matoso mine 3 65 MMcf/d Nelson Palmer 25 MMcf/d La Creciente Oboe 4 fields 100% WI ~785k acres +65 MMcf/d from new 2016 pipeline Flows north / south 65 / 25 MMcf/d south Total production 90 MMcf/d Gas EBITDAX/yr. $135 MM +100 MMcf/d from planned 2018 pipeline Total production 190 MMcf/d Gas EBITDAX/yr. $310 MM By 2020e, Canacol will supply ~42% of the coast Canacol Km Gas pipeline (1) Average annual decline for each of the trailing 2 years 9

10 Epic Gas Deficit On Colombia s Coast Plan to boost gas production to solve supply shortfall Solving Colombia s gas supply deficit Gas supply-demand forecast in MMcf/d 25 Supply shortfall 127 MMcf/d Supply from Canacol +165 MMcf/d The Caribbean Coast had a balanced gas supply-demand profile for decades 3 mature fields in blow-down 100 MMcf/d per year decline(1) Canacol began planning in 2012 and present 2P reserves 2 acquisitions 3 large discoveries 372 BCF 200 Supply from three mature fields -212 MMcf/d Plan to 8x Canacol-gas - '15 '16e '17e '18e '19e '20e Source: Industry and Government Studies (1) Average annual decline for each of the trailing 2 years Solve % of the Caribbean s lost supply Goal to backfill 165 MMcf/d of the 212 MMcf/d lost 127 MMcf/d of additional opportunity 10

11 Canacol s Cluster Of Gas Discoveries Robust reserves + the quest for exploration upside La Creciente 4 blocks: 3 of 4 fields booked 2P reserves 372 BCF ~50 prospects / leads 3D seismic Oboe to be booked at the end of June >3 TCF exploration VIM % >3 TCF(1) 4 fields 3 new discoveries 100% WI ~785k acres Oboe-1 VIM 5 100% Subcrop edge 3D seismic Upper zone GWC -6,410 ft subsea 3km Clarinete-2ST Clarinete Clarinete VIM % Jobo facility Palmer 1 4 Oboe Nelson Esperanza 100% 10km Cienaga de Oro time structure map Prospects / leads Fields & discoveries Canacol s fields & discoveries 1 Dec acquisition 2 Aug 4 discovery 3 Dec 4 discovery 4 Mar 6 discovery Date Test (MMcf/d) Pay (Ft.) Porosity (%) Clarinete-1 Dec % Clarinete-2ST Sep % Oboe-1 Mar % Average % (1) Management s estimate of net unrisked recoverable resource potential 11

12 Gas Opportunities Continue To Multiply Potential new pool at Nelson field Porquero formation Nelson-5 Middle Porquero petrophysical interpretation Gross Thickness 153 ft Net Pay 62 ft Porosity 31% A NELSON-6 B GWC- TVDSS AVO Events Nelson Field (Porquero Fm.) Area 640 acres Avg. Porosity 29% GIIP 44 Bcf A Nelson-6 Nelson-3 Nelson-5 Nelson-4 Nelson-2 B Porquero net pay map (ft) Potential for new gas pool at Nelson Up to 62 ft. reservoir net pay encountered in existing Nelson wells Nelson- to spud in early Q Targeting shallow Porquero reservoir sandstones 31 Bcf EUR unrisked resource potential $4.6MM D&A cost per well 12

13 Large Resource Potential At Esperanza Reduce exploration risk with the application of AVO technology Top CDO depth structure map AVO extraction: Top CDO (magenta marker) to Top CDO +25ms ESPERANZA VIM-5 N Sucre-2 S 3D seismic image A NISPERO-1 B PLIOCENE UNC N Using 3D seismic data, Canacol is mitigating exploration risk by applying AVO seismic attribute analysis Nispero-1 AVO seismic attribute anomaly Nispero- spud early Q Targeting CDO sandstone reservoirs sealed by Porquero shale 40 Bcf EUR unrisked resource potential $4.6MM cost (D&A) BASEMENT AVO Events S 500 M 13 13

14 Successful Exploration on Block LLA-23 With a lot more running room LLA 23 91% WI >110k acres Las Maracas ~12 MMbls Cravo S ~9 MMbls Leono Pantro Tigro Prospect/Leads Wells Gross Unrisked EUR (MMbbl) 3D prospects Leads 5 16 Cravo E ~8 MMbls Total Macarenas ~6 MMbls 1 2 Pumara Prospect Five light oil discoveries made along Rancho Hermoso fault trend Exceptional on-block track record for exploration success (83%, 5/6 wells) Maltes Labrador Labrad or Rancho Hermoso Three additional trends remain undrilled Multiple prospects are drill-ready 3 1 Canacol s fields & discoveries Prospects Leads 3 Opportunities trends to repeat 3D seismic Competitor oil fields Leono-Pointer fluids flow line Pointer CPF At $50/Bbl + WTI Target four drill ready prospects situated along flow line for short and immediate tie-in e.g. Pumara prospect Significant upside in success case 14

15 Pumara Prospect On Pumara-1 well success case, targeting 5k bopd from 3 wells Ubaque TVDSS map Inline 197 over Pumara C1 NW C7 BARCO SE UBAQUE PALEOZOIC NW 500 m SE Pumara-1 (Exploration location) Pumara-A (Appraisal well) Pumara-B (Appraisal well) Fault dependent anticlinal closure Mapped on 3D seismic Primary targets: Ubaque & Gacheta Secondary targets: Mirador, Barco and C7 4 MMbls unrisked EUR resource potential $3.8MM D&A well cost 15

16 Shale Oil Opportunity In Colombia Orinoco heavy oil belt Venezuela World class shale oil Source rock to 2.3 trillion barrels discovered in Ecuador, Colombia and Venezuela(1) Comparable or superior characteristics to the Bakken and Eagle Ford (thickness, porosity, TOC pressure gradients) Ecuador Colombia Oil Fields sourced from La Luna Middle Magdalena Valley Basin (MMV) La Luna shale deposition limit (1) James 2000, Journal of Petroleum Geology (2) Only three of Canacol s seven blocks km Second largest shale oil land position behind Ecopetrol in Colombia 7 blocks Potential NPV k net acres 458 MMbls of audited unrisked prospective resource potential $1.3 B(2) Early indications are positive Farmed out acreage to Super Majors Two wells drilled de-risked play First frac planned this year by Conoco Ideal location in producing hydrocarbon basin 16

17 Fractured Shale Potential To Be Tested On VMM 2 Top La Luna Structural Map Totumal Field (producing from fractured shale) Mono Araña-1 3D-seismic defined naturally fractured La Luna Shale Mono Araña-1 well test IP 590 bbl/d Oil demonstrated to flow naturally (unstimulated) from 230 ft net pay Guacari-1 Mono Capuchino-1 Two wells planned for - Mono Capuchino-1 and Guacari-1 66% WI Each well has 2-3 MMbls unrisked EUR potential $7.3MM D&A well cost Significant running room in a success case 17

18 Oil Exploration Upside 30,000 Light oil production upside forecast (unrisked) (bbl/d) Large light oil prospects and leads inventory 25,000 Dial up or down with oil price environment 20,000 15,000 Light oil forecast 3x production from drill ready prospects >2x production from remaining prospects and leads 10,000 5,000 Years Remaining Prospects (LLA-23/VMM-2) Drill Ready Prospects (LLA-23/VMM-2) Base Production (LLA-23/Ecuador) 18

19 Projecting 60%+ Drop In Debt Multiple Debt profile Apollo Lower debt multiple to unlock Canacol s equity? Debt multiple to trailing 12-month EBITDAX 3.8x 3.4x Start: Eight equal installments BNP 2.8x 2.6x 2.1x 1.4x '16 Dec '17 '18 Sep '19 Dec '19 Dec '15 Mar '16 Jun '16e Sep '16e Dec '16e '17e $MM Loan Drawn Terms Final Payment BNP $200 $180 L+4.75% Sep Apollo $100 $75 L+8.50% Dec e guidance 16 17,000 boepd $58 MM capex $135 MM ebitdax 19

20 A Rare Dislocation in Equity Value Advantage Canacol vs. five Colombian peers Potential ~2x increase in share price (C$3.95) You re buying Canacol at a discount to the value of our existing gas contracts BT NPV-10, US $MM CDN $/share Stable production under LT contracts US $1,102 US $193 US $2, e EV/DACF Industry avg. ~13x US $723 CDN $5.23/share EV 2P gas 2p oil Exploration in MM, except /share amounts TSX share price (6/3/16) CDN $ ~6x CDN $3.95 FD shares outstanding(1) 163 Market capitalization(2) US $497 Net debt(3) $226 0 Source First Energy P Reserve Life (years) Enterprise value US $723 Cash(3) $30 (1) Includes in-the-money options based on CDN 3.95/share price (2) Converted from CDN USD exchange rate (0.77) as of 5/16/16 (3) As of 3/31/16 20

21 Investment Opportunity Measuring e Canacol Peer avg. North America Production growth +63% +17% +11% Capex $ growth -29% +15% +6% Natural gas pricing ($/MMbtu) Sensitivity to oil volatility Gas netback ($/boe) $5.64 fixed ~$5.00 volatile $1.58 volatile 12% >90% 88% $26 $12 $9 EBITDAX growth 100% < 15% < 10% G&A reduction 40% Debt multiple Decrease Increase Increase F&D cost $2.85 ~$20 Oil price trading at zero? Canacol generates over $100 MM in EBITDAX 2018 pipeline to boost EBITDAX: $135 $310 MM / yr. TSX: CNE BVC: CNE.C Source: corporate filings and Barclays North American E&P research 21