Solving Colombia s gas supply deficit. April 2016

Transcription

1 Solving Colombia s gas supply deficit April 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 Advantage Canacology Pathfinding E&P company focused in Colombia Supply-scarce Caribbean natural gas market Lower Magdalena Basin Canacol gas Dual-listed TSX and BVC Enterprise value US $634 MM Price/share CDN $3.44 Exploration success 8 ) 65% Insider ownership ~25% S. Pacific Ocean LLA 23 Colombia YE P reserves Pre-tax NPV MMboe US $1.3 B Value/share CDN $9.44 Y/Y reserves replacement 1,103% 2P F&D cost $2.85/boe Long reserves life ~10 yrs. Ecuador Canacol Km (1) Management s estimate of net risked recoverable resource potential Substantial exploration resource potential(1) Blocks / gross acres >460 MMboe 23 / 3.4 MM 3

4 A Focused E&P Portfolio Large gas reserves underpin production and cash flow for a decade +52% CAGR in 2P reserves(1) 2P reserves in MMboe oil gas Dry natural gas [stable cash flow] and 2 acquisitions present 3 large discoveries 4 blocks 785k acres / 100% WI 2P reserves 372 BCF (65 MMboe) Exploration resource >3 TCF potential(2) '09 '11 '13 ' % gas Light oil optionality [flexible approach] Track record 65% exploration 96% development Produced 27 MMbls 2P reserves 14 MMbls LLA 23 exploration 40 MMbls resource potential(2) (1) Includes 3.5 MMboe of production since inception (2) Management s estimate of net unrisked recoverable resource potential (3) DeGolyer & MacNaugton best case estimate for prospective oil resources, effective June Large shale oil opportunity [call option] Exploration resource 185 MMbls potential(3) 4

5 The Road Ahead Pursuit of dry natural gas that features stable pricing Shift to high-netback gas production gas production from 4 14k boepd Fixed-price gas contracts eliminate oil volatility Case study: Mar Dec Brent oil price -65% Canacol gas price +11% gas netback +16% Production, boepd in 000s 2P oil 2P gas Oil production contingent on pricing 3 Realized gas price and gas netback per boe Realized gas price Gas netback $27 +11% $30 $31 $26 84% operating margins $19 +16% $ '09 '10 '11 '12 '13 '14 '15 '16e Mar '14 Dec '15 '16e 5

6 The Largest Onshore Natural Gas Producer In One Of The World s Most Under-Supplied Markets Caribbean Sea Barranquilla Chuchupa 1 2 Ballena Three mature fields in blow down [-100 MMcf/d per year decline](1) Chuchupa Ballena La Creciente 2018 pipeline Cartagena 2016 pipeline Canacol is the primary active gas explorer Expanded facilities MMcf/d 65 MMcf/d to flow north and 25 MMcf/d south 65 MMcf/d Clarinete Palmer 25 MMcf/d 3 Nelson La Creciente Oboe 4 fields 100% WI ~785k acres +65 MMcf/d from new 2016 pipeline Pipeline 190 km Total production 90 MMcf/d Annual gas EBITDAX $145 MM Cerro Matoso mine Canacol Km Gas pipeline (1) Average annual decline for each of the trailing 2 years +100 MMcf/d from planned 2018 pipeline Total production 190 MMcf/d Annual gas EBITDAX $310 MM 6

7 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 Supply shortfall 127 MMcf/d Colombia s Caribbean Coast had a balanced gas supply-demand profile for decades peak production ~ MMcf/d 3 mature fields are now in blow down 100 MMcf/d per year decline(1) '15 '16e '17e '18e '19e '20e Source: Industry and Government Studies (1) Average annual decline for each of the trailing 2 years Supply from Canacol MMcf/d Supply from three mature fields MMcf/d 265 Canacol anticipated Colombia s supply issues and acquired several gas companies and present 2P reserves 2 acquisitions 3 large discoveries 372 BCF Canacol to 8x its gas business and solve 77% of the Caribbean s lost supply Goal to backfill 165 MMcf/d of the 212 MMcf/d lost 127 MMcf/d of additional opportunity 7

8 A Leader In E&P Capital Efficiency Participate in our capex-light growth 16e Spend ~$31 MM Generate ~$130 MM EBITDAX [80 MMcf/d] The most capital-light E&P business e: 4x EBITDAX from cumulative capex 4x production [25 MMcf/d] $30 MM $130 MM Capital requirements for gas are a fraction of capital requirements for oil Drilling for oil? Not at this price '15a '16e e e e Netback ($/boe) Magdalena Canacol gas Llanos oil $/mcf $5.60 $6.21 $6.25 % change +11% %1% Long-term gas contracts with annual price escalation Q $22 $12 outlook stable $26 volatile $9 - $28(1) (1) Range based on Brent oil price sensitivity: $35/Bbl to $55/Bbl 8

9 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 Oboe un-booked ~50 prospects / leads >3 TCF exploration 3D VIM % >3 TCF(1) 4 fields 3 new discoveries 100% WI ~785k acres Oboe Clarinete VIM % Palmer 1 4 Oboe Nelson Esperanza 100% 3D VIM 5 100% 10km Cienaga de Oro time structure map Prospects / leads Fields & discoveries Canacol s fields & discoveries 1 Dec acquisition 2 Aug discovery 3 Dec discovery 4 Mar discovery ~3k acres Upper zone GWC -6,410 ft subsea 3km Date Test (MMcf/d) Clarinete-2ST Pay (Ft.) Porosity (%) Clarinete-1 Dec % Clarinete-2ST Sep % Oboe-1 Mar % Average % (1) Management s estimate of net unrisked recoverable resource potential Subcrop edge Clarinete-1 9

10 3 Opportunities To Repeat The 27 MMbls Oil Trend History never repeats, but often rhymes LLA 23 91% WI >110k acres Las Maracas ~12 MMbls 6 Leono 5 Pantro Successful track record Exploration Development 5/6 wells 24/25 wells Cravo S ~9 MMbls 4 Tigro Produced(1) Remaining 2P reserves 27 MMbls 4 MMbls Cravo E ~8 MMbls 3D Macarenas ~6 MMbls 33 2 Canacol s 27 MMbls light oil trend Ready to repeat 40 MMbls of exploration resource potential(2) 3D Central processing facility CPF 3 opportunities to repeat 3 Maltes >15 prospects and leads 2 Labrador CPF Maintaining profitability(3) 1 1 Rancho Hermoso Production Realized price Netback 2,745 bopd $28.56/Bbl $12.02/Bbl Canacol s fields & discoveries Prospects Leads Oil fields Gross barrels produced from Aug 8 to Dec Management s estimate of net unrisked recoverable resource potential As of the three months ended Dec 10

11 Financial House In Order Canacol s debt multiple to halve when all gas comes online in MM, except /share amounts Path to servicing debt TSX share price (4/11/16)(1) CDN $3.44 FD shares outstanding(2) 161 Market capitalization US $425 Net debt(3) $209 Enterprise value US $634 Cash(3) $43 Restricted cash(3) $62 Diversified ownership Start: 8 equal installments BNP Apollo E.M.E.A. 20% N.A. 35% Mgmt./Board 25% S.A. 20% '16 Dec '17 '18 Sep '19 Dec '19 $ in MM Loan Drawn Terms Final Payment BNP $200 $180 L+4.75% Sep Apollo $100 $75 L+8.50% Dec (1) Includes in-the-money options based on CDN 3.34/share price (2) Converted from CDN USD exchange rate (0.78) as of 4/11/16 (3) As of Dec, bulk of restricted cash tied to Ecuador 11

12 A Rare Dislocation In Equity Value Longest gas reserve life, yet significant valuation discount? 2016e EV/DACF Advantage Canacol vs. Five Colombian Peers Potential ~2.1x increase in share price (CDN $3.44) Industry avg. ~13x CDN $7.25 Sustainable gas investment vehicle in a volatile oil world 2P reserves 372 BCF Long reserves life ~10-yrs. Strong gas pricing $5 - $6+/mcf Operating margins 80% Plan to 4x production A leader in capital efficiency Light oil optionality Shale oil call option 5 ~6x CDN $3.44 Plus a team that improves with age cumulative exploration success 0 Source First Energy P Reserve Life (years) 46% 52% 49% 54% 59% 61% 64% 65% 12