This presentation may include certain forward looking statements. All statements other than

Transcription

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2 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 forwardlooking 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. 2

3 Proven oil & gas finders in Colombia and Ecuador Exploration 16-for-25 wells (64%) Paid ~$230 MM Value created >$1.2 B(1) Development 53-for-55 wells (96%) OIL GAS Large natural gas reserve base until oil rebounds +59% CAGR in 2P gas reserves 2P reserves(1) Gas 362 BCF (64 MMboe) $958 MM(2) Longest reserve life in Colombia 80 Oil Total 16 MMbls $269 MM(2) 80 MMboe $1.2b(2) Production Sep 10,727 boepd(3) average: Contracted gas 14,200 boepd Oil TBD in budget '09 '10 '11 '12 '13 '14 '15 (1) As of Jun reserve reports (2) Represents pre-tax NPV Gas 80% 64 of total Oil 16 (3) Sales for the 3 months ended 9/30/15 3

4 % of CNE s total production Gas and tariff oil focus 52% insensitive, as of Sep Gas 3,455 boepd (32%) Tariff 2,156 (20%) Oil Tariff Gas 40% 52% Reduce exposure to oil price volatility For, up to ~ % of corporate production is insensitive to global oil pricing Lean machine LLA 23 Demobilized rental equipment Jun '14 Sep '14 Dec '14 Mar '15 Jun '15 Sep '15 $ / boe $19.17 Dec '14 Sep '15 Recently completed centralized process facility Reducing water costs via reinjection $ % $ % $ % $3.04 $2.04 G&A LLA 23 Esperanza OPEX 4

5 $8 MM E&D budget for 1 ~63% development Light oil Oriente $8 MM Llanos $33 MM Dry gas Lower Magdalena $43 MM 49% For 2016: production from MMcf/d gas ebitda from $30 $135 MM 1 gas well left in mid-nov 1 Dry gas Oboe-1 appraisal well Pipeline to Jobo Light oil Firm-up exploration leads Multiple prospects on new 3D 5

6 Colombia s gas demand is set to increase ~3x faster than world demand Demand for gas in Canacol s target market (Caribbean coast) is set to accelerate ~3x faster than country demand MMcf/d % Thermoelectricity +10% CAGR +1% +4% % +2% % Bogota % 0 '14 '15 '16 '17 '18 Residential Commercial Industrial Petrochemical Ecopetrol (1) Transport Thermoelectric Source UPME s Caribbean Coastal region forecast as of Jul (1) Excludes 100 MMcf/d of demand from the Reficar refinery starting in mid and beyond 6

7 primary gas fields supply Colombia s Caribbean Coast Ballena, Chuchupa, and La Creciente supply (actual) (estimate) 484 MMcf/d(1) 340 MMcf/d(2,3) Simply backfilling declines nearly doubles Canacol s gas business(4) 18 projected demand SHORTFALL 510 MMcf/d(1,3) -170 MMcf/d Chuchupa Ballena Riohacha (now offline) Over the trailing 2 years, gas supply to the Caribbean Coast has declined by -70 MMcf/d per year(4) Caribbean Sea Barranquilla Post pipeline completion, Canacol is the new supplier 2 discoveries tripled 2P reserves y/y to 362 BCF >3 TCF gross unrisked prospective resources(5) Cartagena Gas field Compressor Promigas pipeline La Creciente Canacol set to 4x gas production to 81 MMcf/d Unique market commands special fixed-price gas contracts (1) ACP Colombia as of Jun. Represents demand from the Caribbean coast only. (2) Ministry of Mines & Energy as of Jun 15 (3) Excludes 100 MMcf/d of demand from the Reficar refinery starting in mid and beyond (4) Measured by taking the average decline (70 MMcf/d) for the trailing 2 periods compared to Canacol s 2016 projected average gas sales volumes of 81 MMcf/d (5) Management s estimate Clarinete Palmer Nelson Cerro Matoso 4 blocks, ~785k net acres 7

8 Cartagena 7 gas fired power plants Oct Finish 15 km flow line, tie Clarinete to Jobo Nov Upgrade Jobo facilities MMcf/d From 120 to 185 MMcf/d Filadelphia 2016 Quadruple gas production MMcf/d Expand gas ebitda $30 $135 MM Sincelejo La Creciente Finish ~ km pipeline MMcf/d of new capacity Gas field Compressor Promigas pipeline Pipeline loop between Sincelejo and Cartagena Jobo Palmer Clarinete Nelson New compression at Filadelphia 25 MMcf/d going south 8

9 60,000 Remarkable gas platform 9 gas sales agreements insensitive to world prices Customers (yrs.) 5-15 Gas sales price estimate (/MMbtu) $5.51 $6.28 Price escalation (/yr.) 2-3% ~80% operating margin per MMcf/d Netback (/MMbtu) $ ,000 40,000 30,000 20,000 10,000 Avg. boepd 0 '15e '16e '17e '18e '19e '20e 4x gas production gas production (boepd) 14,200 Gas EBITDA (MM) $135 The least capital-intensive E&P business in Colombia(1) 5-yr cumulative gas CAPEX (MM) $280 5-yr cumulative gas EBITDA (MM) $1,500 (1) Represents cumulative risked EBITDA and cumulative risked capex for e e $ MM '15e '16e '17e '18e '19e '20e 9

10 VIM 5 3D Upper Zone -6,410 ft subsea ~3,000 acres Oboe-1 appraisal Oboe-1 in mid-nov 1 Opportunity 209 BCF(2) 3km (1) Reserve report as of Jun, pre-tax NPV-10 (2) Resource report as of Jun. Represents best case unrisked resources and risked pre-tax NPV-10. Clarinete-2 ST 127 ft of pay 23% porosity Tested 30MMcf/d Subcrop edge Clarinete ft of pay 26% porosity Tested 44MMcf/d 10

11 Geography Fastest growing gas market in Colombia World >> Colombia >> Colombia s Caribbean Coast +1% +3% +6% per yr. La Creciente 3D Geology Repeatability from Cienaga de Oro reservoir Nelson Palmer Clarinete pipeline VIM 5 100% VIM % Gas Growth platform 362 BCF(1) + >3 TCF upside(2) 50 prospects/leads Blocks 4 Clarinete 3D Gross acres Locked-in growth for 2016 ~785k, ~15% of basin 4x production MMcf/d Expand gas ebitda $30 $135 MM (1) Reserve reports as of Jun (2) Management s estimate of gross unrisked prospective gas resources VIM % Palmer Nelson ESPERANZA 100% Cienaga de Oro time structure map km Prospects and leads Fields and discoveries 11

12 27 MMbls oil trend(1) 08 present Blocks Rancho Hermoso (100%) and LLA 23 (90%) Net acres / oil fields 112k / 6 Success 93% (27/29 wells) Remaining 2P reserves 5 MMbls(2) LLA 23 Las Maracas ~12 MMbls Cravo S ~9 MMbls Jaga Leono Pantro Cravo E ~8 MMbls Tigro Strong netbacks despite a gloomy pricing environment Sep Production 4,301 bopd Realized price / netback $34.01 / $19.75 per barrel Macarenas ~6 MMbls 3D Pumara Chitara Padrote New 3D 1 activities Firm-up future exploration leads Multiple prospects on new 3D Pointer CPF Danes N Danes Maltes Labrador Assuming oil exploration success on parallel trends Potential for ~40 MMbls of remaining prospective resources(3) Pointer CPF and 28 km flow line offer rapid tie-in for future discoveries and appraisal wells Rancho Hermoso 27 MMbls oil trend(1) (1) Gross barrels produced from Aug to Oct (2) Reserve report as of Jun (3) Management s estimate of net unrisked recoverable prospective resources Fault Oil fields Lead Flow line Prospect 12

13 750k net acres Santa Isabel N Ecopetrol 2 Shell Shell VMM VMM 3 CNOOC D&M Report reveals large upside present for Canacol(1) Covers only 3 of 7 prospective shale oil blocks Exxon S COR COR 4 Exxon N 6 COR 11 7 COR 12 S (1) Represents DeGolyer & MacNaugton resource report mean estimate for Canacol s gross working prospective oil resources and potential NPV- respectively, effective Jun 13

14 Gas focus until oil rebounds Production Sep 16 average: Contracted gas Oil 10,727 boepd(1) 14,200 boepd TBD in budget Prove up >280 MMboe(3) 2P reserves Dry gas Light oil 362 BCF (64 MMboe)(1) 16 MMbls(1) 1 e 20e, exploit a diverse portfolio 2P reserves production +21% CAGR, 11k 35k boepd Exploration resource upside from >280 MMboe(2) 33k boepd (1) Sales for the 3 months ended 9/30/15 (2) Reserve reports effective Jun. Represents pre-tax NPV-10. (2) Management s estimate of net risked prospective resources 14

15 TSX (CNE), BVC (CNEC), OTCQX (CNNEF) In MM FD shares outstanding (MM) 160 Market capitalization US $365 Bank debt $255 Working capital surplus ($50) Net debt $205 Enterprise value $570 Cash $49 Restricted cash $61 Cash from Cavengas +$33 Diversified ownership (1) (2) (3) (3) (3) (4) BNP Paribas, new long-term credit agreement $200 MM, $180 MM drawn Replaces existing senior credit agreement Matures Sep No principal payments until Dec Interest payable quarterly at LIBOR % Relaxed financial covenants Apollo, senior notes $100 MM, $75 MM drawn 15% Mgmt. & Board 25% Matures Dec Interest payable quarterly at LIBOR % 18% 23% 19% (1) As of 11/26/15. Includes 1.6 million options that are in-the-money based on CDN 3.03/share. (2) Converted using CDN USD exchange rate (0.75) as of 11/26/15 (3) As of 9/30/15 (4) Post 9/30/15, represents cash from new strategic equity investor, Cavengas Holdings S.R.L. 15

16 Clarinete Discovery, Dec 14