Forward Looking Statements

Transcription

1 May 2017

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 USD All dollar amounts are shown in US dollars, unless indicated otherwise 2 2

3 Canacol Dual listed on TSX and BVC Supply scarce Caribbean coast natural gas market in MM, except /share amounts TSX share price (5/10/17) Natural Gas CDN $ FD shares outstanding(1) 22 blocks / 3.7 MM gross acres US $526 Market capitalization(2) $212 Net debt(3) Enterprise value US $738 Ownership by insiders ~21% (1) Includes in the money options based on CDN $4.08 / share price (2) Converted from CDN USD exchange rate (0.73) as of 5/10/17 (3) As of 3/31/17 S. Pacific Ocean Colombia Ecuador Km corporate guidance Capex $89 MM Production % gas 18 19k boepd 81% 560 3

4 The Finest Natural Gas Business In The World Early innings for Colombia E&P Top 3 E&P regulatory regimes (Accenture Consulting, 2016) South America s oldest and most stable democracy Vastly improved security environment, Colombian E&P is unlocking decades of pent up growth from its rich base of hydrocarbons. Over 50 billion boe of prospective resources left in Colombia Management knows Colombia Combined 50+ years operating history 62% exploration success since corporate launch in 2008 (18/29 wells) Invest in what we know: created $1 billion+ 2P NPV 10 from 5 key acquisitions + drill bit success Canacol s gas business is one of the most profitable in the world 80% gas operating margins with breakeven gas well economics of less than US $1.30/Mcf 2P gas reserves of 410 BCF with high RLI offers a decade+ of opportunity By 2019, Canacol aims to generate >$300 MM EBITDAX/yr. (more than double $135 MM in 2016) (1) Average for 2017e is 85 MMcfd Highly attractive runway to almost 3x current production by the end of step growth from 90(1) MMcf/d to exit 2018 Competitors supply declining 20%/yr. or 100 MMcf/d from only 3 mature fields Supply imbalance has allowed Canacol to sign $5/Mcf LT fixed priced take or pay contracts 4

5 $89 MM Plan For 2017e Natural Gas WI Block Q1 Q2 Q3 Q4 Cańahuate 1 100% Esperanza Tested 28 MMcf/d Toronja 1 100% VIM 21 Pandereta 1 100% VIM 5 Other projects: Guacharaca 155 km 2 3D seismic VIM 5 Optimize Jobo plant Esperanza 18 km flowline Nispero to Jobo Esperanza 3.5 km flowline Nelson 8 to Jobo Esperanza Oil Pumara 1 100% LLA 23 Drilling 3 well workovers 40% / 20% VIM 2, 3 Prep for 50%+ gas production growth Drill 4 exploration wells 85 MMcf/d 17e exit 130 MMcf/d High productivity + capital light feature of the business requires only 3 gas wells Exploration $38 MM 43% Ecuador & other $6MM $89MM Gas facilities $22 MM 25% Prep for 230 MMcf/d $10 MM in 18e Seismic $8 MM Workovers $5 MM 5 (1) 2017e guidance 5

6 A Productive Future Canacol s production forecast In boepd Fixed priced gas contracts offer stable cash flows Production mix Projected 65% CAGR in gas production growth Oil optionality to dial Fixed price gas contracts 18,500 ~25,000 40,350 >85% of revenues are insensitive to oil pricing Fixed netback light oil 3,600 22,800 Light oil 14,900 '17e '17e exit '18e exit 6

7 Large Gas Reserve Base Underpin A Decade+ Of Production +52% CAGR in 2P reserves(1) 2P reserves in MMboe oil gas P Corporate Reserves BT NPV MMboe $1.3b CDN $8.79 / share P/2P reserve 166% / replacement 194% y/y Avg. gas F&D cost $2.52 / boe or $0.44/mcf(2) % gas Natural Gas 14 present 7 discoveries 88% success 314 BCF (55 MMboe) P reserves 410 BCF '09 '10 '11 '12 '13 '14 '15 '16 (1) Measured from June 2008 to December 2016 or 2.0 MMbls of 2P reserves to 85 MMbls 2P reserves as of 12/31/16 (2) Trailing 2 year period Oil Optionality At $55/Bbl Engage light oil 7

8 Canacol s Sweet Spot Chuchupa Ballena Caribbean Sea Gas supply decline 20%/yr. or 100 MMcf/d from 3 mature gas fields(1) Chuchupa, Ballena and La Creciente La Creciente Gas demand +3% through 2025e(2) Thermoelectric, refining and industrial customers driving demand In 2015, the Caribbean region consumed 37% of Colombia s gas(2) 8gas fields 1.1 MM net acres Canacol gas blocks Compressor (1) Average annual decline for each of the trailing 3 years Gas pipeline New gas pipeline Gas field 10 km (2) UPME, December

9 Two New Gas Pipelines To Nearly Triple Canacol s Gas Business To 230 MMcf/d Chuchupa Ballena Caracoli 90 MMcf/d Jan Nov 17 Caribbean Sea Paiva SPV Pipeline Co. +40 MMcf/d = 130 MMcf/d Dec 17 Filadelfia Build 6 in. pipeline Jobo Sincelejo Add 2 compressor stations La Creciente Pipeline Co MMcf/d = 230 MMcf/d Dec 18 8gas fields 1.1 MM net acres Twin Jobo Sincelejo pipeline Construct new pipeline Cartagena Baranquilla Canacol gas blocks Gas pipeline New gas pipeline Compressor Gas field 10 km power at Filadelfia and Paiva compressor stations 9

10 Expansive Inventory of Exploration Prospects & Leads 17 Exploration Activity VIM 5 3D 100% WI 3D Oboe Pandereta CDO Continued mitigation of technical risk Clarinete Canahuate Jobo Nispero Esperanza/ VIM 21 Trombon 100% WI 10 km 3D Toronja Porquero Nelson Porquero Nelson CDO Palmer Focus on existing 615 km2 of 3D seismic on Esperanza, VIM 21, VIM 5 blocks Drill 3 gas wells in 2017 Canahuate 1 Tested 28 MMcf/d Toronja 1 Q2 Pandereta 1 Q3 Proposed Guacharaca 155 km2 3D seismic Canacol s fields & discoveries prospects / leads Top Cienaga de Oro time structure map (5 X 3D seismic merged (615km2), reprocessed and remapped in 2016) Reduce risk on presence of gas charged reservoir AVO seismic attribute analysis 3 step opportunity to 2018 exit 85(1) MMcf/d (1) 2017e guidance 10

11 Investing In What We Know Management s strong record of purchasing contiguous acreage Began with oil, now gas 2P reserve adds since BCF Block WI Purchase BT NPV 10 acquisition Date % price ($ MM) ($ MM) Esperanza / VIM 21 Dec ' $ 111 $ 724 VIM 5 / VIM 19 Dec ' $ 30 $ 443 SSJN7 Apr '17 50 Total $ 141 $ 1,167 (1)As of Jun 11 reserve report (2) As of Dec 14 reserve report (3) As of Dec 16 reserve report Apr 17 acquisition of SSJN7 consolidates core gas position in the Lower Magdalena Basin Seller Operated WI 50% Commitments Time frame Pacific E&P 1 exploration well + seismic Next 18 months Prime acreage along the Cienaga de Oro and Porquero gas play fairway Easy access to pipelines 11

12 Canahuate 1 Tests 28 MMcf/d 124 ft md (86 ft true vertical depth) of net gas pay 3D seismic demonstrates stacked AVO events potentially gas charged reservoir targets A CANAHUATE 1 CANAHUATE B B B 1,000 JOBO 6 CANAHUATE D 1,200 MID MIOCENE UNC COR 5 COR 4 CANAHUATE B TOP CDO 1,400 CAÑAFLECHA M HKW = Highest Known Water Spud March 24, 2017 Exploration target D&A / Depth Days to drill CANNAHUATE C CDO depth structure map Cienaga de Oro reservoir sandstones $3.5 MM / ~9k ft. MD 13 days Short tie back to Jobo processing plant (~3 km) A CANAHUATE M Fluid Factor (AVO) section across CANAHUATE 1 and CANAHUATE C Potential for up to 3 additional locations 12 1,600 1,800 INTRA CDO BASEMENT

13 Toronja 1 Exploration Target 2 1 Toronja 1 Nelson 6 2 1,200 1,400 1,600 NELSON 5 INTRA PORQUERO NELSON 4 1,800 TOP CDO NELSON 2 2,200 PALMER 1 NELSON 8 BASEMENT Mid Porquero time structure 1 1KM Fluid Factor (AVO) section Estimated spud June 2017 Exploration target Porquero reservoir sandstones D&A / Depth $5 MM / ~7k ft. MD Days to drill/test 5 weeks First follow up location for the Porquero post Nelson 6, which confirmed commerciality On success, rapid tie in to Betania station (1km away) 13

14 Pandereta 1 Exploration Target 1 1 PANDERETA 2 1,400 1,600 1,800 MID MIOCENE 2,000 MID CDO 2 2,200 Mid CDO time structure Estimated spud September 2017 Exploration target D&A / Depth Days to drill/test Cienaga de Oro reservoir sandstones $3.5 MM / ~9k ft. MD 6 weeks 2KM 2,400 BASEMENT Fluid Factor (AVO) section 13 km from Clarinete discovery 1KM On success, rapid tie in to 6 flow line connecting Clarinete to Jobo 14

15 Advance VIM 5 Acquire 155 km2 of 3D seismic in the Guacharaca area Existing 2D seismic PORQUERO LEAD D Multiple CDO and Porquero leads presently defined on open grid of 1970 s vintage 2D seismic data. CIENAGA LEAD A PORQUERO LEAD A CIENAGA LEAD B 1 FLAUTA LEAD 2 PORQUERO LEAD C 3D seismic program objective to advance leads to drill ready prospects 3D seismic acquisition area: 155 km 2 Total cost: US$13 mm (US$6mm 2017) Commence acquisition 4Q 2017 PORQUERO LEAD B CIENAGA LEAD C 1 2 FLAUTA Porquero Cienaga Basement 15

16 Three Oil Levers Able to dial up / dial down with oil price environment Canacol s oil portfolio 17 of 22 total blocks targeting oil (77% of total) 2.2 MM oil focused acres 1 Oriente Basin, Ecuador + 2 Llanos Basin, Colombia + Middle Magdalena Llanos Production Matchless explorer 2P reserves Prospects and leads ~1,300 bopd(1) 10/14 or 71% success 3 MMbls(2) >20 3 Middle Magdalena Basin, Colombia S. Pacific Ocean Shallow Investigate potential in an established play Colombia Deep Blocks / net acres Key partner Ecuador Canacol Ecuador Km DeGolyer & MacNaugton prospective resource report, October 2014 In MMbls 3 blocks(3) (1) For the 3 months ended 12/31/16 (2) As of 12/31/2016 (3) Represents Canacol s gross working interest economic prospective oil resources 7 / ~750k ConocoPhillips Best, P High, P Mean

17 Successful Oil Exploration on Block LLA 23 With a lot more running room LLA % WI >110k acres Las Maracas ~12 MMbls Cravo S ~9 MMbls Cravo E ~8 MMbls Leono Pantro Tigro Five light oil discoveries made along Rancho Hermoso fault trend Exceptional on block track record for exploration success (83%, 5/6 wells) Macarenas ~6 MMbls 1 2 Spud Mar 31, 17: Drill Pumara 1 5 potential pay zones Three additional trends remain undrilled Maltes Labrador Multiple prospects are drill ready Labrad or Rancho Hermoso At sustained $50/Bbl+ WTI 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 Target four drill ready prospects situated along flow line for short and immediate tie in e.g. Pumara prospect Significant upside in success case 17

18 LLA 23: Pumara 1 Exploration Target #1 Gacheta/Ubaque Target #2 Mirador/Barco/C7 Fault dependent anticlinal closure mapped on 3D 1,500 Leon 1,750 NW Pumara 1 Spud 3/31/17 2,000 C1 SE 2,250 C7 Mirador / Barco Gacheta / Ubaque Paleozoic 2,500 INLINE 197 over PUMARA Ubaque TVDSS map Exploration target Drill cost / Depth Up to 5 stacked reservoirs $3.3 MM / ~11k ft. MD 2,750 NW 500 M SE Days to drill/test 5 weeks Potential for up to 2 additional locations Short tie in to flow line (~250M) 18

19 Financial House In Order Canacol s corporate debt profile $250 $200 $150 Mar 22 maturity US $265 MM Senior secured term loan Credit Suisse + syndicate Green Shoe funds w/in 1 yr. Beginning Mar 19 No re determination if oil prices fall $265 MM / L+5.50% Up to $40 MM 13 equal quarterly installments $100 $50 Exit MMcf/d $300 MM EBITDAX Mar equal quarterly installments Debt service AFTER Canacol starts generating >$300 MM EBITDAX/yr. $ in MM $ '17 '18 '19 '20 '21 '22 90 MMcf/d 130 MMcf/d 230 MMcf/d Dedicate capital to high netback production instead of debt service 19

20 Contact Carolina Orozco Direction, Investor Relations Kevin Flick VP, Investor Relations Phil Heinrich Investor Relations Manager

21 Valuation Disconnect Enterprise Value / 2017e EBITDA Canacol trades at 44% and 54% discount to U.S. peers Enterprise Value / 2017e production (in boepd) Canacol trades at 51% and 60% discount to U.S. peers U.S. Mid Cap E&P ($1 B $5 B) 10.4x 60% 51% $77,525 $96,987 U.S. Small Cap E&P (< $1 B) 8.5x $38,319 Canacol 4.8x 44% 54% 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x Canacol U.S. Small Cap E&P 2017e of U.S. small and mid cap E&P from CanaccordGenuity U.S. small caps include Abraxas, Bill Barrett, Callon, Earthstone, Gastar, Lonestar, Northern Oil & Gas, Oasis, Penn Virginia, Ring, Sanchez and SRC Energy U.S. mid caps include Carrizo, Centennial, Diamondback, Energen, Gulfport, Matador, Parsley, RSP Permian and Whiting Petroleum U.S. Mid Cap E&P

22 Canacol Gas Is The Leader In Cash Generation Vs. North America Gas(1) Canacol avg. well Avg. Marcellus/Montney 8 mo. payout 23 mo. $ e operating netback(1) Pre tax $/boe Top 8 most economic gas plays in the Marcellus and Montney $16 (2017e pricing $3.25/MMbtu ) $14 $12 $10 $10 $10 $9 $8 Canacol gas Kakwa Sunrise / Sunset SW PA super rich Septimus SW PA rich Dawson Susquehanna NE PA Netbacks beat the top 8 most economic gas plays in the Marcellus and Montney Source: CanaccordGenuity (1) Top 8 Marcellus and Montney plays only. Canacol data represents 2017e pre tax $/boe.

23 Proven Senior Leadership Team Charle Gamba Director, President & CEO Ravi Sharma COO Jason Bednar CFO Mark Teare SVP, Exploration Dr. Luis Baena EVP, Business Development Tom Lutz President, Canacol Energy Colombia Co founder of Canacol Energy Ltd. Former VP Exploration, Occidental Petroleum Colombia and previous Chief Geologist in Ecuador and Qatar Over 30 years of oil & gas experience in the Middle East, North America, South America and Southeast Asia.PhD Geology Former Head of Production & Operations, Afren Plc Previous Global Petroleum Engineering Manager, BHP Billiton and Chief Reservoir Engineer, Occidental Petroleum Over 30 years of oil and natural gas experience in the Americas, Middle East, Russia, Australasia and Africa M.Sc. Mechanical Engineering Former Chief Financial Officer, Pan Orient Energy Previous Chairman and Board Member of several internationally focused E&P companies Over 25 years of domestic and international finance and accounting experience Chartered Accountant Former Country Lead, Encana in Brazil Previous VP Exploration, EnCana in Ecuador Over 30 years of oil & gas experience in Australia, Canada and South America M.Sc. Geology Co founder of Canacol Energy Ltd. Former Secretary of Health of Colombia Over 30 years of experience in the public and private sector in Colombia M.D., M.P.A. and M.I.A. Former Operations Director, Statoil ASA Previous Director Operations Planning & Analysis, Occidental Petroleum Over 30 years of oil & gas experience in the Americas and Middle East B.S. Petroleum Engineering, M.B.A.