December Selling Natural Gas In A Supply Scarce Market

Transcription

1 December 2016 Selling Natural Gas In A Supply Scarce Market

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 Canacology A history of discovery Supply scarce Caribbean coast natural gas market Dual listed Enterprise value Ownership by insiders 16e guidance Natural Gas Light Oil S. Pacific Ocean Shale Oil Colombia Year end P reserves TSX and BVC $791 MM ~25% 16 17,000 boepd $135 MM EBITDAX $90 MM capex 79 MMboe Pre tax NPV 10 Contracted gas sales price(1) 2P F&D cost $1.4 B $5.61 / MMbtu $2.85/Boe + Mid year P reserves + 5 MMboe Substantial exploration potential 21 blocks / 3 MM acres Light Oil Ecuador Canacol Km

4 Colombia s Restless Gas Finder Canacol discovered more gas than all Colombia explorers, combined(1) +59% CAGR in 2P reserves(2) 2P reserves in MMboe oil gas 62% exploration success 43 79(3) 14 Dry natural gas record cash flow 13 present 6 discoveries (86% success) +302 BCF (+53 MMboe) Gas produced ~38 BCF Large gas reserves underpin gas sales contracts to 2020 and beyond (1) Source: ANH, over the trailing 5 yrs. (2) Measured from June 2008 to December 2015 or 2.0 MMbls of 2P reserves to 79 MMbls (3) Excludes mid year P reserves for Oboe 1 gas discovery 18 '09 '11 '13 ' % gas Oil when the price is right 08 present 12 discoveries (52% success) Oil produced ~18 MMbls Matchless oil field 55 / 57 wells (96% success) developer Portfolio 17 / 21 blocks (83% oil) ~2.2MM acres 4

5 A Passion To Explore, And A Drive To Produce +45% projected CAGR in realized contractual gas sales(1) Expressed in boepd +45% 40,000 Fixed priced gas contracts erase oil volatility 16e sales mix High netback natural gas 78% 16e avg. 16,500 11,746 17,017 18,908 86% insensitive Tariff oil 8% Light oil 14% 1Q '16 2Q '16 3Q '16 Late '18 post new pipeline 15 16e: +101% increase to EBITDAX ($67 $135 MM)(2) ~40% reduction to G&A Fixed price gas contracts erase oil volatility (1) Realized contractual sales is defined as oil & gas produced and sold plus gas revenues received from nominated take or pay contracts (2) Budgeted $40/Bbl WTI 81% operating margins for natural gas $5.60/Mcf avg. sales price $.30/Mcf operating costs $4.56/Mcf netback 5

6 Sleep Deprived Over Oil Prices? Not Canacol Oil prices at zero? Canacol generates >$100MM EBITDAX EBITDAX in US$ MM $107 MM $118 $130 $142 $45 $153 MM $60 Pursuing dry natural gas that features stable pricing Quarterly average MMbtu $12 $10 $8 CANACOL 16e avg. $5.61/MMbtu 81% operating margin $30 $6 $4 LT gas contracts w/ 2 3% price escalation EUROPE $15 $2 USA CANADA $0/Bbl 1 2 WTI oil price 3 sensitivity 4 5 $ Mar '14 Jun '14 Sep '14 Dec '14 Mar '15 Jun '15 Sep '15 Dec '15 Mar '16 Jun '16 Sep '16 6

7 Canacol s Sweet Spot Chuchupa Ballena Caribbean Sea Gas supply 20%/yr. or 100 MMcf/d from 3 mature gas fields(1) Chuchupa, Ballena and La Creciente La Creciente Gas demand +3 4% through 2020e Thermoelectric, refining and industrial customers driving demand Canacol 2016(2) Gas EBITDAX 75 MMcf/d $135 MM 7gas fields 785k acres 100% WI Canacol gas blocks Compressor (1) Average annual decline for each of the trailing 2 years Gas pipeline New gas pipeline Gas field 10 km (2) Represents fiscal year average 7

8 Two New Gas Pipelines To Nearly Triple Canacol s Gas Business To 230 MMcf/d Chuchupa Ballena Caribbean Sea Caracoli 90 MMcf/d Jan Nov 17 Paiva SPV Pipeline Co. +40 MMcf/d 130 MMcf/d Dec 17 Filadelfia Build new pipeline Jobo Sincelejo Add 2 compressor stations La Creciente Pipeline Co MMcf/d 230 MMcf/d Dec 18 7gas fields 785k acres 100% WI 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 8

9 Reserves + Productive Capacity From 7 Gas Fields VIM 5 100% WI 3D Discovered over 300 BCF in trailing 3 yrs. 3D Large inventory of prospects / leads Clarinete Oboe Esperanza/ VIM % WI Balanced resource capture strategy Nispero Trombon 10 km Nelson Porquero Canacol s fields & discoveries prospects / leads 3D Palmer Nelson CDO Top Cienaga de Oro time structure map (5 X 3D seismic merged (615km 2 ), reprocessed and remapped in 2016) 9

10 Clarinete 3 Development Well Tests 18 MMcf/d Opportunities at Clarinete continue to multiply Cienaga de Oro depth structure map CLA 3 CLA 2ST B Oboe 1 1,500 GWC 6,415 ft. M MIOCENE 1,650 L. ATTIC 1,800 BLUE SAND 500 M A CLA 2ST B 1,950 Sub crop edge RED SAND BASAL SAND CLA 3 CLA 1 2,100 BASEMENT AVO event Clarinete 3 tests 18 MMcf/d or 3,158 boepd Exploration target Cienaga de Oro reservoir sandstones Depth / date 9,280 ft. in mid Nov 16 Pay 31 ft. md (28 ft. TVD) Porosity 22% (1) Represents 2P reserves as of December 31,

11 Nelson 8 Development Well Encounters 163 ft. of Pay Nelson field s 4 existing producers Cienaga de Oro depth structure map A Nelson 8 B Gross sand 383 ft. Net pay 167 ft. Avg. porosity 23% 1 km N 2 N 4 N 5 1,000 1,300 PORQUERO N 3 1,600 Nelson 8 B 1,900 CIENAGA A NELSON FAULT 2,200 GWC 7,550 ft. BASEMENT Another win at Nelson Exploration target Cienaga de Oro reservoir sandstones Depth / date 10,985 ft. in early Dec 16 Pay 163 ft. md (132 ft. TVD) Porosity 19% 11

12 Nelson 5 Recompletion Well Encounters 103 ft. of Pay Nelson 6 success confirmed the Porquero recompletion opportunity at Nelson 5 A Nelson 6 B Exploration target Shallow Porquero Depth 6,400 ft. in mid Nov 16 1,000 Pay 41 ft. md (39 ft. TVD) 1,300 TOP PORQUERO UP PORQUERO Porosity 19% Test 23 MMcf/d 1,600 M PORQUERO 1,900 2,200 2,500 NELSON FAULT AVO event TOP CDO BASEMENT Nelson 5 Porquero recompletion Producing CDO reservoir sandstones Exploration target Shallow Porquero Re entered Late Nov 16 Pay 103 ft. md (79 ft. TVD) Porosity 29% Test 13 MMcf/d or 2,281 boepd 10

13 Three Oil Levers, When The Time Is Right Canacol s oil portfolio 17 of 21 total blocks targeting oil (83% of total) 2.2 MM oil focused acres Llanos Basin, Colombia + Oriente Basin, Ecuador Production Matchless explorer 2P reserves Prospects and leads ~3,200 bopd(1) 10/14 or 71% success 14 MMbls(2) ~20 Middle Magdalena + Middle Magdalena Basin, Colombia Shallow Investigate potential in an established play Llanos S. Pacific Ocean Colombia Ecuador Canacol Ecuador Km Deep Blocks / net acres 7 / ~750k Key partner ConocoPhillips In early pilot testing phases_ DeGolyer & MacNaugton prospective resource report, October 2014 In MMbls 3 blocks(3) (1) For the 3 months ended 9/30/16 (2) As of 12/31/2015 (3) Represents Canacol s gross working interest economic prospective oil resources Best, P High, P Mean

14 Investigate Potential In The Cretaceous La Luna VMM 2 Mono Capuchino 1 ( MC 1 ) oil exploration well Offset to MA 1, drill MC 1 in Dec 16e Depth structure map 67% WI A MA 1 MC 1 B A MC 1 MA 1 B N MIOCENE 1 KM 1,000 LISAMA BASAL LISAMA UMIR 1,500 Mar 14 MA 1 discovery 593 ft. MD prospective interval 2,000 CRETACEOUS LA LUNA MA 1 Tested ~600 bopd from 335 ft. perforated interval SIMITRI MC 1 MC 1 spud on Dec 17 Exploration target D&A, net ~2,00 ft. MD prospective interval $5.5 MM / ~12k ft. TVD 2,500 ROSABLANCA GIRON 500 M 500 M Days to drill 75 14

15 Successful Oil 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 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 (86%, 6/7 wells) Macarenas ~6 MMbls 1 2 Mar 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 $55 $60/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 15

16 LLA 23: Pumara 1 Exploration For ~$4MM D&A, exposure to up to 5 pay zones Fault dependent anticlinal closure mapped on 3D 91% WI #1 target: Gacheta / Ubaque #2 target: Miradaor / Barco / C7 INLINE 197 over PUMARA NW Pumara A appraisal 1,900 C1 Pumara 1 Pumara B appraisal SE 2,200 2,275 C7 Mirador / Barco 2,400 Gacheta / Ubaque 2,450 Paleozoic Ubaque TVDSS map NW 500 M SE 16

17 7 for 7 In Recap 1Q 2017 Balanced Resource Capture Strategy CAPEX $90 MM 7 natural gas wells 5light oil work overs 1 oil exploration well Feb 17 Mar 17 Spud Cañahuate 1 gas exploration Spud Pumara 1 light oil exploration Results Mono Capuchino 1 oil exploration Gas production facilities 7 for 7 in 16 Gas exploration Oboe 1 well test Nispero 1 well test Trombon 1 test Nelson 6 test Clarinete 3 (development) Nelson 5 (recompletion) Nelson 8 (development) 66 MMcf/d 28 MMcf/d 26 MMcf/d 23 MMcf/d 18 MMcf/d 13 MMcf/d 163 ft. md. of pay 17

18 Record Cash Flows Are Reducing Canacol s Debt Multiple Debt profile $ in MM $250 Apollo Debt multiple Debt to trailing actual 12 month EBITDAX Debt to quarterly EBITDAX (annualized) 3.8x $200 BNP 3.4x $150 $100 Start: Eight equal installments 2.8x 2.3x 1.9x $50 1.8x 1.5x 1.5x 1.5x $ $ $ '16 Dec '17 '18e Sep '19e Dec '19e Dec '15 Mar '16 Jun '16 Sep '16e Dec '16e 2017e BNP (term loan) Apollo (sub notes) $180 MM / L+4.75% $75 MM / L+8.50% 16e guidance 16 17,000 boepd $135 MM ebitdax 18

19 A Rare Dislocation in Equity Value Buy Canacol at a discount to the value of our existing gas contracts BT NPV 10, US $MM Stable production under LT contracts $193 $166 in MM, except /share amounts TSX share price (12/17/16) CDN $4.56 $1,165 FD shares outstanding(1) 177 Market capitalization(2) US $605 Net debt(3) $186 $791 $778 Enterprise value US $791 Cash(3) $62 (1) Includes in the money options based on CDN 4.56/share price (2) Converted from CDN USD exchange rate (0.75) as of 12/18/16 (3) As of 9/30/16. Excludes restricted cash of $63 million. EV 2P Gas 2p Oil Possible Gas + Oil 19

20 Contact Calle 113 No Torre B Oficina 1501 Bogota, Colombia IR LA@canacolenergy.com 8th Avenue Place 4500, 525 8th Avenue South West Calgary, Alberta T2P 1G1 Canada IR@canacolenergy.com 20