Solving Colombia s Gas Supply Deficit. June 2016

Transcription

1 Solving Colombia s Gas Supply Deficit June 2016

2 Focused Portfolio Dual listed Supply scarce Caribbean natural gas market Natural Gas Enterprise value Exploration success ( 08 ) Insider ownership 16e guidance YE P reserves Light Oil S. Pacific Ocean Shale Oil Colombia Pre tax NPV 10 Value/share Y/Y reserves replacement 2P F&D cost Long reserves life Substantial exploration resource potential(1) Light Oil Ecuador Canacol Km (1) Management s estimate of net unrisked recoverable resource potential 13x 2P reserves Blocks / gross acres TSX and BVC US $800 MM 65% ~25% 16 17,000 boepd 79 MMboe US $1.3 B CDN $9.44 1,103% $2.85/boe ~10 yrs. 1,045 MMboe 23 / 3.4 MM 2

3 Key Portfolio Components Large gas reserves underpin production and cash flow for a decade +52% CAGR in 2P reserves(1) 2P reserves in MMboe oil gas Over the last 5 yrs, Canacol has discovered more natural gas than every other Colombian explorer, combined 79(2) 14 Dry natural gas [stable cash flow] 12 and 14 2 acquisitions 13 present 3 large discoveries 2P reserves 372 BCF (65 MMboe) Exploration resource >3 TCF potential(3) '09 '11 '13 '15 (1) Includes 21 MMboe of production since inception through 12/31/15 (2) Excludes 21 MMboe of production since inception through 12/31/15 (3) Management s estimate of net unrisked recoverable resource potential (4) DeGolyer & MacNaugton unrisked mean prospective oil resources, effective June % gas Light oil optionality [flexible approach] 2P reserves 14 MMbls LLA 23 exploration 33 MMbls resource potential(3) Large shale oil opportunity [call option] Exploration resource 458 MMbls potential(4) 3

4 Strong Sales Growth +45% projected CAGR in corporate sales Expressed in boepd 40, 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 4

5 Canacol Doesn t Lose Sleep Over Oil Prices Pursuit of dry natural gas that features stable pricing Oil prices at zero? Canacol generates ~$100MM EBITDAX EBITDAX in US$ MM $118 $130 $142 $153 MM $60 Best gas pricing Quarterly average MMbtu $12 $107 MM $45 $9 $30 $6 Canacol LT gas contracts with price escalation $15 $3 US Canada $0/Bbl WTI oil price sensitivity $0 Mar '14 Jun '14 Sep '14 Dec '14 Mar '15 Jun '15 Sep '15 Dec '15 Mar ' e 5

6 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 09 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 6

7 ALeader In E&P Capital Efficiency Participate in our capex light growth cumulative capex $MM Canacol gas Peer avg. $807 Capex, x acquisitions ($ MM) $97 $807 Production increase (boe/d) 10M 10M Wells drilled Q 16 netback ($/boe) $27 $12 16 outlook ($/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 16e: spend $58 MM to generate $135 MM EBITDAX (1) Range based on Brent oil price sensitivity: $35/Bbl to $55/Bbl 7

8 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 8

9 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 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 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 9

10 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 12 acquisition 2 Aug 14 discovery 3 Dec 14 discovery 4 Mar 16 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 10

11 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 5500 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 6 to spud in early 4Q 16 Targeting shallow Porquero reservoir sandstones 31 Bcf EUR unrisked resource potential $4.6MM D&A cost per well 11

12 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 1 spud early 3Q 16 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 12 12

13 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 13

14 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 14

15 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 ( 11 12) Two wells drilled de risked play ( 12 15) First frac planned this year by Conoco Ideal location in producing hydrocarbon basin 15

16 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 16

17 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) 17

18 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 19 Apollo $100 $75 L+8.50% Dec 19 16e guidance 16 17,000 boepd $58 MM capex $135 MM ebitdax 18

19 A Rare Dislocation in Equity Value Advantage Canacol vs. five Colombian peers Potential ~2x increase in share price (C$4.50) You re buying Canacol at a discount to the value of our existing gas contracts BT NPV 10, US $MM CDN $/share US $2, Stable production under LT contracts 20 US $193 US $1, e EV/DACF Industry avg. ~13x US US $800 $800 CDN $5.23/share EV 2P gas 2p oil Exploration in MM, except /share amounts TSX share price (6/23/16) CDN $ ~6x CDN $4.50 FD shares outstanding(1) 164 Market capitalization(2) US $574 Net debt(3) $226 0 Source First Energy P Reserve Life (years) Enterprise value US $800 Cash(3) $30 (1) Includes in the money options based on CDN 4.50/share price (2) Converted from CDN USD exchange rate (0.78) as of 6/23/16 (3) As of 3/31/16 19

20 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 20