On The Horizon Doubling Production To 230 MMcf/d September 2018 - - PowerPoint PPT Presentation
On The Horizon Doubling Production To 230 MMcf/d September 2018 - - PowerPoint PPT Presentation
On The Horizon Doubling Production To 230 MMcf/d September 2018 Forward Looking Statements This presentation may include certain forward looking statements. All statements other than statements of historical fact, included herein, including,
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Forward Looking Statements
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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. Production and Reserves Production represents net before royalty. Reserves represent 2P reserves and before tax NPV-10 as of December 31, 2017 USD All dollar amounts are shown in US dollars, unless indicated otherwise
Why Natural Gas In Colombia?
3 Bogota Colombia Caribbean Sea gas
Colombia
- South America’s oldest/most stable democracy
- 3rd largest South American economy
- 2016 peace treaty = security
- OECD newest member
- Regulatory Stability (1)
- Natural gas in Colombia(2)
- Country´s gas demand ~ 1000 MMcfd
- Caribbean Coast ~ 40%
- Demand increasing 2-3% per annum
- Main gas historical suppliers declining
- Limited Competition
- Canacol´s gas production
- Current ~ 120 MMcfd
230 MMsfd in March´19
- 90% sold at wellhead in US$ escalated 2% per year
- 2018 avg. wellhead price $4.80/ MMcfd (2)
70km Canacol’s conventional
- il E&P blocks
(1) Accenture “Strategy Energy”, March 2016: Accenture Consulting ranks Colombia’s oil & gas regulatory reform In the top 3 (2) Average for 2 quarters ended 6.30.2018
unconventional
Cartagena Barranquilla Cerro Matos0
Colombia’s Natural Gas Supply Deficit
- Caribbean Coast gas demand
450 MMcf/d
- Demand increasing 3% per annum(1)
- For 30+ yrs., Chevron supplied ~50% of all gas
supply to Colombia
- Supply declining 12% per annum(1)
- Transportation Infrastructure capacity is key
challenge to grow
- Over the trailing 6 yrs., Canacol is the only active
explorer in the Caribbean
- Canacol is filling the gas supply gap
Hocol 30 MMcf/d Frontera 25 MMcf/d Mature Chevron fields ~282 MMcf/d
Canacol
114-129MMcf/d(1)
10 km Canacol gas blocks Promigas pipeline expansion Existing gas pipelines
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(1) Source: Wood Mackenzie Total Colombia demand represents low case
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- Natural gas success
- Acquisitions
$170 MM
- Capital invested
$244 MM $414 MM
- Value created
$1.4 B(2)
- ‘17 2P reserve replacement
399%
- Solid reserve base underpins value
- Blocks/net acres
5 / 1.1 MM
- Dec ‘17 2P gas reserves
505 BCF
- Jul ‘18 2P reserve additions
+ 59 BCF
- Resource upside
2.6 TCF(3)
35 43 79 85
103
+32% CAGR in natural gas 2P reserves
Discovered 468 BCF In 5-years
In MMboe
- il gas
7 8 11 18 18 23 14 13 14 17 20 65 72 89 89 +10
' 0 9 ' 1 0 ' 1 1 ' 1 2 ' 1 3 ' 1 4 ' 1 5 ' 1 6 ' 1 7 ' 1 8 Reserve reports as of 12/31/17 and 7/31/18 (1) As of 12/31/17 (2) Pre-tax NPV-10 for Canacol’s 2P gas reserves as of 12/31/17 (3) Represents gross mean unrisked resources from a resource report prepared by Boury Global Energy Consultants, effective 7/31/18.
- 16-yr. gas reserve life
- 2P reserves F&D $0.63/Mcf(1)
YTD reserve adds from 3 wells
Canacol’s Consistent Growth
- Solid gas portfolio
- E&P contracts / net acres
5 / 1.1 MM
- Take/pay fixed wellhead gas pricing $4.85/mcf(1)
- Robust operating margins
>75%
- Continuous production and reserves growth
- Est.‘18→‘19 production growth
+90%
- 2P reserves adds over the trailing 5-yrs. 468 BCF
- Outstanding gas exploration success
80%
40,300
Natural gas production growth profile
(1) Based on current gas contracts, net of transportation costs
70 81 114-129 230 '16a '17a '18e '19e
In MMcf/d
+90% +44% +16%
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- Team created $1B+ of value
from 3 gas acquisitions
Cartagena Barranquilla Cerro Matos0
Dec ’12 +20 MMcfd
- Acquired Shona Energy
- 80 km pipeline → Cerromatoso nickel mine
Apr ‘16 +65 MMcfd → 85 MMcfd
- Promigas-funded 190 km pipeline
Dec ‘17 +40 MMcfd → 120 MMcfd
- Private-funded 82km line Jobo → Bremen
Mar ‘19 +100 MMcfd → 230 MMcfd
- Promigas-funded expansion
- 70 km Jobo → Sincelejo
100 km Cartagena → Barranquilla
2021 +100 MMcf/d → 330MMcfd
- Future pipeline to Barranquilla/Medellin
10 km Canacol gas blocks Pipeline expansion Existing gas pipelines
August 3rd Environmental Permit Enables Canacol To Add +100 MMcf/d in ‘19
Jobo Station
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Bremen Sincelejo To Medellin
VIM 21 Esperanza
Chirmia Clarinete Field 143 BCF Cañandonga Toronja
VIM 5
Oboe Trombon Nispero Nelson Field 193 BCF Canahuate Pandereta
5 km
Canacol gas 3D seismic Flow line Lead Prospect “E” Exploration “A” Appraisal (1) Boury & Associates resource report, effective 7/31/2018
- Applying AVO to investigate the presence of
gas-charged sandstones
- 12-for-15 successful exploration wells
- 80% success
- 8-for-8 successful appraisal/development wells
- 100% success
- 2 reservoirs
- Ciénaga de Oro (“CDO”) (deep)
- Porquero (shallow)
- Key stats
A Conventional Natural Gas Success Story
Breva
Jobo Station
Palmer 8
Avg. Net pay Test rate Well cost
- Ft. TVD
MMcf/d $ MM CDO 85 42 $4.5 Porquero 59 30 $3.9 Avg. 72 38 $4.2
Acordeon
115 prospects / 2.6 TCF upside(1)
La Creciente
Pandereta Oboe Nispero Trombon Palmer Toronja Canahũate
SSJN 7 50% WI VIM 5 100% WI Bremen Sincelejo Guepaje Mamay VIM 19 100% WI Esperanza 100% WI VIM 21 100% WI
Sabanas 2017 Breva Clarinete Cañandonga Esperanza Chirimia Jobo Station
El Deseo Chimu
Canacol gas field Gas field Prospect Lead 3D seismic Existing flow line Future flow line Facilities 5 10 15 km
Promigas 2018 2016
Canacol-gas '12 - '13 '14 - '16 '17 - '18 CAGR Blocks 2 4 5 14% Net acres (in 000s) 85 725 1,100 44% Gross resources (in TCF)(1) 0.1 2.0 2.6 59% Prospects & leads 7 44 115 49%
Expanding Canacol’s Gas Resource Runway
(1) Represents gross mean unrisked prospective resources
9 Acordeon
- July ‘18 resource report increased prospective
resources by 30%
- Forward plan
- ‘18 - ‘20 Ongoing exploratory drilling covered by
existing 3D seismic
- ‘19 -’21
Acquire 3D seismic (VIM5, VIM19, SSJN7)
- ‘20+
Exploratory drilling on new 3D seismic (VIM5, VIM19, SSJN7)
3rd Consecutive Shallow Porquero Gas Discovery
Breva-1
- 3-for-3 exploration discoveries
- Up to 5 additional locations
- Emerging and important new Porquero play type
- Canacol investigating future Porquero upside
across 1.1 MM net acres
1 KM AVO extraction over Mid Porquero SST marker
Nuez-1 Datil-1 Cachuate-1
VIM-21
Toronja-1 14 ft. BREVA-1 29 ft.
Arandala-1 Carambolo-1
Breva-1 success yields at least 5 more locations
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Porquero exploration Breva-1 Toronja-1 Nelson-6 May '18 Jun '17 Nov '16 Test rate (MMscfpd) 25 24 23 Pay (ft. TVD) 29 14 39 Porosity 27% 20% 19% Days to drill 13 6 9 Total depth (ft. MD) 7,560 7,200 6,400
Replaying CDO success with AVO in the Porquero
Nelson-5 79 ft. Nelson-6 39 ft.
3D
Includes net pay in ft. TVD
Acordeon Running Room?
November ’18: Acordeon-1 exploration well on VIM 5
B Fluid factor section along Acordeon-1 and -3 Acordeon-1 Acordeon-3 11 A
Chirimia ‘18 Clarinete ‘14
A-3 Acordeon-A, -B,-C Acordeon-1 A-2 Depth Structure with Fluid Factor extraction (AVO) at Mid CDO level B B A
1KM Surface pad location
- Cienaga de Oro Formation target
- 8,700 ft. TVD
- Drill cost (D&A) $3.65 MM
- Multiple follow up locations in success case
- 3 km from Clarinete and Chirimia discoveries
- <1km tie-in to proposed Pandereta-Jobo flow-line
Well objective: Investigate presence of gas charged reservoir sandstones supported by AVO methodology VIM 5
SSJN 7 VIM 5 VIM 19 VIM 21
Acordeon-1
Esperanza
Ecuador 140 280 420 560 Km
- S. Pacific Ocean
Colombia
Caguan Putumayo Basin Heavy oil Llanos Basin Light oil Middle Magdalena Basin Unconventional oil Upper Magdalena Shale oil
Ecuador
- Closed the sale of Ecuador assets in Feb ‘18
- $36.4 MM in cash proceeds
Colombia conventional oil
- $40 MM pending sale to Arrow Exploration Ltd.
- 8 blocks and associated commitments
- Arrow common shares $25 MM
- Cash
$10 MM
- Promissory note
$5 MM
Divesting Canacol Conventional Colombia Oil
By late September anticipated transaction close
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La Luna Unconventional Oil
- Source rock >2.3 trillion barrels in S.A.
- Canacol’s unconventional portfolio
- Operating partner
ConocoPhillips
- Non–operated WI
20%
- 2 Blocks
VMM2 & VMM3
- VMM2
Carried in 1st Explorat Phase
- D&M prospective
Best P50 – 168 MMbls resources report(1) High P10 – 263 MMbls
- ConocoPhillips activity
- Late ´17 Applied for drill & frack license
6 horiz wells / VMM2 & VMM3
- Early ´19 Anticipated date to receive permit
- ´19 Plan VMM3 –drill & frack 1 horiz well
140 280 420 Km 560
Ecuador Colombia
La Luna Shale depositional limit Middle Magdalena 13
VMM2 & VMM3 Blocks
(1) Degoyler & McNaughton Unconventional Prospective Resource Report, Oct 2014. Pro forma for Blocks VMM2 & VMM3
MMcf/d
Realized contractual gas sales growth
Solid Results 2Q ‘18
3 consecutive quarters of production growth
Strong gas pricing & netbacks
US $ / MMCF/d
76 85 106 112 114-129 230 3Q '17 4Q '17 1Q '18 2Q '18 '18e '19e $4.69 $4.65 $4.72 $4.85 $3.83 $3.55 $3.71 $3.80 3Q '17 4Q '17 1Q '18 2Q '18 Gas price, net of transportation Gas netback
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(1) Includes in-the-money options based on CDN $4.03/share price (2) Converted from CDN → USD exchange rate (0.76) as of 9/7/18 (3) As of 6/30/18 (4) Fluctuating three month Libor +5.5% as of 4/26/18
US $ in MM, except CDN $/share
TSX $/share (9/7/18) CDN $4.03 Fully diluted shares outstanding(1) 179 Market capitalization(2) $ 549 Net debt(3) $ 282 Enterprise value $ 831 Insider ownership 22%
Capital structure
As of 06/30/2018
- Cash $55 MM
- Restricted cash $6 MM
- Working capital surplus $84 MM
TSX: CNE | BVC: CNE.C
Financial Summary
EBITDA ramping
US$ in MM