Optimizing Shareholder Value CORPORATE PRESENTATION APRIL 2020 1 CORPORATE PRESENTATION | APRIL 2020
CORPORATE SNAPSHOT Capital Structure Operating results 2018 2019 Production (boe/d) FY Average 44,408 52,687 Net Working Capital - US$ million (3) ~$344 DAPS Growth (1) 26% 34% Drilling Program (# wells) 54 43 US$200 MM Undrawn Credit Facility (3) No Debt Capital Expenditures - US$ million $302 $208 FFO- US$ million $383 $571 Market Capitalization (4) ~C$1.7 Billion EBITDA $640 $663 Reserves (2019 Year-End) Common Shares Basic Outstanding (4) 2P Reserves (Dec. 31) (2) - Mmboe 198 (TSX: PXT) 139.8 MM 2P Reserve Life Index - years 10 (1) Debt- adjusted production per share (“DAPS”) growth (2) Parex’ WI per the independent reserve report prepared by GLJ Petroleum Consultants (“GLJ”) effective Dec. 31, 2019 Share Buyback (5) (3) As at December 31 , 2019 Bought 4MM Shares (4) As at March 31, 2020 (5) As of April 1, 2020 repurchased 4MM shares at ~18.70/sh pursuant to the Normal Course Issuer Bid which commenced on December 23, 2019 See “Advisories” at the end of this presentation 2020 Guidance Suspended to Protect Balance Sheet Strength 2 CORPORATE PRESENTATION | APRIL 2020
WHY INVEST IN PAREX? DEBT-ADJUSTED PRODUCTION PER SHARE (DAPS) 1. No Debt & Positive Q4’19 Working Capital of US$344 MM PPS DAPS Share Price (QE) 0.50 $25 2. High Margins o 2019 FFO netback → US$30/boe at Brent $64/bbl 0.40 $20 BOE/D PER 1,000 SHARES 4. Capital Allocation Discipline SHARE PRICE (C$) 0.30 $15 o Balanced capital program and return of capital 5. Focused Shareholder Return 0.20 $10 o 2019 CROIC (1) → 29% o Share buy-back funded from free cash flow 0.10 $5 ▪ 14.7 million shares repurchased (2018-2019) ▪ 4 million shares repurchased as of April 1, 2020 0.00 $0 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Source: Company’s data – March 10, 2020 Delivering Shareholder Value (1) Cash return on invested capital calculated (CROIC), a non-GAAP measure, is calculated as EBITDA divided by average carrying value of exploration and evaluation assets and property, plant and equipment assets, excluding accumulated DD&A 3 CORPORATE PRESENTATION | APRIL 2020
DELIVERING CONSISTENT SHAREHOLDER VALUE PRODUCTION PER SHARE (DEBT ADJUSTED) 2P RESERVE PER SHARE (DEBT ADJUSTED) 500 1,800 BOE/MILLION WA BASIC SHARES MBOE/MILLION WA BASIC SHARES 450 1,600 400 1,400 350 1,200 300 1,000 250 800 200 600 150 400 100 200 50 - - 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 FUNDS FLOW PER BASIC SHARE PAREX VS. TSX ENERGY INDEX FFO/SHARE Brent Oil Price PXT S&P/TSX Energy Index FUNDS FLOW PER SHARE (USD) $4.00 80 80% BRENT OIL PRICE (USD/BBL) $3.50 70 60% $3.00 60 TOTAL RETURN 40% $2.50 50 $2.00 40 20% $1.50 30 $1.00 20 0% 2015 2016 2017 2018 2019 $0.50 10 -20% $0.00 0 2015 2016 2017 2018 2019 -40% See advisories at the end of this presentation 4 CORPORATE PRESENTATION | APRIL 2020
BALANCE SHEET STRENGTH PROVIDES OPTIONALITY ANNUAL PRODUCTION CAPITAL RETURNED TO SHAREHOLDERS $250 16 60,000 $6 Brent: ANNUAL AVERAGE PRODUCTION (BOE/D) DEBT-ADJUSTED CASH FLOW PER SHARE (US$) 55,000 $64/Bbl 14 CAPITAL RETURNED (US$ MILLIONS) 50,000 $5 Brent: $200 BUYBACK (MILLIONS OF SHARES) $72/Bbl 12 45,000 40,000 $4 Brent: 10 $55/Bbl $150 35,000 Brent: $45/Bbl 30,000 $3 8 25,000 $100 6 20,000 $2 15,000 4 $50 10,000 $1 2 5,000 - $0 $0 0 2016 2017 2018 2019 2017 2018 2019 Production DACF/Share Capital Returned Share Buyback 5 CORPORATE PRESENTATION | APRIL 2020
PAREX CASH NETBACK (1) $80 $71.59 $75 $70 $64.21 $65 $60 Corporate’s Cost Structure (Estimate) $54.75 $53.57 ($13.88) $55 Transportation $9/bbl $50 $45.12 ($7.06) $45 USD/BOE Royalties 9% ($5.76) $40 ($1.66) Based on realized price $35 ($6.24) $30 Operating Expenses $4/bbl $25 $20 G&A $2/bbl $15 $10 $5 Cash Netback $13.20 (4) $13.70 (4) $22.29 (4) $24.65 (4) $29.61 (4) $0 2015 2016 2017 2018 2019 Cash Netback Tax G&A-Finance Opex Royalties Differential & Transportation Brent Price (1) Cash netback or funds flow netback is a non-GAAP measure that includes all cash generated from operating activities and is calculated before changes in non-cash working capital, divided by sales volumes for the period See advisories at the end of this presentation 6 CORPORATE PRESENTATION | APRIL 2020
CONVENTIONAL OIL RESERVES GENERATE VALUE $8 Proved Proved+ Developed Proved + Probable+ $7 2019YE Producing Proved Probable Possible 2P FD&A (USD/BOE)(1) $6 FD&A USD/boe (1) $7.63 $7.50 $7.57 $12.44 Recycle Ratio (FD&A) (1) 3.9x 3.9x 3.9x 2.4x $5 $4 After Tax NPV10% - C$/sh (2) $12.45 $19.36 $25.72 $32.72 $3 Working Capital – C$/sh (3) $3.12 $3.12 $3.12 $3.12 NAV at Brent $ 60 flat - C$/Sh (2) $15.57 $22.48 $28.84 $35.84 $2 (1) Per the independent reserve reports prepared by GLJ Petroleum Consultants Ltd. effective Dec. 31 of the reported year, including Future Development Cost. Recycle Ratio is calculated using 2019FY Funds Flow From Operations. $1 per barrel divided by annual F&D or FD&A as applicable. (2) At Parex’ request, the GLJ 2019 Report was calculated using a constant $60/bbl Brent oil price. (3) Working Capital of US$344 million (CAD 447 million) and 143 million shares at December 31, 2019. $0 See advisories at the end of this presentation 2017 2018 2019 1 Year $/boe 3 Year $/boe 7 CORPORATE PRESENTATION | APRIL 2020
FOUNDATION FOR GROWTH: APPRAISE & DEVELOP NET WORKING INTEREST PRODUCTION LLA-32 (LLA-32, LLA-34 & Cabrestero) 50,000 Kananaskis Azogue LLA-34 40,000 Max Tilo 30,000 BOE/D Chachalaca Chiricoca 20,000 Tarotaro 10,000 Guaco Tigana 0 2015 2016 2017 2018 2019 Tua Faults GLJ 3P (2019YE) NET WORKING INTEREST RESERVES* - LAST 5 YEARS Aruco Pipeline (LLA-32, LLA-34 & Cabrestero) Jacana 250 Curucucu RESEVES (MMBOE) Jacamar 200 Tigui 150 100 Totoro Cabrestero Bacano Akira 50 0 2015 2016 2017 2018 2019 As per the independent reserve report prepared by GLJ. effective December 31, 2019 1P 2P 3P *Per the independent reserve reports prepared by GLJ Petroleum Consultants Ltd. effective Dec. 31 of the reported year. See advisories at the end of this presentation Generation of Significant Free Cash Flow 8 CORPORATE PRESENTATION | APRIL 2020
CAPACHOS DEVELOPMENT AND EXPLORATION POTENTIAL Guadalupe depth structure Capachos (50% WI, Operator) • Producing at restricted rate of 5,000 - 6,000 gross bopd ANDINA NORTE-1 • Flowline expected to be in service by mid-2020 ANDINA-3 o Construction commenced in January ANDINA-1 • Commissioned Phase-1 gas processing facility ANDINA-2 CAPACHOS-2 CAPACHOS SUR-2 Legacy well Parex wells Facility/Pad Planned Flowline 9 CORPORATE PRESENTATION | APRIL 2020
ASSET REPLENISHMENT FOR FUTURE GROWTH Trucking Parex Blocks 1. ANH Bid Round (July & December 2019) Cartagena Pipeline o Acquired 5 blocks (VSM-25, VSM-36, LLA-94, LLA-122 & VMM-46) River in 2019 Terminal Covenas o 9% Royalty, no Cash Payments 2. CPO-11 (1) o Acquired Q4 2018 VMM-46 3. Merecure o Acquired Q1 2019 & tested Tamariniza-1 at 800 bopd gross 4. Fortuna (1) LLA-122 Mercure o Acquired Q4 2018 Why we like these and timing of activity VSM-25 ✓ Material prospect sizes LLA-94 ✓ Wide variety of play types VSM-36 ✓ Accessible operating areas for 2020-2021 drilling (1) Subject to regulatory approval See advisories at the end of this presentation 10 10 CORPORATE PRESENTATION | APRIL 2020
VIM-1: LA BELLEZA DISCOVERY Gas fields Oil fields VIM-1 (50% WI, Operator) Gas pipeline Oil Pipeline • Main target is a Cienaga De Oro River formation draped over a basement high • Analogue fields at Cicuco, Boquete and VIM-1 El Dificil Field El Dificil Discovered: 1943 *Cum Production = 12 MMBO, 352 BCF La Belleza • Tested 2,696 bopd and 11.8 MMcf/d of gas (4,663 boe/d combined) La Creciente • 43 API crude, selling at Brent less $5/Bbl Cicuco Field Discovered: 1956 *Cum Production = 48 MMBO, 194 BCF Boquete Field Discovered: 1961 *Cum Production = 18.5 MMBO, 41 BCF *Source: IHS Data 11 11 CORPORATE PRESENTATION | APRIL 2020
EXPANDING LLANOS INVENTORY LLA-32 LLA-34 CPO-11 (50% WI, Operator) Cabrestero • Additional leads and prospects being evaluated LLA-94 • Shallow drilling targets testing stratigraphic prospects CPO-11 Rubiales LLA-94 (100% WI, Operator) • Multiple play types identified on 3D seismic data • Short turnaround time to drill ready due to existing data Apply key learnings from adjacent areas (Cabrestero and LLA-34) 12 12 CORPORATE PRESENTATION | APRIL 2020
FORTUNA, BORANDA & VMM-46 Fortuna Fortuna (100%WI, operator) • Acquired in Q4 2018 • No drilling since 2012 • Target conventional oil prospects in Lisama and La Luna Formations Midas • Acquired 3D seismic in 2019 (Acordianero) Boranda (50% WI, operator) Boranda • Exploration discovery at Boranda-2ST • Producing at rate of 500 bopd VMM-46 VMM-46 (100% WI, operator) • Acquired in Q4 2019 13 13 CORPORATE PRESENTATION | APRIL 2020
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