March 2018 The Path to ~230 MMcf/d
Forward Looking Statements This presentation may include certain forward looking statements. All statements other than statements of historical fact, included herein, Caribbean Sea 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 Natural Gas 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 Bogota 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 19 blocks / barrel of oil. Boes may be misleading, particularly if used in isolation. A 2. 1 MM net acres 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, 2016 Colombia USD All dollar amounts are shown in US dollars, unless indicated otherwise 140 280 420 560 2 2 Km
The Leader In Natural Gas Production Growth +48% CAGR in gas production MMcf/d Guidance USD in MM, except CDN $/share TSX $/share (2/21/18) CDN $4.29 Fully diluted shares outstanding (2) 178 Market capitalization (3) $ 602 Net debt (4) $ 243 Enterprise value $ 845 ~230 Insider ownership 22% (1) Based on current gas contracts, net of transportation costs 114 - (2) Includes in-the-money options based on CDN $4.29 / share price (3) Converted from CDN → USD exchange rate (0.79) as of 2/21/18 129 (4) As of 9/30/17 85 70 '16 '17e '18e '19e • 2018 guidance • 2019 • New Promigas pipeline • Capital $80 MM +100 MMcf/d • Gas 114 – 129 MMcf/d • Oil 1,700 boepd • % gas >90% • Avg. gas pricing $4.75/MMbtu (1) 3
A History Of Discovery +314 BCF in 2P reserves over the trailing 4-yrs. +51% CAGR in 2P reserves • Highly disciplined exploration growth In MMboe (1) • Evaluated over 150 transactions oil gas 80 74 8 • Selected 3 gas acquisitions 9 Long-lived reserve base Acquired gas reserves ('12-'14) 96 BCF Canacol’s 2p reserve adds 314 BCF 410 BCF 72 Gas exploration success 10/12 wells (83%) 65 19 Producing wells 17 14 Large resource upside 20 Net acres 1.1 MM 17 14 11 8 7 Blocks 5 Gross mean unrisked resources (2) > 2 TCF '09 '10 '11 '12 '13 '14 '15 '16 BT EMV-10 (3) US $789 MM Prospects / leads 44 2 oil acquisitions 3 gas acquisitions (1) In USD Pro forma for the sale of Canacol’s assets in Ecuador as of Dec ‘17 (1) The 2017 acquisition of SSJN-7 exploration asset from Pacific Exploration & Production is not pictured (2) Gaffney, Cline & Associates (“GCA”) resource report, effective Dec ’16 (3) Expected Monetary Value discounted at 10%, GCA Dec ‘16 4
Canacol Gas vs. North America Gas Selling premium-price gas in a stable price environment Higher netback / productivity = competitive edge Quarterly average USD sale price per MMbtu Canacol gas vs. top 8 most economic conventional gas plays in N.A. 2018e USD operating netback Pre-tax USD $/MMbtu Canacol 2018E pricing USD $4.75/MMbtu US/Canada 2018E pricing USD $2.75/MMbtu $6 NE Penn (US) $1.19 Payout Canacol 8-mo. Kakwa-Nest (CA) $1.34 $5 $4.96(1) Top 8 avg. 25-mo. Sunrise/Sunset (CA) $1.49 $4 SW Penn super rich (US) $1.49 Septimus (CA) $1.49 $3 $2.82 SW Penn rich (US) $1.79 $1.95 $2 Dawson (CA) $2.08 Susquehanna (US) $2.38 (1)For the 3 months ended 9/30/2017 $1 Canacol Mar '14 Jun '14 Sep '14 Dec '14 Mar '15 Jun '15 Sep '15 Dec '15 Mar '16 Jun '16 Sep '16 Dec '16 Mar '17 Jun '17 Sep '17 Dec '17 $3.66 Source: Scotiabank $- $1.00 $2.00 $3.00 $4.00 5
Natural Gas Comparison Canacol vs. North America Special gas economics (1) Canacol’s ‘18e projected realized gas contracts, net of transportation costs (2) Barclays N.A. E&P research NYMEX spot 2018 estimate (3) Barclays N.A. E&P research AECO 30+ day spot as of 1/29/18. Conversion CDN → USD as of 1/29/18. (4) Scotiabank 2018E operating netback (5) Barclays N.A. E&P research representing 25+ pure-play, intermediate size natural gas companies in N.A. (6) Canacol’s average for the trailing 2-yr. period 6 (7) Canacol’s average D&A cost for ‘18e exploration program
2018 Plan $80 MM capital budget for 2018 US $ in MM 1. Ensure gas productive capacity exceeds 230 MMcf/d by Dec 2018 Gas overweight: 97% of production and capital • ‘17e guidance 85 MMcf/d • ‘18e guidance 114-129 MMcf/d Seismic, Exploration & 2. Execute 7-well program workover & Development, • Program 4 exploration & appraisal other, $30 $33 3 development • Avg. F&D cost $0.44 / MCF (1) • ‘18e avg. sales price $4.75 / MCF (2) Facilities & equipment, $17 3. Divest or spin out legacy conventional oil assets • Creating a pure-play, clean natural gas-focused Colombian E&P company (1) Average over the trailing 2-yr. period 7 (2) Based on current gas contracts, net f transportation costs
Build Capacity To Exceed 230 MMcf/d Execute 7-well program and upgrade facilities • Accelerated drilling program 2018 • 2 rigs Block 1Q 2Q 3Q 4Q • 4 exploration & appraisal wells DRILLING • 3 development Exploration Gaiteros-1 VIM-5 Breva-1 VIM-21 • Facilities Borojo-1 Esperanza • Gas gathering system debottlenecking Appraisal/development • Gas plant expansion from 200 → 300 MMcf/d Pandereta-3 VIM-5 Chirimia-1 VIM-5 • Key objectives 2 more well (TBD) • Achieve 230 MMcf/d of productive capacity FACILITIES by mid-year 2018 Clarinete sub-station VIM-5 • Add new reserves to plan for future pipeline Water treatment system Esperanza projects Betania sub-station Esperanza 8
Canacol’s Success Required Access To New Customers 2015 – 2016 Promigas-funded pipeline • ’14 → ’16: Canacol discovered more gas than all Caribbean Colombian explorers combined (1) Barranquilla Sea Mature Chevron fields • Acquired 2P gas reserves ('12-'14) 96 BCF ~333 MMcf/d • Canacol’s 2P reserve adds +314 BCF Cartagena • ’15 → ’16: Promigas funded and constructed a 190 +65 MMcf/d N km pipeline from Canacol’s success to Cartagena • Replaced declining supply from Chevron fields 4 blocks 785k acres • ’15 → ’16: This new infrastructure enabled Canacol (1) ANH statistics Jobo Station to increase production from 20 → 85 MMcf/d • +65 MMcf/d north to Cartagena Cerro Matos0 20 MMcf/d S 10 km • Existing 20 MMcf/d south to Cerro Matosa Canacol gas blocks 190 km Promigas pipeline Existing gas pipelines 9 (1) ANH statistics
Canacol’s Growth Requires Infrastructure Expansion On schedule to deliver +100 MMcf/d in Dec ‘18 Added to Canacol’s winning gas portfolio over time 2017 – 2018: new and expand infrastructure VIM 19 SSJN-7 Caribbean Barranquilla Sea Mature Chevron fields VIM-5 VIM 21 ~270 MMcf/d 3 Esperanza Cartagena 2012 2014 Today 85k acres 1.1MM acres 3 Filadelphia • In Apr 2017, acquired SSJN-7 block 1 +100 MMcf/d N Bremen • In Dec 2017, ↑ capacity by 40 MMcf/d Sincelejo 2 1 • Private-funded 6-in. line Jobo → Bremen (“Sabanas”) 3 2 Sabanas 3 • In Dec 2018, scheduled to ↑ capacity from 2 nd (1) ANH statistics expansion of the Promigas pipeline Jobo Station • Promigas-funded 20-in. line Jobo → Sincelejo Cerro Matos0 • Promigas north 10 km 165 MMcf/d Canacol gas blocks 230 MMcf/d • Sabanas north 40 MMcf/d Promigas pipeline expansion target • Cerro Matos0 south* Existing gas pipelines 25 MMcf/d New compression stations 10 * Includes 5 MMcf/d of other customers
Rich History Building Pipes • ‘15 → ’17 Completed 7 pipeline projects • ~130 aggregate kilometers • Sourced $30 MM to build Sabanas pipeline • Private funding (anti-dilutive) Pandereta Oboe • Commenced operations Dec 5, 2017 • 82 kilometers Clarinete Field • 6-inch line 143 BCF VIM 21 Canahuate Jobo Station Nispero Trombon Cañandonga Esperanza Toronja Canacol gas field Palmer Flow line Nelson Field 5 km 193 BCF VIM 5 Sabanas Nov 2017 11
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