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A Latin Oil Gas - Canacol · PDF fileShale Oil Light Oil Light Oil Natural Gas

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  • CreatingALatinAmericaOil&GasLeaderJune2016

  • ForwardLookingStatements

    This presentation may include certain forward looking statements. All statements other thanstatements of historical fact, included herein, including, without limitation, statementsregarding future plans and objectives of Canacol Energy Ltd. (Canacol or theCorporation), are forwardlooking 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 theCorporation. There can be no assurance that such statements will prove to be accurate, andactual results and future events could differ materially from those anticipated in suchstatements. All of the forward looking statements contained in this presentation are qualifiedby these cautionary statements and the risk factors described above. Furthermore, all suchstatements are made as of the date this presentation is given and Canacol assumes noobligation to update or revise these statements.

    Barrels of Oil EquivalentBarrels of oil equivalent (boe) is calculated using the conversion factor of 5.7 Mcf (thousandcubic 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 anenergy equivalency conversion method primarily applicable at the burner tip and does notrepresent a value equivalency at the wellhead.

    AcresAcres represents gross acres

    Production and ReservesProduction represents net before royaltyReserves represent 2P reserves and before tax NPV10 as of December 31, 2015

    Exploration Resource PotentialExploration resource potential represent managements estimate of net unrisked recoverableresource potential, unless indicated otherwise

    USDAll dollar amounts are shown in US dollars, unless indicated otherwise

    MagdalenaValley,Colombia 2

  • GROWTHFORMULADemocraticsecurity

    + Investorconfidence+ Capital= Sustainablegrowth

    InTheLate90s,ColombiaLaunchedANewGrowthFormula

    Bogota,2016

    0.7%

    2.2%

    3.2%

    3.7%

    3.7%

    4.3%

    4.5%

    5.2%

    00 15averagegrowthrateSource:15WorldBank

    Peru

    Colombia

    Chile

    Argentina

    LATAM

    Mexico

    Brazil

    Venezuela

    Colombiatreatscapitalwithrespect15WorldBankInvestorProtectionIndex

    2

    4

    10

    30

    35

    40

    56

    62Colombia

    Brazil

    Peru

    Chile

    LATAM

    Mexico

    Argentina

    Venezuela3

  • ColombiasGrowthFormulaIsDrivingABoomInCapitalFlows

    '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

    CumulativeFDIinColombia(1)US$inMME&PAllotherindustries

    Colombiaiscapitalfriendly15OECDforeigndirectinvestment(FDI)restrictivenessindex

    0315:Canada,U.S.andU.K.investedoverUS$45billion,or~35%ofFDI

    0315:OilandgasrelatedFDIincreasedfrom16% 30%oftotalcapitalinflows

    CumulativeUS$39billioninvestedinE&P

    CanadaU.S. 22%oftotalU.K. 13%

    US$130b

    US$2b

    (1) Balanceofpayments BancodelaRepublica

    E&P30%

    4

    launch

  • ChangeAgent#1:ColombiasNationalSecurityThursday,June23,2016 ahistoricdayinColombiashistory

    99PlanColombia/NationalSecurityPolicy Extraordinaryplantocounterthewarondrugs

    Vastlyimprovedsecurityenvironmentisunlockingdecadesofpentupgrowth

    June23,2016signedagreement bilateralandfinalceasefire Endtoallhostilities,decommissionweapons,

    offersecurityguaranteesandinstallcriminalprosecutions

    ColombianPresidentSantosandFARCRebelLeaderLondono signagreement

    5

  • ChangeAgent#2:ColombiasOil&GasRegulation

    03ProbusinessrestructuringofColombiasoil&gasregulatorymodel UnleashedoneofthemostattractiveE&P

    regimesintheworld

    LatinAmericasoldestandmoststabledemocracy(1886)

    Solidlegalsystem

    Strongpursuitofthecountrysrichlyendowedhydrocarbons

    6

    Source:ANHandBarclaysCapitalE&PResearchbasedWTI$50/Bbl,effectiveJune16

    Colombiasoldvs.newoilgasregulatorymodel

    After2003

    Before2003

  • 03 09 Today05

    ExplorationExploitationANHTEAAvailable

    EvolutionofColombiasE&Plandbase

    PreANHlaunch,early03 31MMprospectiveE&Pacres 8%contracted

    Today 253MMprospectiveE&Pacres 53%contracted 80+oil&gascompanies

    (supermajorstostartups)

    CapitalIsFindingManyE&POpportunities8xincreaseinexplorationarea

    7

    launch

  • ANewEraInColombiaE&P

    528 527

    588

    786

    944990

    951

    '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

    OilproductiondoubledANHAvg.bopd in000s

    Yetonly25%ofColombias~50bbarrelsofresourcepotentialhavebeendiscovered(1)

    Prolificgeology Richlyendowedhydrocarbonbase Freedomtomarkettoanycontinent

    (1) SourceANH,Ecopetrol

    launch

    CumulativeANHinvestment&executionANHAvg.bopd in000s

    US$4b

    '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

    8

  • Colombiaisintheearlyinnings 8bidroundstodate 640E&Plicensesoffered Growthdelayedduetocountryissues

    GrowthdelaythemeiscrystallizedbyCanacols 79MMboeofconventional 2Preserves Vs.therestoftheworldisforcedtofindand

    produceunconventional hydrocarbons

    AccentureconsidersColombiasoil&gasregulatoryreform1of3finestinhistory Developandmanagegeologicalinformation Assess/promoteopportunity Fosterindustrypartnerships Frequencyofbidrounds Ruleoflaw

    AccentureRanksColombiasOil&GasRegulatoryReformInTheTop3(1)

    Top3countryreformations

    Yearselapsed

    Bidrounds

    UK1970

    44

    42

    Norway1972

    46

    34

    Colombia2003

    13

    8

    (1) AccentureGlobalConsultingStrategyEnergy,March20169

  • 10

    Ecuador

    70 140 280 420 560

    Km

    Colombia

    S.PacificOcean

    Canacol

    SupplyscarceCaribbeannaturalgasmarket Board/managementteamwith60+years

    cumulativeexperienceoperatinginColombiaE&P HeadquarteredinCalgary,Alberta 08launch DuallistedonTSXandBVC Enterprisevalue US$800MM Explorationsuccess(08) 65% Insiderownership ~25% 16eguidance 16 17,000boepd

    YE20152Preserves 79MMboe Y/Yreservesreplacement 1,103% 2PF&Dcost $2.85/boe Longreserveslife ~10yrs.

    Substantialexploration 1,045MMboeresourcepotential(1) Blocks/grossacres 23/3.4MM

    CanacolToday

    (1) Managementsestimateofnetunriskedrecoverableresourcepotential

    ShaleOil

    LightOil

    LightOil

    NaturalGas

  • Sourcingofopportunities Jumpstartwithlandacquisitionand/orM&A Evaluated

    Over75mmnetprospectiveacres 150potentialtransactions Over20farmins Participatedin5bidrounds

    Buildingaportfoliotoweatheranysetting Fouracquisitionssince08 Totalpurchaseprice US$228MM CurrentNPV10 US$1.3b Fourfoldincreasein2Preserves

    Deriskthroughexplorationandexpandthroughdevelopment

    RigorousApproachToE&PPortfolioManagement

    08 11 12 14

    OIL GAS

    4acquisitionssincelaunch

    Scorecard

    (1) Managementsestimateofnetunrisked recoverableresourcepotential 11

  • 12

    KeyPortfolioComponentsLargegasreservesunderpinproductionandcashflowforadecade

    (1)Includes21MMboe ofproductionsinceinceptionthrough12/31/15(2) Excludes21MMboe ofproductionsinceinceptionthrough12/31/15(3) Managementsestimateofnetunrisked recoverableresourcepotential(4) DeGolyer &MacNaugton unrisked meanprospectiveoilresources,effectiveJune14

    17

    65

    14

    '09 '11 '13 '15

    82%gas

    +52%CAGRin2Preserves(1) Drynaturalgas [stablecashflow] 12and14 2acquisitions 13 present 3largediscoveries 2Preserves 372BCF(65MMboe) Explorationresource >3TCF

    potential(3)

    Lightoiloptionality [flexibleapproach] 2Preserves 14MMbls LLA23exploration 33MMbls

    resourcepotential(3)

    Largeshaleoilopportunity [calloption] Explorationresource 458MMbls

    potential(4)

    79(2)

    7 811

    18

    35

    43

    18

    20

    23

    2PreservesinMMboeoilgas

    Overthelast5yrs,CanacolhasdiscoveredmorenaturalgasthaneveryotherColombianexplorer,combined

  • CanacolDoesntLoseSleepOverOilPricesPursuitofdrynaturalgasthatfeaturesstablepricing

    BestgaspricingQuarterlyaverageMMbtu

    $0

    $3

    $6

    $9

    $12

    Mar'14

    Jun'14

    Sep'14

    Dec'14

    Mar'15

    Jun'15

    Sep'15

    Dec'15

    Mar'16

    2016e

    Canacol

    US

    Canada

    LTgascontractswithpriceescalation

    1 2 3 4 5

    $30/Bbl

    $15

    WTIoilpricesensitivity

    $60/Bbl

    $45

    $0/Bbl

    Oilpricesatzero?Canacol generates~$100MMEBITDAX

    EBITDAX inUS$MM

    $107MM

    $118

    $130MM$142

    $153MM

    13

    Canacol breakeven

  • CanacolGaspipeline

    LaCreciente

    Cartagena

    Ballena

    Chuchupa

    CaribbeanSea

    CerroMatosomine

    12

    Barranquilla

    3

    15 30 60 90 120

    Km

    Supplydecreasing20%/yr.fromcoastalfields[100MMcf/dperyeardecline](1)

    Demandincreased3%/yr.forthepast10yrs.andprojectedtogrowat34%through2026

    +65MMcf/dfromnew2016pipeline Flowsnorth/south 65/25MMcf/dsouth Totalproduction 90MMcf/d GasEBITDAX/yr. $135MM

    +100MMcf/dfromplanned2018pipeline Totalproduction 190MMcf/d GasEBITDAX/yr. $310MM By2020e,Canacolwillsupply~42%ofthecoast

    1 2 3Chuchupa Ballena LaCreciente

    2016pipeline

    65MMcf/d

    (1) Averageannualdeclineforeachofthetrailing2years

    2018pipeline

    25MMcf/d

    14

    4fields100%WI

    ~785kacres

    +100MMcf/d

    EpicGasDeficitOnColombiasCoastPlantoboostgasproductionandsolveove

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