Parex Resources
Investor Presentation - May 2024
TSX:PXT
- Colombia's Largest Independent Oil & Gas Company
- Track Record of Creating Value in Colombia since 2009
- Deep Portfolio with Transformational Exploration Opportunities
- Target the Return of ≥33% of FFO(1) to Shareholders
- Top-TierESG Performance
Stock Symbol | TSX:PXT |
Shares Outstanding(2) | 102.5 million |
Market Capitalization(2) | C$2.5 billion |
Quarterly Dividend(3) | C$0.385 per share |
Dividend Yield(2)(3)(4) | 6.4% |
Average Production(5) | 53,338 boe/d |
Land Position | 5.4 million net acres |
See "Forward-Looking Statements and Financial Outlook" advisory.
(1) Funds flow provided by operations; capital management measure; see advisory.
(2) As at April 30, 2024.
(3) Based on C$0.385 per share quarterly dividend as first approved on May 8, 2024.
(4) Supplementary financial measure; annualized dividend per share divided by PXT share price; see advisory.
(5) For three months ended March 31, 2024 (light & medium crude oil: 7,237 bbl/d, heavy crude oil: 45,543 bbl/d,
conventional natural gas: 3,348 mcf/d).
Strategy
Business Fundamentals
Colombia Advantage
& ESG
Asset Sustainability
Production Growth
Return of Capital to
Shareholders
Strategic Growth Levers
Utilize Exploitation & Technology
UNLOCKING EXTENSIVE LAND BASE USING GLOBALLY-PROVEN TECHNOLOGY
Capture Liquids-Rich Gas Opportunities
PURSUING ONSHORE, WORLD-CLASS GAS PLAYS THAT ARE UNDEREXPLORED
Deliver Outsized Exploration Potential
FOCUSING ON THE EXECUTION OF TRANSFORMATIONAL, HIGH-IMPACT PROSPECTS
3
Colombia
~750,000 | Independent | Free | OECD |
BBL/D | Branches of | Capital Movement | Member |
Oil Production(1) | Government | & No Foreign | Country |
Currency Controls |
Parex Advantages
Offshore
Oil Sales
Paid in USD based on Brent reference pricing
Top Decile | Established Strong | Strategic Partner |
Cash Flow per BOE | Social License | with Ecopetrol S.A. |
When compared against | US$20MM+ of community | Agreement signed in high- |
TSX-listed oil & gas peers(2) | investment in 2023 | potential Foothills trend |
(1) 2022; source: National Hydrocarbons Agency of the Republic of Colombia (ANH). (2) Source: Peters & Co. (January 8, 2024); 2024E assumptions: Brent: US$75.91/bbl WTI: US$71.31/bbl, NYMEX: US$2.83/mmbtu, AECO: C$2.34/mcf, USD/CAD: 0.749; all USD cash flow per boe netbacks converted to CAD; peer list based on Peters | 4 |
& Co. Canadian Producers coverage list (40 total companies (excludes royalty companies)). | |
Track Record of Growth
PRODUCTION PER SHARE(1) | PDP RESERVES PER SHARE(2) |
0.20
12% | CAGR | 0.19 |
(2018A-2024F) | ||
0.17 | ||
0.13 | 0.14 | |
0.12 |
0.10
2018A | 2019A | 2020A | 2021A | 2022A | 2023A | 2024F | ||
45 | 57 | |||||||
Absolute Production Growth CAGR: 4% | ||||||||
kboe/d | kboe/d | |||||||
15% | CAGR | 0.76 |
(2018A-2023A) | ||
0.67 | ||
0.55 | ||
0.50 |
0.40
2018A | 2019A | 2020A | 2021A | 2022A |
63 | |
Absolute PDP Reserves Growth CAGR: 6% | |
mmboe | |
0.80
2023A
83
mmboe
Long-term track record of growing production and PDP reserves combined with share
repurchases that result in strong per share growth
(1) Calculated as total annual average production divided by weighted-average basic shares; see "Historical Production" table within advisory for production by product type; supplementall financial measure; see advisory. (2) Calculated as PDP gross volume divided by year-end basic shares; see advisory. | 5 |
Track Record of Returning Capital
RETURN OF CAPITAL (CAD MM)(1)
~$295 ~$1,840
$300
$384
$334
$230
$300
CONTINUALLY LOWERING THE SHARE COUNT (MM)
162
148
134
122
110 104
2019A | 2020A | 2021A | 2022A | 2023A | 2024F(2) | Total | ||
Share Repurchases | Dividends | |||||||
2018A | 2019A | 2020A | 2021A | 2022A | 2023A |
Fully Diluted Shares Outstanding
Returned over C$1.5B to shareholders and reduced the float by ~35% in the last five years;
on track to continue capital returns in 2024
(1) See "Forward-Looking Statements and Financial Outlook" advisory. (2) Current dividend based on C$0.385 per share quarterly dividend as first approved on May 8, 2024; USD/CAD assumption: 0.73. | 6 |
2024 Guidance
Average | 54,000-60,000 |
Production | ~5% Growth at |
boe/d | Midpoint vs. 2023 |
2024F CAPITAL DISTRIBUTION
10% Magdalena
40% | |
Northern LLA | 75% |
Operated |
25%
Southern LLA
25%25%
LLA-34Non-Operated
VIM-1
1 Big 'E' well
Hydra
Fortuna
~2 wells
Funds Flow
$ millions
$590-660(1) | Capital |
Expenditures | |
$75/bbl Brent | |
$ millions |
Arauca, Capachos & LLA-38
~5 wells
1 Big 'E' well
Berilo Oeste
LLA-122
1 Big 'E' well
Arantes
2024F Program: ~35 gross wells
$390-430(2)
~15% Lower at Midpoint vs. 2023
LLA-30/32/74
~6 wells
Cabrestero
Workover activities
LLA-34
15-20 wells
Workover activities
See "Forward-Looking Statements and Financial Outlook" advisory. 2024 guidance based on $75/bbl Brent crude oil price (see Janua ry 15, 2024, news release).
(1) Funds flow provided by operations; capital management measure; see advisory. (2) Non-GAAP financial measure; see advisory.
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Capital Allocation Framework Reinforced by 2024 Plan
2024F CAPITAL ALLOCATION ($MM)
2024F FFO NETBACK(5) SENSITIVITY
($/bbl Brent)
~$100
$29-31
$25-27
$31-33
~$115
~$625
19-21%
10-12%
25-27%
$75/bbl
Brent
~$410
FFO | (1) | (2) | Current Dividend | (3) | (4) |
Capital Expenditures | Remaining FFF |
2024 plan at $75/bbl Brent is expected to generate
~$215MM of free funds flow(4)
$65 | $75 | $85 |
FFO Netback ($/boe)(5) | Effective Tax Rate |
2024F CAPITAL EXPENDITURES(2)
BY CATEGORY
Development | ||||
23% | Activity | |||
Development | ||||
Facilities | ||||
50% | 10% | Near-Field | ||
Exploration | ||||
12% | Big 'E' | ||
5% | Exploration | ||
Carry Capital | |||
See "Forward-Looking Statements and Financial Outlook" advisory. 2024 guidance based on $75/bbl Brent crude oil price (see Janua ry 15, 2024, news release).
(1) Capital management measure; see advisory. (2) Non-GAAP financial measure; see advisory. (3) Based on paid Q1 2024 dividend of C$0.375 per share and updated Q2 2024 C$0.385 per share dividend as first approved on May 8, 2024. (4) Non-GAAP financial measure; free funds flow defined as funds flow less capital expenditures; 8 see advisory; remaining FFF defined as FFO less forecast capital expenditures, less the estimated current dividend. (5) Non-GAAP ratio; see advisory.
Long-Term Capital Allocation Framework
1. Reinvest ~2/3 of FFO(1) into Business | 2. Return ≥1/3 to Shareholders(2) |
Near-Field Investments | Big 'E' |
- Drive sustainable business model
- Invest in long-term growth
- Replenish development inventory
- Portion of investment geared towards high-impact, big 'E' exploration
- Actively manage risk & reward
- Capitalize on Colombia advantage to generate potential for outsized returns
Regular Dividends +
Share Buybacks
- Quarterly regular dividend
- Target dividend growth
- Ensure sustainability through commodity cycles
- Share repurchases
- Mechanism to supplement returns
Target the return of at least 1/3 of total FFO(1) to shareholders
through regular dividends and share buybacks
See "Forward-Looking Statements and Financial Outlook" advisory. | 9 |
(1) Funds flow provided by operations; capital management measure; see advisory. (2) Based on funds flow provided by operations; capital management measure; see advisory. | |
Three-Year Plan: Growing Production & Free Funds Flow
2024-2026 Plan based on $75/bbl Brent(1)
Net Average Production (kboe/d)(2)
52 54
47
57
61
65
5%+ Annual Production Growth
TARGETING GROWTH FROM OPERATED BLOCKS
$375-450MM of Capital Expenditures(3) Per Year
INVESTING GOVERNED BY ≥1/3% FFO SHAREHOLDER RETURN FRAMEWORK(4)
~$50MM Invested on High-Impact Exploration Annually
DRILLING WORLD-CLASS PROSPECTS FOR STEP-CHANGE GROWTH POTENTIAL
2021A | 2022A | 2023A | 2024F | 2025F | 2026F | ||
Southern Llanos | Northern Llanos | ||||||
LLA-34 | Cabrestero | Magdalena | |||||
~$850MM Free Funds Flow(5) Generation over Outlook Period(6)
FREE FUNDS FLOW TO BE USED FOR SHAREHOLDER RETURNS(4)
Plan increases production at reduced capital expenditures(3) while providing exposure to high-impact exploration and increasing shareholder returns
See "Forward-Looking Statements and Financial Outlook." (1) Three-year plan derived by utilizing, among other assumptions, historical Parex production performance, current cost assumptions, and Brent crude oil prices assumptions, adjusted annually after 2024; budgets and forecast have not been finalized and are subject to a variety | 10 |
of factors, including prior year's results. (2) See "Historical Production" table within Advisory for production by product type. (3) Non-GAAP financial measure; see advisory. (4) See slide #9. (5) Non-GAAP financial measure; free funds flow defined as FFO less capital expenditures; see advisory. (6) Plan based on 5%+ average annual |
production growth, capital expenditures of $375-$450MM, and FFO netbacks of $29-32/bbl based on assumed $75/bbl Brent crude oil pricing (no hedging assumed).
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Disclaimer
Parex Resources Inc. published this content on 08 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 May 2024 21:43:37 UTC.