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FUEL FOR THOUGHT

November 7, 2017

Currencies in U.S. dollars unless otherwise stated. stated .

For Reg AC Certification and important disclosures see Appendix A of this report. Analysts employed by non-U.S. affiliates are not registered/qualified as research analysts with FINRA in the U.S.

1

ANALYST TEAM

COMMODITY STRATEGY

Michael Loewen, MBA, CFA | Analyst

416-863-7985

[email protected]

Scotia Capital Inc. – Canada

EQUITY RESEARCH

Gavin Wylie | Analyst

403-213-7333

[email protected]


Patrick Bryden, CFA | Analyst

403-213-7750

[email protected]


Fuel for Thought

Inside

WTI-Brent Widens: Middle East/African Geopolitics & U.S. Pipeline Dynamics 1

Geopolitical Supply Risk on the Rise 2

WTI Underperforming as Transport Costs Increase 3

Equity Implications: Brent Producers Come Out Ahead 6

Calendar of Events 8

Energy Price Workbook 9

WTI-Brent Gap Widens on Middle East/African

Geopolitics & U.S. Pipeline Dynamics

Crude oil futures are hitting multi-year highs, coinciding with a steady stream of

global supply-risk events dragging the barrel higher. Due to the persistence of an

oversupplied market in recent years, a pipeline bombing or political shake-up in the

Middle East would have provided little incentive for oil prices to move higher and

only on a temporary basis before succumbing to the selling pressure characteristic

of a market awash with oil. However, OPEC+ supply caps have slowly reshaped

global balancing dynamics, and only now are certain factors, such as geopolitics,

becoming more important.

We believe location is a key consideration for oil market dynamics. While

there are a handful of factors moving oil market pricing lately, there may be some

relative winners and losers from a market-access standpoint, especially when

considering the widening WTI-Brent differential. The E&Ps that stand to benefit

the most from strong Brent pricing in the Scotiabank GBM universe of

coverage are: Parex (PXT), GeoPark (GPRK), Gran Tierra (GTE), and

Vermilion (VET).

Firstly, geopolitical conflict is on the rise. The frequency and number of

major changes and escalating tension in the Middle East and Africa has

created an air of supply uncertainty, supporting higher crude oil market pricing

and driving Brent prices into the mid-$60s bbl, in our view.

Secondly, growing U.S. production, coupled with increasing transportation

costs, may be depressing WTI on a relative basis. As domestic production

grows, so does competition for access to global markets and the corresponding

cost of transportation to the U.S. Gulf Coast.

Bottom line: We believe crude oil prices, more specifically Brent prices, are rising

due to tightening supply-demand balances and a general increase in global

supply-risk premiums. However, WTI is lagging global crude oil markets due to the

physical inland location of Cushing, growing domestic production, and the rising

cost of transportation to access global markets. Looking forward, oil prices are

likely to remain well supported, and, in our view, the WTI-Brent spreads may

remain wide, or perhaps widen further, over the next year under the following

scenarios: (1) OPEC+ supply caps are maintained through 2018, and (2) Middle

East and African geopolitical tension/supply risk remains elevated.

mailto:[email protected]



FUEL FOR THOUGHT

November 7, 2017

2

Geopolitical Supply Risk on the Rise

Global crude oil markets, more specifically Brent, have rallied in a near linear fashion over the last three-

and-a-half months. Prompt-month January futures are currently trading just shy of $64 bbl, representing a

44% gain from late-June lows. While one could argue that Q2/18 prices were artificially depressed as a

result of lacklustre demand data during the first half of the year, the oil markets story has largely shifted to

supply concerns after the OPEC+ consortium announced plans

to discuss extending the group’s supply caps through 2018.

However, it was the subsequent catalysts – such as the Kurdistan

independence referendum and the Saudi, UAE, and Bahrain-led

blockade of Qatar – that recently brought geopolitical supply risk

to the forefront of oil markets, in our view.

Geopolitical supply risk is only now becoming relevant due

to tight global balances. Most of the supply-risk events

affecting the market today would likely have been broadly

dismissed by the market only a few months ago. The impact of

a few hundred thousand barrels a day here or there would have

been easily absorbed by growing production and then

burgeoning inventories. Now that OPEC+ supply caps have

been in place for nearly a year, and after progressing through

abnormally weak demand in 1H/17, global inventories are

noticeably drawing down, which is creating a sense of urgency

when coupled with the threat of potential supply disruptions.

And this potential appears to be increasing each day. From memory, the market has witnessed at least a

half-dozen significant geopolitical events occurring in and around major oil-producing regions that could

eventually affect the security of supply:

Nigerian Delta Avengers threatened to end the ceasefire that has held since August 2016. Recall, the

NDA was responsible for disrupting nearly 500 kbbld, a quarter of Nigeria’s oil production, in early 2016

over disputed resource payments.

The Kurdistan independence referendum reportedly saw a voter turnout of roughly 72% of the 8.4 million

Iraqi Kurdish population, which voted overwhelmingly in favour of secession from Iraq. The event

spurred threats and even military maneuvers from Turkish, Iraqi, and Iranian officials, leading to the

KRG’s leader, President Massoud Barzani, stepping down from power.

Saudi Arabia, UAE, and Bahrain sever diplomatic ties and blockade Qatar over claims of terrorist

financing and cooperation with neighboring Iran.

Nearly a dozen Saudi princes were arrested, including Prince Alwaleed, with a handful of government

ministers and dozens of prominent businessmen and officials. While the move was publicized as part of

an anti-corruption probe orchestrated by the Saudi Crown Prince, Mohammad Bin Salman, some view

the shake-up as a consolidation of power for the rising prince.

Yemeni Houthis ballistic missiles were fired, and intercepted, near Riyadh, the Saudi Arabian capital.

Col. Turki Al-Maliki has made claims that Riyadh has evidence to prove the full complicity of the Tehran

regime in the Yemen conflict.

Prime Minister Saad Hariri of Lebanon resigns while visiting Riyadh due to concerns for his

life/assassination, leading to another power vacuum in Lebanon.

Bottom line: Geopolitical supply risk is on the rise, which is affecting global (Brent) oil markets, in our view.

Exhibit 1: Global Balances in a Deficit

Note: comprises crude oil, condensates, NGLs, and other sources. Source: IEA; DOE EIA; JODI; OPEC; Scotiabank GBM estimates.

(2.5)

(2.0)

(1.5)

(1.0)

(0.5)

-

0.5

1.0

1.5

2.0

2.5

90

92

94

96

98

100

102

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

2013 2014 2015 2016 2017 2018

Net B

ala

nce (

MM

bbl/d)

Supply

& D

em

and (

MM

bbl/d)

Global Supply-Demand Forecast

Net Balance Forecasted S/D Supply Demand

http://www.reuters.com/article/us-nigeria-oil/nigerias-delta-avengers-militants-end-oil-hub-ceasefire-idUSKBN1D3268

http://www.independent.co.uk/news/world/middle-east/kurdistan-referendum-kurdish-turkey-military-recep-tayyip-erdogan-iraq-kurds-krg-independence-a7967566.html

http://www.bbc.com/news/world-middle-east-41794083

http://www.bbc.com/news/world-middle-east-41794083

http://www.express.co.uk/news/world/876020/bahrain-claims-rights-to-qatar-land-as-gulf-tensions-rise

http://www.aljazeera.com/news/2017/11/detained-saudi-businessmen-171105095103488.html

http://www.aljazeera.com/news/2017/11/detained-saudi-businessmen-171105095103488.html

http://www.arabnews.com/node/1188936/saudi-arabia

http://www.cnn.com/2017/11/04/middleeast/lebanese-prime-minister-saad-hariri-resigns/index.html

FUEL FOR THOUGHT

November 7, 2017

3

WTI Underperforming as Transport Costs Increase

The performance of WTI futures has lagged their equivalent Brent contracts over the last few

months and we don’t expect this to reverse in the near term. The WTI-Brent spread has widened

from a steady -$2.50 bbl during the first half of the year toward -$6.50 to -$6.75 bbl in mid-Q4/17. We’re

only starting to see signs of infrastructure constraints moving barrels from Cushing to the U.S. Gulf Coast.

Importantly, we are under the impression that there is space on the Marketlink and Seaway Twin

pipelines; however, the dynamics governing the cost of transportation and endemic supply-demand

balancing inland may be what is influencing WTI market pricing relative to global markets. We view

the relatively constant and tight Light Louisiana Sweet spread to Brent as evidence that U.S. trading hubs

with physical access to tidewater are largely unaffected by the dynamics currently facing WTI.

Exhibit 3: Tight LLS-Brent Spread Suggests Cushing May Have a Localized Problem

Source: Bloomberg.

Exhibit 2: WTI Disconnecting from Global Brent Markets

Source: Bloomberg.

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November 7, 2017

4

The drivers of the historically wide WTI-Brent spread may not necessarily be the same issues facing

the current market. We believe that the widening WTI-Brent spread is more holistically a combination of

three factors:

1. Transportation costs from Cushing, Ok, to the U.S. Gulf Coast are rising. Both Enterprise Products

Partners and TransCanada have sought to increase tolls on their pipelines, the Seaway pipeline system

and Marketlink, respectively.

2. Relative supply-demand balancing favours global oil markets. While 24 nations (OPEC+ group) are

currently participating in supply caps/curtailments, U.S. tight oil production growth continues apace. This

dynamic is likely causing localized oversupply within the United States and relative undersupply in global

markets, in our view.

3. Geopolitical supply risk may affect global prices more acutely than inland U.S. markets. Inland

markets within the United States may be less reliant on foreign barrels, especially as domestic

production continues to grow. Consequently, the combination of localized supply, plus the

price/competition bottleneck to access global markets, may be insulating WTI from reaping a portion of

the rewards of OPEC+ supply caps.

This is not the first time WTI disconnected from global market dynamics. The WTI-Brent spread

stretched nearly $30 bbl wide in 2011 when physical transportation bottlenecks created an oversupply and

storage problem at Cushing, ultimately depressing WTI futures. A number of pipelines and refineries were

subsequently constructed, which ultimately debottlenecked this inland market.

After half a dozen years of robust tight-oil production growth, which has shifted aggregate production further

inland toward the Permian basin, transportation dynamics within the United States once again appear to be

rapidly changing. Pipelines that were once viewed as market-equalizing and debottlenecking assets, are

now witnessing increasing volumes of flowing barrels heading south toward the U.S. Gulf Coast.

Exhibit 4: WTI-Brent Spread Once Reached Near -$30 bbl Due to Localized Oversupply

Source: Bloomberg.

https://www.reuters.com/article/us-enterprise-prodt-pipeline-seaway/enterprise-says-may-raise-tariffs-on-seaway-crude-oil-pipeline-idUSKBN1D227E

FUEL FOR THOUGHT

November 7, 2017

5

Consequently, as production continues to climb, so does competition for space on these pipes in order to

access alternate markets, which may be pushing transportation tolls toward tidewater higher.

Lastly, local light grades may be penalized versus heavy grades. The aforementioned three factors

are likely exacerbated, as the United States continues to produce more quantities of similar types of light-

grade oil as a result of tight-oil drilling technology. With a relative abundance of light grades, and relatively

constant demand for end-use products, local refineries continue to import/demand medium/heavy grades.

This may lead to a higher volume of light grades being locally discounted in price and increasingly

earmarked for exports.

Bottom line: We believe that the inland U.S. oil market may be grappling with oversupply of light-grade oil

impacting localized supply-demand dynamics and transportation costs to global markets. Brent prices are

likely to outperform WTI over the next few years given these fundamentals. Other U.S. markets with more

direct access to tidewater (e.g., Light Louisiana Sweet) may not be affected to the same degree.

Exhibit 5: Light-Grade Oil Imports Decreasing, Medium/Heavy Grades Increasing, as Tight-Oil Volumes Grow

Source: DOE EIA; Scotiabank GBM.

-

1,000

2,000

3,000

4,000

5,000

6,000

1985 1990 1995 2000 2005 2010 2015

Gross Imports by API Gravity

-

2,000

4,000

6,000

8,000

10,000

1985 1990 1995 2000 2005 2010 2015

Gross Imports by API Gravity

Ultra-light>=40.1

Light30.1-40.0

Medium20.1-30.0

Heavy<=20.0

FUEL FOR THOUGHT

November 7, 2017

6

Equity Implications: Brent Producers Come Out Ahead

We see the Latin American producers as some of the best-positioned names to benefit from the

current differential situation and any sustained strength in Brent crude prices. In addition to the wide

WTI/Brent differential, we have seen the Vasconia/Brent differential maintain one of its tightest spreads at

~$4.00/bbl versus the historical average of $7.00-$8.00/bbl (see Exhibit 6), which adds incremental benefit

to Colombian realized prices. We continue to favour companies with the highest operational torque to higher

crude prices and the ability to rapidly expand drilling/exploration programs and deliver well-above-average

reserves/production growth in 2018E.

We see PXT, GPRK, and GTE as best situated to leverage strong crude prices into above-average

growth rates. We see both a significant potential increase in 2018E cash flow on the basis of strip crude

prices (versus our base estimate) and the ability to cycle cash flow into growth capex. That said, running

Brent crude futures in 2018E (+8% versus our base Brent forecast) implies cash flow upside of 10%-15%

on average, which would also equate to a yr/yr increase of 30%-40% (see Exhibit 7).

Discount valuation for above-average growth. Under our base Brent forecast, we already have PXT,

GPRK, and GTE growing at 20%, which at current futures prices could move into the 25%-30% range,

which is above the Canadian E&P (>30,000 boe/d) average of 12% and moving close to the U.S. E&P

average of 33%. On a valuation basis, the Colombian names remain at a discount at 2018E EV/DACF

multiples of 4.8x for PXT, 3.4x for GPRK, and 3.0x for GTE versus 7.0x-8.0x on average for the

U.S./Canadian E&Ps.

While not as flexible on the operational front due to the nature of their assets (long lead time/ultra-deep-

water programs), Petrobras (PBR) holds the most cash flow torque relative to their LatAm peers

(2018E/2019E cash flow growth from Brent $50 to Brent $60 = 52% and 61%, respectively).

From a European standpoint, VET is 24% exposed to Brent based on 2018E production and 30%

based on 2016 reserves. For 2018E, the company exhibits a funds flow sensitivity of $3.4 million for each

US$1/b change in Brent, and on an unhedged basis the sensitivity is $5.2 million. Note that the company is

also 32% exposed for 2018E production to European natural gas markets, along with 21% exposed based

on 2016 2P reserves, which can exhibit further sensitivity to the influences of Brent prices. For context,

management projects its funds flow for 2018E to be 34% derived from Brent-based markets and 37% from

European natural gas markets. We estimate, based on our current Scotiabank GBM price deck, $578 million

of corporate cash flow generation for VET in 2018E. Our estimates imply 2018E metrics of 10.8x EV/DACF,

2.4x net D/CF, an effective payout (DPS/CFPS + capex/CF) of 109%, and production growth of 10%.

Exhibit 6: Differentials Continue to Benefit Colombian Producers – Widening Brent/WTI + Narrowing Vasconia/Brent

Source: Bloomberg; Scotiabank GBM.

40

45

50

55

60

65

Jan-17 Apr-17 Jul-17 Oct-17

$/b

bl

Spot Market Prices

Brent

Vasconia

WTI

(8)

(7)

(6)

(5)

(4)

(3)

(2)

(1)

-

Jan-17 Apr-17 Jul-17 Oct-17

$/b

bl

Vasconia and WTI Differentials vs. Brent

Vasconia - Brent

WTI - Brent

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November 7, 2017

7

Exhibit 7: Latin American E&P Sensitivity Analysis

Source: Bloomberg; FactSet; Scotiabank GBM estimates.

Scotia Deck Strip US$50 Brent US$60 Brent US$70 Brent

2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E

WTI [$/bbl] $49.82 $52.00 $56.00 $50.74 $56.46 $52.52 $48.56 $46.00 $46.00 $51.08 $56.00 $56.00 $53.60 $66.00 $66.00

Brent [$/bbl] $53.15 $56.00 $60.00 $54.44 $60.59 $57.68 $51.89 $50.00 $50.00 $54.41 $60.00 $60.00 $56.93 $70.00 $70.00

Henry Hub [$/mcf] $3.08 $3.05 $3.00 $3.02 $3.06 $2.92 $3.08 $3.05 $3.00 $3.08 $3.05 $3.00 $3.08 $3.05 $3.00

USD/CAD FX Rate [US$/CDN$] $0.78 $0.86 $0.84 $0.77 $0.79 $0.79 $0.78 $0.86 $0.84 $0.78 $0.86 $0.84 $0.78 $0.86 $0.84

GeoPark Ltd.

Production [boe/d] 27,577 32,626 34,632 27,577 32,626 34,632 27,577 32,626 34,632 27,577 32,626 34,632 27,577 32,626 34,632

% Oil [% ] 77% 82% 94% 77% 82% 94% 77% 82% 94% 77% 82% 94% 77% 82% 94%

GrowthYOY [% ] 22% 17% 6% 22% 17% 6% 22% 17% 6% 22% 17% 6% 22% 17% 6%

CF Growth vs. Previous Sensitivity [% ] 7% 15% -7% 14% 40% 52% 13% 30% 32%

Cash Flow [$M] $148,581 $179,829 $199,771 $158,895 $206,970 $186,739 $138,863 $145,487 $131,951 $158,719 $203,048 $200,784 $178,654 $263,456 $265,057

CFPS (F.D.) [$/share] $2.38 $2.88 $3.20 $2.54 $3.31 $2.99 $2.22 $2.33 $2.11 $2.54 $3.25 $3.21 $2.86 $4.21 $4.24

Growth YOY [% ] 100% 21% 11% 114% 30% -10% 87% 5% -9% 114% 28% -1% 141% 47% 1%

All-in Payout Ratio [% ] 71% 92% 97% 67% 80% 104% 76% 113% 147% 67% 81% 97% 59% 63% 73%

Market Price EV/DACF [x] 4.8x 4.0x 3.6x 4.5x 3.4x 3.7x 5.2x 5.1x 6.0x 4.5x 3.5x 3.5x 4.0x 2.4x 2.2x

Target Implied EV/DACF [x] 5.2x 4.3x 3.9x 4.8x 3.6x 4.0x 5.5x 5.4x 6.3x 4.8x 3.7x 3.7x 4.2x 2.6x 2.4x

Parex Resources Inc.

Production [boe/d] 35,830 42,774 49,664 35,830 42,774 49,664 35,830 42,774 49,664 35,830 42,774 49,664 35,830 42,774 49,664

% Oil [% ] 84% 81% 84% 84% 81% 84% 84% 81% 84% 84% 81% 84% 84% 81% 84%

GrowthYOY [% ] 15% 18% 14% 15% 18% 14% 15% 18% 15% 15% 18% 14% 15% 18% 14%

CF growth vs. previous sensitivity [% ] 3% 11% -5% 5% 24% 30% 6% 21% 24%

Cash Flow [$M] $270,280 $351,183 $412,251 $279,101 $388,984 $390,827 $264,414 $311,188 $319,097 $278,951 $384,367 $413,490 $295,631 $464,809 $510,721

CFPS (F.D.) [$/share] $1.72 $2.24 $2.63 $1.78 $2.48 $2.49 $1.68 $1.98 $2.03 $1.78 $2.45 $2.64 $1.88 $2.96 $3.26

Growth YOY [% ] 82% 30% 17% 88% 40% 0% 78% 18% 3% 87% 38% 8% 99% 58% 10%




Canacol Energy Ltd.

Production [boe/d] 17,660 25,365 39,322 17,660 25,365 39,322 17,660 25,365 39,322 17,660 25,365 39,322 17,660 25,365 39,322

% Oil [% ] 87% 56% 45% 87% 56% 45% 87% 56% 45% 87% 56% 45% 87% 56% 45%

GrowthYOY [% ] 11% 38% 47% 11% 38% 47% 11% 38% 47% 11% 38% 47% 11% 38% 47%


Cash Flow [$M] $92,976 $140,381 $195,849 $93,985 $143,630 $189,421 $91,984 $134,342 $189,363 $93,968 $143,211 $192,257 $95,952 $152,079 $195,143

CFPS (F.D.) [$/share] $0.53 $0.80 $1.12 $0.54 $0.82 $1.08 $0.52 $0.77 $1.08 $0.54 $0.82 $1.10 $0.55 $0.87 $1.12

Growth YOY [% ] -21% 51% 40% -20% 53% 32% -22% 46% 41% -20% 53% 34% -19% 59% 28%




Gran Tierra Energy Ltd.

Production [boe/d] 27,020 32,896 35,854 27,002 32,756 35,733 27,037 33,031 36,111 27,003 32,771 35,725 26,978 32,595 35,445

% Oil [% ] 83% 78% 91% 84% 79% 91% 83% 78% 91% 84% 79% 91% 84% 79% 91%

GrowthYOY [% ] 17% 22% 9% 16% 21% 9% 17% 22% 9% 16% 21% 9% 16% 21% 9%


Cash Flow [$M] $220,604 $290,969 $344,309 $233,125 $333,197 $314,671 $208,107 $223,694 $222,543 $232,978 $328,984 $343,238 $250,760 $405,535 $424,880

CFPS (F.D.) [$/share] $0.55 $0.75 $0.89 $0.59 $0.86 $0.81 $0.52 $0.58 $0.58 $0.58 $0.85 $0.89 $0.63 $1.05 $1.10

Growth YOY [% ] 69% 36% 18% 79% 47% -6% 60% 11% -1% 79% 45% 4% 92% 67% 5%




Ecopetrol

Production [boe/d] 715,654 718,467 723,173 715,654 718,467 723,173 715,654 718,467 723,173 715,654 718,467 723,173 715,654 718,467 723,173

% Oil [% ] 83% 83% 84% 83% 83% 84% 83% 83% 84% 83% 83% 84% 83% 83% 84%

GrowthYOY [% ] 0% 0% 1% 0% 0% 1% 0% 0% 1% 0% 0% 1% 0% 0% 1%

CF growth vs. previous sensitivity [% ] 4% 16% 1% 8% 35% 34% 8% 26% 26%

Cash Flow [COP Billion] $16,069 $16,005 $17,769 $16,704 $18,511 $18,021 $15,440 $13,476 $13,882 $16,697 $18,134 $18,640 $17,954 $22,791 $23,397

CFPS (F.D.) [COP/share] $391 $389 $432 $406 $450 $438 $376 $328 $338 $406 $441 $453 $437 $554 $569

Growth YOY [% ] -15% 0% 11% -12% 11% -3% -19% -13% 3% -12% 9% 3% -5% 27% 3%




Petrobras

Production [mboe/d] 2,772 2,958 3,240 2,772 2,958 3,240 2,772 2,958 3,240 2,772 2,958 3,240 2,772 2,958 3,240

% Gas [% ] 81% 81% 81% 81% 81% 81% 81% 81% 81% 81% 81% 81% 81% 81% 81%

GrowthYOY [% ] 0% 7% 10% 0% 7% 10% 0% 7% 10% 0% 7% 10% 0% 7% 10%


Cash Flow [$B] $28,301 $24,882 $27,297 $29,483 $29,542 $24,923 $27,139 $18,977 $16,920 $29,464 $28,924 $27,325 $31,413 $37,362 $36,235

CFPS (F.D.) [$/share] $2.17 $1.91 $2.09 $2.26 $2.26 $1.91 $2.08 $1.45 $1.30 $2.26 $2.22 $2.09 $2.41 $2.86 $2.78

Growth YOY [% ] -1% -12% 10% 4% 0% -16% -5% -30% -11% 4% -2% -6% 10% 19% -3%




FUEL FOR THOUGHT November 7, 2017

Calendar of Events

Upcoming Events

Oct 30 31 1 2 3

DOE Crude Stats EIA NatGas Storage CFTC Commitments

10:30 AM 10:30 AM Mid Market

Nov 6 7 8 9 10

OPEC DOE Crude Stats EIA NatGas Storage CFTC Commitments

World Oil Outlook 10:30 AM 10:30 AM Mid Market

9:30 EST

Nov 13 14 15 16 17

OPEC Report IEA Report DOE Crude Stats EIA NatGas Storage CFTC Commitments

Before Market Before Market 10:30 AM 10:30 AM Mid Market

Nov 20 21 22 23 24

DOE Crude Stats Thanksgiving Day Market holiday

10:30 AM (Standard Hours) (U.S. early close)

EIA NatGas Storage CFTC Commitments

12:00 PM Mid Market

Nov 27 28 29 30 1

DOE Crude Stats OPEC 173rd Meeting CFTC Commitments

10:30 AM Vienna, Austria Mid Market

EIA NatGas Storage

10:30 AM

Source: Agency reports, Scotiabank GBM

http://www.opec.org/o

pec_web/en/press_ro

om/4557.htm

8


Energy Market Price Book

Prompt-Month Market Price Performance

Price Previous Change (%) Characteristics

Contract Units 7-Nov-17 Day Week Month Year D/D W/W M/M Y/Y D W M Y

Crude Oil

Brent JAN 18 $/bbl 63.86 64.27 60.94 55.62 46.15 (0.6%) 4.8% 14.8% 38.4%

WTI Cushing DEC 17 $/bbl 57.16 57.35 54.38 49.29 44.89 (0.3%) 5.1% 16.0% 27.3%

West Canada Crude DEC 17 $/bbl 43.24 43.43 41.28 38.13 30.05 (0.4%) 4.7% 13.4% 43.9%

Louisiana Light Sw eet DEC 17 $/bbl 56.32 56.31 54.00 48.26 44.30 0.0% 4.3% 16.7% 27.1%

Dubai Fateh DEC 17 $/bbl 61.92 61.92 58.69 53.53 43.38 0.0% 5.5% 15.7% 42.7%

DME Oman JAN 18 $/bbl 62.20 62.20 59.00 53.85 43.56 0.0% 5.4% 15.5% 42.8%

Products

NY Harbor Gasoline DEC 17 USd/gal. 180.90 183.00 173.25 155.88 137.10 (1.1%) 4.4% 16.1% 31.9%

NY Harbor ULSD DEC 17 USd/gal. 192.62 194.22 188.05 174.39 144.06 (0.8%) 2.4% 10.5% 33.7%

Cushing 321 Crack DEC 17 $/bbl 20.45 21.08 20.46 18.76 13.67 (3.0%) (0.1%) 9.0% 49.6%

Gasoil-Brent Crack JAN 18 $/bbl 12.11 11.40 12.45 13.14 10.33 6.2% (2.7%) (7.8%) 17.3%

Note: Rolled three days early; Source: Bloomberg prices

-

10

20

30

40

50

60

70

2015 2016 2017

$/b

bl

Crude Oil Prices

WTI

Brent

WCC

Source: Bloomberg

(12)

(10)

(8)

(6)

(4)

(2)

-

2

-

10

20

30

40

50

60

70

2015 2016 2017

$/b

bl

$/b

bl

WTI-Brent Spread

WTI-Brent WTI Brent

Source: Bloomberg

(20)

(18)

(16)

(14)

(12)

(10)

(8)

(6)

(4)

(2)

-

-

10

20

30

40

50

60

70

2015 2016 2017

$/b

bl

$/b

bl

WCC Differential

WCC diff WTI WCC

Source: Bloomberg

1.15

1.20

1.25

1.30

1.35

1.40

1.45

-

10

20

30

40

50

60

70

2015 2016 2017

US

D/C

AD

$/b

bl &

C$/b

bl

WCC Flat Price & FX Impact

CAD WCC (C$) WCC

Source: Bloomberg

Crude Oil

9


Spot Market Price Performance

Monthly Average

Spot MTD Month/Month Quarter/Quarter Year/Year

Location 7-Nov-17 Nov-17 ∆ M/M ∆ % ∆ Q/Q ∆ % ∆ Y/Y ∆ %

North American Crude Oil ($/bbl)

West Texas Intermediate Cushing, OK 57.09 55.78 4.22 8.2% 7.75 16.1% 10.21 22.4%

Alaska North Slope U.S. Alaska 63.84 62.21 4.94 8.6% 10.85 21.1% 17.23 38.3%

Light Louisiana Sw eet U.S. Gulf Coast 63.09 61.74 4.30 7.5% 10.70 21.0% 15.05 32.2%

Edm. C5 Condensate AB, Canada 61.89 60.61 6.75 12.5% 11.69 23.9% 15.53 34.4%

Syncrude Sw eet AB, Canada 59.09 57.88 2.74 5.0% 8.81 18.0% 13.90 31.6%

Western Canada Select AB, Canada 43.09 41.73 1.88 4.7% 3.75 9.9% 11.11 36.3%

European Crude Oil ($/bbl)

Dated BFOE North Sea 63.92 62.24 4.62 8.0% 10.87 21.2% 15.80 34.0%

Mediterranean Strip Mediterranean 63.85 62.19 4.61 8.0% 10.85 21.1% 15.78 34.0%

ESPO Pacif ic/Russia 65.30 63.26 4.78 8.2% 10.53 20.0% 16.39 35.0%

Central & South American Crude Oil ($/bbl)

Maya Mexico 56.22 54.62 5.19 10.5% 8.43 18.3% 14.99 37.8%

Oriente Ecuador 57.63 56.21 4.34 8.4% 9.37 20.0% 15.14 36.9%

Vasconia Colombia 59.63 58.01 4.31 8.0% 8.77 17.8% 15.74 37.2%

Middle East Crude Oil ($/bbl)

Arab Light Saudi Arabia 61.72 60.26 4.42 7.9% 10.18 20.3% 16.74 38.5%

Arab Heavy Saudi Arabia 59.33 57.86 3.97 7.4% 9.08 18.6% 17.19 42.3%

Arbian Gulf Oman Oman 60.35 59.46 3.96 7.1% 8.82 17.4% 15.30 34.6%

Basrah Light Iraq 60.88 59.41 4.12 7.5% 9.53 19.1% 16.89 39.7%

Basrah Heavy Iraq 57.28 55.81 4.32 8.4% 9.73 21.1% 17.99 47.6%

Dubai Fateh U.A.E. 61.90 59.86 4.28 7.7% 9.43 18.7% 16.09 36.8%

Iran Light Iran 61.92 60.46 4.42 7.9% 10.11 20.1% 16.74 38.3%

Iran Heavy Iran 60.03 58.57 4.02 7.4% 9.21 18.7% 16.20 38.2%

Africa Crude Oil ($/bbl)

Angola Strip Angola 63.74 62.10 4.65 8.1% 10.82 21.1% 15.65 33.7%

West Africa Strip WAF 63.71 62.07 4.66 8.1% 10.80 21.1% 15.55 33.4%

(26)

(21)

(16)

(11)

(6)

Jul-17 Aug-17 Sep-17 Oct-17 Nov-17

$/bbl Canadian Heavy Differential

WCS Bitumen

40

45

50

55

60

65

70


$/bbl Select Global Benchmarks

WTI Brent

40

45

50

55

60

65

70


$/bbl Select Global Benchmarks

ESPO Arab Heavy W.Africa

Source: Bloomberg; Scotiabank GBM

Crude Oil

10


Weekly Average Spot Market Differentials

Inland Coastal Imported

$/bbl WTI Bakken Midland WTS WCS Maya LLS Mars BrentArab

Light

WTI -2.02 -0.45 0.27 13.67 1.31 -6.03 -2.49 -6.69 -3.40

Bakken 2.02 1.57 2.29 15.69 3.33 -4.01 -0.47 -4.67 -1.38

Midland 0.45 -1.57 0.72 14.12 1.76 -5.58 -2.04 -6.24 -2.95

WTS -0.27 -2.29 -0.72 13.40 1.04 -6.30 -2.76 -6.96 -3.67

WCS -13.67 -15.69 -14.12 -13.40 -12.36 -19.70 -16.16 -20.36 -17.07

Maya -1.31 -3.33 -1.76 -1.04 12.36 -7.34 -3.80 -8.00 -4.71

LLS 6.03 4.01 5.58 6.30 19.70 7.34 3.54 -0.66 2.63

Mars 2.49 0.47 2.04 2.76 16.16 3.80 -3.54 -4.20 -0.91

Brent 6.69 4.67 6.24 6.96 20.36 8.00 0.66 4.20 3.29

Arab Light 3.40 1.38 2.95 3.67 17.07 4.71 -2.63 0.91 -3.29

Source: Bloomberg prices as of: Friday, 3-Nov-2017

Inla

nd

Imp

ort

ed

Co

asta

l

Inland Coastal Imported

$/bbl WTI Bakken Midland WTS WCS Maya LLS Mars BrentArab

Light

WTI -0.03 -0.58 -0.52 1.09 -0.72 0.29 0.23 -1.72 0.24

Bakken 0.03 -0.55 -0.49 1.12 -0.69 0.32 0.26 -1.69 0.27

Midland 0.58 0.55 0.06 1.67 -0.14 0.87 0.81 -1.14 0.82

WTS 0.52 0.49 -0.06 1.61 -0.20 0.81 0.75 -1.20 0.76

WCS -1.09 -1.12 -1.67 -1.61 -1.81 -0.80 -0.86 -2.81 -0.85

Maya 0.72 0.69 0.14 0.20 1.81 1.01 0.95 -1.00 0.96

LLS -0.29 -0.32 -0.87 -0.81 0.80 -1.01 -0.06 -2.01 -0.05

Mars -0.23 -0.26 -0.81 -0.75 0.86 -0.95 0.06 -1.95 0.01

Brent 1.72 1.69 1.14 1.20 2.81 1.00 2.01 1.95 1.96

Arab Light -0.24 -0.27 -0.82 -0.76 0.85 -0.96 0.05 -0.01 -1.96

Source: Bloomberg prices as of: Friday, 3-Nov-2017

Inla

nd

Co

asta

lIm

po

rted

Weekly Average Change in Spot Market Differentials

Crude Oil

11


Crude Oil

Futures/Forward Curves

Brent WTI Western Canadian Crude Canadian Light Sw eet LLS

Month Contract $/bbl $/bbl Sw ap* diff to WTI $/bbl C$/bbl diff to WTI $/bbl C$/bbl diff to Brent $/bbl

1 DEC 17 n.a. 57.17 n.a. -13.92 43.25 55.33 -1.49 55.68 71.23 -0.84 n.a.

2 JAN 18 63.59 57.39 -6.99 -15.20 42.19 53.92 -2.65 54.74 69.96 -0.89 62.70

3 FEB 18 63.28 57.55 -6.46 -15.25 42.30 54.05 -2.95 54.60 69.76 -0.98 62.30

4 MAR 18 63.01 57.58 -6.05 -15.30 42.28 53.63 -2.95 54.63 69.30 -1.09 61.92

5 APR 18 62.76 57.51 -5.71 -15.00 42.51 53.90 -2.90 54.61 69.24 -1.25 61.51

6 MAY 18 62.47 57.32 -5.58 -15.25 42.07 53.31 -2.75 54.57 69.15 -1.38 61.09

7 JUN 18 62.26 57.06 -5.52 -15.35 41.71 52.82 -2.60 54.46 68.97 -1.39 60.87

8 JUL 18 61.99 56.87 -5.42 -15.25 41.62 52.68 -2.50 54.37 68.82 -1.47 60.52

9 AUG 18 61.47 56.44 -5.59 -15.40 41.04 51.93 -2.65 53.79 68.06 -1.55 59.92

10 SEP 18 61.81 56.05 -5.62 -15.55 40.50 51.23 -2.80 53.25 67.36 -1.63 60.18

11 OCT 18 60.96 55.76 -5.64 -16.00 39.76 50.28 -3.90 51.86 65.59 -1.69 59.27

12 NOV 18 60.46 55.25 -5.66 -16.20 39.05 49.37 -3.95 51.30 64.86 -1.82 58.64

* Traded WTI-Brent ICE swap matches delivery months.


42

44

46

48

50

52

54

56

58

60

1 2 3 6 9 12 18 24

$/b

bl

Forw ard Months

WTI

y/y m/m w/w 7-Nov-16

Source: Bloomberg

44

49

54

59

64

69

1 2 3 6 9 12 18 24

$/b

bl

Forw ard Months

Brent


Source: Bloomberg

54

55

56

57

58

59

60

61

62

63

64

65

Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18

$/b

bl

Global Futures Curve

NYMEX WTI

ICE Brent

DME Oman

Source: Bloomberg

38

43

48

53

58

63

Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Oct-18

$/b

bl

North American Futures Curve

NYMEX WTI

Canada Light Sweet

Western Canada Crude

Source: Bloomberg

12


Refined Products

Prompt-Month and Forward Curves

10

12

14

16

18

20

22

24

Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17

$/b

bl

NY321 Crackspread


-

5

10

15

20

25

30

35

-

50

100

150

200

250

2015 2016 2017

Cra

ck

($/b

bl)

US

d/g

al.

NYH Gasoline

RBOB-WTI

NYH Gasoline

Source: Bloomberg

-

5

10

15

20

25

30

35

-

50

100

150

200

250

2015 2016 2017

Cra

ck

($/b

bl)

US

d/g

al.

NYH Distillate

ULSD-WTI

NYH ULSD

Source: Bloomberg

130

140

150

160

170

180

190

200

1 2 3 6 9 12 18 24

$/b

bl

Forw ard Months

Gasoline


Source: Bloomberg

140

150

160

170

180

190

200

1 2 3 6 9 12 18 24

$/b

bl

Forw ard Months

Distillate


Source: Bloomberg

Brent WTI MoGas Dist.

Month Contract $/bbl $/bbl USd/gal. USd/gal.

1 DEC 17 n.a. 57.16 180.90 192.61

2 JAN 18 63.59 57.39 178.50 193.04

3 FEB 18 63.28 57.55 178.21 192.86

4 MAR 18 63.01 57.58 179.44 192.25

5 APR 18 62.76 57.51 195.74 191.18

6 MAY 18 62.47 57.32 195.25 190.80

7 JUN 18 62.26 57.06 193.67 189.35

8 JUL 18 61.99 56.87 191.25 189.03

9 AUG 18 61.47 56.44 188.34 189.11

10 SEP 18 61.81 56.05 184.34 188.76

11 OCT 18 60.96 55.76 172.45 188.65

12 NOV 18 60.46 55.25 168.61 189.12

Source: B loomberg; Scotiabank GBM

13


Natural Gas

Prompt-Month Market Price Performance

Price Previous Change (%)

Unit 7-Nov-17 Day Week Month Year D/D W/W M/M Y/Y D W M Y

Henry Hub $/mmBtu 3.12 3.13 2.90 2.86 2.82 (0.5%) 7.7% 8.9% 10.7%

ICE NBP GBp/therm 53.41 52.67 50.38 50.02 51.12 1.4% 6.0% 6.8% 4.5%

$/mmBtu 7.02 6.94 6.69 6.54 6.34 1.1% 4.8% 7.4% 10.7%

AECO C$/GJ 2.49 2.55 2.25 2.01 2.50 (2.4%) 10.7% 23.9% (0.4%)

$/mmBtu 2.05 2.12 1.84 1.69 1.97 (3.1%) 11.4% 21.2% 4.0%

Union Daw n $/mmBtu 3.26 3.22 2.97 2.82 3.18 1.2% 9.8% 15.5% 2.6%

TranscoZ6 $/mmBtu 4.12 4.13 2.72 3.04 3.79 (0.4%) 51.5% 35.5% 8.7%

TCO Appa. $/mmBtu 2.90 2.92 2.58 2.66 2.65 (0.5%) 12.7% 9.3% 9.7%

Tetco M3 $/mmBtu 3.33 3.23 3.09 2.24 2.62 3.2% 8.0% 48.6% 27.3%

Rockies $/mmBtu 2.95 2.96 2.68 2.43 2.72 (0.5%) 9.8% 21.4% 8.5%

PG&E Gate $/mmBtu 3.26 3.27 3.01 3.06 3.23 (0.5%) 8.2% 6.4% 1.0%

SoCal Gate $/mmBtu 3.49 3.51 3.15 2.59 2.98 (0.5%) 11.0% 35.0% 17.3%

Permian $/mmBtu 2.76 2.77 2.52 2.31 2.68 (0.6%) 9.3% 19.6% 2.8%

NGPL Trunk $/mmBtu 3.01 3.01 2.80 2.82 2.81 (0.3%) 7.5% 6.7% 6.8%

Source: Bloomberg prices; Scotiabank GBM

AECO/NOVA

$0.74 -0.09

$1.88 $2.08

+0.19 +0.03

Stanfield

$2.56 +0.09

$0.07 ($0.03) $2.05

-0.04 +0.03 +0.10 Dawn Algonquin

Malin $0.03 $2.82 -0.06 $2.73 +0.30

$2.63 +0.05 Opal/Rockies -0.07 TrnsCo Z6NY

$0.51 $2.59 +0.07 TrnsCo Leidy $2.56 +0.23

-0.10 Chicago $0.81 -0.25

$2.79 +0.01 Dom.South

($0.16) $1.88 $0.91 -0.24

PG&E CG $1.51 -0.09 +0.25

$3.14 -0.05 +1.04

($0.96)

-1.16

SoCal Border $0.07

$4.11 +1.11 $1.68 +0.01 ($0.14)

+1.13 +0.30 ($0.31)

+0.23

EP Permian

$2.43 -0.02

MAP LEGEND $0.44 Henry Hub

Daily average spot prices for the month of Oct-2017 -0.02 $2.87 -0.10

Trade Hub All trade hub prices are in USD/MMBtu.

$Price ∆Basis ∆ basis is the change in basis m/m.

$Diff Pipeline differential betw een trade hubs.

+/-∆ Change in differential betw een trade hubs m/m.


14


Natural Gas

Forward Curves

NYMEX AECO Basis AECO Basis Daw n Basis Chicago Basis Dom.S. Basis Sumas Basis

Month Contract ($/mmBtu) ($/mmBtu) (C$/GJ) ($/mmBtu) ($/mmBtu) ($/mmBtu) ($/mmBtu) ($/mmBtu)

1 Dec-17 2.86 1.69 (1.17) 2.01 (1.39) 2.82 (0.05) 2.74 (0.13) 2.02 (0.85) 2.49 (0.38)

2 Jan-18 3.05 1.90 (1.15) 2.25 (1.36) 3.09 0.04 2.99 (0.06) 2.51 (0.54) 3.07 0.02

3 Feb-18 3.17 1.99 (1.19) 2.36 (1.41) 3.22 0.05 3.20 0.03 2.70 (0.47) 3.09 (0.08)

4 Mar-18 3.18 1.98 (1.20) 2.35 (1.42) 3.24 0.06 3.21 0.03 2.75 (0.43) 2.86 (0.32)

5 Apr-18 3.14 1.93 (1.22) 2.29 (1.44) 3.19 0.05 3.04 (0.10) 2.67 (0.47) 2.54 (0.60)

6 May-18 2.91 1.63 (1.28) 1.93 (1.52) 2.83 (0.08) 2.67 (0.24) 2.46 (0.46) 1.90 (1.02)

7 Jun-18 2.89 1.57 (1.32) 1.87 (1.56) 2.67 (0.22) 2.60 (0.29) 2.39 (0.50) 1.83 (1.06)

8 Jul-18 2.92 1.56 (1.36) 1.85 (1.61) 2.67 (0.25) 2.60 (0.32) 2.41 (0.51) 1.83 (1.09)

9 Aug-18 2.95 1.55 (1.39) 1.84 (1.65) 2.67 (0.28) 2.65 (0.29) 2.41 (0.54) 2.17 (0.78)

10 Sep-18 2.95 1.57 (1.38) 1.86 (1.64) 2.67 (0.28) 2.66 (0.29) 2.38 (0.57) 2.19 (0.76)

11 Oct-18 2.93 1.56 (1.37) 1.85 (1.63) 2.64 (0.29) 2.61 (0.32) 2.23 (0.70) 2.16 (0.77)

12 Nov-18 2.96 1.59 (1.37) 1.88 (1.62) 2.67 (0.29) 2.64 (0.32) 2.29 (0.66) 2.13 (0.82)

Source: Bloomberg

2.60

2.80

3.00

3.20

3.40

1 2 3 6 9 12 18 24

$/M

MB

tu

Months

NYMEX Natural Gas (Henry Hub)

y/y

w/w

d/d

7-Nov-16

Source: Bloomberg

1.30

1.80

2.30

2.80

3.30

1 2 3 6 9 12 18 24 36

CA

D/G

J

Months

AECO Natural Gas

y/y

w/w

d/d

7-Nov-16

Source: Bloomberg

(2.00)

(1.80)

(1.60)

(1.40)

(1.20)

(1.00)

(0.80)

(0.60)

(0.40)

(0.20)

-

1.00

1.50

2.00

2.50

3.00

3.50

Spot 2 4 6 8 10 12

AEC

O B

asis

(U

SD

/mm

Btu

)

US

D/m

mB

tu &

CA

D/G

J

Months

NYMEX & AECO Forward Curves

Basis NYMEX AECO

Source: Bloomberg

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1995 2000 2005 2010 2015

AEC

O %

of N

YM

EX

in U

SD

AECO Flat Price as a % of NYMEX


15

Pertinent Data

GeoPark Limited (GPRK-N)

Valuation: Based on our risked NAV ($9.75/share) that also equates to 1.37x our 2P NAV.Key Risks: Commodity prices, exploration, project execution, political/regulatory. Gran Tierra Energy Inc. (GTE-T)

Valuation: Based on our risked NAV (C$5.20/share) that also equates to 6.3x 2018E debt-adjusted CF and 1.36x our 2P NAV.Key Risks: Commodity prices, exploration, project execution, political/regulatory Parex Resources Inc. (PXT-T)

Valuation: Based on our risked NAV ($22.31/share) that also equates to 7.6x 2017E debt-adjusted CF and 1.56x our 2P NAV.Key Risks: Commodity prices, exploration, project execution, political/regulatory. Petrobras (PBR-N)

Valuation: Based on our risked NAV ($11.56/share) that also equates to 1.39x our 2P NAV.Key Risks: Commodity prices, exploration, project execution, political/regulatory. Vermilion Energy Inc. (VET-T)

Valuation: 12.2x 2018E EV/DACFKey Risks: Crude oil and natural gas prices; foreign exchange rates; drilling programsuccess; political/regulatory.

November 7, 2017

16

Appendix A: Important Disclosures

Company Disclosures (see legend below)*

Gran Tierra Energy Inc. G, I, U, VS0223, VS0446Parex Resources Inc. VS0226Petrobras V126Vermilion Energy Inc. G, N1, U

We, Gavin Wylie, Michael Loewen and Patrick Bryden, certify that (1) the views expressed in this report in connection withsecurities or issuers that we analyze accurately reflect our personal views and (2) no part of our compensation was, is, or willbe directly or indirectly, related to the specific recommendations or views expressed by us in this report.

This research report was prepared by employees of Scotia Capital Inc. and/or its affiliates who have the title of Analyst.

All pricing of securities in reports is based on the closing price of the securities’ principal marketplace on the night before thepublication date, unless otherwise explicitly stated.

All Equity Research Analysts report to the Head of Equity Research. The Head of Equity Research reports to the ManagingDirector and Co-Head, Global Capital Markets, who is not and does not report to the Head of the Investment BankingDepartment. Scotiabank, Global Banking and Markets has policies that are reasonably designed to prevent or control thesharing of material non-public information across internal information barriers, such as between Investment Banking andResearch.

The compensation of the research analyst who prepared this report is based on several factors, including but not limited to,the overall profitability of Scotiabank, Global Banking and Markets, and the revenues generated from its various departments,including investment banking, trading fees and other types of transactions. Furthermore, the research analyst’s compensationis charged as an expense to various Scotiabank, Global Banking and Markets departments, including investment banking.Research Analysts may not receive compensation from the companies they cover.

Non-U.S. analysts may not be associated persons of Scotia Capital (USA) Inc. and therefore may not be subject to FINRA Rule2241 restrictions on communications with subject company, public appearances and trading securities held by the analysts.

For Scotiabank, Global Banking and Markets Research analyst standards and disclosure policies, please visitgbm.scotiabank.com/disclosures.

Scotiabank, Global Banking and Markets Research, 40 King Street West, 33rd Floor, Toronto, Ontario, M5H 1H1.

Time of dissemination: November 07, 2017, 16:17 ET. Time of production: November 07, 2017, 16:14 ET. Note: Time ofdissemination is defined as the time at which the document was disseminated to clients. Time of production is defined as thetime at which the Supervisory Analyst approved the document.

*Legend

G Scotia Capital (USA) Inc. or its affiliates has managed or co-managed a public offering in the past 12 months.

I Scotia Capital (USA) Inc. or its affiliates has received compensation for investment banking services in the past 12months.

N1 Scotia Capital (USA) Inc. had an investment banking services client relationship during the past 12 months.

U Within the last 12 months, Scotia Capital Inc. and/or its affiliates have undertaken an underwriting liability with respectto equity or debt securities of, or have provided advice for a fee with respect to, this issuer.

V126 Scotia Capital (USA) Inc. has been retained as the financial advisor to Petrobras International Braspetro B.V., anaffiliate of Petróleo Brasileiro S.A. (Petrobras), with respect to the sale of its equity interest in Petrobras Oil & GasB.V. Scotia Capital (USA) Inc. is a subsidiary of The Bank of Nova Scotia. Scotia Capital (USA) Inc. is a broker-dealerregistered with the SEC and a member of FINRA, NYSE and SIPC.

VS0223 Research Analyst Gavin Wylie visited GTE's local office in Bogota in April 2013. No payment was received from theissuer for the travel-related expenses incurred by the Research Analyst to visit this site.

VS0226 Research Analyst Gavin Wylie visited PXT's local office in Bogota in April 2013. No payment was received from theissuer for the travel-related expenses incurred by the Research Analyst to visit this site.

VS0446 Research Analyst Gavin Wylie visited the Costayaco and Acordionero fields, producing and exploration assets,on January 31, 2017. Partial payment was received from the issuer for the travel-related expenses incurred by theResearch Analyst to visit this site.

November 7, 2017

17

http://gbm.scotiabank.com/disclosures

Rating and Price Target History

Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18

10

9

8

7

6

5

4

3

2

Pric

e (U

SD

)

GeoPark Limited (GPRK-N) as of November 06, 2017 (in USD)

Ratings Legend: FS=Focus Stock; SO=Sector Outperform; SP=Sector Perform; SU=Sector Underperform; T=Tender; UR=Under Review; CS=Coverage Suspended; DC=Discontinued Coverage*Represents the value(s) that changed.

Source: Scotiabank GBM estimates/Scotia Howard Weil estimates; FactSet.

20-Nov-2014Price: 8.10Rating: SOTarget: 13.00

03-Dec-2014Price: 6.31Rating: SOTarget: 11.00*

21-Jan-2015Price: 4.52Rating: SOTarget: 9.25*

02-Feb-2015Price: 3.91Rating: SOTarget: 7.50*


24-Mar-2015Price: 4.01Rating: SOTarget: 7.00*

29-Sep-2015Price: 3.06Rating: SOTarget: 6.50*



11-Jul-2016Price: 3.37Rating: SOTarget: 5.00*

15-Nov-2016Price: 4.45Rating: SOTarget: 5.50*





12-Jun-2017Price: 8.19Rating: SOTarget: 9.50*

13-Oct-2017Price: 9.16Rating: SOTarget: 10.00*

Powered by: BlueMatrix


7

6

5

4

3

2

Pric

e (C

AD

)

Gran Tierra Energy Inc. (GTE-T) as of November 06, 2017 (in CAD)



07-Nov-2014Price: 5.23Rating: SOTarget: 11.00


21-Jan-2015Price: 2.99Rating: SP*Target: 6.50*

02-Feb-2015Price: 2.92Rating: SPTarget: 5.25*

03-Mar-2015Price: 3.24Rating: SPTarget: 5.00*

29-Sep-2015Price: 2.96Rating: SPTarget: 4.50*

14-Dec-2015Price: 2.78Rating: SPTarget: 4.25*

17-Dec-2015Price: 3.03Rating: SO*Target: 4.50*






November 7, 2017

18


18

16

14

12

10

8

6

4

2

Pric

e (U

SD

)

Petrobras (PBR-N) as of November 06, 2017 (in USD)



14-Nov-2016Price: 9.57Rating: I:SPTarget: 12.50

14-Dec-2016Price: 10.40Rating: SPTarget: 13.00*

27-Mar-2017Price: 9.16Rating: SPTarget: 12.50*

29-Jun-2017Price: 7.87Rating: SPTarget: 12.00*



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Parex Resources Inc. (PXT-T) as of November 06, 2017 (in CAD)



03-Dec-2014Price: 7.78Rating: SOTarget: 15.00

09-Jan-2015Price: 6.52Rating: SOTarget: 14.00*



12-May-2015Price: 10.17Rating: SOTarget: 13.00*

05-Aug-2015Price: 8.46Rating: SOTarget: 13.50*









07-Feb-2017Price: 16.06Rating: FS*Target: 23.00*

07-Apr-2017Price: 17.56Rating: FSTarget: 24.00*

29-Jun-2017Price: 14.74Rating: FSTarget: 23.00*



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Vermilion Energy Inc. (VET-T) as of November 06, 2017 (in CAD)



03-Dec-2014Price: 51.99Rating: SOTarget: 75.00






08-Aug-2016Price: 46.86Rating: SOTarget: 56.50*





November 7, 2017

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Definition of Scotiabank, Global Banking and Markets Equity Research RatingsWe have a four-tiered rating system, with ratings of Focus Stock, Sector Outperform, Sector Perform, and SectorUnderperform. Each analyst assigns a rating that is relative to his or her coverage universe or an index identified by the analystthat includes, but is not limited to, stocks covered by the analyst.

The rating assigned to each security covered in this report is based on the Scotiabank, Global Banking and Markets researchanalyst’s 12-month view on the security. Analysts may sometimes express to traders, salespeople and certain clients theirshorter-term views on these securities that differ from their 12-month view due to several factors, including but not limited to theinherent volatility of the marketplace.Ratings

Focus Stock (FS)The stock represents an analyst’s best idea(s); stocks in thiscategory are expected to significantly outperform the average12-month total return of the analyst’s coverage universe or anindex identified by the analyst that includes, but is not limited to,stocks covered by the analyst.

Sector Outperform (SO)The stock is expected to outperform the average 12-month totalreturn of the analyst’s coverage universe or an index identifiedby the analyst that includes, but is not limited to, stocks coveredby the analyst.

Sector Perform (SP)The stock is expected to perform approximately in line withthe average 12-month total return of the analyst’s coverageuniverse or an index identified by the analyst that includes, butis not limited to, stocks covered by the analyst.

Sector Underperform (SU)The stock is expected to underperform the average 12-monthtotal return of the analyst’s coverage universe or an indexidentified by the analyst that includes, but is not limited to,stocks covered by the analyst.

Other RatingsTender – Investors are guided to tender to the termsof the takeover offer.

Under Review – The rating has been temporarilyplaced under review, until sufficient information hasbeen received and assessed by the analyst.

Risk RankingAs of June 22, 2015, Scotiabank, Global Bankingand Markets discontinued its Low, Medium, and Highrisk rankings. The Speculative risk ranking reflectsexceptionally high financial and/or operational risk,exceptionally low predictability of financial results,and exceptionally high stock volatility. The Directorof Research and the Supervisory Analyst jointlymake the final determination of the Speculative riskranking.

Scotiabank, Global Banking and Markets Equity Research Ratings Distribution*

Distribution by Ratings and Equity and Equity-Related Financings*

47.4% 47.2%

5.4%

43.4% 35.8% 12.0%Sector Outperform Sector Perform Sector

Underperform

0%

20%

40%

60%

* As of October 31, 2017. Source: Scotiabank GBM.

Percentage of companies covered byScotiabank, Global Banking and Markets EquityResearch within each rating category.

Percentage of companies within each ratingcategory for which Scotiabank, Global Bankingand Markets has undertaken an underwritingliability or has provided advice for a fee withinthe last 12 months.

For the purposes of the ratings distribution disclosure FINRA requires members who use a ratings system with termsdifferent than “buy,” “hold/neutral” and “sell,” to equate their own ratings into these categories. Our Focus Stock,Sector Outperform, Sector Perform, and Sector Underperform ratings are based on the criteria above, but for thispurpose could be equated to strong buy, buy, neutral and sell ratings, respectively.

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General Disclosures

This report has been prepared by analysts who are employed by the Research Department of Scotiabank, Global Bankingand Markets. Scotiabank, Global Banking and Markets Research produces research reports under a single marketing identityreferred to as “globally branded research” under U.S. rules. This research is produced on a single global research platform withone set of rules which meet the most stringent standards set by regulators in the various jurisdictions in which the researchreports are produced. In addition, the analysts who produce the research reports, regardless of location, are subject to one setof policies designed to meet the most stringent rules established by regulators in the various jurisdictions where the researchreports are produced.

The frequency of reports is determined by the analyst on a case-by-case basis, driven by external market factors and issuerannouncements. Analysts will endeavour to review and publish such estimates and recommendations as soon as possibleafter the release of material information by the issuer or the occurrence of other relevant events. This will typically involve, at aminimum, a summary of quarterly earnings releases.

Scotia Capital Inc. ("SCI"), as principal, and Alberta Investment Management Corporation ("AIMCo"), on behalf of certain of itsclients, have each agreed to sell 2,750,000 common shares ("Common Shares") of TMX Group Limited ("TMX") representingan aggregate of approximately 9.9% of the issued and outstanding Common Shares of TMX as of October 2, 2017. TheCommon Shares are being sold by SCI and AIMCo by way of a trade carried out under exemptive relief from certain provisionsof the Universal Market Integrity Rules granted by the Investment Industry Regulatory Organization of Canada at a gross priceof $67.00 per Common Share. After giving effect to the trade, SCI and AIMCo will each hold less than 5% of the issued andoutstanding Common Shares of TMX and will no longer be entitled to appoint nominees to the board of directors of TMX.

This report is provided to you for informational purposes only. This report is not, and is not to be construed as, an offer to sell orsolicitation of an offer to buy any securities and/or commodity futures contracts.

The securities mentioned in this report may neither be suitable for all investors nor eligible for sale in some jurisdictions wherethe report is distributed.

The information and opinions contained herein have been compiled or arrived at from sources believed reliable, however,Scotiabank, Global Banking and Markets makes no representation or warranty, express or implied, as to their accuracy orcompleteness.

Scotiabank, Global Banking and Markets has policies designed to make best efforts to ensure that the information contained inthis report is current as of the date of this report, unless otherwise specified.

Any prices that are stated in this report are for informational purposes only. Scotiabank, Global Banking and Markets makes norepresentation that any transaction may be or could have been effected at those prices.

Any opinions expressed herein are those of the author(s) and are subject to change without notice and may differ or be contraryfrom the opinions expressed by other departments of Scotiabank, Global Banking and Markets or any of its affiliates.

Neither Scotiabank, Global Banking and Markets nor its affiliates accepts any liability whatsoever for any direct or consequentialloss arising from any use of this report or its contents.

Equity research reports published by Scotiabank, Global Banking and Markets are available electronically via: Bloomberg,Thomson Financial/First Call - Research Direct, Reuters, Capital IQ, and FactSet. Institutional clients with questions regardingdistribution of equity research or who wish to access the proprietary model used to produce this report should contactScotiabank at 1-800-208-7666. A list of all investment recommendations in any financial instrument or issuer that have beendisseminated during the preceding 12 months is available at the following location: gbm.scotiabank.com/disclosures

This report and all the information, opinions, and conclusions contained in it are protected by copyright. This report may not bereproduced in whole or in part, or referred to in any manner whatsoever, nor may the information, opinions, and conclusionscontained in it be referred to without the prior express consent of Scotiabank, Global Banking and Markets.

Additional Disclosures

Canada: This report is distributed by Scotia Capital Inc., a subsidiary of The Bank of Nova Scotia.

Chile: This report is distributed by Scotia Corredora de Bolsa Chile S.A., a subsidiary of The Bank of Nova Scotia.

Colombia: This report is distributed in Colombia by Banco Colpatria Multibanca Colpatria S.A. as authorized by theSuperintendencia Financiera de Colombia to The Bank of Nova Scotia (“Scotiabank”) by Resolution 058 of 2014 and toScotia Capital Inc. by Resolution 0226 of 2015. Said Resolutions authorize Scotiabank and Scotia Capital Inc. to promote andadvertise their products and services through Banco Colpatria Multibanca Colpatria S.A. This report is prepared by analystsemployed by The Bank of Nova Scotia and certain of its affiliates including Scotia Capital Inc.

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http://gbm.scotiabank.com/disclosures

Hong Kong: This report is distributed by The Bank of Nova Scotia Hong Kong Branch, which is authorized by the Securitiesand Future Commission to conduct Type 1, Type 4 and Type 6 regulated activities and regulated by the Hong Kong MonetaryAuthority.

Japan: This report is provided simply as advice and investment decisions shall be made at each investor’s own risk. ScotiaSecurities Asia Limited and any of its affiliates shall not provide compensation for any loss incurred by the reader.

Mexico: The information contained in this report is for informational purposes only and is not intended to influence the decisionof the addressee in any way whatsoever with respect to an investment in a certain type of security, financial instrument,commodity, futures contract, issuer, or market, and is not to be construed as an offer to sell or a solicitation of an offer to buyany securities or commodities futures contracts. Scotiabank Inverlat Casa de Bolsa, S.A. de C.V. is not responsible for theoutcome of any investment performed based on the contents of this research report.

Peru: This report is distributed by Scotia Sociedad Agente de Bolsa S.A., a subsidiary of The Bank of Nova Scotia.

Singapore: For investors in the Republic of Singapore, this document is provided via an arrangement with BNS Asia Limitedpursuant to Regulation 32C of the Financial Advisers Regulations. The material contained in this document is intended solelyfor accredited, expert or institutional investors, as defined under the Securities and Futures Act (Chapter 289 of Singapore).If there are any matters arising from, or in connection with this material, please contact BNS Asia, located at 1 Raffles Quay,#20-01 North Tower, One Raffles Quay, Singapore 048583, telephone: +65 6305 8388. This document is intended for generalcirculation only and any recommendation that may be contained in this document concerning an investment product doesnot take into account the specific investment objectives, financial situation, or particular needs of any particular person, andadvice should be sought from a financial adviser based in Singapore regarding the suitability of the investment product,taking into account the specific investment objectives, financial situation, or particular needs of any person in receipt of therecommendation, before the person makes a commitment to purchase the investment product.

United Kingdom and the rest of the European Economic Area: Except as otherwise specified herein, this report is distributed byScotiabank Europe plc, a subsidiary of The Bank of Nova Scotia. Scotiabank Europe plc complies with all requirements underthe EU Market Abuse Regulation concerning investment recommendations.

United States: This report is distributed by Scotia Capital (USA) Inc., a subsidiary of Scotia Capital Inc., and a registered U.S.broker-dealer. All transactions by a U.S. investor of securities mentioned in this report must be effected through Scotia Capital(USA) Inc.

Non-U.S. investors wishing to effect a transaction in the securities discussed in this report should contact a Scotiabank, GlobalBanking and Markets entity in their local jurisdiction unless governing law permits otherwise.

™ Trademark of The Bank of Nova Scotia. Used under license, where applicable. Scotiabank, together with "Global Bankingand Markets," is a marketing name for the global corporate and investment banking and capital markets businesses of TheBank of Nova Scotia and certain of its affiliates in the countries where they operate, including Scotia Capital Inc., Scotia Capital(USA) Inc., Scotiabanc Inc., Citadel Hill Advisors L.L.C., The Bank of Nova Scotia Trust Company of New York, ScotiabankEurope plc, Scotiabank (Ireland) Designated Activity Company, Scotiabank Inverlat S.A., Institución de Banca Múltiple, ScotiaInverlat Casa de Bolsa S.A. de C.V., Scotia Inverlat Derivados S.A. de C.V. – all members of the Scotiabank Group andauthorized users of the mark. The Bank of Nova Scotia is incorporated in Canada with limited liability. Scotia Capital Inc. isa member of the Canadian Investor Protection Fund and regulated by the Investment Industry Regulatory Organization ofCanada. Scotia Capital (USA) Inc. is a broker-dealer registered with the SEC and is a member of FINRA, NYSE, NFA andSIPC. Scotiabank Europe plc is authorized by the Prudential Regulation Authority and regulated by the Financial ConductAuthority and the Prudential Regulation Authority. Scotiabank Inverlat, S.A., Scotia Inverlat Casa de Bolsa, S.A. de C.V., andScotia Derivados, S.A. de C.V., are each authorized and regulated by the Mexican financial authorities.

© The Bank of Nova Scotia 2017

This report and all the information, opinions, and conclusions contained in it are protected by copyright. This report may not bereproduced in whole or in part, or referred to in any manner whatsoever, nor may the information, opinions, and conclusionscontained in it be referred to without prior express consent.

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™ Trademark of The Bank of Nova Scotia. Used under license, where applicable. Scotiabank, together with “Global Bankingand Markets,” is a marketing name for the global corporate and investment banking and capital markets businesses of TheBank of Nova Scotia and certain of its affiliates in the countries where they operate, including Scotia Capital Inc. Scotia CapitalInc. is a Member of the Canadian Investor Protection Fund.

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