parex resources corporate_presentation january 2015 london

January 2015Corporate Presentation

PAREXRESOURCES.COM | TSX:PXT

Leveraging Portfolio Flexibility

Financial

Q4 2014 Production ~26,580 bopd

2014 Production ~22,515 bopd

Q3 Funds Flow (Sales 24,490 bopd) US $89 MM

Reserves 2P (June 30, 2014) 58 MMboe(1)

2P Reserve Life Index (RLI) of 6.7 years

NPV 10 AT $1,326 MM

Capital Structure

Market capitalization at $7/share ~Cdn$945 MM

Net Bank Surplus(2) (Credit Facility $175 MM) US$ 3.0 MM

Common shares outstanding (TSX listed, added to S&P/TSX Composite Index in June 2014)

Basic 134.7 MM

Fully Diluted 143.9 FD(3) MM

Snapshot

(1) Parex net working interest, as per the independent reserve report prepared by GLJ Petroleum Consultants Ltd. effective June 30, 2014.(2) Defined as bank debt minus working capital(3) Fully diluted shares does not include out of the money options based on a share price of $10.50

22015: Leveraging Portfolio Flexibility

Colombia Focused

3

VIM-1

VMM-9

VMM-11

Morpho

Capachos

LLA-10

LLA-40

LLA-57

LLA-24

LLA-30

LLA-29

LLA-16 LLA-17

Los Ocarros

LLA-34

LLA-32

LLA-26

El Eden

El Porton

Cerrero

Cabrestero

Meta River

Mag

dale

na R

iver

Ocensa

LLA-20

Santa MartaBarranquilla

Cartagena

Covenas

Medellin

BOGOTA

VENEZUELA

COLOMBIAO

DC

OBC

Barrancaberm

eja

Ocensa

Significant land base 2.75 mm gross acres Working interest in 23 blocks

Diversified production base

Experienced operator ~120 wells drilled

58 mmbbls in 2P Reserves 78 2P locations

Cebucan

/BLOCK

*Certain lands are subject to farm-in-agreement earnings terms and/or regulatory approval.


($0.50)

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

($100)

$0

$100

$200

$300

$400

2009 2010 2011 2012 2013 2014E

Fund

s Fl

ow ($

/sha

re)

Fund

s Fl

ow ($

MM

)

Funds Flow Growth Debt AdjustedFunds Flow

LHSFunds Flow per share

RHS

Track Record of Consistent Growth

4

$0.00

$4.00

$8.00

$12.00

$16.00

$0

$400

$800

$1,200

$1,600

$2,000

2009 2010 2011 2012 2013 June 2014

3P N

PV10

AT

per s

hare

3P N

PV10

AT

($M

M)

NPV Growth Debt Adjusted3P NPV10AT (USD) - LHS

3P NPV10AT per share (USD) - RHS

3P NPV10AT per share (CAD) - RHS

0.00

0.20

0.40

0.60

0.80

0

20

40

60

80

100

2009 2010 2011 2012 2013 June 2014

Rese

rves

per

sha

re

Rese

rves

(MM

boe)

Reserve Growth Debt Adjusted

Possible - LHS

2P - LHS

3P Reserve per share - RHS

2P Reserve per share - RHS

Q4

20

14E

0

40

80

120

160

200

0

5,000

10,000

15,000

20,000

25,000

2009 2010 2011 2012 2013 2014E

Prod

ucti

on p

er s

hare

Prod

ucti

on (b

opd)

Production Growth Debt AdjustedProduction (bopd)

LHSProduction per share

RHS


2015 Guidance: Self Funded 18% Growth

5

Brent Oil Price Scenario $50-$60 per barrel

Maintenance Capital $70-$75 Exploration Commitments $75-$80

2015 Base Capital $145-$155

Discretionary Growth Capital ScenarioGrowth Capital: Exploration Follow-Up Discretionary Exploration - PXT Operated

$25

$50

Seismic - Q4 Option $20 Optional Positioning Capital Up to $95

(USD millions)

Brent Price $50/bbl $55/bbl $60/bbl

Cash Netback $13-$15/bbl $15-$17/bbl $18-$20/bbl

Ability to change 2015 capital expenditures to match cash flow.

Overall, we expect the 2015 cash netbacks per barrel of:


Grow & Diversify Production

Fourth Quarter production averaged 26,580 bopd

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 est.

0

3

6

9

12

15

18

21

24

27

Bo

pd

(00

0) b

y b

lock

2010 2011 2012 2013 2014

LLA-16 LLA-20 Los Ocarros Cabrestero LLA-32 LLA-34 LLA-30 Other


Proved + Probable + Possible

Proved + Probable Proved2P Reserves Life

Index (1) (2)

After Tax PV10(3)

(USD MM)

Reserves* MMboe

31-Dec -09 - - - - -

31-Dec -10 10.4 5.8 1.1 - $149

31-Dec-11 17.6 10.7 4.9 2.6x $344

31-Dec-12 23.1 16.1 10.1 3.5x $450

30-Jun-13 36.4 23.7 14.1 4.2x $614

31-Dec-13 49.9 32.0 17.4 5.1x $832

30-Jun-14 90.6 57.6 31.9 6.7x $1,326

Track record of progressing reserves from 3P to cash flow

Focus on increasing reserve life index (RLI) & sustainability

Building A Sustainable Business

(1) Year-end RLI calculated using 2P year-end reserves divided by Q4 production annualized(2) Mid-year RLI calculated using 2P year-end reserves divided by annualized Q2 production at June 30, 2013 and estimated second quarter (Q2) exit rate production of 23,500 bopd annualized at June 30, 2014. (3) Value based on GLJ ‘s Ice Brent Price Forecast : US $107.50 in 2015 , US $105.00 in 2016 and US $102.50 in 2017

*Reserves are independently evaluated by GLJ Petroleum Consultants Ltd.


Median Llanos100 acres

Kona 300 acres

Akira / Tigana500 +3000 acres

Oil Water Sandstone Shale

Las Maracas300 acres

Bottom water drive Edge water drive Edge water drive

Progressively Larger Discoveries

8

2. Drive

1. Size


Llanos Plains Structural Pool Sizes (IHS)

Pmean = 3.9 MMBOP50 = 2.0 MMBO

Good fit to a logarithmic distribution – Mature distribution40% of discoveries made since 2010Conforms to Parex Llanos initial assumptionParex discoveries include Kona, Las Maracas

Parex Structural Discovery (Avg 2P= 2.7 MMBO)

92015: Leveraging Portfolio Flexibility*Reserves are independently evaluated by GLJ Petroleum Consultants Ltd.

10

2P

Re

se

rve

s M

MB

O 50

60

20

30

40

200

8 *

198

9 *

2011

201

020

13

201

220

07

*

201

0

10

* Drilled on structural anomalies but now acknowledged to have a significant stratigraphic elements

Llanos Stratigraphic Pools: Significant Gaps in the 20-90 MMBO Range

2015: Leveraging Portfolio Flexibility*Parex Reserves are independently evaluated by GLJ Petroleum Consultants Ltd.

Tigana Guadalupe & Mirador likely both fit into this gap

20

60

80

100

40

120

140

160

2P

Re

se

rve

s M

MB

O

Parex Exploration Life Cycle

Continue to deliver on our strategy to expand the asset base and addedmeaningful positions for future sustainable growth

DevelopConcept

AcquireLand

TestConcept

Initial Development

Expand Land

Exploitation

Traditional 3-Ways

Low Side Closures

Stratigraphic Traps

New Plays

LLA-26, Cebucan

LLA-24, LLA-30, Akira, Tigana

Cabrestero, LLA-34, LLA-10

Magdalena Basin, Llanos Deep, Capachos


Cabrestero (100% WI, Operator)

Akira – development drilling; swing producer

LLA 34 (55% WI, Non-operated)

Large discoveries at Tua & Tigana

Significant development focus for 2015+

LLA-32 (70% WI, Operator)

Kananaskis, Carmentea & Calona discoveries

Follow-up appraisal drilling and exploration

Southern Llanos: New Play Trends

Explore core position, appraise & develop discoveries, and leverage Parex’ costs and exploration know-how

2013 3D SeismicDiscoveries 2010/11 Seismic

12

Cabrestero

LLA-32

Santiago

Max

Tarotaro

LLA-34Tigana Sur

Tua

Akira

Balay

El Palmar

Los Trompillos

Maniceño -Bandola

Kitaro

Tigana

Kananaskis

Carmentea

Drillable exploration prospects on new 3D seismic for 2015



Southern Llanos: 2015 Focus

13

Chenchena

Chenchena Sur

Chiricoca

Tilo

Jacana Mochuleo

PXT-B

MaxNorte

TIGANA TAROTARO

ARUCO

TUA

AKIRA

Aruco Norte

Prospects

2014 Drill

KANANASKIS

Capachos (50% WI, Operator)1

Development & exploration opportunities

ANH royalty contract

Large structure, light oil, 2 mmbbls produced from 2 wells

Leverages our strengths:

low cost drilling

strong operator

working with communities

Capachos Farm-in: Ecopetrol Partnership

14

Capachos Sur-1

Capachos-1

Prospect/Extension

Capachos

LLA-16

LLA-40

LLA-17

LLA-57

LLA-10

1) Working interests are subject to regulatory approval.


Middle Magdalena Basin

VMM-11

Morpho

Ocensa Pipeline

VMM-9

40 km

VMM-9 & VMM-11 (100% WI, Operator)

Testing of new play concepts:

Cold heavy oil production (CHOPS)

Conventional structure/sub-thrust

La Luna unconventional play

Builds on management’s success with Petro Andina in Argentina’s Neuquén Basin

Morpho (100% WI, Operator)

Over 2000’ of gross sands with potential pay in two zones

Morpho-1 well produced ~80 bopd of 38o API clean oil without decline for greater than one year

Next: 2D seismic + new well & optimized frac program

Middle Magdalena Basin: New Play Concepts

New Play Concepts: applying proven technology in Colombia

Discoveries

15

Nare

Palagua

Cocorna

PP Velasquez


Middle Magdalena New Play Concepts

Play Types1. Tertiary Structure

(CHOPS/Hztl Drills)2. Foothills/Subthrust

(Light Oil)3. Eocene Subcrop Plays

(CHOPS/Hztl Drills)4. Unconventional La Luna

(Hztl Multi-Fracs)

1. Teriatry Structure Fairway

(CHOPS)

2. Foothills/Subthrust Plays

Multiple play types, in close proximity, on the same 3D seismic volumes

16

OPON

3. Eocene Subcrop Edge

4. La Luna Resource Play


VMM 11

Velasquez/Palagua FieldCum Production: 199 MMboe

Teca-Nare FieldCum Production: 115

MMboe

Lead 2

Lead 1

Lead 3

Glauca Prospect

2014 3D Acquisition

Producing Field

Parex Block

Prospect/Lead

Faults

VMM 11 Leads & Prospects


Operating Netback: Colombia Premium

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q30

20

40

60

80

100

120

140

$63 $71 $67 $71

$82 $73 $71 $69 $67

$58 $64 $61 $62 $62 $53

$26 $22

$22 $23

$26

$26 $29 $29 $27 $28

$29 $29 $28 $28 $30

$7 $12

$8 $8

$9

$8 $8 $8 $15 $14

$14 $12 $14 $15

$11

Rea

lize

d P

rice

(U

S $

/bb

l)

Price

Royalties

Costs

Parex’ Take

2011 2012 2013 2014

Brent PriceUS $/BBL

RoyaltiesOpex &Transportation

OperatingNetback


Proven Management’s track record

Exposure to Brent Oil Pricing LATAM exposure

Self-funded growth

Parex’ Value Proposition


Appendix – Block Summary

1) Working interests are subject to regulatory approval.2) Farm-in agreement for 50% participating interest in the block, excluding Curiara Area, subsequent to fulfilling certain obligations.3) Morpho is subject to a 4% Net Profit Interest.4) Farm-out agreement awarding 51% participating interest subsequent to fulfilling certain obligations.

BlockOperated/

Non-OperatedWorking Interest Partners Gross Acres Basin

LLA-10 Operated 50% Petro America 189,544 Llanos

LLA-16 Operated 100% N/A 157,611 Llanos

LLA-17 Operated 63% Geopark 108,726 Llanos






LLA-32 Operated 70% Apco & Geopark 100,325 Llanos

LLA-34 Non-Operated 55% Geopark 82,286 Llanos

LLA-40 Operated 50% Apco 163,090 Llanos


Cabrestero Operated 100% N/A 29,562 Llanos

Capachos(1) Operated 50% Ecopetrol 64,175 Llanos

Cebucan Operated 100% N/A 109,150 Llanos

Cerrero(1) Operated 65% Perenco 108,973 Llanos

El Eden Operated 60% Petro America 109,249 Llanos

El Porton(2) Operated 50% Petro America 109,476 Llanos

Los Ocarros Operated 50% Petro America 110,436 Llanos

VIM-1 Operated 100% N/A 223,651 Lower Magdalena

Morpho(3) Operated 100% N/A 51,398 Middle Magdalena

VMM-9 Operated 100% N/A 152,314 Middle Magdalena

VMM-11 Operated 100% N/A 116,826 Middle Magdalena

Moruga(4) - (Trinidad) Operated 32.8%Caribbean Rex &

Touchstone7,443 -

20

2014 2013 2012

Q3 Q2 Q1 FY Q4 Q3 Q2 Q1 FY Q4 Q3 Q2 Q1

OPERATING

Production (thousands of bopd) 25.2 19.9 18.4 15.9 17.3 16.2 15.5 14.4 11.4 12.7 10.9 10.4 11.7

Average realized prices, prior to hedging 94 105 103 104 102 106 99 110 109 106 108 108 117

Brent Price ($/bbl) 104 110 108 109 109 110 103 112 112 110 110 108 119

Operating Netback ($/bbl) 53 62 61 63 61 64 58 67 73 69 71 73 82

Cash Netback ($/bbl) 39 46 45 47 48 46 45 50 56 47 42 58 75

FINANCIAL (millions of US dollars, except per share amounts)

Sales of crude oil 229 183 180 637 167 157 148 165 524 150 131 113 130

Funds flow from operations 89 77 77 270 76 68 66 60 242 54 42 61 84

Per share – basic 0.70 0.70 0.70 2.49 0.70 0.63 0.61 0.56 2.23 0.50 0.39 0.57 0.77

Net income (loss) 17 11 10 13 22 (28) 8 11 40 (16)

8 21 27

Per share – basic 0.13 0.10 0.09 0.20 0.20 (0.26) 0.07 0.10 0.37 (0.15)

0.07 0.19 0.25

EBITDA 114 84 97 325 92 82 80 72 258 46 62 68 83

Cash and cash equivalents 34 63 40 57 57 26 45 27 32 32 27 51 121Working Capital 45 31 37 24 24 19 9 17

(13) (13) (9)

(0.6)116

Net Debt (Surplus) (1) (3) 110 29 70 70 85 104 88 107 107 94 86 (31)

Capital Expenditures 57 95 62 234 59 50 78 47 268 65 51 93 59

Weighed average shares outstanding 126 111 109 108 108 108 108 109 108 108 108 108 108

Weighed average shares outstanding, diluted 130 122 111 124 124 108 130 129 126 110 109 117 118

TRADING STATISTICS (CAD)

(based on intra-day trading)

High 15.49 13.25 9.50 6.8 6.80 6.30 4.89 6.50 8.67 6.03 5.18 7.15 8.67

Low 11.98 9.33 6.59 4.05 5.60 4.10 4.05 4.39 4.07 4.27 3.85 4.29 6.49

Close (end of period) 12.45 12.55 9.50 6.58 6.58 5.83 4.12 4.63 5.80 5.80 4.83 4.72 7.04

Average daily volume (thousands) 602 556 360 216 258 193 203 210 236 235 148 335 264

Appendix – Summary of Quarterly Results (Unaudited)

(1) Defined as Bank Debt + Convertible Denture Face Value ( C$ 85 million) - Working CapitalBank credit facility currently has a borrowing base of US $175 million

Debentures were converted at C$10.15 for an aggregated of 8,339,991 shares during August and September


Certain statements in this document are “forward-looking statements”. Forward-looking statements are frequently

characterized by words such as “prospective”, “plan”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “forecast”,

or other similar words, or statements that certain events or conditions “may” or “will” occur. Forward-looking statements are not

based on historical facts but rather on the expectations of management of the Company ("Management") regarding the

Company's future growth, results of operations, production, plans for and results of drilling activity, business prospects and

opportunities. Such forward-looking statements reflect Management's current beliefs and assumptions and are based on

information currently available to Management. In particular, this document contains forward-looking statements regarding, but

not limited to, the Company's expected production rates and Parex' drilling plans. Forward-looking statements involve

significant known and unknown risks and uncertainties. A number of factors could cause actual results to differ materially from

the results discussed in the forward-looking statements including the risks associated with negotiating with foreign

governments as well as country risk associated with conducting international activities, competition, the ability to generate

revenue and exploit operating margins, capital resources, the use of certain technologies and materials, annual impairment

tests, labour relations, insurance, damage from weather and other disasters, operating and maintenance risks and

environmental risks, new information regarding reserves, changes in demand for and volatility of commodity prices of oil and

natural gas, failure to receive all required regulatory approvals for acquisition, the risk that the acquisition may not be

completed as contemplated or at all, legislative, regulatory and political changes, the risks discussed under "Risk Factors" in

Parex' annual information form for the year ended December 31, 2013 and other factors, many of which are beyond the control

of the Company. The risks outlined should not be construed as exhaustive. Although the forward-looking statements contained

in this document are based upon assumptions which Management believes to be reasonable, the Company cannot assure

investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are

made as of the date hereof, and the Company assumes no obligation to update or revise them to reflect new events or

circumstances, except as required by law.

Statements relating to “reserves” are by their nature forward-looking statements, as they involve the implied assessment,

based on certain estimates and assumptions that the reserves described can be profitably produced in the future.

With respect to forward-looking statements contained in this presentation, the Company has made assumptions regarding:

future exchange rates; the price of oil and natural gas; the impact of increasing competition; conditions in general economic

and financial markets; availability of equipment; availability of skilled labour; current technology; cash flow; commodity prices;

production rates; timing and amount of capital expenditures; royalty rates; effects of regulation by governmental agencies;

future operating costs; receipt of all required regulatory approvals for the acquisition; successful completion of the acquisition;

and the Company's ability to obtain financing on acceptable terms. Management has included the above summary of

assumptions and risks related to forward-looking information provided in this presentation in order to provide shareholders

with a more complete perspective on the Company's future operations and such information may not be appropriate for other

purposes.

This is not an offer to sell or a solicitation of an offer to purchase securities by Parex. Before making an investment,

investors should refer to the Offering Documents for more complete information, including investment risks, fees and expenses

and should also thoroughly and carefully review Parex' public disclosure documents available on SEDAR at www.sedar.com

with their financial, legal and tax advisors to determine whether an investment is suitable for them.

Legal Advisory How to Reach UsParex Resources Inc.2700 Eighth Avenue Place, West Tower

585 8th Av SW

Calgary AB T2P 1G1

Canada

Tel: 403-265-4800

Fax: 403-265-8216

Email: [email protected]

www.parexresources.com

Michael KruchtenVice President, Investor Relations & Corporate Planning


mailto:[email protected]

http://www.parexresources.com/