Parex Resources Corporate Presentation May 9 2014

March 2014Corporate Presentation

PAREXRESOURCES.COM | TSX:PXT

BuildingTheRunway

Significant land base (2.02mm gross acres)

Diversified production base

Experienced operator (100 wells drilled)

Historical exploration success rate (50%)

Legend

Corporate Presentation March 2014 2

Columbia Focused

Objectives

Q4 2013 Operating Netback $60.78/bbl

Q4 2013 Production -17,287 bopd

2014FY Guidance 17,500-18,500 bopd

Reserves 2P (Dec. 31, 2013) 32 MMboe1

Doubled 2P reserves over 2012 year-end

Capital Structure

Market capitalization at $9.00/share -Cdn$978 MM

Convertible debenture PXT.DB Cdn$85 MM(5.25% coupon & $10.15/share conversion with 2016 maturity)

Common shares outstanding (TSX listed)

Basic 108.7 MM

Fully Diluted 118.3 FD2 MM

Snapshot

(1) Parex networking interest, as per the independent reserve report prepared by GLJ Petroleum Consultants Ltd. effective December31, 2013.(2) Fully diluted shares does not include out of the money options, RSUs and convertible debenture potential shares based on a share price of $8.00


Existing Fields: Development & Appraisal Drilling -16,000 bopd

Exploration Drilling 1,500-2,500 bopd

New Play Concepts (types: heavy oil, tight sands, stratigraphic) “upside”

2014 Production* 17,500-18,500 bopd

*First quarter production to average approximately 18,300-18,700 bopd

2014 Guidance

Delivering cash flow funded 15% year-year production growthAvailable to supportExploration Success


#Wells Capex (Net $ million)

Gross Net Wells Facilities Other Total

Development /Appraisal (existing fields) 15 9.6 $54 $34 $2 $90

Exploration (proven plays) 19 11.5 $96 $20 $9 $125

New Play Concepts 3 2.3 $21 $5 $9 $35

Base (Firm) Total 37 23.4 $171 $59 $20 $250

Appraisal (Contingent) 8 4.7 $18 $12 $0 $30

2014 Planned Activity


Colombia: Diversified & Extensive Asset BaseBlock Production Exploration

Development & Appraisal

New Play Types

Cabestero

Cebucan

El Eden

LLA-24

LLA-26

LLA-29

LLA-30

LLA-40

LLA-57

Los Ocarros

Morpho

VMM-11

LLA-32

LLA-34

Gross Wells 19 15 3 Total 37

Track record of reserve category progression

Increasing reserve life index (IRL) & sustainability

Building A Sustainable Business

June 30, 2013 Company’s reported reserves were 3P-36.4 Mmboe, 2P-23.7 Mmboe and 1P-14.1 Mmboe(1) RLI calcuted using 2P year-end reserves divided by Q4 production annualized

*Reserves are independently evaluated by GLJ Petroleum Consultants Ltd.


Proved + Probable + Possible

Proved + Probable Proved2P Reserves Life

Index (1)

After Tax PV10 (USD MM)

Reserves* MMboe

31-Dec 09 - - - - -

31-Dec 10 10.4 5.8 1.1 - $149

31-Dec 11 17.6 10.7 4.6 2.6x $344

31-Dec 12 23.1 16.1 10.1 3.5x $450

31-Dec 12 49.9 32.0 17.4 5.1x $832

Cash Flow Funding Growth

Note: 2014 FFO Forecast is an estimate based on $105/bbl Brent and the mid-point of current production guidance


Capex FFO Capex FFO Capex FFO Capex FFO$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2011 2012 2013 2014

AverageProduction

Funds FlowAcquisition(FFO)

AcquisitionCapitalExpenditure(Capex)

$M

M

An

nu

al P

rod

uc

tio

n (

bo

pd

)

Grow & Diversify Production

2014 Production Guidance is 15% higher than 2013


Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY0

2

4

6

8

10

12

14

16

18

20

2010 2011 2012 2013 2014

2014 Guidance*17,500 – 18,500

bopd FYLLA-16 LLA-20 Los Occarros Carbrestero LLA-32 LLA-34 LLA-30 Other

Parex Exploration Life Cycle

In 2013, we delivered on our strategy to expand the asset base and addedMeaningful positions for future sustainable growth


DevelopConcept

AcquireLand

TestConcept

Initial DevelopmentExpand

LandExploitation

Traditional 3-Ways

Low Side Closures

Stratigraphic Traps

New Plays

LLA-26Cebucan

LLA-24, LLA-29, & LLA-30

CarbresteroLLA-34

VMM-11, Morpho, Tight Sands

Characterized by:Parex’ deep basin knowledge & operational experience

Producing light oil 30-37º API from 5 fields

Productive reservoirs: C7, Mirador, Gacheta& Une

Ability to use fields as swing producers to manage quarterly growth.

2014 ActivityExplore on blocks untested by Parex

9 exploration wells on LLA-26/40/57 and Cebucan

Manage existing production

2 development wells Ongoing recompletion program

Traditional Llanos Structures

Continue to exploit and manage producing fields

Reserves are independently evaluated by GLJ Petroleum Consultants Ltd.


Acquired blocks in 2012 to develop concepts

and prove-up in 2013 with discoveries

Cabrestero (100% WI, Operator)

Akira - new play type low side closures

Significant development focus in 2014

LLA 34 (45% WI, Non-operated)

Increased new prospect inventory through 3D seismic acquisition on western side

Significant development focus

2014 Activity

6 exploration wells

12 development wells on LLA-34 & Cabrestero

Southern Llanos: Low Side Closures

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


LLA-29 (100% WI, Operator)

Land access secured:

Two exploration wells in 2014


New Discoveries 2013:

Adalia-1 38° API at 1,000 bopd

Adalia-2 waiting on completion

Adalia-3 initial test of 38° API at 1,000 bopd (indicativerate with ESP)

Exploration well in 2014


New block for Parex:

Exploration well in 2014 & test concepts

New Play Type: Stratigraphic/Channels

First drilled in 2013 and analyzing stratigraphic concepts. Drilling off structure prospect to prove-up concept.


VMM-11 (60% WI, Operator)

Farm-in to drill one well

Testing of new play concepts for cold heavy oil

production (CHOPS)

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

Morpho (100% WI, Operator)

Light oil tight sand play

Acquired remaining 50% and operatorship in 2013

Block land held by production – producing 90 bopd

of 38° API

2014 plan is to:

Define play area

Refine completion strategy based on WCSB

analogies

New Play Concepts

New Play Concepts: applying proven technology in Colombia


Expanding Capacity

Crude Oil Pipeline – Key Projects

1. San Fernando - Monterrey System: +390 mbod

2. Bicentenario Phase 1: +120 mbod

3. Magdalena Medio System: +75 mbod

4. Caño Limón - Coveñas: +55 mbod

New take-away capacity exceeds basin production growth


Source: Ecopetrol, 2013

2010 2011 2012 2013 2014 2015 20160

500

1000

1500

2000

2500

Colombian demand vs. Capacity* (mbd)

LLA-16

LLA-16

LLA-16

LLA-16

LLA-16

LLA-16

LLA-16

LLA-16

Current Production

Operating Netback: Colombia Premium


Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q40

20

40

60

80

100

120

140

6371 67 71

8273 71 69 67

58 64 61

2622

2223

23

26 26 2927

2829

29

712

88

98 8 8 15

1414

12

2011 2012 2013

Price

Fiscal

Costs

Parex’Take

Q1 2014 5,00 bpdhedged>$105/bbl

Brent Price$/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 financial obligations.3) Risk Sharing Contract – gross acres is the drainage area of Guariquies-1 well. Parex’ production rights are 45% WI. Morpho is also subject to a 4% Net Profit Interest.4) Farm-out agreement awarding 51% participating interest subsequent to fulfilling certain financial obligations.


BlockOperated/Non-Operated

Working Interest Partners Gross Acres Basin Initial Royalty Rate

Colombia

LLA-16 Operated 100% N/A 157,611 Llanos 9%

LLA-17 Operated 40% Geopark & Verano 108,726 Llanos 9%


LLA-24(1) Operated 70% Sorgenia 147,100 Llanos 9%

LLA-26(1) Operated 80% Sorgenia 184,061 Llanos 9%



LLA-32 Non-Operated 30%Verano, Apco & Geopark

100,325 Llanos 9%

LLA-34 Non-Operated 45% Geopark & Apco 82,286 Llanos 9%

LLA-40 Operated 50% Apco 163,090 Llanos 9%


Cabrestero Operated 100% N/A 29,562 Llanos 8%

Cebucan Operated 100% N/A 109,150 Llanos 8%

El Eden Operated 60% Petro America 109,249 Llanos 8%

El Porton(2) Operated 50% Petro America 109,476 Llanos 8%

Los Carros Operated 50% Petro America 110,436 Llanos 8%

Guariques(3) Non-Operated 50% Ecopetrol N/A Middle Magdalena 8%

Morpho(1) Operated 100% N/A 51,398 Middle Magdalena 8%

VMM-11(1) Operated 60% Green Power 116,826 Middle Magdalena 9%

Trinidad

Moruga(3) Operated 32.8% Primera Energy 7,443 - -30%

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 2013 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, 2012 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 Us

Parex Resources Inc.1900 - 250 Second Street S.W.,

Calgary, Alberta, Canada T2P 0C1

Tel: 403-265-4800

Fax: 403-265-8216

Email: [email protected]

www.parexresources.com

Michael KruchtenVice President, Investor Relations& Corporate Planning


Parex Resources Corporate Presentation May 9 2014

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Transcript of Parex Resources Corporate Presentation May 9 2014