Two gas projects to nearly triple gas production by Dec 2018(1) - September 2017
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September 2017 Two gas projects to nearly triple gas production by Dec 2018(1) (1) From 85 → 230 MMcf/d, or 2.7x
Forward Looking Statements
Gas deficit
This presentation may include certain forward looking statements. All statements
20 blocks / other than statements of historical fact, included herein, including, without
2.2 MM net acres limitation, statements regarding future plans and objectives of Canacol Energy
Ltd. (“Canacol” or the “Corporation”), are forward‐looking statements that
Natural Gas
involve various risks, assumptions, estimates, and uncertainties. These statements
reflect the current internal projections, expectations or beliefs of Canacol and are
based on information currently available to the Corporation. There can be no
Shale oil
assurance that such statements will prove to be accurate, and actual results and
future events could differ materially from those anticipated in such statements.
All of the forward looking statements contained in this presentation are qualified
by these cautionary statements and the risk factors described above.
Furthermore, all such statements are made as of the date this presentation is
Light oil given and Canacol assumes no obligation to update or revise these statements.
Shale oil
Barrels of Oil Equivalent
S. Pacific Ocean
Barrels of oil equivalent (boe) is calculated using the conversion factor of 5.7 Mcf
Colombia
(thousand cubic feet) of natural gas being equivalent to one barrel of oil. Boes
may be misleading, particularly if used in isolation. A boe conversion ratio of 5.7
Heavy oil Mcf:1 bbl (barrel) is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value equivalency at the
wellhead.
Light oil Production and Reserves
Production represents net before royalty
Reserves represent 2P reserves and before tax NPV‐10 as of December 31, 2016
Ecuador
USD
All dollar amounts are shown in US dollars, unless indicated otherwise
140 280 420 560
Km 2
2
FOCUS: The Path To ~$300 MM EBITDA TSX: CNE | BVC: CNE.C
In MM, except CDN $/share amounts
TSX $/share (9/12/17) CDN $4.04 • ‘17 corporate production guidance
• ↑ gas production 85 → 130 MMcf/d (Dec ’17 exit)
Fully diluted shares outstanding(1) 177
• Fully funded capex $89 MM
Market capitalization(2) US $590 • Production 18‐19k boepd
Net debt(3) $230 % gas 81%
Enterprise value US $820
Insider ownership 22% • ‘18 gas production guidance
(1) Includes in‐the‐money options based on CDN $4.04 / share price • ↑ gas production 130 → 230 MMcf/d (Dec ’18 exit)
~140 MM shares in the float
(2) Converted from CDN → USD exchange rate (0.825) as of 9/12/17
(3) As of 6/30/17 3
Strong Track Record Of Asset Optimization
Added 314 BCF in 2P reserves over the trailing 3‐yrs.
+52% CAGR in 2P reserves • A conventional gas success story
In MMboe(1)
oil gas
• Recent 2P NPV‐10 $1.2 B(2)
85
79 • Gas exploration success 8/9 wells (89%)
13 • 1P / 2P reserve 166% /
14 replacement 194% y/y
• Avg. F&D cost $0.44 / MCF(3)
43
85%
35 72 gas • The lowest cost gas operator always wins
23 65
For the 3 months ended 6/30/17
18
$ / MCF % margin
Natural gas revenues $ 4.96
18 17 20 Royalties $ (0.64) 13%
8 11
7 Production expenses $ (0.36) 7%
'09 '10 '11 '12 '13 '14 '15 '16 Operating netback $ 3.96 80%
Oil Gas
In US dollars unless otherwise noted
(1) Represents before tax corporate total (oil + natural gas) 2P reserves value as of 12/31/16
(2) Represents before tax natural gas only 2P reserves value as of 12/31/16 4
(3) Average over the trailing 2‐yr. period
Two Gas Projects To Nearly Triple Gas Production By Dec ‘18
Chuchupa
Ballena
Barranquilla
1 Sabanas +40 MMcf/d
Pipeline Co.
Caribbean Sea Caracoli 130 MMcf/d
Dec ‘17
Paiva • $40 MM pipeline; announced $30 MM
Cartagena
Reficar
private financing
Filadelfia
• In Aug ‘17, build 6‐in. pipeline Jobo →
Sincelejo
La Creciente
1 2
+100 MMcf/d
2
230 MMcf/d
Jobo facility Dec ‘18
• Twin Jobo → Sincelejo pipeline
8 gas fields
5 blocks
• Construct new pipeline Cartagena→
1.1 MM net acres
Barranquilla
Canacol gas blocks Compressor
Gas pipeline 10 km
‘17 pipeline Gas field 5
‘18 pipeline
Canacol’s Sweet Spot
Replacing Chevron’s gas supply to the Caribbean
Chuchupa
Ballena
• Gas demand +3%/yr. through 2025e(1)
supply ‐20%/yr. decline ongoing
Caribbean Sea or ‐100 MMcf/d(2)
• Excess demand ~70 MMcf/d avg. → ‘20e
600
Excess demand
75 230
25 230
Lower Magdalena 477 85 138
Basin
400 432
381
337
La Creciente
299
265
200
3 mature producing fields
Chuchupa, Ballena, & La Creciente
0
'15 '16 '17E '18E '19E '20E 6
(1)Source: Wood Mackenzie and UPME Colombia estimates
(2) Average annual decline for the trailing 3 years
A Conventional Natural Gas Success Story
X
3 exploration wells left for 2017
• Canacol Gas
Sincelejo Bremen
Strong base production and reserves
3 acquisitions ('12‐'14) 96 BCF
2 1 VIM 19 Trailing 3‐yr. 2P reserve adds 314 BCF
Recent 2p reserves 410 BCF (1)
Gas exploration success 8/9 wells (89%)
Producing wells 14
Large resource upside
SSJN7
VIM 5 Net acres 1.1 MM
Blocks 5
Gross mean unrisked resources 2 TCF (2)
’17 Gaitero‐1 BT EMV‐10 US $789 MM (3)
Prospects / leads 44
Oboe (1) As of Dec ‘16 reserve reports, net of ~50 BCF produced
’17 Pandereta‐1
Clarinete (2) Gaffney, Cline & Associates (“GCA”)prospective conventional natural gas resource
VIM 21 report, effective Dec ‘16
(3) Expected Monetary Value discounted at 10%, GCA Dec ‘16
Canahuate
Legend
Gas field
Trombon
Prospects / leads
Jobo Nispero
Facilities
’17 Cañandonga‐1 Existing pipeline
Esperanza Sabanas planned pipeline (12/1/17)
Toronja Promigas planned pipeline (12/1/18)
7
Palmer Nelson 20 km
AVO Reduces Exploration Risk
Discovered 314 BCF from 8 gas fields over the trailing 3‐yrs.
OBOE‐1
FEB ‘16
PANDERETA‐1
The hunt for repeatable anomalies
CLARINETE‐1
CLARINETE‐1 PANDERETA‐1
Dec ‘14
AVO extraction over the Mid CDO
1,200
ACORDEON‐1 2.5 KM
1,400
Tubara Marker
1,600
• Applying AVO technology to gas‐
charged sandstones
Lower Tubara
• Exploration success 8‐for‐9 (89%)
1,800
• Avg. net pay/well 78 ft. TVD
Mid Miocene / Top CDO
• Avg. test rate/well 33 MMcf/d
•
2,000
Producers 14 wells
Upper CDO
2,200
Mid CDO
• >2 TCF of running room(1)
Basal CDO
2.400
Fluid Factor (AVO) section
(1) Represents gross unrisked mean resources from the
Gaffney, Cline & Associates prospective gas resource report, effective Dec ‘16 8
Drilling For Repeatable Anomalies In The Porquero VIM
19
Jun ’17: Toronja‐1 exploration well tested 46 MMcf/d SSJN7
VIM 5
VIM 21
Esperanza
TORONJA‐1 NELSON‐6
Jun ‘17 Nov ‘16
1
1,200
1,400
1,600
NELSON‐5 Intra
Porquero
PORQUERO 1,800
NELSON‐4
NELSON‐2
2.000 Top CDO
NELSON‐3 2
2,200
PALMER‐1 NELSON‐8 Basement
2.400
1 2
Mid Porquero time structure 1KM Fluid Factor (AVO) section
• Tested 46 MMcf/d
• Exploration target Porquero reservoir sandstones • Work underway to tie Toronja into Jobo (3 kms)
• Well cost 41% below budget • Porosity 20%
9
Toronja‐1 Suggests Much More VIM
19
In Store For The Porquero SSJN7
VIM 5
VIM 21
Esperanza
Nelson‐5, Nelson‐6 added 25 Bcf
from the Porquero Formation(1)
• Nov ’16 Nelson‐6 spelled opportunity
• Net pay 39 ft. TVD
• Tested 23 MMcf/d
ARANDALA‐1
• Dec ‘16 Nelson‐5 Porquero recompletion ↑ confidence
• Net pay 79 ft. TVD
CARAMBOLO‐1
• Tested 13 MMcf/d
BREVA‐1
• Jun ‘17 Toronja‐1 says more running room…
TORONJA‐1 • Tested 46 MMcf/d
NELSON‐5
• Aranadala‐1, Breva‐1, Carambolo‐1 offer 3 follow‐up
exploration locations
NELSON‐6
AVO extraction over
Mid Porquero SST marker 1 KM
10
(1) Represents 2P reserves as of Dec ‘16 reserve reportVIM
19
Pandereta‐1 Exploration Target SSJN7
VIM 5
VIM 21
Esperanza
1 1 Pandereta‐1 2
1,500
Tubara Marker
1,700
Lower Tubara Marker
Pandereta‐1
1,900
Mid Miocene / Top CDO
2,100
Top Blue
Top Red
2
2,300
Top Basal
Basement
Mid CDO time structure 2KM Fluid Factor (AVO) section 1KM
• Estimated spud October 2017
• Exploration target Cienaga de Oro reservoir sandstones • 13 km from Clarinete discovery
• Drill & test / Depth $5.5 MM / ~9k ft. MD • On success, rapid tie‐in to 6” flow‐line
• Days to drill/test 5 weeks connecting Clarinete to Jobo 11Cañandonga‐1 Exploration Well | 3 Potential Pay Zones
Castor N
Sucre
Flow line Castor S
Sucre S
NISPERO‐1
TROMBON‐1
Cañandonga‐1
Tablon
• On strong structural trend
Jobo Station
• Canacol fields 240 BCF(1)
• Nelson, Nispero & Trombon
• Formerly producing fields 378 BCF
• Castor, Sucre, Tablon
• Cañandonga‐1 spud Nov 2017
• Fault dependent closure
NELSON‐5
Nelson Field • Stacked multi‐zone objectives
193 BCF (CDO, Porquero, Tubara)
NELSON‐4
• AVO‐supported new play in Tubara sandstones
NELSON‐2
4 km • Drill & test / Depth $5.5 MM / ~10k ft. MD
(1) Includes Arianna and Palmer fields 12
NELSON‐3
(not pictured on map)Aim To Deliver 230 MMcf/d By 2018 Exit
Only 3 wells or $18 MM to maintain 230 MMcf/d
• 85 MMcf/d today
• Today ‐ 13 gas wells producing 85 MMcf/d
• Wells choked back
• Potential ‐ 13 gas wells producing 130 MMcf/d
• To 130 MMcf/d to exit 2017
• Drill 2 more wells ~$12 MM
• Debottleneck gathering systems $5 MM
• Additional flowlines $12 MM
• To 230 MMcf/d to exit 2018
• Drill 5‐7 wells ~$30 ‐ $42 MM
• +50 MMcf/d of processing capacity ~$10 ‐ $15 MM
• Additional flowlines $10 ‐ $12 MM
Construction of the new Sabanas pipeline project, Sep 2017 13Spend ~$40 MM To +40 MMcf/d in Dec ‘17
→ 130 → 230 MMcf/d in Dec ‘18
• Building 84 km Sabanas pipeline +
Caribbean 2 compressor stations
Sea
Bremen • ~42 MMcf/d flow line capacity to Bremen
Station
Sincelejo
VIM 19 • Utilizing state‐of‐the‐art flexible steel pipe
San Luis
Station
• Flex pipe requires no welding and optimal
La Union construction (2km of pipe/day)
SSJN 7 Station
• IN PROGRESS ‐ deployment of flowline + civil
works for compressor station sites
VIM 5
Promigas
• $40.6 MM budget
Other $4.4
VIM 21 Pipeline $12.4
Envrionmental &
Esperanza social $4.2
Jobo
Station
Customs & EPC pipeline $11.8
transport
20 m $6.8 14Outlook
85 → 130 → 230 MMcf/d
+49% CAGR in gas production Substantial liquidity enables execution
MMcf/d US $ in MM
~$300
220 forecast 2Q ‘17 net debt $230 MM
‘19e ebitda ~$300 MM
180
140 230
$135
100
130
85
60 70
'16 '17 '17 exit '18 exit '16 '19e
• For the remainder of 2017e: • Senior secured term loan
• Drill 3 more gas exploration wells • Credit Suisse + syndicate / L+5.50%
• Completion of Sabanas flow line • No re‐determination if oil prices fall
• Mar ’19 → Mar ’22 ~$22 MM of principal
payments for 13
consecutive quarters 15Canacol’s Acreage Is Colombia’s Shale Oil Sweet Spot
• > 2.3 trillion oil barrels in S.A. has La Luna source rock
• Source: 2010 Journal of Petroleum Geology
Mono Araña • 1.7 M acres of La Luna fairway in Colombia
Mono Capuchino • Source: 2013 U.S. EIA study
VMM 2 • Canacol blocks 5
• Gross / net acres 625k / 371k
• Canacol’s VMM 2 and VMM 3 offer over pressured, Tier 1
acreage in the La Luna fairway
Pico Plata
• Gross/net acres 159k / 32k
Normal Over
• Operating partner ConocoPhillips
pressure pressured • Solid results from multiple fracs in the latest well (Pico Plata)
VMM 3
Tier 1
Tier 2
% Vro 0.6‐1.2 • Potential prize: 1.9 B barrels of net mean OOIP(1)
% Vro >0.6 • Source: DeGolyer & McNaughton unconventional oil
prospective resource report, Oct ’14
10 km (1) Pro forma for the relinquishment of the Santa Isabel block
Wells DeGolyer & McNaughton (“D&M”) Resource Report as of 6/30/14. D&M provided
Oil fields mean estimates of Original Oil In Place (OOIP). These estimates have not
been adjusted for the probability of geologic success. 16
Canacol wellsPicoPlata‐1 Vertical Unconventional Well
• Operated By Conoco
GALEMBO C
Frac #3 • VMM3 gross acres 83k
• Canacol WI 20%
• La Luna shales
• Gross thickness 1369 ft.
• Net pay 866 ft.
• Avg. porosity 10%
GALEMBO D‐1
• Jan 2017, 3 successful fracs
Frac #2
• Highly over pressured
• All fracture treatment successfully placed
• Induced fractures grow in height (125 ‐ 200 ft.)
SALADA A
Frac #1
• Variable flow rates 60 – 500 bopd (no water)
• 31 ̊ API gravity oil
18Contact
Carolina Orozco
Director, Investor Relations
44 (0) 755.537.3873
corozco@canacolenergy.com
Kevin Flick
VP, Investor Relations
214.235.4798
kflick@canacolenergy.com
Phil Heinrich
Investor Relations Manager
403.561.1648
pheinrich@canacolenergy.com
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