Parex 2016 Playbook Calgary, Canada

Parex 2016 Playbook Calgary, Canada www.parexresources.com | TSX:PXT SUSTAINED PERFORMANCE| EXPANDING POTENTIAL ADVISORIES This presentation is pr...
Author: Silas Allen
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Parex 2016 Playbook Calgary, Canada

www.parexresources.com | TSX:PXT

SUSTAINED PERFORMANCE| EXPANDING POTENTIAL

ADVISORIES This presentation is provided for informational purposes only as [NTD: INSERT DATE], is not complete, and may not contain certain material information about Parex Resources Inc. ("Parex" or the "Company"), including important disclosures and risk factors associated with an investment in Parex. This presentation does not take into account the particular investment objectives or financial circumstances of any specific person who may receive it and does not constitute an offer to sell or a solicitation of an offer to buy any security in Canada, the United States or any other jurisdiction. The contents of this presentation have not been approved or disapproved by any securities commission or regulatory authority in Canada, the United Sates or any other jurisdiction, and Parex expressly disclaims any duty on Parex to make disclosure or any filings with any securities commission or regulatory authority, beyond that imposed by applicable laws. Forward-Looking Statements and FOFI • Certain information regarding Parex set forth in this document contains forward-looking statements that involve substantial known and unknown risks and uncertainties. The use of any of the words "plan", "expect", “prospective”, "project", "intend", "believe", "should", "anticipate", "estimate" or other similar words, or statements that certain events or conditions "may" or "will" occur are intended to identify forward-looking statements. Such statements represent Parex' internal projections, estimates or beliefs concerning, among other things, future growth, results of operations, production, future capital and other expenditures (including the amount, nature and sources of funding thereof), plans for and results of drilling activity, business prospects and opportunities. These statements are only predictions and actual events or results may differ materially. Although the Company’s management believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause Parex' actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, Parex. • In particular, forward-looking statements contained in this document include, but are not limited to, statements with respect to the performance characteristics of the Company's oil properties; the Company's vision, strategy and values; Parex' estimated year end production for 2015; the Company's anticipated 2016 capital investment program, including the amount thereof; the Company's 2016 capital budget, including the expected allocation of such budget to the number of wells and capital expenditures for each of development/appraisal in existing fields, exploration, exploration appraisal and new play concepts; the Company's forecasted 2016 average production range; the Company's planned capital program, including anticipated amounts focused on existing discoveries and the appraisal programs and the timing of drilling key exploration prospects, seismic programs and development drilling; anticipated cash flow, cash flow per share, cash netback, capital expenditures, and funds flow from operations for 2016; the Company's exploration, development and appraisal program for 2016 including anticipated number of wells, drill ready prospects, the focus of development/appraisal drilling and the potential for drilling of additional follow-up appraisal wells and facilities in 2016; exploration prospects; the Company's exploration schedule; the Company's drilling plans and production capability/potential; anticipated drilling locations, including the Company's delineation and drilling plans; the Company's plans to target additional growth opportunities; Parex' anticipated debt levels; financial and business prospects and financial outlook; and activities to be undertaken in various areas. Statements relating to "reserves" or "resources" are forwardlooking statements, as they involve the implied assessment, based on estimates and assumptions that the reserves and resources described exist in the quantities predicted or estimated and can be profitably produced in the future. • These forward-looking statements are subject to numerous risks and uncertainties, including but not limited to, the impact of general economic conditions in Canada and Colombia; industry conditions including changes in laws and regulations including adoption of new environmental laws and regulations, and changes in how they are interpreted and enforced, in Canada and Colombia; competition; lack of availability of qualified personnel; the results of exploration and development drilling and related activities; risks related to obtaining required approvals of regulatory authorities, in Canada and Colombia and partner and community approvals in Colombia; risks associated with negotiating with foreign governments as well as country risk associated with conducting international activities; volatility in market prices for oil; fluctuations in foreign exchange or interest rates; environmental risks; changes in income tax laws, tax rates and/or incentive programs relating to the oil industry; changes to pipeline capacity; ability to access sufficient capital from internal and external sources; risks related to the lawsuit brought in Texas against Parex and certain foreign subsidiaries; failure of counterparties to perform under the terms of their contracts; and other factors, many of which are beyond the control of the Company. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could effect Parex' operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). • 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. With respect to forward-looking statements contained in this document, Parex has made assumptions regarding, among other things: current commodity prices and royalty regimes; availability of skilled labour; timing and amount of capital expenditures; future exchange rates; the price of oil, including the anticipated Brent oil price; the impact of increasing competition; conditions in general economic and financial markets; availability of drilling and related equipment; effects of regulation by governmental agencies; receipt of partner, regulatory and community approvals; royalty rates; future operating costs; effects of regulation by governmental agencies; uninterrupted access to areas of Parex' operations and infrastructure; recoverability of reserves and future production rates; the status of litigation; timing of drilling and completion of wells; on-stream timing of production from successful exploration wells; operational performance of non-operated producing fields; pipeline capacity; that Parex will have sufficient cash flow, debt or equity sources or other financial resources required to fund its capital and operating expenditures and requirements as needed; that Parex' conduct and results of operations will be consistent with its expectations; that Parex will have the ability to develop it's oil and gas properties in the manner currently contemplated; current or, where applicable, proposed industry conditions, laws and regulations will continue in effect or as anticipated as described herein; that the estimates of Parex' reserves volumes and the assumptions related thereto (including commodity prices and development costs) are accurate in all material respects; that Parex will be able to obtain contract extensions or fulfill the contractual obligations required to retain its rights to explore, develop and exploit any of its undeveloped properties; and other matters.

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ADVISORIES •



Management has included the above summary of assumptions and risks related to forward-looking information provided in this document in order to provide shareholders with a more complete perspective on Parex' current and future operations and such information may not be appropriate for other purposes. Parex' actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do, what benefits Parex will derive. These forward-looking statements are made as of the date of this document and Parex disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws. The forward-looking statements contained in this presentation are expressly qualified by this cautionary statement. This document also contains Future Oriented Financial Information ("FOFI") within the meaning of applicable securities laws, in particular the information set forth on slides 12 and 13. The FOFI has been prepared by Parex’s management to provide an outlook of the Company's activities and results. The FOFI has been prepared based on a number of assumptions including the assumptions discussed above and assumptions with respect to the costs and expenditures to be incurred by the Company, capital equipment and operating costs, foreign exchange rates, taxation rates for the Company, general and administrative expenses and the prices to be paid for the Company's production. Management does not have firm commitments for all of the costs, expenditures, prices or other financial assumptions used to prepare the FOFI or assurance that such operating results will be achieved and, accordingly, the complete financial effects of all of those costs, expenditures, prices and operating results are not objectively determinable. The actual results of operations of the Company and the resulting financial results will likely vary from the amounts set forth in the analysis presented in this presentation, and such variation may be material. The Company and its management believe that the FOFI has been prepared on a reasonable basis, reflecting the best estimates and judgments, and represent, to the best of management's knowledge and opinion, Parex's expected expenditures and results of operations. However, because this information is highly subjective and subject to numerous risks including the risks discussed above, it should not be relied on as necessarily indicative of future results. Except as required by applicable securities laws, Parex undertakes no obligation to update such FOFI and forward-looking statements and information.

Oil and Gas Information • The estimates of Parex' December 31, 2015 reserves set forth in this presentation have been prepared by GLJ Petroleum Consultants Ltd. ("GLJ") as of December 31, 2015 with a preparation date of February 5, 2016 (the "GLJ 2015 Report") in accordance with National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities ("NI 51-101") and the Canadian Oil and Gas Evaluations Handbook (the "COGEH") and using GLJ's forecast prices and costs as at January 1, 2016. The estimates of Parex' December 31, 2014 reserves set forth in this presentation have been prepared by GLJ as of December 31, 2014 with a preparation date of February 13, 2015 in accordance with NI 51-101 and the COGEH and using GLJ's forecast prices and costs as at January 1, 2015. The estimates of Parex' December 31, 2013 reserves set forth in this presentation have been prepared by GLJ as of December 31, 2013 with a preparation date of February 20, 2014 in accordance with NI 51-101 and the COGEH and using GLJ's forecast prices and costs as at January 1, 2014. The estimates of Parex' December 31, 2012 reserves set forth in this presentation have been prepared by GLJ as of December 31, 2012 with a preparation date of February 28, 2013 in accordance with NI 51-101 and the COGEH and using GLJ's forecast prices and costs as at January 1, 2013. The estimates of Parex' December 31, 2011 reserves set forth in this presentation have been prepared by GLJ as of December 31, 2011 with a preparation date of February 10, 2012 in accordance with NI 51-101 and the COGEH and using GLJ's forecast prices and costs as at January 1, 2012. The estimates of Parex' December 31, 2010 reserves set forth in this presentation have been prepared by GLJ as of December 31, 2010 with a preparation date of January 11, 2011 in accordance with NI 51-101 and the COGEH and using GLJ's forecast prices and costs as at January 1, 2011. • Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10 percent probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves. • Estimates of the net present value of the future net revenue from Parex' reserves do not represent the fair market value of Parex' reserves. The estimates of reserves and future net revenue from individual properties or wells may not reflect the same confidence level as estimates of reserves and future net revenue for all properties and wells, due to the effects of aggregation. In this presentation NPV10 represents the net present value of net income discounted at 10% and NPV20 represents the net present value of net income discounted at 20%. • This presentation contains certain oil and gas metrics, including F&D and FD&A costs, EUR, reserves life index and recycle ratios, which do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies and should not be used to make comparisons. Such metrics have been included herein to provide readers with additional measures to evaluate the Company's performance; however, such measures are not reliable indicators of the future performance of the Company and future performance may not compare to the performance in previous periods and therefore such metrics should not be unduly relied upon. A summary of the calculations of such metrics are as follows: • • • • • •

F&D costs are calculated as [●].The aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserves additions for that year. FD&A costs are calculated as capex plus change in finding and development costs divided by reserves additions. Reserves life index is calculated proved plus probable reserves divided by annualized fourth quarter production. Recycle ratio is calculated as cash netback per boe divided by F&D or FD&A, as applicable. Cash netback per boe is calculated as funds flow from operations divided by production for the period. EUR represents the [proved plus probable estimated ultimate recoverable [heavy oil] volumes per well] as disclosed in the GLJ 2015 Report. EUR is the estimated raw quantity of oil that is potentially recoverable or has already been recovered from a well.

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ADVISORIES •











• •

"BOEs" may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (6 mcf: 1 bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value. All of Parex’ crude oil reserves disclosed herein are located in Colombia [and are light crude oil and medium crude oil]. [The Company does not have any heavy oil, coalbed methane or natural gas liquid production or reserves and had an immaterial amount of natural gas reserves.] [NTD: Parex to outline product types presented in this presentation. The product types are: light and medium crude oil (combined), heavy crude oil, natural gas liquids, conventional natural gas, coal bed methane, bitumen, gas hydrates, shale gas, synthetic crude oil, synthetic gas and tight oil] The recovery and reserve estimates of crude oil reserves provided in this document are estimates only, and there is no guarantee that the estimated reserves will be recovered. Actual crude oil reserves may eventually prove to be greater than, or less than, the estimates provided herein. All evaluations and reviews of future net revenue contained in GLJ's reports are stated prior to any provision for interest costs or general and administrative costs and after the deduction of royalties, development costs, production costs, well abandonment costs and estimated future capital expenditures for wells to which reserves have been assigned. This presentation discloses drilling locations in three categories: (i) proved locations; (ii) probable locations; and (iii) possible locations. Proved locations, probable locations and possible locations are derived from the GLJ 2015 Report and account for drilling locations that have associated proved and/or probable and/or possible reserves, as applicable. [Of the 132 drilling locations identified herein, 40 are proved locations, 62 are probable locations and 30 are possible locations.] The drilling locations on which the Company actually drills wells will ultimately depend upon the availability of capital, regulatory approvals, seasonal restrictions, oil prices, costs, actual drilling results, additional reservoir information that is obtained and other factors. Further, this presentation includes estimates of pay thickness, which are considered to be anticipated results or information that indicate the potential value or quantities of resources under NI 51-101. [Such estimates have been prepared by GLJ.] [NTD: confirm] The risks associated with these estimates include, but are not limited to, the risk that Parex' exploration and development drilling and related activities may provide different results; the risk that Parex may encounter unexpected drilling results; the occurrence of unexpected events involved in the exploration for, and the operation and development of, oil and gas; delays in anticipated timing of drilling and completion of wells; geological, technical, drilling and processing problems and other difficulties in producing petroleum reserves; and the risk that if any resources are discovered that it will not be commercially viable to produce any portion thereof. There is no certainty that Parex will achieve the estimated results or that any portion of the resources will be discovered. If discovered, there is also no certainty that it will be commercially viable to produce any portion of the resources. Certain information in this document may constitute "analogous information" as defined in NI 51-101. Such information includes production estimates, drilling results, test rates, reserves estimates and other information retrieved from [the continuous disclosure record of certain industry participants from www.sedar.com] or other publically available sources. Management of Parex believes the information is relevant as it may help to define the reservoir characteristics and production profile of lands in which Parex may hold an interest. Parex is unable to confirm that the analogous information was prepared by a qualified reserves evaluator or auditor and is unable to confirm that the analogous information was prepared in accordance with NI 51-101. Such information is not an estimate of the production, reserves or resources attributable to lands held or to be held by Parex and there is no certainty that the production, reserves or resources data and economic information for the lands held or to be held by Parex will be similar to the information presented herein. The reader is cautioned that the data relied upon by Parex may be in error and/or may not be analogous to such lands held or to be held by Parex. Certain other information contained in this presentation has been prepared by third-party sources, which information has not been independently audited or verified by Parex. No representation or warranty, express or implied, is made by Parex as to the accuracy or completeness of the information contained in this document, and nothing contained in this presentation is, or shall be relied upon as, a promise or representation by Parex. This presentation contains references to type well production and economics, which are derived, at least in part, from available information respecting the well economics of other companies and, as such, there is no guarantee that Parex will achieve the stated or similar results, capital costs and return costs per well. References in this presentation to initial production test rates, initial "flow" rates, initial flow testing, and "peak" rates are useful in confirming the presence of hydrocarbons, however such rates are not determinative of the rates at which such wells will commence production and decline thereafter and are not indicative of long term performance or of ultimate recovery. While encouraging, investors are cautioned not to place reliance on such rates in calculating the aggregate production for Parex. Parex has not conducted a pressure transient analysis or well-test interpretation on the wells referenced in this presentation. As such, all data should be considered to be preliminary until such analysis or interpretation has been done.

Financial Matters •

Certain financial and operating results included herein for the year ended December 31, 2015, including production, operating costs, total cash costs, capital expenditures, total debt including working capital, and funds from operations, are based on unaudited estimated results. These estimated results are subject to change upon completion of the Company's audited financial statements for the year ended December 31, 2015, and changes could be material.

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Agenda 1. Introduction 2. Corporate Overview 3. 2015 Reserve Report 4. Operating in a Low Price

5. Drilling 6. Exploration

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Parex Vision 1. Generate long-term shareholder value

2. Build a portfolio of assets to allow for consistent growth 3. Develop an organization with bench strength to allow Parex to evolve into the leading LATAM independent E&P

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Parex Leadership Team Wayne Foo CEO

Stu Davie Vice President HR & Admin

Ken Pinsky

Dave Taylor

CFO

President

Mike Kruchten

Ryan Fowler

Eric Furlan

VP Corporate Planning & IR

VP Exploration

VP Engineering

Cam Grainger

Nicolas Marot

Ron MacDonald

Controller

VP New Ventures

VP Drilling & Completions

Lee DiStefano President Parex Colombia & Country Manager

Organization is built to accommodate growth and provide bench strength

Daniel Ferreiro VP Operations Parex Colombia

Rafael Pinto VP Legal Parex Colombia

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Demonstrating Portfolio Flexibility Operating Results(1)

2014

2015

Production (bopd)

22,526

27,434

US $297

US $126

16

5

Discoveries

7

3

Appraisal

4

4

18

none

68.4 Mmboe 7.1 years

81.7 Mmboe 7.8 years

US $40/bbl

~US $25/bbl

Full Year

Capital Expenditures (million) Exploration Drilling (# of prospects) (# wells)

Development Drilling (# wells) Reserves 2P (Dec. 31) (2) 2P Reserve Life Index (RLI) Costs (Royalties + Opex + Transportation)

Capital Structure Net Working Capital US $200MM Credit Facility Market Capitalization ($10.00/share)

~ US $77 MM Undrawn – No Debt ~ CAD $1,515 MM

Common Shares Outstanding (TSX listed) Basic(3) Fully Diluted(4) (1) (2) (3) (4)

151.5 MM 158.0 MM

See “Advisories” on slides 2-4 Parex net working interest, as per the independent reserve reports prepared by GLJ Petroleum Consultants Ltd. effective December 31, 2014 and December 31, 2015 Shares outstanding on December 31, 2015 Diluted shares include the effects of common shares and in-the-money stock options outstanding at December 31, 2015 stock price was CAD $10.16/share

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Consistent Performance 32

Average Production (000 bopd)

28

24 20 16 12 8 4 0

2011

2012

2013

2014

2015

2016E(1)

15 consecutive quarters of production growth (1)

See “Advisories” on slides 2-4

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Annual Finding, Development & Acquisition Costs(1) Profitability = Cash Netbacks > F&D Total Company

$45

$40

2015

3 Year

1P

2P

2P

F&D $/bbl

$2.00

$0.88

$9.35

FD&A $/bbl

$2.00

$3.57

$10.86

F&D $/bbl

6.2x

14.0x

3.1x

F&DA $/bbl

6.2x

3.5x

2.6x

Recycle Ratio

$35

$30

2P FD&A ($/bbl)

2015

$25

2015 Drivers: 1. 2. 3. 4.

$20

$15

Discoveries Performance FX: CAD & COP Service Costs

$10

$5

$0 2012

2013 1 Year $/bbl

2014 3 Year $/bbl

2015 * Includes Future Development Cost (FDC)

(1) See “Advisories on slides 2-4 (2) Per the independent reserve reports prepared by GLJ Petroleum Consultants Ltd. effective Dec. 31, 2012; Dec. 31, 2013; Dec. 31, 2014 and Dec. 31, 2015

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Portfolio Supports the Path to Growth Track record of progressing reserves* from 3P to cash flow(1)(2) Proved +Probable + Possible (mmboe)

Proved + Probable (mmboe)

31-Dec-09

-

-

31-Dec -10

10.4

31-Dec-11

Proved (mmboe)

Annual Production (mmbbls)

2P Reserves Life Index

-

-

-

5.8

1.1

0.3

-

17.6

10.7

4.9

2.0

2.6 years

31-Dec-12

23.1

16.1

10.1

4.2

3.5 years

31-Dec-13

49.9

32.0

17.4

5.8

5.1 years

31-Dec-14

104.0

68.4

40.4

8.2

7.1 years

31-Dec-15

124.5

81.7

46.0

10.0

7.8 years

based on annualized Q4 Production

125 mmboe & 8 year RLI  42,500 bopd 2P (mmboe)(2)

Gross 2P Development Locations (#)(2)

FDC ($US MM)(2)

31-Dec-14

68.4

62

361

31-Dec-15

81.7

102

318

(1) See “Advisories” on slides 2-4 (2) Per the independent reserve reports prepared by GLJ Petroleum Consultants Ltd. effective Dec. 31, 2010; Dec. 31, 2011; Dec. 31, 2015; Dec. 31, 2014 and Dec. 31, 2015

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2016

: Guidance Flexibility

to Adjust

Scenario 1: November 2, 2015(1) Assuming Brent oil price averages ~ $50/bbl in 2016, we are targeting full year:

$165MM cash flow $15/bbl cash netback $165MM Capex 30,200 bopd production (10% y-y growth)

Scenario 2: January 2016 Adjust capital budget so that capex = cash flow at current pricing: Brent ~$35-40/bbl  $40-80 mm CF Capex: a) b) c) d)

Maintenance wells & facility upgrades (1km

2. Drive

Edge water drive – Fast pressure response and effective sweep

Bottom water drive – Fast pressure response Oil

Water

Sandstone

Edge water drive – Slow pressure response and effective sweep Shale

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Progressively Larger Discoveries – Combination Traps Akira 1000 – 1500 acres

Tigana Trend 3000+ acres

1. Size

Stratigraphic element

Stratigraphic element >1km

>1km

Structural Closure Structural Closure

2. Drive

Traps Exceed Structural Closure

Edge water drive – Slow pressure response and effective sweep

Oil

Water

Sandstone

Shale

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Rumba Field: 2015 Discovery and Development

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Rumba – High quality prospect identification La Gloria Norte

The Rumba Prospect was identified by Parex prior to the 2008 Bid Round on LLA-26 o Block was acquired by competitor

La Gloria

LLA-26 Rumba

There are significant fields to the north and south along the same fault trend o La Gloria Norte o La Gloria o Maniceno

An opportunity to acquire LLA 26 with only 2 remaining commitment wells arose in 2012 In 2014 Parex began working with the communities to gain access

Maniceno

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Rumba Reserves – Year End

(1) 2015 (2)

CI = 10’

Bazar 2

MMBO(2)(3)

GLJ 2P = 5.1 GLJ 3P = 6.8 MMBO(2)(3) Production = 4000 bopd (capable of 5000 bopd) Capital Invested = $43MM (plus $9MM FDC) Six months of continuous activity starting in March 2015 yields an effectively full development

Rumba 2

Rumba 4 Rumba 1

o 4 wells, facility

(1) (2) (3)

See “Advisories:” on slides 2-4 Historical production plus current reserves, per the independent reserve report prepared by GLJ Petroleum Consultants Ltd. effective December 31, 2015 Heavy crude oil with a relative density greater than 10 degrees API gravity and less than or equal to 22.3 degrees API gravity

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Southern Casanare

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Southern Casanare Fields & Exploration Targets FAULTS GLJ 3P (YE 2015)

N2016 Exploration

Carmentea

Future Exploration

Calona

LLA32 Kananaskis Chachalaca

Max

LLA34

Tilo

Tarotaro

Tigana

Tua Aruco

Jacana

Curucucu Este

Cabrestero

Akira Jaruki

As per the independent reserve report prepared by GLJ Petroleum Consultants Ltd. effective December 31, 2015

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Between Exploration & Development – Appraisal of The Tigana Trend There are numerous stratigraphic elements that act as traps in the Southern Casanare area o Pinch outs, Onlaps, Subcrops, Sealing Unconformities

The faults in the area range from fully sealing to non-sealing depending on the throw and stratigraphic level Combining the faults with the stratigraphic elements yields a vast array of possibilities o Most of these elements are at the limits of seismic resolution but can trap millions of barrels of oil

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Expanding the Llanos Basin

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Llanos Basin Foreland

(1) Exploration 2016 Program – 2 Wells: o Jaruki o Curucucu Este (or alternate LLA 34 well)

Cano Limon

Arauca

Future Focus: o Combination & Stratigraphic Traps Current Portfolio: o 41 Gross Prospects o 55% Historic Success Rate

Foreland Casanare

Castilla

Meta

Rubiales

Parex 2016 Exploration Parex Exploration Focus (1) See

“Advisories” on slides 2-4

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Llanos Basin – Foothills

(1) Area

Cano Limon

Capachos

Arauca Arauca

Foreland Casanare Casanare

Castilla

Meta Meta

High deliverability reservoirs Mixed Oil & Gas Area Large Pool Sizes High cost drilling Difficult access Current Parex Portfolio: Capachos Block = 6 Gross Prospects

Rubiales

(1) See

“Advisories” on slides 2-4

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Capachos Block: Arauca Regional Context Arauca

Cano Limon

Caricare

Capachos

ARUACA

LLA 10 Llanos DEM

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Capachos Guadalupe Potential(1)

2 earning wells are planned between old producers that cumm’d > 1 mm bbls/well Additional exploration upside exists in 6 undrilled prospect areas

Development earning well locations Prospective exploration areas

(1) See

“Advisories” slides 2-4

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Middle Magdalena Basin

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The Middle Magdalena Basin Characteristics Lower deliverability reservoirs – in some cases caused by reservoir damage o Modern fracs have improved deliverability Oily basin – World Class dormant unconventional play in the La Luna Provincia Cantagallo

Large Fields Lisama

Casabe

Teca Nare

Palagua

Velasquez

La Cira Infantas

No natural aquifer pressure support o Large secondary recovery projects Basin production has tripled over the last 10 years – almost completely due to field redevelopment o from 50 mbbls/d to 150 mbbls/d (1)

(1) Source: IHS Data 2015

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Mid Mag Basin Discovery History

Historical Production Plus Current 2P Reserves (MMBO)

Source: IHS Data 2015

Teca-Nare

Nare Norte

Provincia

Velasquez

Cantagallo Casabe

La Cira

Infantas

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Parex Mid Mag Exploration

(1) Portfolio

Llanito Lisama Casabe

La Cira Infantas

Future Focus: Velasquez style structures & stratigraphic pinch outs Current Parex Portfolio: 5 Gross Leads (VMM9 – requires 3D seismic)

Opon

Teca Nare

Palagua

4 Gross Prospects (VMM 11) No exploration wells currently planned in 2016

Velasquez

(1) See “Advisories” on slides 2-4

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Aguas Blancas Development

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How Mid Mag Basin Geology & History = Growth Opportunity ECP is the dominant land holder in the Mid Mag basin o Low oil prices have caused ECP to look for low cost/risk alternatives to increase production – farm outs

Significant reserves and production additions have occurred as a result of recent field re-developments done by ECP and their partners (Oxy, Schlumberger) Some “Marginal” Fields discovered in the 1960’s have never been developed so remain as primary development opportunities

Example: Aguas Blancas

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La Cira Infantas – Aguas Blancas Area Map LISAMA: 51.86 MM OCUM CASABE: 333 MMB OCUM

LA CIRA-INFANTAS: 813 MMB OCUM

NUTRIAS: 6.55 MM OCUM

PEROLES: 1.8 MM OCUM

COLORADO 8.66 MMB OCUM AGUAS BLANCAS 0.93 MMB OCUM

IHS Data Year End 2014 PAREX PLAYBOOK| March 2016

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La Cira Infantas Production History

Source: SPE #120794 PAREX PLAYBOOK| March 2016

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Infantas Field Analog

La Cira

The southern end of the Infantas Field is covered by the Aguas Blancas 3D. Direct analog for the Footwall accumulation.

W

E

W

E

Infantas Mugrosa Oil Accumulation

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La Cira Infantas to Aguas Blancas

La Cira Field

Infantas Field

AGUAS BLANCAS BLOCK

Aguas Blancas-2

SUBSURFACE FAULT TRENDS

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La Cira to Aguas Blancas Correlation AB -7

AB -2

AB -5

Infantas

La Cira

La Cira

SPE #121854 SPE #121854

Universidad Industrial De Santander 2013

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Aguas Blancas – Current

(1) Reserves

(2)

(2)

790 acre

266 acre

GLJ reserves booking in Aguas Blancas is limited to blocks where there is some well control. In the footwall (left) the compartment has been filled from the lowest well penetration to the closure. In the south (hanging wall) a 1000 m spacing around the wellbore truncated by the faults has been used to determine the reserve area. GLJ has assigned 10% primary recovery factor to the areas. The La Cira/Infantas field to the north is targeting recover factor beyond 30% on waterflood. (1) See “Advisories” on slides 2-4 (2) As per the independent reserve report prepared by GLJ Petroleum Consultants Ltd. effective December 31, 2015

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Aguas Blancas: Phase 1 Development Current Status(1)(2)

Target Areas(1)(2) Phase 1a drills from existing pads Phase 1b drills from new pads. Drill additional infill wells.

Reserves Areas

Prospective Resource Area

Reserves Area = 1055 ac Remaining Prospective Area = 5408

Producer Phase 1a Location

Abandoned Producer

Water-flood pilot.

Reserves + Resource Area = 4225 ac Remaining Prospective Area = 2238

Bypassed Pay Phase 1b Location

Focus on delineation and waterflood potential

(1) See “Advisories” on slides 2-4 (2) As per the independent reserve report prepared by GLJ Petroleum Consultants Ltd. effective December 31, 2015

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Current Activities Performed a classification of the existing pads, according to surface conditions and feasibility of utilization. Pads type “A” (activity planned for first part of Phase I) Under certain surface limitations and restrictions these pads can be utilized as they stand. Accessibility ~3 months. Formalize access to each pad 4 of the existing pads have been classified as type A (with low to medium risk with regards to access). Pads type “B”: Require new environmental plans and new environmental permits for utilization of local resources. Accessibility 9-12 months 3 pads (abandoned areas) classified as type B; basically not usable in the short term.

Current status aerial view.

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Phase 2: Value Realization Phase 2. Goal: Section Field Development

Objectives: Implement Development Optimized Capex Plan (Well Cost / Facilities) Optimized Opex Plan (LOE, Power, Well Maintenance, Water Management). Implement Marketing strategy. Reservoir Surveillance to maximize recovery Dedicated asset team. Time frame: 3 - 5 years from the start of Phase 2 (depending on pace of development/ oil price/ partner agreement). Field Development at this scale (hundreds of wells-secondary recovery) is not new to Parex  Build on Petro Andina success in Argentina. (1) See “Advisories:” slides 2-4

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PetroAndina past experience. Back in 2004… Looking for oil North of “Rio Colorado”

Source: Petro Andina, company presentation

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PetroAndina past experience /

(1) similarities

Parex plan for Aguas Blancas is similar in scope and magnitude to the appraisal and development of Block CNQ7-A (and nearby ones) in the Neuquén Basin, North of Río Colorado. Large discovery demanded the implementation of phases to delineate / appraise and prove concepts for development; as well as coordination on surface for drilling, completion, construction and production to happen in parallel and effectively.

Number of wells: By the fourth year there were close to 500 total wells, including 80 injection patterns (inverted 7 and 5); in parallel with field extension and continuous development. Well Spacing: 20 to 30 Acre.

Unionized labor: Had to manage three different unions working together in the same area. People and Philosophy for field development: Planning, Construction and Production Operations teams were led by the same people now in Parex. Partnered with major oil producer in Argentina: YPF. (1) See “Advisories:” slides 2-4

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Petro Andina +200 wells/year drilled

Reached 30,000 BOPD gross

Source: IHS Data

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If Colombia Focused, Where Next?

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The Future of Exploration in Colombia – The Future According to the USGS Source: IHS Data 2015

Colombia Discovery History – Cumulative Reserves by Basin

Historical Production Plus Current 2P Reserves (MMBO)

Parex Arrival

Worst Years of Conflict

Akacias, Huron

Florena

Nare Norte

Teca-Nare

Cusiana

USGS Mean YTF Projected 20 Years

Provincia

Velasquez

Apiay

Cantagallo Casabe

Cano Limon Cupiagua Rubiales

La Cira Orito Infantas

Castilla Guando Santiago, Trinidad

Costayaco San Francisco

Dina T

Cicuco

Tello

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Wrap-Up Balance sheet and financial strength positioned to capture new opportunities

High quality assets provide the foundation for growth in next 3-5 years, even in a lower-for-longer world Organization in place (management, technical and support staff) to execute our strategy based on our core competencies: 1. identify and acquire large prospective resources 2. engage stakeholders 3. being a low cost operator

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