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April 2012
INVESTOR PRESENTATION
Building On Our Success
PMD - TSXV
1
Forward-looking statement
All monetary amounts in U.S. dollars unless otherwise stated.
This presentation contains certain “forward-looking statements” and “forward-looking information” under applicable Canadian securities laws concerning the business, operations and financial performance and condition of PetroMagdalena Energy Corp. Forward-looking statements and forward-looking information include, but are not limited to, statements with respect to estimated production and reserve life of the various oil and gas projects of PetroMagdalena Energy; synergies and financial impact of completed acquisitions; the benefits of the acquisitions and the development potential of the properties of PetroMagdalena Energy; the future price of oil and natural gas; the estimation of oil and gas reserves; the realization of oil and gas reserve estimates; the timing and amount of estimated future production; costs of production; success of exploration activities; ANH/ Ecopetrol approval of transfer of title and operatorship of joint ventures; and currency exchange rate fluctuations. Except for statements of historical fact relating to the company, certain information contained herein constitutes forward-looking statements. Forward-looking statements are frequently characterized by words such as “plan,” “expect,” “project,” “intend,” “believe,” “anticipate”, “estimate” and other similar words, or statements that certain events or conditions “may” or “will” occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Many of these assumptions are based on factors and events that are not within the control of PetroMagdalena Energy and there is no assurance they will prove to be correct. Factors that could cause actual results to vary materially from results anticipated by such forward-looking statements include changes in market conditions, risks relating to international operations, fluctuating oil and gas prices and currency exchange rates, changes in project parameters, the possibility of project cost overruns or unanticipated costs and expenses, labour disputes and other risks of the oil and gas industry, failure of plant, equipment or processes to operate as anticipated, acquisitions not being integrated successfully or such integration proving more difficult, time consuming or costly than expected as well as those risk factors discussed or referred to in PetroMagdalena Energy’s public filings with the securities regulatory authorities in the provinces of Canada and available at www.sedar.com. Although PetroMagdalena Energy has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. PetroMagdalena Energy undertakes no obligation to update forward-looking statements if circumstances or management’s estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements. Statements concerning oil and gas reserve estimates may also be deemed to constitute forward-looking statements to the extent they involve estimates of the oil and gas that will be encountered if the property is developed. Comparative market information is as of a date prior to the date of this presentation.
Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 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. The management estimates of resources presented herein are arithmetic sums of multiple estimates of remaining recoverable resources (unrisked), which statistical principles indicate may be misleading as to volumes that may actually be recovered. Readers should give attention to the estimates of individual classes of resources and appreciate the differing probabilities of recovery associated with each class. Estimates of remaining recoverable resources (unrisked) include prospective resources that have not been adjusted for risk based on the chance of discovery or the chance of development and contingent resources that have not been adjusted for risk based on the chance of development. It is not an estimate of volumes that may be recovered. Actual recovery is likely to be less and may be substantially less or zero.
Although PetroMagdalena has closed the acquisitions of its working interests in Carbonera, Catguas, Rio Magdalena, Arrendajo, Yamu, Topoyaco, and Mecaya, it is currently in the process of completing the required approvals from ANH/ Ecopetrol, as applicable, for the formal transfer of title and or operatorship.
2
Focus on organic cash flow opportunities in our portfolio
3
EXPERIENCED LEADERSHIP
IMPROVING OPERATING CASH FLOW
HIGH POTENTIAL
EXPLORATION ASSETS
DRIVING VALUE
Goal is to increase production and reserves 3
Building On Our Success
Enhance netbacks, reduce costs, increase efficiency
Increase development activity in 2012 in the Llanos Basin following exploration success
Maximize value from all assets in our portfolio – leverage relationships with strong partners
Identify production growth opportunities in Colombia
Diversified Portfolio
CATATUMBO BASIN •Santa Cruz (3) •Carbonera •Catguas •Carbonera-La Silla(2)
LLANOS BASIN •Cubiro(1)
•Arrendajo(2)
•LLA 47 •Yamu •La Punta
PUTUMAYO BASIN •Mecaya (4) •Topoyaco
RED blocks: 2010 ANH E&P blocks
Agreements subject to ANH or Ecopetrol approval (1)Operated by Alange, Corp. a wholly owned subsidiary. (2)Operated by Pacific Stratus., a wholly owned subsidiary of Pacific Rubialas (3) Operated by Mompos Oil and Gas, a wholly owned subsidiary. (4) Operated by Gran Tierra
4
358,884 394,039
538,985
$0
$200,000
$400,000
$600,000
2009 2010 2011
Before Tax Net Present Value Discounted at 10% (1)
2P NPV10BT
6.6 9.3 13.3
0
5
10
15
20
25
30
35
2009 2010 2011
2P Reserves (MM boe) (2)
OIL Gas Nat. Gas Liquids(1) Before Tax Net Present Value Discounted at 10% (2) Source: NI 51-101 Technical Report, Petrotech Engineering, December 2009, December 2010 and December 2011. Reserves before royalties based on working interest
43% increase in 2P oil reserves $145 Million increase in 2P NPV (1)
2011 provided High Profit, light oil, reserves growth
2P Light Oil reserves increased by 4 MM Bbls
37% increase in 2P NPV(1), up $145 million
5
6
Cubiro 2P oil reserves up 96% in 2011
Source: NI 51-101 Technical Reports, Petrotech Engineering dated: December 31, 2009, December 31, 2010 and December 31, 2011
2,570
5,831
1,225 1,569
1,415
2,374
1,831
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Dec 2009ReserveReport
Dec 2010ReserveReport
Less 2011Production& Technical
Revisions
PetirrojoDiscovery
YopoDiscovery
Copa A SurDiscovery
Copa BDiscovery
M B
bls
December 31, 2011
11,432
Daily Average Production 2010-2012
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
bo
ed
Azor-1X
Cernicalo-1ST
Yopo-1X
Copa A Sur-1X
Copa B-1X
Petirrojo Field
Yamu
2010 base wells
* Cernicalo-1ST put on production February 25th, 2012 * Azor-1X put on production January 31st, 2012. 7
PetroMagdalena’s Gross Working Interest
It’s All About Brent Now
30
50
70
90
110
130
150
US$
Brent WTI Vasconia
• Brent 96% correlated with Vasconia over the last 6 months. Leveraging marketing strategy to capture positive premium to WTI.
• 4th quarter premium to WTI was approximately $14 per barrel. Increased revenue to $109 per barrel sold.
• Average Q1 2012 sales price was $116 at Cubiro
Source: Bloomberg
Q1 2012 Avg. sales price = $116
8
Vasconia linked to Brent
8
(1) Management Estimate (2) Royalty presented on barrel of oil sold. ANH royalty oil is taken in kind at the wellsite (3) Production Costs and Transport & Pipeline costs presented are the average for Q4, 2011
• A 3-year conventional oil marketing agreement signed with Pacific Rubiales effective February 1, 2011
• Lower Trucking costs would be expected for deliveries to Cusiana or Bicentenario would positively impact net back between US$3.00/bbl and US$ 7.00/bbl. Projects to be completed in second half of 2012.
Illustrative summary of potential netbacks from crude oil sales from Cubiro production (US$ per barrel)
Delivery Point / Reference Price : Guaduas / Vasconia
Q4 2011 A APRIL 12, 2012 (1)
WTI Average (Nymex) 93.23 103.64 Benchmark Quality Adjustment 14.14 12.60 Royalties (2) (8.21) (8.74)
Net Revenue 99.16 107.50
Production Costs (3) (19.20) (19.20) Transportation & pipeline (3) (18.63) (18.63)
Operating Netback 61.33 69.67
Cubiro’s Netback
9
•Enhancing operating netback
• Oil marketing contract in conjunction with Pacific Rubiales
• Ongoing opex reduction program
• Price of Colombian light oil moves to Brent reference
•Efficiencies generating positive trend in G&A per barrel produced
Net
bac
k p
er
bar
rel
G &
A p
er b
arrel
Strengthening Operating Cash Flow
10
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
Q2 - 2010 Q3 - 2010 Q4 - 2010 Q1 - 2011 Q2 - 2011 Q3 - 2011 Q4 - 2011
Operating Netback per barrel G&A per barrel
2012 Work Program Overview
2012 Work Program Overview
• Original capital expenditure program estimated at $50 to $60 million, excluding commitments funded by farm-ins
• Capital expected to be funded from cash and internally generated cash flow
• No near term financing expected to be required to fund 2012 work plan.
• 65% planned to be directed to light oil exploration and development in Cubiro and Arrendajo
• 3 more Llanos exploration wells and 10 development wells planned for the balance of 2012, 5 exploration wells drilled
• 2012 Llanos exploration program: Management estimate of company’s working interest share of recoverable prospective light oil resources would be almost a double 2P Llanos reserves on an Un-Risked or approximately + 40% on a Risked basis
11 (1) Management estimate, subject to change, subject to board approval
Exploration Success – Expanded Work Program
• Revised budget with capital expenditure estimated at $70 to $80 million(1) planned to be presented in May 2012
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53
Jul Aug Sep Oct Nov Dec
Q1 Q2 Q3 Q4Jan Feb Mar Apr May Jun
C C C B C C B C C
B C
• Exploration wells • Petirrojo Sur-1X • Copa C-1X • Copa A Norte-1X
Q2 – Q4 Cubiro Drilling Schedule(1)
(1) Management Estimate, subject to change (2) 7 development wells in Area ‘C’,3 development wells in Area ‘B’ (3) Revised budget and work program planned to be presented to Board in May 2012
B
C
Development
Exploration
WELL TYPE
Production modelling for Development wells: • Average Cubiro Development well, first 6 months = 585 bopd (1)
12
13
(1) Management estimate, subject to change. (2) Management estimate, 2012E calculated with an $80/bbl WTI pricing. (3) Based on 2011 daily average sales of 2,664 boe at average netback of $55.84 per boe (4) Represents estimated revenues less royalties, production and transportation/pipeline costs based upon average daily production of 2,800 boed for 2011E and 4,500 boed (mid-point of management guidance range)for 2012E. (5) Includes interest of $3M and funds being set aside from cash flow for principal repayments of senior notes in May 2012 and May 2013. The 2012E amount is net of $4M in a trust
account as of December 2011 to be used toward the first annual principal repayment in May 2012 of the senior notes (TSX-V: PMD.DB). (6) Includes $6.0M of seismic and other costs charged to exploration expense, $35.3M additions to exploration and evaluation assets and $15.6M additions to oil & gas properties,
plant & equipment.
2011A 2012E (1)
Average daily production for the year (gross before royalties)
2,761 boed
4,300-4,700 boed
Cash flow from operating netbacks(4) $54.3 M(3) $82M(2)
Less: G&A $14.7M $16M
Less: Debt service (principal & interest) $18.4M $20M(5)
Less: Equity tax instalments $2.1M $ 2M
Net cash flow from operations $19.1M $44M
Cash position, beginning of year $6.5M $14M
Cash available from equity financing for work program $35.0M -
Other sources/ (uses), including working capital changes and cash from asset dispositions
$10.4M $ 7M (1)
Total cash available to fund annual work program $71.0M $66M
ANNUAL WORK PROGRAM EXPENDITURES $56.9M(6) $50-$60M
Annual Cash Flow
Llanos Basin
Most prolific hydrocarbon basin in Colombia
CUBIRO RESERVES
Reserve Category L&M Crude Oil
Gross (Mbbl) (1)
Proved 5,564
Probable 5,870
Total 2P 11,432
(1) Reserves before royalties based on working interest Source: NI 51-101 Technical Report, Petrotech Engineering, December 2011
14
BOGOTA
Yopo-1X
Llanos Basin - Cubiro
Polygon A : Development
Area 60.5% W.I.
Polygon B : Exploration
Area 70% W.I.
Polygon C : Exploration
Area 57.13% W.I.
Highlights
•Operated by PetroMagdalena
• 4 discoveries in 2011, 1 YTD 2012
• The Cubiro Block has been under an E&P Contract with ANH since October 8, 2004. Exploration phase followed by a 25 year production period.
Producing Field Prospect
C5 37 °API
Palmarito C7 40 °API
Caño Gandul C5-C7 38 °API
Careto
Arauco Sirenas
Guanapalo C7 30 °API
Barranquero Petirrojo
Altair
Copa
C7
Canario Sirenas Sur
Alondra Q1 -2012
Tijereto Sur Q1-2012
Yopo, Q4-2011
Petirrojo Sur Q2 - 2012
Copa B
Copa A Sur
Jordán C7 29 °API
Copa C, Q3-2012
Copa A Norte Q4-2012
Cernicalo Q1-2012 MAIN FACILITY AT CARETO
CUBIRO
15
16
Petirrojo & Yopo Fields, Petirrojo Sur Prospect
DEVELOPMENT
• Two development wells in 2012, one in Petirrojo and one in Yopo.
• Petirrojo-1X cumulative production block over 240,000 bbls 40 API oil produced
• Engineering plans being developed to replace rented facilties to reduce Opex, estimated payout in 1.5 years.
EXPLORATION
• Petirrojo Sur-1X exploration well will be drilled in Q2-2012, civil work is completed 2012.
1 Km
Yopo Field
Petirrojo Field
Petirrojo-1
Carbonera C7 TWT Seismic Map
Petirrojo Sur-1X Prospect
2P RESERVES
(Mbbls) (1)
Petirrojo 1,569
Yopo 1,415
CURRENT TECHNICAL REPORT
Source: NI 51-101 Technical Report, Petrotech Engineering, December 2011 (1) Reserves before royalties based on working interest
2P Reserves
(Mbbls) (1)
Copa 1,710
Copa B 1,379
Copa A Sur 2,375
CURRENT TECHNICAL REPORT
Copa, Copa A & Copa AS Fields DEVELOPMENT
• Copa-4 was drilled NW of Copa-1X at the projected OWC and found the reservoir sands ≈ 20 ft higher - additional drilling further west is planned to determine reservoir limits.
• Copa-5 to be drilled in Q2-2012
EXPLORATION
• The Copa C structure is to the south of Copa B, an exploration well is planned for Q4-2012.
• The Copa A Norte structure is between two producing fields, Copa and Copa A Sur, an exploration well is planned for Q4-2012.
Carbonera C7 TWT Seismic Map
COPA B FIELD
Copa B -1
COPA ASUR FIELD
1 Km
Copa AN Prospect
(1) Reserves before royalties based on working interest Source: NI 51-101 Technical Report, Petrotech Engineering, December 2011
Copa ASur-1
17
COPA FIELD
Copa-1X
Copa-4
Cubiro ‘C’ Area – Copa Upside
2P RESERVES
(Mbbls) 100% Gross Net
Copa Field 2,991 1,709 1,572
Copa A Sur 4,157 2,375 2,185
Copa B 2,570 1,468 1,352
9,718 5,552 5,109
Dec 31, 2011 Technical Report
Copa Field
Copa A Norte Q4-2012
Copa A Sur
Copa B
Copa C Q4-2012
Copa D Q1-2013
Producing Exploration 2012 Development
Carbonera C7 TWT Seismic Map
18
Copa Field Main Facility
Treatment Capacity = 12,000 bfpd Storage Capacity = 10,000 bbls
19
Highlights
•Arrendajo is 7 km NE of the Cubiro block
•Operated by Pacific Rubiales Energy
•120 km2 of 3D survey completed in April 2011, interpretation shows 6 light oil prospects on trend with producing oil fields
•Azor discovered in January 2012 and was initially put on production on January 31, 2012.
• Four exploration prospects in the Carbonera formation have been identified for Drilling: Yaguazo, Arrendajo Sur, Mirla Blanca, and Mirla Oeste
•3D seismic required to map complete trend, to be acquired in 2013.
•PetroMagdalena acquired 32.5% additional working interest, from Pacific Rubiales in November 2011, subject to ANH approval, for $10 million to be paid out of production.
Llanos Basin – Arrendajo
(1) A wholly owned subsidiary of Pacific Rubiales Energy.
Operator: Pacific Stratus Energy Colombia (1)
WI: 67.5% Contract: subject to ANH approval Product: Light Oil Area: 78,102 acres Stage: Exploration
ARRENDAJO
CUBIRO
Yaguazo
Mirla Oeste
Azor Q4-2011
Arrendajo Sur
Mirla Blanca
Mirla Negra
Azor average Production
March 2012 870 bopd
3D seismic proposed for
2013 program
Producing Field
Prospect
3D Seismic
Arrendajo Block Azor discovery - Upside
Producing Exploration 2012 Exploration 2013 Development
Yaguazo
Azor
Mirla Negra
Carbonera C7 TWT Seismic Map
• Azor-1X well was drilled and completed on January 31, 2012. The well tested at 870 bopd. Average production for March 2012 was 830 bopd natural flow adding 560 bopd to PetroMagdalena’s gross working interest production.
• Two exploration prospects defined by 3D seismic north of the Azor discovery, Yaguazo and Yaguazo Norte.
• Mirla Negra-1X was drilled in 2008 and tested oil in the C5 but was not declared commercial
20
Road to the Azor Wellsite
LLA-47 Block – Exploration Potential
Highlights
• PetroMagdalena signed a binding letter of intent with Interoil Colombia E&P Inc. in respect of a 50% participation to farm in
• Expansion of current Llanos exploration play – LLA-47 covers an area of 447 km2 south and on trend with the company’s main Cubiro block and other producing blocks in the basin
• Two additional years of active drilling
• Interoil has a 100% of the working interest on the block and is the current operator.
• The Company has agreed to undertake a $30 million work program commitment in the three years of Phase 1 of the E&P contract with the ANH.
• Transaction is subject to approval by the ANH. In addition, the Company shall pay a $2 million signing fee upon receipt of ANH approval.
21
About Catatumbo
• Catatumbo Basin is located in northwest Colombia and is the western extension of the very prolific Maracaibo basin in Venezuela
• High potential exploration targets
Highlights
• PetroMagdalena has a beneficial 100% working interest in the Carbonera Block, subject to ANH approval.
• PetroMagdalena has a 70% working interest in the Santa Cruz Block, the Santa Cruz-1X well is the first exploration well on the block.
• PetroMagdalena has a 58% working interest in the Carbonera La Silla Block, an Ecopetrol association contract.
• PetroMagdalena has a beneficial 50% working interest in the northern area and 15% working interest in the southern area. Gran Tierra is the operator.
• MOU signed with YPF to farm out 60% of Carbonera and 70% of the Catguas WI.
Catatumbo Basin
Catguas, Santa Cruz and Carbonera Contracts: ANH Operator: Catguas – Solana (1)
WI: 50% N, 15% S, subject to ANH approval Santa Cruz – Mompos Oil and Gas (2)
WI: 70% Carbonera – Well Logging WI: 100%, subject to ANH approval Product: L/M oil exploration potential Production: Nil
(1) Wholly owned Subsidiary of Gran Tierra Energy (2) Wholly owned subsidiary of PetroMagdalena.
22
VENEZUELA
Carbonera Block
Santacruz
Block
Carbonera La
Silla
Catguas
Block
23
Catatumbo Basin – Santa Cruz-1
Operator: Mompos Oil and Gas (1)
WI: 70%
C: 700
acres
Total of
3480 acres
F: 420
acres
E: 580
acres
D: 230
acres
A: 750
acres
B: 800
acres
Santa Cruz – 1, TD Q1 - 2012
Santa Cruz – 2, TD Q1 - 2013 About Santa Cruz
• The Santa Cruz Block has several faulted structures assigned prospective resources based on the 3D seismic interpretations and information from the offset Rio Zulia field
• High potential exploration targets
Highlights • Santa Cruz-1 spudded on November 20,
2011, and casing run over the Mirador Formation end of February, 2012. The A Block with an area of 750 acres has the Mirador as the primary target, a high porosity & permeability Sandstone reservoir. A contingent exploration location has been identified in the C Block to the north of the Santa Cruz-1X well.
• Santa Cruz 2X targeted for exploration Q4 2012 (pending Santa Cruz 1X results)
(1) Wholly owned subsidiary of PetroMagdalena.
24
Catatumbo Basin – Cantaclaro-1X About Cantaclaro
• The Cantaclaro-1X exploration well, on the Carbonera Block, spudded on March 15, 2012, and was drilled to the top of the target La Luna formation at a depth of 4,560 feet MD where intermediate 9-5/8 inch casing was set .
Highlights • After setting Intermediate 9-5/8 inch
casing the next operation is to install underbalanced drilling equipment.
• The La Luna target formation will then be drilled, highly deviated, and the well is estimated to reach TD at the base of the La Luna Formation at a measured depth of 5,480 feet MD.
• PetroMagdalena has signed an MOU to farm-out 60% of the Carbonera block to YPF as part of a $23 million work program, subject to ANH approval.
Catatumbo
Mito Juan
Colon
La Luna
Cogollo
25
Topoyaco & Mecaya Contracts: ANH Operator: Topoyaco – Pacific Rubiales
WI: 50%, subject to ANH approval Mecaya – Gran Tierra WI: 43%, subject to ANH approval Product: L/M oil exploration potential Production: Nil
About Putumayo
•Putumayo Basin is located in southwest Colombia
•High potential exploration targets
Highlights
•Partnered with experienced operators.
•PetroMagdalena has a beneficial 43% working interest in the Mecaya Block, subject to ANH approval, with no overriding royalty and will pay 85% of the cost of the first 3D and well.
•PetroMagdalena has a 50% working interest in the Topoyaco Block, subject to the ANH approval, with a 6% overriding royalty to Trayectoria. In addition, there is a 3.5% profit interest payable to Grant Geophysical for the seismic work.
Putumayo Basin
26
Cash position (December 31, 2011): $14 million
Debt (December 31, 2011): Factoring Loan (maturing October 2012) Bank term loans (maturing May/ August 2013) 9% Senior Notes ( $10.4MM maturing May 2014)
$5.1 million $6.6 million CA$31.1 million
Share price (April 10, 2012): CA$1.48
Shares outstanding: 147.1 million
Options outstanding ($2.16 average) Warrants outstanding ($3.50)
13.7 million 19.0 million
Fully diluted: 174.8 million
Market capitalization - undiluted (April 10, 2012): CA$217.7 million
Capitalization
Most secure Latin American country to do business (1)
July 2011
Oil opportunities are significant, proven reserves of
over 2 billion barrels
(1) World Bank, Doing Business 2010 and 2011 Reports (2) ANH Report
Consistently high exploration success in Colombia
has encouraged investment - key success factor for
future opportunities
PetroMagdalena is in the right country, focused in the right basin
500% increase in exploration activity – 50% success
0%
20%
40%
60%
80%
020406080
100120
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
Succ
ess
Fac
tor
Number of Wells
Number of wells Success factor27
(2)
28
Leadership team
Luciano Biondi
Chief Executive Officer
Gregg K. Vernon, P. Eng.
Chief Operating Officer
Michael Davies, C.A.
Chief Financial Officer
Francisco Bustillos, M.Sc.
Colombian Finance &
Administration Manager
Jesus Aboud
Exploration Manager
Peter Volk, LL.B.
General Counsel & Secretary
Management
Jaime Perez Branger
Executive Chairman
Miguel de la Campa
Serafino Iacono
Ian Mann
Robert Metcalfe
Luis Miguel Morelli
Nelson Ortiz
Directors
Appendix
29
Valuation Gap
30
50
70
90
110
130
150
40
60
80
100
120
140
160
WTI
Sp
ot
Ind
ex L
eve
l
WTI Spot Colombian E&P* International E&P** S&P/ TSX Energy Index S&P/ TSX Composite Index
Colombian E&Ps are trading at compressed multiples relative to International E&P companies = growing value gap
Source: Bloomberg; January 4, 2011 – April 10, 2012 *Colombian E&P: Azabache Energy Inc, Anatolia Energy Corp, Brownstone Energy Inc, C&C Energia Ltd, Canacol Energy Ltd, Sintana Energy Inc, Gran Tierra Energy Inc, Loon Energy Corp, Pacific Rubiales Energy Corp, Parex Resources Inc, Petro Andina Resources Inc, Petrodorado Energy Ltd, Petrolifera Petroleum Ltd, PetroMagdalena Energy Corp, Abacan Resource Corp PetroNova Inc, Petro Vista Energy Corp, Quetzal Energy Ltd, Sagres Energy Inc, Stetson Oil and Gas Ltd, Shear Diamonds Ltd, Talisman Energy Inc, Vast Exploration Inc, and Petroamerica Oil Corp. **International E&P: Antrim Energy Inc, Enhanced Oil Resources, Inc Bankers Petroleum Ltd, Bengal Energy Ltd, BNK Petroleum Inc, Candax Energy Inc, Caspian Energy Inc, Caza Oil & Gas Inc, Coastal Energy Co, Falcon Oil & Gas Ltd, Encana Corp, Epsilon Energy Ltd/Canada, Heritage Oil PLC, Husky Energy Inc, Ithaca Energy Inc, Ivanhoe Energy Inc, Jura Energy Corp, Energulf Resources Inc, Niko Resources Ltd, NiMin Energy Corp, TAG Oil Ltd, TransAtlantic Petroleum Ltd, TransGlobe Energy Corp, Vermilion Energy Inc, East West Petroleum Corp, Eco Atlantic Oil & Gas Inc, Emerald Bay Energy Inc, Patriot Petroleum Corp, and North Sea Energy Inc.
Value Gap
30
Assets in the most prolific basins
Area Operator (2)
Gross Acres WI (2)
Contract Stage Product Status
Llanos Basin
Cubiro PMD
61,509 60.5-70-57.13% ANH E&P Light Oil Core Asset
Arrendajo Pacific Stratus 60,252 67.5% ANH Exploration Light Oil Near Cubiro*
La Punta Vetra 18,913 Up to 6% ECP E&P Light Oil Under review
Yamu WOGSA 15,534 10% ANH Prod & Exp Light Oil Producing
Catatumbo Basin
Carbonera Well Logging 41,506 100% ANH E&P Oil & Gas Farm-Out
Catguas Gran Tierra 330,354 15% / 50% S N
(1) ANH Exploration Oil & Gas Farm-Out
Santa Cruz Mompos 40,058 70% ANH Exploration Light Oil Exploration
Carbonera – La Silla
Mompos 12,558 58% ECP E&P Light Oil 3D seismic work plan in
place
Magdalena Basin
Las Quinchas Pacific Stratus 124,493 24.5% ECP E&P H Oil To Be Sold
Rio Magdalena Gran Tierra 36,131 56% ECP E&P Gas/Cond/ Oil JV or Farm-Out
Putumayo Basin
Topoyaco Trayectoria 60,035 50% ANH Exploration L/M Oil Under Review
Mecaya Gran Tierra 74,128 43% ANH Exploration L/M Oil 3D seismic planned
(1) After Farm Out WI retained is 4.5% S/15% N. (2) Subject to ANH /ECOPETROL approvals.
* Working interest reflects acquisition of PRE’s 32.5%, subject to ANH approval. Yellow background = Core portfolio assets 31
PMD Today
Cash Flow Positive
• Doubling of revenues: $86 million in 2011 up from $44 million in 2010
• 100% funded 2012 exploration program
Track Record of Discoveries and
Production Growth
• 4 discoveries at Cubiro in 2011
• 1 discovery at Cubiro YTD 2012
• Increase in 2011 exit rate (4,181 boed) production of 76% over 010 (2,374 boed)
Focused on Earnings Quality
• Increase in NPV (1), at Cubiro of 180% to $383 million
• 55% improvement in netbacks year over year
• 4 quarters of production and netback increases
(1)NPV before taxes discounted at 10% 32
Well name 2012
Quarter Cubiro Block
Cernicalo-1ST (formerly named Cernicalo-2X) 1 – on production
Tijereto Sur-1X 1 - testing
Alondra-1X (formerly named Turpial-1X) 1 – dry hole
Petirrojo Sur-1X 2
Copa C-1X 4
Copa A Norte-1X 4
Arrendajo Block
Arrendajo Norte-1X 1 – dry hole
Carbonera Block
Cantaclaro-1X (formerly named San Roque-1X) 1
Santa Cruz Block
Santa Cruz-1X 2 - testing
Santa Cruz-2X (contingent) 4
Planned Exploration Program 2012 Exploration overview 2012
• 6 exploration wells planned for Cubiro, 3 drilled in Q1 – Cernicalo-1ST on production • 1 exploration well for Arrendajo, Arrendajo Norte – dry hole • 1 exploration well for Carbonera , Cantaclaro-1X • 1 exploration well for Santa Cruz
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Well name 2012
Quarter
Cubiro Block
Well Type WI
COPA-4 Single 57.13% Q2 COPA-5 Dual 57.13% Q2 PETIRROJO-4 Single 70.00% Q2 COPA-ASUR2 Dual 57.13% Q2 COPA-B2 Dual 57.13% Q3 COPA-B3 Dual 57.13% Q3 YOPO-2 Dual 70.00% Q3 COPA-ASUR3 Dual 57.13% Q4 PETIRROJO-5H Horizontal 70.00% Q4 COPA-6 Single 57.13% Q4
2012 Development Program
Development overview 2012
• 10 Llanos development wells planned for Cubiro
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35
VSM 12
VMM 35
COR 33
VSM 13
LLA 41 VMM 11
MIDDLE MAGDALENA VALLEY BASIN
CORDILLERA BASIN
UPPER MAGDALENA VALLEY BASIN
LLANOS BASIN
2010 ANH Bid Round - Six E&P Assets
• Agreement for funding the exploration commitment, resulting in PetroMagdalena holding a 6% Working Interest on COR 33, VMM 11 and VMM 35 and 5% Working Interest on the other three in place.
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Colombian Pipeline Infrastructure
