J.H.T. (Jim) Riddell
President and Chief Operating Officer
(403) 290-3600
Paramount Resources Ltd.
B.K. (Bernie) Lee
Chief Financial Officer
(403) 262-7994
(403) 290-3600
www.paramountres.com
FIRST QUARTER OVERVIEW
Principal Properties
Strategic Investments |
Corporate |
FINANCIAL AND OPERATING HIGHLIGHTS(1)(2) | |||||
($ millions, except as noted) | |||||
Three months ended March 31 | 2013 | 2012 | % Change | ||
Financial | |||||
Petroleum and natural gas sales | 61.3 | 54.7 | 12 | ||
Funds flow from operations | 16.6 | 12.8 | 30 | ||
Per share – diluted ($/share) | 0.18 | 0.15 | 20 | ||
Net income | 0.4 | 124.5 | (100 | ) | |
Per share – basic ($/share) | – | 1.46 | |||
Per share – diluted ($/share) | – | 1.42 | |||
Exploration and development expenditures | 145.2 | 142.2 | 2 | ||
Investments in other entities – market value(3) | 719.6 | 675.6 | 7 | ||
Total assets | 2,076.5 | 1,810.9 | 15 | ||
Net debt(4) | 857.9 | 474.0 | 81 | ||
Common shares outstanding (thousands) | 90,130 | 85,569 | 5 | ||
Operating | |||||
Sales volumes | |||||
Natural gas (MMcf/d) | 113.6 | 88.6 | 28 | ||
NGLs (Bbl/d) | 2,662 | 1,652 | 61 | ||
Oil (Bbl/d) | 998 | 2,386 | (58 | ) | |
Total (Boe/d) | 22,591 | 18,813 | 20 | ||
Average realized price | |||||
Natural gas ($/Mcf) | 3.47 | 2.77 | 25 | ||
NGLs ($/Bbl) | 73.78 | 78.57 | (6 | ) | |
Oil ($/Bbl) | 84.37 | 89.21 | (5 | ) | |
Total ($/Boe) | 30.16 | 31.95 | (6 | ) | |
Net wells drilled (excluding oil sands evaluation) | 9 | 11 | (18 | ) | |
Net oil sands evaluation wells drilled | 6 | 1 | 500 | ||
(1) | Readers are referred to the advisories concerning non-GAAP measures and oil and gas definitions in the Advisories section of this document. |
(2) | Amounts include the results of discontinued operations. Refer to Paramount’s Management’s Discussion and Analysis for the three months ended March 31, 2013. |
(3) | Based on the period-end closing prices of publicly traded enterprises and the book value of the remaining investments. |
(4) | Net debt is a non-GAAP measure, it is calculated and defined in the Liquidity and Capital Resources section of Paramount’s Management’s Discussion and Analysis for the three months ended March 31, 2013. |
OUTLOOK
Paramount’s 2013 capital budget for exploration and development (“E&D”) and Strategic Investments remains at approximately $550 million, excluding land acquisitions and capitalized interest. E&D spending will focus primarily on the Kaybob COU’s Deep Basin development. Construction of the Musreau Deep Cut Facility is progressing on-schedule for completion in the fourth quarter and construction of the third-party Smoky Deep Cut Facility will continue into 2014. Drilling activities are continuing in the Kaybob COU through breakup in preparation for the start-up of the deep cut facilities. Strategic Investment capital spending will be directed towards shale gas exploration activities in the Liard Basin and continued front-end engineering and design work for the initial phase of the Hoole Grand Rapids development within Cavalier Energy.
Sales volumes for the second and third quarters of 2013 are expected to range between 21,000 Boe/d and 25,000 Boe/d, depending upon the availability of downstream NGLs transportation and processing capacity. Sales volumes are expected to increase in the fourth quarter once the expansion of a third-party NGLs pipeline is completed, additional fractionation capacity is secured and the Musreau Deep Cut Facility is on-stream.
After the Musreau Deep Cut Facility starts up in late-2013, the Company will have owned and firm-service contracted natural gas processing capacity of 279 MMcf/d, which will increase to over 300 MMcf/d in 2014 with the addition of the Smoky Deep Cut Facility. Corporate production is expected to ramp up in 2014 to over 50,000 Boe/d, with the timing dependent on the completion of downstream fractionation facilities expansions in which Paramount has secured long-term firm service capacity.
ADDITIONAL INFORMATION
ABOUT PARAMOUNT
Paramount Resources Ltd. is a Canadian oil and natural gas exploration, development and production company with operations focused in Western Canada. Paramount’s common shares are listed on the Toronto Stock Exchange under the symbol “POU”.
A copy of the Company’s first quarter 2013 report, including Management’s Discussion and Analysis and the unaudited Interim Condensed Consolidated Financial Statements, can be obtained at http://media3.marketwire.com/docs/507pou_q1.pdf.
This information will also be made available through:
Paramount’s website at: http://www.paramountres.com/investor_relations/quarterlies.html
SEDAR at: www.sedar.com.
ADVISORIES
FORWARD-LOOKING INFORMATION
Certain statements in this document constitute forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as “anticipate”, “believe”, “estimate”, “expect”, “plan”, “schedule”, “intend”, “propose”, or similar words suggesting future outcomes or an outlook. Forward looking information in this document includes, but is not limited to:
Such forward-looking information is based on a number of assumptions which may prove to be incorrect. The following assumptions have been made, in addition to any other assumptions identified in this document:
Although Paramount believes that the expectations reflected in such forward looking information is reasonable, undue reliance should not be placed on it as Paramount can give no assurance that such expectations will prove to be correct. Forward-looking information is based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Paramount and described in the forward looking information. These risks and uncertainties include, but are not limited to:
The foregoing list of risks is not exhaustive. Additional information concerning these and other factors which could impact Paramount, its operations and its financial condition are included in Paramount’s most recent Annual Information Form. The forward-looking information contained in this document is made as of the date hereof and, except as required by applicable securities law, Paramount undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise.
NON-GAAP MEASURES
In this document “Funds flow from operations”, “Funds flow from operations per share – diluted”, “Netback”, “Net Debt”, “Exploration and development expenditures” and “Investments in other entities – market value”, collectively the “Non-GAAP measures”, are used and do not have any standardized meanings as prescribed by International Financial Reports Standards.
Funds flow from operations refers to cash from operating activities before net changes in operating non-cash working capital, geological and geophysical expenses and asset retirement obligation settlements. Funds flow from operations is commonly used in the oil and gas industry to assist management and investors in measuring the Company’s ability to fund capital programs and meet financial obligations. Netback equals petroleum and natural gas sales less royalties, operating costs, production taxes and transportation costs. Netback is commonly used by management and investors to compare the results of the Company’s oil and gas operations between periods. Net Debt is a measure of the Company’s overall debt position after adjusting for certain working capital amounts and is used by management to assess the Company’s overall leverage position. Refer to the liquidity and capital resources section of Management’s Discussion and Analysis for the calculation of Net Debt. Exploration and development expenditures refer to capital expenditures and geological and geophysical costs incurred by the Company’s COUs (excluding land and acquisitions). The exploration and development expenditure measure provides management and investors with information regarding the Company’s Principal Property spending on drilling and infrastructure projects, separate from land acquisition activity. Investments in other entities – market value reflects the Company’s investments in enterprises whose securities trade on a public stock exchange at their period end closing price (e.g. Trilogy, MEG Energy, MGM Energy and others), and investments in all other entities at book value. Paramount provides this information because the market values of equity-accounted investments, which are significant assets of the Company, are often materially different than their carrying values.
Non-GAAP measures should not be considered in isolation or construed as alternatives to their most directly comparable measure calculated in accordance with GAAP, or other measures of financial performance calculated in accordance with GAAP. The Non-GAAP measures are unlikely to be comparable to similar measures presented by other issuers.
OIL AND GAS MEASURES AND DEFINITIONS
This document contains disclosures expressed as “Boe” and “Boe/d”. All oil and natural gas equivalency volumes have been derived using the ratio of six thousand cubic feet of natural gas to one barrel of oil. Equivalency measures may be misleading, particularly if used in isolation. A conversion ratio of six thousand cubic feet of natural gas to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head. The term “liquids” is used to represent oil and natural gas liquids.
During the first quarter of 2013, the value ratio between crude oil and natural gas was approximately 24:1. This value ratio is significantly different from the energy equivalency ratio of 6:1. Using a 6:1 ratio would be misleading as an indication of value.
Paramount Resources Ltd.
B.K. (Bernie) Lee
Chief Financial Officer
(403) 262-7994
(403) 290-3600
www.paramountres.com