CALGARY, ALBERTA–(Marketwired – March 6, 2014) – Paramount Resources Ltd. (TSX:POU) –
OVERVIEW
Oil and Gas Operations
Corporate
Strategic Investments
FINANCIAL AND OPERATING HIGHLIGHTS(1)(2) | |||||||||||||
($ millions, except as noted) | |||||||||||||
Three months ended December 31 | Year ended December 31 | ||||||||||||
2013 | 2012 | % Change | 2013 | 2012 | % Change | ||||||||
FINANCIAL | |||||||||||||
Petroleum and natural gas sales | 57.8 | 54.6 | 6 | 232.5 | 197.1 | 18 | |||||||
Funds flow from operations | 18.3 | 17.7 | 3 | 70.6 | 58.1 | 22 | |||||||
Per share – diluted ($/share) | 0.19 | 0.20 | 0.75 | 0.67 | |||||||||
Net income (loss) | 0.3 | (151.8 | ) | 100 | (59.1 | ) | (61.9 | ) | 5 | ||||
Per share – diluted ($/share) | – | (1.69 | ) | (0.63 | ) | (0.71 | ) | ||||||
Exploration and development expenditures | 175.8 | 166.8 | 5 | 624.9 | 523.1 | 19 | |||||||
Investments in other entities – market value (3) | 688.5 | 704.8 | (2 | ) | |||||||||
Total assets | 2,447.8 | 2,037.0 | 20 | ||||||||||
Net debt | 1,119.2 | 701.4 | 60 | ||||||||||
Common shares outstanding (thousands) | 96,993 | 89,932 | 8 | ||||||||||
OPERATING | |||||||||||||
Sales volumes | |||||||||||||
Natural gas (MMcf/d) | 102.5 | 104.1 | (2 | ) | 106.1 | 98.5 | 8 | ||||||
NGLs (Bbl/d) | 2,668 | 2,110 | 26 | 2,498 | 1,873 | 33 | |||||||
Oil (Bbl/d) | 536 | 1,213 | (56 | ) | 726 | 1,620 | (55 | ) | |||||
Total (Boe/d) | 20,290 | 20,674 | (2 | ) | 20,914 | 19,917 | 5 | ||||||
Average realized price | |||||||||||||
Natural gas ($/Mcf) | 3.73 | 3.45 | 8 | 3.57 | 2.72 | 31 | |||||||
NGLs ($/Bbl) | 74.30 | 61.23 | 21 | 74.73 | 67.10 | 11 | |||||||
Oil ($/Bbl) | 78.92 | 79.72 | (1 | ) | 87.47 | 83.16 | 5 | ||||||
Total ($/Boe) | 30.99 | 28.70 | 8 | 30.46 | 27.04 | 13 | |||||||
RESERVES (4) | |||||||||||||
Proved | Proved & Probable | ||||||||||||
December 31 2013 |
December 31 2012 |
December 31 2013 |
December 31 2012 |
||||||||||
Natural gas (Bcf) | 301.3 | 201.9 | 49 | 450.5 | 323.7 | 39 | |||||||
NGLs (MBbl) | 36,777 | 15,662 | 135 | 57,844 | 30,761 | 88 | |||||||
Light and medium crude oil (MBbl) | 680 | 1,540 | (56 | ) | 885 | 2,128 | (58 | ) | |||||
Total Conventional (MBoe) | 87,677 | 50,857 | 72 | 133,813 | 86,842 | 54 | |||||||
Oil sands bitumen (MBbl) | – | – | – | 93,468 | 93,091 | – | |||||||
Total Company (MBoe) | 87,677 | 50,857 | 72 | 227,281 | 179,933 | 26 | |||||||
Conventional F&D costs excluding facilities & gathering ($/Boe) | 17.79 | 16.82 | 6 | 10.87 | 12.18 | (11 | ) | ||||||
Conventional reserves replacement | 611 | % | 336 | % | 759 | % | 599 | % | |||||
NPV10 future net revenue before tax | |||||||||||||
Conventional | 1,093 | 456 | 140 | 1,793 | 880 | 104 | |||||||
Total Company | 1,093 | 456 | 140 | 2,094 | 1,259 | 66 |
(1) | Readers are referred to the advisories concerning non-GAAP measures and Oil and Gas Measures and 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 year ended December 31, 2013. |
(3) | Based on the period-end closing prices of publicly-traded enterprises and the book value of the remaining investments. |
(4) | Working interest reserves before royalty deductions. Net present values were determined using forecast prices and costs and do not represent fair market value. |
OUTLOOK
The Company’s 2014 exploration and development (“E&D”) and strategic investments capital budget is $650 million, excluding land acquisitions and capitalized interest. Paramount’s E&D investments will primarily focus on the Company’s Deep Basin developments, including drilling and completing wells in Kaybob to feed the new deep cut facilities and at Karr-Gold Creek to further delineate the middle and upper Montney formation. Spending will also be directed to facilities projects including completion of the deep cut projects at Musreau and at Smoky, the amine processing train and the condensate stabilizer expansion. In the Southern and Northern COUs, up to eight wells are planned to be drilled to explore new opportunities and for land retention. Strategic Investments spending in 2014 will be directed towards completing the d-57-D shale gas exploration well at Dunedin and drilling an additional vertical shale gas exploration well at Dunedin for land retention.
Fourth quarter 2013 sales volumes averaged approximately 20,000 Boe/d and Paramount expects sales volumes to continue at that level, after giving effect to the first quarter Chain area disposition. Paramount will begin to ramp-up production as the Musreau Deep Cut Facility starts up, additional components of the Company’s Kaybob area infrastructure are completed and third-party de-ethanization capacity becomes available. Sales volumes are expected to reach approximately 50,000 Boe/d in 2014 and increase to approximately 70,000 Boe/d in 2015, depending upon the availability of downstream third-party de-ethanization 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”.
Paramount’s financial and operating results for 2013, including Management’s Discussion and Analysis and the Company’s audited consolidated financial statements as at and for the year ended December 31, 2013, can be obtained at: http://media3.marketwire.com/docs/306pou_ar.pdf.
This information will also be made available through: SEDAR at www.sedar.com and Paramount’s website at www.paramountres.com.
Paramount’s Annual Information Form (“AIF”) for the year ended December 31, 2013, which includes the disclosure and reports relating to reserves data and other oil and gas information required pursuant to National Instrument 51-101, will also be made available through Paramount’s website and SEDAR.
[expand title=”Advisories & Contact”]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”, “will”, “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. Assumptions have been made with respect to the following matters, 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 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. The material risks and uncertainties include, but are not limited to:
The foregoing list of risks is not exhaustive. For more information relating to risks, see the section titled “RISK FACTORS” in Paramount’s current 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”, “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 Reporting 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 the Company’s Management’s Discussion and Analysis for the period 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 Energy Corp., MEG Energy Corp., MGM Energy Corp., Strategic Oil & Gas Ltd. 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”, “MBoe” 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 2013, the value ratio between crude oil and natural gas was approximately 25:1. 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.
Conventional reserve estimates include nominal amounts of volumes and future net revenues related to Paramount’s completed shale gas well. The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation. In addition, estimates of future net revenue do not represent fair market value.
Finding and Development (“F&D”) costs exclude capital costs and reserve volumes related to oil sands and exploratory shale gas properties within Paramount’s Strategic Investments business segment because the relationship between capital amounts invested and reserve volumes discovered for such properties is not comparable to conventional oil and gas properties.
The reserves replacement disclosure herein was calculated as the net increase in proved and proved and probable reserves estimates from extensions and discoveries, technical revisions and economic factors divided by the Company’s total production in the period. Estimated production from wells that have not yet produced included in the Kaybob COU’s estimated behind pipe production inventory is based on the Company’s 4.4 Bcf type curve for Falher formation wells and 3.0 Bcf type curve for Montney formation wells.
Paramount Resources Ltd.
J.H.T. (Jim) Riddell
President and Chief Operating Officer
(403) 290-3600
(403) 262-7994 (FAX)Paramount Resources Ltd.
B.K. (Bernie) Lee
Chief Financial Officer
(403) 290-3600
(403) 262-7994 (FAX)
www.paramountres.com
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