CALGARY, ALBERTA–(Marketwired – March 5, 2015) – Paramount Resources Ltd. (TSX:POU)
RESERVES
OIL AND GAS OPERATIONS
STRATEGIC INVESTMENTS
OUTLOOK
FINANCIAL FLEXIBILITY
FINANCIAL AND OPERATING HIGHLIGHTS (1) | ||||||||||||
($ millions, except as noted) | Q4 2014 | Q4 2013 | % Change |
2014 | 2013(2) | % Change |
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OPERATING | ||||||||||||
Sales volumes | ||||||||||||
Natural gas (MMcf/d) | 143.9 | 102.5 | 40 | 110.5 | 106.1 | 4 | ||||||
Condensate and oil (Bbl/d) | 5,320 | 2,530 | 110 | 3,986 | 2,313 | 72 | ||||||
Other NGLs (Bbl/d) (3) | 5,123 | 674 | 660 | 2,128 | 911 | 134 | ||||||
Total (Boe/d) | 34,430 | 20,290 | 70 | 24,524 | 20,914 | 17 | ||||||
FINANCIAL | ||||||||||||
Petroleum and natural gas sales | 99.4 | 57.8 | 72 | 350.0 | 232.5 | 51 | ||||||
Funds flow from operations | 41.6 | 18.3 | 127 | 141.0 | 70.6 | 100 | ||||||
Per share – diluted ($/share) | 0.40 | 0.19 | 1.39 | 0.75 | ||||||||
Net income (loss) | (106.5 | ) | 0.3 | (71.7 | ) | (59.1 | ) | (21 | ) | |||
Per share – diluted ($/share) | (1.02 | ) | – | (0.71 | ) | (0.63 | ) | |||||
Principal Properties Capital (4) | 224.6 | 171.8 | 31 | 813.9 | 612.8 | 33 | ||||||
Cash proceeds from divestitures (5) | 0.5 | 8.3 | (94 | ) | 100.0 | 37.9 | 164 | |||||
Investments in other entities – market value (6) | 256.9 | 688.5 | (63 | ) | ||||||||
Total assets | 3,199.4 | 2,447.8 | 31 | |||||||||
Net Debt | 1,482.5 | 1,119.2 | 32 | |||||||||
Common shares outstanding (thousands) | 104,844 | 96,993 | 8 | |||||||||
(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, 2014. (3) Other NGLs means ethane, propane and butane. (4) Principal Properties Capital includes capital expenditures and geological and geophysical costs related to the Company’s Principal Properties, and excludes land acquisitions and capitalized interest. (5) Excludes shares of other companies and/or properties received in consideration for properties sold. (6) Based on the period-end closing prices of publicly-traded investments and the book value of the remaining investments. |
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RESERVES HIGHLIGHTS (1)(2) | ||||||||
Proved | Proved & Probable | |||||||
2014 | 2013 | % Change |
2014 | 2013 | % Change |
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Natural gas (Bcf) | 703.8 | 301.3 | 134 | 1,090.9 | 450.5 | 142 | ||
NGLs (MBbl) | 108,410 | 36,777 | 195 | 163,736 | 57,844 | 183 | ||
Light and Medium crude oil (MBbl) | 1,108 | 680 | 63 | 1,526 | 885 | 72 | ||
Total Conventional (MBoe) | 226,812 | 87,677 | 159 | 347,085 | 133,813 | 159 | ||
Oil sands bitumen (MBbl) | – | – | – | 93,468 | 93,468 | – | ||
Total Company (MBoe) | 226,812 | 87,677 | 159 | 440,553 | 227,281 | 94 | ||
Conventional F&D costs | ||||||||
Excluding facilities & gathering ($/Boe) (3) | 19.72 | 17.79 | 11 | 14.29 | 10.87 | 31 | ||
Conventional reserves replacement | 17 X | 6 X | 183 | 25 X | 8 X | 213 | ||
NPV10 future net revenue before tax ($ millions) | ||||||||
Conventional | 2,255 | 1,093 | 106 | 3,836 | 1,793 | 114 | ||
Total Company | 2,255 | 1,093 | 106 | 4,199 | 2,094 | 101 | ||
(1) Readers are referred to the advisories concerning Oil and Gas Measures and Definitions in the Advisories section of this document. (2) Reserves evaluated by the Company’s independent reserves evaluator, McDaniel & Associates Consultants Ltd. as of December 31, 2014 in accordance with National Instrument 51-101 definitions, standards and procedures. Amounts are working interest reserves before royalty deductions. Net present values were determined using forecast prices and costs and do not represent fair market value. (3) P+P F&D costs, excluding facilities and gathering capital, were $10.87 per Boe in 2013 and $12.18 per Boe in 2012 and the three-year average for the period 2012 to 2014 is $13.37 per Boe. |
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ADDITIONAL INFORMATION
ABOUT PARAMOUNT
Paramount is an independent, publicly traded, Canadian corporation that explores for and develops conventional petroleum and natural gas prospects, pursues longer-term non-conventional exploration and pre-development projects and holds investments in other entities. The Company’s principal properties are primarily located in Alberta and British Columbia. Paramount’s Class A Common Shares are listed on the Toronto Stock Exchange under the symbol “POU”.
Paramount’s 2014 annual report, including Management’s Discussion and Analysis and the Company’s Consolidated Financial Statements can be obtained at: http://file.marketwire.com/release/995440ar.pdf
This information will also be made available through Paramount’s website at www.paramountres.com and SEDAR at www.sedar.com.
[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”, “Principal Properties Capital”, “Investments in other entities – market value” and “Cash proceeds from divestitures”, 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 and transportation and NGLs processing 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.
Principal Properties Capital includes capital expenditures and geological and geophysical costs related to the Company’s Principal Properties, and excludes land acquisitions and capitalized interest. The Principal Properties Capital measure provides management and investors with information regarding the Company’s Principal Properties spending on drilling and infrastructure projects separate from land acquisition activity. Refer to the Exploration and Capital Expenditures section of the Company’s Management Discussion and Analysis. 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., Marquee Energy Ltd., 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. Cash Proceeds From Divestitures represents cash proceeds received by the Company on dispositions of oil and gas properties and excludes any non-cash consideration received. This measure is equivalent to Proceeds on Sale of Property, Plant and Equipment in the Company’s Consolidated Statement of Cashflows.
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 “MMBoe”, “MBoe”, “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. During 2014, the value ratio between crude oil and natural gas was approximately 18:1. 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. The term “liquids” is used to represent oil and natural gas liquids (“NGLs”) volumes. The term “Other NGLs” means ethane, propane and butane.
Test rates for the wells fracked on the Company’s 3-20 ten-well pad averaged 10.8 MMcf/d of natural gas per well, and are the average of production test rates over the final period of post clean-up flow-back at the largest choke setting, with durations of between 5 and 53 hours. Flow-back casing pressures for the tests ranged between approximately 2,200 psi and 3,000 psi. Test rates for the wells fracked on the Company’s 8-22 ten-well pad averaged 13.0 MMcf/d of natural gas per well, and are the average of production test rates over the final period of post clean-up flow-back at the largest choke setting, with durations of between 4 and 30 hours. Flow-back casing pressures for the tests ranged between approximately 2,000 psi and 2,900 psi.
All 20 of the wells on these two ten-well pads were stimulated using frack oil and substantially all fluids recovered during the test periods were load fluids. As a result, fluid volumes recovered during the tests have not been disclosed. Pressure transient analyses and well-test interpretations have not been carried out for these wells and as such, data should be considered to be preliminary until such analysis or interpretation has been done. Test results are not necessarily indicative of long-term performance or of ultimate recovery.
Wellhead condensate-gas ratios (“CGRs”) for the three wells on the 3-20 pad were calculated for each well for the period commencing on the date load oil volumes were completely recovered for such well and ending on February 28, 2015 (the “Post-load Recovery Period”). CGRs were calculated for each well over its applicable Post-load Recovery Period by dividing total raw liquids volumes produced by total raw natural gas volumes produced during such period. Raw volumes as measured at the wellhead. Sales volumes are lower due to shrinkage.
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.
Behind-pipe wells includes new wells that have been rig-released but have not been placed on production, including wells that have not been completed, wells that have been completed but not yet tied-in and wells that have been completed and tied-in. Estimated volumes are based on the Company’s applicable type curves for each well, which vary depending location and formation.
Paramount Resources Ltd.
J.H.T. (Jim) Riddell
President and Chief Operating Officer
(403) 290-3600
Paramount Resources Ltd.
B.K. (Bernie) Lee
Chief Financial Officer
(403) 290-3600
(403) 262-7994 (FAX)
www.paramountres.com
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