Paramount Resources Ltd. 2013 Results: Proved Reserves Up 72%;
Conventional P+P Reserves Up 54%; Musreau Deep Cut Facility To
Ramp-up In Q2 2014; Company Production To Reach 50,000 Boe/d In
2014
CALGARY, ALBERTA--(Marketwired - Mar 6, 2014) - Paramount
Resources Ltd. (TSX:POU) -
OVERVIEW
Oil and Gas Operations
- Proved reserves increased 72 percent year-over-year to 87.7
MMBoe, after production of 7.6 MMBoe and dispositions of 2.2 MMBoe
(replacement ratio of 6.1 times).
- Total proved and probable ("P+P") reserves increased 47.3 MMBoe
to 227.3 MMBoe, with conventional P+P reserves increasing 54
percent to 133.8 MMBoe (replacement ratio of 7.6 times) and
probable oil sands bitumen reserves increasing to 93.5 MMBoe.
- Year-end 2013 P+P reserves included 57.8 MMBbl of NGLs (43
percent of conventional P+P reserves), representing an 88 percent
increase in NGLs reserves over 2012.
- The value of year-end 2013 conventional P+P reserves (10%
discount, before tax) more than doubled to $1.8 billion.
- Kaybob COU P+P finding and development costs, excluding major
facilities and gathering system project construction costs, were
$10.21 per Boe compared to $10.31 per Boe in 2012.
- Sales volumes will begin to ramp-up as the Musreau Deep Cut
Facility starts up in the second quarter of 2014. Paramount's sales
volumes are expected to reach approximately 50,000 Boe/d in 2014
and increase to approximately 70,000 Boe/d in 2015.
- Paramount's behind pipe well inventory in the Kaybob Deep Basin
has increased to 66 (47.9 net) wells with estimated first month
deliverability of approximately 300 MMcf/d (230 MMcf/d net).
- Kaybob COU sales volumes increased 23 percent to 13,402 Boe/d
in 2013 compared to 10,910 Boe/d in 2012. Total Company sales
volumes increased 5 percent in 2013 to average 20,914 Boe/d,
despite third-party downstream disruptions that curtailed
production by approximately 3,500 Boe/d and the sale of 1,500 Boe/d
of production.
- NGLs volumes are projected to increase from 12 percent of total
sales volumes in 2013 to approximately 40 percent by the end of
2014.
- Netbacks increased by 42 percent to $126.2 million in 2013 from
$88.9 million in 2012.
- In 2013, the Company sold non-core properties in Alberta, the
Northwest Territories and the United States, realizing proceeds of
approximately $70 million in cash and publicly trading
securities.
- In February 2014, Paramount entered into an agreement to sell
coal bed methane properties producing approximately 6 MMcf/d in the
Chain-Delia area of Alberta for approximately $12 million in common
shares of a TSX-Venture listed Company.
Corporate
- The Company raised a total of approximately $360 million in
2013 through equity offerings and the $150 million re-opening of
its 7 5/8 percent senior notes due 2019.
- In November 2013, Paramount's bank credit facility was
increased from $450 million to $600 million based on progress made
in the Kaybob Deep Basin development and increases in reserves to
the end of September 2013.
- Total 2013 capital spending was approximately $100 million
lower than Paramount's $800 million capital guidance because of
severe weather conditions in late-2013 and other factors which
deferred spending into 2014.
Strategic Investments
- The market value of Paramount's investments in publicly-traded
and private corporations was approximately $690 million ($7.10 per
Paramount share) as of December 31, 2013.
- In the Liard Basin, the Company's first horizontal shale gas
exploration well at Patry was brought-on production in
late-December. At Dunedin, the Company plans to complete its d-57-D
shale gas exploration well and drill an additional shale gas
exploration well in 2014 to preserve lands.
- Cavalier Energy anticipates regulatory approvals for the
initial 10,000 Bbl/d phase of its Hoole project will be received by
mid-2014. Front-end engineering and design work was completed in
2013.
- Fox Drilling's two new walking rigs are both currently drilling
separate 10-well pads in the Kaybob COU.
FINANCIAL AND OPERATING HIGHLIGHTS(1)(2) |
|
($ 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.
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:
- projected production and sales volumes and growth and the
timing thereof (including expected first month production volumes
from the Kaybob COU's inventory of behind-pipe wells);
- forecast capital expenditures;
- exploration, development, and associated operational plans and
strategies and the anticipated timing of such activities;
- projected timelines for constructing, commissioning and/or
starting-up new and expanded deep cut natural gas processing and
associated facilities;
- the projected availability of third party processing,
transportation, fractionation, de-ethanization and other
facilities;
- the anticipated date for receiving regulatory approvals for the
initial phase of Cavalier Energy's Hoole Grand Rapids oil sands
development project;
- business strategies and objectives; and
- estimated reserves and the discounted present value of future
net revenues therefrom.
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:
- future oil, bitumen, natural gas, NGLs and other commodity
prices;
- royalty rates, taxes and capital, operating, general &
administrative and other costs;
- foreign currency exchange rates and interest rates;
- general economic and business conditions;
- the ability of Paramount to obtain the required capital to
finance its exploration, development and other operations;
- the ability of Paramount to obtain equipment, services,
supplies and personnel in a timely manner and at an acceptable cost
to carry out its activities;
- the ability of Paramount to secure adequate product processing,
transportation, fractionation, de-ethanization and storage capacity
on acceptable terms;
- the ability of Paramount to market its oil, bitumen, natural
gas and NGLs successfully to current and new customers;
- the ability of Paramount and its industry partners to obtain
drilling success (including in respect of anticipated production
volumes, reserves additions and NGLs yields) and operational
improvements, efficiencies and results consistent with
expectations;
- the timely receipt of required governmental and regulatory
approvals; and
- anticipated timelines and budgets being met in respect of
drilling programs and other operations (including well completions
and tie-ins and the construction, commissioning and start-up of new
and expanded facilities).
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:
- fluctuations in oil, bitumen, natural gas, NGLs and other
commodity prices;
- changes in foreign currency exchange rates and interest
rates;
- the uncertainty of estimates and projections relating to future
revenue, future production, NGLs yields, royalty rates, taxes and
costs and expenses;
- the ability to secure adequate product processing,
transportation, fractionation, de-ethanization and storage capacity
on acceptable terms;
- operational risks in exploring for, developing and producing
crude oil, bitumen, natural gas and NGLs;
- the ability to obtain equipment, services, supplies and
personnel in a timely manner and at an acceptable cost;
- potential disruptions or unexpected technical or other
difficulties in designing, developing, expanding or operating new,
expanded or existing facilities (including third party
facilities);
- industry wide processing, pipeline, de-ethanization, and
fractionation infrastructure outages, disruptions and
constraints;
- risks and uncertainties involving the geology of oil and gas
deposits;
- the uncertainty of reserves and resources estimates;
- general business, economic and market conditions;
- the ability to generate sufficient cash flow from operations
and obtain financing at an acceptable cost to fund planned
exploration, development and operational activities and meet
current and future obligations (including costs of anticipated new
and expanded facilities and other projects and product, processing,
transportation, fractionation and similar commitments);
- changes in, or in the interpretation of, laws, regulations or
policies (including environmental laws);
- the ability to obtain required governmental or regulatory
approvals in a timely manner, and to enter into and maintain leases
and licenses;
- the effects of weather;
- the timing and cost of future abandonment and reclamation
obligations and potential liabilities for environmental damage and
contamination;
- uncertainties regarding aboriginal claims and in maintaining
relationships with local populations and other stakeholders;
- the outcome of existing and potential lawsuits, regulatory
actions, audits and assessments; and
- other risks and uncertainties described elsewhere in this
document and in Paramount's other filings with Canadian securities
authorities.
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) RiddellPresident and Chief
Operating Officer(403) 290-3600(403) 262-7994Paramount Resources
Ltd.B.K. (Bernie) LeeChief Financial Officer(403) 290-3600(403)
262-7994www.paramountres.com
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