CALGARY, July 6, 2017 /CNW/ - Paramount Resources Ltd.
(TSX: POU) ("Paramount" or the "Company") is pleased to announce
that it has entered into an agreement with certain subsidiaries of
Apache Corporation to acquire Apache Canada Ltd. ("Apache Canada")
for $459.5 million, plus working
capital and other monetary adjustments (the "Apache Canada
Acquisition"). Paramount plans to fund the Apache Canada
Acquisition with cash on hand and no debt will be
assumed.
Paramount has also entered into an agreement with Trilogy Energy
Corp. ("Trilogy") to merge by way of an arrangement under the
Business Corporations Act (Alberta), pursuant to which Paramount would
acquire all of the common shares and non-voting shares of Trilogy
not already owned by Paramount in exchange for Class A common
shares of Paramount on the basis of one Paramount share for every
3.75 Trilogy shares (the "Merger").
These strategic transactions are the next steps in Paramount's
transformation following the sale of the Company's Musreau deep cut
gas processing plant and properties in 2016 and the repayment of
all debt then outstanding. The Company is redeploying its cash on
hand and immediately increasing its production, cash flows,
reserves and landholdings.
Paramount, upon acquiring Apache Canada and merging with
Trilogy, will become a Montney, Duvernay and Deep Basin focused intermediate
exploration and production company with the financial strength to
accelerate the development of a portfolio of top-tier resource
plays, unlocking the value of the underlying resources. The
integration of the three companies will generate operational
synergies, optimize cost structures, offer financial flexibility
and provide economies of scale. Paramount's diversified production
base will be capable of delivering repeatable, low risk growth and
generating free cash flow in a variety of price environments.
Once completed, the Apache Canada Acquisition and the Merger
will result in Paramount having:
- Combined fourth quarter 2017 production expected to exceed
90,000 Boe/d, including approximately 35 percent liquids, and
proved plus probable reserves of 600 MMBoe, based on independent
reserves evaluations prepared by McDaniel & Associates
Consultants Ltd. ("McDaniel") effective as of June 1, 2017;
- A total land position of approximately 2.7 million net acres
with a number of top-tier Montney and Duvernay resource development plays which will
provide the Company with considerable capital allocation
flexibility;
- A strong balance sheet and materially enhanced cash flow
base;
- Montney acreage of approximately 372,000 net acres, with
near-term production growth focused at Karr and a new turn-key
resource play at Wapiti which is anticipated to add material new
production in mid-2019;
- Duvernay acreage of
approximately 223,000 net acres, with near-term growth planned for
the Kaybob Duvernay; and
- 176,000 net acres of fee simple lands in southern Alberta and additional minor properties, all
of which may be monetized in whole or in part.
"These transactions represent Paramount's next significant
resource capture, building on the transformation of the Company we
initiated in 2016. We have replaced more than the liquids-rich
Montney lands and reserves we sold in 2016 and acquired a suite of
top-tier development opportunities," said Jim Riddell, Paramount's President and Chief
Executive Officer.
"We believe the 46,000 Montney acres we are acquiring at Wapiti
are a continuation of Paramount's liquids-rich resource play at
Karr, where our drilling and completion programs have been
delivering record results for Paramount. These transactions combine
Trilogy's and Apache Canada's complementary land positions at
Kaybob, materially increasing the size of those Montney and
Duvernay resource plays.
"The combination of these three organizations will result in
synergies in field operations, general and administrative expenses
and development capital expenditures, as well as the optimization
of processing and transportation infrastructure and
commitments."
The Apache Canada Acquisition is not conditional on the
completion of the Merger. Closing of the Apache Canada Acquisition
is expected to occur in August 2017,
subject to the receipt of regulatory approvals and other customary
closing conditions. The Merger is conditional upon, among other
things, the completion of the Apache Canada Acquisition and is
targeted for completion in September
2017.
The map below outlines the location of Apache Canada's and
Trilogy's lands in relation to Paramount's lands:
* Note: Apache Canada landholding information provided by Apache
Canada.
Trilogy landholding information is from Trilogy's public
disclosure documents.
Sales volumes and netbacks for Paramount, Apache Canada and
Trilogy for the three months ended March 31,
2017 are as follows:
|
Paramount
|
Apache Canada
(1)
|
Trilogy
(2)
|
Proforma
|
Sales Volumes
(Boe/d)
|
16,163
|
42,196
|
25,133
|
83,492
|
|
%
liquids
|
47%
|
26%
|
38%
|
34%
|
|
|
|
|
|
Netback ($
millions)
|
31.7
|
37.2
|
44.2
|
113.1
|
|
|
|
|
|
(1)
|
Sales volumes and
netback information provided by Apache Canada. Excludes sales
volumes and netbacks associated with Apache Canada's Midale, House
Mountain and Provost properties, which have either been sold or are
in the process of being sold by Apache Canada.
|
(2)
|
Sales volumes and
netback information is from Trilogy's public disclosure
documents.
|
Reserves
Paramount's independent reserves evaluator, McDaniel, updated
the Company's reserves evaluation to June 1,
2017. The Company's proved plus probable reserves increased
27 percent to 146 MMBoe compared to 115 MMBoe as of December 31, 2016. The increase in reserves is
primarily due to the performance of new wells brought on production
at the Karr property in 2017.
The reserves of Apache Canada and Trilogy have also been
evaluated by McDaniel as of June 1,
2017. Estimated reserves volumes are summarized as
follows:
|
Proved
(1)
|
|
Paramount
(2)
|
Apache
Canada
(3)
|
Trilogy
|
Proforma
|
Natural Gas
(Bcf)
|
292.0
|
661.7
|
347.2
|
1,300.9
|
NGLs (MBbl)
(4)
|
33,959
|
54,968
|
19,531
|
108,457
|
Light and Medium
Crude Oil (MBbl)
|
771
|
2,943
|
15,837
|
19,551
|
Total
(MBoe)
|
83,400
|
168,193
|
93,238
|
344,832
|
See notes
below.
|
|
Proved Plus
Probable (1)
|
|
Paramount
(2)
|
Apache
Canada
(3)
|
Trilogy
|
Proforma
|
Natural Gas
(Bcf)
|
530.9
|
1,124.6
|
595.3
|
2,250.7
|
NGLs (MBbl)
(4)
|
56,798
|
97,129
|
40,218
|
194,145
|
Light and Medium
Crude Oil (MBbl)
|
1,098
|
3,760
|
25,629
|
30,487
|
Total (MBoe)
|
146,377
|
288,320
|
165,059
|
599,757
|
(1)
|
Reserves evaluated by
McDaniel as of June 1, 2017. Volumes disclosed are working interest
reserves before royalty deductions. Readers are referred to the
advisories concerning Oil and Gas Measures and Definitions in the
Advisories section of this news release.
|
(2)
|
Paramount's reserves
volumes exclude probable bitumen reserves related to the Company's
oil sands properties.
|
(3)
|
Excludes reserves
volumes associated with Apache Canada's Midale, House Mountain and
Provost properties, which have either been sold or are in the
process of being sold by Apache Canada.
|
(4)
|
NGLs means ethane,
propane, butane, pentanes plus and condensate.
|
The following table summarizes the net present value of
estimated future net revenue before tax of estimated reserves as at
June 1, 2017:
|
Discounted at
10% (1)(2)
|
($
millions)
|
Paramount
(3)
|
Apache Canada (4)
|
Trilogy
|
Proforma
|
Total
Proved
|
757.9
|
1,137.7
|
835.9
|
2,731.5
|
Total
Probable
|
435.9
|
1,006.9
|
765.2
|
2,208.0
|
Total Proved plus
Probable
|
1,193.8
|
2,144.6
|
1,601.1
|
4,939.5
|
(1)
|
Reserves evaluated by
McDaniel as of June 1, 2017. Readers are referred to the advisories
concerning Oil and Gas Measures and Definitions in the Advisories
section of this news release.
|
(2)
|
The estimated net
present values of future net revenue disclosed in this document do
not represent fair market value. Revenues and expenditures were
calculated based on McDaniel's forecast prices and costs as of
April 1, 2017.
|
(3)
|
Excludes the
Company's oil sands properties.
|
(4)
|
Excludes Apache
Canada's Midale, House Mountain and Provost properties, which have
either been sold or are in the process of being sold by Apache
Canada.
|
APACHE CANADA LTD.
Apache Canada is an indirect,
wholly-owned subsidiary of Apache Corporation, a publicly traded
U.S. based international oil and gas company. Highlights of the
Apache Canada Acquisition include:
- Paramount is acquiring future Montney and Duvernay resource play opportunities in the
Alberta Deep Basin, with production currently concentrated at
Kaybob and Central Alberta;
- The acquisition of a turn-key Montney resource play at Wapiti,
northwest of Paramount's Karr project, and 150 MMcf/d of gathering
and processing capacity which a midstream owner/operator has
committed to construct by mid-2019 and to which Paramount will have
priority access with a take-or-pay commitment for a portion of the
capacity;
- The addition of approximately 46,000 acres of undeveloped
acreage at Wapiti with multiple intervals in the Montney formation
which the Company plans to develop utilizing the well completion
designs that have been successfully implemented by the Company at
Karr;
- An increase in the Company's total acreage by approximately 1.6
million net acres, including highly prospective Montney and
Duvernay undeveloped acreage of
approximately 185,000 and 45,000 net acres, respectively; and
- The acquisition of approximately 176,000 net acres of fee
simple lands in Central
Alberta.
Apache Canada has recently sold
its Midale and House Mountain
properties and has entered into an agreement with another party to
sell its Provost properties. These three properties are not part of
the Apache Canada Acquisition.
Overview of Properties
Apache Canada's primary
developments are located at Wapiti, Kaybob/Ante Creek and
Central Alberta.
* Note: Apache Canada landholding information provided by Apache
Canada.
Alberta Liquids-Rich Montney - Wapiti
Apache Canada's Wapiti area
includes approximately 46,000 (45,800 net) acres of Montney rights
in the core of the over-pressured, liquids-rich fairway in the
Alberta Deep Basin. Paramount is ready to commence a large-scale
development of these resources and add new production in mid-2019
when a new third-party processing facility is completed (the
"Wapiti Montney Project"). The Company plans to develop Wapiti
utilizing the well completion designs that have been successfully
executed at Paramount's Karr development. The Company expects
Wapiti Montney Project natural gas volumes to increase to
approximately 150 MMcf/d by 2021 as development proceeds and
multi-well pads are completed and brought-on production.
The reserves evaluation for Apache Canada prepared by McDaniel
includes 96 net undeveloped well locations for the Wapiti Montney
Project, representing the development of approximately only 20
percent of the total Wapiti lands.
A midstream arrangement with a third-party owner/operator is in
place for the turn-key Wapiti Montney Project. The first phase,
scheduled for startup in mid-2019, includes 150 MMcf/d of sour gas
processing capacity with acid gas injection capabilities and 25,000
Bbl/d of condensate processing capacity, as well as a gathering
pipeline system and field compressor stations. Paramount will have
priority access to the full 150 MMcf/d of capacity, with a
take-or-pay commitment for a portion thereof. This gathering and
processing arrangement allows Paramount to focus on drilling and
completing wells while a third-party midstream operator
concentrates on building and operating the infrastructure.
Firm-service natural gas transportation is also in place for the
Wapiti Montney Project, with 50 MMcf/d of firm-service capacity
available in mid-2019, which can be increased to 130 MMcf/d by
2020.
Kaybob/Ante Creek
The Kaybob/Ante Creek area includes approximately 490,000
(312,000 net) acres of land targeting liquids-rich natural gas
production from the Duvernay,
Montney and various Cretaceous horizons, including approximately
38,000 (24,000 net) acres of core Duvernay rights. Liquids-rich growth
production will be processed through a third-party turn-key
midstream solution with up to 100 MMcf/d of priority processing
service. Production from the Kaybob area is for the three months
ended March 31, 2017 was
approximately 20,000 Boe/d, including approximately 20 percent
liquids volumes.
Central
Alberta
The Central Alberta area
primarily consists of low-decline properties with resource
development potential from the East Shale Basin Duvernay and the
Glauconite, Cardium and Ellerslie
formations. Apache Canada also
owns approximately 176,000 net acres of fee simple lands in the
Central Alberta region. Production
for the three months ended March 31,
2017 was approximately 14,000 Boe/d, including approximately
38 percent liquids volumes.
Other Assets
Paramount plans to pro-actively manage the other Apache Canada
assets acquired in the Northwest
Territories, northeast British
Columbia and northwest Alberta and explore opportunities to monetize
the fee simple lands and certain other properties.
Operating Results
The following table summarizes Apache's Canada's operating results for the first
quarter of 2017:
|
APACHE
CANADA Operating Results
(1)
|
Three months ended
March 31, 2017
|
Sales
Volumes
|
|
|
Natural Gas
(MMcf/d)
|
188.6
|
|
Other NGLs
(Bbl/d)(2)
|
5,333
|
|
Condensate and
Oil (Bbl/d)
|
5,437
|
Total Sales
Volumes (Boe/d)
|
42,196
|
|
%
liquids
|
26%
|
Netback ($
millions)
|
$
37.2
|
(1)
|
Operating information
provided by Apache Canada. Excludes the results of the Midale,
House Mountain and Provost properties, which have either been sold
or are in the process of being sold by Apache Canada.
|
(2)
|
Other NGLs means
ethane, propane and butane.
|
Advisors
HSBC Securities (Canada) Inc.
is acting as Paramount's exclusive financial advisor on the Apache
Canada Acquisition. Norton Rose
Fulbright is acting as the Company's legal advisor.
TRILOGY ENERGY CORP.
Trilogy is a petroleum and natural gas-focused Canadian energy
corporation that actively develops, produces and sells natural gas,
crude oil and natural gas liquids. Trilogy's geographically
concentrated assets are primarily high working interest properties
that provide abundant low-risk infill drilling opportunities and
good access to infrastructure and processing facilities. Trilogy's
common shares are listed on the Toronto Stock Exchange under the
symbol "TET".
Overview of Properties
Trilogy's lands are primarily located in the Kaybob area,
southeast of Grande Prairie,
Alberta:
* Note: Trilogy landholding information is from Trilogy's public
disclosure documents
Kaybob Montney Oil Pool
Trilogy discovered the Kaybob Montney oil pool in 2011 and owns
approximately 32,000 net acres of land in the play. Approximately
125 wells have been drilled on the play to date. In its 2016/17
drilling program, Trilogy has tested increased proppant loading
intensity with a slickwater fluid system, which has yielded results
similar to the original wells drilled into the core of the
pool.
Kaybob Presley Montney Gas
Trilogy's Presley Montney natural gas development includes
approximately 38,000 net acres of land. Trilogy had drilled 82
horizontal wells on the play as of December
31, 2016.
Kaybob Duvernay
Trilogy holds approximately 118,000 net acres of Duvernay rights at Kaybob. The lands are
strategically positioned in the core of the Duvernay, with offsetting operators initiating
full-scale developments on adjacent lands. Multi-well pad
development is expected to yield significant cost reductions
relative to previous Duvernay
wells.
Kaybob Infrastructure
In addition to its oil and gas resources, Trilogy owns a working
interest in five gas plants, three major oil batteries plus an
extensive gathering system in the Kaybob region.
The Merger
Paramount owns approximately 15% of the common shares and
non-voting shares of Trilogy and Clayton H.
Riddell is the principal shareholder and Chairman of both
Paramount and Trilogy. The boards of directors of Paramount and
Trilogy each established special committees of independent
directors to consider and make a recommendation with respect to the
Merger. The Paramount special committee engaged Peters & Co.
Limited as its financial advisor and Burnet, Duckworth & Palmer
LLP as its legal counsel to assist with its review. The Paramount
and Trilogy special committees jointly engaged Deloitte LLP
("Deloitte") as independent valuator to provide certain financial
advisory services in respect of the transaction, including the
preparation of formal valuations of the Paramount shares and the
Trilogy shares in accordance with Multilateral Instrument
61-101—Protection of Minority Security Holders in Special
Transactions ("MI 61-101"). The Paramount and Trilogy
special committees each recommended approval of the Merger to their
respective boards of directors. Prior to making their
recommendations, the special committees received from Deloitte its
valuation conclusions for each of Paramount and Trilogy. In
addition, the special committees were provided by Deloitte with a
verbal opinion indicating that the proposed issuance by Paramount
of one Paramount share for every 3.75 outstanding shares of Trilogy
is fair, from a financial point of view, to the shareholders of
both Paramount and Trilogy. Clayton H. Riddell has advised
that he supports the Merger.
The Merger is subject to shareholder and court approvals,
including the minority shareholder approval required by
MI 61-101 by the shareholders of each of Paramount and
Trilogy, and the fulfilment of other conditions that are typical
for transactions of this nature. A joint information circular for
the special meetings of shareholders of Paramount and Trilogy to
consider the Merger is expected to be mailed in August 2017. The special meetings of shareholders
are expected to be held in September. If all approvals are
received, and other closing conditions satisfied, the Merger is
expected to be completed in September
2017. The Arrangement Agreement will be filed on SEDAR
(www.sedar.com).
Clayton H. Riddell will remain as
Chairman and Jim Riddell will remain
as President and Chief Executive Officer of Paramount following
completion of the Merger. It is anticipated that the
independent directors of Trilogy will become directors of Paramount
upon completion of the Merger. The senior management of Paramount
and Trilogy are all expected to be part of the Paramount management
team following completion of the Merger.
Upon completion of the Merger, Paramount will have approximately
134.7 million shares outstanding (140.2 million shares on a fully
diluted basis), based on the currently outstanding shares of
Paramount and Trilogy, and Clayton H.
Riddell will beneficially own or control, directly or
indirectly, approximately 44% of the outstanding shares of the
Company.
The outstanding high yield notes of Trilogy will remain
outstanding following completion of the Merger. The Merger will not
trigger any change of control payments. Following the Merger, the
outstanding Trilogy options will entitle the holders to acquire
Paramount shares rather than Trilogy shares, based on the exchange
ratio for the Merger.
Advisors
Peters & Co. Limited is acting as financial advisor and
Burnet, Duckworth & Palmer LLP is acting as legal advisor to
the Paramount special committee. Raymond James Ltd. is acting as
financial advisor and Stikeman Elliott LLP is acting as legal
advisor to the Trilogy special committee. Norton Rose Fulbright is acting as company
counsel for Paramount and Trilogy.
CREDIT FACILITY INCREASE
In connection with the annual review of Paramount's existing
credit facility, the facility has been increased from $100 million to $300
million and the revolving term of the facility has been
extended to April 30, 2018. It is
anticipated that further amendments will be made to the facility
following closing of the Apache Canada Acquisition and the
Merger.
ABOUT PARAMOUNT
Paramount is an independent, publicly traded, Canadian energy
company that explores and develops unconventional and conventional
petroleum and natural gas prospects, including long-term
unconventional exploration and pre-development projects, and holds
a portfolio of 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".
INVESTOR PRESENTATION
An investor presentation relating to these transactions will be
posted on the Company's website (www.paramountres.com).
ADVISORIES
Forward-Looking Information
Certain statements in this news release 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 news release includes, but is
not limited to:
- the anticipated closing of the Apache Canada Acquisition and
the Merger, including satisfaction of closing conditions, receipt
of regulatory, shareholder and court approvals and the timing
thereof;
- the anticipated timing of the special meetings of shareholders
which are being held to consider the Merger, and the mailing of the
information circular in connection therewith;
- Paramount's assets, reserves (including increases thereto
resulting from enhanced well performance) and the discounted
present value of future net revenues therefrom, inventory of
drilling locations, projected production levels (including decline
rates and the liquids component thereof), anticipated growth in
landholdings, and the increase in, and stabilization of, cash
flows, all following the completion of the Apache Canada
Acquisition and the Merger;
- the impact of the Apache Canada Acquisition and the Merger on
the Company's financial position and strength, cost structures and
strategy including the monetization of certain properties and its
exploration, development and associated operational plans
(including its drilling and completions program);
- the proforma operating and reserves information following
the completion of the Apache Canada Acquisition and the
Merger;
- the synergies, economies of scale and other benefits expected
to be realized from the Apache Canada Acquisition and the
Merger;
- anticipated third-party transportation and processing
capacity;
- anticipated amendments to the Company's credit facility as a
result of the Apache Canada Acquisition and the Merger;
- anticipated reductions in development costs in the Kaybob
Duvernay resource play resulting from multi-well pad development;
and
- general business strategies and objectives of
Paramount.
In addition, information and statements herein relating to
"reserves" are deemed to be forward looking information as they
involve the implied assessment based on certain estimates and
assumptions that the reserves described exist in the quantities
predicted or estimated, and that the reserves can be profitably
produced in the future.
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 news release:
- the terms of the Apache Canada Acquisition and the Merger and
the other matters disclosed herein in relation to the Apache Canada
Acquisition and the Merger;
- the timely receipt of regulatory, shareholder and court
approvals and satisfying closing conditions for the completion of
the Apache Canada Acquisition and the Merger;
- the scope and effect of the expected benefits from the Apache
Canada Acquisition and the Merger;
- future natural gas and liquids prices;
- royalty rates, taxes and capital, operating, general and
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 and meet
its commitments and financial obligations;
- 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, de-ethanization, fractionation, and storage
capacity on acceptable terms;
- the ability of Paramount to market its natural gas and liquids
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, liquids yields and resource
recoveries) and operational improvements, efficiencies and results
consistent with expectations;
- the timely receipt of required governmental and regulatory
approvals;
- anticipated timelines and budgets being met in respect of
drilling programs and other operations; and
- general business, economic and market conditions.
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 Apache Canada Acquisition and/or the Merger may not be
completed on the terms anticipated or at all;
- the conditions to and approvals for the completion of the
Apache Canada Acquisition and/or the Merger not being satisfied and
obtained;
- the expected benefits of the Apache Canada Acquisition and/or
the Merger not being realized;
- fluctuations in natural gas and liquids prices;
- changes in foreign currency exchange rates and interest
rates;
- the uncertainty of estimates and projections relating to future
revenue, future production, reserve additions, liquids yields
(including condensate to natural gas ratios), resource recoveries,
royalty rates, taxes and costs and expenses;
- the ability to secure adequate product processing,
transportation, de-ethanization, fractionation, and storage
capacity on acceptable terms;
- operational risks in exploring for, developing and producing
natural gas and liquids;
- the ability to obtain equipment, services, supplies and
personnel in a timely manner and at an acceptable cost;
- potential disruptions, delays or unexpected technical or other
difficulties in designing, developing, expanding or operating new,
expanded or existing facilities (including third-party
facilities);
- 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 to fund planned exploration, development and
operational activities and meet current and future commitments and
obligations (including product processing, transportation,
de-ethanization, fractionation and similar commitments and debt
obligations);
- 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 news
release 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 news release 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 news release, "netback" and "free cash flow" (the
"Non-GAAP Measures") are used and do not have a standardized
meaning as prescribed by IFRS. 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. Free cash flow equals funds flow
from operations minus maintenance capital and is used to measure
whether net cash flows are positive or negative after deducting
capital amounts incurred to maintain production at current levels.
The calculation of free cash flow excludes capital amounts incurred
to increase production and capital amounts incurred in prior
periods.
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. Non-GAAP Measures
are unlikely to be comparable to similar measures presented by
other issuers.
Oil and Gas Measures and Definitions
Abbreviations
Liquids
|
|
Natural
Gas
|
|
Bbl
|
Barrels
|
Mcf
|
Thousands of cubic
feet
|
MBbl
|
Thousands of
barrels
|
Bcf
|
Billions of cubic
feet
|
Bbl/d
|
Barrels per
day
|
MMcf/d
|
Millions of cubic
feet per day
|
NGLs
|
Natural gas
liquids
|
|
|
Condensate
|
Pentane and heavier
hydrocarbons
|
|
|
|
|
|
|
Oil
Equivalent
|
|
|
Boe
|
Barrels of oil
equivalent
|
|
|
MBoe
|
Thousands of barrels
of oil equivalent
|
|
|
MMBoe
|
Millions of barrels
of oil equivalent
|
|
|
Boe/d
|
Barrels of oil
equivalent per day
|
|
|
Measures
This news release contains disclosures expressed in "Boe/d",
"MBoe" and "MMBoe". Oil 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, condensate and Other NGLs. The
term "Other NGLs" means ethane, propane and butane.
During the three months ended March
31, 2017, the value ratio between crude oil and natural gas
was approximately 23:1. 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.
SOURCE Paramount Resources Ltd.