CALGARY, ALBERTA — (Marketwired) — 11/05/14 — Paramount Resources Ltd. (TSX: POU)
THIRD QUARTER OVERVIEW
Oil and Gas Operations
Strategic Investments
Corporate
OUTLOOK
Sales volumes are expected to reach up to 50,000 Boe/d later in 2014, depending on the availability of sufficient downstream de-ethanization capacity. In 2015, sales volumes are expected to surpass 70,000 Boe/d following the completion of additional components of the Company–s Kaybob area infrastructure and third-party de-ethanization capacity expansions.
Paramount–s total 2014 exploration and development and Strategic Investments budget has been increased by $100 million to approximately $900 million, excluding land acquisitions and capitalized interest. The Company is accelerating the completion of the 8-22 10-well Montney pad in Kaybob and will be utilizing up to 10 drilling rigs in the Deep Basin in the upcoming 2014 / 2015 winter drilling season, focusing on Montney formation wells.
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 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 third quarter 2014 report, including Management–s Discussion and Analysis and the Company–s unaudited Interim Condensed Consolidated Financial Statements can be obtained at:
This information will also be made available through Paramount–s website at and SEDAR at .
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 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., 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.
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 (“NGLs”) volumes. The term “Other NGLs” means ethane, propane and butane.
During the nine months ended September 30, 2014, the value ratio between crude oil and natural gas was approximately 19:1. 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.
TEST RATES
Test rates for the wells fracked on the Company–s 10-well Montney 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. All wells 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.
Contacts:
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)