Paramount Resources Ltd. Second Quarter 2013 Results

Paramount Resources Ltd. Second Quarter 2013 Results 
Musreau Deep Cut Facility Takes Shape - Commissioning to Begin in
Q4/13; Bank Credit Facility Increased to $450 Million 
CALGARY, ALBERTA -- (Marketwired) -- 08/07/13 -- Paramount Resources
Ltd. (TSX:POU) 
SECOND QUARTER OVERVIEW 
Principal Properties 


 
--  The final stages of construction of the Company's wholly-owned 200
    MMcf/d deep cut facility at Musreau (the "Musreau Deep Cut Facility")
    will be completed over the next few months and the project remains in-
    line with budget. Commissioning of the major components will begin in
    the fourth quarter of 2013. 
--  Advance drilling for the deep cut facility expansions at Musreau and
    Smoky continued. Paramount currently has an inventory of 45 (37.2 net)
    wells with estimated first month deliverability exceeding 250 MMcf/d
    (200 MMcf/d net) of raw gas. 
--  The Company achieved significant reductions in drilling time with its
    walking drilling rigs on its latest pads, drilling Montney wells in
    Musreau in less than 30 days compared to approximately 45 days for
    Montney wells drilled in 2012. 
--  Based on positive middle-Montney drilling results at Karr-Gold Creek in
    the Grande Prairie COU, the Company is planning to drill up to five
    additional horizontal wells during the remainder of 2013. 
--  Second quarter netbacks increased 80 percent to $37.8 million in 2013
    from $21.0 million in 2012, despite the impact of third-party downstream
    disruptions and spring road bans which curtailed production by
    approximately 4,000 Boe/d, including the temporary shut-in of high
    liquids content Montney wells. 
--  Kaybob COU sales volumes increased 14 percent to 13,901 Boe/d in the
    second quarter of 2013 compared to 12,236 Boe/d in 2012. Total Company
    sales volumes in the second quarter of 2013 averaged 20,790 Boe/d
    compared to 21,474 Boe/d in 2012.  
--  Kaybob COU operating expenses have averaged approximately $4.00 per Boe
    in 2013, and less than $4.00 per Boe within the Musreau area, after
    accounting for processing income. 
--  Paramount continued to rationalize its non-core assets, including the
    disposition of its Ante Creek property, to focus on the opportunities
    that generate the best retu
rns.

 
Corporate 


 
--  Paramount's bank credit facility (the "Facility") has been increased by
    $150 million to $450 million. The Facility was undrawn at June 30, 2013.
--  The Company raised $150.9 million through the issuance of 4.0 million
    common shares in May 2013.

 
Strategic Investments 


 
--  Drilling operations at the Company's shale gas exploratory well in
    Dunedin will resume in September following the completion of an all-
    season access road. The Company's shale gas exploratory well at Patry is
    expected to be tied-in later in the year.  
--  Paramount's wholly-owned subsidiary, Cavalier Energy Inc., continued
    with front-end engineering and design work for the first phase of the
    Hoole Grande Rapids project, funded with Cavalier's own credit facility.
--  Fox Drilling's five rigs are fully deployed on the Company's lands in
    the Deep Basin. 
 
FINANCIAL AND OPERATING HIGHLIGHTS(1)(2)                                    
($ millions, except as noted)                                               
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                     Three months ended June 30   Six months ended June 30  
                        2013      2012 % Change     2013      2012 % Change 
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Financial                                                                   
Petroleum and                                                               
 natural gas sales      59.4      46.5       28    120.8     101.2       19 
Funds flow from                                                             
 operations             22.3      12.1       84     38.8      25.0       55 
  Per share -                                                               
   diluted ($/share)    0.24      0.15       60     0.42      0.28       50 
                                                                            
Net income (loss)      (22.1)        -     (100)   (21.8)    124.5     (118)
  Per share - basic                                                         
   ($/share)           (0.24)        -             (0.24)     1.46          
  Per share -                                                               
   diluted ($/share)   (0.24)        -             (0.24)     1.43          
                                                                            
Exploration and                                                             
 development                                                                
 expenditures           94.0      66.4       42    239.2     208.6       15 
Investments in other                                                        
 entities - market                                                          
 value(3)                                          759.1     611.4       24 
Total assets                                     2,084.4   1,777.3       17 
Net debt(4)                                        803.3     472.8       70 
Common shares                                                               
 outstanding                                                                
 (thousands)                                      95,375    85,498       12 
                                                                            
Operating                                                                   
Sales volumes                                                               
  Natural gas                                                               
   (MMcf/d)            107.6     106.2        1    110.6      97.4       14 
  NGLs (Bbl/d)         2,126     1,973        8    2,392     1,813       32 
  Oil (Bbl/d)            722     1,808      (60)     859     2,097      (59)
  Total (Boe/d)       20,790    21,474       (3)  21,685    20,144        8 
Average realized                                                            
 price                                                                      
  Natural gas                                                               
   ($/Mcf)              3.97      2.09       90     3.71      2.40       55 
  NGLs ($/Bbl)         71.84     69.63        3    72.90     73.71       (1)
  Oil ($/Bbl)          85.98     78.65        9    85.05     84.66        - 
  Total ($/Boe)        31.41     23.82       32    30.76     27.62       11 
                                                                            
Net wells drilled                                                           
 (excluding oil                                                             
 sands evaluation)         6         8      (25)      15        19      (21)
Net oil sands                                                               
 evaluation wells                                                           
 drilled                   -         -        -        6         1      500 
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(1) Readers are referred to the advisories concerning non-GAAP measures and 
    oil and gas 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 three and six  
    months ended June 30, 2013.                                             
(3) Based on the period-end closing prices of publicly-traded enterprises   
    and the book value of the remaining investments.                        
(4) Net debt is a non-GAAP measure, it is calculated and defined in the     
    Liquidity and Capital Resources section of Paramount's Management's     
    Discussion and Analysis for the three and six months ended June 30,     
    2013.                                                                   

 
OUTLOOK 
As a result of continued drilling success in Paramount's Deep Basin
lands and higher than expected liquids yields from Montney formation
wells, the Company has increased its total 2013 exploration and
development ("E&D") and Strategic Investments budget by $100 million
to approximately $650 million, excluding land acquisitions and
capitalized interest.  
The Company's 2013 E&D spending is primarily focused on the Kaybob
COU's Deep Basin development, including completing construction of
the Musreau Deep Cut Facility and drilling wells to feed the new
facility. The Company is also active drilling middle Montney wells at
Karr-Gold Creek in the Grande Prairie COU. Strategic Investment
capital spending is being directed towards shale gas exploration
activities in the Liard Basin and continued front-end engineering and
design work for the initial phase of the Hoole Grand Rapids
development within Cavalier Energy.  
Sales volumes are expected to range between 21,000 Boe/d and 25,000
Boe/d, depending upon the availability of downstream NGLs
transportation and processing capacity, until the expansion of a
third-party NGLs pipeline is completed, additional NGLs fractionation
capacity is available and the Musreau Deep Cut Facility is on-stream. 
Upon start-up of the Musreau Deep Cut Facility, the Company will have
owned and firm-service contracted natural gas processing capacity of
279 MMcf/d, which will increase to 309 MMcf/d with the expansion of
the non-operated processing facility at Smoky in the second half of
2014. Corporate production is expected to ramp up in 2014 to over
50,000 Boe/d, with the timing dependent on the completion of
downstream NGLs fractionation facilities expansions in which
Paramount has secured long-term firm service 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".  
A copy of the Company's second quarter 2013 report, including
Management's Discussion and Analysis and the unaudited Interim
Condensed Consolidated Financial Statements, can be obtained at:
http://media3.marketwire.com/docs/807pou.pdf. 
This information will also be made available through: SEDAR at
www.sedar.com and Paramount's website at
http://www.paramountres.com/investor_relations/quarterlies.html. 
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", "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 (including planned drilling programs and well tie-ins) and
    the anticipated timing thereof;    
--  the projected availability of third party facilities to process,
    transport and/or fractionate natural gas and NGLs production; 
--  projected timelines for constructing, commissioning and/or starting-up
    new and expanded deep cut gas processing facilities, and the Kaybob
    COU's projected processing capacity following the completion of such
    facilities; and 
--  business strategies and objectives.

 
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  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 are reasonable, undue reliance should not
be placed on them as Paramount can give no assurance that such
expectations will prove to be correct. Forward-looking information is
based on current 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. These risks and
uncertainties include and/or relate (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 and storage capacity on acceptable terms; 
--  opera
tional 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); 
--  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 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; 
--  potential lawsuits and regulatory actions; and 
--  other risks and uncertainties described elsewhere in this document and
    in Paramount's other filings with Canadian securities authorities,
    including its Annual Information Form.

 
The foregoing list of risks is not exhaustive. Additional information
concerning these and other factors which could impact Paramount, its
operations and its financial condition are included in Paramount's
most recent 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", "Funds flow from
operations per share - diluted", "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, MEG Energy, MGM Energy, Strategic, RMP
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.  
During the second quarter of 2013, the value ratio between crude oil
and natural gas was approximately 22:1. 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 Kaybob COU's estimated behind pipe production inventory is based
on the Company's 4.9 Bcf type curve for Falher formation wells and
3.7 Bcf type curve for Montney formation wells. 
Contacts:
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