Paramount Resources Ltd. Third Quarter Results; Updated Independent Reserves Evaluation - Proved Reserves Increase 75%; Musreau

Paramount Resources Ltd. Third Quarter Results; Updated Independent Reserves 
Evaluation - Proved Reserves Increase 75%; Musreau Deep Cut
Facility Commissioning To Begin In December 
CALGARY, ALBERTA -- (Marketwired) -- 11/06/13 -- Paramount Resources
Ltd. (TSX:POU)  
THIRD QUARTER OVERVIEW 
Principal Properties 


 
--  Paramount engaged its independent reserves engineers to complete an
    updated evaluation of the Company's conventional reserves, effective
    September 30, 2013, in connection with the renewal of its bank credit
    facility at the end of November. Proved reserves increased 75 percent
    from year-end 2012 to 88.9 MMBoe (replacement ratio of eight times) and
    proved and probable reserves increased 55 percent from year-end 2012 to
    134.9 MMBoe (replacement ratio of ten times). 
--  The Company's 200 MMcf/d deep cut facility at Musreau (the "Musreau Deep
    Cut Facility") is nearing completion, in-line with budget. Commissioning
    will commence in December and is expected to span approximately 12
    weeks. 
--  Paramount's behind pipe well inventory in the Kaybob Deep Basin has
    increased to 61 (47.9 net) wells and advance drilling for the deep cut
    facilities expansions at Musreau and Smoky continues. 
--  Based on positive middle-Montney drilling results in the Grande Prairie
    COU, the Company is planning to drill up to four additional horizontal
    wells at Karr-Gold Creek during the remainder of 2013. 
--  Third quarter netbacks increased 47 percent to $28.0 million in 2013
    from $19.0 million in 2012, despite the impact of third-party downstream
    disruptions which curtailed production by approximately 3,600 Boe/d. 
--  Kaybob COU sales volumes increased 29 percent to 13,176 Boe/d in the
    third quarter of 2013 compared to 10,225 Boe/d in the same quarter of
    2012. Total Company sales volumes in the third quarter of 2013 averaged
    20,022 Boe/d compared to 18,712 Boe/d in the third quarter of 2012. 

 
Corporate 


 
--  In October 2013, Paramount raised approximately $60 million through the
    issuance of 1.4 million CEE flow-through Common Shares.  
--  Paramount is currently working with its lenders on the annual renewal of
    its $450 million bank credit facility. The Company anticipates that the
    facility will be renewed before the end of November and the size will be
    increased based on the progress achieved in the Kaybob Deep Basin
    development and the significant increases in reserves. 

 
Strategic Investments 


 
--  Paramount is currently drilling the horizontal leg of its shale gas
    evaluation well in the Dunedin area of Northeast British Columbia.
    Completion operations are expected to follow.  
--  Tie-in work for the Company's shale gas evaluation well at Patry is
    substantially complete, and the Company plans to bring the well on
    production before the end of 2013.
 
FINANCIAL AND OPERATING HIGHLIGHTS(1)(2)                                    
($ millions, except as noted)                                               
----------------------------------------------------------------------------
                      Three months ended            Nine months ended       
                         September 30                  September 30         
                     2013      2012  % Change      2013      2012  % Change 
----------------------------------------------------------------------------
                                                                            
FINANCIAL                                                                   
Petroleum and                                                               
 natural gas                                                                
 sales               53.9      41.3        31     174.7     142.5        23 
Funds flow from                                                             
 operations          13.4      15.5       (14)     52.3      40.4        29 
  Per share -                                                               
   diluted                                                                  
   ($/share)         0.14      0.18       (22)     0.56      0.46        22 
Net income                                                                  
 (loss)             (37.6)    (34.6)       (9)    (59.4)     89.9      (166)
  Per share -                                                               
   diluted                                                                  
   ($/share)        (0.39)    (0.40)        3     (0.64)     1.03      (162)
Exploration and                                                             
 development                                                                
 expenditures       209.8     147.7        42     449.1     356.3        26 
Investments in                                                              
 other entities                                                             
 - market                                                                   
 value(3)                                         749.8     656.6        14 
Total assets                                    2,282.4   1,903.0        20 
Net debt (4)                                    1,009.3     569.1        77 
Common shares                                                               
 outstanding                                                                
 (thousands)                                     95,351    87,489         9 
                                                                            
OPERATING                                                                   
Sales volumes                                                               
  Natural gas                                                               
   (MMcf/d)         100.9      95.3         6     107.4      96.7        11 
  NGLs (Bbl/d)      2,535     1,755        44     2,441     1,793        36 
  Oil (Bbl/d)         656     1,081       (39)      790     1,756       (55)
  Total (Boe/d)    20,022    18,712         7    21,125    19,663         7 
Average realized                                                            
 price                                                                      
    Natural gas                                                             
     ($/Mcf)         3.10      2.58        20      3.52      2.46        43 
    NGLs ($/Bbl)    78.55     60.65        30     74.89     69.42         8 
    Oil ($/Bbl)    100.73     81.28        24     89.43     83.96         7 
    Total                                                                   
     ($/Boe)        29.27     24.00        22     30.29     26.46        14 
                                                                            
Net wells                                                                   
 drilled (excl.                                                             
 oil sands                                                                  
 evaluation)           16         9        78        32        28        14 
Net oil sands                                                               
 evaluation                                                                 
 wells drilled          -         -         -         6         1       500 
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CONVENTIONAL                                          
                      
 RESERVES              Proved                 Proved and Probable           
                --------------------          --------------------          
                September  December           September  December           
                       30        31                  30        31           
                     2013      2012                2013      2012           
                --------------------------------------------------          
  Natural gas                                                               
   (Bcf)            306.2     201.9        52     455.6     323.7        41 
  NGLs (MBbl)      37,226    15,662       138    58,106    30,761        89 
  Light and                                                                 
   medium crude                                                             
   oil (MBbl)         669     1,540       (57)      870     2,128       (59)
                --------------------          --------------------          
  Total                                                                     
   Conventional                                                             
   (MBoe)          88,932    50,857        75   134,910    86,842        55 
                --------------------          --------------------          
                --------------------          --------------------          
                                                                            
Conventional F&D                                                            
 costs excluding                                                            
 facilities &                                                               
 gathering                                                                  
 ($/Boe)            17.49     16.82         4     11.35     12.18        (7)
Conventional                                                                
 reserves                                                                   
 replacement          799%      336%                992%      599%          
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(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 three and nine     
months ended September 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 nine months ended September 30,   
2013.                                                                       

 
OUTLOOK 
Paramount has expanded its fourth quarter capital program, including
the addition of approximately 11 net wells in the Kaybob and Grande
Prairie areas and accelerating plans for the completion of the
Dunedin shale gas evaluation well. As a result, the Company's total
2013 exploration and development ("E&D") and Strategic Investments
capital budget has been increased by $150 million to approximately
$800 million, excluding land acquisitions and capitalized interest.  
The Company's E&D spending in the fourth quarter will primarily focus
on the Kaybob COU's Deep Basin development, including drilling and
completing additional wells, and the final stages of construction of
the Musreau Deep Cut Facility. Fourth quarter activities will also
include drilling and completing middle Montney wells in the Grande
Prairie COU. Strategic Investment capital spending for the remainder
of 2013 will be directed towards the Company's shale gas evaluation
wells in the Liard Basin.  
Sales volumes for the remainder of 2013 are expected to be
approximately 21,000 Boe/d, unless additional interruptible natural
gas processing capacity becomes available.  
Upon start-up of the Musreau Deep Cut Facility, Paramount will begin
to ramp-up production to achieve levels exceeding 50,000 Boe/d later
in 2014, following the completion of expansions to a downstream NGLs
fractionation facility in which Paramount has secured long-term firm
service capacity and the non-operated Smoky facility. 
CONVENTIONAL RESERVES UPDATE 
In connection with the renewal of its bank credit facility at the end
of November, Paramount engaged McDaniel & Associates Consultants Ltd.
("McDaniel"), its independent reserves evaluator, to evaluate the
Company's conventional reserves as of September 30, 2013 in
accordance with National Instrument 51-101 definitions, standards and
procedures. The updated evaluation was undertaken to incorporate the
significant progress made by the Company in its Kaybob Deep Basin
Development and the results of recent drilling activity at Karr-Gold
Creek in the Grande Prairie COU. 
Paramount's conventional proved reserves at September 30, 2013
increased 75 percent over year-end 2012 to 88.9 MMBoe, after
production of 5.8 MMBoe and dispositions of 2.2 MMBoe, resulting in a
proved reserves replacement ratio of 799 percent. Conventional proved
and probable reserves increased 55 percent over year-end 2012 to
134.9 MMBoe, resulting in a proved and probable reserves replacement
ratio of 992 percent.  
The Company's working interest reserves and before tax net present
value of future net revenues as of September 30, 2013 using forecast
prices and costs are as follows: 


 
                      Conventional Reserves Summary (1)                     
                        Gross Proved and Probable          Before Tax       
                                Reserves              Net Present Value(3)  
----------------------------------------------------------------------------
                             Light &                                        
                             Medium  Natural                                
                     Natural  Crude    Gas                 ($ millions)     
                       Gas     Oil   Liquids  Total       Discount Rate     
                    --------------------------------------------------------
                                             (MBoe)                         
Reserves Category     (Bcf)  (MBbl)  (MBbl)    (2)     0%      10%     15%  
----------------------------------------------------------------------------
Conventional                                                                
Proved                                                                      
  Developed                                                                 
   Producing          143.9    669    4,427  29,072    524     411     373  
  Developed Non-                                                            
   producing          35.2      -    11,324  17,189    344     193     153  
  Undeveloped         127.2     -    21,475  42,670    726     241     124  
----------------------------------------------------------------
------------
Total Proved          306.2    669   37,226  88,932   1,594    845     649  
Total Probable        149.4    201   20,879  45,978   1,273    698     572  
----------------------------------------------------------------------------
Total Proved and                                                            
 Probable             455.6    870   58,106  134,910  2,867   1,543   1,221 
----------------------------------------------------------------------------
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(1) Columns may not add due to rounding.                                    
(2) Refer to the Oil and Gas Measures and Definitions and other advisories  
 in the Advisories section of this document.                                
(3) The estimated net present values 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 October 1, 2013.       
 

 
                                                                            
                  Conventional Reserves Reconciliation (1)                  
                                                       Proved and Probable  
                                 Proved Reserves            Reserves        
                            ------------------------------------------------
                             Natural Oil and         Natural Oil and        
                               Gas   NGLs(2)  Total    Gas   NGLs(2)  Total 
                            ------------------------------------------------
                                             (MBoe)                  (MBoe) 
                              (Bcf)  (MBbl)    (3)    (Bcf)  (MBbl)    (3)  
----------------------------------------------------------------------------
January 1, 2013               201.9  17,202  50,857   323.7  32,889  86,842 
Extensions & discoveries      120.1  18,849  38,864   188.7  29,836  61,285 
Technical revisions           22.9    3,379   7,193  (13.7)  (1,804) (4,091)
Dispositions                  (9.4)   (652)  (2,215) (13.8)  (1,063) (3,359)
Production                   (29.3)   (882)  (5,767) (29.3)   (882)  (5,767)
September 30, 2013            306.2  37,895  88,932   455.6  58,976  134,910
----------------------------------------------------------------------------
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(1) Columns and rows may not add due to rounding.                           
(2) Light and medium crude oil and natural gas liquids.                     
(3) Refer to the Oil and Gas Measures and Definitions and other advisories  
 in the Advisories section of this document.                                

 
Additional information concerning the updated reserves evaluation and
finding and development costs is contained in the Company's third
quarter 2013 report. 
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 third 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/1106pou_pr.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; 
--  estimated conventional reserves and the undiscounted and discounted
    present value of future net revenues therefrom (including the forecasted
    prices and costs and timing of expected production volumes and future
    development capital); 
--  forecast capital expenditures; 
--  exploration, development, and associated operational plans and
    strategies (including planned drilling programs and well tie-ins) and
    the anticipated timing thereof;    
--  anticipated increases in the size of the Company's bank credit facility;
--  anticipated increases in funds flow from operations; 
--  projected timeline for constructing, commissioning and starting-up the
    Musreau Deep Cut Facility; 
--  the projected availability of third party facilities to process,
    transport and/or fractionate natural gas and NGLs production; 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; 
--  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; 
--  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); 
--  risks and uncertainties involving the geology of oil and gas deposits; 
--  the uncertainty of reserves and resources estimates; 
--  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; 
--  changes in foreign currency exchange rates and interest rates; 
--  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 
--  general business, economic and market conditions 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 third quarter of 2013, the value ratio between crude oil
and natural gas was approximately 33:1. 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 oil sands bitumen properties owned by Paramount's wholly-owned
subsidiary, Cavalier Energy Inc., have not been evaluated subsequent
to December 31, 2012 and, as a result, oil sands reserve estimates
have not been included in this document. Conventional reserve
estima
tes 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 Costs exclude capital costs and reserve
volumes related to shale gas and oil sands properties because the
relationship between capital amounts invested and reserve volumes
discovered for such properties are not comparable to conventional oil
and gas properties. 
The reserves replacement disclosure herein was calculated as the net
increase in proved and probable reserves estimates from extensions
and discoveries, technical revisions and economic factors divided by
the Company's total production in the period. 
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
 
 
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