Paramount Resources Ltd. press release
Paramount Resources Ltd. Announces First Quarter 2025 Results and Sinclair Update
TSX - Toronto Stock Exchange · Natural Gas · Oil · Natural Gas Liquids · Ethane · Canada
Canada NewsWire
CALGARY, AB , May 13, 2025 /CNW/ - Paramount Resources Ltd. ("Paramount" or the "Company") (TSX: POU) is pleased to announce its first quarter 2025 financial and operating results and provide an update respecting its Sinclair Montney property.
HIGHLIGHTS
First quarter sales volumes averaged 54,409 Boe/d (45% liquids). (1)
Sales volumes from the Central Alberta Region, which includes Willesden Green, averaged 7,929 Boe/d (56% liquids).
Kaybob Region sales volumes averaged 21,371 Boe/d (36% liquids).
Sales volumes from the Karr and Wapiti properties that were sold in the quarter averaged 24,704 Boe/d (48% liquids). (2)
Cash from operating activities was $150 million ( $1.03 per basic share) in the first quarter. Adjusted funds flow was $149 million ( $1.03 per basic share). Free cash flow was ($91) million ( ($0.63) per basic share). (3)
First quarter capital expenditures totaled $216 million . Significant activities included:
Willesden Green Duvernay – one (1.0 net) well drilled, three (3.0 net) wells completed and brought on production and the continuing construction of the Alhambra Plant;
Kaybob North Duvernay – two (2.0 net) wells drilled and four (4.0 net) wells completed and brought on production; and
Sinclair Montney – completion and flow testing of the Company's first two (2.0 net) appraisal wells.
| | | | (1) | In this press release, "natural gas" refers to shale gas and conventional natural gas combined, "condensate and oil" refers to condensate, light and medium crude oil, tight oil and heavy crude oil combined, "Other NGLs" refers to ethane, propane and butane and "liquids" refers to condensate and oil and Other NGLs combined. See the "Product Type Information" section for a complete breakdown of sales volumes for applicable periods by the specific product types of shale gas, conventional natural gas, NGLs, light and medium crude oil, tight oil and heavy crude oil. See also "Oil and Gas Measures and Definitions" in the Advisories section. | | (2) | Boe/d sales volumes for the Karr and Wapiti properties calculated by dividing aggregate sales volumes from January 1, 2025 to January 30, 2025 by 90 days. | | (3) | Adjusted funds flow and free cash flow are capital management measures used by Paramount. Cash from operating activities per basic share, adjusted funds flow per basic share and free cash flow per basic share are supplementary financial measures. Refer to the "Specified Financial Measures" section for more information on these measures. |
Paramount closed the sale of its Karr, Wapiti and Zama properties (the "Sold Assets") on January 31, 2025 for cash proceeds of approximately $3.3 billion , plus certain Horn River Basin properties of the acquiror (the "Grande Prairie Disposition"). Concurrently with closing, the Company entered into an amended $500 million four-year financial covenant-based revolving credit facility (the "Paramount Facility").
Following the Grande Prairie Disposition and the assignment of transportation capacity for the Sold Assets to the acquiror, approximately 70 percent of Paramount's expected natural gas sales volumes for the remainder of 2025 are priced at diversified markets outside of AECO.
The Company paid a special cash distribution of $15.00 per class A common share ("Common Share") to shareholders in February 2025 , comprised of a return of capital of $12.00 per Common Share and a special dividend of $3.00 per Common Share.
Paramount repurchased a total of 4.9 million Common Shares in the first quarter under its normal course issuer bid.
The Company received a second interim payment of $11 million from insurers related to 2023 Alberta wildfire losses. Paramount has received an aggregate of $21 million in interim payments to date and continues to advance its claims process.
Paramount continues to have 10,000 Bbl/d of liquids hedged at a WTI price of C$105.00 /Bbl for the remainder of 2025.
The Company realized $7 million on the assignment of a portion of its first quarter 2025 ex- Alberta natural gas transportation capacity.
Asset retirement obligations settled in the first quarter totaled $22 million .
The carrying value of the Company's investments in securities at March 31, 2025 was $523 million .
At March 31, 2025 , Paramount had net cash of $638 million and the $500 million Paramount Facility remained undrawn. (1)
SINCLAIR UPDATE
Activities at Sinclair in the first quarter included the completion and flow testing of the Company's first two appraisal wells, testing two distinct benches within the Montney formation. The wells achieved average raw production rates of 24 MMcf/d and 16 MMcf/d of dry gas, respectively, over the final three days of testing. Gas composition monitoring demonstrated lower than expected H 2 S content. (2)
With these results in hand, Paramount has initiated work for a potential new dry gas processing facility at Sinclair capable of handling up to 400 MMcf/d of raw gas production, including detailed engineering and design, regulatory and other activities. This work is expected to be completed in 2025 at a cost of between $20 million and $50 million and will preserve optionality for the Company to sanction the development of Sinclair in the coming quarters and allow for the possibility of ordering long-lead equipment before year
| | | | (1) | Net (cash) debt is a capital management measure used by Paramount. This capital management measure has been expressed as net cash in this instance for simplicity. Refer to the "Specified Financial Measures" section for more information on this measure. | | (2) | The well tests were conducted by production testing over periods of approximately 15 days and 9 days, respectively. Stated production rates were measured at the wellhead for a period of three days once the wells were considered stabilized after the flow-back of completion fluids. To date, no pressure transient or well-test interpretation has been finalized on the wells and, as such, the data should be considered preliminary. The production rates stated: (i) are test rates only over a short period of time and are not necessarily indicative of long-term performance or of ultimate recovery from the wells tested or from any other future wells that may be drilled by the Company at Sinclair and (ii) are raw gas volumes and do not represent potential sales volumes after processing and related shrinkage. |
end. As previously disclosed, Paramount has secured downstream transportation capacity that would enable the first phase of Sinclair production to commence as early as the fourth quarter of 2027.
Over the remaining three quarters of 2025, the Company plans to drill an additional two Montney appraisal wells. These wells are planned to be completed and flow tested in 2026.
GUIDANCE
Paramount is now expecting 2025 capital expenditures of between $780 million and $840 million (previously $760 million and $790 million ), reflecting the additional expenditures associated with the detailed engineering and design, regulatory and other activities related to the potential new dry gas processing facility at Sinclair.
The Company continues to expect annual sales volumes of between 37,500 Boe/d and 42,500 Boe/d (48% liquids). Paramount anticipates: (i) sales volumes of between 28,000 Boe/d and 32,000 Boe/d (46% liquids) until the start-up of the Alhambra Plant at Willesden Green, (ii) fourth quarter 2025 sales volumes of between 40,000 Boe/d and 45,000 Boe/d (52% liquids) and (iii) a 2025 year-end exit rate in excess of 45,000 Boe/d (52% liquids).
Paramount expects to incur abandonment and reclamation expenditures of approximately $20 million over the final three quarters of 2025.
REVIEW OF OPERATIONS
CENTRAL ALBERTA REGION
Central Alberta Region sales volumes averaged 7,929 Boe/d (56% liquids) in the first quarter of 2025 compared to 8,488 Boe/d (55% liquids) in the fourth quarter of 2024.
First quarter development activities were focused on Willesden Green, where the Company brought onstream three (3.0 net) new Duvernay wells halfway through the quarter. Initial production from these wells is in line with expectations, averaging gross 30-day peak production per well of 1,073 Boe/d (1.9 MMcf/d of shale gas and 753 Bbl/d of NGLs) with an average CGR of 393 Bbl/MMcf. (1 ) The wells are being produced at restricted rates to optimize both condensate recovery and facility capacity.
Construction of the first phase of Paramount's wholly-owned and operated Alhambra Plant at Willesden Green is progressing as planned and on budget, with start-up expected by the fourth quarter of 2025. This first phase will provide estimated raw handling capacity of 10,000 Bbl/d of liquids and 50 MMcf/d of natural gas. Significant milestones achieved in the first quarter include the delivery of final equipment packages and the construction of gathering pipelines and egress infrastructure. Paramount has commenced operational readiness activities for the new plant, including the hiring and training of personnel to support testing and commissioning activities.
The Company continues to advance the second phase of the Alhambra Plant, which will double raw handling capacity to 20,000 Bbl/d of liquids and 100 MMcf/d of natural gas. All major equipment for the
| | | | (1) | 30-day peak production is the highest daily average production rate for each well, measured at the wellhead, over a rolling 30-day period, excluding days when the well did not produce. The production rates and volumes stated are over a short period of time and, therefore, are not necessarily indicative of average daily production, long-term performance or of ultimate recovery from the wells. CGR means condensate to gas ratio and is calculated by dividing raw wellhead liquids volumes by raw wellhead natural gas volumes. See "Oil and Gas Measures and Definitions" in the Advisories section. Natural gas sales volumes were lower by approximately 13% and liquids sales volumes were lower by approximately 12% due to shrinkage. In addition, certain liquids entrained in the natural gas stream are only recovered once processed and therefore final sales volumes cannot be imputed from wellhead volumes and shrinkage estimates alone. |
second phase has now been ordered and the Company has commenced the construction of additional tankage that will support future phases. Start-up of the second phase of the Alhambra Plant continues to be expected in the fourth quarter of 2026.
Paramount anticipates drilling a total of 25 (25.0 net) wells and bringing onstream a total of 22 (22.0 net) wells at Willesden Green in 2025. Six of these wells will flow to the Leafland Plant and 16 of the wells will flow to the new Alhambra Plant upon start-up.
KAYBOB REGION
Kaybob Region sales volumes averaged 21,371 Boe/d (36% liquids) in the first quarter of 2025 compared to 22,441 Boe/d (41% liquids) in the fourth quarter of 2024. Sales volumes were lower in the first quarter primarily due to natural declines.
Development activities in the first quarter included the drilling of two (2.0 net) Duvernay wells at Kaybob North as well as the completion and tie-in of four (4.0 net) Duvernay wells at Kaybob North that were brought onstream at the end of the quarter. Initial production from these four new wells, which have been significantly choked due to facility gas constraints, averaged gross 30-day peak production per well of 861 Boe/d (0.5 MMcf/d of shale gas and 772 Bbl/d of NGLs) with an average CGR of 1,446 Bbl/MMcf. (1 ) Initial condensate production is in line with expectations given the restricted rates. Gas production is anticipated to reach peak rates after approximately 90 producing days.
Over the remainder of 2025, Paramount plans to drill and bring onstream five (5.0 net) Duvernay wells at Kaybob North.
HEDGING
The Company's current commodity contracts are summarized below:
| | Q2 2025 | Q3 2025 | Q4 2025 | | Average Price (1) | | | Oil | | | | | | | | NYMEX WTI Swaps (Sale) (Bbl/d) | 10,000 | 10,000 | 10,000 | | C$105.00/Bbl | | | | | | | | | | | Natural gas | | | | | | | | Citygate / Malin Basis Swap (MMBtu/d) (2) | 10,000 | 10,000 | 10,000 | | Citygate less US$1.03/MMBtu (Sell)
Malin (Buy) | | | | | | | | | |
| (1) | Average price is calculated using a weighted average of notional volumes and prices. | | (2) | "Citygate" refers to Pacific Gas & Electric Citygate and "Malin" refers to Pacific Gas & Electric Malin. Pursuant to the swap transaction, Paramount sells at Citygate less US$1.03/MMBtu and buys at Malin. The transaction is financially settled with no physical delivery. The remaining term of this contract is April 2025 to October 2027. |
| | | | (1) | 30-day peak production is the highest daily average production rate for each well, measured at the wellhead, over a rolling 30-day period, excluding days when the well did not produce. The production rates and volumes stated are over a short period of time and, therefore, are not necessarily indicative of average daily production, long-term performance or of ultimate recovery from the wells. CGR means condensate to gas ratio and is calculated by dividing raw wellhead liquids volumes by raw wellhead natural gas volumes. See "Oil and Gas Measures and Definitions" in the Advisories section. Natural gas sales volumes were lower by approximately 14% and liquids sales volumes were lower by approximately 6% due to shrinkage. In addition, certain liquids entrained in the natural gas stream are only recovered once processed and therefore final sales volumes cannot be imputed from wellhead volumes and shrinkage estimates alone. |
ANNUAL GENERAL MEETING
Paramount will hold its annual general meeting of shareholders on Tuesday May 13, 2025 at 10:00 am (Mountain time) in the Doulton Room at Bankers Hall Conference Centre, 400, 315 – 8 th Avenue S.W., Calgary Alberta . A webcast will be available at www.paramountres.com/investors/presentations .
ABOUT PARAMOUNT
Paramount is an independent, publicly traded, liquids-rich natural gas focused Canadian energy company that explores for and develops both conventional and unconventional petroleum and natural gas, including longer-term strategic exploration and pre-development plays, and holds a portfolio of investments in other entities. The Company's principal properties are located in Alberta and British Columbia . Paramount's Common Shares are listed on the Toronto Stock Exchange under the symbol "POU".
Paramount's first quarter 2025 results, including Management's Discussion and Analysis and the Company's Interim Consolidated Financial Statements, can be obtained on SEDAR+ at www.sedarplus.ca or on Paramount's website at www.paramountres.com/investors/financial-shareholder-reports .
A summary of historical financial and operating results is also available on Paramount's website at www.paramountres.com/investors/financial-shareholder-reports .
FINANCIAL AND OPERATING RESULTS (1)
| ($ millions, except as noted) | Q1 2025 | Q4 2024 | Q1 2024 | | | | | Net income | 1,288.8 | 87.4 | 68.1 | | | | | per share – basic ($/share) | 8.90 | 0.60 | 0.47 | | | | | per share – diluted ($/share) | 8.74 | 0.59 | 0.46 | | | | | Cash from operating activities | 149.9 | 187.7 | 201.3 | | | | | per share – basic ($/share) | 1.03 | 1.28 | 1.39 | | | | | per share – diluted ($/share) | 1.02 | 1.26 | 1.35 | | | | | Adjusted funds flow | 149.1 | 237.8 | 225.6 | | | | | per share – basic ($/share) | 1.03 | 1.62 | 1.56 | | | | | per share – diluted ($/share) | 1.01 | 1.59 | 1.52 | | | | | Free cash flow | (90.6) | 52.8 | (9.5) | | | | | per share – basic ($/share) | (0.63) | 0.36 | (0.07) | | | | | per share – diluted ($/share) | (0.63) | 0.35 | (0.07) | | | | | Total assets | 3,616.4 | 4,757.5 | 4,458.9 | | | | | Investments in securities | 522.8 | 563.9 | 568.6 | | | | | Long-term debt | – | 173.0 | – | | | | | Net (cash) debt | (637.9) | 188.4 | 68.4 | | | | | Common shares outstanding _(millions) _(2) | 143.2 | 146.9 | 145.2 | | | | | Sales volumes (3) | | | | | | | | Natural gas (MMcf/d) | 179.6 | 317.3 | 318.7 | | | | | Condensate and oil (Bbl/d) | 20,542 | 42,835 | 40,908 | | | | | Other NGLs (Bbl/d) | 3,934 | 6,753 | 6,954 | | | | | Total (Boe/d) | 54,409 | 102,477 | 100,977 | | | | | % liquids | 45 % | 48 % | 47 % | | | | | Central Alberta Region and Other (Boe/d) | 8,334 | 8,972 | 11,485 | | | | | Kaybob Region (Boe/d) | 21,371 | 22,441 | 22,353 | | | | | Sold Assets (Boe/d) | 24,704 | 71,064 | 67,139 | | | | | Total (Boe/d) | 54,409 | 102,477 | 100,977 | | | | | Netback | | ($/Boe) (4) | | ($/Boe) (4) | | ($/Boe) (4) | | Natural gas revenue | 52.6 | 3.25 | 58.0 | 1.99 | 82.4 | 2.84 | | Condensate and oil revenue | 180.6 | 97.70 | 379.4 | 96.26 | 344.8 | 92.64 | | Other NGLs revenue | 14.3 | 40.47 | 21.3 | 34.32 | 23.9 | 37.81 | | Natural gas transportation assignment income (5) | 7.4 | 0.46 | 0.9 | 0.03 | – | – | | Royalty income and other revenue (5) | 11.7 | – | (0.3) | – | 1.2 | – | | Petroleum and natural gas sales | 266.6 | 54.43 | 459.3 | 48.72 | 452.3 | 49.24 | | Royalties | (26.7) | (5.44) | (48.5) | (5.14) | (61.8) | (6.73) | | Operating expense | (67.8) | (13.85) | (123.0) | (13.05) | (118.9) | (12.94) | | Transportation and NGLs processing | (20.4) | (4.17) | (38.1) | (4.04) | (31.9) | (3.47) | | Sales of commodities purchased (6) | 109.7 | 22.40 | 98.7 | 10.46 | 54.7 | 5.95 | | Commodities purchased (6) | (107.2) | (21.88) | (97.7) | (10.36) | (53.4) | (5.81) | | Netback | 154.2 | 31.49 | 250.7 | 26.59 | 241.0 | 26.24 | | Risk management contract settlements | 1.6 | 0.32 | (1.5) | (0.16) | (0.5) | (0.05) | | Netback including risk management contract settlements | 155.8 | 31.81 | 249.2 | 26.43 | 240.5 | 26.19 | | Capital expenditures | | | | | | | | Central Alberta Region and Other | 138.3 | 95.3 | 39.9 | | | | | Kaybob Region | 51.0 | 18.8 | 56.3 | | | | | Fox Drilling | 3.1 | 0.9 | 4.0 | | | | | Corporate (7) | 2.9 | – | (6.5) | | | | | Sold Assets | 20.4 | 55.8 | 120.2 | | | | | Total | 215.7 | 170.8 | 213.9 | | | | | Asset retirement obligations settled | 22.2 | 11.9 | 16.5 | | | |
| (1) | Adjusted funds flow, free cash flow and net (cash) debt are capital management measures used by Paramount. Netback and netback including risk management contract settlements are non-GAAP financial measures. Netback and Netback including risk management contract settlements presented on a $/Boe or $/Mcf basis are non-GAAP ratios. Each measure, other than net income, that is presented on a per share, $/Mcf or $/Boe basis is a supplementary financial measure. Refer to "Specified Financial Measures". | | (2) | Common shares are presented net of shares held in trust under the Company's restricted share unit plan (millions): Q1 2025: 0.3, Q4 2024: 0.4, Q1 2024: 0.4. | | (3) | Refer to the Product Type Information section of this document for a complete breakdown of sales volumes for applicable periods by specific product type. | | (4) | Natural gas revenue and natural gas transportation assignment income presented as $/Mcf. | | (5) | Natural gas transportation assignment income for the three months ended March 31, 2025 relates to proceeds realized by the Company on the assignment of a portion of its first quarter 2025 ex-Alberta natural gas transportation capacity to third parties. Royalty income and other revenue for the three months ended March 31, 2025 includes $11.1 million related to a second interim payment from insurers for 2023 Alberta wildfire losses. The Company has realized $21.1 million in aggregate interim payments in respect of its 2023 Alberta wildfire losses to date and continues to advance its insurance claims process. These amounts were not allocated to individual regions or properties. | | (6) | Sales of commodities purchased and commodities purchased are treated as corporate items and not allocated to individual regions or properties. | | (7) | Includes transfers of amounts held in Corporate to and from regions. |
PRODUCT TYPE INFORMATION
This press release includes references to sales volumes of "natural gas", "condensate and oil", "NGLs", "Other NGLs" and "liquids". "Natural gas" refers to shale gas and conventional natural gas combined. "Condensate and oil" refers to condensate, light and medium crude oil, tight oil and heavy crude oil combined. "NGLs" refers to condensate and Other NGLs combined. "Other NGLs" refers to ethane, propane and butane. "Liquids" refers to condensate and oil and Other NGLs combined. Below is a complete breakdown of sales volumes for applicable periods by the specific product types of shale gas, conventional natural gas, NGLs, light and medium crude oil, tight oil and heavy crude oil. Numbers may not add due to rounding.