Paramount Resources Ltd. press release

Paramount Resources Ltd. Announces 2024 Annual Results

2025-03-05

TSX - Toronto Stock Exchange · Natural Gas · Oil · Natural Gas Liquids · Ethane · Canada

Canada NewsWire

CALGARY, AB , March 5, 2025 /CNW/ - Paramount Resources Ltd. ("Paramount" or the "Company") (TSX: POU) is pleased to announce its 2024 annual financial and operating results.

RECENT EVENTS

On January 31, 2025 , Paramount closed the sale of its Karr, Wapiti and Zama properties to a wholly-owned subsidiary of Ovintiv Inc. ("Ovintiv") for cash proceeds of approximately $3.3 billion , after adjustments, plus certain Horn River Basin properties of Ovintiv (the "Grande Prairie Disposition"). The Company used a portion of the proceeds of the Grande Prairie Disposition to pay a special cash distribution (the "Special Distribution") of $15.00 per class A common share ("Common Share") to shareholders on February 14, 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 5.7 million Common Shares under its normal course issuer bid between late-November 2024 and early-February 2025 at a total cost of $177 million .

2024 HIGHLIGHTS

The Company achieved record annual sales volumes of 98,490 Boe/d (48% liquids) in 2024 and record quarterly sales volumes of 102,477 Boe/d (48% liquids) in the fourth quarter. (1) Sales volumes excluding Karr and Wapiti were 31,178 Boe/d (44% liquids) in 2024 and 31,425 Boe/d (45% liquids) in the fourth quarter. Duvernay production accounted for approximately 15,000 Boe/d (64% liquids) of these sales volumes in 2024. Cash from operating activities was $815 million ( $5.58 per basic share) in 2024 and $188 million ( $1.28 per basic share) in the fourth quarter. (2) Adjusted funds flow was $930 million ( $6.37 per basic share) in 2024 and $238 million ( $1.62 per basic share) in the fourth quarter.

| _ | | | (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) | 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. |

Capital expenditures totaled $842 million in 2024, which were largely directed to the Grande Prairie Region Montney development and the Willesden Green and Kaybob North Duvernay developments. Paramount drilled 58 (58.0 net) wells, brought 59 (58.4 net) wells on production and advanced the construction of the new Alhambra Plant at Willesden Green. Asset retirement obligation settlements totaled $38 million in 2024, which included the abandonment of 44 wells and reclamation of 119 sites. Free cash flow was $37 million ( $0.25 per basic share) in 2024 and $53 million ( $0.36 per basic share) in the fourth quarter. At December 31, 2024 , net debt was $188 million . (1) The carrying value of the Company's investments in securities at December 31, 2024 was $564 million . Paramount received total cash dividends of $12 million in 2024 from these investments. In addition to its investment in securities, Paramount's Fox Drilling subsidiary continues to own six triple-sized drilling rigs, four of which are utilized for Company wells and two of which are under contract to a third party.

SHAREHOLDER RETURNS AND LIQUIDITY

Since the start of 2021, Paramount has: paid a total of $20.73 per Common Share ( $2.97 billion ) in regular monthly dividends and special distributions; fully repaid its bank credit facility, reducing debt by over $800 million ; and continued to build material, contiguous, low-cost land positions in key resource plays, including at Willesden Green and Sinclair.

The Company has repurchased a total of 5.7 million Common Shares under its current normal course issuer bid, representing 72% of the maximum number of shares, at an aggregate cost of $177 million . At February 28, 2025 , the Company had approximately $830 million in cash and cash equivalents, investments in securities valued at approximately $470 million and an undrawn $500 million four-year financial covenant-based revolving bank credit facility. This provides Paramount ample liquidity to advance the development of its deep inventory of opportunities.

| | | | (1) | Net (cash) debt is a capital management measure used by Paramount. This capital management measure has been expressed as net debt in this instance for simplicity as the amount referenced is a positive number. Refer to the "Specified Financial Measures" section for more information on this measure. |

RESERVES

At December 31, 2024 , the Company's gross reserves were as follows: (1)

| | Total Company | Total Company

Excluding Karr & Wapiti (2) | | | | MMBoe | NPV 10 ($MM) | MMBoe | NPV 10 ($MM) | | | Proved Developed Producing ("PDP") | 167.0 | 2,308 | 40.5 | 429 | | Total Proved ("TP") | 423.1 | 4,678 | 140.3 | 1,411 | | Total Proved Plus Probable ("P+P") | 756.5 | 7,703 | 242.5 | 2,462 |

The following table summarizes the Company's PDP, TP and P+P gross reserves at December 31, 2024 , excluding the Karr and Wapiti properties:

| | Gross Reserves | | | | | Proved Developed Producing | Total Proved | Total Proved Plus Probable | | Natural gas (Bcf) | 143 | 431 | 730 | | NGLs (MBbl) | 13,944 | 65,694 | 116,854 | | Crude oil (MBbl) | 2,673 | 2,727 | 3,889 | | Total (MBoe) | 40,528 | 140,329 | 242,479 | | % Liquids | 41 % | 49 % | 50 % |

The following table summarizes Paramount's gross proved and proved plus probable developed and undeveloped reserves, excluding the Karr and Wapiti properties, as at December 31, 2024 , and the net present value of future net revenue of these reserves before income taxes, undiscounted and discounted at 10%.

| | Proved | Proved plus Probable | | | | | | | Gross Reserves | Future Net Revenue

NPV Before Tax

($ millions) | Gross Reserves | Future Net Revenue

NPV Before Tax

($ millions) | | | | | (MBoe) | 0 % | 10 % | (MBoe) | 0 % | 10 % | | Developed | 45,603 | (126) | 441 | 66,390 | 311 | 635 | | Undeveloped | 94,726 | 2,158 | 971 | 176,089 | 4,737 | 1,827 | | Total | 140,329 | 2,032 | 1,411 | 242,479 | 5,048 | 2,462 |

| | | | (1) | All reserves in this press release are gross reserves based on an evaluation prepared by McDaniel & Associates Consultants Ltd. ("McDaniel") dated March 4, 2025 and effective December 31, 2024 (the "McDaniel Report"). "NPV 10 " refers to the before tax net present value of future net revenue of the applicable reserves, discounted at 10 percent, as estimated in the McDaniel Report. Such value does not represent fair market value. Readers are referred to the advisories concerning "Reserves Data". | | (2) | Total Company Excluding Karr & Wapiti has been presented to help readers assess the impact of the sale of Karr and Wapiti on the Company's December 31, 2024 reserves. Reserves associated with additional Horn River Basin properties acquired by Paramount as part of the Grande Prairie Disposition are not included. |

2025 GUIDANCE

As previously announced, the Company is budgeting capital expenditures in 2025 of between $760 million and $790 million , focused mainly on its Willesden Green Duvernay and Kaybob North Duvernay developments. Capital has also been allocated to ongoing appraisal activities at Paramount's early-stage assets, including Sinclair.

As previously announced, 2025 average sales volumes are expected to be between 37,500 Boe/d and 42,500 Boe/d (48% liquids), with a 2025 year-end exit rate in excess of 45,000 Boe/d. Revised estimated January sales volumes, which included production from the assets sold pursuant to the Grande Prairie Disposition, averaged approximately 101,500 Boe/d (47% liquids). Sales volumes are anticipated to average between 28,000 Boe/d and 32,000 Boe/d in February to September, with new well activity essentially offsetting declines. With the start-up of the first phase of the new Alhambra Plant at Willesden Green, fourth quarter sales volumes are anticipated to average between 40,000 Boe/d and 45,000 Boe/d.

REVIEW OF OPERATIONS

CENTRAL ALBERTA AND OTHER REGION

The Central Alberta and Other Region includes:

the Willesden Green Duvernay development in central Alberta ; shale gas properties in northeast British Columbia in the Horn River Basin, where the Company holds 113,000 net acres of Muskwa rights (including 68,000 net acres acquired as part of the consideration for the Grande Prairie Disposition), and in the Liard Basin, where the Company holds 179,000 net acres of Besa River rights; and 1.31 million net acres of land that are prospective for cold flow heavy oil and in-situ thermal oil recovery, including 297,000 net acres with Clearwater and Bluesky cold flow heavy oil potential and 71,000 net acres with thermal oil potential at its Hoole Grand Rapids project.

Development activities in the Central Alberta and Other Region in 2024 were focused on Willesden Green, where the Company holds 263,000 net acres of contiguous Duvernay rights, operates and majority owns the Leafland Plant and is in the process of constructing the first phase of its wholly-owned and operated Alhambra Plant. The Leafland Plant has raw handling capacity of approximately 6,000 Bbl/d of liquids and 22 MMcf/d of natural gas. The Alhambra Plant will provide estimated raw handling capacity of 10,000 Bbl/d of liquids and 50 MMcf/d of natural gas upon start-up of the first phase and is designed to be capable of expansion to a total capacity of 30,000 Bbl/d of raw liquids and 150 MMcf/d of raw natural gas through the construction of two additional phases.

Capital expenditures in the Central Alberta and Other Region totaled $238 million in 2024. Development activities included the ongoing construction of the Alhambra Plant, the drilling of 10 (10.0 net) Duvernay wells and the bringing onstream of five (5.0 net) Duvernay wells, all at Willesden Green.

Central Alberta and Other Region sales volumes averaged 8,723 Boe/d (50% liquids) in 2024 compared to 8,001 Boe/d (32% liquids) in 2023. Sales volumes were higher due to production growth from new liquids-rich Duvernay wells at Willesden Green. Lower dry gas sales in northeast British Columbia due to economic shut-ins partially offset this new production.

Approximately $560 million of the Company's planned 2025 capital expenditures at the midpoint are allocated to the Willesden Green Duvernay development, with expenditures anticipated to be evenly weighted between the first and second half of the year. Approximately one third of planned expenditures are related to the buildout of facilities and infrastructure in the area, including the completion of the first phase of the Alhambra Plant, the acceleration of the second phase of the Alhambra Plant, construction of a pipeline interconnect between the Leafland Plant and the Alhambra Plant and installation of additional compression at the Leafland Plant.

Startup of the first phase of the Alhambra Plant is expected in the fourth quarter of 2025. Construction is progressing as planned with all mechanical packages received and set on piles. Engineering and procurement of equipment packages for the second phase of the Alhambra Plant have commenced. The Company anticipates start-up of the second phase in the fourth quarter of 2026.

Paramount anticipates drilling 22 (22.0 net) Duvernay wells and bringing onstream 23 (23.0 net) Duvernay wells at Willesden Green in 2025. Seven wells are expected to feed the Leafland Plant with the remaining 16 wells expected to be brought onstream through the first phase of the Alhambra Plant upon start-up.

KAYBOB REGION

The Kaybob Region, located in west-central Alberta , includes the Kaybob North Duvernay development and other natural gas and oil producing properties. The Company holds 109,000 net acres of Duvernay rights and 179,000 net acres of Montney rights in the Kaybob Region and also owns and operates extensive processing and gathering infrastructure in the region.

Capital expenditures in the Kaybob Region totaled $173 million in 2024 and were focused on the Kaybob North Duvernay development. Development activities included the drilling of 14 (14.0 net) Duvernay wells and the bringing on production of 17 (17.0 net) Duvernay wells at Kaybob North.

Kaybob Region sales volumes averaged 22,404 Boe/d (41% liquids) in 2024 compared to 17,449 Boe/d (31% liquids) in 2023. The increase in sales volumes was primarily the result of new well production from the Kaybob North Duvernay development as well as improved run times compared to 2023 when production was impacted by the Alberta wildfires.

Capital expenditures in the Kaybob Region in 2025 are expected to be approximately $135 million at the midpoint, weighted approximately 65% to the first half of the year. In 2025, the Company anticipates drilling eight (8.0 net) Duvernay wells and bringing onstream nine (9.0 net) Duvernay wells at Kaybob North.

SINCLAIR

Sinclair is an early-stage property comprised of approximately 107,000 net acres of Montney rights located west of Grande Prairie, Alberta that are prospective for high-rate gas production.

The Company has completed its first two appraisal wells at Sinclair and is currently in the process of flow testing the wells. Data obtained from the drilling and completion operations and flow tests will be analyzed to inform future development plans for the property. Paramount is planning to drill an additional two (2.0 net) Montney wells at Sinclair in the fourth quarter of 2025 to further inform its development plans. The Company has secured downstream transportation capacity that would enable the first phase of Sinclair production to commence as early as the fourth quarter of 2027.

GRANDE PRAIRIE REGION

Prior to the Grande Prairie Disposition, Paramount's primary focus in the Grande Prairie Region was its Karr and Wapiti Montney properties, located south of the city of Grande Prairie , Alberta. The Karr and Wapiti properties represented essentially all 2024 Grande Prairie Region sales volumes, which averaged 67,363 Boe/d (50% liquids). Capital expenditures in the Grande Prairie Region totaled $431 million in 2024, the vast majority of which was directed to the Karr and Wapiti properties.

LAND

Paramount's land position as at December 31, 2024 is summarized below.

| (thousands of acres) | Gross (1) | Net (2) | | Acreage assigned reserves | 696 | 533 | | Acreage not assigned reserves | 3,624 | 2,572 | | Total | 4,320 | 3,105 |

| | | | (1) | Gross acres means the total acreage in which Paramount has an interest. Gross acreage is calculated only once per lease or license of petroleum and natural gas rights ("Lease") regardless of whether or not Paramount holds a working and/or royalty interest, or whether or not the Lease includes multiple prospective formations. If Paramount holds interests in different formations beneath the same surface location pursuant to separate Leases, the acreage set out in each Lease is counted. | | (2) | Net acres means gross acres multiplied by Paramount's working interest therein. |

MARCH DIVIDEND

Paramount's Board of Directors has declared a cash dividend of $0.05 per Common Share that will be payable on March 31, 2025 to shareholders of record on March 17 , 2025. The dividend will be designated as an "eligible dividend" for Canadian income tax purposes.

HEDGING & GAS MARKET DIVERSIFICATION

HEDGING

The Company's current financial commodity contracts are summarized below:

| | | | 2025 | | Average Price (1) | - | | Oil | | | | | | | | NYMEX WTI Swaps (Sale) | | | 10,000 Bbl/d | | C$105.00/Bbl | | | | | | | | | | | Natural gas | | | | | | | | Citygate / Malin Basis Swap (2) | | | 10,000 MMBtu/d | | 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 Jan 2025 to Oct 2027. |

GAS MARKET DIVERSIFICATION

With the natural gas market diversification contracts currently in place, approximately 70% of the Company's natural gas sales volumes following the closing of the Grande Prairie Disposition will benefit from exposure to markets outside of AECO.

ANNUAL GENERAL MEETING

Paramount will hold its annual general meeting of shareholders on Tuesday, May 13, 2025 at 10:00 a.m. (Mountain Time) in the Doulton Room at Bankers Hall Conference Centre, 400, 315 - 8th Avenue S.W., Calgary, Alberta .

COMPLETE ANNUAL RESULTS

Paramount's: (i) complete annual results, including the Company's audited consolidated financial statements as at and for the year ended December 31, 2024 (the "Consolidated Financial Statements") and the accompanying management's discussion and analysis (the "MD&A"); and (ii) 2024 annual information form, which contains additional important information concerning the Company's reserves, properties and operations, 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 .

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".

FINANCIAL AND OPERATING RESULTS (1)

| ($ millions, except as noted) | Three months ended December 31 | Year ended December 31 | | | | | | | | | 2024 | 2023 | 2024 | 2023 | | | | | | Net income | 87.4 | 111.9 | 335.9 | 470.2 | | | | | | per share – basic ($/share) | 0.60 | 0.78 | 2.30 | 3.29 | | | | | | per share – diluted ($/share) | 0.59 | 0.75 | 2.25 | 3.17 | | | | | | Cash from operating activities | 187.7 | 287.0 | 815.3 | 938.2 | | | | | | per share – basic ($/share) | 1.28 | 1.99 | 5.58 | 6.56 | | | | | | per share – diluted ($/share) | 1.26 | 1.93 | 5.46 | 6.32 | | | | | | Adjusted funds flow | 237.8 | 284.1 | 930.3 | 965.3 | | | | | | per share – basic ($/share) | 1.62 | 1.97 | 6.37 | 6.75 | | | | | | per share – diluted ($/share) | 1.59 | 1.91 | 6.24 | 6.51 | | | | | | Free cash flow | 52.8 | 59.7 | 37.3 | 168.4 | | | | | | per share – basic ($/share) | 0.36 | 0.41 | 0.25 | 1.18 | | | | | | per share – diluted ($/share) | 0.35 | 0.40 | 0.25 | 1.13 | | | | | | Total assets | | | 4,757.5 | 4,388.7 | | | | | | Investments in securities | | | 563.9 | 540.9 | | | | | | Long-term debt | | | 173.0 | – | | | | | | Net (cash) debt | | | 188.4 | 59.6 | | | | | | Common shares outstanding _(millions) _(2) | | | 146.9 | 144.2 | | | | | | | | | | | | | | | | Sales volumes (3) | | | | | | | | | | Natural gas (MMcf/d) | 317.3 | 326.2 | 306.8 | 315.1 | | | | | | Condensate and oil (Bbl/d) | 42,835 | 40,290 | 40,432 | 37,657 | | | | | | Other NGLs (Bbl/d) | 6,753 | 6,698 | 6,920 | 6,226 | | | | | | Total (Boe/d) | 102,477 | 101,348 | 98,490 | 96,393 | | | | | | % liquids | 48 % | 46 % | 48 % | 46 % | | | | | | Grande Prairie Region (Boe/d) | 71,130 | 72,860 | 67,363 | 70,943 | | | | | | Kaybob Region (Boe/d) | 22,441 | 20,324 | 22,404 | 17,449 | | | | | | Central Alberta & Other Region (Boe/d) | 8,906 | 8,164 | 8,723 | 8,001 | | | | | | Total (Boe/d) | 102,477 | 101,348 | 98,490 | 96,393 | | | | | | | | | | | | | | | | Netback | | $/Boe (4) | | $/Boe (4) | | $/Boe (4) | | $/Boe (4) | | Natural gas revenue | 58.0 | 1.99 | 83.7 | 2.79 | 223.3 | 1.99 | 349.1 | 3.04 | | Condensate and oil revenue | 379.4 | 96.26 | 363.7 | 98.12 | 1,434.9 | 96.96 | 1,364.2 | 99.25 | | Other NGLs revenue | 21.3 | 34.32 | 22.2 | 36.00 | 89.6 | 35.37 | 81.9 | 36.06 | | Royalty income and other revenue (5) | 0.6 | – | 0.9 | – | 12.4 | – | 3.3 | – | | Petroleum and natural gas sales | 459.3 | 48.72 | 470.5 | 50.46 | 1,760.2 | 48.83 | 1,798.5 | 51.12 | | Royalties | (48.5) | (5.14) | (68.9) | (7.39) | (222.8) | (6.18) | (254.3) | (7.23) | | Operating expense | (123.0) | (13.05) | (126.4) | (13.56) | (473.9) | (13.15) | (453.8) | (12.90) | | Transportation and NGLs processing | (38.1) | (4.04) | (33.2) | (3.56) | (135.6) | (3.76) | (134.4) | (3.82) | | Sales of commodities purchased (6) | 98.7 | 10.46 | 50.2 | 5.38 | 317.3 | 8.80 | 255.1 | 7.25 | | Commodities purchased (6) | (97.7) | (10.36) | (47.4) | (5.08) | (312.0) | (8.65) | (250.2) | (7.11) | | Netback | 250.7 | 26.59 | 244.8 | 26.25 | 933.2 | 25.89 | 960.9 | 27.31 | | Risk management contract settlements | (1.5) | (0.16) | 43.0 | 4.61 | 36.4 | 1.01 | 46.7 | 1.33 | | Netback including risk management contract settlements | 249.2 | 26.43 | 287.8 | 30.86 | 969.6 | 26.90 | 1,007.6 | 28.64 | | | | | | | | | | | | Capital expenditures | | | | | | | | | | Grande Prairie Region | 71.3 | 75.8 | 431.0 | 380.3 | | | | | | Kaybob Region | 18.8 | 64.5 | 172.6 | 190.4 | | | | | | Central Alberta and Other Region | 79.5 | 61.7 | 238.1 | 120.0 | | | | | | Fox Drilling and Cavalier Energy | 1.2 | 3.9 | 8.8 | 29.2 | | | | | | Corporate (7) | – | 3.0 | (8.3) | 12.2 | | | | | | Total | 170.8 | 208.9 | 842.2 | 732.1 | | | | | | | | | | | | | | | | Asset retirement obligations settled | 11.9 | 12.8 | 38.1 | 54.6 | | | | |