Paramount Resources Announces Second Quarter 2026 Results, Increased Production Guidance, Sinclair Test Results and Increased Core Land Positions

2026-08-06

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

Canada NewsWire

CALGARY, AB, Aug. 6, 2026/CNW/ -- Paramount Resources Ltd. ("Paramount" or the "Company") (TSX: POU) is pleased to announce its second quarter 2026 financial and operating results, increased 2026 production guidance, record Sinclair Montney test results and expanded land positions at Sinclair and Willesden Green.

HIGHLIGHTS

Second quarter sales volumes averaged 47,279 Boe/d (49% liquids).(1) Willesden Green sales volumes averaged 27,466 Boe/d (55% liquids). The Company successfully started up the second phase of its Alhambra Plant in early June, doubling the facility's designed raw handling capacity, following a planned plant outage in May. The ramp-up of production through the expanded facility in June significantly exceeded forecast, with natural gas volumes reaching the facility's inlet capacity in the second half of the month. Runtime at the Alhambra Plant continued to be outstanding in the second quarter. Kaybob sales volumes averaged 19,413 Boe/d (40% liquids). Three (3.0 net) Duvernay wells were brought onstream during the quarter, which more than offset natural declines quarter-over-quarter.

With the stronger than forecast Willesden Green performance, sales volumes in the first half of 2026 averaged 47,765 Boe/d (50% liquids), exceeding the upper end of previous guidance of 46,000 Boe/d (48% liquids). Cash from operating activities was $144 million ($0.99 per basic share) in the second quarter. Adjusted funds flow was $176 million ($1.21 per basic share). Free cash flow was ($129) million (($0.88) per basic share).(2) Operating expenses were $8.66/Boe in the second quarter of 2026, compared to $9.81/Boe in the previous quarter and $12.39/Boe in the second quarter of 2025. This represents the fifth consecutive quarter of lower unit operating expenses.

| _ | | | (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. |

Second quarter capital expenditures totaled $297 million. Activities in the quarter included: Willesden Green Duvernay – commissioning and start-up of the second phase of the Alhambra Plant, commissioning of the water recycling facility at the Alhambra Plant, the ongoing construction of the pipeline interconnecting the Alhambra and Leafland Plants and of incremental compression and dehydration capacity at the Leafland Plant, the drilling of 11 (11.0 net) Duvernay wells and the bringing on production of ten (10.0 net) Duvernay wells; Sinclair Montney – ongoing work related to advancing construction of the Sinclair Plant, the drilling of three (3.0 net) Montney wells and the completion and flow testing of the Company's second set of two appraisal wells; and Kaybob North Duvernay – the bringing on production of three (3.0 net) Duvernay wells.

At Sinclair, the Company completed and flow tested its second two (2.0 net) well appraisal pad, testing both the Upper and Lower benches of the Montney formation. The results surpassed expectations, with the wells achieving average raw production rates of 34 MMcf/d and 25 MMcf/d of dry natural gas, respectively, over the final three days of testing. (1)These represent the highest publicly recorded test rates for the two Montney benches in Alberta.(2) Following recent acquisitions, Paramount's land position at Sinclair now exceeds 170,000 net acres, providing the flexibility to increase targeted plateau production in the future. Gross 210-day peak production from the Company's 16 Duvernay wells brought onstream through the Alhambra Plant in 2025 averaged approximately 1,240 Boe/d (56% liquids) per well. Gross 300-day peak production from the first ten of these wells averaged approximately 1,130 Boe/d (56% liquids) per well. (3)Thirteen of the 16 wells have already paid out, with an average payout period of approximately eight months. At Willesden Green, the Company has further expanded its core land position to over 350,000 net acres. Approximately 48% of Paramount's forecast natural gas sales volumes for the remainder of 2026 are expected to be priced at diversified markets outside of AECO, including at Dawn, Malin and Emerson. The Company now has 7,000 Bbl/d of liquids hedged at an average WTI price of C$109.19/Bbl for the second half of 2026 and 6,000 Bbl/d of liquids hedged at an average WTI price of C$100.34/Bbl for 2027. At June 30, 2026, Paramount had $449 million in cash and cash equivalents and undrawn credit facilities totaling $750 million.

| _ | | | (1) | The well tests were conducted by production testing over periods of approximately 13 days and 6 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. 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. The data should be considered preliminary. | | (2) | Test rates were compared using public data sources in Alberta. Montney wells that were completed after 2017 with lateral lengths exceeding 3,000 meters within the Montney dry gas area were included for comparison. The Montney dry gas area was defined as wells with an actual/forecasted 12-month cumulative condensate gas ratio of less than 10 Bbl/MMcf. Flow test data were compared relative to similar landing zones in the Montney based on Paramount's internal geological characterizations. Readers are cautioned that comparability may be affected by, among other factors, flowback conditions, completions design, well length, operating conditions, equipment and regulatory limitations. | | (3) | Gross 210-day and 300-day peak production is the highest daily average production rate for each well, measured at the wellhead, over a rolling 210-day period or 300-day period, as applicable, 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. Natural gas sales volumes were lower by approximately 7% and liquids sales volumes were lower by approximately 13% 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. |

The Company closed the sale of its Fox Drilling subsidiary to AKITA Drilling Ltd. ("AKITA") on June 30, 2026 for approximately 19.3 million AKITA common shares and $3 million cash. The AKITA shares were distributed as a dividend in kind to Paramount shareholders on July 16, 2026.

UPDATED 2026 PRODUCTION GUIDANCE

Paramount is increasing its 2026 sales volumes guidance as a result of continued well outperformance (particularly natural gas), a faster than expected ramp-up of the second phase of the Alhambra Plant and an increase in forecast runtime at Willesden Green driven by continuing strong performance. Annual sales volumes are now expected to range between 51,000 Boe/d and 53,000 Boe/d (49% liquids), representing a 2,000 Boe/d increase at the mid-point.

Forecast capital expenditures and abandonment and reclamation expenditures for the year remain unchanged at between $1,000 million and $1,100 million and at $35 million, respectively.

2027 OUTLOOK

Paramount continues to expect 2027 annual sales volumes of between 60,000 and 65,000 Boe/d (50% liquids) and a 2027 exit rate of production of over 100,000 Boe/d (35% liquids), approximately double forecast average sales volumes for 2026.

The Company is currently maintaining its outlook for midpoint 2027 annual capital expenditures of $1,000 million.

With the second phase expansion of the Alhambra plant now onstream and strong Willesden Green performance, Paramount is continuing its evaluation and planning of the third phase expansion of the Alhambra Plant, including the possibility of accelerating start-up to the second half of 2028. The Company expects to be in a position to make a final investment decision as early as the fourth quarter of 2026. This will also be weighed against the ongoing assessment of the Black Oil window on the eastern-most part of the Company's Willesden Green lands.

AUGUST DIVIDEND

Paramount's Board of Directors has declared a cash dividend of $0.05 per class A common share that will be payable on August 31, 2026 to shareholders of record on August 17, 2026. The dividend will be designated as an "eligible dividend" for Canadian income tax purposes.

REVIEW OF OPERATIONS

WILLESDEN GREEN

Willesden Green sales volumes averaged 27,466 Boe/d (55% liquids) in the second quarter of 2026 compared to 28,750 Boe/d (59% liquids) in the first quarter.

Following a one-week planned outage, the Company successfully started up the second phase of the Alhambra Plant in early June, doubling the designed raw handling capacity of the facility to 20,000 Bbl/d of liquids and 100 MMcf/d of natural gas. Runtime at the Alhambra Plant, both before and after start-up of the second phase, has exceeded expectations. A total of ten (10.0 net) Duvernay wells were brought on production through the Alhambra Plant on a staggered basis following the expansion in June, with a total of 26 wells now flowing through the facility and filling its raw natural gas inlet capacity.

Additional development activities in the second quarter included the drilling of 11 (11.0 net) Duvernay wells, the ongoing construction of the pipeline interconnecting Alhambra and Leafland and ongoing work to expand compression and dehydration capacity at the Leafland Plant. Also in the second quarter, Paramount finished the commissioning of the water recycling facility at the Alhambra Plant, which is expected to reduce both operating costs and well completion costs in the future. The Company has recently begun to pump produced water directly from the Alhambra Plant to a pad site for use in well completion activities.

Of the 26 Duvernay wells now tied-in to the Alhambra Plant, 19 remain choked as part of Paramount's well drawdown strategy and to manage production within infrastructure capacity. Gross 210-day peak production from the Company's 16 Duvernay wells brought onstream through the Alhambra Plant in 2025 averaged approximately 1,240 Boe/d (56% liquids) per well. Gross 300-day peak production from the first ten of these wells averaged approximately 1,130 Boe/d (56% liquids) per well. (1)Thirteen of the 16 wells have already paid out, with an average payout period of approximately eight months.

Construction of incremental compression and dehydration at the Leafland Plant and the pipeline interconnection of Alhambra and Leafland is nearing completion, with start-up of both expected in August. These enhancements will enable Paramount to optimize the flow of production and the utilization of processing capacities in Willesden Green. The Company began a planned outage at the Leafland Plant in early July to accommodate this work and leveraged the downtime to perform a facility turnaround that was originally scheduled for 2027.

Planned activities for the second half of 2026 include the drilling of 14 (14.0 net) Duvernay wells and the bringing on production of 16 (16.0 net) Duvernay wells.

The Company has further expanded its core land position at Willesden Green to over 350,000 net acres, primarily through acquisitions at Crown land sales in the southern portion of its land base.

| _ | | | (1) | Gross 210-day and 300-day peak production is the highest daily average production rate for each well, measured at the wellhead, over a rolling 210-day period or 300-day period, as applicable, 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. Natural gas sales volumes were lower by approximately 7% and liquids sales volumes were lower by approximately 13% 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. |

SINCLAIR

Activities at Sinclair in the second quarter included the completion and flow testing of the Company's second two (2.0 net) well appraisal pad, testing both the Upper and Lower benches of the Montney formation. The flow tests surpassed expectations, with the wells achieving average raw production rates of 34 MMcf/d and 25 MMcf/d of dry natural gas, respectively, over the final three days of testing. (1)These results represent the highest publicly recorded test rates for the two Montney benches in Alberta. (2)They also reflect a 42% and 56% increase, respectively, over the original two well 15-20 appraisal pad tested in the first quarter of 2025, which tested at 24 MMcf/d for the Upper Montney and 16 MMcf/d for the Lower Montney. (3)These results contribute to the delineation of lands south-east of the Company's existing development and are supportive of incremental future development.

In the second quarter, development activities continued with ongoing work related to the Sinclair Plant and the drilling of three (3.0 net) Montney wells on a five-well pad. Construction activities at the Sinclair Plant included earthworks, engineering and offsite module fabrication.

Over the second half of 2026, the Company anticipates drilling nine (9.0 net) additional Montney wells and continuing the construction of the Sinclair Plant and related area infrastructure.

Following recent acquisitions, including the purchase of a contiguous, adjacent block in British Columbia at a Crown land sale, Paramount's land position at Sinclair now exceeds 170,000 net acres. This provides the flexibility to increase targeted plateau production in the future.

KAYBOB

Kaybob sales volumes averaged 19,413 Boe/d (40% liquids) in the second quarter of 2026 compared to 19,088 Boe/d (35% liquids) in the first quarter. New well production more than offset natural declines quarter-over-quarter.

Development activities in the second quarter included the bringing onstream of three (3.0 net) Duvernay wells which were drilled and completed over the preceding two quarters.

Over the remainder of 2026, Paramount plans to drill and bring on production two (2.0 net) Montney oil wells.

| _ | | | (1) | The well tests were conducted by production testing over periods of approximately 13 days and 6 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. 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. The data should be considered preliminary. | | (2) | Test rates were compared using public data sources in Alberta. Montney wells that were completed after 2017 with lateral lengths exceeding 3,000 meters within the Montney dry gas area were included for comparison. The Montney dry gas area was defined as wells with an actual/forecasted 12-month cumulative condensate gas ratio of less than 10 Bbl/MMcf. Flow test data were compared relative to similar landing zones in the Montney based on Paramount's internal geological characterizations. Readers are cautioned that comparability may be affected by, among other factors, flowback conditions, completions design, well length, operating conditions, equipment and regulatory limitations. | | (3) | 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. 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. The data should be considered preliminary. |

HEDGING

The Company's current financial commodity and foreign currency exchange contracts are summarized below:

| (1) | Average price is calculated using a weighted average of notional volumes and prices. Foreign currency exchange average rate forward contracts are settled monthly against the average of the CAD$/US$ noon spot rate on each applicable day in that month. | | (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$0.97/MMBtu and buys at Malin. The transaction is financially settled with no physical delivery. |

ABOUT PARAMOUNT

Paramount is an independent, publicly traded 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. The Company's principal properties are located in Alberta and British Columbia. Paramount's class A common shares are listed on the Toronto Stock Exchange under the symbol "POU".

Paramount's second quarter 2026 results, including Management's Discussion and Analysis and the Company's Interim Consolidated Financial Statements, can be obtained on SEDAR+ at www.sedarplus.caor on Paramount's website at www.paramountres.com/investors/financial-shareholder-reports.

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