Paramount Resources Announces First Quarter 2026 Results, Increased Production Guidance and Lower Capex Guidance

2026-05-12

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

Canada NewsWire

CALGARY, AB, May 12, 2026/CNW/ - Paramount Resources Ltd. ("Paramount" or the "Company") (TSX: POU) is pleased to announce: (i) its first quarter 2026 financial and operating results, (ii) increased 2026 production guidance, which incorporates an earlier expected start-up of the second phase of the Alhambra Plant, and (iii) lower expected 2026 and 2027 capital expenditures, reflecting strong well deliverability and improving capital efficiencies.

HIGHLIGHTS

First quarter sales volumes averaged 48,255 Boe/d (50% liquids).(1) Willesden Green sales volumes averaged 28,750 Boe/d (59% liquids), exceeding internal forecasts as a result of continuing outperformance of the Company's initial 16 Duvernay wells at Alhambra and high run time at the Alhambra Plant. Kaybob sales volumes averaged 19,088 Boe/d (35% liquids).

Duvernay production totaled 36,767 Boe/d, representing 76% of total sales volumes. Duvernay oil and condensate production totaled 15,997 Boe/d, representing 88% of total oil and condensate sales volumes. Cash from operating activities was $116 million ($0.80 per basic share) in the first quarter. Adjusted funds flow was $143 million ($0.99 per basic share). Free cash flow was ($147) million (($1.02) per basic share). (2) First quarter capital expenditures totaled $257 million. Activities in the quarter included: Willesden Green Duvernay – the ongoing construction of the second phase of the Alhambra Plant and the pipeline to interconnect Alhambra and Leafland as well as the drilling of five (5.0 net) wells; Sinclair Montney – clearing of the Sinclair Plant site, construction of a freshwater reservoir and the drilling of an acid gas injection well; and Kaybob North Duvernay – the drilling of two (2.0 net) wells and completion of a three (3.0 net) well pad.

| | | | (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. | | | |

The Company's recent Willesden Green Duvernay wells continue to exhibit shallower initial declines compared to earlier Duvernay wells, largely as a result of Paramount's well drawdown strategy. Gross 210-day peak production from the Company's first ten Duvernay wells brought onstream through the Alhambra Plant between late July and early September 2025 averaged approximately 1,205 Boe/d (59% liquids) per well. Gross 150-day peak production from the 16 Duvernay wells brought onstream through the plant to date averaged approximately 1,276 Boe/d (58% liquids) per well. (1) Approximately 55% 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. Operating expenses were $9.81/Boe in the quarter, with Willesden Green operating expenses averaging $4.00/Boe. Asset retirement obligation settlements totaled $27 million in the first quarter. Activities included the abandonment of 22 wells, decommissioning of eight pipeline segments and reclamation of 11 sites. The Company sold its interests in certain non-core undeveloped heavy oil lands in the quarter for cash proceeds of $23 million. At March 31, 2026, Paramount had $672 million in cash and cash equivalents and undrawn credit facilities totaling $750 million. Construction of the second phase of the Alhambra Plant, which is set to double its raw handling capacity, is substantially complete and commissioning activities are underway. Start-up of the second phase of the plant is now expected in June, about one month earlier than previously forecast. In light of its recently expanded Duvernay land position and stronger than expected well and operating performance, Paramount now believes that its Willesden Green asset has the potential to support a plateau production level of approximately 70,000 Boe/d that can be sustained for 20+ years. This represents a 40% increase over the prior plateau production target of approximately 50,000 Boe/d. On April 27, 2026, the Company announced that it had agreed to sell its Fox Drilling subsidiary to AKITA Drilling Ltd. ("AKITA") in exchange for approximately 19.3 million voting common shares of AKITA. Closing of the transaction is expected to occur in June 2026, subject to the satisfaction of closing conditions. Paramount has agreed to dividend the AKITA shares it receives to its shareholders following closing of the transaction. The AKITA voting common shares had a closing trading price of $5.00 per share on the Toronto Stock Exchange as of May 11, 2026.

UPDATED 2026 GUIDANCE

With the outperformance of the Willesden Green Duvernay property to date and the expected earlier start-up of the second phase of the Alhambra Plant, Paramount is increasing its first half 2026 production guidance to between 43,000 Boe/d and 46,000 Boe/d (48% liquids). This represents a 3,000 Boe/d increase at the mid-point and includes a slightly higher liquids weighting. As a consequence, annual 2026 production guidance is being increased to between 48,000 Boe/d and 52,000 Boe/d (50% liquids), representing a 1,500 Boe/d increase at the mid-point.

| | | | (1) | Gross 150-day and 210-day peak production is the highest daily average production rate for each well, measured at the wellhead, over a rolling 150-day period or 210-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 9% and liquids sales volumes were lower by approximately 14% 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. |

Paramount is revising its 2026 capital expenditures guidance downward by $50 million to between $1,000 million and $1,100 million, reflecting stronger well performance and improved capital efficiencies. Expected abandonment and reclamation expenditures for the year remain the same at $35 million.

UPDATED 2027 OUTLOOK

Paramount is revising its outlook for midpoint 2027 annual capital expenditures downward by $100 million to $1,000 million as a result of stronger well performance and improved capital efficiencies. Paramount continues to expect 2027 annual sales volumes of between 60,000 to 65,000 Boe/d (50% liquids) and a 2027 exit rate of production of over 100,000 Boe/d (35% liquids), representing more than double forecast 2026 midpoint sales volumes.

REVIEW OF OPERATIONS

WILLESDEN GREEN

Willesden Green sales volumes averaged 28,750 Boe/d (59% liquids) in the first quarter of 2026 compared to 25,752 Boe/d (62% liquids) in the fourth quarter of 2025. The Alhambra Plant continued to exhibit exceptional run time throughout the first quarter which, combined with strong well performance and a full quarter of production from the six-well pad that came onstream partway through the fourth quarter of 2025, resulted in higher quarter-over-quarter sales volumes.

Development activities in Willesden Green in the first quarter were focused on the continued buildout of area infrastructure as well as the drilling of five (5.0 net) Duvernay wells.

The second phase expansion of the Alhambra Plant continues to progress well, with construction now substantially complete and commissioning activities underway. A one-week outage at the plant is planned for later in May to accommodate the expansion, following which final commissioning activities are expected to be completed. The second phase expansion of the Alhambra Plant is now expected to come onstream in June, about one month earlier than forecast.

Other Willesden Green infrastructure development activities in the first quarter included the ongoing construction of the pipeline interconnecting Alhambra and Leafland, ongoing commissioning of the water recycling facility at the Alhambra Plant and site preparation work for expanded compression at the Leafland Plant.

The 16 wells flowing to the Alhambra Plant are outperforming previous expectations and continue to fill the plant's capacity. The majority of these wells remain choked as part of the Company's well drawdown strategy as well as to manage production within infrastructure capacity. Gross 210-day peak production from the Company's first ten Duvernay wells brought onstream through the Alhambra Plant between late July and early September 2025 averaged approximately 1,205 Boe/d (59% liquids) per well. Gross 150-day peak production from the 16 Duvernay wells brought onstream through the plant to date averaged approximately 1,276 Boe/d (58% liquids) per well. (1)New Duvernay wells originally forecast to be brought on to backfill expected declines in the first half of 2026 are now planned to come onstream in conjunction with the start-up of the second phase of the Alhambra Plant.

The Company continues to expect a one-month outage at the Leafland Plant starting in July to facilitate the installation of incremental compression and to bring the pipeline interconnection to the Alhambra Plant into service. Paramount now plans to conduct a facility turnaround of the Leafland Plant, originally planned for 2027, during this outage.

Paramount continues to anticipate drilling a total of 29 (29.0 net) Duvernay wells and now anticipates bringing onstream a total of 23 (23.0 net) Duvernay wells at Willesden Green in 2026, three (3.0 net) less than previously expected as onstream timing has been pushed out in light of the recent strong performance.

In light of the recent expansion of its Duvernay land position by approximately 20% to over 500 net sections (320,000 acres) and stronger than expected well and operating performance, the Company has re-evaluated the potential plateau production level at Willesden Green. Paramount now expects that the asset, with the further expansion of area infrastructure, can support a plateau production level of approximately 70,000 Boe/d for 20+ years. This represents an approximate 40% increase over the prior target of approximately 50,000 Boe/d.

The Company is also actively assessing the Black Oil window on the eastern-most part of its Willesden Green acreage. Any success on this portion of Paramount's land base would be incremental to the potential 70,000 Boe/d plateau production level.

SINCLAIR

In the first quarter of 2026, the Company broke ground on the site of the Sinclair Plant, which is being designed to handle up to 400 MMcf/d of raw natural gas. Activities in the first quarter included site clearing, the construction of a freshwater reservoir and the drilling and completion of an acid gas injection well.

Development drilling activities also commenced in the first quarter on the first five wells of a total ten (10.0 net) Montney wells to be drilled in 2026. The Company continues to anticipate having 24 (24.0 net) Montney wells ready to produce for the planned fourth quarter 2027 start-up of the Sinclair Plant.

KAYBOB

Kaybob sales volumes averaged 19,088 Boe/d (35% liquids) in the first quarter of 2026 compared to 20,387 Boe/d (41% liquids) in the fourth quarter of 2025.

Development activities in the first quarter included the drilling of two (2.0 net) Duvernay wells and the completion of a three (3.0 net) well Duvernay pad which has recently been brought on production. Over the remainder of 2026, Paramount plans to drill and bring two (2.0 net) Montney oil wells on production.

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) | As of March 31, 2026. | | (3) | "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. |

ANNUAL GENERAL MEETING

Paramount will hold its annual general meeting of shareholders on Tuesday May 12, 2026 at 10:00 am (Mountain time) in the Doulton Room at Bankers Hall Conference Centre, 400, 315 – 8thAvenue S.W., Calgary Alberta. A webcast will be available at www.paramountres.com/investors/presentations.

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 Common Shares are listed on the Toronto Stock Exchange under the symbol "POU".

Paramount's first 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.

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 2026 | Q4 2025 | Q1 2025 (2) | | | | | Net income (loss) | 53.2 | (1.9) | 1,288.8 | | | | | per share – basic ($/share) | 0.37 | (0.01) | 8.90 | | | | | per share – diluted ($/share) | 0.36 | (0.01) | 8.74 | | | | | Cash from operating activities | 116.2 | 185.4 | 149.9 | | | | | per share – basic ($/share) | 0.80 | 1.29 | 1.03 | | | | | per share – diluted ($/share) | 0.79 | 1.29 | 1.02 | | | | | Adjusted funds flow | 143.4 | 140.1 | 149.1 | | | | | per share – basic ($/share) | 0.99 | 0.97 | 1.03 | | | | | per share – diluted ($/share) | 0.97 | 0.97 | 1.01 | | | | | Free cash flow | (146.9) | (84.6) | (90.6) | | | | | per share – basic ($/share) | (1.02) | (0.59) | (0.63) | | | | | per share – diluted ($/share) | (0.99) | (0.59) | (0.63) | | | | | Total assets | 3,746.7 | 3,587.2 | 3,616.4 | | | | | Investments in securities | 141.4 | 137.3 | 522.8 | | | | | Long-term debt | – | – | – | | | | | Net (cash) debt | (515.8) | (672.8) | (637.9) | | | | | Common shares outstanding _(millions)_(3) | 144.9 | 144.2 | 143.2 | | | | | Sales volumes (4) | | | | | | | | Natural gas (MMcf/d) | 144.5 | 133.1 | 179.6 | | | | | Condensate and oil (Bbl/d) | 18,137 | 19,472 | 20,542 | | | | | Other NGLs (Bbl/d) | 6,037 | 5,318 | 3,934 | | | | | Total (Boe/d) | 48,255 | 46,973 | 54,409 | | | | | % liquids | 50 % | 53 % | 45 % | | | | | Willesden Green (Boe/d) | 28,750 | 25,752 | 7,929 | | | | | Kaybob (Boe/d) | 19,088 | 20,387 | 21,371 | | | | | Other (Boe/d) | 417 | 834 | 405 | | | | | Sold Assets (Boe/d)(5) | – | – | 24,704 | | | | | Total (Boe/d) | 48,255 | 46,973 | 54,409 | | | | | Netback | | ($/Boe) (6) | | ($/Boe) (6) | | ($/Boe) (6) | | Natural gas revenue | 45.7 | 3.52 | 43.8 | 3.58 | 52.6 | 3.25 | | Condensate and oil revenue | 157.1 | 96.27 | 137.3 | 76.66 | 180.6 | 97.70 | | Other NGLs revenue | 16.6 | 30.61 | 13.3 | 27.15 | 14.3 | 40.47 | | Natural gas transportation assignment income (7) | 8.6 | 0.66 | 4.5 | 0.37 | 7.4 | 0.46 | | Royalty income and other revenue (7) | 0.6 | – | (0.4) | – | 11.7 | – | | Petroleum and natural gas sales | 228.6 | 52.65 | 198.5 | 45.92 | 266.6 | 54.43 | | Royalties | (12.6) | (2.90) | (11.3) | (2.61) | (26.7) | (5.44) | | Operating expense | (42.6) | (9.81) | (42.5) | (9.84) | (67.8) | (13.85) | | Transportation and NGLs processing | (21.0) | (4.83) | (20.8) | (4.81) | (20.4) | (4.17) | | Sales of commodities purchased (8) | 64.4 | 14.82 | 72.7 | 16.82 | 109.7 | 22.40 | | Commodities purchased (8) | (63.9) | (14.71) | (71.6) | (16.56) | (107.2) | (21.88) | | Netback | 152.9 | 35.22 | 125.0 | 28.92 | 154.2 | 31.49 | | Risk management contract settlements | (2.1) | (0.46) | 20.4 | 4.73 | 1.6 | 0.32 | | Netback including risk management contract settlements | 150.8 | 34.76 | 145.4 | 33.65 | 155.8 | 31.81 | | Capital expenditures | | | | | | | | Willesden Green | 161.7 | 158.3 | 120.7 | | | | | Sinclair | 59.6 | 35.0 | 16.8 | | | | | Kaybob | 31.8 | 20.8 | 51.0 | | | | | Fox Drilling | 1.5 | 2.2 | 3.1 | | | | | Corporate and other (9) | 2.3 | (7.7) | 3.7 | | | | | Sold Assets(5) | – | – | 20.4 | | | | | Total | 256.9 | 208.6 | 215.7 | | | | | Asset retirement obligations settled | 26.5 | 9.4 | 22.2 | | | |

| (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 (loss), that is presented on a per share, $/Mcf or $/Boe basis is a supplementary financial measure. Refer to the "Specified Financial Measures" section for more information on these measures. | | (2) | Includes the results of operations of the Sold Assets from January 1, 2025 to the closing date on January 31, 2025. | | (3) | Common shares are presented net of shares held in trust under the Company's cash bonus and restricted share unit plan (millions): Q1 2026: 0.1, Q4 2025: 0.2, Q1 2025: 0.3. | | (4) | Refer to the "Product Type Information" section for a complete breakdown of sales volumes for applicable periods by specific product type. | | (5) | "Sold Assets" refers to the Karr, Wapiti and Zama properties that were sold on January 31, 2025. | | (6) | Natural gas revenue and natural gas transportation assignment income presented as $/Mcf. | | (7) | Natural gas transportation assignment income relates to proceeds realized by the Company on the assignment of a portion of its ex-Alberta natural gas transportation capacity to third parties. Royalty income and other revenue in Q1 2025 includes $11.1 million related to a second interim payment from insurers for 2023 Alberta wildfire business interruption losses. These amounts were not allocated to individual properties. Sales of commodities purchased and commodities purchased are treated as corporate items and not allocated to individual properties. | | (8) | Sales of commodities purchased and commodities purchased are treated as corporate items and not allocated to individual properties. | | (9) | Includes transfers of amounts held in Corporate to and from properties. |

Earlier from Paramount Resources Ltd.

Paramount Resources Ltd. Announces May Dividend 2026-05-01
Paramount Resources Announces Sale of Fox Drilling 2026-04-27
Paramount Resources Ltd. Acquires Additional Securities of Canadian Premium Sand Inc. 2026-04-10

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