Corporate Presentation December 2019
Advisories • In the interest of providing information regarding Paramount Resources Ltd. ("Paramount", "PRL" or the "Company") and its future plans and operations, this presentation contains certain forward- looking information and statements. • The projections, estimates and forecasts contained in such forward-looking information and statements necessarily involve a number of assumptions, and are subject to both known and unknown risks and uncertainties that may cause the Company's actual performance and financial results in future periods to differ materially from these projections, estimates and forecasts. The Advisories Appendix attached hereto lists some of the material assumptions, risks and uncertainties that these projections, estimates and forecasts are based on and are subject to. • Accordingly, recipients are cautioned that events or circumstances could cause actual results to differ materially from those predicted. • All dollar amounts in this presentation are expressed in Canadian dollars, unless otherwise noted. • Reserves and production information are presented in accordance with Canadian standards. • The Advisories Appendix attached hereto contains additional information concerning the oil and gas measures and terms and reserves data contained in this presentation. • The forward-looking information and statements contained in this presentation are made effective as of December 5, 2019. The type well information contained in this presentation has been prepared effective March 1, 2019, except where otherwise noted, and the drilling location information contained in this presentation was prepared effective January 1, 2019. In each case, events or information subsequent to the applicable effective dates have not been incorporated. 2
Corporate Overview Founded in 1976 (IPO’d in 1978), Paramount has a proven track record and strategy that generates above-average long term rates of return. Early identification and low cost capture • Large and diversified suite of horizons/zones to pursue, dependent on market conditions Appraise and high-grade top tier economic returns • Current Focus: liquids-rich Montney and Duvernay Develop, Refine, Optimize • Continuous improvement in all facets of technical understanding and execution Harvest / Monetize • Free cash flow positive full field development • Well documented history of buying low and selling high Paramount Market Snapshot Quarterly Production Outlook Range (Boe/d) Ticker Symbol - TSX POU Share Count 134.2 MM Market Cap @ $6.25/share ~$840 MM Net Debt - Sept 30/19 Pro Forma (1) ~$685 MM Enterprise Value ~$1.5 Bln Insider Ownership (2) ~ 48% 1P Reserves (3) 390.7 MMBoe 2P Reserves (3) 634.4 MMBoe 1) Net debt as of September 30, 2019 was ~$778 MM . Pro forma net debt includes proceeds from the November 2019 flow-through share issuance and the December 2019 sale of non-core assets in West Central 3 Alberta. Refer to heading “Non-GAAP Measures” in the Advisories Appendix. 2) Represents position held by directors, officers and other insiders. 3) See the Advisories Appendix – Reserves Data.
Montney and Duvernay Focus Areas Paramount is forecasting 2019F production of 81,000 to 85,000 Boe/d. The Montney and Duvernay account for ~45,000 Boe/d of this. (1) (1) 1) Excludes production from the Resthaven / Jayar asset that was sold in 2018. Stated acreage as at December 31, 2018. 4
Paramount Strategy Paramount has secured significant land positions in what is proving to be the most liquids-rich (and therefore economic) windows of the Montney and Duvernay. • Large suite of high rate of return assets at various stages in the development lifecycle provides significant optionality Paramount Portfolio of Assets 2019 Type Well Rate of Return (%) (1) 1) Based on Management’s estimates and price deck. See the Advisories Appendix – Type Well Information. 5
2019 Budget and Production Guidance Paramount has set a base 2019 capital budget of $350 MM to support annual production of 81,000 – 85,000 Boe/d; Q419 forecast to average 84,500 – 87,500 Boe/d. 2019F Budget and Production Guidance 2019F Capex Breakdown ($MM) (1) 2018 2019F Production (Boe/d) 85,941 81,000 - 85,000 Liquids (%) 37% 39% (1) Capex ($MM) $569 $350 ARO ($MM) $29 $32 • Capital budget down ~40% vs. 2018 program • Prioritizing lower-risk and higher return, liquids-rich Montney plays with the tie-in of 20 wells at Karr and Wapiti • 5 well completions at Kaybob South Duvernay • 3 well Montney Oil program • Minor capex for emerging play land retention • The $350 MM budget excludes the capital related to the Karr 6-18 Facility expansion (“D2”) • Paramount closed the sale of its Karr 6-18 facility and related midstream assets for cash proceeds of ~$330 MM in August 2019 • Paramount was reimbursed at closing for the ~$75 MM already incurred to date to advance D2 • Sales volumes are expected to increase in the fourth quarter of 2019 as Wapiti ramps up 6 1) Base 2019 capital budget, excluding land acquisitions and abandonment and reclamation.
Karr Asset Overview Montney wells at Karr exhibit strong production rates and condensate yields with the recent 4-24 pad averaging gross peak 30-day production per well of 2,027 Boe/d (339 Bbl/MMcf). (1) • A multi-stacked horizon, offering development potential over three intervals • Primary focus has been the Middle Montney with no reserves bookings in other intervals Type Well (2) • Drilled and tested first Lower Montney Return (%) 46% well in 2018 with results on par with the Middle Montney Payout (Months) 21 • Two of the 2019 wells are targeting the IP 365 (Boe/d) 961 Lower Montney Sales Vol. (MBoe) 1,481 • Will incorporate results to determine inventory count Avg. CGR (Bbl/MMcf) 173 • Generated 2018 netback of ~$224 MM DCET ($MM) $12.7 on capex of ~$169 MM (3) • Type well drilling inventory can sustain greater than 40,000 Boe/d of production (post D2) for nearly two decades from the Middle Montney alone Middle Montney Development Potential (2) Karr Middle Montney Type Well Inventory (#) >250 Type Well Raw Gas Volume (Bcf) 4.0 Calculated Recovered Gas (Bcf) >1,000 Current Raw Gas Production Capacity (Mcf/d) 100,000 Implied Number of Years Production (Years) ~27 Raw Gas Production Capacity Post D2 (Mcf/d) 150,000 Implied Number of Years Production (Years) ~18 1)See Advisories Appendix – Oil and Gas Measures and Definitions. CGRs stated are over a short period of time and are not necessarily indicative of long-term performance. Excludes days where wells did 7 not produce. 2) Based on management estimates and price deck. See Advisories Appendix – Type Well Information. 3) See Advisories Appendix - Non-GAAP Measures.
Karr Asset Overview (Cont’d) Processing and takeaway capacity is in place to support Montney growth at Karr. Recent Developments CSV Karr 6-18 Facility Capacity • The five Montney wells on the 4-24 pad were completed and brought on production with an average peak 30-day rate per well of 2,027 Boe/d and a Gross Capacity CGR of 339 Bbl/MMcf (1) Post • Completion costs for these wells averaged $6.8MM per well compared to Current D2 budgeted type-well completion costs of $7.7MM Sour Raw Compression/Dehy • Drilling was completed on three new wells on the 1-19 pad 100 80 (MMcf/d) • Wells are scheduled to be completed and brought onstream in the fourth quarter Sour Raw Gas Processing - 70 (MMcf/d) • Drilling was accelerated for ten Montney wells on two new 5-well pads originally planned for 2020 Total Raw Gas Handling 100 150 • These wells will be brought onstream in 2020 (MMcf/d) • A new pacesetter drill cost was achieved on one of these wells of Raw Hydrocarbon Liquids 15,000 30,000 approximately $2.9MM compared to the budgeted type-well drilling cost of Handling (Bbl/d) $4.0MM per well Implied CGR @ Capacity • Paramount is investing in additional water injection facilities in 2020 to add 150 200 incremental water disposal capacity (Bbl/MMcf) D2 Facility Expansion Raw Water Handling (Bbl/d) 15,000 28,000 • D2, which is scheduled to be completed in the second half of 2020, would add Sales Gas Takeaway (MMcf/d) ~65 ~130 70 MMcf/d of raw natural gas processing capacity and an additional 15,000 Bbl/d of raw liquids handling capacity • As part of the sale agreement with CSV for the sale of the 6-18 Facility, Paramount entered into a midstream services agreement that includes a fee for service arrangement, a reliability guarantee and a take-or-pay volume commitment that ends 20 years after the start-up of D2 • The commitment has been structured to minimize unutilized demand charges as well as provide Paramount with flexibility to further develop its Karr resource play 1)See Advisories Appendix – Oil and Gas Measures and Definitions. CGRs stated are over a short period of time and are not necessarily indicative of 8 long-term performance. Excludes days where wells did not produce.
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