CALGARY,
AB, Dec. 9, 2022 /CNW/ - Paramount Resources
Ltd. (ʺParamountʺ or the ʺCompanyʺ) (TSX: POU) is pleased to
announce that it has entered into an agreement with an affiliate of
Crescent Point Energy Corp. for the sale of its Kaybob Smoky
and Kaybob South Duvernay properties and certain other minor
interests in the Kaybob Region (the ʺAssetsʺ) for cash
consideration of $375 million prior
to adjustments (the ʺDispositionʺ).
Disposition
The Assets include approximately 114 gross (101 net) sections of
land, with 7.2 MMBoe of proved developed producing reserves, 40.2
MMBoe of proved reserves and 63.9 MMBoe of proved plus probable
reserves based on the Company's December 31,
2021 reserves report.(1) The Assets
also include the Smoky 6-16 gas plant and other infrastructure
related to the Assets. Sales volumes from the Assets were
approximately 4,700 Boe/d (13 MMcf/d of shale gas and 2,500 Bbl/d
of NGLs) in the third quarter of 2022. Paramount's current
five-year outlook for the period from 2023 to the end of 2027
incorporates average sales volumes of approximately 5,000 Boe/d
from the Assets.
The Disposition crystalizes the value of the Assets at
attractive metrics while maintaining significant long-life
production and development potential in the Kaybob Region,
including at the Company's Kaybob North Duvernay property.
Closing of the Disposition is expected to occur in January 2023, subject to receipt of regulatory
approvals and the satisfaction of other customary closing
conditions.
On closing, Paramount expects to:
- use a portion of the cash proceeds from the Disposition to
repay any then remaining drawings under its revolving credit
facility;
- declare a special dividend of $1.00 per class A common share; and
- update its 2023 guidance, preliminary 2024 guidance and
five-year outlook.
PRODUCTION UPDATE
Sales volumes in October averaged approximately 104,000 Boe/d
(45% liquids).(1) Grande Prairie Region production
in November and early December was adversely impacted by unplanned
outages and curtailments at the third-party Wapiti natural gas
processing plant and unexpected infrastructure downtime at
Karr. Unplanned constraints on firm receipt service on the
Nova Gas Transmission Line in late October also impacted
production. Although Grande Prairie Region production has
largely been restored, these impacts are expected to result in
average fourth quarter sales volumes being reduced by approximately
6,000 Boe/d. Accordingly, fourth quarter 2022 sales volumes
are now expected to average between 97,000 Boe/d and 101,000 Boe/d
(45% liquids) versus previous guidance of between 103,000 Boe/d and
107,000 Boe/d (45% liquids). Full year 2022 average sales
volumes are now expected to average between 88,000 Boe/d and 90,000
Boe/d (45% liquids) versus previous guidance of between 90,000
Boe/d and 91,000 Boe/d (45% liquids).
ABOUT PARAMOUNT
Paramount is an independent, publicly traded, liquids-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 class A common shares are listed on the
Toronto Stock Exchange under the symbol "POU".
Advisories
Forward-looking Information
Certain statements in this press release constitute
forward-looking information under applicable securities
legislation. Forward-looking information typically contains
statements with words such as "anticipate", "believe", "estimate",
"will", "expect", "plan", "schedule", "intend", "propose", or
similar words suggesting future outcomes or an outlook.
Forward-looking information in this press release includes, but is
not limited to:
- the expected closing of the Disposition and the expected timing
thereof;
- the expectation that Paramount will use a portion of the cash
proceeds from the Disposition to repay any then remaining drawings
under its revolving credit facility;
- the planned declaration of a special dividend on closing of the
Disposition;
- the expected update of the Company's 2023 guidance, preliminary
2024 guidance and five-year outlook on closing of the Disposition;
and
- anticipated average sales volumes for the fourth quarter of
2022 and for full year 2022.
Such forward-looking information is based on a number of
assumptions which may prove to be incorrect.
The forward-looking information concerning: (i) the expected
closing of the Disposition and the expected timing thereof, (ii)
the expectation that Paramount will use a portion of the cash
proceeds from the Disposition to repay any then remaining drawings
under its revolving credit facility, (iii) the planned declaration
of a special dividend on closing of the Disposition and (iv) the
expected update of the Company's 2023 guidance, preliminary 2024
guidance and five-year outlook on closing of the Disposition is
based on the assumption that all closing conditions to the
Disposition will be satisfied and the closing of the Disposition
will occur as anticipated. In addition, the planned
declaration of a special dividend on closing of the Disposition is
subject to final approval by the Board of Directors of the Company
and the need to comply with requirements under debt agreements and
applicable laws respecting the declaration and payment of
dividends.
The forward-looking information concerning anticipated average
sales volumes for the fourth quarter of 2022 and for full year 2022
is based on the following assumptions:
- current capital expenditure and development plans;
- the performance of wells, facilities and pipelines;
- the ability of Paramount and its industry partners to obtain
drilling success (including in respect of anticipated production
volumes, reserves additions, liquids yields and resource
recoveries) and operational improvements, efficiencies and results
consistent with expectations;
- the timely receipt of required governmental and regulatory
approvals; and
- anticipated timelines and budgets being met in respect of
drilling programs and other operations (including well completions
and tie-ins, the construction, commissioning and start-up of new
and expanded facilities, including third-party facilities, and
facility turnarounds and maintenance).
Although Paramount believes that the expectations reflected in
such forward-looking information are reasonable based on the
information available at the time of this press release, undue
reliance should not be placed on the forward-looking information as
Paramount can give no assurance that such expectations will prove
to be correct. Forward-looking information is based on
expectations, estimates and projections that involve a number of
risks and uncertainties which could cause actual results to differ
materially from those anticipated by Paramount and described in the
forward-looking information.
With respect to the forward-looking information concerning: (i)
the expected closing of the Disposition and the expected timing
thereof, (ii) the expectation that Paramount will use a portion of
the cash proceeds from the Disposition to repay any then remaining
drawings under its revolving credit facility, (iii) the planned
declaration of a special dividend on closing of the Disposition and
(iv) the expected update of the Company's 2023 guidance,
preliminary 2024 guidance and five-year outlook on closing of the
Disposition, there is a risk that the Disposition will not be
completed on the terms anticipated or at all, including due to a
closing condition not being satisfied. Further, even if the
Disposition closes as anticipated, the Board of Directors of the
Company retains the discretion to determine not to declare the
special dividend in the amount stated or at all, including if
payment of the dividend would be restricted by requirements under
debt agreements or applicable laws.
With respect to the forward-looking information
concerning anticipated average sales volumes for the fourth
quarter of 2022 and for full year 2022, the material risks and
uncertainties include, but are not limited to:
- changes in capital spending plans and planned exploration and
development activities;
- the uncertainty of estimates and projections relating to
production and product yields;
- the ability to secure adequate product processing,
transportation, fractionation, and storage capacity on acceptable
terms;
- operational risks in exploring for, developing, producing and
transporting natural gas and liquids, including the risk of spills,
leaks or blowouts;
- the ability to obtain equipment, materials, services and
personnel in a timely manner and at expected and acceptable costs,
including the potential effects of inflation and supply chain
disruptions;
- potential disruptions, delays or unexpected technical or other
difficulties in designing, developing, expanding or operating new,
expanded or existing facilities (including third-party
facilities);
- processing, pipeline, and fractionation infrastructure outages,
disruptions and constraints;
- risks and uncertainties involving the geology of oil and gas
deposits;
- general business, economic and market conditions;
- the ability to obtain required governmental or regulatory
approvals in a timely manner, and to obtain and maintain leases and
licenses;
- the effects of weather and other factors including wildlife and
environmental restrictions which affect field operations and
access; and
- other risks and uncertainties described elsewhere in this
document and in Paramount's other filings with Canadian securities
authorities.
The foregoing list of risks is not exhaustive. For more
information relating to risks, see the sections titled "Risk
Factors" in Paramount's annual information form for the year
ended December 31, 2021, which is
available on SEDAR at www.sedar.com. The forward-looking
information contained in this press release is made as of the date
hereof and, except as required by applicable securities law,
Paramount undertakes no obligation to update publicly or revise any
forward-looking statements or information, whether as a result of
new information, future events or otherwise.
Oil and Gas Measures and Definitions
Liquids
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Natural
Gas
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Bbl
|
Barrels
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GJ
|
Gigajoules
|
Bbl/d
|
Barrels per
day
|
|
GJ/d
|
Gigajoules per
day
|
MBbl
|
Thousands of
barrels
|
|
MMBtu
|
Millions of British
Thermal Units
|
NGLs
|
Natural gas
liquids
|
|
MMBtu/d
|
Millions of British
Thermal Units per day
|
Condensate
|
Pentane and heavier
hydrocarbons
|
Mcf
|
Thousands of cubic
feet
|
|
|
|
MMcf
|
Millions of cubic
feet
|
Oil
Equivalent
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|
MMcf/d
|
Millions of cubic feet
per day
|
Boe
|
Barrels of oil
equivalent
|
|
AECO
|
AECO-C reference
price
|
MBoe
|
Thousands of barrels of
oil equivalent
|
|
WTI
|
West Texas
Intermediate
|
MMBoe
|
Millions of barrels of
oil equivalent
|
|
Boe/d
|
Barrels of oil
equivalent per day
|
|
|
|
|
|
|
|
|
|
This press release contains disclosures expressed as "MMBoe" and
"Boe/d". Natural gas equivalency volumes have been derived
using the ratio of six thousand cubic feet of natural gas to one
barrel of oil when converting natural gas to Boe. Equivalency
measures may be misleading, particularly if used in isolation. A
conversion ratio of six thousand cubic feet of natural gas to one
barrel of oil is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a
value equivalency at the well head. For the nine months ended
September 30, 2022, the value ratio
between crude oil and natural gas was approximately 23:1. This
value ratio is significantly different from the energy equivalency
ratio of 6:1. Using a 6:1 ratio would be misleading as an
indication of value.
Reserves data set forth in this press release is based upon an
evaluation of the Company's reserves prepared by McDaniel &
Associates Consultants Ltd. ("McDaniel") dated March 1, 2022 and effective December 31, 2021 (the "McDaniel Report").
The estimates of reserves contained in the McDaniel Report and
referenced in this document are estimates only and there is no
guarantee that the estimated reserves will be recovered. Actual
reserves may be greater than or less than the estimates contained
in the McDaniel Report and referenced in this press release.
The estimates of reserves for individual properties may not reflect
the same confidence level as estimates of reserves for all
properties, due to the effects of aggregation. Readers should refer
to the Company's annual information form for the year ended
December 31, 2021, which is available
on SEDAR at www.sedar.com, for a complete description of the
McDaniel Report and the material assumptions, limitations and risk
factors pertaining thereto.
Product Type
Information
This press release includes references to sales volumes of
"other NGLs" and "liquids". "Other NGLs" refers to ethane, propane
and butane. "Liquids" refers to light and medium crude oil,
tight oil, condensate and other NGLs combined. Below is
further information of sales volumes or forecast sales volumes for
applicable periods with reference to the specific product types of
shale gas, conventional natural gas, NGLs, tight oil and light and
medium crude oil.
Sales volumes in October averaged approximately 104,000 Boe/d
(55% shale gas and conventional natural gas combined, 39% light and
medium crude oil, tight oil and condensate combined and 6% other
NGLs).
The Company forecasts that fourth quarter 2022 sales volumes
will average between 97,000 Boe/d and 101,000 Boe/d (55% shale gas
and conventional natural gas combined, 38% light and medium crude
oil, tight oil and condensate combined and 7% other NGLs).
The Company forecasts that 2022 annual sales volumes will
average between 88,000 Boe/d and 90,000 Boe/d (55% shale gas and
conventional natural gas combined, 38% light and medium crude oil,
tight oil and condensate combined and 7% other NGLs).
________________________________________________________
(1) See Oil and
Gas Measures and Definitions in the Advisories section.
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(1) See Product
Type Information in the Advisories section.
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SOURCE Paramount Resources Ltd.