Paramount Resources Ltd. announces $375 million asset sale, planned special dividend and production update

Forward-looking InformationCertain 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

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.

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).