35 slides from Paramount Resources Ltd. Class A's investor presentation, September 2015
Slide 1: Corporate Presentation September 2015
Corporate Presentation September 2015
Slide 2: Future Oriented Information
Future Oriented Information (See additional advisories at the end of this document) • In the interest of providing information regarding Paramount Resources Ltd. ("Paramount" or the "Company") and its future plans and operations, this presentation contains certain forward-looking information and for
Slide 3: Corporate Profile
Corporate Profile Corporate Profile • Founded in 1974; IPO in 1978 • TSX: POU • Market Cap: 106.2 MM shares @ $13.00/share ~ $1.4 Billion • ~50% insider ownership • Net Debt (June 30, 2015): $1.7 Billion • 2015 Capital Guidance: $400 MM Low Risk/Repeatable Growth Operations focused on large-scale De
Slide 4: Deep Basin Resource
Deep Basin Resource Paramount Acreage (gross): • 500 Sections Cretaceous Rights • 364 Sections Montney Rights • 209 Sections Duvernay Rights • Deep Basin liquids-rich gas resources in multiple stacked horizons • 40-160 Bcf/section DGIIP (1) • ~5+ Bcf EUR/Hz well (1) • >10 Tcf DGIIP + NGLs net to POU
Slide 5: Cretaceous Gas Resource
Cretaceous Gas Resource • Hz Dunvegan well at • Hz Falher well at Musreau Resthaven • Tested 16.4 MMcf/d(1) at • Tested 11.3 MMcf/d(1) at 20.8 MPa 6.2 MPa • IP: 12.0 MMcf/d • IP: 8.3 MMcf/d • Cost: $8.6 MM d/c/t in 2010 • Cost: $8.3 MM d/c/t in 2010 (1) Please refer to the heading "Test Results" in
Slide 6: Cretaceous Economics
Cretaceous Economics Assumptions Capital: $7.0 MM horizontal well IP30: 9.0 MMcf/d Natural Gas (raw): 4.9 Bcf Raw Condensate Gas Ratio (CGR)(1): 17 Bbl/MMcf C2-C4 NGLs: 61 Bbl/MMcf Deep Cut Facility Economics(2) @ $2.75 AECO US$45.00 WTI NPV 10% $ 1.6 MM IRR 23% Payout (Years) 2.9 P/I (1) 1.2 (1) Pl
Slide 7: Montney Gas Resource
Montney Gas Resource Liquids-rich Montney gas play; Paramount holds ~315 net sections of Montney rights Musreau Montney Wells Natural Wellhead Gas(1) Liquids(1) CGR(1) Total MMcf/d Bbl/d Bbl/MMcf Boe/d Wells IP 30 4.3 632 145 1,349 37 IP 90 3.2 426 131 959 28 IP 180 2.5 292 115 709 19 Wells < 30 d
Slide 8: Montney "Rich" Well Economics
Montney "Rich" Well Economics "Rich" Montney Wells (1) Gas Liquids CGR Total Wells MMcf/d Bbl/d Bbl/MMcf Boe/d IP 30 5.0 627 126 1,460 26 IP 90 3.8 408 108 1,041 17 IP 180 2.8 230 82 697 10 Wells < 30 days onstream and wells in progress 9 Total 35 Assumptions Capital: $9.2 MM horizontal 1-mile later
Slide 9: Montney "Ultra Rich" Well Economics
Montney "Ultra Rich" Well Economics "Ultra Rich" Montney Wells(1) Gas Liquids CGR(1) Total Wells MMcf/d Bbl/d Bbl/MMcf Boe/d IP 30 2.2 820 365 1,187 8 IP 90 1.8 576 312 876 8 IP 180 1.7 494 296 777 6 Wells < 30 days onstream and wells in progress 19 Total 27 Assumptions Capital: $9.2 MM horizontal 1
Slide 10: Montney Drilling/Completion Improvements
Montney Drilling/Completion Improvements • Pad drilling/pad layout • Bits/muds/motors • Well design: monobores/orientation/reservoir placement • Toe up/toe down: effects on production • Natural gas fueled rigs • Plug and perf/sliding sleeves • Cemented liners/open-hole packers (ECP’s) • Frac sizing/
Slide 11: Montney Well Cost Progression
Montney Well Cost Progression Key Points Expected Well Cost ($MM) 1.0 Mile 1.5 Mile ($MM) Lateral Lateral Drill $4.3 $5.1 Complete $3.9 $5.8 Equip/Tie in. $1.0 $1.0 Total $9.2 $11.9 • 1.0 mile well cost reductions from 2014 to 2015: •$0.5 MM in drilling costs due to price reductions •$2.1 MM in comp
Slide 12: Musreau
Musreau 2015 Capex: $250 MM Drill 19 (19 net) horizontal Montney wells Drill 5 Cretaceous horizontal/directional wells Completed amine plant Completed condensate stabilizer expansion: $18 MM Musreau gathering system expansion: $31 MM 12
Slide 13: Karr
Karr 2015 Capex: $75 MM • Multi-zone potential, including Halfway, Montney sour and Gething, Bluesky, Falher sweet commingled gas • Current plant and gathering systems 40 MMcf/d; expanding by 40 MMcf/d in 2016 2015: • Drill 6 (5.5 net) horizontal Montney wells • Gathering System/Facility expansion:
Slide 14: Deep Basin Processing Capacity
Deep Basin Processing Capacity Gross Net POU Potential Raw Gas Raw Gas Sales Capacity Capacity Volumes MMcf/d MMcf/d Boe/d (1) Musreau Deep Cut Facility 200 200 50,000 Musreau Refrig Facility 45 45 8,500 Smoky Deep Cut Facility 200 40 10,000 Karr Capacity 40 40 10,000 Other Musreau area capacity 64
Slide 15: Deep Basin Processing Capacity (map)
Deep Basin Processing Capacity (1) (1) Please refer to the heading “Deep Basin Processing Capacity” in the Advisories section for further information. 15
Slide 16: Paramount Production History
Paramount Production History 16
Slide 17: Musreau 8-13 Complex
Musreau 8-13 Complex October 13, 2014
Slide 18: Illustrative Deep-Cut - Montney Wells
Illustrative Deep-Cut - Montney Wells 200 MMcf/d x 23% Shrinkage = 154 MMcf/d Sales Gas (25,667 Boe/d) + 22,000 Bbl/d condensate + 18,000 Bbl/d NGLs Price(1) Yield Bbl/MMcf Deep-Cut Sales Gas $2.75/Mcf 154 MMcf/d $423,500 Condensate $65.00/Bbl 110 22,000 Bbl/d $1,430,000 Butane $35.00/Bbl 12.5 2,500
Slide 19: Paramount Deep-Cut Montney - Illustrative Project Economics
Paramount Deep-Cut Montney - Illustrative Project Economics • Paramount’s shallow rights will add substantially to the RLI • Paramount has de-risked a substantial amount of its land base and thus could have the potential to add a series of refrigeration or deep cut plants • Simple Payout from free c
Slide 20: Willesden Green
Willesden Green Duvernay Shale Play • 64,452 (34,305 net) acres of land • Drilled and completed 3 (2.5 net) Hz Duvernay wells to date: • 03/16-13-39-5W5: > 1,000 Bbl/MMcf • 7-19-39-5W5: > 200 Bbl/MMcf • Drilled and completed 3-28-39-5W5 (0.5 net) in 2015; awaiting tie in • Currently drilling 2-7-39-
Slide 21: Montney
Montney Valhalla: ~65 sections (~49 net) Montney/~60 sections (~44 net) Doig rights • Montney/Doig Play • 16 wells tied in at restricted rates (midstream constraints) • Montney wells tested 3.0 - 12.5 MMcf/d + NGLs/Condensate(1) • Doig wells tested 2.5 - 15 MMcf/d + NGLs/Condensate(1) • Evaluating l
Slide 22: Paramount Investments
Paramount Investments Z /< Paramount resources Itd.
Slide 23: Paramount Investments
Paramount resources Itd. am _|rilogy Energy (TSX:TET) TRILOGY “ ‘Spun-out from Paramount in 2005 Market Cap: ~$630.9 Million Q2 2015 production: 28,926 Boe/d Concentrated asset base, liquids-rich resource with multi-zone potential Key growth plays: Kaybob South Montney Gas, Kaybob Montney Oil and Du
Slide 24: Paramount 100% Subsidiary Investments
Paramount 100% Subsidiary Investments (1) Independent evaluation by McDaniel & Associates Consultants Ltd. effective December 31, 2014 Please refer to "Oil Sands Measures and Definitions" in the Advisories section of this presentation for oil sands resources and related definitions (2) As publicly d
Slide 25: Quarterly Operating Results
Quarterly Operating Results 25
Slide 26: Simplified Illustrative Cash Flow
Simplified Illustrative Cash Flow H2 2015 2016 2017 Sales Volumes 56,000 Boe/d 70,000 Boe/d 70,000 Boe/d CAPEX $81 MM $300 MM $300 MM WTI Price (US$/Bbl) $45/Bbl $70/Bbl $45/Bbl $70/Bbl $45/Bbl $70/Bbl EBITDA $159 MM $255 MM $434 MM $708 MM $434 MM $708 MM Long-Term Debt $1.8 B $1.7 B $1.8 B $1.4 B
Slide 27: Conventional Reserves
Conventional Reserves Columns may not add due to rounding. Conventional reserves only. Includes nominal amounts of estimated reserves in respect of Paramount's initial shale gas well at Patry, B.C. Reserves evaluated by McDaniel &Associates Consultants Ltd. in accordance with National Instrument 51-
Slide 28: Summary
Summary Exposure to significant reserve opportunities Deep Basin: Cretaceous, Montney Valhalla: Montney, Doig Birch: Montney Willesden Green: Duvernay Significant asset value Trilogy MEG Energy Cavalier Energy Liard Shale Gas Paramount continues to provide long-term value creation fo
Slide 29: Advisories Appendix
Paramournt resources Itd.
Slide 30: Advisories
Advisories Forward-Looking Information Certain statements in this presentation constitute forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as "anticipate", "believe", "estimate", "will", "expect", "plan", "
Slide 31: Advisories
Advisories fluctuations in natural gas, natural gas liquids, oil and bitumen prices; changes in foreign currency exchange rates and interest rates; the uncertainty of estimates and projections relating to future revenue, future production, reserve additions, liquids (including condensate and natural
Slide 32: Advisories
Advisories Conventional reserve estimates include nominal amounts of volumes related to Paramount’s completed shale gas well in the Liard Basin in British Columbia. The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properti
Slide 33: Advisories cont'd
Advisories cont’d Musreau and Karr CGRs Production rates are the average gross volumes per day measured at the wellhead over the initial 30, 90 and 180 producing days commencing from the day after load oil volumes were completely recovered (the "Post-load Recovery Period"). CGRs were calculated for
Slide 34: Advisories cont'd
Advisories cont’d Oil Sands Measures and Definitions "Contingent resources (development pending)" are those quantities of bitumen resources that are estimated, as of a given date, to be potentially recoverable from known accumulations using established technology but which are classified as resource
Slide 35: Paramount Resources Ltd. contact details
Paramrmournt resources itd. 4700 Bankers Hall West 888 Third Street S.W. Calgary, Alberta Canada T2P 5C5 Telephone: (403) 290-3600 Facsimile: (403) 262-7994 Www.paramountres.com