52 slides from Paramount Resources Ltd. Class A's shareholder meeting presentation, May 2004
Slide 1: Paramount Resources Ltd. 2004 Investor Presentation
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Paramount Resources Ltd. 2004 Investor Presentation
Slide 2: Future Oriented information
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Future Oriented information In the interest of providing Paramount Resources Ltd. ("Paramount") shareholders and potential investors with information regarding Paramount, including management's assessment of the Company's future plans and operations, cert
Slide 3: Corporate Profile
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Corporate Profile • ≈ 80% gas leverage • Intermediate gas focused producer/explorer • 58.5 million shares + ≤ 5% dilution for options • Market Cap. @ $14.50/share = $850 million • 50% management ownership • Successful efforts accounting. • Current product
Slide 4: Production (BOE)
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Production(BOE) 50000 Trust Assets Summit Liard/Kaybob 40000 Acquisition Acquisition Disposed of Sturgeon Lake 4,000 BOE/d 2200 Bbl/d 30000 20000 10000 132 MMcf/d 6000 Bbl/d 0 Q1 02 Q2 Q3 Q4 Q1 03 Q2 Q3 Q4 Q1 04 Q2E Q3E Q4E PARAMOUNT RESOURCES LTD. CORPOR
Slide 5: Core Producing Properties
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Core Producing Properties Paramount 2004 Estimate Gas Production Liard, NWT/ Northeast British Columbia Kaybob 107 MMcf/d Grande Prairie 26 MMcf/d NW AB 18 MMcf/d Northwest NWT - Liard 19 MMcf/d Alberta Southern Alberta 10 MMcf/d Grande Prairie Total 180
Slide 6: Current Production with Acquisition
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Current Production with Acquisition The Liard/Kaybob acquisition Liard, NWT/ Northeast British adds 10,000 Boe/d Columbia 4,800 Boe/d – 6,500 Boe/d at Kaybob – 3,500 Boe/d at Liard Northwest Alberta 4,000 Boe/d Grande Prairie 5,000 Boe/d Paramount Current
Slide 7: The Transaction
OPERATIONS PRODUCTION FINANCIALS EXPLORATION The Transaction May 25, 2004
Slide 8: Transaction
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Transaction • Acclaim & Enerplus purchase Chevron for $1.09 billion • PRL purchase assets from Enerplus for $189 million – Approx 63% WI of Kaybob package – 100% WI of Fort Liard package • 10,000 Boe/d (40 MMcf/d, 3,300 Bbl/d) • Expected Closing – June 30
Slide 9: Assets Purchased
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Assets Purchased Reserves (MBOE) Kaybob Liard Total Proved Developed 8,986 3,050 12,036 Proved Undeveloped - 233 233 Probable 5,129 4,850 9,979 Total Reserves 14,115 8,133 22,248 Gas: 64% Proved, 70% Proved plus Probable Undeveloped Land 139,900 61,200 20
Slide 10: Acquisition Metrics
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Acquisition Metrics Acquisition Price $189 MM Less Land $20 MM Less Seismic $5 MM Reserves $164 MM Proved, 12.3 MM BOE $13.25/BOE P + P, 22.2 MM BOE $7.25/BOE Est 2004 Prod’n $15,800/BOE/d PARAMOUNT RESOURCES LTD. CORPORATE PRESENTATION 10
Slide 11: Acquisition Results
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Acquisition Results Pre Post Gas 160 MMcf/d 180 MMcf/d Liquids 6,000 Bbl/d 7,500 Bbl/d Cash Flow $240 MM $300 MM CFPS $4.00 $5.00 CAPEX $240 MM $430 MM PARAMOUNT RESOURCES LTD. CORPORATE PRESENTATION 11
Slide 12: Reserves Results
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Reserves Results MBOE Proven Probable Total Balance Jan 1, 2004 50,900 16,513 67,413 Liard/Kaybob Acquisition 12,269 9,979 22,248 Total 63,169 26,492 89,661 PARAMOUNT RESOURCES LTD. CORPORATE PRESENTATION 12
Slide 13: Production
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Production
Slide 14: Kaybob
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Kaybob Kaybob Natural Gas Liard, NWT/ (MMcf/d) Northeast British Columbia 107E 120 80 Northwest Alberta 40 0 Grande Prairie 99 OO O1 O2 O3 04E Kaybob Oil & Liquids Kaybob (Bbl/d) Southern Alberta/ 4,000E Southeast Saskatchewan Montana/North Dakota 5,000 2
Slide 15: Kaybob
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Kaybob • Down-spacing program to Kaybob Kaybob produce new reserves in North existing spacing units Fox Creek • 2004 drilling: – 60 infill wells – 10 exploration/extension wells Clover Kaybob • Wells : $1.5 MM to D/C/T South • Initial production : 1- 5 MM
Slide 16: Kaybob Acquisition
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Kaybob Acquisition Karr Notikewin Unit Simonette A&B KNBHL #1 KSBHL #2 Fox Creek Viking KSBHL #3 KSBHL #1 Bluesky PARAMOUNT RESOURCES LTD. CORPORATE PRESENTATION 16
Slide 17: Grande Prairie
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Grande Prairie Grande Prairie Natural Gas Liard, NWT/ (MMcf/d) Northeast British Columbia 26E 30 20 Northwest Alberta 10 0 Grande Prairie 99 OO O1 O2 O3 O4E Grande Prairie Oil & Liquids Kaybob (Bbl/d) Southern Alberta/ 650E Southeast Saskatchewan Montana/
Slide 18: Grande Prairie
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Grande Prairie 2003 Mirage Mirage: Valhalla •Added 10 MMcf/d Saddle Hills Saddle Hills •Added 10 MMcf/d Prairie River 2004 •60 wells planned Drilling Location PARAMOUNT RESOURCES LTD. CORPORATE PRESENTATION 18
Slide 19: Saddle Hills Valhalla Area
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Saddle Hills Valhalla Area 1 6 • 4-35 successful 36 31 Wabamun well 4-35 6-25 • 6-25 drilled and cased • Three additional Wabamun tests planned in 2004 1 6 36 31 PARAMOUNT RESOURCES LTD. CORPORATE PRESENTATION 19
Slide 20: Grande Prairie Area
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Grande Prairie Area 2004 •Plan to drill 40 exploration/ development locations to develop Dunvegan play. PARAMOUNT RESOURCES LTD. CORPORATE PRESENTATION 20
Slide 21: NWT/NE BC
OPERATIONS PRODUCTION FINANCIALS EXPLORATION NWT/NE BC NWT/NE BC Gas Liard, NWT/ Northeast British (MMcf/d) Columbia 19E 20 Northwest 10 Alberta 0 Grande Prairie 99 OO O1 O2 O3 O4E Kaybob Southern Alberta/ The Liard acquisition Southeast Saskatchewan Montana/North will add 20 MMcf/d June Dakota 1, 2
Slide 22: Liard, NWT
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Liard, NWT 2004 F-56 K-35 •2M-25 well 3K-29 Liard 2M-25 Arrowhead currently drilling •Two locations Bovie Lake farmed out; to be completed Liard/Maxhamish PARAMOUNT RESOURCES LTD. CORPORATE PRESENTATION 22
Slide 23: Liard Acquisition
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Liard Acquisition • Liard acquisition with 20 MMcf/d (3,333 Boe/d) effective June 1,2004 • 61,000 net acres undeveloped land at Maxhamish/Patry northeastern British Columbia PARAMOUNT RESOURCES LTD. CORPORATE PRESENTATION 23
Slide 24: Northwest Alberta
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Northwest Alberta NW Alberta Gas Liard, NWT/ Northeast British (MMcf/d) Columbia 18E 30 20 Northwest Alberta 10 0 Grande Prairie 99 OO O1 O2 O3 O4E NW Alberta Oil & Liquids Kaybob (Bbl/d) Southern Alberta/ 1,000E Southeast Saskatchewan Montana/North Dakot
Slide 25: Cameron Hills
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Cameron Hills 2003 • Oil project onstream April 2003 • Producing at target in November 2003 • C-19 successfully tested C-19 C-38 2004 • Three development wells to C-16 offset C-19 • C-16 oil exploration well • C-38 gas exploration well PARAMOUNT RESOURCES
Slide 26: Haro
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Haro 1 6 1 6 1 2003 36 31 36 31 • 13-17 discovery • 12-21 offset • Onstream Spring 2003 2004 1 6 1 6 • 13 locations for 36 31 36 31 Pekisko/Banff plant expansion • + 5MMcf/d June 1, 2004 PARAMOUNT RESOURCES LTD. CORPORATE PRESENTATION 26
Slide 27: Southern Alberta
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Southern Alberta Southern Alberta Gas Liard, NWT/ (MMcf/d) Northeast British Columbia 10E 10 Northwest 5 Alberta 0 Grande Prairie 99 OO O1 O2 O3 O4E Southern Alberta Oil & Liquids Southern Kaybob (Bbl/d) Alberta/ Southeast 1,850E Saskatchewan Montana/Nort
Slide 28: Chain/Craigmyle
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Chain/Craigmyle • 17 shallow gas /CBM locations • Two firm, five contingent Banff oil locations • CBM potential on 90 sections(60 net) PARAMOUNT RESOURCES LTD. CORPORATE PRESENTATION 28
Slide 29: Natural Gas Production
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Natural Gas Production PF* 180 10 19 18 120 Natural Gas 107 26 Production (MMcf/d) 180E 60 Kaybob Grande Prairie Northwest Alberta NWT/NE BC Southern Alberta 0 99 00 01 02 03 04E * NE Alberta production removed from historical data PARAMOUNT RESOURCES LTD
Slide 30: Oil and NGL Production
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Oil and NGL Production 8,000 1,850 6,000 4,000 Oil & NGL 1,000 Production (MMcf/d) 650 4,000 7,500E 2,000 Kaybob Grande Prairie Northwest Alberta Southern Alberta 0 99 00 01 02 03 04E PARAMOUNT RESOURCES LTD. CORPORATE PRESENTATION 30
Slide 31: Production BOE
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Production BOE PF* 40 3,517 3,167 30 4,000 21,833 Production 4,983 (BOE/d) 20 37,500E Kaybob 10 Grande Prairie Northwest Alberta NWT/NE BC Southern Alberta 0 99 00 01 02 03 04E * NE Alberta production removed from historical data PARAMOUNT RESOURCES LTD.
Slide 32: Natural Gas Markets
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Natural Gas Markets AGGREGATORS – 2004E Pan Alberta - 8.0 20 Progas - 11.0 3.3 TCGS 1.0 Sub-Total 20.0 MMcf/d Natural Gas FIXED 3.3 MMcf/d Production SPOT Distribution (Mcf/d) 156.7 Northeast Canada 8.5 Ventura/Nrthn Border 5.0 Selkirk – Empress 16.5 180E
Slide 33: Financial
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Financial
Slide 34: Hedging
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Hedging Paramount will hedge up to 50 % Natural Gas 60 TJ/d @ $5.72/GJ for Apr’04/ Oct’04 @ AECO 20 TJ/d @ $6.78/GJ for Apr’04/ Oct’04 @ AECO 25 TJ/d @ $7.25/GJ for June’04/ Oct’04 @ STN2 105 TJ/d 20 TJ/d @ $8.03/GJ for Nov’04/Mar’05 @ AECO 20 TJ/d @ $8.0
Slide 35: Cash Flow ($MM)
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Cash Flow ($MM) 350 Cash Flow 6.00 CFPS ($millions) ($/share) 300 $300E 5.00 $5.00E 250 4.00 200 3.00 150 2.00 100 1.00 50 0 0.00 99 00 01 02 03 04E 99 00 01 02 03 04E PARAMOUNT RESOURCES LTD. CORPORATE PRESENTATION 35
Slide 36: Q1 2004 Netback
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Q1 2004 Netback Royalties $7.88/BOE Revenue Expenses $40.14/BOE $9.82/BOE Netback $22.44/BOE PARAMOUNT RESOURCES LTD. CORPORATE PRESENTATION 36
Slide 37: Net Debt ($MM)
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Net Debt ($MM) 640 Summit Acquisition Cash Flow 560 Cash Flow 480 Acquisition 400 320 Trust Closing Cash Flow Cash Flow 240 160 80 322 619 598 555 326 299 298 307 380 320 460 430 0 Q1 02 Q2 Q3 Q4 Q1 03 Q2 Q3 Q4 Q1 04 Q2E Q3E Q4E PARAMOUNT RESOURCES LTD. C
Slide 38: Exploration
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Exploration
Slide 39: Colville Lake, NWT
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Colville Lake, NWT • 1850 km north of Calgary at the Arctic Circle • In Sahtu settlement region • Proximal to proposed Mackenzie Valley Pipeline (MVPL) PARAMOUNT RESOURCES LTD. CORPORATE PRESENTATION 39
Slide 40: Colville Lake, NWT
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Colville Lake, NWT PARAMOUNT RESOURCES LTD. CORPORATE PRESENTATION 40
Slide 41: Colville Lake, NWT
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Colville Lake, NWT • SDL’s in area > 400 Bcf gas (NEB) • Paramount 50/50 with Apache in over 500,000 acres • Seismic shot in 2002 • Drilled 2 gaswells in 2003 • 2-4 well drilling program planned for 2004 PARAMOUNT RESOURCES LTD. CORPORATE PRESENTATION 41
Slide 42: Colville Lake, NWT
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Colville Lake, NWT Nogha Drilling To-date EL 399 Maunoir Flank Location (L- – M-17 COLVILLE E-15 C-34 AUBRY J-13 COLVILLE D-45 – C-49 Maunoir Ridge Location (C-34) 50% PARAMOUNT COLVILLE LAKE 50% APACHE 2004 Delineation Locations BELOT HILLS M-63 BEHDZIA
Slide 43: Colville Lake, NWT
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Colville Lake, NWT $/mcf Colville Lake Southern Alberta Price $6.00.. $6.00. MVPL Toll <1.25> -. TCPL <0.20> <0.15> Royalty <0.15> <1.50> Operating Cost <0.80> <0.80> Netback Subtotal $3.60.. $3.55.. Colville Plant/Gathering Cost <0.60> -.. F&D Cost <0.50
Slide 44: Northeast BC – Multi-Zone
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Northeast BC – Multi-Zone • Devonian – Two locations/3000m Zaremba Fox – 50+ BCF/pool – One farmout location Hazel • Mississippian – Two locations/1500m – 10-25 BCF/pool • Triassic Clear Hills – Two locations/1200m – 10 BCF/pool • Cretaceous – One locatio
Slide 45: Alberta Shallow Gas Exploration
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Alberta Shallow Gas Exploration Berry Lake Development • 2002 discovery Peerless Lake • Five existing gaswells • Six Wabiskaw/Clearwater locations for 2004 • 5 MMcf/d initial tie-in volumes • Onstream April 2004 Berry Lake PARAMOUNT RESOURCES LTD. CORPORA
Slide 46: SAGD, Northeast Alberta
OPERATIONS PRODUCTION FINANCIALS EXPLORATION SAGD, Northeast Alberta Paramount Projects: Hangingstone : • Leismer ( 7 wells) Jacos Conoco:Surmont • Christina Lake • Surmont (5 wells) • Corner Corner Paramount keys: Surmont • Modular upgrading • Alternative energy source to natural gas Christina Leis
Slide 47: Heavy Oil Delineation Drilling
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Heavy Oil Delineation Drilling Leismer 11-05-079-10W4 •Wells came in on prognosis –confirmed location of channel 19m bitumen Water - OV Well - Gas Well - Undrilled location PARAMOUNT RESOURCES LTD. CORPORATE PRESENTATION 47
Slide 48: Heavy Oil Delineation Drilling
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Heavy Oil Delineation Drilling Surmont - 11 sections 07-31-081-05W4 •Wells came in better than prog. –Less bottom water than predicted Surmont 26m bitumen - OV Well - Gas Well - Undrilled location PARAMOUNT RESOURCES LTD. CORPORATE PRESENTATION 48
Slide 49: Surmont Gas over Bitumen
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Surmont Gas over Bitumen • Surmont Rg 7 Rg 6 Rg 5 W 4 0 Tp 8 4 Repressurization Pilots 1 4 38 6 0 2 44.2 43 41 5 – Inert gas injection 42 8 46 6279 . 024 16 – Exhaust gas 35 34 0 3 displacement 39 40 23 E Tp 83 1 1 13 .7 9-13 38 1-14 1-18 • Potential to r
Slide 50: Pelican Lake Development
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Pelican Lake Development Conventional Heavy - OV Well 1 6 1 6 Oil Production 36 31 36 31 •Drill 6 OV wells during the winter 1 6 1 6 36 31 36 31 •Success leads to 3 3 development Q2 04 1 6 4 1 6 11-05-081-23W4 36 31 36 31 5 •Initial 12 wells off two Water
Slide 51: Summary
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Summary • Paramount’s cash flow has increased significantly with the expiry of hedging in October 2003 • Gas volumes are increasing with development drilling at Kaybob and Grande Prairie • Acquisition adds production economically and adds significant grow
Slide 52: Paramount Resources Ltd.
OPERATIONS PRODUCTION FINANCIALS EXPLORATION Paramount Resources Ltd. 2004 Investor Presentation