Paramount Resources Ltd. Class A · TSX:POU
Paramount Resources Ltd. Class A — Investor Presentation (June 2014)
43 slides from Paramount Resources Ltd. Class A's investor presentation, June 2014
Slide 1: Investor Presentation
Investor Presentation June 2014
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"), including management's assessment of the Company's future plans and operations, this presentation contains
Slide 3: Corporate Profile
Corporate Profile • Average Q1 2014 production: 21,028 Boe/d (~80% gas) • 97.9 MM shares outstanding • Market capitalization @ $56.00/share: $5.5 billion • > 50% insider ownership • 924,000 net acres undeveloped land (December 31, 2013) • Net Debt: $1,274 MM (at March 31, 2014) • Q1 2014 Capital Exp
Slide 4: Core Areas
Core Areas Average Production (Boe/d) Q1 2014 Kaybob 13,368 Grande Prairie 5,553 Southern 1,455 Northern 652 Total Boe/d 21,028 • 2014E capital expenditures: $650 MM (including Strategic Investments) 4
Slide 5: Kaybob Resource
Kaybob Resource Paramount Acreage: • 560 sections Cretaceous Rights • 394 Sections Montney Rights • 258 Sections Duvernay Rights • Deep Basin liquids-rich gas resources in multiple stacked horizons • 40-160 Bcf/section (1) • ~5+ Bcf EUR/Hz well (1) • >10 Tcf DGIIP net to PRL (1) • Liquids-rich Montn
Slide 6: Dunvegan Hz Wells
Dunvegan Hz Wells • Hz Dunvegan well at Resthaven • Tested 11.3 MMcf/d(1) at 6.2 MPa • IP: 8.3 MMcf/d • Currently producing ~1.3 MMcf/d • Cost: $8.3 MM d/c/t (1) Please refer to the heading "Test Results" in the Advisories section of this presentation for further information 6
Slide 7: Falher/Wilrich Hz Wells
Falher/Wilrich Hz Wells • Hz Falher well at Musreau • Tested 16.4 MMcf/d(1) at 20.8 MPa • IP: 12 MMcf/d • Producing ~2 MMcf/d • Cost: $8.6 MM d/c/t (1) Please refer to the heading "Test Results" in the Advisories section of this presentation for further information 7
Slide 8: Falher Type Curve
oc paicremetere Falher Type Curve resources Itd. 6.0 Raw Gas Production MMcfid \ } ] : eth " | ! 1 , it { re | WAR) tine § Ua. lah ' i) Af i amen Ay, iain ees [lve we | il] a Peeph alate al la The ror tt ) i " 1 Y = | my PA AMM ET 200 00 4.0 | 2.0 | | 0.0 ‘| 0 600 1000 1200 Days on Production - Norm
Slide 9: Economics of Kaybob 4.9 Bcf Horizontal Falher Well
Economics of Kaybob 4.9 Bcf Horizontal Falher Well * Based on processing through a refrigeration facility 9
Slide 10: Montney Gas Resource
Montney Gas Resource Liquids-rich Montney gas play Paramount holds ~325 net sections of Montney rights 2011/2012 program included 12 Hz Montney wells: tested 5.5-15.4 MMcf/d(1) Montney 2013 program: Drilled 13 wells; commenced drilling 25 additional wells off 3 pads which are expected to rig
Slide 11: Montney NGL Rates
Montney NGL Rates For Paramount well test results please refer to the heading "Test Results" in the Advisories section of this presentation for further information. 11 Test results from Competitor wells were obtained through publicly disclosed information.
Slide 12: 3.7 Bcf Montney Type Curve
3.7 Bcf Montney Type Curve * Based on processing through a refrigeration facility 12
Slide 13: 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 • Cemented liners/open-hole packers (ECP’s) • Plug and perf/sliding sleeves • Frac sizing/
Slide 14: Fox Rig No 3
/*< Fox Rig N° 3 Paramount resources Itd.
Slide 15: Musreau
Musreau 2014 Capital Plan Drill 26 (26 net) horizontal Montney wells Start drilling 11 (11 net) Montney pad wells Drill 6 (5.8 net) horizontal Falher/Wilrich wells Drill 4 (3.5 net) vertical wells to hold lands Bring 70 (net) horizontal wells on production during 2014 15
Slide 16: Karr
Karr • Located 50 km SW of Grande Prairie • Multi-zone potential, including Halfway, Montney sour and Gething, Bluesky, Falher sweet commingled gas • Current lands ~93,500 net acres (~146 sections) • Average 78% working interest • Expanded plant and gathering systems to 40 MMcf/d • Seven horizontal
Slide 17: Kaybob Plant Capacity
Kaybob Plant Capacity Net POU Est. Net Gross Raw Raw POU Sales Capacity Capacity Capacity(1) Current Capacity MMcf/d MMcf/d Boe/d Musreau Refridge 45 45 8,500 Plant Resthaven Plant 20 10 2,000 Smoky Plant 100 10 2,500 Kakwa Plant 40 4 700 Pembina Musreau Processing Capacity 10 10 1,800 Subtotal 215
Slide 18: Kaybob Processing Capacity
Kaybob Processing Capacity (1) (2) 18
Slide 19: Sales Turbines
Sales Turbines 19
Slide 20: Parzamournt
Parzamournt resources Itd. aaa séchiathe dal = } —.
Slide 21: Process Flow Chart: Musreau Deep Cut Facility
Process Flow Chart: Musreau Deep Cut Facility Note: Illustrative example 21 Based on indicative prices and differentials which are subject to change
Slide 22: Illustrative Deep-Cut
Illustrative Deep-Cut Mix of Cretaceous and Montney Wells Example Montney Wells Only Example 200 MMcf/d x 23% Shrinkage=154 200 MMcf/d x 15% Shrinkage=170 MMcf/d (25,667 Boe/d) Sales Gas Price MMcf/d (28,333 Boe/d) Sales Gas 150 Bbl/MMcf: ~30,000 Bbl/d 100 Bbl/MMcf: 20,000 Bbl/d NGLs NGLs Deep-Cut R
Slide 23: 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 do this many times • Simple Payout after start up is 1.5 - 2.3 years Resourc
Slide 24: Pembina Peace Pipeline Expansion
Pembina Peace Pipeline Expansion Numbers provided by Pembina Pipelines LVP Capacity (Bbl/d) HVP Capacity (Bbl/d) In-Service Current 195,000 115,000 Phase 2 Expansion 55,000 20,000* 2015 Phase 3 Expansion 320,000** 2016/2017 Total 705,000 * By displacement onto 53,000 Bbl/d Pembina North Expansion *
Slide 25: Valhalla
Valhalla • Montney/Doig Play • 16 wells tied in at restricted rates (midstream constraints) • Currently tied in to four different producer-mid streamers on interruptible capacity leading to intermittent production profiles • Exploring options for long- term processing arrangements with a dedicated m
Slide 26: Birch
Birch • Three Hz Montney wells on production • Production processed through pilot facility limited to 3 MMcf/d • NGL yields average 60 Bbl/MMcf • Four wells planned in H2 2014 • Evaluating type curve/NGL ratios to determine economic viability (1) Cumulative production to the end of February 2014 26
Slide 27: Paramount Investments
Paramoumsrtt resources Itd. be ho Se a) — DF
Slide 28: Paramount Investments
Paramount Investments 19.1 MM shares of Trilogy @ $28.00/share ~$536 MM 54.1 MM MGM Energy shares @ ~$0.19/share ~$10 MM Fox Drilling ~$85 MM 3.7 MM shares of MEG Energy @ $37.00/share ~$137 MM Other (Marquee, RMP, Strategic, Westbrick, etc.) ~$56 MM Total ~$824 MM Paramount shares outstanding 97.9
Slide 29: Cavalier Energy Inc.
Pararrtacust resources Itd Cavalier Energy Inc.
Slide 30: Cavalier Energy Inc.
Cavalier Energy Inc. • Created in December 2011 • Experienced team led by CEO Dr. Will Roach (ex UTS) • Paramount has contributed its oilsands assets and seed capital to Cavalier Energy • Funding at the Cavalier level will be via a combination of equity and debt • Assets retained as 100% WI within C
Slide 31: Cavalier Assets
Cavalier Assets • Approximately 320 sections gross (316 net) • Prospective primarily for conventional oilsands, bitumen in carbonates, and cold-flow heavy oil • Hoole Project: 100% WI (1) Resource estimates are Best Estimates based on McDaniel independent engineering reports dated as of October 31,
Slide 32: Hoole Grand Rapids - 1st Project
Hoole Grand Rapids - 1st Project Grand Rapids Reservoir Φ = 30 %, k = 1 to 4 D d = 250m, h ~ 20m, p = 1,500 kPa Viscosity = 200,000 to 2,000,000 cp McDaniel Best Estimate: DEBIP = 1.7 Billion Bbl(1) 80 wells drilled to date; 42 cored 93 Million Bbl Probable Undeveloped Reserves and 746 M
Slide 33: Liard, NWT
Paramoumsrtt resources Itd.
Slide 34: Liard Basin
Liard Basin • Drilled and completed b-40-I • Clean-up test: ~5-14 MMcf/d(1) • Completion of d-57-D/94-O-12 horizontal planned for later in 2014 • Liard Basin industry estimates(2): • 170-500 Bcf / section OGIP • ~20% expected recovery • ~34-100 Bcf sales gas/section • Paramount holds ~156 net sectio
Slide 35: Quarterly Operating Results
Quarterly Operating Results 35
Slide 36: 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 36 Patry, B.C.
Slide 37: Summary
Summary • Exposure to significant reserve opportunities – Kaybob Deep Basin: Cretaceous, Montney – Karr: Montney – Valhalla: Montney, Doig – Birch: Montney • Significant asset value – Trilogy – MGM – MEG Energy – Cavalier Energy – Liard Shale Gas • Paramount continues to provide long-term value crea
Slide 38: Advisories Appendix
Paramoumsrtt resources Itd. Ce)
Slide 39: Advisories
Advisories 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", "intend", "propose", or simil
Slide 40: Advisories cont'd
Advisories cont’d the outcome of existing and potential lawsuits, regulatory actions, audits and assessments; and other risks and uncertainties described elsewhere in this presentation and in Paramount’s filings with Canadian securities authorities, including its Annual Information Form. The foregoi
Slide 41: Advisories cont'd
Advisories cont’d Test Results The Kaybob test rates disclosed in this document represent the average rate of gas-flow during the post clean-up production testing at the largest choke setting. The flow tests typically range from 12 to 72 hours in duration. Karr-Gold Creek and Valhalla test rates rep
Slide 42: Advisories cont'd
Advisories cont’d At Hoole, a portion of Cavalier’s economic contingent resources were re-classified by McDaniel as probable reserves in McDaniel's evaluation effective as of December 31, 2012 by virtue of Cavalier having finalized its plans for a pilot project and submitted a regulatory application
Slide 43: Paramount Resources contact details
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
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