Paramount Resources Ltd.
CALGARY, March 4, 2020 /CNW/ -
HIGHLIGHTS
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(1) | See "Oil and Gas Measures and Definitions" in the Advisories section. |
(2) | "Adjusted funds flow" and "base capital" are Non-GAAP measures. See "Non-GAAP Measures" in the Advisories section. |
(3) | Production measured at the wellhead. Natural gas sales volumes are lower by approximately 10 percent and wellhead liquids sales volumes are lower by approximately 12 percent due to shrinkage, under normalized operations. Excludes days when the wells did not produce. The production rates and volumes stated are over a short period of time and, therefore, are not necessarily indicative of average daily production, long-term performance or of ultimate recovery from the wells. CGRs calculated by dividing raw wellhead liquids volumes by raw wellhead natural gas volumes. See Oil and Gas Measures and Definitions in the Advisories section. |
2020 GUIDANCE
RESERVES (1)
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(1) | Readers are referred to the advisories concerning "Reserves Data" and "Oil and Gas Measures and Definitions" in the Advisories section of this document. Reserves evaluated by McDaniel & Associates Consultants Ltd. ("McDaniel") as of December 31, 2019 and December 31, 2018 in accordance with National Instrument 51-101 definitions, standards and procedures. Reserves are gross reserves representing working interest before royalties. Net present values of future net revenue were determined using forecast prices and costs and do not represent fair market value. |
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
CORPORATE
FINANCIAL AND OPERATING RESULTS (1)
($ millions, except as noted)
Three months ended December 31 | Twelve months ended December 31 | ||||||||
2019 | 2018 | 2019 | 2018 | ||||||
Net income (loss) | (31.1) | (170.5) | (87.9) | (367.2) | |||||
per share – basic and diluted ($/share) | (0.24) | (1.31) | (0.67) | (2.78) | |||||
Cash from operating activities | 70.5 | 12.4 | 255.7 | 223.4 | |||||
per share – basic and diluted ($/share) | 0.54 | 0.10 | 1.96 | 1.69 | |||||
Adjusted funds flow | 93.5 | 45.5 | 299.0 | 263.9 | |||||
per share – basic and diluted ($/share) | 0.71 | 0.35 | 2.29 | 2.00 | |||||
Total assets | 3,531.3 | 4,118.1 | |||||||
Long-term debt | 632.3 | 815.0 | |||||||
Net debt | 703.5 | 896.0 | |||||||
Common shares outstanding (thousands) (2) | 133,337 | 130,326 | |||||||
Sales volumes | |||||||||
Natural gas (MMcf/d) | 299.0 | 315.2 | 303.3 | 325.9 | |||||
Condensate and oil (Bbl/d) | 28,516 | 24,898 | 25,079 | 24,238 | |||||
Other NGLs (Bbl/d) (3) | 7,064 | 7,059 | 6,767 | 7,386 | |||||
Total (Boe/d) | 85,411 | 84,495 | 82,394 | 85,941 | |||||
% liquids | 42% | 37% | 39% | 37% | |||||
Grande Prairie Region (Boe/d) | 36,789 | 26,976 | 29,040 | 26,059 | |||||
Kaybob Region (Boe/d) | 33,167 | 37,262 | 35,500 | 39,004 | |||||
Central Alberta and Other Region (Boe/d) | 15,455 | 20,257 | 17,854 | 20,878 | |||||
Total (Boe/d) | 85,411 | 84,495 | 82,394 | 85,941 | |||||
Netback | $/Boe (4) | $/Boe (4) | $/Boe (4) | $/Boe (4) | |||||
Natural gas revenue | 75.1 | 2.73 | 79.2 | 2.73 | 261.0 | 2.36 | 267.1 | 2.25 | |
Condensate and oil revenue | 175.0 | 66.70 | 104.3 | 45.54 | 610.2 | 66.66 | 599.9 | 67.81 | |
Other NGLs revenue (3) | 8.5 | 13.03 | 20.4 | 31.39 | 37.7 | 15.24 | 82.7 | 30.67 | |
Royalty and sulphur revenue | 1.3 | ─ | 3.5 | ─ | 6.0 | ─ | 15.8 | ─ | |
Petroleum and natural gas sales | 259.9 | 33.08 | 207.4 | 26.68 | 914.9 | 30.42 | 965.5 | 30.78 | |
Royalties | (17.2) | (2.19) | (8.0) | (1.03) | (63.3) | (2.10) | (69.2) | (2.21) | |
Operating expense | (105.0) | (13.36) | (103.2) | (13.28) | (376.0) | (12.50) | (381.0) | (12.15) | |
Transportation and NGLs processing (5) | (22.8) | (2.90) | (24.2) | (3.11) | (94.7) | (3.15) | (93.0) | (2.96) | |
Netback | 114.9 | 14.63 | 72.0 | 9.26 | 380.9 | 12.67 | 422.3 | 13.46 | |
Commodity contract settlements | 4.7 | 0.60 | (9.3) | (1.20) | 13.2 | 0.44 | (76.5) | (2.44) | |
Netback including commodity contract settlements |
119.6 |
15.23 |
62.7 |
8.06 |
394.1 |
13.11 |
345.8 |
11.02 | |
Base Capital (6) | |||||||||
Grande Prairie Region | 60.7 | 48.1 | 256.7 | 265.7 | |||||
Kaybob Region | 9.5 | 35.6 | 80.7 | 215.7 | |||||
Central Alberta and Other Region | 0.6 | 16.3 | 7.6 | 40.9 | |||||
Corporate | ─ | 2.5 | 6.0 | 10.8 | |||||
Total | 70.8 | 102.5 | 351.0 | 533.1 | |||||
Asset retirement obligations settlements | 18.0 | 8.9 | 29.4 | 29.4 |
(1) | Readers are referred to the advisories concerning Non-GAAP Measures and Oil and Gas Measures and Definitions in the Advisories section of this document. This table contains the following Non-GAAP measures: Adjusted Funds Flow, Net Debt, Netback, and Base Capital. |
(2) | Common shares are presented net of shares held in trust under the Company's restricted share unit plan (000's of common shares): 2019: 857.9; 2018: 574.0. |
(3) | Other NGLs means ethane, propane and butane. |
(4) | Natural gas revenue presented as $/Mcf. |
(5) | Includes downstream transportation costs and NGLs fractionation costs. |
(6) | Excludes spending related to the expansion of the Karr 6-18 facility prior to its sale, land and property acquisitions |
RESERVES (1)
Proved | Proved plus Probable | |||||
2019 | 2018 | % Change | 2019 | 2018 | % Change | |
Natural gas (Bcf) | 1,059.5 | 1,366.6 | (22) | 1,993.8 | 2,169.2 | (8) |
NGLs (MBbl) (2) | 141,238 | 146,791 | (4) | 264,917 | 238,325 | 11 |
Crude oil (MBbl) | 16,997 | 16,130 | 5 | 34,875 | 34,550 | 1 |
Total (MBoe) | 334,817 | 390,688 | (14) | 632,097 | 634,403 | ─ |
Future Net Revenue NPV10 ($ millions) | 2,427 | 2,136 | 14 | 4,478 | 4,134 | 8 |
(1) | Readers are referred to the advisories concerning "Reserves Data" and "Oil and Gas Measures and Definitions" in the Advisories section of this document. Reserves evaluated by McDaniel & Associates Consultants Ltd. ("McDaniel") as of December 31, 2019 and December 31, 2018 in accordance with National Instrument 51-101 definitions, standards and procedures. Reserves are gross reserves representing working interest before royalties. Net present values of future net revenue were determined using forecast prices and costs and do not represent fair market value. |
(2) | Includes ethane, propane, butane, pentanes-plus, and condensate. |
APPOINTMENT OF CHIEF FINANCIAL OFFICER
The Board of Directors of Paramount is pleased to announce the appointment of Paul Kinvig to the role of Chief Financial Officer. Paul has most recently served as Paramount's Vice President Finance, Capital Markets and has held roles of increasing responsibility in Paramount's finance area throughout his 15 years with the Company. Bernie Lee will continue to serve as Executive Vice President, Finance of the Company. The Board recognizes and appreciates the significant contributions that Bernie Lee has made as Chief Financial Officer to Paramount's success over the last 17 years and looks forward to his continuing contributions.
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 reserves and resources, 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".
Paramount's 2019 annual results, including the Review of Operations, Management's Discussion and Analysis and the Company's Consolidated Financial Statements can be obtained at: https://mma.prnewswire.com/media/1099299/Paramount_Resources_Ltd__Paramount_Resources_Ltd__Reports_2019_A.pdf
This information will also be made available through Paramount's website at www.paramountres.com and on SEDAR at www.sedar.com.
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:
Such forward-looking information is based on a number of assumptions which may prove to be incorrect. Assumptions have been made with respect to the following matters, in addition to any other assumptions identified in this press release:
Statements relating to reserves are also deemed to be forward looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and that the reserves can be profitably produced in the future.
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. The material risks and uncertainties include, but are not limited to:
The foregoing list of risks is not exhaustive. For more information relating to risks, see the section titled "Risk Factors" in Paramount's annual information form for the year ended December 31, 2019, 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.
Non-GAAP Measures
In this press release, "Adjusted funds flow", "Base capital", "Netback" and "Net Debt", together the "Non-GAAP measures", are used and do not have any standardized meanings as prescribed by International Financial Reporting Standards.
"Adjusted funds flow" refers to cash from operating activities before net changes in operating non-cash working capital, geological and geophysical expenses, asset retirement obligation settlements, closure cost expenditures, dispute settlements and transaction and reorganization costs. Adjusted funds flow is used to assist management and investors in measuring the Company's ability to fund capital programs and meet financial obligations, including the settlement of asset retirement obligations. Asset retirement obligation settlements are excluded from the calculation of adjusted funds flow because such expenditures are not directly linked to the revenue generating activities of the Company. Paramount manages the timing of expenditures related to asset retirement obligation settlements in accordance with regulatory requirements and its overall approach to managing its asset retirement obligations and, as a result, amounts incurred may vary from period to period. Adjusted funds flow is not intended to represent cash from operating activities, net loss or any other GAAP measure and should not be construed as being an alternative to, or more meaningful than, cash flow from operating activities as determined in accordance with IFRS. The following are the calculations of adjusted funds flow from the nearest GAAP measure for the years ended December 31, 2019 and December 31, 2018 and for the three months ended December 31, 2019 and December 31, 2018:
Year ended December 31, 2019 | 2019 (MM$) | 2018 (MM$) | |
Cash from operating activities | 255.7 | 223.4 | |
Change in non-cash working capital | (15.9) | (7.0) | |
Geological and geophysical expenses | 11.0 | 12.5 | |
Asset retirement obligations settled | 29.4 | 29.4 | |
Closure costs | 14.0 | – | |
Transaction and reorganization costs | 2.3 | 5.6 | |
Dispute settlements | 2.5 | – | |
Adjusted funds flow | 299.0 | 263.9 | |
Three months ended December 31, 2019 | 2019 (MM$) | 2018 (MM$) | |
Cash from operating activities | 70.4 | 12.4 | |
Change in non-cash working capital | (7.9) | 21.2 | |
Geological and geophysical expenses | 3.5 | 1.9 | |
Asset retirement obligations settled | 18.0 | 8.9 | |
Closure costs | 4.7 | – | |
Transaction and reorganization costs | 2.3 | 1.1 | |
Dispute settlements | 2.5 | – | |
Adjusted funds flow | 93.5 | 45.5 |
"Base capital" consists of the Company's spending on wells, infrastructure projects, other property, plant and equipment and exploration and evaluation assets and excludes spending related to the expansion of the Karr 6-18 facility prior to its sale and land and property acquisitions. The base capital measure provides management and investors with information regarding the Company's capital spending on wells and infrastructure projects separate from land and property acquisition activity. The following is a reconciliation of base capital from the nearest GAAP measure for the years ended December 31, 2019 and December 31, 2018:
2019 (MM$) | 2018 (MM$) | ||
Property, plant and equipment and exploration | 404.1 | 580.2 | |
Karr 6-18 facility expansion | (45.5) | (35.9) | |
Land and property acquisitions | (7.6) | (11.2) | |
Base capital | 351.0 | 533.1 |
"Netback" equals petroleum and natural gas sales less royalties, operating costs and transportation and NGLs processing costs. Netback is commonly used by management and investors to compare the results of the Company's oil and gas operations between periods. Refer to the table under the heading "Financial and Operating Results" for the calculation thereof.
"Net Debt" is a measure of the Company's overall debt position after adjusting for certain working capital and other amounts and is used by management to assess the Company's overall leverage position. Refer to the Liquidity and Capital Resources section of the Company's Management's Discussion and Analysis for the calculation of Net Debt.
Non-GAAP measures should not be considered in isolation or construed as alternatives to their most directly comparable measure calculated in accordance with GAAP, or other measures of financial performance calculated in accordance with GAAP. The Non-GAAP measures are unlikely to be comparable to similar measures presented by other issuers.
Reserves Data
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 3, 2020 and effective December 31, 2019 (the "McDaniel Report"). The price forecast used in the McDaniel Report is an average of the January 1, 2020 price forecasts for McDaniel and GLJ Petroleum Consultants Ltd. and the December 31, 2019 price forecast of Sproule Associates Ltd. The estimates of reserves contained in the McDaniel Report and referenced in this press release 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. There is no assurance that the forecast prices and costs assumptions used in the McDaniel Report will be attained, and variances could be material. Estimated future net revenue does not represent fair market value. 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, 2019, 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.
Oil and Gas Measures and Definitions
The term "liquids" includes oil, condensate and Other NGLs (ethane, propane and butane). NGLs consist of condensate and Other NGLs.
Abbreviations
Liquids | Natural Gas | ||||||
Bbl | Barrels | GJ | Gigajoules | ||||
Bbl/d | Barrels per day | GJ/d | Gigajoules per day | ||||
MBbl | Thousands of barrels | Mcf | Thousands of cubic feet | ||||
NGLs | Natural gas liquids | MMcf | Millions of cubic feet | ||||
Condensate | Pentane and heavier hydrocarbons | MMcf/d | Millions of cubic feet per day | ||||
AECO | AECO-C reference price | ||||||
Oil Equivalent | WTI | West Texas Intermediate | |||||
Boe | Barrels of oil equivalent | ||||||
MBoe | Thousands of barrels of oil equivalent | ||||||
MMBoe | Millions of barrels of oil equivalent | ||||||
Boe/d | Barrels of oil equivalent per day |
This press release contains disclosures expressed as "Boe", "$/Boe", "MBoe","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 year ended December 31, 2019, the value ratio between crude oil and natural gas was approximately 45:1. 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.
This press release contains metrics commonly used in the oil and natural gas industry. Each of these metrics is determined by the Company as set out below or elsewhere in this press release. The metrics are "CGR", "reserves replacement ratio" and "finding and development costs". These metrics do not have standardized meanings and may not be comparable to similar measures presented by other companies. As such, they should not be used to make comparisons. Management uses these oil and gas metrics for its own performance measurements and to provide shareholders with measures to compare the Company's performance over time; however, such measures are not reliable indicators of the Company's future performance and future performance may not compare to the performance in previous periods and therefore should not be unduly relied upon.
"CGR" means condensate to gas ratio and is calculated by dividing wellhead raw liquids volumes by wellhead raw natural gas volumes.
"Reserves replacement ratio" is calculated by dividing: (i) the aggregate changes in reserves from the prior year from extensions and discoveries, technical revisions and economic factors, by (ii) the aggregate production during the year. Reserves replacement ratio is a measure commonly used by management and investors to assess the rate at which reserves depleted by production are being replaced by reserves added through operations.
"Finding and development costs" are calculated by dividing: (i) the sum of the total base capital expenditures for the year excluding corporate expenditures, and net changes in estimated future development costs from the prior year excluding those associated with the Karr 6-18 facility, by (ii) the net changes to reserves from the prior year before production. Finding and development costs are a measure commonly used by management and investors to assess the relationship between capital invested in oil and gas exploration and development projects and reserve additions associated with such projects.
Additional information respecting the Company's oil and gas properties and operations, including a breakdown of 2019 annual and quarterly production volumes by product type, is provided in the Company's annual information form for the year ended December 31, 2019 which is available on SEDAR at www.sedar.com.
SOURCE Paramount Resources Ltd.
https://paramount.mediaroom.com/2020-03-04-Paramount-Resources-Ltd-Reports-2019-Annual-Results-and-Provides-2020-Guidance