CALGARY, ALBERTA - May 25, 2004 /CNW/ - Paramount
Resources Ltd. is pleased to announce that it has entered into an
agreement to acquire oil and natural gas assets in the Kaybob
area in central Alberta and in the Fort Liard area in the
Northwest Territories and northeast British Columbia for $189
million, subject to adjustments. The properties to be acquired
are adjacent to or nearby Paramount's existing properties at
Kaybob and Fort Liard. Kaybob is Paramount's largest core area.
The acquisition will complement Paramount's existing production
in those areas and provide additional facility synergies and
development drilling opportunities. Paramount has arranged a $180
million non-revolving bridge financing with a Canadian chartered
bank to fund the acquisition.
The Kaybob assets to be acquired include interests in:
- the Kaybob North Beaverhill Lake Unit # 1, which has produced
over 200 million Bbls of oil;
- the Notikewin unit, which has produced over 600 Bcf of natural
gas and includes individual wells which have produced over 60
Bcf;
- the Fox Creek Viking Pool, which has produced over 200 Bcf;
- the Kaybob South Units #1, #2, and #3 which comprise the Kaybob
South Pool, the largest gas pool ever discovered in western
Canada, which has produced over 5 Tcf of natural gas;
- the Simonette Units A and B which were discovered in the early
1990's; and
- (140,000 net acres of undeveloped land on the W6 deep basin
play.
The properties to be acquired are currently producing
approximately 10,000 BOE/d, comprised of 40 MMcf/d of natural gas
and 3,300 bbl/d of oil and NGLs. The reserves attributable to the
properties as of June 1, 2004 are estimated by Paramount to
consist of proved reserves of approximately 47.2 Bcf of natural
gas and 4.4 million Bbls of oil and NGLs, or a total of 12.3
million BOEs, and proved plus probable reserves of approximately
93.6 Bcf of natural gas and 6.7 million Bbls of oil and NGLs, or
a total of 22.2 million BOEs.
Assuming completion of the acquisition, Paramount forecasts its
production to average 180 MMcf/d of natural gas and 7,500 Bbl/d
of oil and NGLs, or a total of 37,500 BOE/d, for all of 2004.
Current production, including the acquisition, approximates 200
MMcf/d and over 9,000 Bbl/d, or in excess of a total of 42,500
BOE/d. Assuming completion of the acquisition and based on
current forward strip pricing, Paramount forecasts cash flow in
2004 to be about $300 million or approximately $5.00/share and
capital expenditures to total $430 million. Net debt levels at
year end giving effect to the acquisition are projected to be
around $430 million which would equate to a debt to cash flow
ratio of approximately 1.4 times.
The acquisition is to be effective June 1, 2004 and is expected
to be completed on or about June 30, 2004, subject to the
satisfaction of the conditions of closing.
BMO Nesbitt Burns Inc. has acted as advisor to Paramount in
connection with the acquisition.
Conference Call
A conference call will be held with the senior management of
Paramount Resources Ltd. to answer questions with respect to the
acquisition at 9:00 a.m. MST on Wednesday, May 26, 2004. To
participate, please call 1- 877-211-7911 or 1-416-405-9310
approximately 15 minutes before the call is to begin. The
conference call will be live webcast from www.paramountres.com or
www.companyboardroom.com. A replay of the conference call will be
available within an hour of the call for seven days: until June
2, 2004. The number for the replay is 1-800-408-3053 or
1-416-695-5800 with passcode number 3056250. The conference call
will be available for replay on the Company website,
www.paramountres.com within two hours of the webcast.
Advisory Regarding Oil and Gas Information
In this news release, certain natural gas volumes have been
converted to barrels of oil equivalent (BOE) on the basis of six
thousand cubic feet (Mcf) to one barrel (Bbl). BOE may be
misleading, particularly if used in isolation. A BOE conversion
ration of 6 Mcf: 1 Bbl is based on an energy equivalency
conversion method primarily applicable at the burner tip and
doers not represent equivalency at the well head.
Advisory Regarding Forward-Looking Statements
This news release contains forward-looking statements within the
meaning of applicable securities laws. Forward-looking statements
include estimates, plans, expectations, opinions, forecasts,
projections, guidance or other statements that are not statements
of fact. The forward looking statements in this news release
include statements with respect to the transaction closing date,
future production, capital expenditures, cash flow, net debt, and
the magnitude of oil and natural gas reserves. Although Paramount
believes that the expectations reflected in such forward-looking
statements are reasonable, undue reliance should not be placed on
them because we can give no assurance that such expectations will
prove to have been correct. Factors that could cause actual
results to differ materially from those set forward in the
forward looking statements include general economic business and
market conditions, fluctuations in interest rates, changes in
production estimates, our future costs, future crude oil and
natural gas prices, failure to meet the conditions of the
acquisition, and changes in our reserve estimates. Paramount's
forward-looking statements are expressly qualified in their
entirety by this cautionary statement. We undertake no obligation
to update our forward-looking statements except as required by
law.
Paramount is a Canadian oil and natural gas exploration,
development and production company with operations focused in
Western Canada. Paramount's common shares are listed on the
Toronto Stock Exchange under the symbol "POU".
