Paramount Resources Ltd T.POU

Healthy Place (350 Million in Adjusted Funds Flow)

[MyHoneyPot]

Magic Number for POU would be this

$54 WTI dollar Oil - $55 U.S. dollar condensate
$3.50 Canadian Gas, 2.69 U.S.
$20 NGL's
Exchange 1.3

This would generate north of 2.50 a share in (FCF) not really FCF but adjusted funds flow for accountants. 

Karr
At 7 million dollars wells, and IP365 of 1126 boe/day at Karr they can add 1000 boe of production at Karr for roughly just a little over 6 million dollars. 

Every 1000 boe in the above healthy place of pricing will add 4.2 million dollars in yearly FCF while still taking into account Maintenance Capex. At $55 dollar condensate, you get like 70% of the capital back in the first year, and now your have that revenue stream forever. 

Real Economics Karr
To maintain 25,000 boe at Karr, requires 7 wells to address declines years at 7 million a well roughly 50 million dollars. So it is 2 million a year to pay for declines at Karr. 

1 Year (First Year)
At Karr in the first year for every 1000 boe's you add, you would get 6.2 millon dollars in New  FCF, and the well would be paid for entirely.  (1 year payback)

After the 1st Year it costs you 2 million a year to maintain every 1000 boe of anual production, at Karr, Karr is a cash cow. 

Adding 10,000 boe to Karr Production

In the first year it would require the adding of 9 wells, these 9 wells would cost approximately 65 million dollars. The would FCF in the first year not counting maintenance capex 62 million dollars. Then that 10,000 boe would free cash flow 45 million dollars a year for 25 years with maintenance capex taken into account. 

If would not be surprized that POU adds on more $55 U.S. condensate hedges and ramps up the production at Karr and Wapiti.

The Break even price while maintain production is $38 dollars U.S. for POU overall. These number include all of POU production in terms of returns, and the maintenance capex of 2 million per 1000 boe is Karr specific.  (Roughly 40-50 cents a share in FCF)

IMHO

[regardless]

For the entire q4 we have been above 44$ Us so this has to bode well or shall I say better for q4 and share holders  raymond James asked me why would anyone sell an asset in this time where things are still undervalued? well why would anyone pay too dollar for an asset like karr when wti hits 65$ this year? same difference because I belive company's will not make mistakes like buying

[Robertboblaw]

Regardless, what's the story with your preoccupation with pou being debt free. They have industry wide healthy debt levels. Just look at tourmaline by comparison. Admittedly tourmaline is the best in class energy company right? Well we (pou) have a similar debt to equity ratio as tourmaline. Yes ok we have 1/3 assets of tou but also 1/3 the debt. We are among the healthiest balance sheets in

[regardless]

Robertlaw you are mistaken I think? tourmaline has a 6billion mkt cap with 2.5b in debt  pou has a 760million mkt cap with 847million in debt....

[Robertboblaw]

Regardless, No I'm not. Market cap is simply the number of shares multiplied by share price. It has absolutely nothing to do with debt levels or debt to equity ratios. To get debt to equity ratios you need to go directly to the balance sheet of the respective companies.

[regardless]

Robertlaw I understand that as well but market cap does have a direct correlation on what they can borrow for future programs  now.... unless pou is happy with being an 82-90000 bpd producer then fine but if they ever wanted to grow  They'd have to show a smaller debt to equity ratio  same as if I need a line of credit increase on my buisiness....my reciveables amd value of

[regardless]

My preoccupation with them being debt free is they have the ability to do so and very quickly as most other do not  my Assessment of them being at 20$ today debt free is huge because they're interest alone on their debt is as much as a decent free cash flow earnings in one quarter ... that's why! so if you have all this great land that can get you out of debt then you sell some of

[Robertboblaw]

The interst on their debt is ~$40 million per year. That's nothing. $800 million X 5%. Not sure why this would worry you. Every company has debt. Every single one. They all pay some interest. It's a cost of doing business. Get used to it lol.

[regardless]

All I'm saying they have the unique ability and are in the unique position to be debt free or close to... they why wouldn't you do it ? 40 million in interest is 7.5 new wells drilled and producing per year 

[Robertboblaw]

Let's agree to disagree. There will be no major asset sale in 2021 imo. Btw last time pou was a 90k boe producer it's share price was at $25 per share. The market was more than happy with them being a 90k boe producer. Just saying bud...

[regardless]

Robertlaw I ado agree  just making some Sunday chatter and making an argument and picking a side 

[Robertboblaw]

Fair enough man. But selling off the crown jewels now we would never get fair value. And JR and CR (RIP) don't do that.

[regardless]

I did agree Robert law ..// ypu would have a better chance getting a decent fair value now at the beginning of a super cycle in commodities than holding out for the top lile i said before nobody is going to buy anythi g at the top but of you look at my honey pots comparison that a decent deal on karr would only take a few years or so to pay back the purchase price that would leave them 22 years

[regardless]

I don't agree with you on that Robert law 

[Robertboblaw]

Yes regardless I understand what you're saying. They won't get fair value either if and when oil is at $80. I'm saying they will have a much much better chance then for getting top dollar for their assets. History has a way of repeating itself...oil prices climb so to does acquisitions...Remember nexen (china)? Canada's not the only country with energy needs.

[regardless]

Robert law that is a great point too 

[regardless]

Just the price increase of last week should shoot this up 10-15% this week  if eia shows yet another draw this could have a 20% week