Q1; divy increase; 5 year projection ... Good all roundCheers folks
Paramount Resources Ltd. Announces First Quarter 2022 Results, Upwardly Revised Guidance, Increased Dividend and Complementary Asset Acquisition
CALGARY, AB, May 4, 2022 /CNW/ - Paramount Resources Ltd. ("Paramount" or the "Company") (TSX: POU) is pleased to announce strong first quarter 2022 financial and operating results, the acceleration of development activities at Karr supporting increased production in 2023 and beyond and a highly complementary $40 millionDuvernay acquisition in its Willesden Green core area. Paramount is also pleased to announce that it is increasing its regular monthly dividend from $0.08 per class A common share ("Common Share") to $0.10 per Common Share beginning May 2022.
HIGHLIGHTS
- First quarter 2022 sales volumes averaged 82,137 Boe/d (45% liquids), in-line with expectations.(1)
- Sales volumes at Karr averaged 38,611 Boe/d (51% liquids).
- Sales volumes at Wapiti averaged 16,126 Boe/d (59% liquids).
- Cash from operating activities was $175 million ($1.25 per basic share) in the first quarter. Adjusted funds flow was $238 million ($1.70 per basic share). Free cash flow was $103 million ($0.74 per basic share).(2)
- First quarter capital expenditures totaled $117 million and were predominantly focused on drilling and completion activities at Karr and Wapiti as well as in the Kaybob region.
- Paramount realized cash proceeds of approximately $51 million from the sale of a portion of its investments in securities in the first quarter.
- Net debt was reduced by approximately $96 million quarter-over-quarter to $361 million at March 31, 2022, including drawings under the Company's credit facility of $305 million. Net debt does not account for the $479 million carrying value of the Company's investments in securities as at March 31, 2022. (3)
- Paramount now expects to achieve its net debt target of about $300 million by mid-year, earlier than previously forecast, even after accounting for the $40 million Willesden Green acquisition.
- Abandonment and reclamation expenditures in the first quarter totaled $15 million, net of $5 million in funding under the Alberta Site Rehabilitation Program ("ASRP"). A total of 63 wells were abandoned in the quarter, including 36 under the Company's ongoing area-based closure program at Zama.
- In late April, the Company acquired Duvernay lands and production directly offsetting its existing 61,000 net acre position in the Willesden Green area of Alberta for approximately $40 million in cash prior to adjustments. The acquisition is accretive on all key metrics and more than doubles Paramount's land position and internally estimated drilling locations in the area, setting the stage for more efficient future development and potential infrastructure synergies. Current production from the acquisition is approximately 1,300 Boe/d (49% liquids).
- In May, Paramount increased the capacity of its bank credit facility to $1.0 billion and extended the maturity date to May 3, 2026. The capacity of the credit facility can be further increased by up to $250 million pursuant to an accordion feature, subject to incremental lender commitments.
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| (1) | In this press release, "liquids" refers to NGLs (including condensate) and oil combined, "natural gas" refers to conventional natural gas and shale gas combined, "condensate and oil" refers to condensate, light and medium crude oil and tight oil combined and "other NGLs" refers to ethane, propane and butane. See the Product Type Information section for a complete breakdown of sales volumes for applicable periods by the specific product types of shale gas, conventional natural gas, NGLs, light and medium crude oil and tight oil. See also "Oil and Gas Measures and Definitions" in the Advisories section. |
| (2) | Adjusted funds flow and free cash flow are capital management measures used by Paramount. Adjusted funds flow per basic share and free cash flow per basic share are supplementary financial measures. Refer to the "Specified Financial Measures" section for more information on these measures. |
| (3) | Net debt is a capital management measure used by Paramount. Refer to the "Specified Financial Measures" section for more information on this measure. |
INCREASED DIVIDEND
Paramount's Board of Directors has approved a 25% increase in the Company's regular monthly dividend from $0.08 to $0.10 per Common Share. The first increased dividend will be payable on May 31, 2022 to shareholders of record on May 16, 2022. The dividend will be designated as an "eligible dividend" for Canadian income tax purposes.
UPDATED 2022 GUIDANCE AND PRELIMINARY 2023 BUDGET
The Company's planned 2022 capital expenditures have been upwardly revised by $20 million to a range of between $520 million and $560 million. The additional capital expenditures will be used to accelerate the drilling of a five-well pad at Karr from 2023 into late 2022 to facilitate further production growth in 2023. Paramount remains committed to prudently managing its capital resources and has the flexibility to adjust its capital expenditure plans depending on commodity prices and other factors. The Company continues to budget $33 million of abandonment and reclamation expenditures in 2022, net of approximately $8 million in funding under the ASRP.
Paramount is reaffirming its 2022 annual average sales volume guidance of between 91,000 Boe/d and 95,000 Boe/d (46% liquids).
- First half 2022 sales volumes are expected to average between 81,000 Boe/d and 85,000 Boe/d (44% liquids).
- Second half 2022 sales volumes are expected to average between 101,000 Boe/d and 105,000 Boe/d (47% liquids).
The Company is increasing its forecast of 2022 free cash flow from approximately $590 million to approximately $710 million to reflect higher commodity price assumptions and its updated capital expenditure plan.(1)
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| (1) | The stated free cash flow forecast is based on the following assumptions for 2022: (i) the midpoint of forecast capital spending and production, (ii) $33 million in net abandonment and reclamation costs, (iii) $7 million in geological and geophysical expenses, (iv) realized pricing of $72.55/Boe (US$97.07/Bbl WTI, US$6.34/MMBtu NYMEX, $5.34/GJ AECO), (v) a $US/$CDN exchange rate of $0.793, (vi) royalties of $12.40/Boe, (vii) operating costs of $11.30/Boe and (viii) transportation and processing costs of $4.10/Boe. |
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The Company's 2022 capital program, targeted net debt reduction and regular monthly dividend would remain fully funded down to an average WTI price of about US$50.00/Bbl over the last three quarters of 2022. (1)
Paramount's anticipated 2023 capital expenditure budget, based on preliminary planning and current market conditions, has been upwardly revised by $60 million at the midpoint to a range of between $540 million and $580 million. The additional capital expenditures will largely be focused on accelerating development activities at Karr to grow production by approximately 4,000 Boe/d in 2023 to a range of 45,000 Boe/d to 49,000 Boe/d and set the stage for a new production plateau range of 50,000 Boe/d to 54,000 Boe/d in 2024.
The Company expects that a capital program in this range will result in 2023 average sales volumes of 105,000 Boe/d to 110,000 Boe/d (47% liquids), 6,500 Boe/d higher than previous estimates and a 15% increase at midpoint from forecast average 2022 sales volumes.
Paramount is updating its estimate of 2023 free cash flow that would be expected from such a capital program from approximately $580 million to approximately $820 million to reflect higher production and commodity price assumptions.(2)
UPDATED FIVE-YEAR OUTLOOK
The Company is updating its previously provided five-year outlook to reflect revised capital and production expectations and recent commodity prices. Param