POU - RBC Analyst Commentary on Q3No debt, great cash flow, pays a monthly dividend of 6.63%, what's not to like? Seeing a lot more positives than negatives. $7.00 potential capital gain to $34 PT from today's low and a 6.63% divy in the meantime. Should be back over $27 by end of day. Not sure why anyone would be selling at these levels.
IMO
HB77
November 7, 2024
Paramount Resources Ltd. Q3/24 - AFFO Ahead of Street; Trimming '24 Guide
TSX: POU | CAD 27.14 | Sector Perform | Price Target CAD 34.00
Sentiment: Neutral
POU reported Q3/24 AFFO/sh ahead of Street expectations at $1.37 (f.d.) driven by better hedging gains and realizations than forecast, despite slightly lower volumes. 2024 production guidance was revised to 99.5 mboe/d (midpoint, down from 103 mboe/ d) on gas shut-ins and outages while capital remains intact. Paramount remains in very good financial condition with essentially no debt, and sufficient 'dry power' to execute a continued growth program or act on other strategic initiatives (such as A&D/M&A).
Key Points:
• POU generated $201 million of cash flow ($1.37 per share (f.d) vs. RBCe/Street: $1.24/$1.24) in the quarter, with variances driven by better realizations and hedging than expected.
• Paramount reported Q3/24 production of 94,892 boe/d (RBC/Street: 96,899/96,796). Capital expenditures came in at $217 million which is below our estimate of $250mm (Street: $230mm).
• Paramount revised its 2024 volumes guidance to 99.5 mboe (midpoint based on Q4 guidance) (from 103 mboe/d) on top of its capital budget of $860 million. The company flagged fourth quarter deferred shut-in dry gas volumes (currently 4.2 mboe/d) and its Wapiti turnaround extending 6 days longer than anticipated. Q4 volume guidance is pegged at 102-109 mboe/d versus prior 109-121 mboe/d.
• Key operational updates include: (1) During Q3 at Grande Prairie, the company drilled 8 wells (brought 19 on stream) with completion of a compressor node at Wapiti. (2) At Kaybob, the company plans to drill 2 Duvernay wells and bring on 6 Duvernay wells in Q4. (3) At Willesden Green, the company initiated the first phase development of the Alhambra Plant (ongoing construction; 18 mboe/d capacity) where the company plans to drill, complete and tie-in 5 wells in Q4 in advance of Q4/25 plant startup.