Mr. Jim Riddell reports

PARAMOUNT RESOURCES LTD. ANNOUNCES FIRST QUARTER 2023 RESULTS

Paramount Resources Ltd. has released its first quarter 2023 financial and operating results, highlighted by record production in the Grande Prairie region, an active capital program that will drive second-half 2023 production growth and continued strong free cash flow generation.

Highlights:

• First quarter sales volumes averaged 97,269 boe/d (barrels of oil equivalent per day) (45 per cent liquids), similar to the fourth quarter of 2022 even with the impact of 4,700 boe/d in property dispositions in January, 2023. Grande Prairie region sales volumes averaged a record 69,507 boe/d (51 per cent liquids).
• Cash from operating activities was $271-million ($1.91 per basic share) in the first quarter. Adjusted funds flow was $268-million ($1.89 per basic share).
• Free cash flow was $60-million (42 cents per basic share) in the first quarter. In addition, Paramount closed the sale of its Kaybob Smoky and Kaybob South Duvernay properties, and certain other minor interests in the Kaybob region (the Kaybob disposition) for cash proceeds of $371-million in January, 2023.
• Capital expenditures in the quarter totalled $184-million. Activities were focused on development in the Grande Prairie region where Paramount drilled six (six net) Montney wells and completed 14 (14 net) Montney wells, and in the Kaybob region where it drilled four (3.4 net) wells, including the longest well by measured depth in the company's history of approximately 7,800 metres at its Kaybob North Duvernay property. Abandonment and reclamation expenditures in the first quarter totalled $22-million.
• The company's infrastructure debottlenecking project in the Grande Prairie region is now complete. This will facilitate production growth in the region to between 77,000 boe/d and 82,000 boe/d in the second half of 2023 as additional wells are brought on stream. Paramount began bringing new Montney wells from the 10-well Karr 4-2 pad on production in mid-April.
• Following the Kaybob disposition, the company repaid all remaining drawings under its $1-billion revolving credit facility and paid a special cash dividend of $1.00 per class A common share.
• At March 31, 2023, Paramount held $82-million in cash and cash equivalents, and its revolving credit facility remained undrawn.
• The carrying value of the company's investments in securities at March 31, 2023, was $498-million.

Guidance

Paramount is reaffirming its 2023 and preliminary 2024 annual average sales volumes and capital expenditure guidance. Capital expenditures in 2023 and 2024 are expected to be evenly split between: (i) sustaining and maintenance capital; and (ii) growth capital. Paramount is revising its free cash flow expectations to reflect higher operating and transportation expenses due to inflationary cost pressures, and to incorporate updated NGLs (natural gas liquids) pricing following the execution of new propane contracts in April, 2023. If inflationary cost pressures persist into 2024, Paramount expects capital expenditures to be on the higher end of the guided range in 2024.

Paramount remains committed to prudently managing its capital resources and has the flexibility to adjust its capital expenditure plans depending on commodity prices, inflationary cost pressures and other factors.

The company's midpoint 2023 sustaining and maintenance capital program, and regular monthly dividend would remain fully financed down to an average WTI (West Texas Intermediate) price of about $50 (U.S.)/bbl (barrel) over the last three quarters of 2023. The company's total midpoint 2023 capital program and regular monthly dividend would remain fully financed down to an average WTI price of about $71 (U.S.)/bbl over the last three quarters of 2023.

Planning for the second phase of development at Willesden Green is continuing, including the design of a new processing facility and the advancement of commercial arrangements for sales volumes egress. Paramount intends to update its five-year outlook later this year.

May dividend

Paramount's board of directors has declared a cash dividend of 12.5 cents per common share that will be payable on May 31, 2023, to shareholders of record on May 15, 2023. The dividend will be designated as an eligible dividend for Canadian income tax purposes.

Review of operations

Grande Prairie region

First quarter 2023 sales volumes in the Grande Prairie region averaged a record 69,507 boe/d (51 per cent liquids) compared with 64,434 boe/d (51 per cent liquids) in the fourth quarter of 2022. The company brought a total of six (six net) new Montney wells at Karr and Wapiti on production in the first quarter.

Development activities in the Grande Prairie region in the first quarter included the drilling of six (six net) Montney wells and the completion of 14 (14 net) Montney wells.

At Karr, all four (four net) wells at the 1-2 North pad were brought on production in the first quarter. The pad included a well with one of the longest lateral lengths in corporate history and a total measured depth of 7,060 metres. All-in drilling, completion, equipping and tie-in (DCET) costs for the pad averaged $10.5-million per well. Production results from these four wells are consistent with expectations, averaging gross peak 30-day production per well of 1,904 boe/d (6.3 MMcf/d (million cubic feet per day) of shale gas and 846 bbl/d (barrels per day) of NGLs) with an average CGR of 133 bbl/MMcf.

The company completed all 10 (10 net) wells on the Karr 4-2 pad during the quarter and began bringing the wells on production in mid-April. Paramount also commenced drilling at the five (five net)-well 7-33 South pad at Karr in the first quarter, with the wells expected to be on production in the third quarter.

At Wapiti, the remaining two wells on the eight (eight net)-well 16-15 pad were brought on stream in the first quarter. Paramount began drilling the eight (eight net)-well 8-15 pad in the first quarter, with the wells expected to come on production in the third quarter.

The company's Grande Prairie region infrastructure debottlenecking project is now complete. This will facilitate sales volumes growth in the region to between 77,000 boe/d and 82,000 boe/d in the second half of 2023 as additional wells are brought on stream.

As previously disclosed, a planned 11-day outage in the second quarter and a planned four-day outage in the fourth quarter at the third party Wapiti natural gas processing plant will impact Grande Prairie region sales volumes.

Kaybob region

Kaybob region sales volumes averaged 19,201 boe/d (29 per cent liquids) in the first quarter of 2023 compared with fourth quarter 2022 sales volumes of 24,477 boe/d (34 per cent liquids) (which included approximately 4,700 boe/d from properties sold in the January, 2023, Kaybob disposition).

Development activities at the company's Kaybob North Duvernay property are continuing, with Paramount recently completing the drilling of the three (three net)-well 4-13 pad that is expected to be brought on stream in the third quarter. The wells on this pad have the longest average well length by total measured depth in the company's history, and include the single longest well at approximately 7,800 metres of total measured depth. The company is applying its learnings from the drilling of long-reach wells, achieving another record by drilling 1,130 metres of lateral length in a 24-hour period on one of the wells.

The drilling of the five (five net)-well 15-7 pad at Kaybob North Duvernay commenced in the second quarter, with all five wells expected to be on stream in the fourth quarter. As a result of the optimization of existing infrastructure and improved surface facility design, the 4-13 and 15-7 pads are not expected to be subject to the production restrictions that impacted the three-well 12-21 pad brought on production in 2022.

Development activities in the Kaybob region also included the drilling and completion of two (1.4 net) Montney gas wells. Paramount is deferring bringing these wells on stream until the winter, when natural gas prices are expected to strengthen.

Central Alberta and other region

Central Alberta and other region sales volumes averaged 8,561 boe/d (32 per cent liquids) in the first quarter of 2023 compared with 8,459 boe/d (31 per cent liquids) in the fourth quarter of 2022.

The company plans to commence the drilling of four (four net) Duvernay wells at Willesden Green late in the second quarter, with first production anticipated in early 2024 to coincide with the start-up of the liquids handling expansion at the Leafland natural gas processing plant. Drilling operations at a second four (four net)-Duvernay-well pad at Willesden Green will commence in late 2023.

Planning for the second phase of development at Willesden Green is continuing, including the design of a new processing facility and the advancement of commercial arrangements for sales volumes egress. It is currently anticipated that the new facility will be capable of handling approximately 150 MMcf/d of raw gas and 30,000 bbl/d of raw liquids upon completion. Additional gathering, compression and associated infrastructure will also be required. Paramount now expects that the new facility will be constructed in three phases of approximately 50 MMcf/d of raw gas handling and 10,000 bbl/d of raw liquids handling each, with the first train to start up in late 2025, approximately six months later than previously estimated.

Paramount controls approximately 240,000 net acres of contiguous land at Willesden Green with over 700 internally estimated Duvernay drilling locations, which supports targeted full field development plateau production of over 50,000 boe/d that can be sustained for over 20 years.

Hedging

The company's current commodity and foreign exchange contracts are summarized in the associated table.

Annual general meeting

Paramount will hold its annual general meeting of shareholders on Wednesday, May 3, 2023, at 10:30 a.m. (Calgary time) in the McMurray room of the Calgary Petroleum Club, located at 319-5th Ave. SW, Calgary, Alta. A webcast of the meeting will be available on the company's website.

About Paramount Resources Ltd.

Paramount is an independent, publicly traded, liquids-rich natural-gas-focused Canadian energy company that explores for and develops both conventional and unconventional petroleum and natural gas, including longer-term strategic exploration and predevelopment plays, and holds a portfolio of investments in other entities. The company's principal properties are located in Alberta and British Columbia.

Paramount's first quarter 2023 results, including management's discussion and analysis and the company's consolidated financial statements, can be obtained on SEDAR or on Paramount's website.

A summary of historical financial and operating results is also available on Paramount's website.

Product type information

The company forecasts that 2023 annual sales volumes will average between 100,000 boe/d and 105,000 boe/d (54 per cent shale gas and conventional natural gas combined, 40 per cent condensate, light and medium crude oil, tight oil, and heavy crude oil combined, and 6 per cent other NGLs). First-half 2023 sales volumes are expected to average between 96,000 boe/d and 101,000 boe/d (55 per cent shale gas and conventional natural gas combined, 39 per cent condensate, light and medium crude oil, tight oil, and heavy crude oil combined, and 6 per cent other NGLs). Second-half 2023 sales volumes are expected to average between 104,000 boe/d and 109,000 boe/d (53 per cent shale gas and conventional natural gas combined, 40 per cent condensate, light and medium crude oil, tight oil, and heavy crude oil combined, and 7 per cent other NGLs). The company's preliminary 2024 guidance provides for annual sales volumes that will average between 110,000 boe/d and 120,000 boe/d (52 per cent shale gas and conventional natural gas combined, 41 per cent condensate, light and medium crude oil, tight oil, and heavy crude oil combined, and 7 per cent other NGLs).

We seek Safe Harbor.