Mr. Jim Riddell reports

PARAMOUNT RESOURCES LTD. ANNOUNCES 2023 ANNUAL RESULTS, NON-CORE ASSET DISPOSITION AND REVISED 2024 GUIDANCE

Paramount Resources Ltd. has released its 2023 annual financial and operating results, highlighted by record production, and a $47-million non-core asset disposition. The company is also providing a production update and revised 2024 guidance.

2023 highlights:

• The company achieved record annual sales volumes of 96,393 barrels of oil equivalent/day (46 per cent liquids) in 2023. Sales volumes in the fourth quarter were 101,348 boe/d (46 per cent liquids), of which 72,860 boe/d (51 per cent liquids) was produced in the Grande Prairie region.
• Cash from operating activities was $938-million ($6.56 per basic share) in 2023 and $287-million ($1.99 per basic share) in the fourth quarter.
• Adjusted funds flow was $965-million ($6.75 per basic share) in 2023 and $284-million ($1.97 per basic share) in the fourth quarter.
• Capital expenditures totalled $732-million in 2023, which were largely directed to the Grande Prairie region Montney development and the Kaybob North and Willesden Green Duvernay developments.
• Asset retirement obligation settlements totalled $55-million in 2023, which included the abandonment of 82 wells and reclamation of 113 sites. Free cash flow was $168-million ($1.18 per basic share) in 2023 and $60-million (41 cents per basic share) in the fourth quarter.
• Paramount returned $355-million to shareholders in 2023 comprising $1.50 per share in regular monthly cash dividends and a special cash dividend of $1 per share.
• The company realized total cash proceeds of approximately $45-million in the fourth quarter from the previously disclosed termination and close out of its 2024 NYMEX WTI swaps.
• At Dec. 31, 2023, net debt was $60-million and Paramount's $1-billion revolving credit facility was undrawn.
• The carrying value of the company's investments in securities at Dec. 31, 2023, was $541-million. Paramount received total cash dividends of $8-million in 2023 from these investments.

2023 reserves:

• At Dec. 31, 2023, the company's:
  • Proved developed producing (PDP) reserves were 165 million boe with a net present value (10 per cent) of approximately $2.1-billion ($14.57 per basic share);
  • Total proved (TP) reserves were 415 MMboe with an NPV10 of approximately $4.5-billion ($31.60 per basic share);
  • Proved plus probable (P+P) reserves were 761 MMboe with an NPV10 of approximately $7.9-billion ($55.04 per basic share).
• Paramount's reserves replacement ratios in 2023 were 1.4 times for PDP reserves, 1.2 times for TP reserves and 2.8 times for P+P reserves.
• The company's 2023 and three-year average F&D (finding and development) costs and recycle ratios are as noted herein.
• Dispositions in 2023 resulted in reductions to the company's PDP reserves of 8.4 MMboe, TP reserves of 35.6 MMboe and P+P reserves of 59.8 MMboe.

Non-core asset dispostion

The company sold certain non-core assets in the Kaybob region in February, 2024, for cash proceeds of approximately $47-million and has retained a 2-per-cent no-deduction gross overriding royalty on the undeveloped Montney acreage forming part of the assets. Paramount had previously forecast these assets to generate approximately 1,000 boe/d of average annual sales volumes for 2024.

Corporate update:

• In the fourth quarter of 2023, Paramount brought on production a total of 11 (11.0 net) wells in the Grande Prairie region, consisting of a three-well pad in Karr and an eight-well pad in Wapiti.
• In December, the company successfully commissioned the liquids handling expansion of its Leafland natural gas processing plant at Willesden Green. The expansion was completed on budget and ahead of the originally scheduled January, 2024, start-up. The plant now has raw handling capacity of approximately 6,000 barrels/d of liquids and 22 million cubic feet/d of natural gas.
• Paramount completed all four (4.0 net) Willesden Green Duvernay wells from its 2023 development program in early December. These wells are all now on production and have exhibited strong results. Three of the wells averaged gross 30-day peak production per well of 1,873 boe/d (4.1 MMcf/d of shale gas and 1,195 bbl/d of NGLs) with an average CGR (condensate to gas ratio) of 294 bbl/MMcf. The fourth well has produced for 27 days and is exhibiting a similar production profile.
• The company recently commenced construction of its second natural gas processing facility at Willesden Green, with start-up anticipated in the fourth quarter of 2025. This first phase of the new facility will provide an estimated raw handling capacity of 10,000 bbl/d of liquids and 50 MMcf/d of natural gas.
• All six (6.0 net) Kaybob North Duvernay wells that were drilled in 2023 were recently brought on production and have exhibited strong initial production rates.

Production update and revised 2024 guidance

Paramount is revising its forecast of 2024 sales volumes to a range of 100,000 boe/d to 106,000 boe/d (47 per cent liquids), 9,000 boe/d lower at the midpoint than prior guidance of 108,000 boe/d to 116,000 boe/d (47 per cent liquids).

The significant factors contributing to the revision are described below.

• The 2024 Kaybob disposition completed in February has reduced forecast 2024 average sales volumes by approximately 1,000 boe/d.
• Paramount has shut in dry gas production due to the current natural gas price environment, reducing forecast 2024 average sales volumes by approximately 2,250 boe/d. The company continues to closely monitor market conditions and may restore or further reduce production as conditions warrant.
• Sales volumes were approximately 95,000 boe/d (46 per cent liquids) in January and 103,000 boe/d (48 per cent liquids) in February based on field estimates, approximately 14,000 boe/d lower on average across the two months than expected. Cold weather in January resulted in a number of significant production upsets, particularly in the Grande Prairie region. In addition, production was impacted by intermittent run time at key facilities, an unplanned pipeline outage in the Karr field that shut in approximately 4,000 boe/d of production for two weeks and the outage of a water disposal well in the Grande Prairie region that will continue until the third quarter of 2024.
• Production expectations for 2024 from the five-well (5.0 net) Karr 7-33S pad that was brought on stream in the third quarter of 2023 have been downwardly revised by approximately 3,500 boe/d (55 per cent liquids). Early production from the wells significantly exceeded type curve expectations and the prior guidance forecasted continued outperformance. The wells, which paid out in approximately three months of being brought on stream, are now performing in line with type curve expectations and the company has reduced forecast sales volumes for the pad accordingly.
• The company has benefited from strong new well performance in the Grande Prairie region in growing its production base and maximizing netbacks, leading to the optimization of production from mature wells being deferred. There are currently 31 wells shut-in and 13 wells that would benefit from intervention in the Grande Prairie region. The company will incur incremental operating expenditures to pursue an aggressive well optimization program beginning in 2024 to increase production from these wells, the full benefit of which has not been incorporated into the revised 2024 sales volume forecast.
• In total, Grande Prairie Region sales volumes are forecast to be approximately 6,000 boe/d lower in 2024, primarily as a result of the revised Karr 7-33S pad production, earlier-than-anticipated tubing installations on certain wells at Karr due to higher-than-expected CGRs and the rescheduling of the 21-day outage at the third party Wapiti natural gas processing plant from May to September.
• The company has increased forecasted sales volumes by a total of 1,500 boe/d in the Kaybob region and central Alberta and other region, largely due to better-than-expected Duvernay results.

The attached table summarizes significant factors contributing to the revision in Paramount's 2024 sales volumes guidance at the midpoint.

The company is updating its forecast of 2024 free cash flow to approximately $235-million from $350-million to reflect revised midpoint 2024 forecast sales volumes of 103,000 boe/d (47 per cent liquids) and updated operating cost, royalty and other assumptions. Free cash flow does not include the $47-million cash proceeds from the 2024 Kaybob disposition.

The company's midpoint 2024 capital program, abandonment and reclamation expenditures, and regular monthly dividend are fully financed under the above forecast. The company's midpoint 2024 sustaining and maintenance capital program, abandonment and reclamation expenditures, and regular monthly dividend would remain fully financed down to an average WTI price in 2024 of about $61 (U.S.)/bbl, assuming no changes to the other forecast assumptions.

March dividend

Paramount's board of directors has declared a cash dividend of 12.5 cents per Class A common share that will be payable on March 28, 2024, to shareholders of record on March 15, 2024. The dividend will be designated as an eligible dividend for Canadian income tax purposes.

Annual general meeting

Paramount will hold its annual general meeting of shareholders on Thursday, May 2, 2024, at 10:30 a.m. (Calgary time) in the Bankers Hall Auditorium located at 315, 8th Ave. SW, Calgary, Alta.

Complete annual results

Paramount's: (i) complete annual results, including a review of operations, the company's audited consolidated financial statements as at and for the year ended Dec. 31, 2023, and the accompanying management's discussion and analysis; and (ii) 2023 annual information form, which contains additional important information concerning the company's reserves, properties and operations, 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.

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 common shares are listed on the Toronto Stock Exchange under the symbol POU.

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