Paramount Sells Non-Core Assets, Lowers 2024 Sales Forecast

Calgary-based Paramount Resources Ltd. has sold certain non-core assets in the Kaybob Region in February for cash proceeds of approximately $34.88 million (CAD 47 million).

Paramount retained a two percent no-deduction gross overriding royalty on the undeveloped Montney acreage forming part of the assets. The company had previously forecast these assets to generate approximately 1,000 barrels of oil equivalent per day (boepd) of average annual sales volumes for 2024, it said in a news release.

In the fourth quarter of 2023, Paramount said it brought into production 11 wells in the Grande Prairie Region, consisting of a three-well pad in Karr and an eight-well pad in Wapiti. The company in December 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 startup, the company noted. The plant now has a raw handling capacity of approximately 6,000 barrels per day (bpd) of liquids and 22 million cubic feet per day (MMcfpd) of natural gas.

Paramount said it is revising its forecast of 2024 sales volumes to a range of 100,000 to 106,000 boepd consisting of 47 percent liquids, which is 9,000 boepd lower at the midpoint than prior guidance of 108,000 to 116,000 boepd.

The revision is due to a number of factors, the company noted, including the Kaybob asset divestment, which reduced its forecasted 2024 average sales volumes by approximately 1,000 boepd.

Paramount has also shut-in dry gas production due to the current natural gas price environment, reducing forecast 2024 average sales volumes by approximately 2,250 boepd. The company said it “continues to closely monitor market conditions and may restore or further reduce production as conditions warrant”.

The company’s sales volumes were approximately 95,000 boepd in January and 103,000 boepd in February based on field estimates, approximately 14,000 boepd lower on average across the two months than expected. Paramount noted that 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 boepd 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.

Paramount said its 2024 production expectations from the five-well Karr 7-33S pad that was brought onstream in the third quarter of 2023 have been downwardly revised by approximately 3,500 boepd.

"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 onstream, are now performing in line with type curve expectations and the company has reduced forecast sales volumes for the pad accordingly", it noted.

Meanwhile, the Company said it 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.

As there are currently 31 wells shut-in and 13 wells that would benefit from intervention in the Grande Prairie Region, Paramount plans to 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”, it said.

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