Calgary independent Paramount Resources Ltd., better known for its natural gas exploration, saw its stock price jump by nearly 5% in midday trading Monday after the company said it was creating a subsidiary to house its growing oilsands and bitumen businesses.

Once the revamp is completed Pixar Petroleum Corp. would own all of Paramount’s estimable unconventional oil leases, including the Hoole and Saleski prospects, which are in the western Athabasca region of Alberta. In total Pixar would own close to 275 sections of Crown oilsands leases, the majority of which are 100% owned. These leases are prospective in multiple formations, primarily for thermal in-situ development, but they also have potential for cold production, according to the company.

On the news Paramount’s share price on the Toronto Stock Exchange at midday was up about US$1.76 and was trading at about US$39.00/share.

Paramount CEO James Riddell has been appointed executive chairman of Pixar. William Roach, former CEO of oilsands operator UTS Energy Corp., is to become president and CEO of Pixar.

“The reorganization is being undertaken to create a focused, self-funding oilsands entity in order to accelerate the development of Paramount’s bitumen interests,” Riddell said.

Paramount earlier this year acquired Calgary-based junior explorer ProspEx Resources Ltd., which owns the rights to 90,000 net undeveloped acres in west Central Alberta and the Deep Basin. Paramount now has four operating units in North America: Kaybob; Grande Prairie; the Northern area, which includes northwest Alberta, the Liard Basin in the Northwest Territories and northeast British Columbia; and the Southern area, which includes production from southern Alberta, Montana and North Dakota.

Paramount is majority stakeholder in Canadian explorer Trilogy Energy Corp., which was formed through a spinoff from Paramount in April 2005. It also is majority stakeholder in MGM Energy Corp., a Canadian producer that is developing natural gas-weighted resources in Northern Canada’s Mackenzie Valley, as well as in the Arctic regions.

The formation of Pixar follows updated, independent evaluations of Paramount’s 100%-owned in-situ oilsands leases, which cover about 56 contiguous sections in the Hoole area. McDaniel & Associates Consultants Ltd. earlier this year evaluated the results of Paramount’s 15-well 2010/2011 winter delineation drilling program, which increased the mapped thickness of the reservoir in some areas, confirmed the continuous nature of the reservoir and extended the boundaries of the exploitable reservoir.

According to the evaluation, the Hoole properties contain about 763 million bbl of economic contingent (proved and probable) bitumen resources, which is 20% higher than a prior evaluation issued by McDaniel in April 2010. Most of the work necessary to commercially develop the Hoole leases has been completed, together with preliminary front-end engineering and design, and reservoir modeling and simulation. Preparatory work for project development is continuing, including field activities focused on optimizing water source and disposal options.

In April Paramount completed a 10-well delineation drilling program at the Saleski property. Plans are currently being developed for the 2011/2012 winter capital program, including further delineation drilling and seismic surveys.