Growing oil and natural gas volumes from the Montney and Duvernay formations, along with rising commodity prices, lifted Paramount Resources Ltd. back to black in 2021.

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The Calgary-based independent also expects to see higher production in 2022 following its recent acquisition in the Grande Prairie region. The new asset package in northwestern Alberta, near the British Columbia border, is set to contribute 1,000 boe/d to annual sales volumes, management said in its fourth quarter and 2021 results. Paramount reports in Canadian dollars (C$1.00/U.S. 79 cents). 

“The company’s planned 2022 capital expenditures remain unchanged at a range of between $500 million and $540 million, with anticipated efficiency gains offsetting certain inflationary pressures,” the executive team said.

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This year’s capital spending is to focus on developing and debottlenecking operations at Karr in Western Canada, where production is set to increase to 43,000-47,000 boe/d in the second half of this year. 

Paramount also is planning development activities at Wapiti “to achieve targeted plateau production of 30,000 boe/d in 2023.” In addition, capital is earmarked for development activities at Kaybob to advance the Duvernay plays at Kaybob Smoky and Kaybob North.

In 2021, Paramount noted that it drilled a company record horizontal well, with a 4,000-meter (13,080-foot) lateral leg across its target formation at a depth of about 3,400 meters (11,118 feet). This year’s plans include multiple Montney and Duvernay wells.

Paramount noted that it “remains committed to prudently managing its capital resources and has the flexibility to adjust its capital expenditure plans depending on commodity prices and other factors.”

To that end, 2022 annual production guidance has been raised to reflect the development plans. Paramount is forecasting output will average 91,000-95,000 boe/d.

“Although production in early 2022 at Wapiti was affected by two unplanned outages totaling 18 days at the third-party operated Wapiti natural gas processing facility, well outperformance is anticipated to offset this unplanned downtime,” management noted.

Through June, “sales volumes are still expected to average between 81,000 boe/d and 85,000 boe/d, taking into account a planned 16-day full field outage at Karr during the second quarter for turnaround activities at third-party midstream facilities.”

In the second half of the year, sales volumes are expected to average 101,000-105,000 boe/d, “as numerous new wells from the company’s capital program are brought onstream.”

During 2021, natural gas production increased year/year to 275.2 MMcf/d from 248.7 MMcf/d. Oil and condensate output increased to 30,989 b/d from 22,565 b/d, while natural gas liquids (NGL) grew to 5,147 b/d from 4,325 b/d.

Paramount fetched an average natural gas price of $3.72/Mcf in 2021 from $2.25 in 2020. Oil and condensate jumped to $89.91/bbl  from $46.47. NGL prices more than doubled to $41.84/bbl from $15.63.

Year-end 2021 corporate debt was cut by 47% to $456.7 million from $854.1 million in 2020. Repayments continue toward a target of $300 million, management said.

Net profits in 4Q2021 were $101 million (70 cents/share) from year-earlier earnings of $311.5 million ($2.35). For 2021, earnings were $236.9 million ($1.67/share),  reversing 2020 losses of $22.7 million (minus 17 cents).