Corporate Presentation November 2016
Future Oriented Information (See additional advisories at the end of this document) • In the interest of providing information regarding Paramount Resources Ltd. ("Paramount" or the "Company") and its future plans and operations, this presentation contains certain forward-looking information and forward-looking statements. • The projections, estimates and forecasts contained in such forward-looking information and statements necessarily involve a number of assumptions, and are subject to both known and unknown risks and uncertainties that may cause the Company's actual performance and financial results in future periods to differ materially from these projections, estimates or forecasts. The Advisories Appendix lists some of the material assumptions, risks and uncertainties that these projections, estimates and forecasts are based on and are subject to. • Accordingly, shareholders and potential investors are cautioned that events or circumstances could cause actual results to differ materially from those predicted. • Any use of information contained in this presentation is expressly forbidden. 2
Corporate Profile Corporate Profile Strategic Investments/Emerging Plays • Emerging Montney plays at Valhalla and Birch • Founded in 1976; IPO in 1978; TSX: POU • Emerging Duvernay play at Willesden Green • Q3 2016 production: 24,786 Boe/d (~40% Liquids) • Oil Sands • Ongoing Operations Production: 11,148 Boe/d (~30% Liquids) • Liard Basin shale gas • Market Cap: 105.7 MM shares @ $14.50/share • Frontier gas in northern Canada (MGM) ~$1.5 Billion • Equity investments portfolio • > 50% insider ownership • Investments and Cash: $1.3 Billion • 2019 Senior Notes: $287 Million • Credit Facility: $100 Million (undrawn) 3
Summary of Musreau/Kakwa Sale Transaction $2.1 Billion • ~$0.5 Billion Cash • Assumption of US$450 MM 2023 Notes • 33.5 MM shares of Seven Generations: ~$1.0 Billion (monetized 24.7MM shares for $715 MM net proceeds) Sold • ~30,000 Boe/d Sales Volumes (1) • 295 MMBoe P+P Reserves (2) • $535 Million PDP NPV @10% (2) • $2.2 Billion FDC P+P (2) • 310 net sections, including 155 net Montney sections Full Cycle Value Capital spent from inception: ($2,220 MM) Netback $680 MM Sale of Midstream to Pembina (3) $575 MM Sale to Seven Generations $2,065 MM Full Cycle Value Realized $1,100 MM (1)(2)Please refer to the heading “Summary of Musreau/Kakwa Sale Transaction (Slide 4)” in the Advisories Appendix of this presentation for more information. (3) Also includes proceeds from other minor property dispositions. 4
Karr/Gold Creek Cretaceous and Montney targets Sections (1) Formation Gross Net Cardium 31 23.0 Dunvegan 33 24.3 Wilrich 48 39.3 Falher 50 40.0 Gething 54 45.0 Montney 96 80.6 • Q3 Sales: 5,237 Boe/d • 40 MMcf/d plant capacity currently being expanded to 80+ MMcf/d (Q2 2017 completion) • Four-rig drilling program currently underway 1) The acreage figures for particular formations may be the subject of the same lease and therefore simply aggregating such acreage figures would result in overstating our total acreage subject to leases in this area. 5
Karr Economics: Montney Assumptions: Economics @ $2.75/GJ AECO Capital: $10.2 MM d/c/e/t US$/Bbl WTI $35 $40 $45 $50 $55 IP 30 (raw): 7.1 MMcf/d NPV 10% $MM 3.3 5.3 7.1 8.9 10.6 Raw Natural Gas EUR: 7.0 Bcf IRR (%) 24 35 47 61 76 Stabilized Condensate EUR: 490 MBbl Payout (Years) 3.1 2.4 2.0 1.7 1.5 Total Sales per Well: 1.6 MMBoe CGR(raw): 136 Bbl/MMcf (IP 30 ) P/I @ 10% 1.3 1.5 1.7 1.9 2.1 FX (USD/CAD): $0.75 EUR denotes estimated ultimate recovery. 6
15-14-065-06W6M Daily Separator Volumes (Excluding Zero Days) (1) (1) Volumes herein consist of natural gas and liquids volumes measured at the wellhead separator. Natural gas sales volumes are approximately 10 percent lower and stabilized condensate sales volumes are approximately 15 percent lower due to shrinkage. Please refer to the heading “15-14-065-06W6 Daily Separator Volumes (Slide 7)” in the Advisories Appendix of this presentation for more information. (2) The term “Wellhead Liquids” is used to represent condensate before shrinkage 7
Smoky/Resthaven Cretaceous and Montney targets Sections (1) Formation Gross Net Cardium 74 44.3 Dunvegan 113 80.4 Wilrich 115 84.9 Falher 115 84.9 Gething 107 81.2 Montney 80 78.2 • Paramount owns 54 MMcf/d (~18%) of the Smoky Deep Cut facility and 10 MMcf/d (50%) of the Resthaven facility • Q3 Sales: ~2,429 Boe/d (2) 1) The acreage figures for particular formations may be the subject of the same lease and therefore simply aggregating such acreage figures would result in overstating our total acreage subject to leases in this area. 2) Sales volumes impacted by plant outages in Q3 2016 8
Smoky/Resthaven Economics: Montney Assumptions: Economics @ $2.75/ GJ AECO Capital: $9.0 MM d/c/e/t US$/Bbl WTI $35 $40 $45 $50 $55 IP 30 (raw): 3.4 MMcf/d NPV 10% $MM 0.4 1.2 1.9 2.6 3.4 Raw Natural Gas EUR: 3.0 Bcf Stabilized Condensate EUR: 317 MBbl IRR (%) 12 16 19 23 28 Total Sales per Well: 894 MBoe Payout (Years) 5.1 4.2 3.5 3.0 2.7 CGR(raw): 178 Bbl/MMcf (IP 30 ) P/I @ 10% 1.1 1.1 1.2 1.3 1.4 FX (USD/CAD): $0.75 EUR denotes estimated ultimate recovery. 9
Valhalla • ~64 sections (~48 net) Montney rights • ~58 sections (~44 net) Doig rights • Three development horizons: • Upper Montney/Doig • Middle Montney • Lower Montney • 16 wells currently tied in • Q3 Sales: ~842 Boe/d • Evaluating long term production/economics to determine future investment levels (1) Based on results from Paramount's wells and publicly disclosed results of competitor wells. 10
Valhalla Economics: Montney Assumptions: Economics @ $2.75/GJ AECO Capital: $6.4 MM d/c/e/t US$/Bbl WTI $35 $40 $45 $50 $55 IP 30 (raw): 4.8 MMcf/d NPV 10% $MM 0.6 1.3 1.9 2.5 3.1 Raw Natural Gas EUR: 5.0 Bcf IRR (%) 13 17 21 26 30 Stabilized Condensate EUR: 150 MBbl Payout (Years) 4.8 4.0 3.4 3.0 2.7 Total Sales per Well: 957 MBoe P/I @ 10% 1.1 1.2 1.3 1.4 1.5 CGR(raw): 30 Bbl/MMcf (IP 30 ) FX (USD/CAD): $0.75 EUR denotes estimated ultimate recovery. 11
Birch • Montney shale play (50% WI) • ~60 sections (~30 net) Montney rights • Seven Hz Montney wells drilled to date • NGL yields average 50 Bbl/MMcf • New 20 MMcf/d facility onstream December 2015 • Q3 Sales: 1,138 Boe/d 12
Birch Economics: Montney Assumptions: Economics @ $2.75/GJ AECO Capital: $7.2 MM d/c/e/t US$/Bbl WTI $35 $40 $45 $50 $55 IP 30 : 5.8 MMcf/d NPV 10% $MM 0.1 1.1 2.1 3.0 4.0 Raw Natural Gas EUR: 6.0 Bcf IRR (%) 11 17 24 32 41 Stabilized Condensate EUR: 200 MBbl Payout (Years) 5.0 3.7 2.9 2.4 2.0 Total Sales per Well: 1.2 MMBoe P/I @ 10% 1.0 1.2 1.3 1.4 1.6 CGR(raw): 70 Bbl/MMcf (IP 30 ) FX (USD/CAD): $0.75 EUR denotes estimated ultimate recovery. 13
Willesden Green Duvernay Shale Play • 58,692 acres of land (100% WI) • Drilled and completed 3 Hz Duvernay wells to date: Cumulative production to September 30, 2016 Natural Gas Oil and NGLs MMcf MBbl 03/16-13-39-5W5 202.9 110 7-19-39-5W5 118.5 31 3-28-39-5W5 98.4 43 Total 419.8 184 • 11-32-038-05W5 well drilled to 13-05-039-05W5 and rig released August 28, 2016: will be completed in Q4 2016 • 4-7 will be re-entered at a later date 14 14
Paramount Investments
Paramount Investments and Cash (1) Includes cash proceeds receivable on Seven Generations share monetization due December 2016. 16 16
Paramount 100% Subsidiary Investments (1) As publicly disclosed by a large U.S. public E&P company with significant landholdings in the Liard Basin. The resource evaluation disclosed by such E&P company was not noted as having been prepared independently or by a qualified reserves evaluator or auditor (as such terms are defined in NI 51-101) or in accordance with the COGE Handbook. This information is relevant to Paramount’s landholdings in the Liard Basin as the information is in respect of landholdings in the Liard Basin that are close to Paramount’s lands and are, accordingly, likely to have similar geology. (2) Based on publicly available information. 17 17
18 Quarterly Operating Results 18
Reserves 1) Principal properties reserves, exclude bitumen reserves related to the Hoole oilsands development. Reserves evaluated by McDaniel &Associates Consultants Ltd. in accordance with National Instrument 51-101 definitions, standards and procedures. Columns may not add due to rounding. (2) December 31,2015 reserves volumes, excluding the reserves associated with the Musrea/Kakwa assets sold in August 2016. These volumes were derived from the independent engineering evaluation prepared by McDaniel & Associates Consultants Ltd. attributable to Paramount's properties effective as of December 31, 2015 (the "McDaniel Report"). Estimated reserves volumes from the McDaniel Report have not been updated for subsequent changes occurring after December 31, 2015, including changes in forecast commodity prices, production, current year additions or other potential changes in variables. 19 19
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