Corporate Presentation November 2014 Future Oriented Information - PowerPoint PPT Presentation

Corporate Presentation November 2014

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"), including management's assessment of the Company's future plans and operations, this presentation contains certain forward- looking information and forward-looking statements. • The projections, estimates and beliefs contained in such forward-looking information and statements necessarily involve a number of assumptions and are subject to known and unknown risks and uncertainties which may cause the Company's actual performance and financial results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. The material assumptions, risks and uncertainties are referred to in the advisories contained in the Advisories Appendix. • 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 within this presentation is expressly forbidden. 2

Corporate Profile Corporate Profile • Founded in 1974; IPO in 1978 • TSX: POU • Market Cap: 104.8 MM shares @ $47/share ~ $4.9 Billion • ~50% insider ownership • Net Debt (September 30, 2014): $1.26 Billion • 2014 Capital Guidance: $900 MM Low Risk/Repeatable Growth Operations focused on large-scale Deep Basin development • Large contiguous acreage • Multi-zone potential • High condensate/gas ratios • Owned and firm service access to infrastructure • Significant near-term growth in production and cash flow • Reach up to ~50,000 Boe/d in 2014; 70,000 Boe/d in 2015 (1) • Production mix evolving to ~45% liquids • Exposure to emerging plays and Strategic Investments • Duvernay • Oil sands • Liard Basin shale gas (1) Production dependent on availability of downstream NGLs transportation and processing capacity 3 (2) Estimated average sales for the month of October 2014

Kaybob Resource Paramount Acreage (gross): • 544 Sections Cretaceous Rights • 364 Sections Montney Rights • 249 Sections Duvernay Rights • Deep Basin liquids-rich gas resources in multiple stacked horizons • 40-160 Bcf/section DGIIP (1) • ~5 + Bcf EUR/Hz well (1) • >10 Tcf DGIIP + NGLs net to POU (1) • Liquids-rich Montney gas play • ~70 + Bcf/section DGIIP (1) • ~ 22 Tcf DGIIP + NGLs net to POU (1) • Potential conventional Devonian exploration • Potential Duvernay Shale rock play *Graphic courtesy of www.canadianoilstocks.ca 4 (1) Internal estimates: EUR denotes Estimated Ultimate Recovery, DGIIP denotes Discovered Gas Initially In Place. Please refer to "Oil and Gas Measures and Definitions" in the Advisories section of this presentation for further information.

Cretaceous Gas Resource • Hz Dunvegan well at • Hz Falher well at Musreau Resthaven • Tested 16.4 MMcf/d (1) at • Tested 11.3 MMcf/d (1) at 20.8 MPa 6.2 MPa • IP: 12.0 MMcf/d • IP: 8.3 MMcf/d • Currently producing • Currently producing ~2.3 MMcf/d ~1.2 MMcf/d • Cost: $8.6 MM d/c/t • Cost: $8.3 MM d/c/t (1) Please refer to the heading "Test Results" in the Advisories section of this presentation for further information 5

Cretaceous Economics Assumptions Capital: $7.0 MM horizontal well IP: 9.0 MMcf/d Natural Gas (raw): 4.9 Bcf Condensate: 14 Bbl/MMcf C2-C4 NGLs: 6 Bbl/MMcf Refrig facility (61 Bbl/MMcf Deep Cut facility) Economics @ $4.00 AECO, $90.00 WTI (Refrig) NPV 10%: $9.0 MM IRR: 97% Payout (Months): 14 P/I: 2.2 6

Montney Gas Resource  Liquids-rich Montney gas play  Paramount holds ~313 net sections of Montney rights  2011/2012 program included 12 Hz Montney wells: tested 5.5-15.4 MMcf/d (1)  Montney 2013 program: Drilled 13 wells; commenced drilling 25 additional wells off 3 pads  24 Kaybob Montney wells rig released YTD in 2014 including 23 pad wells  3-20 10-well pad completed in Q3 2014 with combined test rates of 108 MMcf/d + NGLs (1)  Two new 6-well pads have spud  Offset activity indicating exciting test rates of over 10 MMcf/d + NGLs (1) Please refer to the heading "Test Results" in the Advisories section of this presentation for further information 7

Montney Economics Assumptions Capital: $10.0 MM horizontal well IP: 5.8 MMcf/d Natural Gas (raw): 3.0 Bcf Condensate Gas Ratio (CGR): 150 Bbl/MMcf (50 Bbl/MMcf - 400 Bbl/MMcf) C2-C4 NGLs: 90 Bbl/MMcf Deep Cut facility (20 Bbl/MMcf Refrig facility) Economics @ $4.00 AECO, $90.00 WTI (Deep Cut) NPV 10%: $18.1 MM IRR: 144% Payout (Years): 1.1 P/I: 2.9 8

Montney Drilling/Completion Improvements • Pad drilling/pad layout • Bits/muds/motors • Well design: monobores/orientation/reservoir placement • Toe up/toe down: effects on production • Natural gas fueled rigs • Plug and perf/sliding sleeves • Cemented liners/open-hole packers (ECP’s) • Frac sizing/spacing/clusters • Frac fluid selection /fluid handling • Pumping techniques • Frac fluid recycling • Proppants • Flow back/production practices 9

Musreau 2014 Capital Plan  Drill 27 (27 net) horizontal Montney wells  Start drilling 12 (12 net) Montney pad wells  Drill 6 (5.8 net) horizontal Falher/Wilrich wells  Drill 4 (3.5 net) vertical wells to hold lands  Bring ~70 (net) horizontal wells on production during 2014 10

Karr • Located 50 km SW of Grande Prairie • Multi-zone potential, including Halfway, Montney sour and Gething, Bluesky, Falher sweet commingled gas • Current lands ~93,500 net acres (~146 sections) • Average 78% working interest • Expanded plant and gathering systems to 40 MMcf/d 2014 Capital Plan: • Drill 2 (1.0 net) horizontal Cretaceous wells • Drill 10 (9.3 net) horizontal Montney wells (1) Please refer to the heading "Test Results" in the Advisories section of this presentation for further information 11

Kaybob Plant Capacity Net POU Potential Gross Raw Raw Gas Sales Capacity Capacity Volumes MMcf/d MMcf/d Boe/d (1) Musreau Deep Cut 200 200 50,000 Facility Musreau Refrig Plant 45 45 8,500 Smoky Deep Cut Facility 200 40 10,000 Other Musreau area capacity 70 24 4,500 Subtotal 515 309 73,000 Capacity Under Construction Musreau Condensate - - 15,000 Stabilizer Expansion 6-18 Plant 100 100 25,000 3-15 Plant 100 100 25,000 Subtotal 200 200 65,000 Projected Total 715 509 138,000 (1) Please refer to the heading “Potential Sales Volumes” in the Advisories section for further information. 12

Kaybob Processing Capacity (1) (1) Please refer to the heading “Kaybob Processing Capacity” in the Advisories section for further information. 13

Full Capacity at Musreau Currently operating one sales compressor (120 MMcf/d); 8,000 Bbl/d C2+ stabilization capacity of 8,500 Bbl/d  Amine system  Commissioning underway; onstream December 2014  Treat sour production at plant instead of wellsites Liquids transportation  Full Capacity at Musreau  Pembina HVP in-service  LVP in-service  De-ethanization capacity  Current 8,000 Bbl/d gross C2+ capacity  Interruptible capacity with other fractionators Keyera De-ethanizer expansion   Phase 1 by Q1 2015 (13,000 Bbl/d)  Phase 2 mid-2015 (19,000 Bbl/d)  Condensate stabilizer expansion  Additional 15,000 Bbl/d  Commission Q1 2015; onstream April 2015 Long-term contracts   Firm service with TCPL  10 year liquids transportation with Pembina  10 year de-ethanization and fractionation with Keyera  10 year ethane sales agreement

Musreau 8-13 Complex October 13, 2014 15

Illustrative Deep-Cut - Montney Wells 200 MMcf/d x 23% Shrinkage = 154 MMcf/d Sales Gas (25,667 Boe/d) + 22,000 Bbl/d condensate + 18,000 Bbl/d NGLs Price Yield Bbl/MMcf Deep-Cut Sales Gas $4.00/Mcf 154 MMcf/d $616,000 Condensate $90.00/Bbl 22,000 Bbl/d $1,980,000 110 Butane $65.00/Bbl 2,500 Bbl/d $162,500 12.5 Propane $35.00/Bbl 5,000 Bbl/d $175,000 25 Ethane $12.00/Bbl 10,500 Bbl/d $126,000 52.5 Total: 65,667 Boe/d $3,059,500/day Royalty 5% ($152,975/day) Operating Cost ($3.00/Boe) ($197,000/day) $2,709,525/day 24.0 Total: $989 MM/year MMBoe/year $41.26/Boe 16

Paramount Deep-Cut Montney - Illustrative Project Economics • Paramount’s shallow rights will add substantially to the RLI • Paramount has de-risked a substantial amount of its land base and thus could have the potential to add a series of refrigeration or deep cut plants • Simple Payout from free cash flow after start up is 1.0 - 2.2 years Resource Needed: 200 MMcf/d x 365 ~ 73 Bcf/year x 10 year RLI = 730 Bcf 70 Bcf/section @ ~ 50% recovery = ~ 20 Sections Cost 60 (5 MMcf/d wells) x $10 MM/well = $600 MM Gas Plant = $250 MM Total: $850 MM Annual Deep - Cut Cash Flow $989 MM/year Annual Capital = 25 (3.0 Bcf) wells x $10 MM/well $250 MM/year Free Cash Flow $739 MM/year 17

Pembina Peace Pipeline Expansion Numbers provided by Pembina Pipelines LVP Capacity (Bbl/d) HVP Capacity (Bbl/d) In-Service Current 195,000 115,000 Phase 2 Expansion 55,000 20,000* 2015 Phase 3 Expansion 320,000** 2016/2017 Total 705,000 * By displacement onto 53,000 Bbl/d Pembina North Expansion 18 * *LVP/HVP combined; split to be determined