UPDATED 2022 GUIDANCE AND PRELIMINARY 2023 BUDGET
The Company’s planned 2022 capital expenditures have been upwardly revised by $80 million at the midpoint to a range of between $600 million and $640 million. Most of the increase reflects the impact of higher than anticipated inflation. Paramount, through its Fox Drilling subsidiary, is also now budgeting $20 million in 2022 for the majority of the costs to construct a fifth super-spec walking rig that will be deployed in the Company’s 2023 drilling program. The increase also reflects the pre-ordering of certain materials, particularly casing, required for the 2023 development program to ensure continued availability. Paramount 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. The Company continues to budget $33 million of abandonment and reclamation expenditures in 2022, net of approximately $8 million in funding under the ASRP.
The Company is increasing its second half 2022 average sales volume guidance by 1,000 Boe/d to between 102,000 Boe/d and 106,000 Boe/d (46% liquids), resulting in expected annual average sale volumes of between approximately 91,000 Boe/d and 93,000 Boe/d (45% liquids). Higher forecast production at Wapiti due to well out-performance and the acquisition of production through the pending Willesden Green acquisition is anticipated to more than offset lower than previously expected production at Karr resulting from changes to the timing of bringing new wells on production. Production volumes at Wapiti are now anticipated to reach the targeted plateau of 30,000 Boe/d by the end of 2022.
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Paramount is updating its forecast of 2022 free cash flow to approximately $600 million from $710 million to reflect updated capital spending, commodity prices, production and other assumptions.(1)
The Company’s 2022 capital program, targeted net debt reduction and regular monthly dividend would remain fully funded down to an average WTI price of about US$50/Bbl over the last two quarters of 2022.(2)
Paramount’s anticipated 2023 capital expenditure budget, based on preliminary planning and current market conditions, has been upwardly revised by $115 million at the midpoint to a range of between $650 million and $700 million. The additional capital expenditures largely reflect the impact of higher inflation.
The Company continues to expect that a capital program in this range will result in 2023 average sales volumes of 105,000 Boe/d to 110,000 Boe/d (47% liquids).
Paramount is updating its estimate of 2023 free cash flow that would be expected from such a capital program to approximately $725 million from $820 million to reflect updated capital spending, commodity price and other assumptions.(3)
UPDATED FIVE-YEAR OUTLOOK
The Company is updating its five-year outlook to reflect updated capital expenditure expectations, recent commodity prices and other assumptions. Paramount now anticipates cumulative free cash flow through to the end of 2026 of approximately $3.9 billion (approximately $28 per basic share(4)), down from $4.1 billion. The Company now anticipates annual average capital expenditures of approximately $650 million (up from $550 million) and a compound annual production growth rate of approximately 7% (unchanged) through the period.(5)
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