strategic transactions review - paramount · pdf filefuture oriented information • in the...

Strategic Transactions Review

July 2017

Future Oriented Information

• In the interest of providing information regarding Paramount Resources Ltd. ("Paramount","PRL" or the "Company") and its future plans and operations, this presentation containscertain forward-looking information and statements, including information regardingParamount’s previously announced proposed acquisition of Apache Canada Ltd. ("ACL")(the "Apache Canada Acquisition") and the proposed merger of Paramount and TrilogyEnergy Corp. ("Trilogy" or "TET") ("Trilogy Merger").

• Closing of the Apache Canada Acquisition remains subject to the receipt of regulatoryapprovals and other customary closing conditions. The Trilogy Merger remains subject toshareholder, court and regulatory approvals and other customary closing conditions thatare typical for transactions of this nature. The Apache Canada Acquisition is not conditionalon the Trilogy Merger. The Trilogy Merger is conditional upon, among other things, thecompletion of the Apache Canada Acquisition.

• The projections, estimates and forecasts contained in such forward-looking information andstatements necessarily involve a number of assumptions, and are subject to both knownand unknown risks and uncertainties that may cause the Company's actual performanceand financial results in future periods to differ materially from these projections, estimatesor forecasts. The Advisories Appendix attached hereto lists some of the materialassumptions, risks and uncertainties that these projections, estimates and forecasts arebased on and are subject to.

• Accordingly, shareholders and potential investors are cautioned that events orcircumstances could cause actual results to differ materially from those predicted.

• Any use of information contained in this presentation is expressly forbidden.

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Paramount Resources Ltd.

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Founded in 1976

IPO in 1978 (TSX: POU)

~50% Insider Ownership

Focused on Canadian Energy

Real Value Created over Four Decades

Continue to Deliver Profitable Growth

Two Strategic Transactions

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• Apache Canada Acquisition

• $459.5 MM cash plus working capital and other monetary adjustments

• Expected to close in August 2017

• Trilogy Merger• Share exchange ratio is 1 POU share : 3.75 TET shares

• Reviewed by special committees of independent directors of both POU and TET

• Deloitte has prepared independent valuations of the shares of both POU and TET

• Deloitte has provided a verbal fairness opinion to each of the special committees

• Subject to both POU and TET shareholder approval:

• > 66 2/3 % majority of all shareholders in favor of transaction

• > 50% of the minority shareholders in favor of transaction

• Completion targeted for September 2017

Two Transactions - Strategic Rationale

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• Formation of an intermediate E&P company with an extensive portfolio of liquids-rich unconventional plays and the financial strength to accelerate those opportunities

• Large inventory of repeatable drilling locations in many resource development projects

• Diversification of production base to include more low decline production and a higher liquids weighting

• Cash flow from existing larger production base and free cash flowing projects to be redeployed into liquids-rich growth projects

• Economies of scale ─ securing services at reduced costs

• Organizational synergies ─ consolidation of corporate organizations, system processes and G&A

• Operational synergies ─ cost reductions through optimization of field teams, infrastructure and commercial contracts

The Direction

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Paramount

ACL

Profitable Liquids-

Rich Growth

Trilogy

• Q4 2017 forecast production > 90,000 Boe/d

• 600 MMBoe P+P reserves with 37% liquids(1)

• P+P reserves pre-tax NPV10 of ~$4.9 Billion(1)

• ~2.7 million net acres of land

• Liquids-rich focus in Montney and Duvernay

• Drilling inventory > 2,000 (gross) wells(2)

• Liability Management Rating > 3.0(3)

• Proforma March 31, 2017 debt ~$319.5 Million(4)

• ~134.7 MM basic shares outstanding

(~140.2 MM diluted)(5)

Paramount’s core objective is profitable growth whilecreating and delivering real value for all our stakeholders.

(1) Reserves evaluated by McDaniel & Associates Consultants Ltd. effective as of June 1, 2017 (the “McDaniel Reserve Reports”) using their April 1, 2017 price deck

(2) P+P locations in the McDaniel Reserve Reports plus internally identified high-grade locations

(3) Before adjustment for Paramount’s Valhalla asset sale(4) TET debt minus POU cash at March 31,2017 minus proceeds of

Q2 2017 dispositions (POU and TET) plus ACL purchase price(5) Based on current outstanding shares and outstanding options of

POU and TET and on exchange ratio of 1 POU share per 3.75 TET shares

Overview(1)

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Land Overview(2) Gross Acres

Net Acres

Total WCSB 3,940,000 2,669,000

Total Montney 460,000 372,000

Total Duvernay 252,000 223,000

Production Overview (2) Q4 2017EBoe/d

Kaybob and Ante Creek 42,000

Alberta Deep Basin > 29,000

Central Alberta 13,000

NE BC | NW AB 6,000

Total (~35% liquids) > 90,000

Liquids-Rich Growth Potential(3):

(1) ACL landholding information provided by ACL; TET landholding information is from TET’s public disclosure documents (2) Paramount forecast of the combined entities for the fourth quarter of 2017 (3) Liquids-rich growth potential are internal estimates of potential gross wellhead volumes of natural gas and condensate; with such potential being based on certain assumptions and subject to certain risks, as set forth in the "Advisories"

2017/18• Karr Montney and Kaybob Duvernay• Wellhead production ~46,000 Boe/d (43% condensate)

2019/20• Karr Montney, Wapiti Montney, and Kaybob Duvernay• Wellhead production ~105,000 Boe/d (42% condensate)

2021+• Karr Montney, Wapiti Montney, and Kaybob Duvernay• Wellhead production ~138,000 Boe/d (41% condensate)• Montney and Duvernay oil resource plays

Reserves Summary(1)

8(1) As per the McDaniel Reserve Reports. Columns may not add due to rounding (2) Excludes probable reserves associated with the Hoole Oil Sands development

Kaybob Area(1)

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Area Overview:• Q4 2017 average production forecast

of ~42,000 Boe/d (31% liquids)

• Near-term strategy is to harvest free cash flow from Montney oil and gas developments by leveraging owned/operated infrastructure

• Continued development of Montney oil and Presley Montney gas pools

• Growth strategy is focused on Smoky and Kaybob South Duvernay projects using both owned/operated and third-party infrastructure

Land Overview (1) Gross Acres

Net Acres

Total Land Base 1,221,000 865,000

Montney Oil 32,000 32,000

Montney Gas 171,000 123,000

Duvernay 159,000 137,000

(1) ACL landholding information provided by ACL; TET landholding information is from TET’s public disclosure documents

Alberta Deep Basin(1)

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Area Overview:• Q4 2017 average production forecast of > 29,000

Boe/d (46% liquids) • ~145,000 net acres of liquids-rich over-pressured

Montney rights with large-scale development ready to be implemented

Karr Montney Project• Recently expanded processing capacity from 40

MMcf/d to 80 MMcf/d with potential for growth to 200 MMcf/d by 2021

Wapiti Montney Project• 150 MMcf/d turn-key sour gas processing capacity

onstream 2019 with existing midstream and transportation commitments; expandable to 300 MMcf/d

Smoky/Resthaven Project• Piloting the first enhanced well completion design in

late-2017, similar to what is being employed successfully at Karr with access to ~64 MMcf/d of owned gas processing capacity

(1) ACL landholding information provided by ACL

Central Alberta(1)

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Area Overview:• Q4 2017 average production forecast of ~13,000

Boe/d (39% liquids)• Willesden Green Duvernay play:

• ~67,000 gross contiguous acres largely in the volatile oil window

• over-pressured• Test results of a recent Willesden Green Duvernay

well using increased proppant loading intensity coupled with a new cluster design yielded a step change in production performance

• Central Alberta includes established base production, fee simple lands, resource plays, and infrastructure opportunities

• Approximately 192,000 gross and 176,000 net acres of fee simple lands


The Montney Portfolio(1)

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Highlights:• ~370,000 net acres across AB/BC

• ~145,000 net acres in the Alberta

liquids-rich over-pressured trend

• Kaybob Montney oil and gas-

"manufacturing" stage leveraging

owned/operated infrastructure in the

Kaybob Area

• Montney development opportunities:

• Karr

• Wapiti

• Smoky/Resthaven

• Kaybob Presley Montney Gas

• Kaybob Montney Oil

• Birch

• Ante Creek


Karr Montney Project(1)

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Project Overview:• Q4 2017 average production forecast

of ~22,000 Boe/d (45 to 50% liquids)

• Completed in April 2017 ahead of schedule, 06-18 compressor/dehyexpansion from 40 MMcf/d to 80 MMcf/d

• Expansion is supported by firm capacity for gas and liquids takeaway

• Water disposal well is currently being tied in to the 06-18 facility

• Construction of a ~300,000 m3

permanent water storage reservoir is underway with a second reservoir of 200,000 m3 in the planning phase

• Currently evaluating opportunities to add an incremental 120 MMcf/d of capacity over three years


Wapiti Montney Project(1)

50 MMcf/d Mid-2019 to 150 MMcf/d in 2021

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Project Overview:• Primary target is the Upper Montney with

approximately 75 Bcf DPIIP per section of liquids-rich over-pressured gas(2)

• Potential secondary target in the Lower Montney

• Lifetime condensate-gas ratios expected to range from 45 Bbl/MMcf in the West to over 150 Bbl/MMcf in the East

• Planning to deploy well completion design that is being implemented successfully at the Karr Montney Project

• Phase 1 includes a turn-key development project with a midstream third-party owner/operator that has committed to construct by mid-2019; 150 MMcf/d of gathering and processing capacity capable of acid gas injection and processing 25,000 Bbl/d of condensate which is expandable to 300 MMcf/d

• Priority access to full 150 MMcf/d initial capacity

(1) ACL landholding information provided by ACL (2) This is an internal estimate. Please refer to the heading “Oil and Gas Measures and Definitions” in the Advisories Appendix of this presentation for more information

Smoky/Resthaven Project

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Area Overview:• Q4 2017 average production forecast of ~6,000

Boe/d (35% liquids)

• Currently executing a six-well Cretaceous program with new production scheduled for late 2017

• Near-term strategy (late 2017) is to test the enhanced well completion design being employed at Karr in the Resthaven liquids-rich fairway

• Growth strategy is to leverage ownership in two gas processing facilities which total ~64 MMcf/d

• Sweet Cretaceous production can be produced to either facility; Montney has a range of H2S and requires field sweetening

Kaybob Montney Oil and Presley(1)

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• Kaybob Montney oil pool was discovered in 2011 and is expected to have ~135 producing horizontal wells at year end 2017

• 8 hz Montney oil wells/section

• Kaybob Presley Montney gas pool is expected to have ~97 producing horizontal wells at year end 2017

Kaybob Presley Gas Pool Kaybob Montney Oil Pool


Birch

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Area Overview:• Q4 2017 average production forecast

of ~1,500 Boe/d (7% liquids)• Paramount has a 50% non-operated

working interest in the Birch Montney play

• The 2016/17 capital program consists of a facility expansion from 20 MMcf/d to 40 MMcf/d (gross) and 10 new wells

• To date 6 of 10 wells have been rig released and 2 of 10 wells have been completed with the facility expansion expected to come onstream in Q3 2017

• Partners are evaluating future growth opportunities

The Duvernay Portfolio(1)

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Highlights:• ~230,000 net acres of Duvernay Plays • ~136,000 acres in Kaybob where the Duvernay is

being developed commercially by a number of operators

Kaybob South Duvernay Project • Has gas processing capacity of 40 MMcf/d with

fee-for-service cost structure and potential growth leveraging third-party infrastructure or owned/operated infrastructure

Smoky Duvernay Project • Will utilize owned/operated infrastructure with

minor investment for facility modifications and enhancements

• Kaybob North and Willesden Green are currently in the piloting phase; will utilize owned/operated infrastructure for pre-development

• East Shale Basin is currently in delineation phase; transition to pilot or to be monetized


Kaybob Duvernay Liquids-Rich(1)

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Duvernay Liquids-Rich Overview:• Three focus areas including Smoky, Kaybob

South, and Kaybob NorthSmoky • Development is liquid-rich gas with lifetime CGR

of ~200 Bbl/MMcf (2); leverage owned/operated infrastructure

Kaybob South • Development is liquids-rich gas with lifetime CGR

from 75 to 100 Bbl/MMcf (2)

• Initial focus in the furthest North portion of the play area with higher CGR’s

• Development predicated on a turn-key midstream arrangement with excess gas and condensate processed at owned/operated infrastructure

Kaybob North • Development is volatile oil ranging from high gas-

oil ratio in the Southwest to low gas-oil ratio in the Northeast; existing owned/operated infrastructure

(1) ACL landholding information provided by ACL; TET landholding information is from TET’s public disclosure documents (2) Please refer to the heading “Oil and Gas Measures and Definitions” in the Advisories Appendix of this presentation for more information

Willesden Green Duvernay

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Area Overview:• ~67,000 gross contiguous acres largely

in the volatile oil window of the play

• Completion design enhancements on the most recent 02/13-05 horizontal well has yielded significantly improved productivity

• Currently integrating knowledge of the subsurface with surface constraints to run a range of development scenarios

Project Inventory(1)

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(1) Please refer to the heading “Oil and Gas Measures and Definitions” in the Advisories Appendix of this presentation for more information (2) The top four projects deliver a relatively balanced contribution of liquids from Paramount (P), ACL (A) and Trilogy (T)(3) Liquids-rich growth potential are internal estimates of potential gross wellhead volumes of natural gas and condensate; with such potential being based on certain

assumptions and subject to certain risks, as set forth in the "Advisories"

Area Project Company(2) Stage of Development Liquids-Rich Growth Potential (3)

Karr Montney P Development ~56,000 Boe/d with 23,000 Bbl/d condensate

Smoky Duvernay T Development ~23,000 Boe/d with 13,000 Bbl/d condensate

Wapiti Montney A Development ~76,000 Boe/d with 26,000 Bbl/d condensate

Kaybob Montney T Development ~8,000 Bbl/d light oil

Kaybob South Duvernay A/T Development ~20,000 Boe/d with 7,500 Bbl/d condensate

Smoky/Resthaven Montney P Piloting ~13,000 Boe/d with 5,000 Bbl/d condensate

Willesden Green Duvernay P Piloting ~15,000 Bbl/d light oil

Kaybob North Duvernay T Delineation ~20,000 Bbl/d light oil

Presley Montney Montney A/T Development ~60 MMcf/d with CGR ~12 Bbl/MMcf

Birch Montney Montney P Development ~140 MMcf/d with CGR ~25 Bbl/MMcf

Ante Creek Montney A Pre-Development ~4,000 Bbl/d light oil

Total: ~268,000 Boe/d

Half-Cycle Type Well Before Tax Return(1)

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Constant prices and costs at US$50/Bbl WTI and US$3.00/mmbtu NYMEX with AECO Basis US$0.95/mmbtu and FX 0.775 US$/C$

(1) Please refer to the heading “Half-Cycle Economics” in the Advisories Appendix of this presentation for more information(2) Type well generated using P+P reserves estimates in the McDaniel Reserve Report(3) Type well generated using estimates based on analog wells and analytical modeling

Paramount Investments

23(1) Please refer to the heading “Oil and Gas Measures and Definitions” in the Advisories Appendix of this presentation for more information(2) Publicly disclosed by competitor

Summary

• Transactions create a well-capitalized, larger scale, Deep Basin Producer

• Exceptional portfolio of high liquids-weighted resource developments in the Montney and Duvernay

• Liquids–rich growth potential in top 11 projects of ~268,000 Boe/d (1)

• Opportunity to realize significant synergies from the combination of the three entities

• Consolidated company will choose the best systems and processes to the benefit of the new Paramount

24(1) Liquids-rich growth potential are internal estimates of potential gross wellhead volumes of natural gas and condensate; with such potential being based on certain

assumptions and subject to certain risks, as set forth in the "Advisories"

ADVISORIES APPENDIX

Advisories

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Forward-Looking Information

Certain statements in this presentation constitute forward-looking information under applicable securities legislation. Forward-looking information typically containsstatements with words such as "anticipate", "believe", "estimate", "will", "expect", "plan", "schedule", "intend", "propose", or similar words suggesting future outcomesor an outlook. Forward-looking information in this presentation includes, but is not limited to:

the anticipated closing of the Apache Canada Acquisition and the Trilogy Merger, including satisfaction of closing conditions, receipt of regulatory,shareholder and court approvals and the timing thereof; Paramount’s assets, Liability Management Rating, reserves and the discounted present

value of future net revenues therefrom, inventory of drilling locations, projected production levels and growth (including decline rates and the liquidscomponent thereof), expected increases in processing capacity; expected CGRs; anticipated growth in landholdings, and cash flows and debt levels, allfollowing the completion of the Apache Canada Acquisition and the Trilogy Merger; the impact of the Apache Canada Acquisition and the Trilogy Merger onthe Company’s organizational structure, financial position and strength, cost structures and strategy including the monetization of certain properties and itsexploration, development and associated operational plans (including its drilling, completions, well tie-in, facility expansion and water storage reservoirconstruction program); the pro forma operating and reserves information following the completion of the Apache Canada Acquisition and the Trilogy Merger;the synergies, economies of scale and other benefits expected to be realized from the Apache Canada Acquisition and the Trilogy Merger; projected half-cycle type well profiles and rates of return thereon (and the initial production rate, reserves, capital and operating cost, shrinkage, NGLs yield and NGLspricing assumptions used to generate such profiles and estimates); forecast operational costs (including targeted reductions in asset retirement obligationcosts); the number of wells drilled in a given resource pool; anticipated third-party transportation and processing capacity; and general business strategiesand objectives of Paramount.

In addition, information and statements herein relating to “reserves” are deemed to be forward looking information as they involve the implied assessment based oncertain estimates and assumptions that the reserves described exist in quantities predicted or estimated, and that the reserves can be profitably produced in thefuture.

Forward-looking information is based on a number of assumptions which may prove to be incorrect. Assumptions have been made with respect to the followingmatters, in addition to any other assumptions identified in this presentation:

the terms of the Apache Canada Acquisition and the Trilogy Merger and the other matters disclosed herein in relation to the Apache Canada Acquisition andthe Trilogy Merger; the timely receipt of regulatory, shareholder and court approvals and satisfying closing conditions for the completion of the ApacheCanada Acquisition and the Trilogy Merger; the scope and effect of the expected benefits from the Apache Canada Acquisition and the Trilogy Merger; futurenatural gas and liquids prices; royalty rates, taxes and capital, operating, general and administrative and other costs; foreign currency exchange rates andinterest rates; general economic and business conditions; the ability of Paramount to obtain the required capital to finance its exploration, development andother operations and meet its commitments and financial obligations; the ability of Paramount to obtain equipment, services, supplies and personnel in atimely manner and at an acceptable cost to carry out its activities; the ability of Paramount to secure adequate product processing, transportation, de-ethanization, fractionation, and storage capacity on acceptable terms; the ability of Paramount to market its natural gas and liquids successfully to currentand new customers; the ability of Paramount and its industry partners to obtain drilling success (including in respect of anticipated production volumes,reserves additions, liquids yields and resource recoveries) and operational improvements, efficiencies and results consistent with expectations; the timelyreceipt of required governmental and regulatory approvals; anticipated timelines and budgets being met in respect of drilling programs and other operations;and general business, economic and market conditions.

Advisories (con't)

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Although Paramount believes that the expectations reflected in such forward-looking information is reasonable, undue reliance should not be placed on it as Paramountcan give no assurance that such expectations will prove to be correct. Forward-looking information is based on expectations, estimates and projections that involve anumber of risks and uncertainties which could cause actual results to differ materially from those anticipated by Paramount and described in the forward-lookinginformation. The material risks and uncertainties include, but are not limited to:

the Apache Canada Acquisition and/or the Trilogy Merger may not be completed on the terms anticipated or at all; the conditions to and approvals for thecompletion of the Apache Canada Acquisition and/or the Trilogy Merger not being satisfied and obtained; the expected benefits of the Apache CanadaAcquisition and/or the Trilogy Merger not being realized; fluctuations in natural gas and liquids prices; changes in foreign currency exchange rates and interestrates; the uncertainty of estimates and projections relating to future revenue, future production, reserve additions, liquids yields (including condensate-gasratios), resource recoveries, royalty rates, taxes and costs and expenses; the ability to secure adequate product processing, transportation, de-ethanization,fractionation, and storage capacity on acceptable terms; operational risks in exploring for, developing and producing natural gas and liquids; the ability to obtainequipment, services, supplies and personnel in a timely manner and at an acceptable cost; potential disruptions, delays or unexpected technical or otherdifficulties in designing, developing, expanding or operating new, expanded or existing facilities (including third-party facilities); processing, pipeline, de-ethanization and fractionation infrastructure outages, disruptions and constraints; risks and uncertainties involving the geology of oil and gas deposits; theuncertainty of reserves and resources estimates; general business, economic and market conditions; the ability to generate sufficient cash flow from operationsand obtain financing to fund planned exploration, development and operational activities and meet current and future commitments and obligations (includingproduct processing, transportation, de-ethanization, fractionation and similar commitments and debt obligations); changes in, or in the interpretation of, laws,regulations or policies (including environmental laws); the ability to obtain required governmental or regulatory approvals in a timely manner, and to enter intoand maintain leases and licenses; the effects of weather; the timing and cost of future abandonment and reclamation obligations and potential liabilities forenvironmental damage and contamination; uncertainties regarding aboriginal claims and in maintaining relationships with local populations and otherstakeholders; the outcome of existing and potential lawsuits, regulatory actions, audits and assessments; and other risks and uncertainties describedelsewhere in this presentation and in Paramount's other filings with Canadian securities authorities.

The foregoing list of risks is not exhaustive. For more information relating to risks, see the section titled "RISK FACTORS" in Paramount's current annual informationform. The forward-looking information contained in this presentation is made as of the date hereof and, except as required by applicable securities law, Paramountundertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise.

Non-GAAP Measures

In this presentation, “free cash flow” (the “Non-GAAP Measure”) is used and does not have a standardized meaning as prescribed by IFRS. Free cash flow equals fundsflow from operations minus maintenance capital and is used to measure whether net cash flows are positive or negative after deducting capital amounts incurred tomaintain production at current levels. The calculation of free cash flow excludes capital amounts incurred to increase production and capital amounts incurred in priorperiods.

Non-GAAP Measures should not be considered in isolation or construed as alternatives to their most directly comparable measure calculated in accordance with GAAP,or other measures of financial performance, calculated in accordance with GAAP. Non-GAAP Measures are unlikely to be comparable to similar measures presented byother issuers.

Oil and Gas Measures and DefinitionsAbbreviations

Liquids Natural Gas Oil Equivalent

Bbl Barrels Mcf Thousands of cubic feet Boe Barrels of oil equivalentMBbl Thousands of barrels Bcf Billions of cubic feet MBoe Thousands of barrels of oil equivalentBbl/d Barrels per day MMcf/d Millions of cubic feet per day MMBoe Millions of barrels of oil equivalent NGLs Natural gas liquids Boe/d Barrels of oil equivalent per dayCondensate Pentane and heavier hydrocarbons

Measures

This presentation contains disclosures expressed in "Boe/d", "MBoe", and "MMBoe". Natural gas equivalency volumes have been derived using the ratio of six thousandcubic feet of natural gas to one barrel of oil. Equivalency measures may be misleading, particularly if used in isolation. A conversion ratio of six thousand cubic feet ofnatural gas to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency atthe well head. The term "liquids" is used to represent oil, condensate and Other NGLs. The term "Other NGLs" means ethane, propane and butane.

During the three months ended March 31, 2017, the value ratio between crude oil and natural gas was approximately 23:1. This value ratio is significantly different fromthe energy equivalency ratio of 6:1. Using a 6:1 ratio would be misleading as an indication of value.

Definitions

Half-Cycle Economics

Illustrative type wells are subject to the specific assumptions identified by Paramount with respect thereto, and the other assumptions contained in these advisories. Noreserves, or resources other than reserves, are assigned to these type curve estimates and, accordingly, such estimates may not be representative of the actualproduction rates associated with the resource plays. Illustrative type well economics are based on multi-well pads with batch operations and simultaneous operations.Actual capital costs will be different due to a number of factors including, but not limited to: the number of wells drilled on a particular pad and the number of rigs used, thenumber of completions done concurrently at a particular site, the number of wells using shared surface facilities, the timing of field operations and the effects of weather.

Capital costs include only the costs to drill, complete, equip and tie-in a well (with artificial lift, as applicable), with a cycle time similar to pad drilling. Capital costs do notinclude any amounts for infrastructure (including gathering, compression or processing) or land acquisitions. Transportation and processing expenses deducted in thehalf-cycle economics reflect Company and third-party costs associated with the volumes produced, and do not include any return on, or return of capital for Companyowned infrastructure. These economics are intended to represent the marginal return of a single well investment based on the average wells per pad for the full fielddevelopment. No adjustments have been made for downtime or facility constraints.

Advisories (con't)

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Project Inventory

The Company’s project inventory is an illustration of Paramount’s estimate of the maximum potential for a particular project and is subject to the assumptions and risks identified by Paramount herein and in its other publicly filed documents. It is not certain which projects the Company will develop or the ultimate potential of any project since actual results may differ materially from expected potential and/or results and the assumptions upon which Paramount’s estimates are made may not prove to be correct.

Analogous Information and Condensate-Gas Ratios

Paramount has provided information with respect to certain of its plays and emerging opportunities which is "analogous information" as defined in NI 51-101. This analogous information includes internal estimates of DPIIP, as defined in the Canadian Oil and Gas Evaluation Handbook. This analogous information is presented on a basin, sub-basin or area basis utilizing data derived from Paramount’s internal sources as well as from a variety of publicly available sources which are predominantly independent in nature. Internal estimates are subject to the specific assumptions identified by Paramount in respect of such estimates plus other assumptions contained herein, and are not necessarily representative of the actual resources associated with Paramount’s properties.

The Liard Basin estimates set forth herein are 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 Canadian Oil and Gas Evaluation 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.

Condensate-gas ratios ("CGRs") for wells are calculated by dividing total wellhead separator liquids volumes by total wellhead separator natural gas volumes. Natural gas and stabilized condensate sales volumes are approximately 10 percent to 20 percent lower than production volumes due to shrinkage.

Advisories (con't)

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