Paramount Resources (POU) Q2 2024 earnings summary

Executive summary

• Q2 2024 net income was $84.5 million, up from $74.2 million in Q2 2023, driven by higher liquids sales, a $10 million insurance payment for wildfire losses, and risk management gains.

• Sales volumes averaged 95,609 Boe/d (48% liquids), an 8% increase year-over-year, with strong Duvernay well results at Kaybob North and Willesden Green.

• Adjusted funds flow reached $266.2 million, up from $178.7 million in Q2 2023, while free cash flow was $20.3 million, down from $30.5 million due to higher capital expenditures.

• Capital expenditures totaled $240.8 million, focused on Montney and Duvernay developments; asset retirement obligations settled were $2.3 million.

• Net debt decreased to $29.3 million, with the $1.0 billion credit facility undrawn at quarter-end.

Financial highlights

• Petroleum and natural gas sales were $443.6 million, up from $374.4 million year-over-year, reflecting higher volumes and prices.

• Realized natural gas price was $1.69/Mcf (down 30% year-over-year), while condensate and oil price was $103.07/Bbl (up 9%).

• Operating expenses rose to $115.7 million ($13.29/Boe), mainly due to increased workover and maintenance activities.

• Royalties increased to $66.1 million (15.2% rate), reflecting higher liquids prices and more wells past incentive periods.

• Q2 2024 dividends declared were $0.425/share, up from $0.375/share in Q2 2023.

Outlook and guidance

• 2024 sales volumes guidance reaffirmed at 100,000–106,000 Boe/d (48% liquids); Q3 and Q4 expected at 96,000–104,000 and 109,000–121,000 Boe/d, respectively.

• 2024 capital expenditures guidance maintained at $830–$890 million; free cash flow forecast reduced to $100 million (from $205 million) due to lower natural gas price assumptions.

• Regular monthly dividend of $0.15/share declared for August 2024.

• 2024 sustaining capital, abandonment, and dividends fully funded down to WTI $56/Bbl for H2 2024.