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Netback - Continuing Operations
Three months ended December 31 2012 2011---------------------------------------------------------------------------- ($/Boe)(1) ($/Boe)(1) Natural gas 33.1 3.45 30.4 3.62 NGLs 11.9 61.23 11.4 77.98 Oil 8.9 79.72 13.4 97.02 Royalty and sulphur revenue 0.7 - 1.0 -----------------------------------------------------------------------------Petroleum and natural gas sales 54.6 28.70 56.2 33.38 Royalties (4.5) (2.38) (4.4) (2.61) Operating expense (17.9) (9.41) (19.3) (11.45) Transportation (5.5) (2.91) (5.1) (3.03)----------------------------------------------------------------------------Netback 26.7 14.00 27.4 16.29 Financial commodity contract settlements 0.7 0.38 0.3 0.18----------------------------------------------------------------------------Netback including financial commodity contract settlements 27.4 14.38 27.7 16.47--------------------------------------------------------------------------------------------------------------------------------------------------------(1) Natural gas revenue shown per Mcf.
Paramount's fourth quarter average sales volumes were 20,674 Boe/d in 2012, an increase of 13 percent over the fourth quarter of 2011. Natural gas sales volumes increased in the Kaybob COU as a result of new production from wells producing through the Company's new Musreau Refrig Facility. Sales volumes also increased at Valhalla in the Grande Prairie COU where a new gathering and compression system was commissioned in the first quarter of 2012. Sales volumes in the Southern and Northern COUs decreased due to natural declines.
Fourth quarter 2012 petroleum and natural gas sales were $54.6 million, a decrease of $1.6 million from the fourth quarter of 2011, as a 14 percent decrease in average realized prices more than offset the 13 percent increase in sales volumes.
Natural gas and NGLs sales volumes in the fourth quarter of 2012 were reduced due to Third Party Disruptions, which required Paramount to restrict NGLs recovery rates and curtail production in the Kaybob and Grande Prairie COUs. The Company estimates that average sales volumes in the fourth quarter were reduced by approximately 3,000 Boe/d as a result, including reduced liquids yields as the Company preferentially flowed lower liquids content wells. Sales volumes in December 2012 and January 2013 were constrained to approximately 22,000 Boe/d.
Operating expenses decreased $1.4 million in the fourth quarter of 2012 compared to the prior year, as higher operating costs related to the new Musreau Refrig Facility and new wells brought-on production were more than offset by the impact of higher processing income and lower third party processing fees. Operating costs per Boe decreased to $9.41 in the fourth quarter of 2012 compared to $11.45 in the fourth quarter of 2011. The per-unit decrease is primarily due to a higher proportion of sales from the Kaybob COU, which has per unit operating costs of approximately $5.00 per Boe before accounting for the impact of third party processing income. Operating expenses in the fourth quarter include the cost of seasonal maintenance in the Northern COU at remote locations.
