Funds flow from operations decreased by $8.4 million in the fourth quarter of 2012 compared to the same period in 2011, primarily as a result the sale of the US properties, which generated $4.0 million of funds flow from operations in the fourth quarter of 2011, and higher interest expense.
RESERVES
Conventional
Paramount achieved strong conventional reserves additions in 2012, driven by the Company's Deep Basin development in the Kaybob COU. The Company's conventional proved and probable reserves at December 31, 2012 increased 64 percent to 86.8 MMBoe compared to 53.0 MMBoe at December 31, 2011, after production of 7.3 MMBoe and dispositions of 4.4 MMBoe, with a proved and probable reserves replacement ratio of 599 percent. Proved reserves increased 43 percent to 50.9 MMBoe at December 31, 2012 from 35.7 MMBoe at December 31, 2011, with a proved reserves replacement ratio of 336 percent.
Hoole Oil Sands Bitumen
Incremental to the conventional reserves additions, the Company recorded 93.1 MMBbl of probable bitumen reserves additions related to Cavalier Energy's 10,000 barrel per day oil sands development planned for the Hoole Grand Rapids. These reserves volumes were recognized following Cavalier Energy's November 2012 regulatory applications for project approval to the ERCB and AESRD.
Reserves Summary
Paramount's reserves for the year ended December 31, 2012 were evaluated by McDaniel & Associates Consultants Ltd., the Company's independent reserves evaluator, and prepared in accordance with National Instrument 51-101 definitions, standards and procedures. The Company's working interest reserves and before tax net present value of future net revenues as of December 31, 2012 using forecast prices and costs are as follows:
Gross Proved and Probable Reserves(1) -------------------------------------------- Light & Medium Natural Natural Crude Gas Gas Oil Liquids Bitumen Total --------------------------------------------Reserves Category (Bcf) (MBbl) (MBbl) (MBbl) (MBoe)(2)----------------------------------------------------------------------------ConventionalProved Developed Producing 143.3 1,416 4,198 - 29,501 Developed Non-producing 37.6 123 3,695 - 10,090 Undeveloped 21.0 - 7,769 - 11,266----------------------------------------------------------------------------Total Proved 201.9 1,540 15,662 - 50,857Total Probable 121.8 588 15,099 - 35,985----------------------------------------------------------------------------Total Proved and ProbableConventional 323.7 2,128 30,761 - 86,842----------------------------------------------------------------------------Oil Sands BitumenTotal Proved - - - - -Total Probable - - - 93,091 93,091----------------------------------------------------------------------------Total Proved and ProbableBitumen - - - 93,091 93,091----------------------------------------------------------------------------Total CompanyTotal Proved 201.9 1,540 15,662 - 50,857Total Probable 121.8 588 15,099 93,091 129,076----------------------------------------------------------------------------Total Proved and Probable 323.7 2,128 30,761 93,091 179,933--------------------------------------------------------------------------------------------------------------------------------------------------------(1) Columns may not add due to rounding.(2) Refer to the oil and gas measures and definitions in the Advisories section of this document.(3) The estimated net present values disclosed in this document do not represent fair market value. Revenues and expenditures were calculated based on McDaniel's forecast prices and costs as of January 1, 2013. Before Tax Net Present Value(1)(3) ---------------------------- ($ millions) Discount Rate --------------------------- Reserves Category 0% 10% 15% ------------------------------------------------------------ Conventional Proved Developed Producing 472 382 349 Developed Non-producing 122 72 57 Undeveloped 55 2 (14) ------------------------------------------------------------ Total Proved 649 456 392 Total Probable 774 424 334 ------------------------------------------------------------ Total Proved and Probable Conventional 1,422 880 726 ------------------------------------------------------------ Oil Sands Bitumen Total Proved - - - Total Probable 2,065 379 140 ------------------------------------------------------------ Total Proved and Probable Bitumen 2,065 379 140 ------------------------------------------------------------ Total Company Total Proved 649 456 392 Total Probable 2,839 803 474 -----------------------------------------------------------= Total Proved and Probable 3,487 1,259 866 ------------------------------------------------------------ ------------------------------------------------------------ (1) Columns may not add due to rounding. (2) Refer to the oil and gas measures and definitions in the Advisories section of this document. (3) The estimated net present values disclosed in this document do not represent fair market value. Revenues and expenditures were calculated based on McDaniel's forecast prices and costs as of January 1, 2013.
