Paramount's natural gas and NGLs sales volumes increased 21 percent in 2012 as the Company completed the first phase of its Kaybob Deep Basin expansion with the re-commissioning of the Musreau Refrig Facility at the end of the first quarter. New production was also added at Valhalla in the Grande Prairie COU, where the gathering and compression system was expanded.
The ability of Paramount to maximize production through its natural gas firm-capacity and Company-owned facilities in 2012, including the Musreau Refrig Facility and Valhalla gathering and compression system, was impacted by various third party downstream disruptions and capacity constraints (the "Third Party Disruptions"), which reduced sales volumes at times by up to 6,000 Boe/d. The Third Party Disruptions mainly related to reduced throughput at third party NGLs de-ethanization and fractionation facilities at Fort Saskatchewan, which resulted in the apportionment of available processing capacity. The Third Party Disruptions were also caused by NGLs and natural gas pipeline takeaway constraints and scheduled and unscheduled downtime at third party natural gas processing facilities. The Company estimates that average sales volumes in the second half of 2012 were reduced by approximately 3,000 Boe/d. Sales volumes in December 2012 and January 2013 were constrained to approximately 22,000 Boe/d.
Oil sales volumes decreased 29 percent to 1,620 Bbl/d in 2012 compared to 2,291 Bbl/d in 2011, primarily because of the second quarter US property disposition and natural declines in other areas.
Petroleum and natural gas sales revenue in 2012 decreased $44.6 million compared to 2011 as a result of lower realized prices and the US property disposition. Operating costs decreased $1.4 million compared to 2011 primarily due to the disposition of the US properties, partially offset by higher operating expenses from continuing operations.
Kaybob
2012 2011 % Change----------------------------------------------------------------------------Sales Volumes Natural gas (MMcf/d) 59.5 44.5 34 NGLs (Bbl/d) 924 868 6 Oil (Bbl/d) 62 72 (14) ------------------------------------ Total (Boe/d) 10,910 8,361 30 ------------------------------------Exploration and Development Expenditures ($ millions) Exploration, drilling, completions and tie-ins 200.7 171.2 17 Facilities and gathering 161.8 91.6 77 ------------------------------------ 362.5 262.8 38 ------------------------------------ Gross Net Gross Net ------------------------------------Total Land Holdings (sections) 788 446 792 441Wells Drilled 27 21.2 28 18.3--------------------------------------------------------------------------------------------------------------------------------------------------------
The Kaybob corporate operating unit ("COU") operates in West Central Alberta, where its core properties are in the Deep Basin at Musreau, Smoky and Resthaven. Paramount has assembled extensive multi-zone mineral rights to 788 (446 net) sections, with the primary formations of interest being the Montney and various Cretaceous horizons. Depending on the formation, well densities of eight or more wells per section per formation are anticipated to be required to recover the resources in place, representing a multi-decade inventory of drilling locations.
