Paramount Resources (POU) M&A announcement summary

Deal rationale and strategic fit

• Acquisition of core Montney oil assets for $2.377 billion, with ~80% undeveloped acreage, and divestiture of Uinta assets for $2.00 billion, high-grades the portfolio and focuses on top North American oil basins.

• Expands Montney oil inventory to approximately 15 years and adds about 900 net 10k locations, enhancing scale in major oil resource basins.

• Proprietary technical analysis identified the acquired acreage as one of the most valuable undeveloped positions in North America.

• Sale of Karr, Wapiti, and Zama properties for $3.325 billion in cash plus Horn River Basin assets enables realization of value and supports long-term shareholder returns.

• The transaction aligns with a durable return strategy, leveraging operational excellence and innovation to boost shareholder returns and maintain a strong balance sheet.

Financial terms and conditions

• All-cash acquisition of Montney assets valued at $2.377 billion (C$3.325 billion at 0.7150 CAD/USD FX); Uinta Basin sold for $2.00 billion; Karr, Wapiti, and Zama properties sold for $3.325 billion in cash plus Horn River Basin assets.

• Acquisition funded by Uinta sale proceeds and temporary financing; share buyback paused until short-term borrowings are repaid, with buybacks expected to resume in 2Q25.

• No new equity or long-term debt issued; net cash requirement of $377 million covered by pausing buybacks.

• Net debt as of October 31st was about CAD 5.65 billion, with a reaffirmed CAD 4 billion debt target and investment grade ratings expected to be maintained.

• Ovintiv will assume processing and transportation commitments; $100 million deposit required, forfeitable under certain conditions.

Synergies and expected cost savings

• Expected annual synergies of about CAD 125 million, including over CAD 1.5 million per well in capital savings, Canadian cash tax savings, and lower overhead.

• Transaction is immediately and long-term accretive, with approximately $300 million higher free cash flow in FY25E and a 20% increase in free cash flow per share.

• Additional savings from lower overhead and cash taxes due to tax attributes and financing structure.

• Divestiture allows focus on higher-growth, lower-cost assets and redeployment of capital to core areas.

• Retained assets include significant growth inventory and infrastructure, supporting operational efficiency.