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Paramount Resources: Great Margins, Cash Flow Increase And Significant Upside

By Jung-Yung Jonathan Chang, Aditya Patel, Ziyi Jin and Matas Sriubiskis

COMPANY OVERVIEW

Paramount Resources Ltd., (PRMRF) an independent energy company, is engaged in the exploration, development, production, processing, transportation, and marketing of natural gas, crude oil, and natural gas liquids in Canada and the United States.

Its principal properties are located in west central Alberta; the Peace River Arch area of Alberta; southern Alberta; and northern Alberta and northeast British Columbia.

The company was founded in 1978 and is headquartered in Calgary, Canada.

INVESTMENT THESIS:

Point 1: Increasing Production

  • Though costly to build a new plant ($250M) it went online in the spring of 2014
  • Increasing output through 2017 to 160,000 Boe/d
  • 15,000 Bbl/d condenser coming online in April

Point 2: Attractive Gross Margins

  • Competing in unstable oil market, Paramount has done exceptional well to maintain solid gross margins
  • Currently sits at 55%
  • Indicates ability to compete in