Paramount Resources Ltd. raised its 2026 production guidance and reported stronger-than-expected fourth-quarter cash flow and output, as new Duvernay wells outperformed internal forecasts. The company also expanded its land positions in Alberta, reinforcing its long-term growth plans.
BNN Bloomberg spoke with Jeremy McCrea, managing director of energy research at BMO Capital Markets, who said improved well performance, solid liquidity and rising investor interest in energy are supporting the company’s positioning despite geopolitical volatility.
Key Takeaways
- Paramount swung to a net loss of $1.9 million, or $0.01 per share, in the fourth quarter of 2025, compared with net earnings of $87.4 million, or $0.60 per share, a year earlier.
- Fourth-quarter sales volumes fell to 46,973 barrels of oil equivalent per day from 102,477 boe/d a year earlier, while adjusted funds flow totalled $140 million.
- The company raised its 2026 production guidance by two per cent and posted production and cash flow results above analyst expectations.
- Duvernay wells are delivering stronger initial production rates and shallower declines than forecast, supporting faster payouts and higher projected returns.
- Elevated oil and natural gas prices amid Middle East tensions are improving cash flow, though AECO natural gas pricing in Canada remains a constraint.
Read the full transcript below:
LINDSAY: Paramount Resources shares are up this morning. The Canadian energy company reported increased 2026 production guidance and expanded land positions. So let’s bring in Jeremy McCrea, managing director of energy research at BMO Capital Markets, to break everything down. It’s good to have you join us. Thanks so much.
JEREMY: Thank you.
LINDSAY: So your thoughts on the production guidance, first of all, with this company?
JEREMY: There was something in this quarter for everybody. So we saw the production guidance revised up by two per cent. But not only that, we saw a 15 per cent beat on the cash flow, seven per cent beat on production. There really was something here for everybody. And it goes back to what we’re seeing from Paramount as they build up their new Duvernay position, have their facility, have better runtime. And it really just should give a lot of encouragement here for what we could expect for the rest of the year.
LINDSAY: What are some other key takeaways from the latest earnings report?
JEREMY: So the other thing that I think is encouraging here is when you look at their Duvernay results, this is where the big core production is coming from. Here right now, we’re seeing these results come in actually even better than the type curve and what we’re expecting. So not only do you get a better IP rate, but the wells are declining at a lot shallower rate, which basically means you can get not only a quicker payout, but that two-times payout with effectively where your profits are here. And so as we see more of these well results come into better runtime facility, it just means there’s more production and cash flow that we should expect here for the rest of the year, also heading into 2027 and 2028 here. Basically, the subsurface is also working just as well as what we’re seeing on the surface as well.
LINDSAY: I wonder, though, with everything that’s happening right now with the conflict in the Middle East, everything that’s happening in Iran, how does Paramount Resources fit into the broader sense of what’s going on today?
JEREMY: There is a lot of volatility in the market here right now. They’ll benefit from the higher oil prices and natural gas prices that we’re seeing here. And I think it’s difficult for anybody to have a perception of where these commodity prices may land here. But in the meantime, it is helping Paramount realize a better commodity price. I think even before what we’re seeing in Iran, there was a change in tone of what we were seeing with energy investors, and more so generalist investors coming back into the sector. Investors seem like they’re looking for hard assets. And despite what we were seeing with commodity cycle lows with oil, it was seen as a good position to start coming into the sector. So when Paramount has just under $800 million in cash as well, it is a bit of a defensive play. So when you add some of the good production beats and encouraging signs for what we can see for the rest of the quarter, it’s not surprising why the name is one of the better-performing names here today.
LINDSAY: When you add the uncertainty, though, like obviously right now, as you say, oil prices surging, natural gas prices are up today too, particularly in Europe, but the uncertainty that we continue to see here, especially in terms of what’s going to happen coming out of the Middle East, is that a headwind, do you think, for this company?
JEREMY: I wouldn’t say necessarily a headwind. We’re seeing a bigger movement here just in terms of how energy is seen in the global portfolio here, where when you look at it, the S&P 500, it only represents three per cent of the index. So we’re seeing more investors saying, just given the volatility, what we saw with Russia back a few years ago, now what we’re seeing with Ukraine or with Iran, energy is a part of the portfolio that everyone should probably own in some weighting here. There are geopolitical events, and it’s just a good reminder that energy is a good part and should be a part of the portfolio. So that’s the broader movement that we’re seeing. I don’t think anybody really wants to take a position on exactly where we’re going to see the commodity price, but it is a reminder that commodity prices likely could stay elevated here for at least a few more months, just given the uncertainty that we’re still seeing.
LINDSAY: For sure. OK, so that’s not a headwind, you would say. But are there any other headwinds really that this company is facing? This latest earnings report seems pretty rosy.
JEREMY: It is. And I think the only thing, if investors were to have a pushback here, is what we’re seeing with natural gas. A lot of the natural gas that we’re seeing here in Canada with AECO pricing still hasn’t got the same benefit that we have seen down in the U.S., and especially in Europe. So as we start to see more LNG projects get approved and get built, that ultimately should improve things. But in the meantime, as we still see more natural gas come on by all producers here, AECO prices still remain subdued.
LINDSAY: OK, so in terms of Paramount Resources as an overall investment today, how do you like it? Or are there other Canadian energy companies that you would prefer over this one?
JEREMY: We really like Paramount. Paramount is one of those names that just quietly behind the scenes continues to grow and grow and grow. And if you look at the whole sector today, it’s going to be one of the fastest-growing companies, looking to double their production here by the end of 2027, up nearly two times from where it is today. So for investors looking for growth and no debt, Paramount is that name that stands out outside of the Duvernay and the Montney. Other names that we do like are in the Clearwater, where you do see some of the better rates of return, where a lot of companies are working on waterflood. And these are names in the Clearwater like Tamarack, Headwater and Topaz that are seeing the benefit of waterflood, which is somewhat new to a lot of investors. So this is where we’re seeing capital flow into those names here as well.
LINDSAY: OK, we’ll leave it there. Jeremy McCrea, managing director of energy research at BMO Capital Markets. Appreciate your time. Thank you.
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This BNN Bloomberg summary and transcript of the March 3, 2026 interview with Jeremy McCrea are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
