Good morning, ladies and gentlemen. I'd like to welcome everyone to Paramount's 2026 annual general meeting of shareholders. My name's Jim Riddell. I'm the President, Chief Executive Officer, and Chairman of Paramount, and I'll be chairing today's meeting. We'll first hold the formal part of the meeting, and I will then give a presentation to update you on the company's operations. Before I begin, I'd like to acknowledge and thank the Directors of Paramount who are all in attendance today and seated in the front row. I would also like to introduce our new nominee, Curtis Stange. He's put his hand up in the front there. Thanks to Curtis for joining our merry team. I'll now call the meeting to order.
I'd ask Mark Franko, our Corporate Secretary, to act as secretary of the meeting and Jackie Fisher of Odyssey Trust Company to act as scrutineer. A notice of meeting and information circular dated March 30th was sent to all shareholders in advance of the meeting. I direct the notice of meeting to be attached to the minutes of this meeting. I've been advised by the scrutineer that a quorum of shareholders is present. I direct the scrutineer's report on quorum to be attached to the meeting, minutes of the meeting as well. Due notice having been given and a quorum being present, I declare the meeting to be regularly called and properly constituted for the transaction of business. Items of business and voting.
There are three items of business to be considered at today's meeting, the presentation of the 2025 financial statements, the election of Directors, and the appointment of Auditors. No vote is required with respect to the financial statements. Voting on the election of Directors will be held by way of ballot. Voting on the appointment of auditors will be by show of hands. We have received all proxy voting results for today's resolutions in advance of the meeting. If you have already voted by proxy, there is no need for you to vote again. The scrutineer provided ballots to registered shareholders and appointed proxy holders as they entered the room. Those ballots were to be completed and returned to the scrutineer prior to commencement of the meeting.
If any registered shareholder or appointed proxy holder did not receive a ballot, please raise your hand now so that the scrutineer can provide you with one now. Okay. As the first item of business, I place before the meeting Paramount's 2025 audited financial statements. I have them somewhere here. There you go. A copy of the financial statements has been mailed to all registered shareholders and all beneficial shareholders who have requested one. Extra copies of the financial statements are available on the table by the entrance if you'd like. The next item of business is the election of directors. In accordance with Paramount's articles, the directors have fixed the number of Directors to be elected at the meeting at 10. May I have the nominations?
Mr. Chairman, my name is Paul Kinvig, and I'm a duly appointed Proxy Holder. I nominate for director the 10 persons listed in the information circular being James Riddell, James Bell, Shane Fildes, Wilfred Gobert, Dirk Jungé, Kim Lynch Proctor, Keith MacLeod, Jill McAuley, Susan Riddell Rose, and Curtis Stange.
Thank you. I can confirm that no other nominations were received. Are there any questions on this motion? Voting on this matter will be by ballot. Please raise your hand if you have a ballot that you have not yet submitted to the scrutineer. The scrutineer has provided the voting results, and I declare that the persons nominated have been duly elected as Directors of Paramount to hold office until the close of the next Annual Meeting of shareholders. The next item of business is the appointment of Auditor. May I have a motion to reappoint Ernst & Young LLP as auditor?
Mr. Chairman, my name is Spencer Sinclair, and I am duly appointed Proxy Holder. I move that Ernst & Young LLP be appointed as the auditor of Paramount to hold office until the close of the next Annual Meeting of shareholders.
Mr. Chairman, I second the motion.
Is there any questions on this motion? All those in favor of the motion, please raise your hand. Anybody contrary? I declare the motion carried. Is there any other business to discuss at today's meeting? Nothing from the floor. Seeing none, I will now entertain a motion to end the meeting.
I move that this meeting be concluded.
I second the motion.
Any objections? No? I declare the meeting ended. Detailed voting results on the matters considered today will be disclosed in a press release and a voting report to be filed after the meeting. Okay. Okay, thanks to everybody for joining us. It's my privilege to be able to give you an update on the operations of Paramount Resources, your company. I think we've had an exceptional year since the last time that we met, and I'm looking forward to giving you that report. As usual, I ask that you keep in mind our future-oriented disclosure information advisory so that you can consider that with everything that you hear today as you listen to everything today.
Here's a bit of a summary slide. What I wanted to do first was maybe just we released our Q1 results this morning. I thought I'd give you just a quick overview of just the isolated Q1. The company, as you would have maybe read, produced 48,255 Boe/ d in the first quarter. That compared to an analyst expectation, consensus expectations, what I'll refer to along here, 45,000 Boe/d . We beat that expectation by about 7%. Our operating costs were CAD 9.81 / Boe, driven predominantly by very good performance in operating costs in our Willesden Green area of CAD 4 /Boe .
That's now starting to see full plants with an owned and operated facility at Willesden Green that's providing exceptional on time. That 981 corporately compared to a consensus estimate of 1,032, we beat that number by about 5%. Our adjusted funds flow was CAD 143 million or CAD 0.99 a share, which was about 12% higher than what the consensus expectations of CAD 128 million were for the quarter. CapEx, we spent CAD 257 million. That was lower than the consensus estimate of CAD 293 million, or 12% lower. All in, we consumed cash of CAD 147 million, which was lower than the analyst expectations of CAD 173 million.
We did continue to pay CAD 0.05 per share per month as a dividend through the quarter. We ended the quarter with CAD 672 million of cash on the balance sheet, and as well, CAD 750 million of undrawn credit facilities. We have very substantial amount of financial capacity for a company of our size and continue to be in a very good financial state. The last was we did update guidance going forward, we increased our first half guidance based on you know, very good Q1 results.
We increased the first half by 3,000 Boe/d as an average for the whole half, which ended up bringing up our full year guidance by about 1,500 Boe/d to about 50,000 Boe/d for the year. We did reduce our capital expenditure guidance at the midpoint by about CAD 50 million for 2026, and we've also reduced our forecast 2027 CapEx guidance, reducing it by about CAD 100 million down to about CAD 1 billion at the midpoint. We continued to maintain or we continue to guide to 60,000 Boe/d -65,000 Boe/d of production guidance for 2027 and an exit of over 100,000 Boe/d in 2027.
That's kind of the main financial highlights. The rest of the summary to go through, the company's market cap is CAD 4.3 billion. Again, that cash number on the balance sheet, very strong at over CAD 670 million. The guidance I went through and continued dividend. The bottom right-hand panel there just showing that aggressive growth since the sale. Since we met last, our production did drop after the sale of our GP assets down to about 30,000 Boe/d . We've grown them back to close to 50,000 Boe/d now. Plan to exit the year at over 60,000 Boe/d and then grow to over 70,000 Boe/d, sort of over 100,000 Boe/d when we bring on our Sinclair asset near the end of 2027.
Just recapping what the company's been able to achieve in the last five years in shareholder returns. We've delivered back CAD 3.2 billion of return to shareholders since the 2021 fiscal year, mostly as dividends. You can see the large return of capital and special dividend in 2025. Then We bought back about 5 billion shares last year under our NCIB and retired those shares. Total of CAD 3.2 billion. As well as that, we intend to continue to deliver our CAD 0.05 per share per month dividend.
The shareholders, as we previously disclosed, can look forward to a dividend of the AKITA shares as we have agreed to merge our Fox Drilling into AKITA for about 33% of the pro forma company, 19.2 million shares, and we plan to deliver those out to the shareholders right after closing. That'll be another special dividend in the order of CAD 80+ million at current price. Pricing of AKITA shares on that close as a special dividend. Just to touch on reserves. This is our first kind of reporting after having done the Grande Prairie transaction and, you know, showing some really strong reserve replacement growth during the last year.
Just to kind of follow through on the top left-hand side there, our PDP reserves grew by 46%. Our total proved reserves grew by 43% to 200 million Boes, and our 2P reserves grew by 115% to over 500 million Boes. The value of those increased by 61% on a PDP basis, total proved by 19%, and our 2P reserves grew by 32%. Our reserve replacement ratios on the top right-hand side there, we replaced our PDP reserves by 2.4 x the produced amount. Our total proved reserves grew by 5.2 x our produced amount, and our 2P reserves grew by 22 x our produced amount. F&D costs and recycle ratios were strong as well.
You can see the numbers there, 1.2 x recycle on a PDP and total proved basis and 2.5x on a 2P basis. We had a very strong year as we started to book these new growth properties at Willesden Green and Sinclair. Just touching on our strategy, this hasn't changed. The strategy for Paramount has long been to look forward, capture opportunities inexpensively in advance of others, maybe understanding what technology might do or what a new geological discovery might look like, capture them early, de-risk them, and, you know, through an appraisal stage, and then slowly develop those into a mature state and then deliver free cash flow and value out of that mature asset. Historically, we've tended to grow those up and monetize them.
It doesn't always have to work that way. That is the way it's worked in, you know, for Paramount many times is this early-stage, inexpensive acquisition of an opportunity, the discovery by applying new technology or drilling a discovery well, and then that mature asset being monetized and reinvested into the business. You know, I sit back and look at the company today and what we've been able to put out in front of it for near-term and long-term growth, and I still believe it's exceptional.
I sit and think about the you know, we have projects to do, with a, you know, major project opportunities for every year for the next five to 10 years already in place, well understood, and really just slowly grinding through that, those opportunities. Near-term has been to, you know, after the GP sale, has been to start to grow the Willesden Green Duvernay projects, which we've been doing. The next one is Sinclair, and the next ones after that are the opportunities that we have in Northeast BC shale, gas in the Horn River and Liard Basins, our thermal assets in Northeast Alberta.
Those are all major opportunities that, even past the growth that we're seeing in the near term can be, you know, multiples of size of production base for Paramount in the future. The near-term stuff is the what you see in the middle panel there, and that's the growth rates as we've forecast them, at Willesden Green, growing it up to 50,000 Boe/d now, potentially 70,000 Boe/d , and then the Sinclair asset, potentially 50,000 Boe/d and very likely having an opportunity to have a Phase 2 or Phase 3 even in Sinclair in the future. Just maybe zooming in on the current operations at Willesden Green.
Since the last time we would have met at an AGM last spring, we did go ahead and bring on our first phase of our Alhambra plant. Our new facility in Willesden Green came on and has produced exceptionally well. We've had very strong run times. We brought that on in the beginning of July last year, and we brought on concurrently with that 16 new wells. I'm happy to report the performance of those wells has been above forecast and quite exceptional in themselves. The first 16 wells have now produced for 150 days, and they've all produced over 1,200 Boe/d at 59% liquids ratio.
Exceeding our internal type curves and forecasts and really underpinning the, you know, and de-risking the future of the remaining phases of Willesden Green as we go forward. The next phase of that is our Phase 2 expansion of Alhambra. There's a picture of that construction project nearing completion here. We did disclose in our first quarter here that we had already accelerated it from coming on stream in early Q4 to early Q3, and now we've accelerated another month to coming on in June of this year. Imminently starting up, we're in the last phases of commissioning and start up in the next few weeks here.
Coincident with that, we've been working on drilling all the, you know, 15 more wells to bring on coincident with the startup of that second phase, as well as drilling additional wells to replace the declines on phase one and anticipated phase two through the end of the year. The total land capture at Willesden Green has been a project that we've worked hard on in the last year that's brought our total acreage position up to over 500 sections of land and has now increased the plateau potential for the project to be increased from 50,000-ish Boe/d to over 70,000 Boe/d . Up 40%, and we expect to be able to reach that plateau and produce it for 20 years flat once we've reached that plateau.
Maybe a slightly different way of looking at these kind of resource development projects than others, where we've tended to take a longer-term view. You know, our view now is that these resource plays are like manufacturing operations. You wouldn't go out and build a plant for seven or eight years, I don't think. Now, you know, you go out and build a manufacturing facility that's gonna last decades, and that's been our view on these, is to build them and expect to produce these Boes for decades.
Slightly, I guess said differently, someone else might look at this in our industry and say, Well, I could double the production to 140,000 bpd and maximize the NPV by reducing it to a nine or 10-year reserve life, instead of 20. And our view has been to produce at a higher or a lower plateau for longer and, just value it differently. The next exciting project that we've been working on is our Sinclair project. We've now added significant acreage to this as well. Last year, I would have talked about 150 to 160 sections of land. We've now increased that up to 220 sections of land.
We did drill some discovery wells and tested them last year, which I know I talked about, and we FID the project to build the first phase or first plant in Sinclair. It's anticipated to be a 400 million a day gas plant on stream in the fourth quarter of 2027. We'll have a total cost of between pipelines and facilities, about CAD 500 million and CAD 300 million roughly of drilling. CAD 800 million total to bring on the project over kinda 2026, late 2025, 2026, and 2027 spending and come on stream and deliver into a contracted sales volume of CAD 335 million, which we secured years ago in order to be able to underpin the project.
The first two wells that we did test to underpin the FID decision tested 24 and 16 million a day each over long-term tests. We have now commenced drilling the commercial development wells around those first two discovery wells. The top left-hand corner of the map's got two red starred wells. Those are the original delineation wells, all the green stars around it. 24 new wells to come on stream coincident with that on stream of the new plant in late 2027. We also drilled two new wells to the east of that and are currently completing those. Those are intended to delineate more resource and ultimately maybe underpin an additional phase in the future for Sinclair, although we don't have any egress transportation secured for that yet.
We're waiting for the results from those first two wells, as we move further east across the land block. We also have done most of the procurement for the plant facilities, and expect to have those start to be delivered to the site. We also have cleared and started to strip the topsoil off the site now, and we've also drilled the acid gas disposal well and tested it, did an in-injectivity test to ensure we had a place to put the trace amounts of H2S that we expect to recover from the gas. We've also procured all the line pipe in order to be able to build the sales line and water disposal facilities that we need to bring that on stream. Kaybob North.
Maybe, maybe just to talk the whole Kaybob area has kind of been forecast to flatline around 20,000 Boe/d , and the strategy here has been to slowly maintain the production at 20,000 Boe/d by replacing kind of older declining gas production, drier gas production with more liquids rich developments in the Duvernay and tie them into the existing facilities in the area. We've had very good success continuing to drill those wells methodically across the land base in the Duvernay now to maintain that at just under 10,000 barrels a day total and kinda maintain the value out of our out of our Kaybob asset. A couple other longer term things.
These are the, so this is the Northeast Alberta heavy oil areas. Lands perspective for multilateral drilling in and recoveries out of reservoirs that are heavier oil, but can still flow without any kind of thermal assists or surfactants or anything like that. We have about 300,000 acres prospective for exploiting Clearwater, Bluesky type reservoirs with this multilateral technology. We also have four significant thermal assets across the area. The most material being our Hoole asset. We did sell in the first quarter our probably our smallest asset. We had a 50% ownership in an asset called Selina. Paramount was the operator.
We carried on and got the approval for a 10,000 bpd commercial development and then sold it to our partner for CAD 23 million in the quarter. The Hoole asset, though, I will maybe just point the size and scale that we see there for that asset. Ultimately, we see an asset that's got about 1.2 billion bbl of recoverable estimated oil that can be recovered thermally through SAGD type developments and ultimately have a productive capacity of about 100,000 bpd . The Dunkirk, Musqua, and Cadotte are smaller than that, but and I guess not quite as prospective in our view, but still very good projects in themselves.
Northeast B.C., you know, I'd say Paramount has captured the largest positions in both the Liard Basin perspective for shale gas in the Besa River Shale. It's some of the deepest, highest pressure gradients, and also thermally mature resource in Western Canada that I'm aware of. It's very complicated, complex drilling, deep, high pressure, but has exceptional deliverability. We have very high confidence in the assets. Our work is focused on finding how to bring that on stream at a competitive price, competitive cost structure to bring that on in the future. We also have the biggest position in the Horn River Basin, and very similar.
It's shallower depths, but still an enormous resource and same kind of problem where it just needs a bunch of work on the infrastructure and you know, how to bring this resource out on a cost-effective, competitive basis. The last couple things I wanted to say was, you know, we do still have significant amounts of long-term other assets. We have investments in public and private companies of about CAD 140 million, the largest of which is our Sultran, our ownership in Sultran. That's a logistics company that moves sulfur from the Western Canadian Sedimentary Basin out to the West Coast and puts it on ships and off to market. That's probably the biggest one.
The next biggest position now is still ownership in some Headwater securities. We did a transaction last year to trade some land for ownership in Headwater of about 1 million shares, and so we own that position. We also still have a significant ownership in Canadian Premium Sand, which is a potentially a frac sand accumulation in Manitoba. We also have our long-term resource that we have captured up in the Northwest Territories, principally on the Mackenzie Delta. Significant conventional discoveries that are just a couple thousand kilometers away from market. That's really the rundown.
I mean, hopefully I've given you an idea of not only how good the current operations and exploitation of the Duvernay and the Montney have gone or are going at Willesden Green and Sinclair, but also how long a runway we have for projects out into the future. You know, again, I look at what we have. We can do a major project every year for the next five or 10 years and continue to grow. You know, it's our job to allocate our capital to the most prospective of those first and continue to work on the other ones to bring, you know, improve their prospectivity and eventually develop those as well. That's really the comments I wanted to make.
We do have a microphone here if anybody would like to come up and use it. You can also just ask it from the floor, and we can repeat it, but happy to take any questions that you might have. I think we also have the ability online to take questions for anybody that's listening online still and answer those as well. Okay. Well, you can also make complaints or anything like that. Wasn't enough muffins or something out there. Okay. Well Nothing online? Okay. Well, I very much appreciate everybody coming in person and listening in online as well. Yeah. Great. I'll call that an end.