Good morning, everybody. I'd like to welcome everyone to Paramount's 2023 Annual General Meeting to Shareholders. My name's James Riddell, I'm the President, CEO, 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. I'll now call the meeting to order. I'd ask Mark Franko, our Corporate Secretary, to act as the secretary of the meeting, and Kyle Gould of Computershare to act as the scrutineer. A notice of meeting and information circular dated March 17th was sent to all shareholders in advance of the meeting. I direct that the notice of meeting be attached to the minutes of the meeting. I have been advised by the scrutineer that a quorum of shareholders is present.
I direct that the scrutineer's report on quorum be attached to the 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. There are three items of business to be considered at today's meeting, the presentation of the 2022 financial statements, the election of directors, and the appointment of auditors. No vote is required with respect to the financial statements. The voting on the election of directors will be by way of ballot. Voting on the appointment of auditors will be by a show of hands. We received all proxy voting results for today's resolutions in advance of the meeting. If you have already voted by submitting a proxy, there is no need to vote again. Presentation of the financial statements.
As the first item of business, I place before the meeting Paramount's 2022 audited financial statements. Technically, they're supposed to be right here. 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. Election of directors. 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 this meeting at seven. May I have the nominations?
Mr. Chairman, my name is Paul Kinvig, and I am a duly appointed proxyholder. I nominate for director the seven persons listed in the information circular, being James Riddell, James Bell, Wilfred Gobert, Dirk Jungé, Kim Lynch Proctor, Keith MacLeod, and Susan Riddell Rose.
Thank you. I can confirm that no other nominations were received. Are there any questions on this motion? As previously indicated, we will be conducting voting on the election of directors by ballot. The scrutineers provided ballots to shareholders and proxyholders as they entered the room. Those ballots were to be completed and returned to the scrutineer prior to the commencement of this meeting. If any shareholders or proxyholders did not receive a ballot, please raise your hand so the scrutineer can provide you with one. We now have the individual 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 general meeting of shareholders. Detailed voting results on this matter will be disclosed in a report to be filed shortly after the meeting. Appointment of auditor.
The next item of business is the appointment of the auditor. May I have a motion to reappoint Ernst & Young LLP as auditor?
Mr. Chairman, my name is Spencer Sinclair. I am a duly appointed proxyholder. 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.
I second the motion.
Are there any questions on this motion? All those in favor of the motion, please raise your hand. I declare the motion carried. Is there any other business to discuss at today's meeting? Seeing none, I'll 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. That being the end of the formal business, that's fairly expeditious. It's great to have the opportunity in person to give you an update on your company, Paramount. After that, I'd ask that you hold your questions till after that. After that, there will be the opportunity to ask questions. We're also taking questions for those people that are online. You can submit those online, and we'll also entertain those questions. As usual, I'd ask that you keep in mind our forward-oriented information disclosure as it applies to everything that I do have to say.
Just as an overview, where Paramount's at today, I'd like to ground you in where I think the company's at. The company has got about a CAD 4.5 billion enterprise value. It's very exciting for us to be able to stand here now and tell you that we have actually reduced our debt, our bank debt to zero. We actually have cash on the balance sheet at quarter end of about CAD 82 million. Our net debt, including working capital deficiencies in the order of just over CAD 40 million of net cash. We do hold at quarter end investments in other liquid securities and private securities and other entities that totaled about a half a billion dollars of net value to us.
We have continued with an ever-growing increasing base dividend, which is now CAD 0.125 per payable every month, which you do receive. The company has been very successful in executing on its plan in first quarter that was released this morning. We disclosed Q1 production of about 97,200 BOEs per day. That's about the same as what we produced in the fourth quarter. Accounting for the 4,700 BOEs a day of production that we sold when we sold our Kaybob, Smoky, and Fox Creek assets to Crescent Point Energy, that closed in the beginning of January, second week of January, I guess. There is a bit of growth even quarter-over-quarter.
When I reflect back on the 82,000 that we produced in the first quarter a year ago, that's a pretty significant amount of growth year-over-year. When I reflect on the net debt balance, again, we're very proud of that. We did reduce our debt from CAD 161 million at quarter end at year end to, again, that cash surplus. That's net of paying a CAD 1 special dividend in the third week of January of about CAD 140 to shareholders. You know, you reflect on where we came over a whole year. We've gone from Q1 2022, when our net debt was about CAD 360 million net debt, to having a CAD 40 million net debt cash balance.
That's a CAD 400 million change, and that's inclusive of paying almost CAD 300 million of dividends out to, as a return of, as a return to shareholders. When we put out our first quarter this morning, we did reaffirm our forward guidance for CapEx, CAD 700 million-CAD 750 million in 2023. We reaffirmed our production guidance of 100,000-105,000 BOEs a day. Our ARO spending, we still expect to be CAD 55 million, so no change there. Midpoint free cash flow, we're now estimating to be about CAD 335 million in full year 2023, and that's before our dividends.
There's still incremental excess free cash flow in the order of about CAD 125 million, CAD 150 million, somewhere in there, for 2023, over and above the dividend that we will pay to shareholders as a base dividend. 2024, the forward guidance again didn't change. CapEx is CAD 700 million-CAD 800 million. Production guidance is 110,000-120,000 BOEs per day. Midpoint free cash flow is CAD 445 billion. That's net of ARO spending of CAD 40 million as we continue to grind down our long-term liability in ARO that was mostly inherited when we bought Apache in 2017.
I think the center panel, I just draw your attention to this. It's, you know, of those CapEx spends that I mentioned, about half of it is what we estimate is required to maintain our production. The other half is growth. We're trying to have a balance of continued growth, compounded 10% annual return, roughly, or compounded growth, roughly. This base dividend and an ever-growing free cash flow amount. This slide, the main part of this slide I wanna draw attention to, this is, you know, what we're really trying to do, drive free cash flow. The panel on the right with the chart there is really driving home our priorities.
Spending in order to maintain our production base, we need about CAD 30, low CAD 30 per bbl kind of WTI price in order to be able to achieve that. In order to maintain our base dividend and cover that, we need about CAD 50 per bbl. In order to be able to generate enough cash to sustain ourselves, grow with our growth CapEx, as well as maintain the dividend, we need about CAD 71 per bbl in order to achieve that.
It gives you an idea of where, you know, we've used CAD 80 as a planning price for 2023 and CAD 75 after that as a flat price to give you an idea of where the company's going in the future. You can see that does generate excess free cash at that price level over and above all of our CapEx spending and dividend. I did wanna talk, this will be probably the first time most of you have heard me speak about our reserves after our year-end disclosure. I did wanna spend some time talking about it. We had a very good year in reserve bookings this year.
On the bottom left-hand corner of the slide, I want to draw your attention to the maybe just the 2P the total reserve balance. It grew 15% year-over-year. The PDP volume grew 25% year-over-year. The value of that PDP grew 75%, and the total value of the 2P grew 46% in NPV 10 year-over-year. I think the more interesting thing about our reserve report is not just growth and, you know, what you know, really has to do with how efficient were you at investing your capital, allocating capital to plays, and generating returns. You know, we like to look at the recycle ratio.
That's the difference in the value of the reserves divided by the net back that you achieved in the prior year, I guess, is what we use as a measure. Paramount posted one of the best in the industry, certainly one of the best, if not the best in our peer group, in the Canadian E&P space of 5.1 x recycle ratio for PDP and over 4 x. Every dollar, essentially, we're generating 4x or 5 x the value as a result for every dollar that we invest. This is a slide just really trying to depict what we've been trying to achieve.
You know, our growth engine that we've talked about over the last several years has been our GP, or Grande Prairie growth area. We've really focused on how to drill these very efficiently, and we've essentially grown from zero. We did acquire Apache's Wapiti project as part of the Apache acquisition, but it essentially had zero production when we acquired it in 2017. We've essentially grown Grande Prairie from zero to 70,000 BOEs a day at the end of 2022, and we see it essentially having achieved 80,000 BOEs a day as we've accomplished our growth, our final leg of growth here in Karr/Wapiti in the first quarter.
That's what we're trying to mimic in our Willesden Green asset. We had a very successful year in capturing while proving up the ability to drill longer wells and achieve better economics in our Duvernay play at Willesden Green. We had a couple of very effective acquisitions for additional, essentially additional undeveloped acreage at Willesden Green. We now see ourselves having grown essentially from zero to current production of about 3,700 BOEs a day to a total project size of maybe 50,000 - 60,000 BOEs a day, and that's I'll go into a little more detail on how we plan to do that at Willesden Green.
We see ourselves doing the exact same thing we did in Grande Prairie at Willesden Green as well. The right-hand side just talks about that five-year plan and what we do plan to do with it. We essentially, after this year, are investing CAD 700 million-CAD 800 million of capital over that annually over that five-year plan, generating CAD 3.1 billion of free cash flow before dividends and achieving a 10% compounded growth rate to just under 150,000 BOEs a day, and that's all with internally generated or currently owned and delineated projects that we, that we have today.
Just wanna recap our strategy again just to make sure everybody's clear on what we see our strategy, and this is unchanged, so it's repetitious for everybody that's probably heard me say it before. We are trying to build blocks of free cash flow one after another. We think we've done it at Karr. We think we did it at Wapiti. Well, we have done it at those two areas. We're planning to do it at Kaybob to add another 20,000 BOE a day block of production and ultimately free cash flow generated from that and then at Willesden Green. The idea is to build these a little differently than what most in the industry are doing. We're trying to build these free cash flow wedges for longer plateau periods.
We're trying to target free cash flow generation for 20-year plateaus, build it up to a certain level. Karr, for instance, building it to 50,000 bbl a day, BOEs a day, and leaving it at a plateau, generating free cash flow for 20 years. That's arguably different than what the majority of the rest of the industry is doing, which is, I would say, more chasing maximizing NPV, probably investing a little more capital and growing the peak rates a little more, but having a shorter plateau where we've chosen to do it a little differently. My view, it's more of a manufacturing industry type approach when you're getting to this.
Something that's gonna free cash flow for 20 years should be easily valued at 12 x the free cash flow multiple that you're of the free cash flow that you're generating. The center is a slightly updated version of what we've been showing, just as trying to show the potential of each of these areas, where they sit today and what the management's view is doesn't show up in the reserve report because we are limited by regulation on how to book those reserves. We try and show what we think more of a blue sky version of what each of the areas is worth. We have a cross plot of rate of return by the timing of when we're going to attack these.
The earliest or the first being on the left-hand side of the chart and through time migrating to the right. Each of those bubbles, the small dotted circle inside is what we currently book. As a PDP, the solid circle or line inside the bubble is the amount that's booked by the reserve engineers and the 2P balance, and then management's estimate. You can see Karr is essentially, you know, the majority of it is booked. In our reserve report, there is still some left that we recognize that the independent engineers don't yet.
Wapiti may be similar, but as you move over to Willesden Green, you see a very small booking for the PDP reserves, the amount that's booked in the reserve report in the solid circle. Then, you know, our 700 locations of total potential that management sees, multiplied by the value of those wells, you know, gives you a much bigger circle that's solid in the background there, and that's what we see as the full potential.
You know, the idea is to show that we are chasing the near term things and generating the highest rate of return, allocating capital to the highest rate of return asset first, and then through time, trying to grow that reserve balance in the areas that we're planning to chase further out in the future. We try and plot that differently on the stage of development graph there, just to show, you know, the ones that we've got as early stage opportunities and then delineate them, start to develop them, and then have them turn into this free cash flow generating assets.
There is some things that we do have in the early stage that I've learned not to put on the chart anymore 'cause that tends to share with our competitors more where we're going and maybe make them look at maybe create more competition for ourselves when we don't really have to. We've left some of those off. Grande Prairie, just to give you an idea of what we what is happening there. This has been super exciting for us.
The main focus over the last year has been to fully maximize the assets that we have so that we can. What we've been doing is building out the infield gas lift capacity so that we can maximize the amount of sales through the existing facilities that we produce throughout Keyera Wapiti as well as CSV Karr. Up until last year, we were currently doing 40,000 BOEs a day-ish in Karr, and we've been able to achieve rates closer to 50,000 BOEs a day, and we expect to be able to now maintain Karr at over 50,000 BOEs a day and Wapiti at 30,000 by building our own infield gathering system, some additional pipelines, some additional gas lift facilities.
We can now, instead of pulling our sales gas back into the field, to use as gas lift and kind of artificial lift capacity in field, we can now use the full capacity of the sales units at CSV Karr and Keyera Wapiti to go to sales instead of pulling some of that sales back into the field for gas lift purposes. It was a significant investment. It was probably in the order of CAD 100 million to do that, and that should be the majority of the incremental spending we had to do to do that for the life of the field. Update on Kaybob.
The latest and greatest is we just finished drilling our 413 pad, three-well Duvernay pad, on the east side of the map in with the green stars. We moved the rig over, and we're doing now a five-well pad. We just finished fracking that 413 pad, and we're drilling out the plugs and should have results in the next one or two weeks as we start to flow those back. This is in follow-up to what we did last year, which was really proving up the concept of, you know, being able to drill longer wells and do them for a more efficient cost per meter drilled, and ultimately, per barrel of EUR and BOE they have productions.
Last year, we drilled the three-well pad, one existing shorter well and then two new long, 4,200 m lateral wells, so almost 3 mi in length. We do think there's a one-to-one factor in drilling longer wells and the amount of incremental EUR and rate you get. You know, we can do that for a much more efficient cost. We did get fantastic results last year when we drilled that three-well pad. This is really building on the success. And we needed to know that we could execute that, we could execute it efficiently. Having proved that up last year, we've embarked on, I guess, more of the full commercialization of this deal with that newer idea of drilling longer wells for a more efficient result.
You know, I don't wanna ever understate how transformational this is for this Duvernay play. A lot of the historical results for the Duvernay were more challenging, you know, especially compared to maybe the other big resource play in Canada, which is the Montney. By driving the longer length wells and driving the cost down, learning, you know, applying a lot of the learnings that we did achieve in the Montney into the Duvernay, we really have transformed the play where, you know, we're now drilling wells. You know, maybe 10 years ago, if I roll back, these wells probably cost CAD 15 million-CAD 20 million and maybe had EURs.
I'll just quote the oil rates, or oil reserves, they were more in the maybe 300,000 bbl kind of size wells. I guess, by drilling the longer wells and maybe applying a little more of our learnings on how to complete them a little better, we've now got wells that are costing CAD 12 million, and they're got EURs of over 600,000 bbl of oil. You know, it's maybe 2/3 the cost and double the reserves easily. You can imagine the effect on the economics that that has. Wilson Green, just to, I guess, finalize the last real active area that we have. The main things that we're doing here, again, I'll touch on the acquisitions we made.
We spent about CAD 98 million last year on two transactions to add lands east and west of our core area in the center of the map, where the red existing plant is. We also did another transaction to add a large piece of land to the north and south. We added a significant amount of acreage, a modest amount of production. We probably added that production. We probably paid something like PV 20 for the PDP reserves that we acquired, and then we captured the opportunity to increase the size of this play from maybe 20,000 BOEs a day up to 50,000 or 60,000 BOEs a day. The location count went from in the order of 200-700 wells in order to be able to do that.
The main activity here this year is to expand the capabilities of the existing Leafland plant. That's a 20 or 30 million a day plant. Didn't really have any liquids handling capacity, and the Duvernay lands that we are drilling are very liquids rich. We're expanding the liquids handling up to 6,000 bbl a day of liquids handling capacity and adding that to the existing facility. We're starting to drill the commercial wells, and it's off the same pad as the pad that we drilled. We drilled two wells about a year and a half ago in almost two years ago.
Those first two wells paid out in less than seven months, and they're still producing 300 bbl a day and 2 million a day of gas. It was really that result that drove us to do the acquisitions and then plan the major expansions that we've got here. We're planning to drill a four-well pad to come on stream coincident with the completion of the expansion at the Leafland plant at the end of this year. The major growth after that is building a new plant in the south part of the land base here, and where we see the most, or I guess the highest, rate of return opportunity across the entire land base.
Well, it's the start of a new plant that will ultimately be 150 million a day. We plan to build it in 3 50 million a day phases, each, and slowly ramp that production up with drilling from essentially zero to 150 million a day and 30,000 bbl a day of total production out of that plant. The full area potential, again, 50,000-60,000 BOEs per day. The last couple things to touch on, Paramount has been very focused on driving down its, I guess our ESG, or our total ESG focus. Number one, we've been driving down our emissions with different technologies in our operations.
A lot of our drilling and even completion operations are now using gas and displacing diesel, which is driving down costs. We're reducing a lot of trucks on the road with building a lot of the facilities that we're doing for water disposal and oil production to get trucks off the road and emissions down. We're also doing a lot of, you know, the most effective way to reduce your emissions is to reduce your methane emissions.
We've been doing a number of things to reduce the electrifying some of our our well site facilities and also using air compression instead of gas supply in order for our, for our controllers across the well site so that we reduce the fugitive methane emissions. Then we've had a trial that we've been doing to reduce changing out our chemical pumps so that we can try and reduce our emissions on those pumps with. You know, the government's very it's got programs to motivate you to do this. These are economic projects to do as well as good for reducing emissions.
We're also very focused on our, you know, I guess, a company with very high insider ownership, but still very proud of our position in the way we run this company. We think we have the highest standard of governance. You know, some of the items that you see on there are things that we think of when we're, when we're, you know, the way we manage the company for the shareholders. We do try and have a very good relationship with all of the affected stakeholders in all of the areas that we operate in.
A couple other things that may be longer term that people don't always think about. Our investment portfolio, we do have, again, CAD 500 million of liquid securities in other entities, in generally operating within the same industry. We do have our Fox Drilling company where we have four operating super-spec triples. We're currently building a fifth. We have a sixth that is super-spec that doesn't walk. Then we have two other triple size rigs that are generally inactive, but it really is the that fleet of five is almost 10% of the total super-spec drilling fleet in all of Canada.
It is a really unique thing for a company like us that uses these rigs in its operations to have that asset. It allows us to not only make a return and reduce our costs, but it allows us to have an edge in the way we use technology on our rigs to achieve drilling super-spec, you know, cheaper, faster, better, I guess, is what I always try and drive home. We do have our subsidiary, 100% owned assets within Cavalier.
There's five separate thermal opportunities where we've captured within Cavalier that are, I guess the biggest one would be the Hoole Project, which is ultimately something we see that could be built to a 100,000 bbl a day thermal development with, I think it's 1.3 billion bbls of estimated recoverable resource in that. You know, something for the future. We also have close to, there's 1.3 million total acres of land within Cavalier, and we think 1 million of that is got the opportunity for cold flow opportunities in the Bluesky and in the Clearwater. That's quite exciting.
Lastly, you know, we are very excited about our shale properties that we hold in the Horn River Basin and in the Liard Basin in Northeast BC. We see those as being very competitive ultimately as dry gas supply for LNG opportunities on the West Coast of Canada. Something for the future for sure. You know, it's a pipeline like that that I think differentiates Paramount from the majority of companies in the E&P space in Canada, where we are thinking about things for five, 10, 15 years out that we're inventorying now when it's cheap and expect to be very valuable down the road.
With that, you know, in summary, you know, In December of this year, it'll be our 45th anniversary as a public company. We're very proud of what we've been able to do. We think we've got an incredible position in the Grande Prairie area. We have a incredible position in the emerging and early stage commercialization of the Duvernay. We see that the assets that we've put together generating significant amounts of cash flow. We do have a very good yielding monthly dividend that we are returning to shareholders and I guess internally generated growth that we're looking forward to. I think with that, I'm happy to take any questions from the floor.
If, if you'd like to use the microphone, that would be ideal because then people online can hear the questions at the same time. We'll also monitor the online questions to see if any come in as well. If you do have questions, now would be a great time to ask them. We get any questions online there, Rod?
No.
Wow. Okay. Well.
So.
I guess so. Yeah. I used to at least look forward to the guy that would show up with three chairs. I don't know what happened to him over COVID. I used to always look forward to his questions. He used to always say, "Hey, this is your one chance to get up and ask questions that you would like to have answered." Maybe not your one chance, that's certainly a good chance for you to ask them. If there's none, thank you very much for coming and thanks for your support.