Paramount resources Ltd.

Third Quarter 2025 Results

Paramount Resources Announces Third Quarter 2025 Results, Sanctioning of Sinclair Montney Development, 2026 Budget and Production Outlook

Calgary, Alberta – November 4, 2025

Paramount Resources Ltd. ("Paramount" or the "Company") (TSX:POU) is pleased to announce its third quarter 2025 financial and operating results, the sanctioning of its Montney gas development at Sinclair and its 2026 capital expenditure budget and guidance. The Company is increasing its 2025 annual midpoint production guidance and also providing an outlook of planned production growth to over 100,000 Boe/d by the end of 2027.

HIGHLIGHTS

Third quarter sales volumes averaged 36,087 Boe/d (48% liquids), approximately 5,000 Boe/d higher than the midpoint of the prior guidance range of 30,000 Boe/d to 32,000 Boe/d (45% liquids) due to exceptional runtime at Paramount's new wholly-owned and operated Alhambra Plant in Willesden Green during the continuing ramp-up of production. (1)
Sales volumes from the Central Alberta Region, which includes Willesden Green, averaged 13,550 Boe/d (59% liquids).
Kaybob Region sales volumes averaged 21,155 Boe/d (42% liquids).
Duvernay production accounted for 62 percent of total sales volumes and Duvernay condensate production accounted for 82 percent of total oil and condensate sales volumes.
Cash from operating activities was $42 million ($0.30 per basic share) in the third quarter. Adjusted funds flow was $97 million ($0.67 per basic share). Free cash flow was ($117) million ($0.82) per basic share). (2)
Third quarter capital expenditures totaled $207 million. Activities in the quarter included:
Willesden Green Duvernay – commissioning and starting-up the first phase of the Alhambra Plant, continuing construction of the second phase of the Alhambra Plant, drilling four (4.0 net) wells and completing and bringing on production five (5.0 net) wells; and
Kaybob North Duvernay – completing and bringing on production five (5.0 net) wells.

(1) In this press release, "natural gas" refers to shale gas and conventional natural gas combined, "condensate and oil" refers to condensate, light and medium crude oil, tight oil and heavy crude oil combined, "Other NGLs" refers to ethane, propane and butane and "liquids" refers to condensate and oil and Other NGLs combined. See the "Product Type Information" section for a complete breakdown of sales volumes for applicable periods by the specific product types of shale gas, conventional natural gas, NGLs, light and medium crude oil, tight oil and heavy crude oil. See also "Oil and Gas Measures and Definitions" in the Advisories section.

(2) Adjusted funds flow and free cash flow are capital management measures used by Paramount. Cash from operating activities per basic share, adjusted funds flow per basic share and free cash flow per basic share are supplementary financial measures. Refer to the "Specified Financial Measures" section for more information on these measures.

Operating expenses were $10.18/Boe in the third quarter, compared to $12.39/Boe in the second quarter, reflecting the continuing ramp-up of production through the first phase of the Company's Alhambra Plant.(1)
Paramount continues to have 10,000 Bbl/d of liquids hedged at a WTI price of C$105.00/Bbl for the remainder of 2025.
Approximately 60 percent of Paramount's expected natural gas sales volumes for the remainder of 2025 are priced at diversified markets outside of AECO.
Revenue in the third quarter included $5 million related to the finalization of the Company's insurance claims for 2023 Alberta wildfire losses.
Asset retirement obligations settled in the third quarter totaled $4 million.
As previously disclosed, Paramount monetized a portion of its investment in the common shares of NuVista Energy Ltd. ("NuVista Shares") on October 1, 2025, selling 18.5 million shares for cash proceeds of $296 million. The carrying value of the Company's investments in public and private company securities at September 30, 2025, pro forma the sale, was $317 million.
Paramount received cash dividends of $3 million in the third quarter from one of its private company investments.
At September 30, 2025, Paramount had net cash of $629 million (including the value of the NuVista Shares sold on October 1, 2025) and its $500 million revolving credit facility remained undrawn. (2)

SANCTIONING OF SINCLAIR MONTNEY DEVELOPMENT

Paramount has sanctioned the development of its Montney natural gas play at Sinclair, following continued strong results from the recent extended flow tests of the Company's first two appraisal wells. The Sinclair Montney play is a high-rate, low-cost natural gas project, the first phase of which is being designed for a plateau rate of sales gas in excess of 50,000 Boe/d that can be maintained for over 20 years. Paramount holds approximately 167 sections of contiguous, wholly-owned Montney rights in the Sinclair area.

The Company is in the process of finalizing the design of a new natural gas processing plant (the "Sinclair Plant") which will be capable of handling up to 400 MMcf/d of raw gas production. The ordering of long-lead items has commenced. Paramount has contracted 335 MMcf/d of firm service sales egress commencing in the fourth quarter of 2027 to coincide with the planned start-up of the Sinclair Plant. The Company currently plans to have 24 (24.0 net) wells ready to produce to the Sinclair Plant on start-up.

INCREASED 2025 PRODUCTION GUIDANCE

Paramount is increasing its full-year 2025 production guidance at midpoint to account for the outperformance in the third quarter and is reaffirming its fourth quarter production guidance and the midpoint of its 2025 capital expenditure guidance within a narrower range. Paramount continues to expect total abandonment and reclamation expenditures of approximately $40 million in 2025.

2025	Prior Guidance	Revised Guidance
Fourth quarter average sales volumes (Boe/d)	42,000 to 45,000 (52% liquids)	42,000 to 45,000 (51% liquids)
Annual average sales volumes (Boe/d)	38,500 to 42,500 (47% liquids)	41,000 to 42,000 (47% liquids)
Capital expenditures	$780 to $840 million	$795 to $825 million

Paramount Resources Ltd. Third Quarter 2025

2026 BUDGET AND GUIDANCE

In 2026, Paramount is budgeting capital expenditures of between $1,050 million and $1,150 million and abandonment and reclamation expenditures of $35 million.

The breakdown of capital expenditures by key area at midpoint is as follows:

Willesden Green Duvernay – $630 million;
Sinclair Montney – $360 million;
Kaybob Region – $65 million, including $40 million at Kaybob North Duvernay;
Northeast Alberta Heavy Oil - $20 million; and
Other - $25 million.

The breakdown of capital expenditures by category at midpoint is as follows:

Drilling, completion, equipping and tie-ins – $670 million;
Facilities and gathering – $410 million; and
Corporate and other – $20 million.

Facilities and gathering capital expenditures budgeted for 2026 primarily relate to the construction and commissioning of the second phase of the Alhambra Plant, the ordering of long-lead items and commencing construction of the Sinclair Plant, and the construction of produced water recycling and disposal facilities, pipelines and other field infrastructure in both Willesden Green and Sinclair.

Paramount is forecasting 2026 annual average sales volumes of between 45,000 Boe/d and 50,000 Boe/d (50% liquids):

First half 2026 sales volumes are expected to average between 37,000 Boe/d and 42,000 Boe/d (47% liquids). Second quarter sales volumes are expected to be lower than first quarter volumes due to the timing of new well production. In addition, a one-month outage at the Leafland Plant from mid-June to mid-July and a one week outage at the Alhambra Plant in June are planned to accommodate facility expansions.
Third quarter 2026 average sales volumes are expected to increase to between 46,500 Boe/d and 51,500 Boe/d (51% liquids) as the second phase of the Alhambra Plant comes onstream and begins to ramp-up, one quarter earlier than previously anticipated.
Fourth quarter 2026 average sales volumes are expected to further increase to between 59,000 Boe/d and 64,000 Boe/d (53% liquids).

Following ramp-up of the second phase of the Alhambra Plant, fourth quarter 2026 operating expenses are forecast to be approximately $8.00/Boe.

Paramount Resources Ltd. Third Quarter 2025

PRODUCTION AND CAPITAL OUTLOOK

The Company anticipates midpoint annual capital expenditures of approximately $1,100 million for each of 2026 and 2027. Major capital projects over this timeframe include the second phase of the Alhambra Plant at Willesden Green and the Sinclair Montney development.

At Willesden Green, Paramount is expecting capital expenditures, at midpoint, of approximately $630 million in 2026 and $440 million in 2027. The second phase of the Alhambra Plant will double raw gas handling capacity from 50 MMcf/d to 100 MMcf/d and raw liquids handling capacity from 10,000 Bbl/d to 20,000 Bbl/d. The second phase is anticipated to be brought onstream in the third quarter of 2026, one quarter earlier than previously anticipated, and fully ramped up by the fourth quarter. The Company expects to bring 26 (26.0 net) Duvernay wells onstream at Willesden Green in 2026 to fully utilize its processing capacity, including the second phase of the Alhambra Plant.

At Sinclair, Paramount is expecting capital expenditures, at midpoint, of approximately $360 million in 2026 and $440 million in 2027, to: (i) construct the Sinclair Plant, (ii) build out the major sales line, gathering system, disposal and produced water handling for the field, and (iii) drill, complete and have ready to bring onstream 24 (24.0 net) wells for plant start-up.

The Company expects sales volumes to more than double to over 100,000 Boe/d by the end of 2027:

2025 - 41,000 Boe/d to 42,000 Boe/d (47% liquids).
2026 - 45,000 Boe/d to 50,000 Boe/d (50% liquids), representing a 14% growth rate year-over-year at mid-point.
2027 - 60,000 Boe/d to 65,000 Boe/d (50% liquids), representing a 32% growth rate year-over-year at mid-point.
Year-end 2027 exit - over 100,000 Boe/d (35% liquids), representing a 60% growth rate between exit and mid-point average for the year.

Paramount has not yet sanctioned the third phase expansion of the Alhambra Plant, which would add an incremental 50 MMcf/d of raw gas handling and 10,000 Bbl/d of raw liquids handling capacity. Natural gas and liquids sales egress for the third phase remains contracted for the fourth quarter of 2029.

In light of the decision to sanction the Sinclair Montney development, Paramount has elected to moderate the pace of development at its Kaybob North Duvernay property. The Company plans to maintain average sales volumes in the Kaybob Region of between 19,000 Boe/d and 20,000 Boe/d (38% liquids) through to 2028.

With cash and cash equivalents of approximately $650 million at October 31, 2025, an undrawn bank credit facility and its portfolio of investments in securities, Paramount is in a strong financial position to advance its planned Alhambra and Sinclair developments. The Company remains committed to prudently managing its capital resources and also has the flexibility to adjust its capital expenditure plans depending on commodity prices and other factors.

NOVEMBER DIVIDEND

Paramount's Board of Directors has declared a cash dividend of $0.05 per class A common share that will be payable on November 28, 2025 to shareholders of record on November 14, 2025. The dividend will be designated as an "eligible dividend" for Canadian income tax purposes.

Paramount Resources Ltd. Third Quarter 2025

REVIEW OF OPERATIONS

CENTRAL ALBERTA REGION

Third quarter 2025 sales volumes in the Central Alberta Region averaged 13,550 Boe/d (59% liquids) compared to 9,223 Boe/d (60% liquids) in the second quarter. Duvernay production accounted for 95 percent of third quarter sales volumes in the region.

Development activities at Willesden Green in the third quarter included the commissioning and start-up of the Company's wholly-owned and operated Alhambra Plant, continuing construction activities for the second phase of the Alhambra Plant, the drilling of four (4.0 net) Duvernay wells and the completion and bringing on production of five (5.0 net) Duvernay wells. Also in the third quarter, Paramount began construction of a water recycling system that will provide a significant portion of the water required for well completion activities in the future. Water recycling is expected to reduce water related well completion capital costs as well as mitigate operating expenses related to water disposal. The system is expected to be operational in the first half of 2026.

Runtime at the Alhambra Plant, which commenced operations in late-July, has significantly exceeded expectations, resulting in higher than forecast third quarter sales volumes. Ten (10.0 net) Duvernay wells were brought on production and flowing through the Alhambra Plant by the end of the third quarter. Paramount expects sales volumes through the Alhambra Plant to continue to increase over the fourth quarter as the remaining six (6.0 net) 2025 Duvernay wells are brought onstream.

In the fourth quarter, the Company plans to complete and bring onstream three (3.0 net) Duvernay wells that will flow to its Leafland facility and to drill twelve (12.0 net) Duvernay wells that will be tied-in to the Alhambra Plant in 2026.

Onsite work to double the Alhambra Plant's raw handling capacity to 20,000 Bbl/d of liquids and 100 MMcf/d of natural gas began in the third quarter, with piles being set and pipe racks installed. More recently, major equipment has been delivered to site and set on piles. Pipelines connecting the Alhambra Plant to the Leafland Plant are also planned to be commissioned upon start-up of the plant expansion, allowing the Company to optimize the flow of production and processing capacities across its Willesden Green property.

In 2026, Paramount plans to drill 29 (29.0 net) Duvernay wells and complete and bring on production 26 (26.0 net) Duvernay wells at Willesden Green. The majority of new well production is anticipated to be brought onstream in the second half of the year following commissioning and start-up of the second phase of the Alhambra Plant. The Company has assumed reliability factors of 25% and 75% on volumes flowing through the second phase of the Alhambra Plant for the first and second months, respectively, post start-up to account for ramp-up.

SINCLAIR

In October 2025, Paramount commenced the drilling of an additional two (2.0 net) Montney appraisal wells which the Company plans to complete and flow test in 2026.

Also in 2026, the Company plans to commence the construction of the Sinclair Plant, gathering pipelines and other field infrastructure and drill 14 (14.0 net) Montney wells.

Paramount Resources Ltd. Third Quarter 2025

KAYBOB REGION

Kaybob Region sales volumes averaged 21,155 Boe/d (42% liquids) in the third quarter of 2025 compared to 21,962 Boe/d (39% liquids) in the second quarter. Duvernay production accounted for 45 percent of third quarter sales volumes in the Kaybob Region.

Completion activities at the five (5.0 net) well Duvernay pad that were ongoing in the second quarter concluded in the third quarter and all five wells were subsequently brought on production.

In the fourth quarter of 2025, Paramount plans to drill a three (3.0 net) well Duvernay pad at Kaybob North.

In 2026, Paramount plans to complete and bring onstream a three well Duvernay pad that it will drill in the fourth quarter of 2025 and drill, complete and bring on production a two (2.0 net) well Montney Oil pad.

HEDGING

The Company's current financial commodity and foreign exchange contracts are summarized below:

Instruments	Aggregate amount / notional	Average price or rate (1)	Remaining term
Oil
NYMEX WTI Swaps (Sale)	10,000 Bbl/d	CAD$105.00/Bbl	November 2025 – December 2025
Natural Gas
Citygate / Malin Basis Swap (2)	10,000 MMBtu/d	Citygate less US$0.97/MMBtu (Sell) Malin (Buy)	November 2025 – October 2028
Foreign Currency Exchange
Average Rate Forward	US$10MM/Month	1.3810 CAD$ / US$ (1)	January 2026 – December 2026
Average Rate Forward	US$10MM/Month	1.3680 CAD$ / US$ (1)	January 2027 – December 2027

(1) Average price is calculated using a weighted average of notional volumes and prices. Foreign currency exchange average rate forward contracts are settled monthly against the average of the US$/CAD$ noon spot rate on each applicable day in that month.
(2) "Citygate" refers to Pacific Gas & Electric Citygate and "Malin" refers to Pacific Gas & Electric Malin. Pursuant to the swap transaction, Paramount sells at Citygate less US$0.97/MMBtu and buys at Malin. The transaction is financially settled with no physical delivery.

Paramount Resources Ltd. Third Quarter 2025

ABOUT PARAMOUNT

Paramount is an independent, publicly traded Canadian energy company that explores for and develops both conventional and unconventional petroleum and natural gas, including longer-term strategic exploration and pre-development plays, and holds a portfolio of investments in other entities. The Company's principal properties are located in Alberta and British Columbia. Paramount's Common Shares are listed on the Toronto Stock Exchange under the symbol "POU".

Paramount's third quarter 2025 results, including Management's Discussion and Analysis and the Company's Interim Consolidated Financial Statements, can be obtained on SEDAR+ at www.sedarplus.ca or on Paramount's website at www.paramountres.com/investors/financial-shareholder-reports.

A summary of historical financial and operating results is also available on Paramount's website at www.paramountres.com/investors/financial-shareholder-reports.

For further information, please contact:

Paramount Resources Ltd.
J.H.T. (Jim) Riddell, President and Chief Executive Officer and Chairman
Paul R. Kinvig, Chief Financial Officer
Rodrigo (Rod) Sousa, Executive Vice President, Corporate Development and Planning
www.paramountres.com
Phone: (403) 290-3600

Paramount Resources Ltd. Third Quarter 2025

FINANCIAL AND OPERATING RESULTS (1)

($ millions, except as noted)	Q3 2025		Q2 2025		Q3 2024
Net income (loss)	(2.3)		4.2		95.8
per share – basic ($/share)	(0.02)		0.03		0.65
per share – diluted ($/share)	(0.02)		0.03		0.64
Cash from operating activities	42.3		39.8		205.7
per share – basic ($/share)	0.30		0.28		1.40
per share – diluted ($/share)	0.30		0.27		1.38
Adjusted funds flow	96.8		81.5		200.7
per share – basic ($/share)	0.67		0.57		1.37
per share – diluted ($/share)	0.67		0.56		1.34
Free cash flow	(116.7)		(85.5)		(26.3)
per share – basic ($/share)	(0.82)		(0.60)		(0.18)
per share – diluted ($/share)	(0.82)		(0.60)		(0.18)
Total assets	3,560.9		3,517.9		4,544.1
Investments in securities	612.9		575.3		482.2
Long-term debt	–		–		44.0
Net (cash) debt	(628.8)		(500.9)		128.8
Common shares outstanding (millions) (2)	143.4		143.3		146.5
Sales volumes (3)
Natural gas (MMcf/d)	112.4		103.3		294.5
Condensate and oil (Bbl/d)	13,997		11,636		38,770
Other NGLs (Bbl/d)	3,363		2,786		7,045
Total (Boe/d)	36,087		31,631		94,892
% liquids	48%		46%		48%
Central Alberta Region and Other (Boe/d)	14,932		9,669		6,390
Kaybob Region (Boe/d)	21,155		21,962		20,894
Sold Assets (Boe/d) (4)	–		–		67,608
Total (Boe/d)	36,087		31,631		94,892
Netback	($/Boe) (5)		($/Boe) (5)		($/Boe) (5)
Natural gas revenue	20.3	1.96	28.9	3.07	37.2	1.37
Condensate and oil revenue	105.6	82.01	87.7	82.84	342.9	96.15
Other NGLs revenue	8.4	27.04	6.9	27.02	23.5	36.25
Natural gas transportation assignment income (6)	3.6	0.35	2.7	0.29	–	–
Royalty income and other revenue (6)	6.3	–	1.0	–	1.2	–
Petroleum and natural gas sales	144.2	43.43	127.2	44.20	404.8	46.37
Royalties	(7.3)	(2.21)	(5.7)	(2.00)	(46.4)	(5.31)
Operating expense	(33.8)	(10.18)	(35.7)	(12.39)	(116.3)	(13.33)
Transportation and NGLs processing	(14.5)	(4.37)	(13.2)	(4.57)	(34.2)	(3.92)
Sales of commodities purchased (7)	54.2	16.33	43.7	15.18	79.6	9.11
Commodities purchased (7)	(53.1)	(16.00)	(43.4)	(15.07)	(78.5)	(9.00)
Netback	89.7	27.00	72.9	25.35	209.0	23.92
Risk management contract settlements	14.0	4.21	14.9	5.16	2.0	0.23
Netback including risk management contract settlements	103.7	31.21	87.8	30.51	211.0	24.15
Capital expenditures
Central Alberta Region and Other		193.9		114.8		73.8
Kaybob Region		9.2		40.2		56.5
Fox Drilling		1.6		1.6		2.6
Corporate (8)		1.8		5.4		(0.1)
Sold Assets (4)		–		(4.4)		83.9
Total		206.5		157.6		216.7
Asset retirement obligations settled		4.4		3.0		7.4

(1) Adjusted funds flow, free cash flow and net (cash) debt are capital management measures used by Paramount. Netback and netback including risk management contract settlements are non-GAAP financial measures. Netback and Netback including risk management contract settlements presented on a $/Boe or $/Mcf basis are non-GAAP ratios. Each measure, other than net income (loss), that is presented on a per share, $/Mcf or $/Boe basis is a supplementary financial measure. Refer to "Specified Financial Measures".
(2) Common shares are presented net of shares held in trust under the Company's restricted share unit plan (millions): Q3 2025: 0.3, Q2 2025: 0.3, Q3 2024: 0.4.
(3) Refer to the Product Type Information section of this document for a complete breakdown of sales volumes for applicable periods by specific product type.
(4) "Sold Assets" refers to the Karr, Wapiti and Zama properties that were sold on January 31, 2025.
(5) Natural gas revenue and natural gas transportation assignment income presented as $/Mcf.
(6) Natural gas transportation assignment income for the three months ended September 30, 2025 and June 30, 2025 relates to proceeds realized by the Company on the assignment of a portion of its ex-Alberta natural gas transportation capacity to third parties. In the third quarter of 2025, the Company's insurance claims for 2023 Alberta wildfire losses were finalized, with an aggregate claim of $26.8 million being agreed by insurers (the "Wildfire Claim"). Royalty income and other revenue for the three and nine months ended September 30, 2025 includes $5.3 million and $16.8 million, respectively, relating to the Wildfire Claim (nine months ended September 30, 2024 includes $10.0 million relating to the Wildfire Claim). These amounts were not allocated to individual regions or properties.
(7) Sales of commodities purchased and commodities purchased are treated as corporate items and not allocated to individual regions or properties.
(8) Includes transfers of amounts held in Corporate to and from regions.

CONFIDENTIAL DRAFT
FOR DISCUSSION PURPOSES ONLY

PRODUCT TYPE INFORMATION

This press release includes references to sales volumes of "natural gas", "condensate and oil", "NGLs", "Other NGLs" and "liquids". "Natural gas" refers to shale gas and conventional natural gas combined. "Condensate and oil" refers to condensate, light and medium crude oil, tight oil and heavy crude oil combined. "NGLs" refers to condensate and Other NGLs combined. "Other NGLs" refers to ethane, propane and butane. "Liquids" refers to condensate and oil and Other NGLs combined. Below is a complete breakdown of sales volumes for applicable periods by the specific product types of shale gas, conventional natural gas, NGLs, light and medium crude oil, tight oil and heavy crude oil. Numbers may not add due to rounding. "Sold Assets" refers to the Karr, Wapiti and Zama properties that were sold on January 31, 2025.

	Total Company by Product Type			Central Alberta Region and Other			Kaybob Region
	Q3 2025	Q2 2025	Q3 2024	Q3 2025	Q2 2025	Q3 2024	Q3 2025	Q2 2025	Q3 2024
Shale gas (MMcf/d)	72.8	58.9	249.0	36.1	19.4	14.2	36.7	39.5	31.8
Conventional natural gas (MMcf/d)	39.6	44.4	45.5	3.0	3.2	3.8	36.6	41.2	41.6
Natural gas (MMcf/d)	112.4	103.3	294.5	39.1	22.6	18.0	73.3	80.7	73.4
Condensate (Bbl/d)	12,180	9,688	36,830	5,702	3,760	1,964	6,478	5,928	5,943
Other NGLs (Bbl/d)	3,363	2,786	7,045	2,140	1,523	924	1,223	1,263	1,403
NGLs (Bbl/d)	15,543	12,474	43,875	7,842	5,283	2,888	7,701	7,191	7,346
Light and medium crude oil (Bbl/d)	1,188	1,263	1,235	22	22	11	1,166	1,241	1,224
Tight oil (Bbl/d)	254	285	368	190	211	160	64	74	85
Heavy crude oil (Bbl/d)	375	400	337	375	400	337	-	-	-
Crude oil (Bbl/d)	1,817	1,948	1,940	587	633	508	1,230	1,315	1,309
Total (Boe/d)	36,087	31,631	94,892	14,932	9,669	6,390	21,155	21,962	20,894
	Sold Assets
---	---	---	---
	Q3 2025	Q2 2025	Q3 2024
Shale gas (MMcf/d)	-	-	203.0
Conventional natural gas (MMcf/d)	-	-	0.1
Natural gas (MMcf/d)	-	-	203.1
Condensate (Bbl/d)	-	-	28,923
Other NGLs (Bbl/d)	-	-	4,718
NGLs (Bbl/d)	-	-	33,641
Tight oil (Bbl/d)	-	-	123
Crude oil (Bbl/d)	-	-	123
Total (Boe/d)	-	-	67,608

2025 average sales volumes are expected to be between 41,000 Boe/d and 42,000 Boe/d (53% shale gas and conventional natural gas combined, 39% condensate, light and medium crude oil, tight oil and heavy crude oil combined and 8% other NGLs).

Fourth quarter 2025 average sales volumes are expected to be between 42,000 Boe/d and 45,000 Boe/d (49% shale gas and conventional natural gas combined, 41% condensate, light and medium crude oil, tight oil and heavy crude oil combined and 10% other NGLs).

Paramount is forecasting 2026 annual average sales volumes of between 45,000 Boe/d and 50,000 Boe/d (50% shale gas and conventional natural gas combined, 40% condensate, light and medium crude oil, tight oil and heavy crude oil combined and 10% other NGLs):

First half 2026 average sales volumes are expected to be between 37,000 Boe/d and 42,000 Boe/d (53% shale gas and conventional natural gas combined, 37% condensate, light and medium crude oil, tight oil and heavy crude oil combined and 10% other NGLs).

Paramount Resources Ltd. Third Quarter 2025

CONFIDENTIAL DRAFT
FOR DISCUSSION PURPOSES ONLY

Third quarter 2026 average sales volumes are expected to be between 46,500 Boe/d and 51,500 Boe/d (49% shale gas and conventional natural gas combined, 41% condensate, light and medium crude oil, tight oil and heavy crude oil combined and 10% other NGLs).
Fourth quarter 2026 average sales volumes are expected to be between 59,000 Boe/d and 64,000 Boe/d (47% shale gas and conventional natural gas combined, 43% condensate, light and medium crude oil, tight oil and heavy crude oil combined and 10% other NGLs).

2027 annual average sales volumes are expected to be between 60,000 Boe/d to 65,000 Boe/d (50% shale gas and conventional natural gas combined, 40% condensate, light and medium crude oil, tight oil and heavy crude oil combined and 10% other NGLs):

Year-end 2027 exit sales volumes are expected to be over 100,000 Boe/d (65% shale gas and conventional natural gas combined, 29% condensate, light and medium crude oil, tight oil and heavy crude oil combined and 6% other NGLs).

The Company plans to maintain average sales volumes in the Kaybob Region of between 19,000 Boe/d and 20,000 Boe/d (62% shale gas and conventional natural gas combined, 32% condensate, light and medium crude oil, tight oil and heavy crude oil combined and 6% other NGLs) through to 2028.

SPECIFIED FINANCIAL MEASURES

Non-GAAP Financial Measures

Netback and netback including risk management contract settlements are non-GAAP financial measures. These measures are not standardized measures under IFRS and might not be comparable to similar financial measures presented by other issuers. These measures should not be considered in isolation or construed as alternatives to their most directly comparable measure disclosed in the Company's primary financial statements or other measures of financial performance calculated in accordance with IFRS.

Netback equals petroleum and natural gas sales (the most directly comparable measure disclosed in the Company's primary financial statements) plus sales of commodities purchased less royalties, operating expense, transportation and NGLs processing expense and commodities purchased. Sales of commodities purchased and commodities purchased are treated as corporate items and are not allocated to individual regions or properties. Netback is used by investors and management to compare the performance of the Company's producing assets between periods.

Netback including risk management contract settlements equals netback after including (or deducting) risk management contract settlements received (paid). Netback including risk management contract settlements is used by investors and management to assess the performance of the producing assets after incorporating management's risk management strategies.

Refer to the table under the heading "Financial and Operating Results" in this press release for the calculation of netback and netback including risk management contract settlements for the three months ended September 30, 2025, June 30, 2025 and September 30, 2024.

Paramount Resources Ltd. Third Quarter 2025

CONFIDENTIAL DRAFT
FOR DISCUSSION PURPOSES ONLY

Non-GAAP Ratios

Netback and netback including risk management contract settlements presented on a $/Boe basis are non-GAAP ratios as they each have a non-GAAP financial measure as a component. These measures are not standardized measures under IFRS and might not be comparable to similar financial measures presented by other issuers. These measures should not be considered in isolation or construed as alternatives to their most directly comparable measure disclosed in the Company's primary financial statements or other measures of financial performance calculated in accordance with IFRS.

Netback on a $/Boe basis is calculated by dividing netback (a non-GAAP financial measure) for the applicable period by the total sales volumes during the period in Boe. Netback including risk management contract settlements on a $/Boe basis is calculated by dividing netback including risk management contract settlements (a non-GAAP financial measure) for the applicable period by the total sales volumes during the period in Boe. These measures are used by investors and management to assess netback and netback including risk management contract settlements on a unit of sales volumes basis.

Capital Management Measures

Adjusted funds flow, free cash flow and net (cash) debt are capital management measures that Paramount utilizes in managing its capital structure. These measures are not standardized measures and therefore may not be comparable with the calculation of similar measures by other entities. Refer to Note 15 in the Interim Consolidated Financial Statements of Paramount as at and for the three and nine months ended September 30, 2025 for: (i) a description of the composition and use of these measures, (ii) reconciliations of adjusted funds flow and free cash flow to cash from operating activities, the most directly comparable measure disclosed in the Company's primary financial statements, for the three and nine months ended September 30, 2025 and 2024 and (iii) a calculation of net (cash) debt as at September 30, 2025 and December 31, 2024.

Supplementary Financial Measures

This press release contains supplementary financial measures expressed as: (i) cash from operating activities, adjusted funds flow and free cash flow on a per share – basic and per share – diluted basis and (ii) petroleum and natural gas sales, revenue, royalties, operating expenses, transportation and NGLs processing expenses, sales of commodities purchased and commodities purchased on a $/Boe or $/Mcf basis.

Cash from operating activities, adjusted funds flow and free cash flow on a per share – basic basis are calculated by dividing cash from operating activities, adjusted funds flow or free cash flow, as applicable, over the referenced period by the weighted average basic shares outstanding during the period determined under IFRS. Cash from operating activities, adjusted funds flow and free cash flow on a per share – diluted basis are calculated by dividing cash from operating activities, adjusted funds flow or free cash flow, as applicable, over the referenced period by the weighted average diluted shares outstanding during the period determined under IFRS.

Petroleum and natural gas sales, revenue, royalties, operating expenses, transportation and NGLs processing expenses, sales of commodities purchased and commodities purchased on a $/Boe or $/Mcf basis are calculated by dividing petroleum and natural gas sales, revenue, royalties, operating expenses, transportation and NGLs processing expenses, sales of commodities purchased and commodities purchased, as applicable, over the referenced period by the aggregate units (Boe or Mcf) of sales volumes during such period.

Paramount Resources Ltd. Third Quarter 2025

CONFIDENTIAL DRAFT
FOR DISCUSSION PURPOSES ONLY

ADVISORIES

Forward-looking Information

Certain statements in this press release constitute forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as "anticipate", "believe", "estimate", "will", "expect", "plan", "schedule", "intend", "propose", or similar words suggesting future outcomes or an outlook. Forward-looking information in this press release includes, but is not limited to:

the statement that the first phase of the Sinclair Montney play is being designed for a plateau rate of sales gas in excess of 50,000 Boe/d that can be maintained for over 20 years;
the expected capacity of the Sinclair Plant on completion and planned timing of the start-up of the Sinclair Plant;
the Company's plans to have 24 (24.0) net wells ready to produce to the Sinclair Plant on start-up;
expected average sales volumes, capital expenditures and abandonment and reclamation expenditures for 2025;
expected average sales volumes for 2026 and certain periods therein;
budgeted capital expenditures in 2026 and the allocation thereof;
budgeted abandonment and reclamation expenditures in 2026;
expected operating expenses in the fourth quarter of 2026;
the Company's outlook for capital expenditures and sales volumes in 2027 and the year-end 2027 exit rate of sales volumes;
the expected timing of completion of phase two of the Alhambra Plant and the expected capacity thereof on completion;
the Company's plans to maintain average sales volumes in the Kaybob Region within a certain range through to 2028;
planned and potential exploration, development and production activities, including the drilling, completion and bringing onstream of new wells, the construction of pipelines and other infrastructure and planned facility outages; and
the expectation that sales volumes through the Alhambra Plant will increase over the fourth quarter.

Such forward-looking information is based on a number of assumptions which may prove to be incorrect. Assumptions have been made with respect to the following matters, in addition to any other assumptions identified in this press release:

future commodity prices;
the potential scope and duration of tariffs, export taxes, export restrictions or other trade actions;
the impact of international conflicts, including in Ukraine and the Middle East;
royalty rates, taxes and capital, operating, general & administrative and other costs;
foreign currency exchange rates, interest rates and the rate and impacts of inflation;
general business, economic and market conditions;
the performance of wells and facilities;
the availability to Paramount of the funds required for exploration, development and other operations (including the construction of the Sinclair Plant and the second phase of the Alhambra Plant) and the meeting of commitments and financial obligations;
the ability of Paramount to obtain equipment, materials, services and personnel in a timely manner and at expected and acceptable costs to carry out its activities;
the ability of Paramount to secure adequate processing, transportation, fractionation, disposal and storage capacity on acceptable terms and the capacity and reliability of facilities, pipelines and other infrastructure;
the ability of Paramount to obtain the volumes of water required for completion activities;
the ability of Paramount to market its production successfully;
the ability of Paramount and its industry partners to obtain drilling success (including in respect of anticipated sales volumes, reserves additions, product yields and product recoveries) and operational improvements, efficiencies and results consistent with expectations;
the timely receipt of required governmental and regulatory approvals, including those necessary for the construction of the Sinclair Plant;
the application of regulatory requirements respecting abandonment and reclamation; and
anticipated timelines and budgets being met in respect of: (i) drilling programs and other operations, including well completions and tie-ins, (ii) the design, construction, commissioning and start-up of new and expanded third-party and Company facilities, pipelines and other infrastructure, including the Sinclair Plant and the second phase of the Alhambra Plant, and (iii) facility turnarounds and maintenance.

Paramount Resources Ltd. Third Quarter 2025

CONFIDENTIAL DRAFT
FOR DISCUSSION PURPOSES ONLY

Although Paramount believes that the expectations reflected in such forward-looking information are reasonable based on the information available at the time of this press release, undue reliance should not be placed on the forward-looking information as Paramount can give no assurance that such expectations will prove to be correct. Forward-looking information is based on expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Paramount and described in the forward-looking information. The material risks and uncertainties include, but are not limited to:

fluctuations in commodity prices;
changes in capital spending plans and planned exploration and development activities;
changes in political and economic conditions, including risks associated with tariffs, export taxes, export restrictions or other trade actions;
changes in foreign currency exchange rates, interest rates and the rate of inflation;
the uncertainty of estimates and projections relating to future production, product yields (including condensate to natural gas ratios), revenue, cash flows, reserves additions, product recoveries, royalty rates, taxes and costs and expenses;
the ability to secure adequate processing, transportation, fractionation, disposal and storage capacity on acceptable terms;
operational risks in exploring for, developing, producing and transporting natural gas and liquids, including the risk of spills, leaks or blowouts;
risks associated with wildfires, including the risk of physical loss or damage to wells, facilities, pipelines and other infrastructure, prolonged disruptions in production, restrictions on the ability to access properties, interruption of electrical and other services and significant delays or changes to planned development activities and facilities maintenance;
the ability to obtain equipment, materials, services and personnel in a timely manner and at expected and acceptable costs, including the potential effects of inflation and supply chain disruptions;
potential disruptions, delays or unexpected technical or other difficulties in designing, developing, expanding, commissioning, starting-up or operating new, expanded or existing facilities, including third-party facilities, the Sinclair Plant and the Alhambra Plant;
processing, transportation, fractionation, disposal and storage outages, disruptions and constraints;
potential limitations on access to the volumes of water required for completion activities due to drought, conditions of low river flow, government restrictions or other factors;
risks and uncertainties involving the geology of oil and gas deposits;
the uncertainty of reserves estimates;
general business, economic and market conditions;
the ability to generate sufficient cash from operating activities to fund, or to otherwise finance, planned exploration, development and operational activities (including the construction of the Sinclair Plant and the second phase of the Alhambra Plant) and meet current and future commitments and obligations (including asset retirement obligations, processing, transportation, fractionation and similar commitments and obligations);
changes in, or in the interpretation of, laws, regulations or policies (including environmental laws);
the ability to obtain required governmental or regulatory approvals in a timely manner, including those required for the Sinclair Plant, and to obtain and maintain leases and licenses;
the effects of weather and other factors including wildlife and environmental restrictions which affect field operations and access;
uncertainties as to the timing and cost of future abandonment and reclamation obligations and potential liabilities for environmental damage and contamination;
uncertainties regarding Indigenous claims and in maintaining relationships with local populations and other stakeholders;
the outcome of existing and potential lawsuits, regulatory actions, audits and assessments; and
other risks and uncertainties described elsewhere in this document and in Paramount's other filings with Canadian securities authorities.

In addition to the above, there are no assurances as to the continuing declaration and payment of future monthly dividends by the Company or the amount or timing of any such dividends. There are risks that may result in the Company changing, suspending or discontinuing its monthly dividend program, including changes to free cash flow, operating results, capital requirements, financial position, market conditions or corporate strategy and the need to comply with requirements under debt agreements and applicable laws respecting the declaration and payment of dividends.

The foregoing list of risks is not exhaustive. For more information relating to risks, see the section titled "Risk Factors" in Paramount's annual information form for the year ended December 31, 2024, which is available on SEDAR+ at www.sedarplus.ca or on the Company's website at www.paramountres.com. The forward-looking information contained in this press release is made as of the date hereof and, except as required by applicable securities law, Paramount undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise.

Paramount Resources Ltd. Third Quarter 2025

CONFIDENTIAL DRAFT
FOR DISCUSSION PURPOSES ONLY

Oil and Gas Measures and Definitions

Liquids
Bbl	Barrels
Bbl/d	Barrels per day
MBbl	Thousands of barrels
NGLs	Natural gas liquids
Condensate	Pentane and heavier hydrocarbons
WTI	West Texas Intermediate
Oil Equivalent
---	---
Boe	Barrels of oil equivalent
MBoe	Thousands of barrels of oil equivalent
MMBoe	Millions of barrels of oil equivalent
Boe/d	Barrels of oil equivalent per day
Natural Gas
---	---
GJ	Gigajoules
GJ/d	Gigajoules per day
MMBtu	Millions of British Thermal Units
MMBtu/d	Millions of British Thermal Units per day
Mcf	Thousands of cubic feet
MMcf	Millions of cubic feet
MMcf/d	Millions of cubic feet per day
NYMEX	New York Mercantile Exchange
AECO	AECO-C reference price

This press release contains disclosures expressed as "Boe", "$/Boe" and "Boe/d". Natural gas equivalency volumes have been derived using the ratio of six thousand cubic feet of natural gas to one barrel of oil when converting natural gas to Boe. Equivalency measures may be misleading, particularly if used in isolation. A conversion ratio of six thousand cubic feet of natural gas to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head. For the nine months ended September 30, 2025, the value ratio between crude oil and natural gas was approximately 55:1. This value ratio is significantly different from the energy equivalency ratio of 6:1. Using a 6:1 ratio would be misleading as an indication of value.

Additional information respecting the Company's oil and gas properties and operations is provided in the Company's annual information form for the year ended December 31, 2024 which is available on SEDAR+ at www.sedarplus.ca or on Paramount's website at www.paramountres.com.

Paramount Resources Ltd. Third Quarter 2025

Paramount Resources Ltd.
Third Quarter 2025 | 15

Management's Discussion and Analysis

For the three and nine months ended September 30, 2025

This Management's Discussion and Analysis ("MD&A"), dated November 3, 2025, should be read in conjunction with the unaudited interim condensed consolidated financial statements of Paramount Resources Ltd. ("Paramount" or the "Company") as at and for the three and nine months ended September 30, 2025 (the "Interim Financial Statements") and Paramount's audited consolidated financial statements as at and for the year ended December 31, 2024 (the "Annual Financial Statements"). Financial data included in this MD&A has been prepared in accordance with International Financial Reporting Standards ("IFRS" or "GAAP") and is stated in millions of Canadian dollars, unless otherwise noted. All references to "$" are to Canadian dollars and all references to "US$" are to United States dollars. The Company's accounting policies have been applied consistently to all periods presented. Certain comparative figures have been reclassified to conform to the current year's presentation.

ABOUT PARAMOUNT

Paramount is an independent, publicly traded Canadian energy company that explores for and develops both conventional and unconventional petroleum and natural gas. Paramount's principal properties are located in Alberta and British Columbia. Paramount commenced operations as a public company in 1978 and has adapted to a multitude of operating and economic climates over the past 45+ years. The Company's class A common shares ("Common Shares") are listed on the Toronto Stock Exchange ("TSX") under the symbol "POU". Additional information concerning Paramount, including its Annual Information Form for the year ended December 31, 2024 ("Annual Information Form"), can be found on the SEDAR+ website at www.sedarplus.ca.

Paramount's operations are organized into the Central Alberta Region, the Kaybob Region and other geographic areas, which have been grouped into "Other" for the purposes of this MD&A.

Development activities in the Central Alberta Region are currently focused on the Willesden Green Duvernay property located in central Alberta.

The Kaybob Region is located in west-central Alberta and includes the Kaybob North Duvernay development and other legacy natural gas and oil producing properties.

"Other" includes: (i) the Sinclair Montney shale gas property located west of Grande Prairie, Alberta, (ii) shale gas properties in the Horn River Basin and the Liard Basin in northeast British Columbia and (iii) lands located in Alberta prospective for cold flow heavy oil and in-situ thermal oil recovery.

Prior to their sale on January 31, 2025, the Company's Karr and Wapiti properties near Grande Prairie, Alberta were the focus of Paramount's former Grande Prairie Region development activities and operations. For presentation purposes, the remaining assets from the former Grande Prairie Region have been included in "Other" effective January 1, 2025. See the "Grande Prairie Disposition and Special Distribution" section of this MD&A.

For purposes of presentation in this MD&A, the results of operations and capital expenditures of properties included in Other have been combined with the Central Alberta Region and are labeled "Central Alberta and Other".

The Company's assets also include: (i) investments in other publicly traded and private entities; (ii) six triple-sized drilling rigs owned by the Company's wholly-owned Fox Drilling Limited Partnership ("Fox Drilling"); and (iii) strategic investments in exploration and pre-development stage assets, including prospective natural gas and oil acreage in the Mackenzie Delta and Central Mackenzie in the Northwest Territories.

Paramount Resources Ltd. Third Quarter 2025

SPECIFIED FINANCIAL MEASURES, PRODUCT TYPES AND OTHER ADVISORIES

This MD&A includes references to: (i) "netback" and "netback including risk management contract settlements", which are non-GAAP financial measures; (ii) certain non-GAAP ratios; (iii) "adjusted funds flow", "free cash flow", "net (cash) debt" and "net debt to adjusted funds flow", which are capital management measures used by Paramount; and (iv) certain supplementary financial measures. Readers are referred to the "Specified Financial Measures" section of this MD&A for important additional information concerning these measures.

This MD&A includes references to sales volumes of "natural gas", "condensate and oil", "NGLs", "Other NGLs" and "liquids". "Natural gas" refers to shale gas and conventional natural gas combined. "Condensate and oil" refers to condensate, light and medium crude oil, tight oil and heavy crude oil combined. "NGLs" refers to condensate and Other NGLs combined. "Other NGLs" refers to ethane, propane and butane. "Liquids" refers to condensate and oil and Other NGLs combined. Readers are referred to the "Product Type Information" section of this MD&A for a complete breakdown of sales volumes and revenues for applicable periods by the specific product types of shale gas, conventional natural gas, NGLs, light and medium crude oil, tight oil and heavy crude oil.

The disclosures in this MD&A include forward-looking information and certain oil and gas measures. Readers are referred to the "Advisories" section of this MD&A concerning such matters.

Paramount Resources Ltd. Third Quarter 2025

FINANCIAL AND OPERATING HIGHLIGHTS

	Three months ended September 30		Nine months ended September 30
	2025	2024	2025	2024
FINANCIAL
Petroleum and natural gas sales	144.2	404.8	538.0	1,300.9
Net income (loss)	(2.3)	95.8	1,290.6	248.5
Per share – basic ($/share)	(0.02)	0.65	8.98	1.71
Per share – diluted ($/share)	(0.02)	0.64	8.81	1.67
Cash from operating activities	42.3	205.7	232.0	627.7
Per share – basic ($/share) (1)	0.30	1.40	1.61	4.31
Per share – diluted ($/share) (1)	0.30	1.38	1.58	4.21
Adjusted funds flow (1)	96.8	200.7	327.1	692.6
Per share – basic ($/share)	0.67	1.37	2.28	4.75
Per share – diluted ($/share)	0.67	1.34	2.23	4.64
Free cash flow (1)	(116.7)	(26.3)	(293.2)	(15.5)
Per share – basic ($/share)	(0.82)	(0.18)	(2.04)	(0.11)
Per share – diluted ($/share)	(0.82)	(0.18)	(2.00)	(0.11)
Total assets			3,560.9	4,544.1
Investments in securities			612.9	482.2
Long-term debt			–	44.0
Net (cash) debt (1)			(628.8)	128.8
Total liabilities			872.9	936.9
Common shares outstanding (millions) (2)			143.4	146.5
Dividends and distributions declared and paid ($/share)	0.15	0.45	15.55	1.25
OPERATING
Sales volumes
Natural gas (MMcf/d)	112.4	294.5	131.5	303.3
Condensate and oil (Bbl/d)	13,997	38,770	15,367	39,625
Other NGLs (Bbl/d)	3,363	7,045	3,359	6,976
Total (Boe/d)	36,087	94,892	40,642	97,151
% Liquids	48%	48%	46%	48%
Realized prices (1)
Natural gas ($/Mcf)	1.96	1.37	2.83	1.99
Condensate and oil ($/Bbl)	82.01	96.15	89.13	97.22
Other NGLs ($/Bbl)	27.04	36.25	32.22	35.72
Petroleum and natural gas sales ($/Boe)	43.43	46.37	48.49	48.87
Capital expenditures	206.5	216.7	579.9	671.5

(1) Adjusted funds flow, free cash flow and net (cash) debt are capital management measures used by Paramount. Each measure, other than net income, presented on a $/share, $/Bbl, $/Mcf or $/Boe basis is a supplementary financial measure. Refer to the "Specified Financial Measures" section of this MD&A for more information on these measures.
(2) Common shares are presented net of shares held in trust under the Company's restricted share unit ("RSU") plan (Common Shares): 2025: 0.3 million and 2024: 0.4 million.

Paramount Resources Ltd. Third Quarter 2025

GRANDE PRAIRIE DISPOSITION AND SPECIAL DISTRIBUTION

The Company closed the sale of its Karr, Wapiti and Zama properties (the "Sold Assets") on January 31, 2025 (the "Grande Prairie Disposition"). Pursuant to the purchase and sale agreement for the Grande Prairie Disposition, consideration for the Sold Assets was $3.325 billion cash, subject to adjustments based on an effective date of October 1, 2024, plus certain Horn River Basin properties of the acquirer (the "Purchase Price"). The Purchase Price after adjustments totaled $3.243 billion, resulting in a gain on sale of oil and gas assets of $1.595 billion being recorded in respect of the Grande Prairie Disposition for the nine months ended September 30, 2025.

The Company used a portion of the proceeds from the Grande Prairie Disposition to pay a special cash distribution of $15.00 per Common Share (totaling $2,148 million) in the first quarter of 2025 (the "Special Distribution"), comprised of a $12.00 return of capital (totaling $1,718 million) and a $3.00 special dividend (totaling $430 million).

Concurrently with the completion of the Grande Prairie Disposition, the capacity of the Company's financial covenant-based senior secured revolving bank credit facility (the "Paramount Facility") was amended to $500 million and the maturity date was extended to January 31, 2029. Additional information concerning the Paramount Facility is included in the "Liquidity and Capital Resources" section of this MD&A and in the Annual Financial Statements.

Paramount's results for the nine months ended September 30, 2025 include the results of operations of the Sold Assets from January 1, 2025 to the closing date of the Grande Prairie Disposition on January 31, 2025 and actual to estimate differences for operations of the Sold Assets for periods prior to their sale on January 31, 2025, which have been set out in the tables below. The Sold Assets comprised essentially all of Paramount's production in its former Grande Prairie Region. When used in this MD&A, "Ongoing Operations" represents Paramount's total results less amounts attributed to the Sold Assets. The following tables provide selected operating results of the Company:

	Three months ended September 30
	2025				2024
	Ongoing Operations	Sold Assets	Total Company	Ongoing Operations	Sold Assets	Total Company
Sales Volumes (Boe/d) (1)	36,087	-	36,087	27,284	67,608	94,892
% Liquids	48%	-	48%	44%	50%	48%
	$/Boe	$/Boe	$/Boe	$/Boe	$/Boe	$/Boe
Petroleum and natural gas sales (2)	144.2	43.43	-	144.2	43.43	105.4	42.01	299.4
Royalties (2)	(7.3)	(2.21)	-	(7.3)	(2.21)	(6.5)	(2.61)	(39.9)
Operating expense (2)	(33.8)	(10.18)	-	(33.8)	(10.18)	(32.6)	(12.99)	(83.7)
Transportation and NGLs processing (2)	(14.5)	(4.37)	-	(14.5)	(4.37)	(9.4)	(3.76)	(24.8)
Sales of commodities purchased (2)	54.2	16.33	-	54.2	16.33	79.6	31.70	-
Commodities purchased (2)	(53.1)	(16.00)	-	(53.1)	(16.00)	(78.5)	(31.29)	-
Netback (3)	89.7	27.00	-	89.7	27.00	58.0	23.06	151.0
Capital expenditures	206.5	-	206.5	132.8	83.9	216.7

(1) Readers are referred to the "Product Type Information" section of this document for more information respecting the composition of sales volumes by the specific product types of shale gas, conventional natural gas, NGLs, light and medium crude oil, tight oil and heavy crude oil.
(2) Refer to the interim condensed consolidated statements of comprehensive income in the Interim Financial Statements.
(3) Netback is a non-GAAP financial measure and netback presented on a $/Boe basis is a non-GAAP ratio. Refer to the "Specified Financial Measures" section of this MD&A for more information on these measures.

Paramount Resources Ltd. Third Quarter 2025

	Nine months ended September 30
	2025				2024
	Ongoing Operations	Sold Assets (1)	Total Company	Ongoing Operations	Sold Assets	Total Company
Sales Volumes (Boe/d) (2)% Liquids	32,498
46%	8,144
48%	40,642
46%	31,084
43%	66,067
50%	97,151
48%
Petroleum and natural gas sales (3)	$/Boe
419.4
(24.7)
(104.8)
(40.5)	$/Boe
47.27
(2.79)
(11.81)
(4.56)	$/Boe
118.6
(15.0)
(32.5)
(7.6)	$/Boe
53.34
(6.75)
(14.63)
(3.42)	$/Boe
378.7
(3.58)
(12.37)
(4.33)	$/Boe
922.2
(147.6)
(247.4)
(69.3)	$/Boe
1,300.9
(174.3)
(350.9)
(97.5)	$/Boe
48.87
(6.55)
(13.18)
(3.66)
Royalties (3)
Operating expense (3)
Transportation and NGLs processing (3)
Sales of commodities purchased (3)	207.6
(203.6)	23.40
(22.95)	–
–	207.6
(203.6)	18.71
(18.35)	218.6
(25.16)	–
–	218.6
(214.3)
Commodities purchased (3)	253.4
563.9	28.56
16.0	63.5
28.54	316.9
28.57	224.6
26.36	457.9
25.30	682.5
671.5	25.64
Netback (4)
Capital expenditures

(1) Amounts relate to results of operations of the Sold Assets from January 1, 2025 to January 30, 2025 and actual to estimate differences for operations of the Sold Assets for periods prior to their sale on January 31, 2025. Boe/d sales volumes calculated by dividing aggregate sales volumes from January 1, 2025 to January 30, 2025 by 273 days.
(2) Readers are referred to the "Product Type Information" section of this document for more information respecting the composition of sales volumes by the specific product types of shale gas, conventional natural gas, NGLs, light and medium crude oil, tight oil and heavy crude oil.
(3) Refer to the interim condensed consolidated statements of comprehensive income in the Interim Financial Statements.
(4) Netback is a non-GAAP financial measure and netback presented on a $/Boe basis is a non-GAAP ratio. Refer to the "Specified Financial Measures" section of this MD&A for more information on these measures.

Paramount Resources Ltd. Third Quarter 2025

Q3 2025 OVERVIEW

Total Company sales volumes averaged 36,087 Boe/d (48% liquids) in the third quarter of 2025 compared to 31,631 Boe/d (46% liquids) in the second quarter. Duvernay production accounted for approximately 22,500 Boe/d (62% liquids) of third quarter 2025 sales volumes compared to approximately 17,700 Boe/d (62% liquids) in the second quarter. Third quarter 2025 sales volumes were approximately 5,000 Boe/d higher than the midpoint of the prior guidance range of 30,000 Boe/d to 32,000 Boe/d (45% liquids) due to exceptional runtime at the Alhambra Plant during the continuing ramp-up of production.

Construction of the first phase of the Company's wholly-owned and operated Alhambra Plant at Willesden Green was completed in the third quarter of 2025, with first sales volumes being achieved in late-July 2025. At the end of the third quarter, a total of ten (10.0 net) Duvernay wells were on production and flowing through the Alhambra Plant. Paramount expects sales volumes through the Alhambra Plant to continue to increase over the fourth quarter as the remaining six (6.0 net) 2025 Duvernay wells are brought onstream.

Net loss was $2.3 million ($0.02 per basic share) in the third quarter of 2025 compared to net income of $4.2 million ($0.03 per basic share) in the second quarter.

Third quarter 2025 cash from operating activities was $42.3 million ($0.30 per basic share) compared to $39.8 million ($0.28 per basic share) in the second quarter. Adjusted funds flow was $96.8 million ($0.67 per basic share) in the third quarter of 2025 compared to $81.5 million ($0.57 per basic share) in the second quarter. Free cash flow was ($116.7) million ($0.82) per basic share) in the third quarter of 2025 compared to ($85.5) million ($0.60) per basic share) in the second quarter. (1)

Capital expenditures totaled $206.5 million in the third quarter of 2025 compared to $157.6 million in the second quarter. Third quarter activities included:

Willesden Green Duvernay – commissioned and started up the first phase of the Alhambra Plant, continued construction of the second phase of the Alhambra Plant, drilled four (4.0 net) wells and completed and brought on production five (5.0 net) wells; and
Kaybob North Duvernay – completed and brought on production five (5.0 net) wells.

Asset retirement obligations settled in the third quarter of 2025 totaled $4.4 million.

The Company paid total monthly dividends of $0.15 per Common Share or $21.5 million in the third quarter of 2025.

Paramount monetized a portion of its investment in the common shares of NuVista Energy Ltd. ("NuVista Shares") on October 1, 2025, selling 18.5 million NuVista Shares for cash proceeds of $296.0 million (the "NuVista Share Sale"). The carrying value of the Company's investment in public and private companies securities at September 30, 2025, pro forma the NuVista Share Sale, was $316.9 million. Paramount received cash dividends of $3.1 million in the third quarter from one of its private company investments.

Net cash was $628.8 million at September 30, 2025 (including the value of the securities sold in the NuVista Share Sale) compared to $500.9 million at June 30, 2025. The Paramount Facility was undrawn at September 30, 2025. (1)

Revenue in the third quarter included $5.3 million related to the finalization of the Company's insurance claims for 2023 Alberta wildfire losses.

Paramount Resources Ltd. Third Quarter 2025

SANCTIONING OF SINCLAIR MONTNEY DEVELOPMENT

INCREASED 2025 PRODUCTION GUIDANCE

2025	Prior Guidance	Revised Guidance
Fourth quarter average sales volumes (Boe/d)	42,000 to 45,000 (52% liquids)	42,000 to 45,000 (51% liquids)
Annual average sales volumes (Boe/d)	38,500 to 42,500 (47% liquids)	41,000 to 42,000 (47% liquids)
Capital expenditures	$780 to $840 million	$795 to $825 million

2026 BUDGET AND GUIDANCE

In 2026, Paramount is budgeting capital expenditures of between $1,050 million and $1,150 million and abandonment and reclamation expenditures of $35 million.

The breakdown of capital expenditures by key area at midpoint is as follows:

Willesden Green Duvernay – $630 million;
Sinclair Montney – $360 million;
Kaybob Region – $65 million, including $40 million at Kaybob North Duvernay;
Northeast Alberta Heavy Oil - $20 million; and
Other - $25 million.

The breakdown of capital expenditures by category at midpoint is as follows:

Drilling, completion, equipping and tie-ins – $670 million;
Facilities and gathering – $410 million; and
Corporate and other – $20 million.

Paramount Resources Ltd. Third Quarter 2025

construction of the Sinclair Plant, and the construction of produced water recycling and disposal facilities, pipelines and other field infrastructure in both Willesden Green and Sinclair.

Paramount is forecasting 2026 annual average sales volumes of between 45,000 Boe/d and 50,000 Boe/d (50% liquids):

First half 2026 sales volumes are expected to average between 37,000 Boe/d and 42,000 Boe/d (47% liquids). Second quarter sales volumes are expected to be lower than first quarter volumes due to the timing of new well production. In addition, a one-month outage at the Leafland Plant from mid-June to mid-July and a one week outage at the Alhambra Plant in June are planned to accommodate facility expansions.
Third quarter 2026 average sales volumes are expected to increase to between 46,500 Boe/d and 51,500 Boe/d (51% liquids) as the second phase of the Alhambra Plant comes onstream and begins to ramp-up, one quarter earlier than previously anticipated.
Fourth quarter 2026 average sales volumes are expected to further increase to between 59,000 Boe/d and 64,000 Boe/d (53% liquids).

Following ramp-up of the second phase of the Alhambra Plant, fourth quarter 2026 operating expenses are forecast to be approximately $8.00/Boe. (1)

PRODUCTION AND CAPITAL OUTLOOK

The Company expects sales volumes to more than double to over 100,000 Boe/d by the end of 2027:

2025 - 41,000 Boe/d to 42,000 Boe/d (47% liquids).
2026 - 45,000 Boe/d to 50,000 Boe/d (50% liquids), representing a 14% growth rate year-over-year at mid-point.
2027 - 60,000 Boe/d to 65,000 Boe/d (50% liquids), representing a 32% growth rate year-over-year at mid-point.

(1) Operating expenses per Boe is a supplementary financial measure. Refer to the "Specified Financial Measures" section of this MD&A for more information on this measure.

Paramount Resources Ltd. Third Quarter 2025

Year-end 2027 exit - over 100,000 Boe/d (35% liquids), representing a 60% growth rate between exit and mid-point average for the year.

CONSOLIDATED RESULTS

Net Income (Loss)

Paramount recorded a net loss of $2.3 million for the three months ended September 30, 2025 compared to net income of $95.8 million in the same period in 2024. Significant factors contributing to the change are shown below:

Three months ended September 30
Net income – 2024	95.8
• Lower netback in 2025 mainly due to the Grande Prairie Disposition and lower liquids prices in 2025	(119.3)
• Loss on risk management contracts in 2025 compared to a gain in 2024	(36.3)
• Provision expense in 2025 related to a pipeline release	(16.9)
• Lower depletion and depreciation expense in 2025	41.8
• Deferred income tax recovery in 2025 compared to an expense in 2024	11.9
• Exploration and evaluation recovery in 2025 due to a reversal of previously recorded impairment charges, compared to an expense in 2024	7.5
• Lower accretion of asset retirement obligations in 2025	4.6
• Other	8.6
Net loss – 2025	(2.3)

Paramount Resources Ltd. Third Quarter 2025

Paramount recorded net income of $1,290.6 million for the nine months ended September 30, 2025 compared to net income of $248.5 million in the same period in 2024. Significant factors contributing to the change are shown below:

Nine months ended September 30
Net income – 2024	248.5
• Higher gain on sale of oil and gas assets in 2025 due to the Grande Prairie Disposition	1,591.3
• Lower depletion and depreciation expense in 2025	182.1
• Higher interest income in 2025	15.2
• Lower accretion of asset retirement obligations in 2025	12.6
• Lower netback in 2025 mainly due to the Grande Prairie Disposition	(365.6)
• Higher deferred income tax expense in 2025	(325.4)
• Transaction and reorganization costs in 2025 primarily related to cash payments made to optionholders on the surrender of their Paramount stock options	(24.3)
• Lower gain on risk management contracts in 2025	(18.3)
• Provision expense in 2025 compared to a recovery in 2024	(16.9)
• Other	(8.6)
Net income – 2025	1,290.6

Cash From Operating Activities

Cash from operating activities for the three months ended September 30, 2025 was $42.3 million compared to $205.7 million in the same period in 2024. Significant factors contributing to the change are shown below:

Three months ended September 30
Cash from operating activities – 2024	205.7
• Lower netback in 2025 mainly due to the Grande Prairie Disposition and lower liquids prices in 2025	(119.3)
• Change in non-cash working capital	(45.9)
• Provision expense in 2025 related to a pipeline release	(16.9)
• Higher receipts on risk management contract settlements in 2025	12.0
• Other	6.7
Cash from operating activities – 2025	42.3

Cash from operating activities for the nine months ended September 30, 2025 was $232.0 million compared to $627.7 million for the same period in 2024. Significant factors contributing to the change are shown below:

Nine months ended September 30
Cash from operating activities – 2024	627.7
• Lower netback in 2025 mainly due to the Grande Prairie Disposition	(365.6)
• Transaction and reorganization costs in 2025 primarily related to cash payments made to optionholders on the surrender of their Paramount stock options	(24.3)
• Provision expense in 2025 compared to a recovery in 2024	(16.9)
• Lower receipts on risk management contract settlements in 2025	(7.6)
• Higher interest income in 2025	15.2
• Change in non-cash working capital	14.8
• Other	(11.3)
Cash from operating activities – 2025	232.0

Paramount Resources Ltd. Third Quarter 2025

Adjusted Funds Flow

The following is a reconciliation of adjusted funds flow to cash from operating activities, the most directly comparable measure disclosed in the primary financial statements of the Company:

	Three months ended September 30		Nine months ended September 30
	2025	2024	2025	2024
Cash from operating activities	42.3	205.7	232.0	627.7
Change in non-cash working capital (1)	30.6	(15.3)	14.0	28.8
Geological and geophysical expense (2)	2.6	2.9	10.8	10.4
Asset retirement obligations settled (1)	4.4	7.4	29.6	26.2
Provisions (3)	16.9	–	16.4	(0.5)
Transaction and reorganization costs (4)	–	–	24.3	–
Adjusted funds flow (5)	96.8	200.7	327.1	692.6
Adjusted funds flow ($/Boe) (6)	29.12	22.99	29.48	26.01

(1) Refer to the interim condensed consolidated statements of cash flows in the Interim Financial Statements.
(2) Refer to Note 2 in the Interim Financial Statements.
(3) Refer to Note 13 in the Interim Financial Statements.
(4) Refer to the interim condensed consolidated statements of comprehensive income in the Interim Financial Statements.
(5) Adjusted funds flow is a capital management measure used by Paramount. Refer to the "Specified Financial Measures" section of this MD&A for more information on this measure.
(6) Adjusted funds flow ($/Boe) is a supplementary financial measure. Refer to the "Specified Financial Measures" section of this MD&A for more information.

Adjusted funds flow for the three months ended September 30, 2025 was $96.8 million compared to $200.7 million in the same period in 2024. Significant factors contributing to the change are shown below:

Three months ended September 30
Adjusted funds flow – 2024	200.7
• Lower netback in 2025 mainly due to the Grande Prairie Disposition and lower liquids prices in 2025	(119.3)
• Higher receipts on risk management contract settlements in 2025	12.0
• Other	3.4
Adjusted funds flow – 2025	96.8

Adjusted funds flow for the nine months ended September 30, 2025 was $327.1 million compared to $692.6 million in the same period in 2024. Significant factors contributing to the change are shown below:

Nine months ended September 30
Adjusted funds flow – 2024	692.6
• Lower netback in 2025 mainly due to the Grande Prairie Disposition	(365.6)
• Lower receipts on risk management contract settlements in 2025	(7.6)
• Higher interest income in 2025	15.2
• Other	(7.5)
Adjusted funds flow – 2025	327.1

Paramount Resources Ltd. Third Quarter 2025

Free Cash Flow

The following is a reconciliation of free cash flow to cash from operating activities, the most directly comparable measure disclosed in the primary financial statements of the Company:

	Three months ended September 30		Nine months ended September 30
	2025	2024	2025	2024
Cash from operating activities	42.3	205.7	232.0	627.7
Change in non-cash working capital (1)	30.6	(15.3)	14.0	28.8
Geological and geophysical expense (2)	2.6	2.9	10.8	10.4
Asset retirement obligations settled (1)	4.4	7.4	29.6	26.2
Provisions (3)	16.9	–	16.4	(0.5)
Transaction and reorganization costs (4)	–	–	24.3	–
Adjusted funds flow	96.8	200.7	327.1	692.6
Capital expenditures (1)	(206.5)	(216.7)	(579.9)	(671.5)
Geological and geophysical expense (2)	(2.6)	(2.9)	(10.8)	(10.4)
Asset retirement obligations settled (1)	(4.4)	(7.4)	(29.6)	(26.2)
Free cash flow (5)	(116.7)	(26.3)	(293.2)	(15.5)

(1) Refer to the interim condensed consolidated statements of cash flows in the Interim Financial Statements.
(2) Refer to Note 2 in the Interim Financial Statements.
(3) Refer to Note 13 in the Interim Financial Statements.
(4) Refer to the interim condensed consolidated statements of comprehensive income in the Interim Financial Statements.
(5) Free cash flow is a capital management measure used by Paramount. Refer to the "Specified Financial Measures" section of this MD&A for more information on this measure.

Free cash flow for the three months ended September 30, 2025 was ($116.7) million compared to ($26.3) million in the same period in 2024. Significant factors contributing to the change are shown below:

Three months ended September 30
Free cash flow – 2024	(26.3)
• Lower adjusted funds flow in 2025 (described in "Adjusted Funds Flow" section above)	(103.9)
• Lower capital expenditures in 2025	10.2
• Lower asset retirement obligations settled in 2025	3.0
• Lower geological and geophysical expense in 2025	0.3
Free cash flow – 2025	(116.7)

Free cash flow for the nine months ended September 30, 2025 was ($293.2) million compared to ($15.5) million in the same period in 2024. Significant factors contributing to the change are shown below:

Nine months ended September 30
Free cash flow – 2024	(15.5)
• Lower adjusted funds flow in 2025 (described in "Adjusted Funds Flow" section above)	(365.5)
• Higher asset retirement obligations settled in 2025	(3.4)
• Higher geological and geophysical expense in 2025	(0.4)
• Lower capital expenditures in 2025	91.6
Free cash flow – 2025	(293.2)

Paramount Resources Ltd. Third Quarter 2025

OPERATING RESULTS

Netback

	Three months ended September 30				Nine months ended September 30
	2025		2024		2025		2024
	($/Boe)11(3)		($/Boe)11(2)		($/Boe)11(3)		($/Boe)11(2)
Natural gas revenue (3)	20.3	1.96	37.2	1.37	101.7	2.83	165.3	1.99
Condensate and oil revenue (3)	105.6	82.01	342.9	96.15	373.9	89.13	1,055.5	97.22
Other NGLs revenue (3)	8.4	27.04	23.5	36.25	29.6	32.22	68.3	35.72
Natural gas transportation assignment income (3)	3.6	0.35	-	-	13.7	0.38	-	-
Royalty income and other revenue (3)	6.3	-	1.2	-	19.1	-	11.8	-
Petroleum and natural gas sales (4)	144.2	43.43	404.8	46.37	538.0	48.49	1,300.9	48.87
Royalties (4)	(7.3)	(2.21)	(46.4)	(5.31)	(39.7)	(3.58)	(174.3)	(6.55)
Operating expense (4)	(33.8)	(10.18)	(116.3)	(13.33)	(137.3)	(12.37)	(350.9)	(13.18)
Transportation and NGLs processing (4)	(14.5)	(4.37)	(34.2)	(3.92)	(48.1)	(4.33)	(97.5)	(3.66)
Sales of commodities purchased (4)	54.2	16.33	79.6	9.11	207.6	18.71	218.6	8.21
Commodities purchased (4)	(53.1)	(16.00)	(78.5)	(9.00)	(203.6)	(18.35)	(214.3)	(8.05)
Netback (5)	89.7	27.00	209.0	23.92	316.9	28.57	682.5	25.64
Risk management contract settlements (6)	14.0	4.21	2.0	0.23	30.4	2.74	38.0	1.42
Netback including risk management contract settlements (7)	103.7	31.21	211.0	24.15	347.3	31.31	720.5	27.06

(1) Natural gas revenue and natural gas transportation assignment income shown per Mcf.
(2) When presented on a $/Boe or $/Mcf basis, each of the components of Netback is a supplementary financial measure. Refer to the "Specified Financial Measures" section of this MD&A for more information on these measures.
(3) Refer to Note 12 in the Interim Financial Statements.
(4) Refer to the interim condensed consolidated statements of comprehensive income in the Interim Financial Statements.
(5) Netback is a non-GAAP financial measure. Netback presented on a $/Boe basis is a non-GAAP ratio. Refer to the "Specified Financial Measures" section of this MD&A for more information on these measures.
(6) Refer to Note 11 in the Interim Financial Statements.
(7) Netback including risk management contract settlements is a non-GAAP financial measure. Netback including risk management contract settlements presented on a $/Boe basis is a non-GAAP ratio. Refer to the "Specified Financial Measures" section of this MD&A for more information on these measures.

Petroleum and natural gas sales were $144.2 million for the three months ended September 30, 2025 compared to $404.8 million for the same period in 2024. The decrease in 2025 was mainly due to the Grande Prairie Disposition and, to a lesser extent, the effects of a six percent decrease in the average realized petroleum and natural gas sales price per Boe over the same period.

The impact of changes in prices and sales volumes on petroleum and natural gas sales for the three months ended September 30, 2025 compared to the same period in 2024 are as follows:

	Natural gas	Condensate and oil	Other NGLs	Natural gas transportation assignment and royalty income and other revenue	Total
Three months ended September 30, 2024	37.2	342.9	23.5	1.2	404.8
Effect of changes in sales volumes	(23.0)	(219.1)	(12.3)	-	(254.4)
Effect of changes in prices	6.1	(18.2)	(2.8)	-	(14.9)
Change in natural gas transportation assignment and royalty income and other revenue	-	-	-	8.7	8.7
Three months ended September 30, 2025	20.3	105.6	8.4	9.9	144.2

Paramount Resources Ltd. Third Quarter 2025

Petroleum and natural gas sales were $538.0 million for the nine months ended September 30, 2025 compared to $1,300.9 million for the same period in 2024. The decrease in the nine months ended September 30, 2025 was mainly due to the Grande Prairie Disposition.

The impact of changes in prices and sales volumes on petroleum and natural gas sales for the nine months ended September 30, 2025 compared to the same period in 2024 are as follows:

	Natural gas	Condensate and oil	Other NGLs	Natural gas transportation assignment and royalty income and other revenue	Total
Nine months ended September 30, 2024	165.3	1,055.5	68.3	11.8	1,300.9
Effect of changes in sales volumes	(93.9)	(647.7)	(35.5)	–	(777.1)
Effect of changes in prices	30.3	(33.9)	(3.2)	–	(6.8)
Change in natural gas transportation assignment and royalty income and other revenue	–	–	–	21.0	21.0
Nine months ended September 30, 2025	101.7	373.9	29.6	32.8	538.0

Natural gas transportation assignment income of $3.6 million and $13.7 million for the three and nine months ended September 30, 2025, respectively, relates to proceeds realized by the Company on the assignment of a portion of its ex-Alberta natural gas transportation capacity to third parties. The assignee was responsible for the cost of the transportation assigned.

In the third quarter of 2025, the Company's insurance claims for 2023 Alberta wildfire losses were finalized, with an aggregate claim of $26.8 million being agreed by insurers (the "Wildfire Claim"). Royalty income and other revenue for the three and nine months ended September 30, 2025 includes $5.3 million and $16.8 million, respectively, relating to the Wildfire Claim. Royalty income and other revenue for the nine months ended September 30, 2024 includes $10.0 million relating to the Wildfire Claim.

Paramount Resources Ltd. Third Quarter 2025

Sales Volumes

	Three months ended September 30
	Natural gas (MMcf/d) (1)			Condensate and oil (Bbl/d) (1)			Other NGLs (Bbl/d) (1)			Total (Boe/d) (1)
	2025	2024	Chg	2025	2024	Chg	2025	2024	Chg	2025	2024	Chg
Central Alberta and Other	39.1	18.0	117%	6,289	2,472	154%	2,140	924	132%	14,932	6,390	134%
Kaybob	73.3	73.4	-	7,708	7,252	6%	1,223	1,403	(13%)	21,155	20,894	1%
Ongoing Operations	112.4	91.4	23%	13,997	9,724	44%	3,363	2,327	45%	36,087	27,284	32%
Sold Assets	-	203.1	(100%)	-	29,046	(100%)	-	4,718	(100%)	-	67,608	(100%)
Total	112.4	294.5	(62%)	13,997	38,770	(64%)	3,363	7,045	(52%)	36,087	94,892	(62%)

Sales Volumes
Ongoing Operations

Total Company sales volumes averaged 36,087 Boe/d (48% liquids) in the third quarter of 2025 compared to 94,892 Boe/d (48% liquids) in the same period in 2024. The decrease in total Company sales volumes in 2025 was due to the Grande Prairie Disposition.

Sales volumes from Ongoing Operations averaged 36,087 Boe/d (48% liquids) in the third quarter of 2025 compared to 27,284 Boe/d (44% liquids) in the same period in 2024.

Sales volumes for the Central Alberta Region and Other were 14,932 Boe/d (56% liquids) in the third quarter of 2025 compared to 6,390 Boe/d (53% liquids) in the same period in 2024. Construction of the first phase of the Company's wholly-owned and operated Alhambra Plant at Willesden Green was completed in the third quarter of 2025, with first sales volumes achieved in late-July. Sales volumes began to ramp-up in August and September as construction of third-party liquids egress was completed in August. At the end of the third quarter, a total of ten (10.0 net) Duvernay wells were on production and flowing through the Alhambra Plant.

Paramount Resources Ltd. Third Quarter 2025

Willesden Green sales volumes for the prior eight quarters are shown below.

Sales Volumes
Willesden Green

Kaybob Region sales volumes averaged 21,155 Boe/d (42% liquids) in the third quarter of 2025, compared to 20,894 Boe/d (41% liquids) in the same period in 2024. Paramount brought onstream five Duvernay wells at Kaybob North during the third quarter of 2025.

	Nine months ended September 30
	Natural gas (MMcf/d) (1)			Condensate and oil (Bbl/d) (1)			Other NGLs (Bbl/d) (1)			Total (Boe/d) (1)
	2025	2024	Chg	2025	2024	Chg	2025	2024	Chg	2025	2024	Chg
Central Alberta and Other	27.6	27.2	1%	4,774	3,077	55%	1,620	1,074	51%	11,003	8,692	27%
Kaybob	78.5	78.8	-	7,155	7,770	(8%)	1,259	1,494	(16%)	21,495	22,392	(4%)
Ongoing Operations	106.1	106.0	-	11,929	10,847	10%	2,879	2,568	12%	32,498	31,084	5%
Sold Assets	25.4	197.3	(87%)	3,438	28,778	(88%)	480	4,408	(89%)	8,144	66,067	(88%)
Total	131.5	303.3	(57%)	15,367	39,625	(61%)	3,359	6,976	(52%)	40,642	97,151	(58%)

Total Company sales volumes were 40,642 Boe/d (46% liquids) in the nine months ended September 30, 2025 compared to 97,151 Boe/d (48% liquids) in the same period in 2024. The decrease in total Company sales volumes in 2025 was due to the Grande Prairie Disposition.

Sales volumes from Ongoing Operations averaged 32,498 Boe/d (46% liquids) in the nine months ended September 30, 2025 compared to 31,084 Boe/d (43% liquids) in the same period in 2024.

Sales volumes for the Central Alberta Region and Other were 11,003 Boe/d (58% liquids) in the nine months ended September 30, 2025 compared to 8,692 Boe/d (48% liquids) in the same period in 2024. The increase in 2025 was primarily due to new Duvernay wells brought onstream. The Company brought onstream 13 Duvernay wells at Willesden Green in the nine months ended September 30, 2025. Early in the second quarter of 2024, approximately 17 MMcf/d (2,800 Boe/d) of Horn River Basin dry natural gas production was shut in.

Paramount Resources Ltd. Third Quarter 2025

Kaybob Region sales volumes averaged 21,495 Boe/d (39% liquids) in the nine months ended September 30, 2025 compared to 22,392 Boe/d (41% liquids) in the same period in 2024. Paramount brought onstream nine Duvernay wells at Kaybob North in the nine months ended September 30, 2025, mostly offsetting declines.

Commodity Prices

	Three months ended September 30			Nine months ended September 30
	2025	2024	% Chg	2025	2024	% Chg
Natural Gas (1)
Paramount realized natural gas price ($/Mcf)	1.96	1.37	43	2.83	1.99	42
AECO daily spot ($/GJ)	0.60	0.65	(8)	1.42	1.38	3
AECO monthly index ($/GJ)	0.94	0.77	22	1.61	1.36	18
Dawn ($/MMBtu)	3.86	2.35	64	4.47	2.49	80
NYMEX (US$/MMBtu)	3.07	2.22	38	3.48	2.22	57
Malin daily index (US$/MMBtu)	2.74	1.75	57	2.72	2.09	30
Emerson 2 daily index (US$/MMBtu)	0.52	0.68	(24)	1.69	1.34	26
Condensate and Oil (1)
Paramount realized condensate & oil price ($/Bbl)	82.01	96.15	(15)	89.13	97.22	(8)
Edmonton light sweet crude oil ($/Bbl)	85.00	98.43	(14)	88.70	99.95	(11)
Edmonton condensate ($/Bbl)	86.89	99.69	(13)	91.37	101.25	(10)
West Texas Intermediate crude oil (US$/Bbl)	64.93	75.13	(14)	66.70	77.55	(14)
Other NGLs (1)
Paramount realized Other NGLs price ($/Bbl)	27.04	36.25	(25)	32.22	35.72	(10)
Conway – propane ($/Bbl)	38.78	40.26	(4)	44.03	42.40	4
Belvieu – butane ($/Bbl)	50.35	56.08	(10)	53.09	53.87	(1)
Foreign Exchange
$ / 1 $US	1.38	1.36	1	1.40	1.36	3

(1) Realized prices per Mcf and Bbl are supplementary financial measures. Refer to the "Specified Financial Measures" section of this MD&A for more information.

Paramount's current natural gas portfolio primarily consists of sales priced at Alberta, the California/Oregon border and Eastern Canada markets, which are sold in a combination of daily, monthly, seasonal and fixed basis differential physical contracts. In the nine months ended September 30, 2025, Paramount's natural gas sales portfolio included arrangements to sell approximately 40,000 GJ/d of natural gas at Dawn, approximately 22,000 GJ/d of natural gas at Malin and approximately 20,000 GJ/d of natural gas at Emerson. The Company's natural gas sales portfolio in the nine months ended September 30, 2024 included arrangements to sell approximately 60,000 GJ/d of natural gas at Dawn and approximately 22,000 GJ/d of natural gas at Malin. With the natural gas market diversification contracts currently in place, approximately 60 percent of the Company's expected natural gas sales volumes for the remainder of 2025 will benefit from exposure to markets outside of AECO.

The Company ships the majority of its condensate and crude oil production on third-party pipelines for sale in Edmonton, Alberta. A portion of Paramount's production is sold at the lease when warranted by economic or operational factors. Sales prices for condensate and oil are based on West Texas Intermediate reference prices and market index differentials, which are further adjusted for transportation and quality.

Paramount Resources Ltd. Third Quarter 2025

Propane, butane and condensate from fractionation are sold under monthly and long-term contracts with prices primarily based on the Edmonton market with some diversification to alternate markets, adjusted for transportation and fractionation costs.

The Company had the following fixed price and basis differential physical contracts at September 30, 2025:

	Volume	Location	Average price	Remaining Term
Natural gas (Sale)	19,327 GJ/d	Dawn	AECO + $2.06/GJ	October 2025
Natural gas basis swap (1)	38,654 GJ/d	AECO / Dawn	$1.59/GJ	November 2025 – October 2027

(1) Paramount sells at Dawn at a fixed price of $4.51/GJ and buys at AECO at a fixed price of $2.92/GJ resulting in a net amount of $1.59/GJ.

Risk Management Contracts

Commodity Contracts

From time to time Paramount uses financial commodity contracts to manage exposure to commodity price volatility. Changes in the fair value of the Company's financial commodity contracts are as follows:

	Nine months ended September 30, 2025
Fair value, beginning of period	3.8
Changes in fair value	38.9
Settlements (received) paid	(30.4)
Fair value, end of period	12.3

Paramount had the following financial commodity contracts at September 30, 2025:

Instruments	Aggregate notional	Average price	Remaining term
Oil
NYMEX WTI Swaps (Sale) (1)	10,000 Bbl/d	$105.00/Bbl	October 2025 – December 2025
Natural Gas
Citygate / Malin Basis Swap (2)	10,000 MMBtu/d	Citygate less US$0.97/MMBtu (Sell) Malin (Buy)	October 2025 – October 2028

(1) "NYMEX" means New York Mercantile Exchange and "WTI" means West Texas Intermediate.
(2) "Citygate" refers to Pacific Gas & Electric Citygate and "Malin" refers to Pacific Gas & Electric Malin. Pursuant to the swap transaction Paramount sells at Citygate less US $0.97/MMBtu and buys at Malin. The transaction is financially settled with no physical delivery.

For further details on the Company's financial commodity contracts, refer to Note 11 in the Interim Financial Statements.

Foreign Currency Exchange Contracts

Subsequent to September 30, 2025, the Company entered into the following foreign currency exchange contracts:

Instruments	Notional	Forward Rate (1)	Term
Average Rate Forward	US$10 million / month	1.3810 CAD$/US$1.00	January 2026 – December 2026
Average Rate Forward	US$10 million / month	1.3680 CAD$/US$1.00	January 2027 – December 2027

(1) Settled monthly against the average of the US$/CAD$ noon spot rate on each applicable day in that month.

Paramount Resources Ltd. Third Quarter 2025

Royalties

	Three months ended September 30				Nine months ended September 30
	2025	Rate (1)	2024	Rate (1)	2025	Rate (1)	2024	Rate (1)
Ongoing Operations	7.3	5.4%	6.5	6.2%	24.7	6.4%	26.7	7.3%
Sold Assets	-	-	39.9	13.3%	15.0	12.6%	147.6	16.0%
Royalties – Total Company	7.3	5.4%	46.4	11.5%	39.7	7.9%	174.3	13.5%
$/Boe – Ongoing Operations (1)	2.21		2.61		2.79		3.14
$/Boe – Total Company (1)	2.21		5.31		3.58		6.55

(1) Royalty rate and royalties per Boe are supplementary financial measures. Refer to the "Specified Financial Measures" section of this MD&A for more information.

Royalties
Ongoing Operations

Total Company royalties were $7.3 million in the third quarter of 2025 compared to $46.4 million in the same period in 2024. Total Company royalties were $39.7 million for the nine months ended September 30, 2025 compared to $174.3 million in the same period in 2024. Royalties and royalty rates decreased in 2025 mainly due to the Grande Prairie Disposition.

Royalties from Ongoing Operations were $7.3 million in the third quarter of 2025 compared to $6.5 million in the same period in 2024. Royalties from Ongoing Operations increased in third quarter of 2025 mainly due to higher petroleum and natural gas sales. The Ongoing Operations royalty rate decreased in the third quarter of 2025 primarily due to lower liquids prices.

Royalties from Ongoing Operations were $24.7 million for the nine months ended September 30, 2025 compared to $26.7 million in the same period in 2024. Royalties from Ongoing Operations decreased in the nine months ended September 30, 2025 mainly due to lower royalty rates. The Ongoing Operations royalty rate decreased in the nine months ended September 30, 2025 primarily due to lower liquids prices.

Paramount Resources Ltd. Third Quarter 2025

Operating Expense

	Three months ended September 30			Nine months ended September 30
	2025	2024	% Chg	2025	2024	% Chg
Ongoing Operations	33.8	32.6	4	104.8	103.5	1
Sold Assets	-	83.7	(100)	32.5	247.4	(87)
Operating expense – Total Company	33.8	116.3	(71)	137.3	350.9	(61)
$/Boe – Ongoing Operations (1)	10.18	12.99	(22)	11.81	12.16	(3)
$/Boe – Total Company (1)	10.18	13.33	(24)	12.37	13.18	(6)

(1) Operating expense per Boe is a supplementary financial measure. Refer to the "Specified Financial Measures" section of this MD&A for more information.

Operating Expense
Ongoing Operations

Total Company operating expense was $33.8 million ($10.18/Boe) in the third quarter of 2025 compared to $116.3 million ($13.33/Boe) in the same period in 2024. Total Company operating expense was $137.3 million ($12.37/Boe) for the nine months ended September 30, 2025 compared to $350.9 million ($13.18/Boe) in the same period in 2024. Total Company operating expense decreased due to the Grande Prairie Disposition.

Operating expenses relating to Ongoing Operations were $33.8 million ($10.18/Boe) in the third quarter of 2025 compared to $32.6 million ($12.99/Boe) in the same period in 2024. Ongoing Operations operating expense increased in third quarter of 2025 with the start-up of the first phrase of the Alhambra Plant at Willesden Green. This increase was partially offset by lower maintenance activity costs in the Kaybob Region in the quarter. Per unit operating costs relating to Ongoing Operations in the third quarter of 2025 decreased mainly due to higher sales volumes.

Operating expenses relating to Ongoing Operations were $104.8 million ($11.81/Boe) for the nine months ended September 30, 2025 compared to $103.5 million ($12.16/Boe) in the same period in 2024. Operating expenses relating to Ongoing Operations for the nine months ended September 30, 2025 were relatively consistent compared to the same period in 2024.

Paramount Resources Ltd. Third Quarter 2025

Transportation and NGLs Processing

	Three months ended September 30			Nine months ended September 30
	2025	2024	% Chg	2025	2024	% Chg
Ongoing Operations	14.5	9.4	54	40.5	28.2	44
Sold Assets	-	24.8	(100)	7.6	69.3	(89)
Transportation and NGLs processing – Total Company	14.5	34.2	(58)	48.1	97.5	(51)
$/Boe – Ongoing Operations (1)	4.37	3.76	16	4.56	3.31	38
$/Boe – Total Company (1)	4.37	3.92	11	4.33	3.66	18

(1) Transportation and NGLs processing per Boe is a supplementary financial measure. Refer to the "Specified Financial Measures" section of this MD&A for more information.

Total Company transportation and NGLs processing expense was $14.5 million ($4.37/Boe) in the third quarter of 2025 compared to $34.2 million ($3.92/Boe) in the same period in 2024. Total Company transportation and NGLs processing expense was $48.1 million ($4.33/Boe) for the nine months ended September 30, 2025 compared to $97.5 million ($3.66/Boe) in the same period in 2024. Total Company transportation and NGLs processing expense decreased mainly due to the Grande Prairie Disposition. The acquirer assumed Paramount's processing and transportation commitments related to the Sold Assets in connection with the Grande Prairie Disposition.

Transportation and NGLs processing expense relating to Ongoing Operations was $14.5 million ($4.37/Boe) in the third quarter of 2025 compared to $9.4 million ($3.76/Boe) in the same period in 2024. Transportation and NGLs processing expense relating to Ongoing Operations was $40.5 million ($4.56/Boe) for the nine months ended September 30, 2025 compared to $28.2 million ($3.31/Boe) in the same period in 2024. Following the Grande Prairie Disposition and the assignment of transportation capacity to the acquirer, a greater proportion of Paramount's remaining transportation capacity is to markets outside of Alberta, which have a higher per unit cost. Approximately 60 percent of the Company's natural gas sales volumes for the remainder of 2025 will benefit from exposure to markets outside of AECO.

Sales of Commodities Purchased and Commodities Purchased

	Three months ended September 30			Nine months ended September 30
	2025	2024	% Chg	2025	2024	% Chg
Sales of commodities purchased	54.2	79.6	(32)	207.6	218.6	(5)
Commodities purchased	(53.1)	(78.5)	(32)	(203.6)	(214.3)	(5)

Paramount purchases commodities from third parties from time to time to fulfill sales commitments and for blending purposes. These transactions are presented as separate revenue and expense items in the consolidated statements of comprehensive income in the Interim Financial Statements.

Paramount Resources Ltd. Third Quarter 2025

Other Items

	Three months ended September 30		Nine months ended September 30
	2025	2024	2025	2024
Depletion and depreciation expense	61.0	109.4	172.2	332.2
Change in asset retirement obligations	2.3	(4.3)	5.9	28.0
Exploration and evaluation (recovery) expense	(4.6)	2.9	3.9	10.5
(Gain) loss on sale of oil and gas assets	(3.0)	0.4	(1,606.8)	(15.5)
Accretion of asset retirement obligations	6.0	10.6	19.2	31.8

Depletion and depreciation expense was $61.0 million in the third quarter of 2025, compared to $109.4 million in the same period of 2024. Depletion and depreciation expense was $172.2 million in the nine months ended September 30, 2025 compared to $332.2 million in the same period in 2024. The decrease in depletion and depreciation expense in 2025 was mainly due to the Grande Prairie Disposition.

For the nine months ended September 30, 2025, the Company recorded a charge of $5.9 million (September 30 2024 – $28.0 million) to earnings related to changes in the discounted carrying value of estimated asset retirement obligations in respect of properties that had a nil carrying value ascribed to property, plant and equipment. For the nine months ended September 30, 2024, the changes mainly resulted from a reduction in the credit-adjusted risk-free rate used to discount obligations from 7.75 percent per annum to 7.0 percent per annum.

Exploration and evaluation (recovery) expense was ($4.6) million and $3.9 million for the three and nine months ended September 30, 2025, respectively, compared to $2.9 million and $10.5 million for the same periods in 2024. In the third quarter of 2025, the Company sold certain previously impaired exploration and evaluation assets for $7.7 million in common shares of the acquirer. Paramount recorded a $7.7 million reversal of previously recorded impairment charges relating to these assets in the third quarter of 2025.

The Company closed the Grande Prairie Disposition on January 31, 2025. A gain on sale of oil and gas assets of $1.595 billion was recorded in respect of the disposition for the nine months ended September 30, 2025.

In February 2024, Paramount sold certain non-core Kaybob assets for $45.4 million cash and the retention of a two percent no-deduction gross overriding royalty on the undeveloped Montney acreage forming part of the assets. The Company recorded a $14.3 million gain on sale of oil and gas assets in the nine months ended September 30, 2024 in connection with the transaction.

Accretion of asset retirement obligations for the three months ended September 30, 2025 decreased to $6.0 million compared to $10.6 million in the same period in 2024 and decreased to $19.2 million for the nine months ended September 30, 2025 compared to $31.8 million in the same period in 2024. These decreases were primarily due to the Grande Prairie Disposition.

Paramount Resources Ltd. Third Quarter 2025

ASSET RETIREMENT OBLIGATIONS

Asset retirement obligations settled in the nine months ended September 30, 2025 totaled $29.6 million. Activities in the nine months ended September 30, 2025 included the abandonment of 15 wells and the reclamation of 19 sites.

At September 30, 2025, the Company's asset retirement obligations were $363.0 million (discounted at 7.0 percent per annum and using an inflation rate of 2.0 percent per annum) compared to $341.0 million at December 31, 2024 (discounted at 7.0 percent per annum and using an inflation rate of 2.0 percent per annum), which excluded asset retirement obligations related to the Sold Assets that were presented separately as liabilities associated with assets held for sale at December 31, 2024. For further details concerning the Company's asset retirement obligations, refer to Note 6 in the Interim Financial Statements.

OTHER ASSETS

Investments in Securities

As at	September 30, 2025	December 31, 2024
Level One Securities	511.3	439.2
Level Three Securities	101.6	124.7
	612.9	563.9

Paramount holds investments in a number of publicly-traded and private entities as part of its portfolio of investments. Investments in securities that are listed on a public stock exchange are classified as level one fair value hierarchy securities ("Level One Securities") and carried at their period-end trading price. Investments in securities that are not listed on a public stock exchange are classified as level three fair value hierarchy securities ("Level Three Securities"). Estimates of fair values for these investments are based on valuation techniques that incorporate unobservable inputs.

Level One Securities at September 30, 2025 included 31.3 million NuVista Shares (December 31, 2024 – 31.3 million NuVista Shares), which had a carrying value of $501.1 million (December 31, 2024 – $431.9 million).

Level Three Securities at September 30, 2025 included investments in the shares of Sultran Ltd. and other minor investments in securities not listed on a public stock exchange ("Other Investments"). At December 31, 2024, Level Three Securities included investments in the shares of Sultran Ltd., Westbrick Energy Ltd. and Other Investments. During the nine months ended September 30, 2025, Paramount sold all of its shares in Westbrick Energy Ltd. for cash consideration of $33.9 million, resulting in $22.3 million of accumulated gains, net of tax, being reclassified from reserves to retained earnings.

For the three and nine months ended September 30, 2025, the Company recorded an unrealized before tax gain of $32.5 million and $77.8 million, respectively, to other comprehensive income ("OCI") related to changes in the fair value estimates of its investments in securities.

In late-September 2025, the Company agreed to sell 18.5 million of its NuVista Shares for cash consideration of $296.0 million ($16.00 per NuVista Share). The carrying value of these shares was reclassified to investments in securities – current at September 30, 2025. The transaction closed on October 1, 2025.

Paramount Resources Ltd. Third Quarter 2025

For additional details concerning the Company's investments in securities, refer to Note 4 in the Interim Financial Statements.

CORPORATE

	Three months ended September 30		Nine months ended September 30
	2025	2024	2025	2024
General and administrative expense	12.3	10.7	40.2	35.7
Share-based compensation expense	3.6	4.9	25.3	18.1
Interest and financing expense	1.3	1.9	5.1	5.0
Transaction and reorganization costs	–	–	24.3	–
Deferred income tax (recovery) expense	(1.2)	10.7	382.1	56.7
Other	10.5	(1.5)	(6.2)	(11.3)

General and administrative expense was $12.3 million and $40.2 million for the three and nine months ended September 30, 2025, respectively, relatively consistent compared to $10.7 million and $35.7 million in the same periods in 2024.

Share-based compensation expense was $3.6 million and $25.3 million for the three and nine months ended September 30, 2025, respectively, compared to $4.9 million and $18.1 million in the same periods in 2024. The increase in 2025 was mainly due to current year RSU grants under the Company's short-term incentive program being made without vesting periods. Previously, RSU grants under the short-term incentive program vested over a two-year period.

Transaction and reorganization costs in the nine months ended September 30, 2025 totaled $24.3 million, including $22.0 million relating to cash payments made by the Company on the surrender of options to acquire Common Shares ("Paramount Options") by holders in connection with the Special Distribution, which is further described in the "Liquidity and Capital Resources – Paramount Options and Share Capital" section of this MD&A.

For the three months ended September 30, 2025, the Company recorded a deferred income tax recovery of $1.2 million compared to an expense of $10.7 million in the same period in 2024. Deferred income tax expense was $382.1 million for the nine months ended September 30, 2025 compared to $56.7 million in the same period in 2024. The increase in deferred income tax expense in 2025 was primarily related to the Grande Prairie Disposition.

Other is mainly comprised of provisions, interest income earned on cash and cash equivalents and dividend income from the Company's investments in securities.

In July 2025, Paramount identified a release of liquids that it believes to have originated from a Company owned and operated pipeline located approximately 20 kilometers southeast of Fox Creek, Alberta. The Company responded by shutting in the pipeline, immediately commencing clean-up operations and notifying applicable regulators and impacted stakeholders. Paramount has significantly advanced clean-up operations and is continuing its response and investigation activities, including delineation of the release and root cause analysis. The Company has incurred approximately $10 million in response costs related to the release to October 31, 2025.

Paramount Resources Ltd. Third Quarter 2025
39

have yet to be determined, including the extent of required remediation activities. Coverage under the Company's insurance policies remains to be confirmed.

Interest income was $4.0 million and $17.0 million for the three and nine months ended September 30, 2025, respectively, compared to $0.2 million and $1.8 million for the same periods in 2024 and was higher in 2025 because of higher cash and cash equivalents balances held. Dividend income was $3.2 million and $6.8 million for the three and nine months ended September 30, 2025, respectively, compared to $nil and $8.3 million for the same periods in 2024.

CAPITAL EXPENDITURES AND LAND AND PROPERTY ACQUISITIONS

Capital Expenditures

	Three months ended September 30		Nine months ended September 30
	2025	2024	2025	2024
Drilling, completion, equipping and tie-ins	147.5	170.9	419.0	520.5
Facilities and gathering	55.6	43.3	144.5	151.6
Drilling rigs	1.6	2.6	6.3	7.5
Corporate	1.8	(0.1)	10.1	(8.1)
Capital expenditures	206.5	216.7	579.9	671.5
Central Alberta Region and Other	193.9	73.8	447.0	159.6
Kaybob Region	9.2	56.5	100.5	153.7
Fox Drilling	1.6	2.6	6.3	7.5
Corporate (1)	1.8	(0.1)	10.1	(8.1)
Ongoing Operations	206.5	132.8	563.9	312.7
Sold Assets	-	83.9	16.0	358.8
Capital expenditures	206.5	216.7	579.9	671.5

(1) Includes transfer of amounts held in Corporate to and from regions.

Land and Property Acquisitions

	Three months ended September 30		Nine months ended September 30
	2025	2024	2025	2024
Land and property acquisitions	17.8	0.4	21.6	3.4

Capital expenditures totaled $206.5 million in the third quarter of 2025 compared to $216.7 million in the same period in 2024. Capital expenditures totaled $579.9 million in the nine months ended September 30, 2025 compared to $671.5 million in the same period in 2024. Significant capital program activities relating to Ongoing Operations in the nine months ending September 30, 2025 are described below:

Paramount drilled 15 (15.0 net) Duvernay wells and completed and brought onstream 13 (13.0 net) Duvernay wells at Willesden Green.
Construction of the Company's wholly-owned and operated Alhambra Plant was completed, with the first phase commencing operations in late-July 2025. Construction activities commenced for the second phase of the Alhambra Plant, which will double handling capacity when completed.
The Company drilled five (5.0 net) Duvernay wells and completed and brought onstream nine (9.0 net) Duvernay wells at Kaybob North.

Paramount Resources Ltd. Third Quarter 2025

Paramount completed and flow tested the Company's first two Montney appraisal wells at Sinclair and commenced detailed engineering and design work for the Sinclair Plant.

Land and property acquisitions totaled $17.8 million in the third quarter of 2025 compared to $0.4 million in the same period in 2024. Land and property acquisitions totaled $21.6 million in the nine months ended September 30, 2025 compared to $3.4 million in the same period in 2024.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary objectives in managing its capital structure are to:

i. ensure liquidity to fund ongoing operations and capital programs, the settlement of obligations when due and the payment of regular monthly dividends;
ii. preserve financial flexibility and access to capital markets, including for the pursuit of strategic initiatives; and
iii. maximize shareholder returns considering the risk environment.

Paramount monitors and assesses its capital structure for alignment with its current and long-term business plans and will, guided by its primary capital management objectives, seek to adjust the structure as necessary in response to changes in its business plans, plans for shareholder returns, economic and operating conditions, financial and operating results, strategic initiatives and the Company's assessment of the risk environment. Paramount may adjust its capital structure through a number of means, including by modifying capital spending programs, seeking to issue or repurchase shares, altering debt levels, modifying dividend levels or acquiring or disposing of assets.

The key capital management measures used by the Company in monitoring and assessing its capital structure are net (cash) debt, adjusted funds flow, the ratio of net debt to adjusted funds flow and free cash flow. These measures are not standardized measures and therefore may not be comparable with the calculation of similar measures by other entities. Readers are referred to the "Specified Financial Measures" section of this MD&A and Note 15 in the Interim Financial Statements for important additional information concerning these measures.

The calculation of net (cash) debt is as follows:

As at	September 30, 2025	December 31, 2024
Cash and cash equivalents	(398.3)	(2.4)
Accounts receivable (1)	(137.1)	(191.8)
Prepaid expenses and other	(15.0)	(17.4)
Investments in securities – current	(296.0)	–
Accounts payable and accrued liabilities	217.6	227.0
Long-term debt	–	173.0
Net (cash) debt	(628.8)	188.4

(1) December 31, 2024 balance excludes $0.8 million of accounts receivable relating to lease incentives.

Net (cash) debt does not account for the $316.9 million long-term portion of the Company's investments in securities as at September 30, 2025 (December 31, 2024 – $563.9 million).

Paramount's operations are capital intensive and adequate sources of liquidity are required to fund ongoing exploration and development activities, discharge asset retirement obligations and satisfy its other contractual obligations and commitments. Paramount's available capital resources include cash from operating activities, cash and cash equivalents and available capacity under the Paramount Facility.

Paramount Resources Ltd. Third Quarter 2025

Based on the Company's current commodity pricing and foreign exchange rate assumptions, the forecasts of 2025 sales volumes set out in this MD&A under the "Increased 2025 Production Guidance" section and the forecasts of 2026 sales volumes set out in this MD&A under the "2026 Budget and Guidance" section, Paramount expects to fully fund its budgeted 2025 and 2026 annual capital expenditures, abandonment and reclamation expenditures and regular monthly dividends from cash from operating activities, cash and cash equivalents (including the proceeds of the NuVista Share Sale) and borrowing capacity under the Paramount Facility.

Paramount may also determine to divest of assets or investments in securities from time to time to reduce indebtedness or fund operations. Paramount realized cash proceeds of approximately $3.243 billion through the Grande Prairie Disposition and repaid all remaining drawings outstanding under the Paramount Facility in January 2025. In February 2025, the Company paid the $2.1 billion Special Distribution to shareholders. Paramount also received cash proceeds of $333 million to date in 2025 from the disposition of investments in securities, including $296 million from the October 1, 2025 NuVista Share Sale. In 2024, the Company received cash proceeds of approximately $127 million from the disposition of assets and investments in securities. Subject to market conditions and availability, proceeds from new debt and/or equity financings may also provide additional sources of capital from time to time.

Paramount Facility

The Company currently has a $500 million financial covenant-based senior secured revolving bank credit facility, which was amended and extended in January 2025 in conjunction with the closing of the Grande Prairie Disposition. The Paramount Facility is secured by a charge over substantially all of the assets of the Company and its subsidiaries and has a maturity date of January 31, 2029.

At Paramount's request, the capacity of the Paramount Facility can be increased from $500 million to up to $750 million pursuant to an accordion feature in the facility, subject to incremental lender commitments and the Company achieving average quarterly production of at least 55,000 Boe/d for two consecutive fiscal quarters.

The Company had undrawn letters of credit outstanding under the Paramount Facility totaling $4.6 million at September 30, 2025 (December 31, 2024 – $7.5 million) that reduce the amount available to be drawn on the facility.

For additional information concerning the Paramount Facility, refer to Note 8 of the Annual Financial Statements.

Unsecured Letter of Credit Facility

The Company has a $90 million unsecured demand revolving letter of credit facility (the "LC Facility") with a Canadian bank. Paramount's obligations under the LC Facility are supported by a performance security guarantee from Export Development Canada, which is valid to June 30, 2026. At September 30, 2025, $33.1 million in undrawn letters of credit were outstanding under the LC Facility (December 31, 2024 – $29.4 million).

Paramount Resources Ltd. Third Quarter 2025

Cash Flow Hedges

The Company had the following electricity swaps at September 30, 2025:

Contract type	Aggregate notional (1)	Average fixed contract rate (1)	Remaining term
Electricity Swaps (Buy)	240 MWh/d	$71.13/MWh	October 2025 – December 2025
Electricity Swaps (Buy)	120 MWh/d	$58.79/MWh	October 2025 – December 2029
Electricity Swaps (Buy)	120 MWh/d	$58.19/MWh	January 2026 – December 2028
Electricity Swaps (Buy)	120 MWh/d	$61.73/MWh	January 2026 – December 2030

(1) Floating hourly rate established by the Alberta Electric System Operator. "MWh" means megawatt-hour.

The Company has classified its electricity swaps as cash flow hedges and applied hedge accounting. There were no changes to the critical terms of the hedging relationships and no hedge ineffectiveness was identified at September 30, 2025.

Paramount Options and Share Capital

In connection with the Special Distribution, in February 2025:

i. all outstanding unvested Paramount Options with an exercise price less than $15.00 were vested;
ii. 0.9 million Paramount Options were surrendered by holders in consideration for cash payments by Paramount totaling $22.0 million, calculated as the difference between the market price of the Common Shares and the exercise price of the applicable Paramount Options surrendered; and
iii. the exercise price of all Paramount Options with an exercise price of greater than $15.00 was reduced by $15.00.

Transaction and reorganization costs in the nine months ended September 30, 2025 include $22.0 million in respect of the cash payments made by the Company on the surrender of Paramount Options.

For the nine months ended September 30, 2025, Paramount issued 1.3 million Common Shares on the exercise of Paramount Options.

During the nine months ended September 30, 2025, 1.3 million Common Shares were purchased under the Company's RSU plan at a total cost of $20.2 million and 1.4 million Common Shares having a cost of $27.3 million were released to plan participants.

At November 3, 2025, Paramount had 143.6 million Common Shares outstanding (net of 0.3 million Common Shares held in trust under the Company's RSU plan) and 7.1 million Paramount Options outstanding, of which 3.0 million Paramount Options are exercisable.

Paramount Resources Ltd. Third Quarter 2025

Dividends and Distributions

In the nine months ended September 30, 2025, Paramount declared and paid regular monthly cash dividends totaling $0.55 per Common Share or $79.5 million (September 30, 2024 – $1.25 per Common Share or $182.2 million). The Company also paid a monthly cash dividend of $0.05 per Common Share or $7.2 million on October 31, 2025 to shareholders of record on October 15, 2025. Paramount's Board of Directors has declared a cash dividend of $0.05 per Common Share to be payable on November 28, 2025 to shareholders of record on November 14, 2025.

In addition, Paramount paid the $15.00 per Common Share Special Distribution in the first quarter of 2025, which is further described in the "Grande Prairie Disposition and Special Distribution" section of this MD&A.

Normal Course Issuer Bid

In July 2025, Paramount implemented a normal course issuer bid (the "2025 NCIB") under which the Company may purchase up to 7.5 million Common Shares for cancellation. The 2025 NCIB will terminate on the earlier of July 7, 2026 and the date on which the maximum number of Common Shares that can be acquired pursuant to the 2025 NCIB are purchased. Purchases of Common Shares under the 2025 NCIB will be made through the facilities of the Toronto Stock Exchange or alternative Canadian trading systems at the market price at the time of purchase. The Company has not made any purchases of Common Shares under the 2025 NCIB to date.

Paramount previously implemented a normal course issuer bid in July 2024 (the "2024 NCIB"), which expired on July 7, 2025. In early February 2025, prior to the Special Distribution, Paramount purchased and cancelled 4.9 million Common Shares under the 2024 NCIB at a total cost of $154.7 million. The difference between the total acquisition cost of these Common Shares and their average carrying value was charged to retained earnings. Retained earnings for the nine months ended September 30, 2025 was also reduced by $2.4 million in respect of the two percent Canadian federal tax on net share repurchases. The Company purchased and cancelled a total of 5.7 million Common Shares under the 2024 NCIB at a total cost of $177.0 million.

Paramount Resources Ltd. Third Quarter 2025

QUARTERLY INFORMATION

	2025			2024				2023
	Q3	Q2	Q1	Q4	Q3	Q2	Q1	Q4
Petroleum and natural gas sales	144.2	127.2	266.6	459.3	404.8	443.6	452.3	470.5
Revenue	191.1	165.2	349.6	509.5	438.0	461.9	445.2	451.8
Net income (loss)	(2.3)	4.2	1,288.8	87.4	95.8	84.5	68.1	111.9
Per share – basic ($/share)	(0.02)	0.03	8.90	0.60	0.65	0.58	0.47	0.78
Per share – diluted ($/share)	(0.02)	0.03	8.74	0.59	0.64	0.57	0.46	0.75
Cash from operating activities	42.3	39.8	149.9	187.7	205.7	220.5	201.3	287.0
Per share – basic ($/share) (1)	0.30	0.28	1.03	1.28	1.40	1.51	1.39	1.99
Per share – diluted ($/share) (1)	0.30	0.27	1.02	1.26	1.38	1.47	1.35	1.93
Adjusted funds flow (1)	96.8	81.5	149.1	237.8	200.7	266.2	225.6	284.1
Per share – basic ($/share)	0.67	0.57	1.03	1.62	1.37	1.82	1.56	1.97
Per share – diluted ($/share)	0.67	0.56	1.01	1.59	1.34	1.78	1.52	1.91
Free cash flow (1)	(116.7)	(85.5)	(90.6)	52.8	(26.3)	20.3	(9.5)	59.7
Per share – basic ($/share)	(0.82)	(0.60)	(0.63)	0.36	(0.18)	0.14	(0.07)	0.41
Per share – diluted ($/share)	(0.82)	(0.60)	(0.63)	0.35	(0.18)	0.14	(0.07)	0.40
Dividends and distributions declared ($/share)	0.15	0.15	15.25	0.45	0.45	0.425	0.375	0.375
Sales volumes
Natural gas (MMcf/d)	112.4	103.3	179.6	317.3	294.5	296.8	318.7	326.2
Condensate and oil (Bbl/d)	13,997	11,636	20,542	42,835	38,770	39,206	40,908	40,290
Other NGLs (Bbl/d)	3,363	2,786	3,934	6,753	7,045	6,928	6,954	6,698
Total (Boe/d)	36,087	31,631	54,409	102,477	94,892	95,609	100,977	101,348
Liquids %	48%	46%	45%	48%	48%	48%	47%	46%
Realized prices (1)
Natural gas ($/Mcf)	1.96	3.07	3.25	1.99	1.37	1.69	2.84	2.79
Condensate and oil ($/Bbl)	82.01	82.84	97.70	96.26	96.15	103.07	92.64	98.12
Other NGLs ($/Bbl)	27.04	27.02	40.47	34.32	36.25	33.07	37.81	36.00
Petroleum and natural gas ($/Boe)	43.43	44.20	54.43	48.72	46.37	50.99	49.24	50.46

(1) Adjusted funds flow and free cash flow are capital management measures used by Paramount. Each measure presented on a per share, $/Bbl, $/Mcf or $/Boe basis, other than net income per share, is a supplementary financial measure. Refer to the "Specified Financial Measures" section of this MD&A for more information on these measures.

Significant Items Impacting Quarterly Results

Quarterly earnings variances include the impacts of changing sales volumes and realized prices.

Third quarter 2025 earnings include a provision expense of $16.9 million relating to a pipeline release and $5.3 million of income related to the final resolution of Paramount's insurance claims for 2023 Alberta wildfire losses.
Second quarter 2025 earnings include a $33.8 million gain on risk management contracts and a $12.0 million loss on sale of oil and gas assets related to finalization of adjustments to the Purchase Price for the Grande Prairie Disposition.

Paramount Resources Ltd. Third Quarter 2025

First quarter 2025 earnings include a $1,619.1 million gain on the sale of oil and gas assets, $383.0 million of deferred tax expense, $23.7 million of transaction and reorganization costs and $11.1 million of income related to the second interim payment from insurers for 2023 Alberta wildfire losses.
Fourth quarter 2024 earnings include a $25.3 million loss on risk management contracts and lower depletion and depreciation expense mainly from transferring the Sold Assets to held for sale during the fourth quarter of 2024.
Third quarter 2024 earnings include a $32.5 million gain on risk management contracts.
Second quarter 2024 earnings include a $36.0 million gain on risk management contracts, $10.0 million related to the first interim payment from insurers for 2023 Alberta wildfire losses and $7.9 million in dividends on the Company's investments in securities.
First quarter 2024 earnings include a $15.6 million gain on the sale of oil and gas assets.
Fourth quarter 2023 earnings include a $53.4 million gain on risk management contracts.

OTHER INFORMATION

Paramount had the following contractual obligations at September 30, 2025: (1)

	Within one year	After one year but not more than three years	After three years but not more than five years	More than five years	Total
Transportation and processing commitments	69.9	192.5	214.2	728.1	1,204.7
Finance lease and other commitments	11.8	11.1	5.9	17.1	45.9
	81.7	203.6	220.1	745.2	1,250.6

(1) Excludes risk management liabilities and accounts payable and accrued liabilities. For additional information concerning the Company's risk management liabilities, refer to Note 11 in the Interim Financial Statements.

Transportation and processing commitments mainly relate to long-term firm service arrangements for the transportation and processing of the Company's sales volumes.

In connection with the Grande Prairie Disposition, the acquirer assumed Paramount's processing and transportation commitments and finance lease obligations related to the Sold Assets effective January 31, 2025.

Contingencies

In the normal course of Paramount's operations, the Company may become involved in, named as a party to, or be the subject of, various legal proceedings, including regulatory proceedings, tax proceedings and legal actions. The outcome of outstanding, pending or future proceedings cannot be predicted with certainty. Paramount does not anticipate that these claims will have a material impact on its financial position.

Tax and royalty legislation and regulations, and government interpretation and administration thereof, continually change. As a result, there are often tax and royalty matters under review by government authorities. All tax and royalty filings are subject to subsequent government audit and potential reassessments. Accordingly, the final amounts may differ materially from amounts estimated and recorded.

Paramount Resources Ltd. Third Quarter 2025

NEW AND UPDATED ACCOUNTING POLICIES

Future Changes in Accounting Standards

In April 2024, the International Accounting Standards Board ("IASB") issued IFRS 18 – Presentation and Disclosure in Financial Statements, which replaces IAS 1 – Presentation of Financial Statements and establishes a revised structure for the financial statements, required disclosures for certain management-defined performance measures and additional requirements for the grouping of information in the financial statements. IFRS 18 is effective for fiscal years beginning on or after January 1, 2027, with early adoption permitted. The Company is currently assessing the impact of this new standard on its consolidated financial statements.

In May 2024, the IASB issued amendments to IFRS 9 – Financial Instruments and IFRS 7 – Financial Instruments: Disclosures. These amendments clarify the date of recognition and derecognition of financial assets and liabilities including the settling of financial liabilities using an electronic payment system and the classification of certain financial assets. In addition, there are new disclosure requirements related to equity instruments designated as fair value through other comprehensive income. These amendments are effective for fiscal years beginning on or after January 1, 2026, with early adoption permitted. As a result of the adoption of these amendments, Paramount expects to increase its cash and cash equivalents and accounts payable and accrued liabilities balances for the amount of outstanding cheques at the end of each reporting period.

INTERNAL CONTROL OVER FINANCIAL REPORTING

During the three months ended September 30, 2025, there was no change in the Company's internal control over financial reporting ("ICFR") that materially affected, or is reasonably likely to materially affect, the Company's ICFR.

Internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

Paramount Resources Ltd. Third Quarter 2025

RISK FACTORS

Readers should, in conjunction with their review of this MD&A, carefully review the "Risk Factors" section in the Annual Information Form, which is available under the Company's profile on SEDAR+ at www.sedarplus.ca.

A variety of tariffs and retaliatory tariffs have been announced, threatened or imposed as between the United States and Canada and the United States and other nations. Risks exist as of the date of this MD&A that: (i) the tariffs and retaliatory tariffs imposed to date will remain in place for an extended period; (ii) additional tariffs and retaliatory tariffs will be imposed between the United States and Canada or between the United States and other nations; (iii) other actions will be taken to restrict or tax the trade of goods between the United States and Canada or between the United States and other nations; and/or (iv) action will be taken to amend or terminate existing trade agreements, including the United States-Mexico-Canada Agreement.

See the "Risk Factors – Tariffs and Other Trade Actions" section of the Annual Information Form for a description of the risks to the Company associated with existing or potential tariffs, export restrictions and/or export taxes. In addition, the existence of the conditions described above increases the Company's exposure to the risks described in the "Risk Factors" section of the Annual Information Form under "Volatility of NGLs, Natural Gas and Oil Prices and Price Differentials", "Uncertainty as to Costs", "Availability of Equipment, Materials and Services", "Market Price of Common Shares", "Investment Risk" and "Hedging, Interest Rates and Foreign Currency Exchange Rates".

Paramount Resources Ltd. Third Quarter 2025

PRODUCT TYPE INFORMATION

This MD&A includes references to sales volumes of "natural gas", "condensate and oil", "NGLs", "Other NGLs" and "liquids". "Natural gas" refers to shale gas and conventional natural gas combined. "Condensate and oil" refers to condensate, light and medium crude oil, tight oil and heavy crude oil combined. "NGLs" refers to condensate and Other NGLs combined. "Other NGLs" refers to ethane, propane and butane. "Liquids" refers to condensate and oil and Other NGLs combined. Below is a complete breakdown of sales volumes for applicable periods by the specific product types of shale gas, conventional natural gas, NGLs, light and medium crude oil, tight oil and heavy crude oil. Numbers may not add due to rounding.

	2025			2024				2023	YTD Sept 30
	Q3	Q2	Q1	Q4	Q3	Q2	Q1	Q4	2025	2024
SALES VOLUMES - TOTAL COMPANY BY PRODUCT TYPE
Shale gas (MMcf/d)	72.8	58.9	134.2	269.2	249.0	243.1	268.5	271.8	88.4	253.5
Conventional natural gas (MMcf/d)	39.6	44.4	45.4	48.1	45.5	53.7	50.2	54.4	43.1	49.8
Natural gas (MMcf/d)	112.4	103.3	179.6	317.3	294.5	296.8	318.7	326.2	131.5	303.3
Condensate (Bbl/d)	12,180	9,688	18,817	41,243	36,830	36,825	38,332	37,522	13,536	37,327
Other NGLs (Bbl/d)	3,363	2,786	3,934	6,753	7,045	6,928	6,954	6,698	3,359	6,976
NGLs (Bbl/d)	15,543	12,474	22,751	47,996	43,875	43,753	45,286	44,220	16,895	44,303
Light and medium crude oil (Bbl/d)	1,188	1,263	971	792	1,235	1,566	1,595	1,636	1,142	1,465
Tight oil (Bbl/d)	254	285	396	393	368	466	592	699	311	475
Heavy crude oil (Bbl/d)	375	400	358	407	337	349	389	433	378	358
Crude oil (Bbl/d)	1,817	1,948	1,725	1,592	1,940	2,381	2,576	2,768	1,831	2,298
Total (Boe/d)	36,087	31,631	54,409	102,477	94,892	95,609	100,977	101,348	40,642	97,151
SALES VOLUMES - CENTRAL ALBERTA REGION AND OTHER
---	---	---	---	---	---	---	---	---	---	---
Shale gas (MMcf/d)	36.1	19.4	17.6	19.7	14.2	20.3	36.4	27.5	24.4	23.6
Conventional natural gas (MMcf/d)	3.0	3.2	3.6	3.7	3.8	4.8	2.4	4.6	3.2	3.6
Natural gas (MMcf/d)	39.1	22.6	21.2	23.4	18.0	25.1	38.8	32.1	27.6	27.2
Condensate (Bbl/d)	5,702	3,760	2,992	3,120	1,964	2,273	3,233	1,364	4,161	2,487
Other NGLs (Bbl/d)	2,140	1,523	1,186	1,296	924	1,156	1,144	751	1,620	1,074
NGLs (Bbl/d)	7,842	5,283	4,178	4,416	2,888	3,429	4,377	2,115	5,781	3,561
Light and medium crude oil (Bbl/d)	22	22	28	20	11	22	22	34	24	19
Tight oil (Bbl/d)	190	211	234	220	160	239	239	267	211	213
Heavy crude oil (Bbl/d)	375	400	358	407	337	349	389	433	378	358
Crude oil (Bbl/d)	587	633	620	647	508	610	650	734	613	590
Total (Boe/d)	14,932	9,669	8,334	8,972	6,390	8,226	11,485	8,193	11,003	8,692
SALES VOLUMES - KAYBOB
---	---	---	---	---	---	---	---	---	---	---
Shale gas (MMcf/d)	36.7	39.5	39.7	35.7	31.8	35.8	30.6	30.2	38.6	32.7
Conventional natural gas (MMcf/d)	36.6	41.2	41.8	44.3	41.6	48.8	47.7	49.6	39.9	46.1
Natural gas (MMcf/d)	73.3	80.7	81.5	80.0	73.4	84.6	78.3	79.8	78.5	78.8
Condensate (Bbl/d)	6,478	5,928	5,500	6,794	5,943	6,617	6,038	4,003	5,972	6,199
Other NGLs (Bbl/d)	1,223	1,263	1,292	1,480	1,403	1,599	1,480	1,209	1,259	1,494
NGLs (Bbl/d)	7,701	7,191	6,792	8,274	7,346	8,216	7,518	5,212	7,231	7,693
Light and medium crude oil (Bbl/d)	1,166	1,241	943	772	1,224	1,544	1,573	1,602	1,118	1,446
Tight oil (Bbl/d)	64	74	57	60	85	80	212	205	65	125
Crude oil (Bbl/d)	1,230	1,315	1,000	832	1,309	1,624	1,785	1,807	1,183	1,571
Total (Boe/d)	21,155	21,962	21,371	22,441	20,894	23,946	22,353	20,324	21,495	22,392

Paramount Resources Ltd. Third Quarter 2025

	2025			2024				2023	YTD Sept 30
	Q3	Q2	Q1	Q4	Q3	Q2	Q1	Q4	2025	2024
SALES VOLUMES – SOLD ASSETS
Shale gas (MMcf/d)	-	-	76.9	213.8	203.0	187.0	201.5	214.1	25.4	197.2
Conventional natural gas (MMcf/d)	-	-	-	0.1	0.1	0.1	0.1	0.2	-	0.1
Natural gas (MMcf/d)	-	-	76.9	213.9	203.1	187.1	201.6	214.3	25.4	197.3
Condensate (Bbl/d)	-	-	10,325	31,329	28,923	27,935	29,061	32,155	3,403	28,641
Other NGLs (Bbl/d)	-	-	1,456	3,977	4,718	4,173	4,330	4,738	480	4,408
NGLs (Bbl/d)	-	-	11,781	35,306	33,641	32,108	33,391	36,893	3,883	33,049
Tight oil (Bbl/d)	-	-	105	113	123	147	141	227	35	137
Crude oil (Bbl/d)	-	-	105	113	123	147	141	227	35	137
Total (Boe/d)	-	-	24,704	71,064	67,608	63,437	67,139	72,831	8,144	66,067

Fourth quarter 2025 average sales volumes are expected to be between 42,000 Boe/d and 45,000 Boe/d (49% shale gas and conventional natural gas combined, 41% condensate, light and medium crude oil, tight oil and heavy crude oil combined and 10% other NGLs).

First half 2026 average sales volumes are expected to be between 37,000 Boe/d and 42,000 Boe/d (53% shale gas and conventional natural gas combined, 37% condensate, light and medium crude oil, tight oil and heavy crude oil combined and 10% other NGLs).
Third quarter 2026 average sales volumes are expected to be between 46,500 Boe/d and 51,500 Boe/d (49% shale gas and conventional natural gas combined, 41% condensate, light and medium crude oil, tight oil and heavy crude oil combined and 10% other NGLs).
Fourth quarter 2026 average sales volumes are expected to be between 59,000 Boe/d and 64,000 Boe/d (47% shale gas and conventional natural gas combined, 43% condensate, light and medium crude oil, tight oil and heavy crude oil combined and 10% other NGLs).

Year-end 2027 exit sales volumes are expected to be over 100,000 Boe/d (65% shale gas and conventional natural gas combined, 29% condensate, light and medium crude oil, tight oil and heavy crude oil combined and 6% other NGLs).

Paramount Resources Ltd. Third Quarter 2025

SPECIFIED FINANCIAL MEASURES

Non-GAAP Financial Measures

Netback equals petroleum and natural gas sales (the most directly comparable measure disclosed in the Company's primary financial statements) plus sales of commodities purchased less royalties, operating expense, transportation and NGLs processing expense and commodities purchased. Sales of commodities purchased and commodities purchased are treated as corporate items and are not allocated to individual regions or properties. Netback is used by investors and Management to compare the performance of the Company's producing assets between periods.

Netback including risk management contract settlements equals netback after including (or deducting) risk management contract settlements received (paid). Netback including risk management contract settlements is used by investors and Management to assess the performance of the producing assets after incorporating Management's risk management strategies.

A calculation of netback and netback including risk management contract settlements for the three and nine months ended September 30, 2025 and 2024 is provided in this MD&A under "Operating Results – Netback".

Non-GAAP Ratios

Netback and netback including risk management contract settlements presented on a $/Boe basis are non-GAAP ratios as they each have a non-GAAP financial measure (netback and netback including risk management contract settlements, respectively) as a component. These measures are not standardized measures under IFRS and might not be comparable to similar financial measures presented by other issuers. These measures should not be considered in isolation or construed as alternatives to their most directly comparable measure disclosed in the Company's primary financial statements or other measures of financial performance calculated in accordance with IFRS.

Netback on a $/Boe basis is calculated by dividing netback for the applicable period by the total sales volumes during the period in Boe. Netback including risk management contract settlements on a $/Boe basis is calculated by dividing netback including risk management contract settlements for the applicable period by the total sales volumes during the period in Boe. These measures are used by investors and Management to assess netback and netback including risk management contract settlements on a unit of sales volumes basis.

Capital Management Measures

Adjusted funds flow, free cash flow, net (cash) debt and net debt to adjusted funds flow are capital management measures that Paramount utilizes in managing its capital structure. These measures are not standardized measures and therefore may not be comparable with the calculation of similar measures by other entities. Refer to Note 15 in the Interim Financial Statements for a description of the composition and use of these measures. Refer also to the "Liquidity and Capital Resources" section in this MD&A.

Paramount Resources Ltd. Third Quarter 2025

A reconciliation of adjusted funds flow to cash from operating activities, the most directly comparable measure disclosed in the Company's primary financial statements, for the three and nine months ended September 30, 2025 and 2024 is provided in this MD&A under "Consolidated Results – Adjusted Funds Flow".

A reconciliation of free cash flow to cash from operating activities, the most directly comparable measure disclosed in the Company's primary financial statements, for the three and nine months ended September 30, 2025 and 2024 is provided in this MD&A under "Consolidated Results – Free Cash Flow".

A calculation of net (cash) debt as at September 30, 2025 and December 31, 2024 is provided in this MD&A under the "Liquidity and Capital Resources" section. Paramount's net debt to adjusted funds flow ratio was considered not meaningful at September 30, 2025, as the Company was not in a net debt position. The Company's net debt to adjusted funds flow ratio (determined on a trailing four quarter basis) was 0.2x at December 31, 2024.

Supplementary Financial Measures

This MD&A contains supplementary financial measures expressed as: (i) cash from operating activities, adjusted funds flow and free cash flow on a per share – basic and per share – diluted basis, (ii) petroleum and natural gas sales, adjusted funds flow, revenue, royalties, operating expenses, transportation and NGLs processing expenses, sales of commodities purchased and commodities purchased on a $/Bbl, $/Mcf or $/Boe basis and (iii) royalty rate.

Petroleum and natural gas sales, adjusted funds flow, revenue, royalties, operating expenses, transportation and NGLs processing expenses, sales of commodities purchased and commodities purchased on a $/Bbl, $/Mcf or $/Boe basis are calculated by dividing petroleum and natural gas sales, adjusted funds flow, revenue, royalties, operating expenses, transportation and NGLs processing expenses, sales of commodities purchased and commodities purchased, as applicable, over the referenced period by the aggregate units (Bbl, Mcf or Boe) of sales volumes during such period.

Royalty rate is calculated by dividing royalties by petroleum and natural gas sales less natural gas transportation assignment income and royalty income and other revenue.

ADVISORIES

Forward-looking Information

Certain statements in this MD&A constitute forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as "anticipate", "believe", "estimate", "will", "expect", "plan", "schedule", "intend", "propose", or similar words suggesting future outcomes or an outlook. Forward-looking information in this document includes, but is not limited to:

Paramount Resources Ltd. Third Quarter 2025

the expectation that sales volumes through the Alhambra Plant will increase over the fourth quarter;
the statement that the first phase of the Sinclair Montney play is being designed for a plateau rate of sales gas in excess of 50,000 Boe/d that can be maintained for over 20 years;
the expected capacity of the Sinclair Plant on completion and planned timing of the start-up of the Sinclair Plant;
the Company's plans to have 24 (24.0 net) wells ready to produce to the Sinclair Plant on start-up;
expected average sales volumes, capital expenditures and abandonment and reclamation expenditures for 2025;
expected average sales volumes for 2026 and certain periods therein;
budgeted capital expenditures in 2026 and the allocation thereof;
budgeted abandonment and reclamation expenditures in 2026;
expected operating expenses in the fourth quarter of 2026;
the Company's outlook for capital expenditures and sales volumes in 2027 and the year-end 2027 exit rate of sales volumes;
the Company's plans to maintain average sales volumes in the Kaybob Region within a certain range through to 2028;
planned and potential exploration, development and production activities, including the drilling, completion and bringing onstream of new wells, the construction of pipelines and other infrastructure and planned facility outages;
the expected sources of funding for forecast 2025 and 2026 capital expenditures, abandonment and reclamation expenditures and regular monthly dividends; and
the anticipation that legal proceedings will not have a material impact on Paramount's financial position.

future commodity prices;
the potential scope and duration of tariffs, export taxes, export restrictions or other trade actions;
the impact of international conflicts, including in Ukraine and the Middle East;
royalty rates, taxes and capital, operating, general & administrative and other costs;
foreign currency exchange rates, interest rates and the rate and impacts of inflation;
general business, economic and market conditions;
the performance of wells and facilities;
the availability to Paramount of the funds required for exploration, development and other operations (including the construction of the Sinclair Plant and the second phase of the Alhambra Plant) and the meeting of commitments and financial obligations;
the ability of Paramount to obtain equipment, materials, services and personnel in a timely manner and at expected and acceptable costs to carry out its activities;
the ability of Paramount to secure adequate processing, transportation, fractionation, disposal and storage capacity on acceptable terms and the capacity and reliability of facilities, pipelines and other infrastructure;
the ability of Paramount to obtain the volumes of water required for completion activities;
the ability of Paramount to market its production successfully;
the ability of Paramount and its industry partners to obtain drilling success (including in respect of anticipated sales volumes, reserves additions, product yields and product recoveries) and operational improvements, efficiencies and results consistent with expectations;
the timely receipt of required governmental and regulatory approvals, including those necessary for the construction of the Sinclair Plant;

Paramount Resources Ltd. Third Quarter 2025

the application of regulatory requirements respecting abandonment and reclamation;
the merits of outstanding and pending legal proceedings; and
anticipated timelines and budgets being met in respect of: (i) drilling programs and other operations, including well completions and tie-ins, (ii) the design, construction, commissioning and start-up of new and expanded Company and third-party facilities, pipelines and other infrastructure, including the Sinclair Plant and the second phase of the Alhambra Plant, and (iii) facility turnarounds and maintenance.

Although Paramount believes that the expectations reflected in such forward-looking information are reasonable based on the information available at the time of this MD&A, undue reliance should not be placed on the forward-looking information as Paramount can give no assurance that such expectations will prove to be correct. Forward-looking information is based on expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Paramount and described in the forward-looking information. The material risks and uncertainties include, but are not limited to:

those risks set out in this MD&A under "Risk Factors";
fluctuations in commodity prices;
changes in capital spending plans and planned exploration and development activities;
changes in political and economic conditions, including risks associated with tariffs, export taxes, export restrictions or other trade actions;
changes in foreign currency exchange rates, interest rates and the rate of inflation;
the uncertainty of estimates and projections relating to future production, product yields (including condensate to natural gas ratios), revenue, cash flows, reserves additions, product recoveries, royalty rates, taxes and costs and expenses;
the ability to secure adequate processing, transportation, fractionation, disposal and storage capacity on acceptable terms;
operational risks in exploring for, developing, producing and transporting natural gas and liquids, including the risk of spills, leaks or blowouts;
risks associated with wildfires, including the risk of physical loss or damage to wells, facilities, pipelines and other infrastructure, prolonged disruptions in production, restrictions on the ability to access properties, interruption of electrical and other services and significant delays or changes to planned development activities and facilities maintenance;
the ability to obtain equipment, materials, services and personnel in a timely manner and at expected and acceptable costs, including the potential effects of inflation and supply chain disruptions;
potential disruptions, delays or unexpected technical or other difficulties in designing, developing, expanding, commissioning, starting-up or operating new, expanded or existing facilities, pipelines and other infrastructure, including third-party facilities, the Sinclair Plant and the Alhambra Plant;
processing, transportation, fractionation, disposal and storage outages, disruptions and constraints;
potential limitations on access to the volumes of water required for completion activities due to drought, conditions of low river flow, government restrictions or other factors;
risks and uncertainties involving the geology of oil and gas deposits;
the uncertainty of reserves estimates;
general business, economic and market conditions;
the ability to generate sufficient cash from operating activities to fund, or to otherwise finance planned exploration, development and operational activities (including the construction of the Sinclair Plant and the second phase of the Alhambra Plant) and meet current and future commitments and obligations (including asset retirement obligations, processing, transportation, fractionation and similar commitments and obligations);
changes in, or in the interpretation of, laws, regulations or policies (including environmental laws);

Paramount Resources Ltd. Third Quarter 2025

the ability to obtain required governmental or regulatory approvals in a timely manner, including those required for the Sinclair Plant, and to obtain and maintain leases and licenses;
the effects of weather and other factors including wildlife and environmental restrictions which affect field operations and access;
uncertainties as to the timing and cost of future abandonment and reclamation obligations and potential liabilities for environmental damage and contamination;
uncertainties regarding Indigenous claims and in maintaining relationships with local populations and other stakeholders;
the outcome of existing and potential lawsuits, regulatory actions, audits and assessments; and
other risks and uncertainties described elsewhere in this document and in Paramount's other filings with Canadian securities authorities.

The foregoing list of risks is not exhaustive. For more information relating to risks, see the section titled "Risk Factors" in Paramount's Annual Information Form for the year ended December 31, 2024, which is available on SEDAR+ at www.sedarplus.ca. The forward-looking information contained in this document is made as of the date hereof and, except as required by applicable securities law, Paramount undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise.

Oil and Gas Measures and Definitions

Liquids
Bbl	Barrels
Bbl/d	Barrels per day
NGLs	Natural gas liquids
Condensate	Pentane and heavier hydrocarbons
WTI	West Texas Intermediate
Oil Equivalent
Boe	Barrels of oil equivalent
Boe/d	Barrels of oil equivalent per day
Natural Gas
---	---
Mcf	Thousands of cubic feet
MMcf/d	Millions of cubic feet per day
GJ	Gigajoules
GJ/d	Gigajoules per day
MMBtu	Millions of British Thermal Units
MMBtu/d	Millions of British Thermal Units per day
NYMEX	New York Mercantile Exchange
AECO	AECO-C reference price

This MD&A contains disclosures expressed as "Boe", "$/Boe" and "Boe/d". Natural gas equivalency volumes have been derived using the ratio of six thousand cubic feet of natural gas to one barrel of oil when converting natural gas to Boe. Equivalency measures may be misleading, particularly if used in isolation. A conversion ratio of six thousand cubic feet of natural gas to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head. For the nine months ended September 30, 2025, the value ratio between crude oil and natural gas was approximately 55:1. This value ratio is significantly different from the energy equivalency ratio of 6:1. Using a 6:1 ratio would be misleading as an indication of value.

Paramount Resources Ltd. Third Quarter 2025

Paramount Resources Ltd.

Interim Condensed Consolidated Financial Statements (Unaudited)
For the three and nine months ended September 30, 2025

Paramount Resources Ltd. Third Quarter 2025

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

($ millions)

As at	Note	September 30 2025	December 31 2024
ASSETS
Current assets
Cash and cash equivalents	14	398.3	2.4
Accounts receivable		137.1	192.6
Risk management – current	11	16.2	8.3
Prepaid expenses and other		15.0	17.4
Investments in securities – current	4	296.0	–
Assets held for sale	3	–	1,903.2
		862.6	2,123.9
Investments in securities – long-term	4	316.9	563.9
Risk management – long-term	11	5.2	1.2
Exploration and evaluation	2	474.4	427.1
Property, plant and equipment, net	3	1,901.8	1,509.9
Deferred income tax	10	–	131.5
		3,560.9	4,757.5
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities		217.6	227.0
Risk management – current	11	1.3	0.7
Asset retirement obligations and other – current	6	38.3	30.1
Liabilities associated with assets held for sale	3	–	287.1
		257.2	544.9
Long-term debt	5	–	173.0
Risk management – long-term	11	3.9	4.5
Asset retirement obligations and other – long-term	6	351.2	339.8
Deferred income tax	10	260.6	–
		872.9	1,062.2
Commitments and contingencies	16
Shareholders' equity
Share capital	7	515.2	2,323.3
Retained earnings		1,521.8	766.7
Reserves	8	651.0	605.3
		2,688.0	3,695.3
		3,560.9	4,757.5

See the accompanying notes to these Interim Condensed Consolidated Financial Statements

Paramount Resources Ltd. Third Quarter 2025

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

($ millions, except as noted)

	Note	Three months ended September 30		Nine months ended September 30
		2025	2024	2025	2024
Petroleum and natural gas sales		144.2	404.8	538.0	1,300.9
Royalties		(7.3)	(46.4)	(39.7)	(174.3)
Sales of commodities purchased		54.2	79.6	207.6	218.6
Revenue	12	191.1	438.0	705.9	1,345.2
(Loss) gain on risk management contracts	11	(3.8)	32.5	38.9	57.2
		187.3	470.5	744.8	1,402.4
Expenses
Operating expense		33.8	116.3	137.3	350.9
Transportation and NGLs processing		14.5	34.2	48.1	97.5
Commodities purchased		53.1	78.5	203.6	214.3
General and administrative		12.3	10.7	40.2	35.7
Share-based compensation	9	3.6	4.9	25.3	18.1
Depletion and depreciation	3	63.3	105.1	178.1	360.2
Exploration and evaluation	2	(4.6)	2.9	3.9	10.5
(Gain) loss on sale of oil and gas assets	3	(3.0)	0.4	(1,606.8)	(15.5)
Interest and financing		1.3	1.9	5.1	5.0
Accretion of asset retirement obligations	6	6.0	10.6	19.2	31.8
Transaction and reorganization costs	9	-	-	24.3	-
Other	13	10.5	(1.5)	(6.2)	(11.3)
		190.8	364.0	(927.9)	1,097.2
Income (loss) before tax		(3.5)	106.5	1,672.7	305.2
Income tax (recovery) expense
Deferred	10	(1.2)	10.7	382.1	56.7
		(1.2)	10.7	382.1	56.7
Net income (loss)		(2.3)	95.8	1,290.6	248.5
Other comprehensive income (loss), net of tax	8
Items that will be reclassified to net income (loss)
Change in fair value of cash flow hedges, net of tax		0.3	(1.7)	0.8	(3.7)
Reclassification to net income (loss), net of tax		0.4	0.2	1.8	-
Items that will not be reclassified to net income (loss)
Change in fair value of securities, net of tax	4	28.7	(86.2)	68.6	18.4
Comprehensive income		27.1	8.1	1,361.8	263.2
Net income (loss) per common share ($/share)	7
Basic		(0.02)	0.65	8.98	1.71
Diluted		(0.02)	0.64	8.81	1.67

See the accompanying notes to these Interim Condensed Consolidated Financial Statements

Paramount Resources Ltd. Third Quarter 2025

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

($ millions)

	Note	Three months ended September 30		Nine months ended September 30
		2025	2024	2025	2024
Operating activities
Net income (loss)		(2.3)	95.8	1,290.6	248.5
Add (deduct):
Items not involving cash	14	79.6	102.0	(1,015.0)	434.2
Asset retirement obligations settled	6	(4.4)	(7.4)	(29.6)	(26.2)
Change in non-cash working capital		(30.6)	15.3	(14.0)	(28.8)
Cash from operating activities		42.3	205.7	232.0	627.7
Financing activities
Net draw (repayment) of revolving long-term debt	5	-	44.7	(173.6)	44.7
Lease liabilities – principal repayments	6	(1.0)	(0.9)	(3.1)	(2.9)
Dividends and distributions	7	(21.5)	(65.9)	(2,227.0)	(182.2)
Common Shares issued, net of issue costs	7	0.5	0.1	10.5	18.7
Common Shares purchased under NCIB	7	-	-	(157.1)	-
RSU plan	9	(0.3)	(5.1)	(35.1)	(20.3)
Change in non-cash working capital		-	-	2.4	-
Cash used in financing activities		(22.3)	(27.1)	(2,583.0)	(142.0)
Investing activities
Capital expenditures	2,3	(206.5)	(216.7)	(579.9)	(671.5)
Land and property acquisitions	2,3	(17.8)	(0.4)	(21.6)	(3.4)
Proceeds of disposition	2,3,4	5.8	(0.4)	3,275.9	126.8
Change in non-cash working capital		34.7	2.6	72.6	14.5
Cash (used in) from investing activities		(183.8)	(214.9)	2,747.0	(533.6)
Net (decrease) increase		(163.8)	(36.3)	396.0	(47.9)
Foreign exchange on cash and cash equivalents		0.3	0.5	(0.1)	1.1
Cash and cash equivalents, beginning of period		561.8	37.9	2.4	48.9
Cash and cash equivalents, end of period		398.3	2.1	398.3	2.1

See the accompanying notes to these Interim Condensed Consolidated Financial Statements

Supplemental cash flow information

Paramount Resources Ltd. Third Quarter 2025

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)

($ millions, except as noted)

Nine months ended September 30	Note	2025		2024
		Shares (millions)		Shares (millions)
Share capital
Balance, beginning of period		146.9	2,323.3	144.2	2,302.0
Issued on exercise of Paramount Options	7,9	1.3	14.6	2.3	24.8
Common Shares purchased & cancelled under NCIB	7	(4.9)	(111.1)	-	-
Change in Common Shares for RSU plan	9	0.1	7.1	-	(7.3)
Return of capital distribution	7	-	(1,718.7)	-	-
Balance, end of period		143.4	515.2	146.5	2,319.5
Retained earnings
Balance, beginning of period			766.7		632.4
Net income			1,290.6		248.5
Dividends	7		(508.3)		(182.2)
Common Shares purchased & cancelled under NCIB	7		(46.0)		-
Reclassification of accumulated gain on securities	4		18.8		57.7
Balance, end of period			1,521.8		756.4
Reserves	8
Balance, beginning of period			605.3		564.8
Other comprehensive income			71.2		14.7
Contributed surplus			(6.7)		9.5
Reclassification of accumulated gain on securities	4		(18.8)		(57.7)
Balance, end of period			651.0		531.3
Shareholders' equity			2,688.0		3,607.2

See the accompanying notes to these Interim Condensed Consolidated Financial Statements

Paramount Resources Ltd. Third Quarter 2025

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

(Tabular amounts stated in $ millions, except as noted)

1. Basis of Presentation

Paramount Resources Ltd. ("Paramount" or the "Company") is an independent, publicly traded Canadian energy company that explores for and develops both conventional and unconventional petroleum and natural gas. The Company also pursues longer-term strategic exploration and pre-development plays and holds a portfolio of investments in other entities. Paramount's principal properties are located in Alberta and British Columbia.

Paramount is the ultimate parent company of a consolidated group of companies and is incorporated and domiciled in Canada. The address of the Company's registered office is Suite 4700, 888 – 3rd Street SW, Calgary, Alberta T2P 5C5. The consolidated group includes wholly-owned subsidiaries Fox Drilling Limited Partnership and MGM Energy. The financial statements of Paramount's subsidiaries and partnerships are prepared for the same reporting periods as the parent in accordance with the Company's accounting policies. Intercompany balances and transactions have been eliminated.

These unaudited interim condensed consolidated financial statements of the Company, as at and for the three and nine months ended September 30, 2025 (the "Interim Financial Statements"), were authorized for issuance by the Audit Committee of Paramount's Board of Directors on November 3, 2025.

These Interim Financial Statements have been prepared in accordance with IAS 34 – Interim Financial Reporting on a basis consistent with the accounting, estimation and valuation policies described in the Company's audited consolidated financial statements as at and for the year ended December 31, 2024 (the "Annual Financial Statements").

These Interim Financial Statements are stated in millions of Canadian dollars, unless otherwise noted, and have been prepared on a historical cost basis, except for certain financial instruments which are stated at fair value. All references to "$" are to Canadian dollars and all references to "US$" are to United States dollars. Certain information and disclosures normally required to be included in the notes to the Annual Financial Statements have been condensed or omitted. These Interim Financial Statements should be read in conjunction with the Annual Financial Statements.

Future Changes in Accounting Standards

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

(Tabular amounts stated in $ millions, except as noted)

In May 2024, the IASB issued amendments to IFRS 9 – Financial Instruments and IFRS 7 – Financial Instruments: Disclosures. These amendments clarify the date of recognition and derecognition of financial assets and liabilities, including the settling of financial liabilities using an electronic payment system, and the classification of certain financial assets. In addition, there are new disclosure requirements related to equity instruments designated as fair value through other comprehensive income. These amendments are effective for fiscal years beginning on or after January 1, 2026, with early adoption permitted. As a result of the adoption of these amendments, Paramount expects to increase its cash and cash equivalents and accounts payable and accrued liabilities balances for the amount of outstanding cheques at the end of each reporting period.

2. Exploration and Evaluation

	Nine months ended September 30, 2025	Twelve months ended December 31, 2024
Balance, beginning of period	427.1	546.6
Additions	30.1	15.7
Acquisitions	19.7	14.0
Change in asset retirement provision	–	1.2
Transfers to property, plant and equipment	(1.5)	(16.2)
Expired lease costs and other	(0.8)	(14.6)
Reversal of exploration and evaluation asset impairment	7.7	–
Dispositions	(7.9)	(12.5)
Transfer to assets held for sale (see Note 3)	–	(107.1)
Balance, end of period	474.4	427.1

Exploration and Evaluation Expense

	Three months ended September 30		Nine months ended September 30
	2025	2024	2025	2024
Geological and geophysical expense	2.6	2.9	10.8	10.4
Reversal of exploration and evaluation asset impairment	(7.7)	–	(7.7)	–
Expired lease costs and other	0.5	–	0.8	0.1
	(4.6)	2.9	3.9	10.5

In the third quarter of 2025, the Company sold certain previously impaired exploration and evaluation assets for $7.7 million in common shares of the acquirer. Paramount recorded a $7.7 million reversal of previously recorded impairment charges relating to these assets in the third quarter of 2025.

At September 30, 2025, the Company assessed its exploration and evaluation assets for indicators of potential impairment or impairment reversal and none were identified.

Paramount Resources Ltd. Third Quarter 2025

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

(Tabular amounts stated in $ millions, except as noted)

3. Property, Plant and Equipment

Nine months ended September 30, 2025	Petroleum and natural gas assets	Drilling rigs	Right-of-use assets	Other	Total
Cost
Balance, beginning of period	2,744.6	175.2	29.5	63.4	3,012.7
Additions	546.0	6.3	0.8	1.8	554.9
Acquisitions	13.3	–	–	–	13.3
Transfers	1.5	–	–	–	1.5
Dispositions	(17.8)	–	(1.0)	–	(18.8)
Derecognition	–	–	(1.2)	–	(1.2)
Change in asset retirement provision	17.0	–	–	–	17.0
Cost, end of period	3,304.6	181.5	28.1	65.2	3,579.4
Accumulated depletion and depreciation
Balance, beginning of period	(1,357.5)	(98.4)	(9.7)	(37.2)	(1,502.8)
Depletion and depreciation	(160.9)	(8.5)	(3.1)	(3.9)	(176.4)
Dispositions	(0.3)	–	0.9	–	0.6
Derecognition	–	–	1.0	–	1.0
Accumulated depletion and depreciation, end of period	(1,518.7)	(106.9)	(10.9)	(41.1)	(1,677.6)
Net book value, December 31, 2024	1,387.1	76.8	19.8	26.2	1,509.9
Net book value, September 30, 2025	1,785.9	74.6	17.2	24.1	1,901.8

The Grande Prairie Disposition was made pursuant to a purchase and sale agreement dated November 13, 2024 and, as a result, the assets and liabilities associated with the Grande Prairie Disposition were presented as held for sale at December 31, 2024.

In February 2024, Paramount sold certain non-core Kaybob assets for $45.4 million cash and the retention of a two percent no-deduction gross overriding royalty on the undeveloped Montney acreage forming part of the assets. The Company realized a $14.3 million gain on sale of oil and gas assets in 2024 in connection with the transaction.

Depletion and Depreciation

	Three months ended September 30		Nine months ended September 30
	2025	2024	2025	2024
Depletion and depreciation	61.0	109.4	172.2	332.2
Change in asset retirement obligations	2.3	(4.3)	5.9	28.0
	63.3	105.1	178.1	360.2

Paramount Resources Ltd. Third Quarter 2025

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

(Tabular amounts stated in $ millions, except as noted)

For the nine months ended September 30, 2025, the Company recorded a charge of $5.9 million (September 30, 2024 – $28.0 million) to earnings related to changes in the discounted carrying value of estimated asset retirement obligations in respect of properties that had a nil carrying value ascribed to property, plant and equipment. For the nine months ended September 30, 2024, the changes mainly resulted from a reduction in the credit-adjusted risk-free rate used to discount obligations from 7.75 percent per annum to 7.0 percent per annum.

At September 30, 2025, the Company assessed its property, plant and equipment assets for indicators of potential impairment and none were identified.

4. Investments in Securities

As at September 30, 2025	Current	Long-term	Total
Level One Securities	296.0	215.3	511.3
Level Three Securities	–	101.6	101.6
Investments in securities	296.0	316.9	612.9
As at December 31, 2024	Current	Long-term	Total
Level One Securities	–	439.2	439.2
Level Three Securities	–	124.7	124.7
Investments in securities	–	563.9	563.9

Level One Securities at September 30, 2025 included 31.3 million shares of NuVista Energy Ltd. ("NuVista Shares") (December 31, 2024 – 31.3 million NuVista Shares), which had a carrying value of $501.1 million (December 31, 2024 – $431.9 million).

During the nine months ended September 30, 2024, Paramount sold a portion of its Level One Securities, including 6.0 million NuVista Shares, for aggregate cash proceeds of $79.0 million, resulting in $57.7 million of accumulated gains, net of tax, being reclassified from reserves to retained earnings.

Paramount Resources Ltd. Third Quarter 2025

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

(Tabular amounts stated in $ millions, except as noted)

Changes in the fair value of investments in securities are as follows:

	Nine months ended September 30, 2025	Twelve months ended December 31, 2024
Investments in securities, beginning of period	563.9	540.9
Changes in fair value of Level One Securities	67.1	95.0
Changes in fair value of Level Three Securities	10.7	5.9
Changes in fair value of warrants – recorded in earnings	–	(0.1)
Acquired – cash	–	1.2
Acquired – non-cash (see Note 2)	7.7	–
Proceeds of disposition	(36.5)	(79.0)
Investments in securities, end of period	612.9	563.9

In late-September 2025, the Company entered into an agreement to sell 18.5 million of its NuVista Shares for cash consideration of $296.0 million ($16.00 per NuVista Share) (the "Transaction"). The carrying value of these shares was reclassified to investments in securities – current at September 30, 2025. The Transaction closed on October 1, 2025.

5. Long-Term Debt

As at	September 30, 2025	December 31, 2024
Paramount Facility (1)	–	173.0

(1) December 31, 2024 balance presented net of $0.6 million in unamortized transaction costs.

Paramount Facility

On January 31, 2025, the capacity of Paramount's financial covenant-based senior secured revolving bank credit facility (the "Paramount Facility") was adjusted to $500 million and the maturity date was extended to January 31, 2029 in conjunction with the closing of the Grande Prairie Disposition. The Company repaid all outstanding drawings on the Paramount Facility on January 31, 2025.

At Paramount's request, the capacity of the Paramount Facility can be increased to up to $750 million pursuant to an accordion feature in the facility, subject to incremental lender commitments and the Company achieving average quarterly production of at least 55,000 Boe/d for two consecutive fiscal quarters.

Paramount was in compliance with the financial covenants under the Paramount Facility at September 30, 2025.

For additional information concerning the Paramount Facility, refer to Note 8 of the Annual Financial Statements.

Paramount Resources Ltd. Third Quarter 2025

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

(Tabular amounts stated in $ millions, except as noted)

Unsecured Letter of Credit Facility

6. Asset Retirement Obligations and Other

As at September 30, 2025	Current	Long-term	Total
Asset retirement obligations	34.6	328.4	363.0
Lease liabilities	3.7	22.8	26.5
Asset retirement obligations and other	38.3	351.2	389.5
As at December 31, 2024	Current	Long-term	Total
---	---	---	---
Asset retirement obligations	26.5	314.5	341.0
Lease liabilities	3.6	25.3	28.9
Asset retirement obligations and other	30.1	339.8	369.9

Asset Retirement Obligations

	Nine months ended September 30, 2025	Twelve months ended December 31, 2024
Asset retirement obligations, beginning of period	341.0	587.3
Additions	0.6	1.6
Acquisitions	11.3	–
Change in estimates	22.2	2.3
Change in discount rate	–	48.3
Obligations settled	(29.6)	(38.1)
Dispositions	(1.7)	(16.1)
Transfer to liabilities associated with assets held for sale (see Note 3)	–	(286.7)
Accretion expense	19.2	42.4
Asset retirement obligations, end of period	363.0	341.0

Asset retirement obligations have been determined using a credit-adjusted risk-free discount rate of 7.0 percent per annum (December 31, 2024 – 7.0 percent per annum) and an inflation rate of 2.0 percent per annum (December 31, 2024 – 2.0 percent per annum).

Lease Liabilities

	Nine months ended September 30, 2025	Twelve months ended December 31, 2024
Balance, beginning of period	28.9	29.2
Additions	0.8	3.6
Interest expense	1.3	2.0
Transfer to liabilities associated with assets held for sale (see Note 3)	–	(0.4)
Obligations settled	(4.5)	(5.5)
Balance, end of period	26.5	28.9

Paramount Resources Ltd. Third Quarter 2025

Parliament Resources Ltd. Third Quarter 2025

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

(Tabular amounts stated in $ millions, except as noted)

Paramount has lease liabilities in respect of office space and vehicles, which have been recognized at the discounted value of the remaining fixed lease payments. For the nine months ended September 30, 2025, total cash principal payments made in respect of these lease liabilities were $3.1 million (September 30, 2024 – $2.9 million).

For the nine months ended September 30, 2025, expenses related to arrangements containing variable operating costs, short-term and low value leases which have not been included in the lease liabilities were $2.1 million (September 30, 2024 – $1.8 million).

7. Share Capital

At September 30, 2025, 143.4 million (December 31, 2024 – 146.9 million) class A common shares of Paramount ("Common Shares") were outstanding, net of 0.3 million (December 31, 2024 – 0.4 million) Common Shares held in trust under the Company's restricted share unit ("RSU") plan.

For the nine months ended September 30, 2025, the Company also paid regular monthly cash dividends totaling $0.55 per Common Share or $79.5 million (September 30, 2024 – $1.25 per Common Share or $182.2 million). On October 31, 2025, the Company paid a regular monthly dividend of $7.2 million, or $0.05 per Common Share.

For the nine months ended September 30, 2025, Paramount issued 1.3 million Common Shares on the exercise of options to acquire Common Shares ("Paramount Options") (see Note 9).

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

(Tabular amounts stated in $ millions, except as noted)

Net Income (Loss) Per Common Share – Basic and Diluted

	Three months ended September 30		Nine months ended September 30
	2025	2024	2025	2024
Net income (loss) – basic and diluted	(2.3)	95.8	1,290.6	248.5
Basic – weighted average Common Shares (millions)	143.3	146.6	143.8	145.7
Dilutive effect of Paramount Options (millions)	–	2.8	2.7	3.4
Diluted – weighted average Common Shares (millions)	143.3	149.4	146.5	149.1
Net income (loss) per Common Share – basic ($/share)	(0.02)	0.65	8.98	1.71
Net income (loss) per Common Share – diluted ($/share)	(0.02)	0.64	8.81	1.67

Paramount Options are potentially dilutive and are included in the diluted per share calculation when they are dilutive to net income per share.

For the three and nine months ended September 30, 2025, 7.4 million and 1.0 million Paramount Options, respectively, were anti-dilutive (three and nine months ended September 30, 2024 – 4.4 million and 4.5 million, respectively, were anti-dilutive).

8. Reserves

Nine months ended September 30, 2025	Unrealized gains on cash flow hedges	Unrealized gains on securities	Contributed surplus	Total reserves
Balance, beginning of period	0.4	416.4	188.5	605.3
Other comprehensive income, before tax	3.4	77.8	–	81.2
Deferred tax	(0.8)	(9.2)	–	(10.0)
Reclassification of accumulated gain on securities, net of tax (see Note 4)	–	(18.8)	–	(18.8)
Share-based compensation	–	–	(2.1)	(2.1)
Paramount Options exercised	–	–	(4.6)	(4.6)
Balance, end of period	3.0	466.2	181.8	651.0

Paramount Resources Ltd. Third Quarter 2025

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

(Tabular amounts stated in $ millions, except as noted)

9. Share-Based Compensation

Paramount Options

	Nine months ended September 30, 2025		Twelve months ended December 31, 2024
	Paramount Options (millions)	Weighted average exercise price ($/share)	Paramount Options (millions)	Weighted average exercise price ($/share)
Balance, beginning of period	8.2	20.52	11.8	17.11
Granted	2.0	15.87	0.2	29.37
Exercised (1)	(1.3)	7.36	(3.4)	9.05
Surrendered for cash payment	(0.9)	4.62	-	-
Reduction in exercise price (2)	-	(12.96)	-	-
Cancelled or forfeited	(0.6)	12.74	(0.3)	22.72
Expired	-	-	(0.1)	31.75
Balance, end of period	7.4	11.30	8.2	20.52
Options exercisable, end of period	1.4	9.18	3.1	16.90

(1) For Paramount Options exercised during the nine months ended September 30, 2025, the weighted average market price of Common Shares on the dates exercised was $26.30 per share (twelve months ended December 31, 2024 – $29.31 per share).
(2) Represents the impact on the weighted average exercise price of all Paramount Options of reducing the exercise price of 6.4 million Paramount Options that had an exercise price of greater than $15.00 by $15.00 in connection with the Special Distribution.

In connection with the Special Distribution, in February 2025:

Transaction and reorganization costs for the nine months ended September 30, 2025 includes $22.0 million in respect of the cash payments made by the Company on the surrender of Paramount Options.

The weighted average remaining contractual life and exercise prices of Paramount Options outstanding as at September 30, 2025 are as follows:

Exercise Price	Paramount Options Outstanding			Paramount Options Exercisable
	Number (millions)	Remaining contractual life (years)	Weighted average exercise price	Number (millions)	Remaining contractual life (years)	Weighted average exercise price
$0.13 – $6.99	1.5	1.6	1.24	0.5	1.6	1.23
$7.00 – $11.99	2.0	3.5	11.83	0.3	3.6	11.83
$12.00 – $14.99	1.8	2.6	13.49	0.5	2.6	13.48
$15.00 – $21.37	2.1	4.4	15.92	0.1	2.2	16.26
	7.4	3.2	11.30	1.4	2.5	9.18

Paramount Resources Ltd. Third Quarter 2025

Parliament Resources Ltd. Third Quarter 2025
70

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

(Tabular amounts stated in $ millions, except as noted)

The grant date fair value of Paramount Options and related weighted average inputs, estimated using the Black-Scholes model, are as follows:

	Options granted in 2025	Options granted in 2024
Weighted average exercise price ($ / share)	15.87	29.37
Volatility (%)	42	34
Expected life (years)	4.0	3.7
Pre-vest annual forfeiture rate (%)	11.8	13.0
Risk-free interest rate (%)	2.6	3.6
Dividend yield (%)	3.6	5.8
Weighted average fair value of awards ($ / option)	4.30	5.12

The expected life of Paramount Options is based on historical exercise patterns. Volatility is generally estimated based on the historical volatility in the trading price of the Common Shares over the most recent period that is commensurate with the expected life of the option and is normalized for significant transactions and other factors.

RSU Plan – Shares Held in Trust

	Nine months ended September 30, 2025		Twelve months ended December 31, 2024
	Shares (millions)		Shares (millions)
Balance, beginning of period	0.4	11.3	0.4	3.4
Net change in vested and unvested shares	(0.1)	(7.1)	–	7.9
Balance, end of period	0.3	4.2	0.4	11.3

10. Income Tax

The following table reconciles income taxes calculated at the statutory rate to Paramount's income tax (recovery) expense:

	Three months ended September 30		Nine months ended September 30
	2025	2024	2025	2024
Income (loss) before tax	(3.5)	106.5	1,672.7	305.2
Effective statutory income tax rate	23.0%	23.0%	23.0%	23.0%
Expected income tax (recovery) expense	(0.8)	24.5	384.7	70.2
Effect of:
Share-based compensation	0.3	1.6	(0.6)	2.2
Change in unrecognized deferred income tax asset	–	(15.8)	–	(15.8)
Non-deductible items and other	(0.7)	0.4	(2.0)	0.1
Income tax (recovery) expense	(1.2)	10.7	382.1	56.7

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

(Tabular amounts stated in $ millions, except as noted)

The following table summarizes movements in the deferred income tax (liability) asset:

	Nine months ended September 30, 2025	Twelve months ended December 31, 2024
Deferred income tax asset, beginning of period	131.5	203.5
Deferred income tax expense	(382.1)	(60.9)
Deferred income tax expense included in OCI	(10.0)	(11.1)
Deferred income tax (liability) asset, end of period	(260.6)	131.5

11. Financial Instruments and Risk Management

Financial Instruments

Financial instruments at September 30, 2025 consist of cash and cash equivalents, accounts receivable, risk management assets and liabilities, investments in securities and accounts payable. The carrying values of these financial instruments approximate their fair values.

Risk Management

From time to time, Paramount enters into derivative financial instruments to manage commodity price, interest rate and foreign currency exchange risks.

The fair values of risk management financial instruments are estimated using a market approach incorporating level two fair value hierarchy inputs, including forward market curves and price quotes for similar instruments, provided by financial institutions.

Changes in the fair value of risk management assets and liabilities for the nine months ended September 30, 2025 are as follows:

Nine months ended September 30, 2025	Financial commodity contracts (3)	Electricity swaps	Total
Fair value of asset, December 31, 2024	3.8	0.5	4.3
Changes in fair value – gain (1)	38.9	–	38.9
Changes in fair value – OCI	–	1.1	1.1
Risk management contract settlements (received) paid (2)	(30.4)	2.3	(28.1)
Fair value of asset, September 30, 2025	12.3	3.9	16.2
Risk management asset – current	16.2	–	16.2
Risk management asset – long-term	–	5.2	5.2
Risk management asset, September 30, 2025	16.2	5.2	21.4
Risk management liability – current	–	(1.3)	(1.3)
Risk management liability – long-term	(3.9)	–	(3.9)
Risk management liability, September 30, 2025	(3.9)	(1.3)	(5.2)

(1) Changes in fair value of $38.9 million related to financial commodity contracts is recorded as a gain on risk management contracts.
(2) Receipts by the Company on risk management contract settlements related to financial commodity contracts totaled $30.4 million. Risk management contract settlements paid by the Company relating to electricity swap contracts are recorded in operating expense.
(3) Financial commodity contracts include an embedded derivative with a liability of $1.1 million at September 30, 2025.

Paramount Resources Ltd. Third Quarter 2025

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

(Tabular amounts stated in $ millions, except as noted)

The Company had the following risk management contracts as at September 30, 2025:

Instruments	Aggregate notional	Average price or rate	Remaining term
Financial Commodity Contracts
Oil
NYMEX WTI Swaps (Sale) (1)	10,000 Bbl/d	$105.00/Bbl	October 2025 – December 2025
Natural Gas
Citygate / Malin Basis Swap (2)	10,000 MMBtu/d	Citygate less US$0.97/MMBtu (Sell) Malin (Buy)	October 2025 – October 2028
Electricity Contracts (3)
Swaps (Buy)	240 MWh/d	$71.13/MWh	October 2025 – December 2025
Swaps (Buy)	120 MWh/d	$58.79/MWh	October 2025 – December 2029
Swaps (Buy)	120 MWh/d	$58.19/MWh	January 2026 – December 2028
Swaps (Buy)	120 MWh/d	$61.73/MWh	January 2026 – December 2030

(1) "NYMEX" means New York Mercantile Exchange and "WTI" means West Texas Intermediate.
(2) "Citygate" refers to Pacific Gas & Electric Citygate and "Malin" refers to Pacific Gas & Electric Malin. Pursuant to the swap transaction Paramount sells at Citygate less US$0.97/MMBtu and buys at Malin. The transaction is financially settled with no physical delivery.
(3) Reference electricity rate: Floating hourly rate established by the Alberta Electric System Operator. "MWh" means megawatt-hour.

The Company also has an agreement to deliver between 500 Bbl/d and 1,000 Bbl/d of propane over the next three years at a delivery point in Alberta. The price received is based on the Argus Propane Monthly Far East Index less deductions for transportation, fuel and other charges.

Subsequent to September 30, 2025, the Company entered into the following foreign currency exchange contracts:

Instruments	Notional	Forward Rate (1)	Term
Average Rate Forward	US$10 million / month	1.3810 CAD$/US$1.00	January 2026 – December 2026
Average Rate Forward	US$10 million / month	1.3680 CAD$/US$1.00	January 2027 – December 2027

(1) Settled monthly against the average of the US$/CAD$ noon spot rate on each applicable day in that month.

12. Revenue By Product

	Three months ended September 30		Nine months ended September 30
	2025	2024	2025	2024
Natural gas	20.3	37.2	101.7	165.3
Condensate and oil	105.6	342.9	373.9	1,055.5
Other natural gas liquids	8.4	23.5	29.6	68.3
Natural gas transportation assignment income	3.6	–	13.7	–
Royalty income and other revenue	6.3	1.2	19.1	11.8
Royalties	(7.3)	(46.4)	(39.7)	(174.3)
Sales of commodities purchased	54.2	79.6	207.6	218.6
	191.1	438.0	705.9	1,345.2

Paramount Resources Ltd. Third Quarter 2025

Parliament Resources Ltd. Third Quarter 2025
73

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

(Tabular amounts stated in $ millions, except as noted)

Natural gas transportation assignment income for the three and nine months ended September 30, 2025 relates to proceeds realized by the Company on the assignment of a portion of its ex-Alberta natural gas transportation capacity to third parties. The assignee was responsible for the cost of the transportation assigned.

Royalty income and other revenue for the three and nine months ended September 30, 2025 includes $5.3 million and $16.8 million, respectively, relating to the Wildfire Claim. Royalty income and other revenue for the nine months ended September 30, 2024 includes $10.0 million relating to the Wildfire Claim.

13. Other

	Three months ended September 30		Nine months ended September 30
	2025	2024	2025	2024
Interest income	(4.0)	(0.2)	(17.0)	(1.8)
Provisions	16.9	–	16.4	(0.5)
Dividend income	(3.2)	–	(6.8)	(8.3)
Other	0.8	(1.3)	1.2	(0.7)
	10.5	(1.5)	(6.2)	(11.3)

Provisions

Paramount recorded a provision of $16.9 million in the third quarter of 2025 for costs incurred to date and estimated costs to complete incident investigation, delineation and clean-up activities. The ultimate financial impact of the release on Paramount is uncertain and will be dependent on a number of factors that have yet to be determined, including the extent of required remediation activities. Coverage under the Company's insurance policies remains to be confirmed.

Dividend Income

Dividend income for the three and nine months ended September 30, 2025 includes $3.1 million and $6.3 million, respectively, received from Sultran Ltd. (three and nine months ended September 30, 2024, $nil million and $7.8 million, respectively).

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

(Tabular amounts stated in $ millions, except as noted)

14. Consolidated Statement of Cash Flows – Selected Information

Items Not Involving Cash

	Three months ended September 30		Nine months ended September 30
	2025	2024	2025	2024
Risk management contracts	17.8	(30.5)	(8.5)	(19.2)
Share-based compensation	3.6	4.9	25.3	18.1
Depletion and depreciation	63.3	105.1	178.1	360.2
Exploration and evaluation	(7.2)	–	(6.9)	0.1
(Gain) loss on sale of oil and gas assets	(3.0)	0.4	(1,606.8)	(15.5)
Accretion of asset retirement obligations	6.0	10.6	19.2	31.8
Deferred income tax (recovery) expense	(1.2)	10.7	382.1	56.7
Other	0.3	0.8	2.5	2.0
	79.6	102.0	(1,015.0)	434.2

Supplemental Cash Flow Information

	Three months ended September 30		Nine months ended September 30
	2025	2024	2025	2024
Interest paid	0.5	0.9	2.1	1.8
Interest received	4.3	0.2	16.4	1.8

Components of Cash and Cash Equivalents

As at	September 30, 2025	December 31, 2024
Cash	398.3	2.4
Cash equivalents	–	–
	398.3	2.4

Cash and cash equivalents is comprised of interest-bearing demand deposits with a number of banks. Interest earned on deposits for the three and nine months ended September 30, 2025 totaled $4.0 million and $17.0 million, respectively (average interest rate of 3.3 percent per annum for the three and nine months ended September 30, 2025), which has been presented in other (see Note 13).

15. Capital Structure

Paramount's capital structure consists of shareholders' equity and net (cash) debt.

The Company's primary objectives in managing its capital structure are to:

Paramount Resources Ltd. Third Quarter 2025

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

(Tabular amounts stated in $ millions, except as noted)

The key capital management measures used by the Company in monitoring and assessing its capital structure are net (cash) debt, adjusted funds flow, the ratio of net debt to adjusted funds flow and free cash flow. The use and composition of each of these measures is described below. These measures are not standardized measures and therefore may not be comparable with the calculation of similar measures by other entities.

Net (Cash) Debt

Net (cash) debt, in conjunction with capacity under existing credit facilities, is used to monitor and assess liquidity by providing Management and investors with a measure of the Company's overall leverage position.

The calculation of net (cash) debt is as follows:

As at	September 30, 2025	December 31, 2024
Cash and cash equivalents	(398.3)	(2.4)
Accounts receivable (1)	(137.1)	(191.8)
Prepaid expenses and other	(15.0)	(17.4)
Investments in securities – current	(296.0)	–
Accounts payable and accrued liabilities	217.6	227.0
Long-term debt	–	173.0
Net (cash) debt	(628.8)	188.4

(1) December 31, 2024 balance excludes $0.8 million of accounts receivable relating to lease incentives.

Adjusted Funds Flow

Adjusted funds flow is used to monitor and assess liquidity and the flexibility of the Company's capital structure by providing Management and investors with a measure of the cash flows generated by the Company's assets available to fund capital programs and meet financial obligations, including the settlement of asset retirement obligations.

Parasitological Studies in the Study of the Cigarette Smoke Exposure

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

(Tabular amounts stated in $ millions, except as noted)

The calculation of adjusted funds flow is as follows:

	Three months ended September 30		Nine months ended September 30
	2025	2024	2025	2024
Cash from operating activities	42.3	205.7	232.0	627.7
Change in non-cash working capital	30.6	(15.3)	14.0	28.8
Geological and geophysical expense	2.6	2.9	10.8	10.4
Asset retirement obligations settled	4.4	7.4	29.6	26.2
Closure costs	-	-	-	-
Provisions	16.9	-	16.4	(0.5)
Settlements	-	-	-	-
Transaction and reorganization costs	-	-	24.3	-
Adjusted funds flow	96.8	200.7	327.1	692.6

Net Debt to Adjusted Funds Flow Ratio

The ratio of net debt to adjusted funds flow is used to monitor and assess liquidity and the flexibility of the Company's capital structure by showing the relation of the cash flows generated by the Company's assets to its overall leverage position.

The net debt to adjusted funds flow ratio is calculated as the period end net debt divided by adjusted funds flow for the trailing four quarters. When the Company is not in a net debt position, the ratio of net debt to adjusted funds flow is not considered meaningful.

As at	September 30, 2025	December 31, 2024
Net (cash) debt	(628.8)	188.4
Adjusted funds flow, trailing four quarters	564.9	930.3
Net debt to adjusted funds flow ratio	NM (1)	0.2x

(1) NM means not meaningful.

Free Cash Flow

Free cash flow is used to monitor and assess liquidity, the flexibility of the Company's capital structure and the financial capacity to maximize shareholder returns by providing Management and investors with a measure of the internally generated cash available, after funding capital programs and asset retirement obligation settlements, to service the Company's financial obligations, pay dividends, repurchase Common Shares and fund additional growth opportunities.

Paramount Resources Ltd. Third Quarter 2025

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

(Tabular amounts stated in $ millions, except as noted)

The calculation of free cash flow is as follows:

	Three months ended September 30		Nine months ended September 30
	2025	2024	2025	2024
Cash from operating activities	42.3	205.7	232.0	627.7
Change in non-cash working capital	30.6	(15.3)	14.0	28.8
Geological and geophysical expense	2.6	2.9	10.8	10.4
Asset retirement obligations settled	4.4	7.4	29.6	26.2
Closure costs	–	–	–	–
Provisions	16.9	–	16.4	(0.5)
Settlements	–	–	–	–
Transaction and reorganization costs	–	–	24.3	–
Adjusted funds flow	96.8	200.7	327.1	692.6
Capital expenditures	(206.5)	(216.7)	(579.9)	(671.5)
Geological and geophysical expense	(2.6)	(2.9)	(10.8)	(10.4)
Asset retirement obligations settled	(4.4)	(7.4)	(29.6)	(26.2)
Free cash flow	(116.7)	(26.3)	(293.2)	(15.5)

16. Commitments and Contingencies

Paramount had the following commitments at September 30, 2025:

	Within one year	After one year but not more than five years	More than five years
Petroleum and natural gas transportation and processing commitments	69.9	406.7	728.1
Other commitments	6.3	3.6	–
	76.2	410.3	728.1

In connection with the Grande Prairie Disposition, the acquirer assumed Paramount's processing and transportation commitments related to the Sold Assets.

Commitments – Physical Contracts

The Company had the following fixed price and basis differential physical contracts at September 30, 2025:

	Volume	Location	Average price	Remaining Term
Natural gas (Sale)	19,327 GJ/d	Dawn	AECO + $2.06/GJ	October 2025
Natural gas basis swap (1)	38,654 GJ/d	AECO / Dawn	$1.59/GJ	November 2025 – October 2027

(1) Paramount sells at Dawn at a fixed price of $4.51/GJ and buys at AECO at a fixed price of $2.92/GJ resulting in a net amount of $1.59/GJ.

Contingencies

Paramount Resources Ltd. Third Quarter 2025

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

(Tabular amounts stated in $ millions, except as noted)

Paramount Resources Ltd. Third Quarter 2025
79

CORPORATE INFORMATION

EXECUTIVE OFFICERS

J. H. T. Riddell
President and Chief Executive Officer
and Chairman

P. R. Kinvig
Chief Financial Officer

D. B. Reid
Executive Vice President, Operations

R. R. Sousa
Executive Vice President, Corporate
Development and Planning

G. W. J. Stotts
Executive Vice President,
Development and Reserves

J. B. Williams
Executive Vice President, Northeast
British Columbia

DIRECTORS

J. H. T. Riddell
President and Chief Executive Officer
and Chairman
Paramount Resources Ltd.
Calgary, Alberta

J. G. M. Bell (1) (3) (4)
Executive Vice President,
Corporate and Chief Legal Officer
Dominion Lending Centres Inc.
Calgary, Alberta

S.C. Fildes
Chief Executive Officer
Lionsgate Capital Ltd.
Calgary, Alberta

W. A. Gobert (1) (3) (4)
Independent Businessman
Calgary, Alberta

D. Jungé C.F.A. (2) (4)
Independent Businessman
Bryn Athyn, Pennsylvania

K. Lynch Proctor (1) (4) (5)
Independent Businesswoman
Calgary, Alberta

R. K. MacLeod (2) (3) (4) (5)
Independent Businessman
Calgary, Alberta

J. K. McAuley (2) (4) (5)
Independent Businesswoman
Calgary, Alberta

S. L. Riddell Rose
President and Chief Executive Officer
Rubellite Energy Corp.
Calgary, Alberta

(1) Member of Audit Committee
(2) Member of Environmental,
Health and Safety Committee
(3) Member of Compensation
Committee
(4) Member of Corporate
Governance Committee
(5) Member of Reserves Committee

CORPORATE OFFICE

4700 Bankers Hall West
888 Third Street S.W.
Calgary, Alberta
Canada T2P 5C5
Telephone: (403) 290-3600
Facsimile: (403) 262-7994
www.paramountres.com

REGISTRAR AND TRANSFER AGENT

Odyssey Trust Company
Calgary, Alberta
Toronto, Ontario

RESERVES EVALUATORS

McDaniel & Associates
Consultants Ltd.
Calgary, Alberta

AUDITORS

Ernst & Young LLP
Calgary, Alberta

STOCK EXCHANGE LISTING

The Toronto Stock Exchange ("POU")

AI assistant

Paramount Resources Ltd. — Earnings Release 2025

43230_rns_2025-11-04_a5317ffb-f3ad-4810-a113-7d13868b5e4b.pdf

Third Quarter 2025 Results

Paramount Resources Announces Third Quarter 2025 Results, Sanctioning of Sinclair Montney Development, 2026 Budget and Production Outlook

HIGHLIGHTS

SANCTIONING OF SINCLAIR MONTNEY DEVELOPMENT

INCREASED 2025 PRODUCTION GUIDANCE

2026 BUDGET AND GUIDANCE

PRODUCTION AND CAPITAL OUTLOOK

NOVEMBER DIVIDEND

REVIEW OF OPERATIONS

CENTRAL ALBERTA REGION

SINCLAIR

KAYBOB REGION

HEDGING

ABOUT PARAMOUNT

PRODUCT TYPE INFORMATION

SPECIFIED FINANCIAL MEASURES

Non-GAAP Financial Measures

Non-GAAP Ratios

Capital Management Measures

Supplementary Financial Measures

ADVISORIES

Forward-looking Information

Oil and Gas Measures and Definitions

Management's Discussion and Analysis

ABOUT PARAMOUNT

SPECIFIED FINANCIAL MEASURES, PRODUCT TYPES AND OTHER ADVISORIES

GRANDE PRAIRIE DISPOSITION AND SPECIAL DISTRIBUTION

Q3 2025 OVERVIEW

SANCTIONING OF SINCLAIR MONTNEY DEVELOPMENT

INCREASED 2025 PRODUCTION GUIDANCE

2026 BUDGET AND GUIDANCE

PRODUCTION AND CAPITAL OUTLOOK

CONSOLIDATED RESULTS

Net Income (Loss)

Cash From Operating Activities

Adjusted Funds Flow

Free Cash Flow

Sales Volumes

Commodity Prices

Risk Management Contracts

Commodity Contracts

Foreign Currency Exchange Contracts

Operating Expense

ASSET RETIREMENT OBLIGATIONS

OTHER ASSETS

CORPORATE

CAPITAL EXPENDITURES AND LAND AND PROPERTY ACQUISITIONS

Capital Expenditures

Land and Property Acquisitions

LIQUIDITY AND CAPITAL RESOURCES

Paramount Facility

Unsecured Letter of Credit Facility

Cash Flow Hedges

Paramount Options and Share Capital

Dividends and Distributions

Normal Course Issuer Bid

Significant Items Impacting Quarterly Results

OTHER INFORMATION

Contingencies

NEW AND UPDATED ACCOUNTING POLICIES

Future Changes in Accounting Standards

INTERNAL CONTROL OVER FINANCIAL REPORTING

RISK FACTORS

PRODUCT TYPE INFORMATION

SPECIFIED FINANCIAL MEASURES

Non-GAAP Financial Measures

Non-GAAP Ratios

Capital Management Measures

Supplementary Financial Measures

ADVISORIES

Forward-looking Information

Oil and Gas Measures and Definitions

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

Paramount Resources Ltd. Earnings Release 2025