First Quarter Overview

— Funds flow from operations in 2009 declined by CAD6.6 million to CAD17.6 million in the year-ago quarter because of lower realized prices and lower production, partly counterbalanced by higher natural gas financial contract receipts, lower royalties, operating and corporate costs

— The current year loss comprises higher principal properties losses as a result of a lower netback; lower strategic investment losses, as 2008 included a CAD12.4 million loss related with MGM Energy; and lower corporate costs due to lower stock-based compensation, foreign exchange, and general and administrative expenses

Principal Properties

— Kaybob drilled nine wells, including the company’s first horizontal tight gas well in the area

— In Grande Prairie, production at Crooked Creek contributed about 500 Boe/d for the quarter, largely because of waterflood, and one liquid rich gas deep well was drilled at Karr

— Completed Northern’s winter drilling program and the Bistcho plant turnaround

— Suspended Southern’s light oil drilling program in North Dakota because of project economics

— Eight (4.7 net) wells drilled in the quarter started the production in April 2009 and are anticipated to qualify for a lower Alberta royalty rate

— Received CAD11.2 million from the settlement of natural gas financial contracts.

— Exploration and development capital spending declined to CAD55.5 million from CAD64.4 million in the year-ago quarter

— Realized prices declined by 25% for natural gas and 49% for crude oil and NGLs in the year-ago quarter

— Netback declined to CAD9.5 million in the first quarter 2009 from CAD34.8 million in the year-ago quarter

Strategic Investments

— Drilled seven additional oil sands evaluation wells at Hoole for CAD2 million

— Assembly of the third drilling rig continued with completion anticipated in mid 2009

— Signed contract for third party short-term usage of a drilling rig for the summer of 2009

Corporate

— Purchased 615,600 Paramount Resources shares for CAD4.2 million for an average cost of CAD6.85 per share under the company’s normal course issuer bid

— Received CAD12.2 million on settlement of the foreign exchange collar

— Corporate costs decreased from CAD15.7 million to CAD6.6 million in the first quarter 2009

Outlook

The 2009 exploration and development budget of CAD90 million excluding land purchases remains unchanged. Paramount Resources current capital plan remains flexible and depending upon future economic conditions, the company may increase or decrease capital spending. First quarter production of 11,912 Boe/d is reliable with expectations and Paramount Resources continues to forecast annual average production of 12,500 Boe/d, based on the existing exploration and development budget.