CALGARY, Sept. 27, 2016 /PRNewswire/
- (TSX:PMT) - Perpetual Energy Inc.
("Perpetual", the "Corporation" or the "Company") announces that it
has entered into a definitive agreement to effect the strategic
disposition of a large percentage of its high liability mature
shallow gas properties in east central and northeast Alberta (the "Shallow Gas Properties"). The
transaction includes the disposition of all of Perpetual's shallow
gas assets and liabilities in eastern Alberta, specifically excluding heavy oil and
natural gas assets in the Mannville and Panny areas and other bitumen
leases in northeast Alberta.
Closing is expected to occur on or around October 1, 2016 and is subject to customary
closing conditions. Macquarie Capital Markets Canada Ltd. is acting
as financial advisor to the Corporation with respect to the
transaction.
The transaction also includes an effective deferred purchase
price component whereby Perpetual will continue to benefit from the
Shallow Gas Properties for close to two years, given a recovery in
natural gas pricing, through marketing arrangements which provide a
call on 33,611 GJ/d, representing close to 90% of current
production, at $2.81/GJ at AECO from
October 1, 2016 through August 31, 2018. Further to this, arrangements
have been made to provide for an AECO floor price of $2.58/GJ for the Purchaser's account for the same
volume and term. The marketing arrangements will be settled monthly
by a third party marketing company through an adjustment in the
price paid to Perpetual for future physical gas sales.
The Shallow Gas Properties include approximately 35.5 MMcfe/d of
current production and an estimated 83.8 Bcfe of proved plus
probable natural gas reserves (based on the Company's third party
reviewed engineering report prepared by McDaniel and Associates
Consultants Ltd. ("McDaniel"), as at December 31, 2015, and adjusted for production to
the effective date of October 1,
2016). At year-end 2015, Perpetual forecast the undiscounted
cost of future asset retirement obligations ("ARO") for the Shallow
Gas Properties at $133.6 million.
Also included in the transaction are 353,777 net acres of
undeveloped lands not assigned reserves at year-end 2015.
Perpetual's funds flow is expected to be positively impacted by
the disposition as the Shallow Gas Properties continue to operate
on a negative cash flow basis as a result of depressed natural gas
prices combined with high fixed operating costs which include
extremely high municipal property taxes. Including adjustments
related to the estimated value of its proved and probable reserves,
future asset retirement obligations net of salvage value and the
fair market value of undeveloped land, the Company estimates that
the transaction increases its net asset value discounted at 10
percent on a pro forma basis at McDaniel's April 1, 2016 commodity price forecasts by
$28.5 million.
Perpetual is also pleased to announce the refinancing of its
financial arrangement secured by 1 million of the Company's 1.85
million shares of Tourmaline Oil Corp. ("TOU Shares") and maturing
in November 2016. The refinancing
results in an extension of the maturity to March 15, 2017 as well as a reduction in the
number of shares pledged as collateral to 840,619 TOU Shares,
establishing a floor price on these shares of $27.72/TOU Share on the same underlying
obligation plus refinancing costs for repayment at maturity of
$23.3 million. The TOU Share
financial arrangement continues to represent a collateralization of
TOU Shares, not a sale, and Perpetual retains substantially all
rights and privileges associated with the ownership of such
shares.
The Company further advises that it has initiated a search for
the position of Vice President, Finance and Chief Financial
Officer. In the interim, Bill Hahn
(CPA-CA), the Corporation's Financial Controller and Manager,
Corporate Finance will assume the responsibilities of acting Vice
President, Finance and Chief Financial Officer on an interim basis.
The Board of Directors and management of Perpetual would like to
express our gratitude to Mr. Cameron
Sebastian for his past years of service to Perpetual and
wish him all the best in his future endeavours.
Forward-Looking Information
Certain information regarding Perpetual in this news release
including management's assessment of future plans and operations
may constitute forward-looking statements under applicable
securities laws. The forward-looking information includes, without
limitation, statements regarding the expected timing for the
closing of the disposition of the Shallow Gas Properties and the
anticipated value and benefits including the expected impact on the
Corporation's financial position and benefits for Perpetual's
shareholders; the impact of the transaction on the Corporation's
net asset value; forecast and realized commodity prices and future
funds flow. Various assumptions were used in drawing the
conclusions or making the forecasts and projections contained in
the forward-looking information contained in this press release,
which assumptions are based on management analysis of historical
trends, experience, current conditions, and expected future
developments pertaining to Perpetual and the industry in which it
operates as well as certain assumptions regarding the matters
outlined above. Forward-looking information is based on current
expectations, estimates and projections that involve a number of
risks, which could cause actual results to vary and in some
instances to differ materially from those anticipated by Perpetual
and described in the forward looking information contained in this
press release. Undue reliance should not be placed on
forward-looking information, which is not a guarantee of
performance and is subject to a number of risks or uncertainties,
including without limitation those described under "Risk
Factors" in Perpetual's Annual Information Form and MD&A
for the year ended December 31, 2015
and those included in other reports on file with Canadian
securities regulatory authorities which may be accessed through the
SEDAR website (www.sedar.com) and at Perpetual's website
(www.perpetualenergyinc.com). Readers are cautioned that the
foregoing list of risk factors is not exhaustive. Forward-looking
information is based on the estimates and opinions of Perpetual's
management at the time the information is released and Perpetual
disclaims any intent or obligation to update publicly any such
forward-looking information, whether as a result of new
information, future events or otherwise, other than as expressly
required by applicable securities laws.
Volume Conversions
Barrel of oil equivalent ("boe") may be
misleading, particularly if used in isolation. In accordance with
National Instrument 51-101, a conversion ratio for natural gas of 6
Mcf:1 bbl has been used, which is based on an energy equivalency
conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead. In addition,
utilizing a conversion on a 6 Mcf:1 bbl basis may be misleading as
an indicator of value as the value ratio between natural gas and
crude oil, based on the current prices of natural gas and crude
oil, differ significantly from the energy equivalency of 6 Mcf:1
bbl.
About Perpetual
Perpetual Energy Inc. is a Canadian energy company with a
spectrum of resource-style opportunities spanning liquids-rich
natural gas in the Alberta deep
basin, shallow gas, heavy oil and bitumen. Perpetual's shares are
listed on the Toronto Stock Exchange under the symbol "PMT".
Further information with respect to Perpetual can be found at its
website at www.perpetualenergyinc.com.
The Toronto Stock Exchange has neither approved nor disapproved
the information contained herein.
SOURCE Perpetual Energy Inc.