PERPETUAL ENERGY INC. REPORTS FURTHER SUCCESS ON ASSET DISPOSITION PROGRAM, PROVIDES OPERATIONAL UPDATE AT EDSON AND ADVISES ...
02 May 2013 - 2:30AM
OTC Markets
NEWS
RELEASE
Perpetual Energy inc. REPORTS
FURTHER SUCCESS On
ASSET DISPOSITION PROGRAM, Provides
OPERATIONAL update AT EDSON and advises on credit facility
borrowing base review
Calgary, Alberta – December 14, 2012 (TSX:PMT)
- Perpetual Energy
Inc. (“Perpetual” or the “Corporation”) is pleased to announce
further positive results from the Corporation’s ongoing asset
disposition program. Subsequent to the end of the third quarter
Perpetual has entered into definitive purchase and sale agreements
for the divestiture of certain varied assets which will result in
net realized proceeds of $8.2 million, subject
to certain closing adjustments and transaction costs. These
transactions are scheduled to all be closed on or prior to January
7, 2013.
The disposed
assets are non-core properties in northeast and east central
Alberta, including shut-in gas over bitumen reserves, and were
producing in aggregate approximately 2.3 MMcf/d of gas and 25 bbl/d
of oil and natural gas liquids net to Perpetual as at the effective
dates of the transactions. Perpetual will continue to receive the
gas over bitumen financial solution associated with the shut-in gas
over bitumen reserves. Reduced interest charges that will result
from the proceeds of these dispositions in 2013 are expected to
more than offset any lost cash flow from these assets in 2013,
assuming the forward curves for commodity prices and
differentials.
Upon
closing of the announced dispositions, total proceeds realized
through Perpetual’s asset disposition program, initiated one year
ago in November 2011, will total $173 million, exceeding the
targeted $75 to $150 million. Funds from these announced dispositions will be
applied to reduce outstanding bank debt and will bolster
Perpetual’s flexibility to continue to pursue the Corporation’s
ongoing asset base transformation and commodity diversification
strategy. In addition, these transactions provide optionality for
managing long term debt obligations which mature in 2015 and
beyond.
Operations Update - Edson Wilrich
Liquids-Rich Gas
Positive operational results on the Wilrich liquids-rich gas play
in the greater Edson area continue to drive momentum in this key
diversifying growth strategy for Perpetual. During the fourth
quarter, drilling operations have been completed on three gross
(1.5 net) new horizontal wells targeting the Wilrich formation in
the West Edson area of west central Alberta. The drilling program
was designed to more fully delineate the West Edson acreage. Two of
the three wells have been completed by Perpetual and its joint
venture partner at West Edson, Tourmaline Oil Corp., and tested at
final flow rates of 26 MMcf/d at 11 MPa flowing pressure and 20
MMcf/d at 4 MPa flowing pressure respectively. Natural gas liquids
are expected to be similar to the original West Edson wells at
approximately 35 to 40 bbl/MMcf. The third well at West Edson will
be completed by mid-January. These wells have confirmed the
predictability of Perpetual’s Wilrich inventory at West Edson by
stepping through Perpetual’s acreage base approximately 8 miles
from the existing production. The wells have also confirmed the
presence of seismically-indicated uphole Fahler channel trends
which provide additional future inventory.
Operations are underway to
construct a trunk pipeline through the West Edson acreage to bring
on production from the new wells in early 2013. Expansion of the
West Edson compressor station from its current 10 MMcf/d to 30
MMcf/d of capacity is on track for the first quarter of
2013.
One (1.0 net) additional well on
the Wilrich play spud in mid-December 2012 to evaluate the
performance of horizontal Wilrich development on trend to the south
of Perpetual’s original Edson development area. It is expected that
this well will be completed and tied-in via the Perpetual-operated
Edson 16-10 compressor station for production in the first quarter
of 2013.
Perpetual has identified an
additional 100 net locations of a similar caliber to the original
wells for future development in the greater Edson area. While the
Corporation has moved to the development phase of the Wilrich play
in the Edson and West Edson areas, the prospect inventory in the
greater Edson area continues to grow as additional lands are
captured and evaluated and additional prospective zones are
delineated and evaluated. In addition, further technical analysis
is also underway to understand the optimal spacing parameters for
maximum economic recovery of the Wilrich liquids-rich gas
resource.
Credit Facility Borrowing Base
Review
Perpetual further advises that its semi-annual credit facility
borrowing base review was completed on November 30, 2012 as
scheduled. As a result of this review, the lenders have established
a revised borrowing base of $130 million. The $10 million reduction
from the previous borrowing base of $140 million is due to
dispositions and lower natural gas price forecasts used in lender
evaluations, offset by increased lending values attributable to
higher oil and NGL reserves. Current drawings on the Corporation’s
credit facility are approximately $85 million. The next semi-annual
redetermination of the Corporation’s borrowing base remains
scheduled for April 30, 2013.
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
expected access to capital markets; prospective drilling
activities; forecast production, production type, operations, funds
flows, and timing thereof; forecast and realized commodity prices;
expected funding, allocation and timing of capital expenditures;
projected use of funds flow; planned drilling and development and
the results thereof; expected dispositions and the use of proceeds
therefrom; commodity prices; and estimated funds flow sensitivity.
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 management’s
discussion and analysis for the year ended December 31, 2011 and
those included in 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.
The Toronto Stock Exchange has
neither approved nor disapproved the information contained
herein.
For Additional Information, please
contact:
Perpetual Energy
Inc.
|
Suite 3200, 605 - 5 Avenue SW
Calgary, Alberta, Canada T2P 3H5
|
Telephone: 403 269-4400
|
Fax: 403 269-4444
|
Email:
info@perpetualenergyinc.com
|
Susan L. Riddell
Rose
|
President and Chief Executive
Officer
|
Cameron R.
Sebastian
|
Vice President, Finance and Chief
Financial Officer
|
Claire A.
Rosehill
|
Business and Investor Relations
Analyst
|
|
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