NEWS
RELEASE
PERPETUAL ENERGY
INC.
RELEASES 2012 YEAR-END
RESERVES
Calgary, Alberta – February 5,
2013 (TSX:PMT) –
Perpetual Energy Inc. (“Perpetual”, the “Corporation” or the
“Company”) is pleased to release a summary of the Company’s
year-end 2012 reserves as reported by the independent engineering
firm McDaniel and Associates Consultants Ltd.
(“McDaniel”).
YEAR-END 2012
RESERVES
2012
Year-End Reserve Highlights
·
Perpetual added 19.5 MMBoe of
proved and probable reserves in 2012, excluding production, net
dispositions and downward technical revisions related to lower
commodity price forecasts. Reserve additions and net positive
technical revisions due to performance offset 2012 production of
7.4 MMBoe by 265 percent. Reserve additions offsetting production
were a result of total exploration and development capital spending
of $79.8 million.
·
After net dispositions of 11.3
MMBoe, production of 7.4 MMBoe and negative revisions due to
commodity prices of 6.6 MMBoe in 2012, proved and probable reserves
decreased just 5.8 MMboe (seven percent) from 80.8 MMBoe at
year-end 2011 to 75.0 MMBoe. Proved reserves also decreased seven
percent to 36.3 MMBoe at year-end 2012.
·
The majority of the reserve
additions were related to activities driven by Perpetual’s asset
base transformation and diversification strategy, adding natural
gas and natural gas liquids (“NGL”) reserves in the Alberta deep
basin and heavy oil reserves in eastern Alberta. At year-end 2012,
oil and NGL represent 13.4 percent of Perpetual’s total proved and
probable reserves (14.2 percent of proved), up from 10 percent (12
percent of proved) at year-end 2011.
·
Negative revisions due to low
natural gas prices of 6.6 MMBoe occurred throughout Perpetual’s
eastern Alberta shallow gas asset base but most significantly
impacted probable undeveloped reserves recognized in the Viking
formation. These negative reserve revisions also included the
reduction of $63 million of future development capital (“FDC”) to
bring Viking reserves to production.
·
Including changes in FDC; Perpetual
realized finding and development costs (“F&D”) of $13.06 per
Boe on a proved and probable reserve basis in
2012.
·
Since proceeds from dispositions
exceeded exploration and development capital spending, Perpetual’s
realized finding, development and acquisition costs (“FD&A”),
including changes in FDC, was ($13.11) per Boe on a proved and
probable basis.
·
Perpetual’s reserve replacement
ratio for 2012 was 237 percent on a proved and probable reserves
basis. The reserve replacement ratio, including both performance
and price-related technical revisions, was 175 percent on a proved
and probable basis.
·
Perpetual’s reserve to production
ratio (“reserve life index” or “RLI”) increased to 11.0 years from
9.7 years on a proved and probable reserves basis (increased to 6.1
years from 5.3 years on a proved reserves basis) at year-end
2012.
·
Perpetual’s reserve-based net asset
value (“NAV”) at year-end 2012 was estimated at $1.84 per Share
discounted at eight percent.
Reserves Disclosure
Company interest reserves included
herein are before royalty burdens and including royalty interests.
Reserves information is based on an independent reserves evaluation
report prepared by McDaniel with an effective date of December 31,
2012 (the “McDaniel Report”), and has been prepared in accordance
with National Instrument 51-101 (“NI 51-101”) using McDaniel’s
forecast prices and costs. Complete NI 51-101 reserves disclosure
including after-tax reserve values, reserves by major property and
abandonment costs will be included in Perpetual’s Annual
Information Form (“AIF”), which will be filed in March
2013.
Perpetual’s aggregate proved and
probable reserves are reported in barrels of oil equivalent (Boe).
Boe may be misleading, particularly if used in isolation. In
accordance with NI 51-101 a Boe conversion ratio for natural gas of
6 Mcf: 1 Boe has been used, which is based on an energy equivalency
conversion method primarily applicable at the burner tip and does
not necessarily represent a value equivalency at the wellhead.
As the value ratio
between natural gas and crude oil based on the current prices of
natural gas and crude oil is significantly different from the
energy equivalency of 6:1, utilizing a conversion on a 6:1 basis
may be misleading as an indication of
value.
Perpetual’s reserves at year-end
2012 are summarized below.
Reserves at December 31,
2012
Company
Interest
(Working plus Royalty
Interest)
|
Light and Medium Crude Oil
(Mbbl)
|
Heavy
Oil
(Mbbl)
|
Natural Gas
(MMcf)
|
Natural Gas
Liquids
(Mbbl)
|
Oil
Equivalent
(MBoe)
|
Proved Producing
|
74
|
1,359
|
119,980
|
903
|
22,332
|
Proved
Non-Producing
|
3
|
8
|
16,929
|
252
|
3,084
|
Proved
Undeveloped
|
-
|
686
|
49,856
|
1,867
|
10,862
|
Total
Proved
|
77
|
2,053
|
186,765
|
3,021
|
36,278
|
Probable
Producing
|
32
|
752
|
41,051
|
301
|
7,926
|
Probable Non-Producing
excluding
Gas Over Bitumen
|
1
|
67
|
23,987
|
120
|
4,186
|
Probable
Undeveloped
|
-
|
1,116
|
118,242
|
2,519
|
23,342
|
Probable Shut-in Gas over
Bitumen
|
-
|
-
|
19,896
|
-
|
3,316
|
Total Probable
|
33
|
1,934
|
203,176
|
2,940
|
38,770
|
Total
Proved and Probable
|
110
|
3,987
|
389,941
|
5,961
|
75,048
|
The
proved producing reserves of 22.3 MMBoe comprise 62 percent of the
total proved reserves. Proved and probable developed reserves of
40.8 MMBoe represent 54 percent of the total proved and probable
reserves. Total proved reserves account for 48 percent of the total
proved and probable reserves.
McDaniel estimates the FDC required
to convert proved and probable non-producing and undeveloped
reserves to prove producing reserves at $381.8 million. The table
below summarizes the FDC estimated by McDaniel by play type to
bring non-producing and undeveloped reserves to
production.
Future
Development Capital ($ millions)
Play
|
2013
|
2014
|
2015
|
2016
|
2017
|
Remainder
|
Total
|
Conventional Shallow
Gas
|
0.7
|
3.8
|
0.9
|
0.5
|
0.3
|
1.7
|
7.9
|
|
Eastern Alberta
Viking
|
0.0
|
8.4
|
1.5
|
27.8
|
26.3
|
40.1
|
104.1
|
|
Mannville Heavy
Oil
|
23.5
|
9.7
|
-
|
-
|
-
|
-
|
33.2
|
|
Greater Edson
Wilrich
|
18.2
|
44.7
|
40.3
|
9.4
|
-
|
-
|
112.6
|
|
Elmworth Montney
|
-
|
41.0
|
39.3
|
42.5
|
-
|
-
|
122.8
|
|
Deep Basin Other
|
-
|
1.4
|
-
|
-
|
-
|
-
|
1.4
|
|
Total
|
42.4
|
108.9
|
82.0
|
80.2
|
26.6
|
41.8
|
381.8
|
|
|
|
|
|
|
|
|
|
|
|
On December 18, 2012, Perpetual
announced the Company had entered into a definitive purchase and
sale agreement, along with its partner, to jointly divest its
Elmworth, Alberta property for gross proceeds of $155 million,
$77.5 million net to Perpetual, subject to certain closing
adjustments and transaction costs. This transaction is currently
expected to close on or prior to March 1, 2013. At year-end 2012,
McDaniel estimated proved and probable undeveloped reserves of 10.6
MMBoe net to Perpetual at Elmworth. Furthermore, McDaniel estimated
$122.5 million of FDC would be required to convert these
undeveloped reserves to producing reserves.
Reserves
Reconciliation
Company Interest (Working Interest + Royalty
Interest)
Barrels of Oil Equivalent
(MBoe)
|
Proved
|
Probable
|
Proved
and Probable
|
Opening Balance December 31,
2011
|
39,175
|
41,609
|
80,784
|
Discoveries and Extensions
|
6,452
|
11,031
|
17,483
|
Technical Revisions
|
5,480
|
(3,449)
|
2,031
|
Dispositions, net of Acquisitions
|
(6,321)
|
(4,959)
|
(11,281)
|
Production
|
(7,372)
|
-
|
(7,372)
|
Economic Factors
|
(1,135)
|
(5,463)
|
(6,598)
|
Closing Balance December 31,
2012
|
36,278
|
38,770
|
75,048
|
In
2012, Perpetual executed a successful asset disposition program
which resulted in net proceeds of $167.2 million. Reserve
reductions as a result of dispositions were 11.3
MMBoe.
Discoveries and extensions
accounted for 17.5 MMBoe of reserve additions and were related to
activities driven by Perpetual’s asset base transformation and
diversification strategy, adding natural gas and NGL reserves in
the Alberta deep basin and heavy oil reserves in eastern Alberta.
At year-end 2012, oil and NGL represent 13.4 percent of Perpetual’s
total proved and probable reserves (14.2 percent of proved), up
from 10 percent (12 percent of proved) at year-end
2011.
Year
over year, McDaniel recorded net positive technical revisions
related to performance totaling 2.0 MMBoe on a proved and probable
basis. These net positive technical revisions were due to improved
performance and reduced operating costs in a number of
areas.
Positive technical revisions were
offset by a substantially reduced natural gas price forecast at
year-end 2012 relative to year-end 2011, resulting in negative
revisions due to economic factors of 6.6 MMBoe. Included in the
downward price revisions are those future projects whose return on
investment is negative at the current price forecast. This included
approximately 5.4 MMBoe of proved and probable non-producing and
undeveloped reserves that were no longer viewed as economic to
develop, primarily in the Viking formation in eastern Alberta. The
negative economic revisions also included a 1.2 MMBoe reduction in
producing reserves where existing wells are now expected by
McDaniel to reach the economic limits near their end of productive
life earlier due to reduced future commodity price assumptions.
Estimated FDC increased $64.3
million to $381.8 million at year-end 2012, from $317.5 million at
year-end 2011. Relative to year-end 2011, additional FDC of $148.3
million is estimated to be required to develop the increased heavy
oil reserves at Mannville and liquids-rich gas reserves in the
Wilrich in the greater Edson area and the Montney at Elmworth. This
increase was offset by reductions in FDC totaling $84.0 million,
primarily related to downward reserve revisions due to low
commodity prices associated with the Eastern Alberta Viking play
and dispositions. The decrease in FDC related to negative commodity
price-driven reserve revisions is the result of projects being
deemed to be uneconomic under the current McDaniel price forecast.
Perpetual believes that the underlying resource is still present
and those previously identified reserves will be recognized and
classified as future reserve additions if natural gas prices
increase in the future.
McDaniel’s price forecast utilized
in the evaluation is summarized below.
McDaniel January 1, 2013 Price
Forecast
Year
|
West Texas Intermediate Crude Oil
($US/Bbl)
|
Edmonton Light Crude Oil
($Cdn/Bbl)
|
Natural Gas at
AECO
($Cdn/MMBtu)
|
Foreign Exchange
($US/$Cdn)
|
2013
|
92.50
|
87.50
|
3.35
|
1.000
|
2014
|
92.50
|
90.50
|
3.85
|
1.000
|
2015
|
93.60
|
92.60
|
4.35
|
1.000
|
2016
|
95.50
|
94.50
|
4.70
|
1.000
|
2017
|
97.40
|
96.40
|
5.10
|
1.000
|
2018
|
99.40
|
98.30
|
5.45
|
1.000
|
2019
|
101.40
|
100.30
|
5.55
|
1.000
|
2020
|
103.40
|
102.30
|
5.70
|
1.000
|
2021
|
105.40
|
104.30
|
5.80
|
1.000
|
2022
|
107.60
|
106.50
|
5.90
|
1.000
|
2023
|
109.70
|
108.50
|
6.00
|
1.000
|
2024
|
111.90
|
110.70
|
6.15
|
1.000
|
2025
|
114.10
|
112.90
|
6.25
|
1.000
|
2026
|
116.40
|
115.20
|
6.35
|
1.000
|
2027
|
118.80
|
117.50
|
6.50
|
1.000
|
RESERVE LIFE INDEX
(“RLI”)
Perpetual’s proved and probable
reserves to production ratio, also referred to as reserve life
index, was 11.0 years at year-end 2012 while the proved RLI was 6.1
years, based upon the 2013 production estimates in the McDaniel
Report. The following table summarizes Perpetual’s historical
calculated RLI.
Reserve Life Index
(1)
|
2012
|
2011
|
2010
|
2009
|
2008
|
Total
Proved
|
6.1
|
5.3
|
4.9
|
4.8
|
4.5
|
Proved and
Probable
|
11.0
|
9.7
|
8.7
|
8.8
|
7.5
|
(1)
Calculated as year-end reserves
divided by year one production estimate from the McDaniel
Report.
NET
PRESENT VALUE (“NPV”) OF RESERVES
SUMMARY
Perpetual’s light and medium oil,
natural gas and NGL reserves were evaluated by McDaniel using
McDaniel’s product price forecasts effective January 1, 2013 prior
to provision for financial natural gas price hedges, income taxes,
interest, debt service charges and general and administrative
expenses. The following table summarizes the NPV of funds flows
from recognized reserves at January 1, 2013, assuming various
discount rates. It
should not be assumed that the discounted future net funds
flows estimated by
McDaniel represent the fair market value of the potential future
production revenue of the company.
NPV of
Funds Flow Using McDaniel January 1, 2013
Forecast Prices and Costs
|
|
Discounted
at
|
($
thousands)
|
Undiscounted
|
5%
|
8%
|
10%
|
Proved Producing
|
$286,286
|
$244,960
|
$226,511
|
$216,004
|
Proved
Non-Producing
|
40,621
|
32,226
|
28,840
|
26,996
|
Proved
Undeveloped
|
106,911
|
49,150
|
30,248
|
21,028
|
Total
Proved
|
433,818
|
326,337
|
285,600
|
264,027
|
Probable
Producing
|
124,587
|
89,849
|
76,764
|
69,923
|
Probable Non-Producing excl
GOB
|
53,348
|
39,817
|
34,288
|
31,258
|
Probable
Undeveloped
|
281,837
|
157,077
|
121,628
|
104,756
|
Probable Shut-in Gas over
Bitumen
|
60,875
|
36,711
|
27,628
|
23,024
|
Total
Probable
|
520,648
|
323,455
|
260,308
|
228,961
|
Total Proved and
Probable
|
$954,466
|
$649,791
|
$545,908
|
$492,988
|
|
|
|
|
|
|
At a
10 percent discount factor, the proved producing reserves comprise
44 percent of the total proved and probable value, while proved and
probable producing reserves represent 58 percent of the total
proved and probable value. Total proved reserves account for 54
percent of the proved and probable value.
NET
ASSET VALUE (“NAV”)
The
following net asset value table shows what is normally referred to
as a "produce-out" NAV calculation under which the Corporation’s
reserves would be produced at forecast future prices and costs. The
value is a snapshot in time and is based on various assumptions
including commodity prices and foreign exchange rates that vary
over time. It should not be assumed that the NAV represents the
fair market value of Perpetual’s Shares. The calculations below do
not reflect the value of the Corporation’s prospect inventory to
the extent that the prospects are not recognized within the NI
51-101 compliant reserve assessment.
Pre-tax NAV at December 31,
2012(1)
|
|
|
|
($
millions except as noted)
|
Undiscounted
|
5%
|
8%
|
Discounted at
10%
|
Total Proved and Probable
Reserves(2)
|
$955
|
$650
|
$546
|
$493
|
Fair Market Value of Undeveloped
Land(3)
|
161
|
161
|
161
|
161
|
Market Value of TriOil Resources
Ltd. Shares
|
2
|
2
|
2
|
2
|
Warwick Gas
Storage(4)
|
9
|
9
|
9
|
9
|
Net Bank Debt
(unaudited)(1,5)
|
(89)
|
(89)
|
(89)
|
(89)
|
Convertible
Debentures
|
(160)
|
(160)
|
(160)
|
(160)
|
Senior Notes
|
(150)
|
(150)
|
(150)
|
(150)
|
Estimate of Additional Future
Abandonment and Reclamation Costs(6)
|
(104)
|
(67)
|
(48)
|
(45)
|
NAV
|
$624
|
$356
|
$271
|
$221
|
Shares Outstanding (million) –
basic
|
147
|
147
|
147
|
147
|
NAV per Share
($/Share)
|
$4.24
|
$2.42
|
$1.84
|
$1.50
|
(1)
Financial information is per Perpetual’s 2012 preliminary unaudited
consolidated financial statements.
(2)
Reserve values per McDaniel Report as at December 31, 2012,
including Gas over Bitumen financial solution.
(3)
Independent Third party estimate.
(4)
Reflects 10% interest in Warwick Gas Storage valued at
proportionate disposition value at April 25, 2012.
(5)
Includes bank debt, net of working capital, excluding marketable
securities.
(6)
Amounts are in addition to amounts in the McDaniel report for
future well abandonment costs, net of salvage value, related to
developed reserves. See “ABANDONMENT AND RECLAMATION
COSTS”.
In
the absence of adding reserves to the Corporation, the NAV per
Share will decline as the reserves are produced out. The above
evaluation includes future capital expenditure expectations
required to bring undeveloped reserves recognized by McDaniel that
meet the criteria for booking under NI 51-101 on production. The
fair market value of undeveloped land does not reflect the value of
the Company’s extensive prospect inventory which will be converted
into reserves and production over time through future capital
investment.
FAIR
MARKET VALUE OF UNDEVELOPED LAND
Perpetual’s independent third party
estimate of the fair market value of its undeveloped acreage by
region for purposes of the above net asset value calculation is
based on recent Crown land sale activity adjusted for tenure and
other considerations and is as follows:
Fair
Market Value of Undeveloped Land
($ millions except as
noted)
|
Net Acres
|
Total Value
|
$/Acre
|
|
North
|
709,955
|
$20.8
|
$29.30
|
South
|
416,981
|
45.3
|
108.64
|
West Central
|
116,709
|
35.2
|
301.60
|
Oil Sands
|
326,699
|
54.0
|
165.29
|
New Ventures
|
18,107
|
5.2
|
287.18
|
Totals
|
1,588,451
|
$160.6
|
$101.10
|
The
fair market value of Perpetual’s undeveloped land at year-end 2012
decreased by $27.9 million relative to year-end 2011. This was
primarily a result of reduced acreage due to dispositions and lease
expiries, offset by land acquisitions in Perpetual’s priority
exploration and development areas in greater Edson and Mannville.
ABANDONMENT AND RECLAMATION
COSTS
In
addition to the abandonment cost estimates provided by McDaniel
inclusive in their reserve assessment, Perpetual compiles annually
a detailed internal estimate of the Corporation’s total future
asset retirement obligation based on net ownership interest in all
wells, facilities and pipelines, including estimated costs to
abandon the wells, facilities and pipelines and reclaim the sites,
and the estimated timing of the costs to be incurred in future
periods. Pursuant to this evaluation, the estimated cost of future
asset retirement obligations related to Perpetual’s proved and
probable reserves and other liabilities, net of the estimated
salvage value of facilities and equipment and discounted at eight
percent is $80 million as at December 31, 2012. The McDaniel Report
includes an undiscounted amount of $61 million ($32 million,
discounted at eight percent), with respect to expected future well
abandonment costs related specifically to proved and probable
reserves and such amount is included in the values captioned “Total
Proved and Probable Reserves” in the NPV of Funds Flow table (see
“NPV OF RESERVES SUMMARY”).
The
following table presents the estimated future asset retirement
obligations and estimated net salvage values at various discount
rates:
Abandonment and Reclamation
Costs
|
|
|
|
|
($millions, net to
Perpetual)
|
Undiscounted
|
5%
|
8%
|
Discounted at
10%
|
Well abandonment costs for
developed reserves included in McDaniel Report
|
44
|
30
|
24
|
21
|
Well abandonment costs for
undeveloped reserves included in McDaniel Report
|
17
|
10
|
8
|
6
|
Well abandonment costs for Total
Proved and Probable reserves included in McDaniel
Report
|
61
|
40
|
32
|
27
|
Estimate of other abandonment and
reclamation costs not included in
McDaniel Report
|
199
|
131
|
104
|
89
|
Total
estimated future abandonment and reclamation costs
|
260
|
171
|
136
|
116
|
Salvage value
|
(112)
|
(74)
|
(58)
|
(50)
|
Abandonment and reclamation costs ,
net of salvage
|
148
|
97
|
78
|
66
|
Well abandonment costs for
developed reserves included in McDaniel Report
|
(44)
|
(30)
|
(24)
|
(21)
|
Estimate of additional future
abandonment and reclamation costs, net of
salvage(1)
|
104
|
67
|
48
|
45
|
(1)
Future abandonment and reclamation costs not included in the
McDaniel Report, net of salvage value.
FINDING, DEVELOPMENT AND
ACQUISITION (“FD&A”) COSTS
Under
NI 51-101, the methodology to be used to calculate FD&A costs
includes incorporating changes in FDC required to bring the proved
undeveloped and probable reserves to production. For continuity,
Perpetual has presented herein FD&A costs calculated both
excluding and including FDC. Changes in forecast FDC occur annually
as a result of development activities, acquisitions and disposition
activities, undeveloped reserve revisions and capital cost
estimates that reflect the independent evaluator’s best estimate of
what it will cost to bring the proved and probable undeveloped
reserves on production.
The
following table summarizes Perpetual’s F&D cost as well as
FD&A costs, before and after the inclusion of changes in FDC.
F&D costs, including changes in FDC were $11.15 per Boe on a
proved and probable basis in 2012. Since net proceeds on
dispositions exceeded exploration and development capital
expenditures and the year over year increase in FDC, Perpetual’s
FD&A costs were negative in 2012. With net dispositions of 11.3
MMBoe and net proceeds for disposition of $167.2 MM, Perpetual’s
realized FD&A costs calculate to ($13.11) per Boe on a proved
and probable basis in 2012.
2012
FD&A Costs (1)
($
millions (unaudited), except as noted)
|
Proved
|
Proved &
Probable
|
F&D Costs, Excluding
FDC
|
|
|
Exploration and Development Capital
Expenditures(2)
|
$79.8
|
$79.8
|
Reserve Additions, Including
Revisions – MMBoe
|
10.8
|
12.9
|
F&D –
$/Boe
|
$7.39
|
$6.18
|
|
|
|
F&D Costs, Including
FDC
|
|
|
Exploration and Development Capital
Expenditures(2)
|
$79.8
|
$79.8
|
Total
Change in FDC
|
$82.6
|
$88.9
|
Total
F&D Capital, Including Change in FDC
|
$162.4
|
$168.7
|
Reserve Additions, Including
Revisions – MMBoe
|
10.8
|
12.9
|
F&D Costs–
$/Boe
|
$15.04
|
$13.06
|
|
|
|
FD&A Costs, Excluding
FDC
|
|
|
Exploration and Development Capital
Expenditures(2)
|
$79.8
|
$79.8
|
Net
Acquisitions (Dispositions)(3)
|
(165.5)
|
(165.5)
|
FD&A Capital Expenditures
Including, Net Acquisitions
|
($85.7)
|
($85.7)
|
Reserve Additions, Including Net
Acquisitions(3) – MMBoe
|
4.5
|
1.6
|
FD&A Costs –
$/Boe
|
($19.16)
|
($52.43)
|
FD&A Costs, Including
FDC
|
|
|
FD&A Capital Expenditures,
Including Net Acquisitions(2)
|
($85.7)
|
($85.7)
|
Total
Change in FDC
|
$66.7
|
$64.3
|
Total
FD&A Capital, Including Change in FDC
|
($19.0)
|
($21.4)
|
Reserve Additions, Including Net
Acquisitions(3) – MMBoe
|
4.5
|
1.6
|
FD&A Costs, Including FDC –
$/Boe
|
($4.25)
|
($13.11)
|
(1)
Financial information is per Perpetual’s 2012 preliminary unaudited
consolidated financial statements.
(2)
Exploration
and development capital and reserves associated with Warwick Gas
Storage have been excluded post disposition on April 25,
2012.
(3)
Includes
Warwick Gas Storage disposition proceeds of $81 million and
disposed proved and probable reserves of 1.3 MMBoe.
Additional
Information
Perpetual will release its 2012
annual audited financial statements and management's discussion and
analysis (“MD&A”) on or about March 11, 2013.
Unaudited financial information
Certain
financial and operating information included in this press release
for the quarter and year-ended December 31, 2012, such as capital
expenditures, FD&A costs, funds flow and net debt are based on
estimated unaudited financial results for the quarter and year then
ended, and are subject to the same limitations as discussed under
"Forward-Looking Information". These estimated amounts may change
upon the completion of audited financial statements for the
year-ended December 31, 2012 and changes could be material. See
"Non-IFRS Measures".
Non-IFRS
Measures
This
news release includes references to financial measures commonly
used in the oil and gas industry such as "funds flow", “reserve
life index” and "net debt", which do not have any standardized
meaning prescribed by International Financial Reporting Standards
("IFRS").
Management believes that in addition to net income, funds flow and
net bank debt are useful supplemental measures as they are a
measure of a company's ability to generate the cash necessary to
repay debt or fund future growth through capital investment.
However, investors are cautioned that these measures should not be
construed as an alternative to net income determined in accordance
with IFRS as an indication of Perpetual's performance. The method
of calculating these measures may differ from other companies and,
accordingly, they may not be comparable to similar measures used by
other companies. For these purposes, "funds flow" is defined as
cash provided by operations before changes in non-cash working
capital gas over bitumen royalty adjustments not yet received,
settlement of decommissioning obligations and certain exploration
costs and "net bank debt is defined as long-term bank debt plus
working capital (adjusted for the fair value of financial
instruments and future taxes). Readers are referred to advisories and
further discussion on non-IFRS measures contained in the
“Significant Accounting Policies and Non-GAAP Measures” section of
Perpetual’s MD&A for the year-end December 31,
2011.
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, anticipated amounts and
allocation of capital spending; statements regarding estimated
production and timing thereof; prospective drilling, forecast
average production; completions and development activities;
infrastructure expansion and construction; estimated FDC required
to convert proved and probable non-producing and undeveloped
reserves to proved producing reserves; anticipated effect of
commodity prices on reserves; estimates of gross recoverable gas
sales; estimated net asset value; prospective oil and natural gas
liquids production capability; projected realized natural gas
prices and funds flow; projected ending 2012 net debt; estimated
asset retirement obligations; anticipated effect of commodity
prices on future development capital and reserves; commodity prices
and foreign exchange rates; and gas price management. 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 MD&A 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
law.
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
Cameron R.
Sebastian
Claire A.
Rosehill
|
President and Chief Executive
Officer
Vice
President, Finance and Chief Financial Officer
Business and Investor Relations
Analyst
|
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