Perpetual Energy Inc. Releases Third Quarter 2010 Financial and Operating Results, Increases 2010 Capital Budget for Liquids-Rich Wilrich Development, Advises on Q1 2011 Capital Spending and Announces November Distribution
By Perpetual Energy Inc., PRNESunday, November 7, 2010
CALGARY, Alberta, November 9, 2010 - (TSX: PMT) - Perpetual Energy Inc. ("Perpetual", the "Corporation" or
the "Company") is pleased to release its financial and operating results for
the three and nine months ended September 30, 2010. Perpetual's natural gas
price hedging program combined with strong operating results led the
Corporation to post strong funds flow for the third quarter of 2010 despite
extremely weak natural gas prices related to high gas storage levels and
concerns about new supply. A copy of Perpetual's unaudited interim
consolidated financial statements and related notes and management's
discussion and analysis for the three and nine months ended September 30,
2010 and 2009 can be obtained through the Corporation's website at
www.perpetualenergyinc.com and SEDAR at www.sedar.com.
Perpetual has committed significant capital to date in 2010 towards
understanding the technical and commercial viability of a number of its
potentially high impact resource-style opportunities. The results to date
from the liquids-rich gas play in the Wilrich sand at Edson, the Cardium oil
evaluation program and the first of three Montney evaluation wells at
Elmworth in west central Alberta have been very positive and have
demonstrated that they are worthy of continued investment. To build on this,
the Board of Directors of Perpetual has approved an expansion of the
Corporation's 2010 exploration and development capital expenditure budget
from $81 million to $112 million. With exploration and development spending
to the end of the third quarter totaling $77 million, fourth quarter
expenditures are expected to be approximately $35 million. Plans for the
fourth quarter will be focused largely on the Wilrich play. Additional
capital will be spent to complete the Cardium evaluation program in the
Carrot Creek/Edson area.
In addition, the Board of Directors of Perpetual has approved a $48
million capital budget for the first quarter of 2011. First quarter 2011
expenditures will be directed principally toward the advancement of these
same large-scope, resource-style oil and liquids-rich gas opportunities in
the Wilrich at Edson, the Cardium at Carrot Creek, and the Montney formation
at Elmworth where Perpetual's capital activities will be funded by its
partner while completing their earning obligation. In addition, plans are in
place to evaluate several of the Company's high potential bitumen
opportunities with the drilling of a total of 10 wells at Liege, Panny and
Hoole.
Perpetual also advises that its dividend to be paid on December 15, 2010
in respect of income received by Perpetual for the month of November 2010,
for shareholders of record on November 22, 2010, will be $0.03 per share.
Perpetual is reducing its dividend in order to enhance its ability to direct
capital to its high impact resource play opportunities having regard to
current weakness in natural gas prices. The ex-dividend date is November 18,
2010. The November 2010 dividend brings cumulative dividends (including
distributions paid since the inception of Perpetual's predecessor, Paramount
Energy Trust) to $14.294 per share. Perpetual reviews dividends on a monthly
basis. Future dividends are subject to change as dictated by commodity price
markets, operations, capital considerations and future business development
opportunities.
Further, there will be no shares available under either the Premium
Dividend(TM) or dividend reinvestment component of its Premium Dividend(TM)
and Dividend Reinvestment Plan (the "Plan") for the Corporation's November
dividend payable on December 15, 2010 and until further notice. Shareholders
who had elected to participate and were currently enrolled in either the
Premium Dividend(TM) or the dividend reinvestment component of the Plan will
receive cash dividends on the payment date. At such time as the Corporation
elects to reinstate either or both components of the Plan, shareholders that
were enrolled at suspension and remain enrolled at reinstatement will
automatically resume participation in the Plan.
Third Quarter Summary
Corporate
- On June 30, 2010, the previously announced plan of arrangement (the
"Arrangement") involving Perpetual, Paramount Energy Trust (the
"Trust") and Paramount Energy Operating Corp. pursuant to which the
Trust converted into the Corporation was completed. Unitholders of
the Trust voted in favor of the Arrangement at the Annual General and
Special Meeting of Trust Unitholders held on June 17, 2010. Former
Unitholders of the Trust received common shares of Perpetual in
consideration for the cancellation of their Trust Units of the Trust
on a one-for-one basis. In addition, as part of the Arrangement, the
Trust was dissolved and the Corporation assumed all of the existing
liabilities of the Trust, including the Trust's outstanding
convertible debentures which are now convertible debentures of the
Corporation. Trading of the common shares of Perpetual Energy began
on July 6, 2010.
Capital Activity
- Exploration, development and land expenditures totaled $27.6 million
and $77.2 million for the three and nine months ended September 30,
2010 as compared to $8.2 million and $55.7 million for the comparable
periods in 2009. The increased spending was primarily targeting new
ventures areas and in west central Alberta, delineating several of
the Company's high-impact oil and liquids-rich gas plays.
- Spending in west central Alberta for the current quarter totaled
$12.8 million, including drilling three new wells (2.6 net) and
completion of wells in the Edson and Carrot Creek areas.
- A primary focus of Perpetual's 2010 exploration program has been to
determine the productivity of the Cardium formation across the Carrot
Creek and Edson areas through the use of horizontal drilling and
multi-stage fracture completion technologies. To date, Perpetual has
participated in five (3.3 net) wells, each testing a different and
independent part of the Cardium reservoir, of which two wells (1.5
net) were drilled in the current quarter. The average production per
well for the first 30 days was approximately 175 BOE/d for the first
four wells. The fifth and final well is currently testing.
- An exploration program targeting the liquids-rich Wilrich sand was
undertaken during the third quarter. Three vertical wells were re-
completed and one horizontal well (1.0 net) has been drilled and put
on production during the quarter. In the first 30 days, the
horizontal well had an average rate of 4.3 MMcf/d raw gas and 40
bbls/MMcf of natural gas liquids and condensate. An additional three
horizontal wells (3.0 net) are expected to be drilled and completed
prior to year end. An expansion of the compression and gathering
system from 10 MMcf/d to 30 MMcf/d has been initiated to accommodate
the anticipated production growth. Perpetual anticipates that the
volumes from the new wells will be placed on production later in 2010
once the facility construction is completed. A total of 40 gross (33
net) horizontal locations have been identified for further
development at Edson.
- During the quarter, drilling operations were completed on the first
of three horizontal wells targeting liquids-rich gas in the Montney
formation at Elmworth in west central Alberta. Perpetual is being
carried by its partner for all costs of the drilling of the first
three Elmworth wells. One horizontal well (0.5 net) has been drilled
to date and is undergoing completion operations. A second horizontal
well (0.5 net) is drilling in the lateral section. A multi-stage
fracture stimulation has been conducted recently on the first well
and during clean up the well was flowing at 7.5 MMcf/d of raw gas and
associated hydrocarbon liquids. Further testing will be done in the
fourth quarter to determine the ultimate deliverability and nature of
the gas to liquids ratio. A third well (0.4 net) is expected to be
spud prior to year end. In total at Elmworth, the Company has 78
sections of Montney rights, with 120 gross (60 net) horizontal
locations identified on the north and east land blocks which comprise
40 gross sections. Additional exploration activities beyond those
currently planned will be required to evaluate the prospectivity of
the remaining 38 sections of land on the Company's western land
block.
- Perpetual was also active in eastern Alberta, drilling a total of 19
gross (18.9 net) wells, including six gross (6.0 net) shallow gas
wells at Craigend, four gross (3.9 net) shallow gas wells at
Birchwavy east and nine gross (9.0 net) heavy oil wells at Birchwavy
east.
- Facility construction proceeded as planned on the Warwick Gas Storage
Inc. ("WGSI") project, totaling $23.1 million during the third
quarter of 2010. Third quarter capital activity included expenditures
toward the purchase and installation of compression facilities
designed to allow for winter withdrawals. Overall spending on
development of the gas storage reservoir and facility in the first
nine months of 2010 was $46.3 million. Capital activities for the
fourth quarter of 2010 are budgeted at $7 million, including funds
for the completion of the facility for withdrawal and to drill,
complete and tie-in one well for additional withdrawal capability.
The WGSI facility is fully operational for natural gas injection,
which commenced on May 1, 2010 at rates of up to 175 MMcf/d of third
party natural gas. Withdrawal will commence as scheduled in the
fourth quarter of 2010.
Production and Pricing
- Average actual and deemed production for the three months ended
September 30, 2010 increased three percent year over year from
169.9 MMcf/d to 175.6 MMcfe/d. Average actual production measured
151.0 MMcfe/d for the three months ended September 30, 2010 as
compared to 152.4 MMcfe/d reported in the same period of 2009. Total
average production for the nine months ended September 30, 2010
decreased four percent to 155.2 MMcfe/d from 161.6 MMcfe/d in the
2009 period due to the Legend shut-in and non-core property
dispositions in 2009, partially offset by the increase in production
associated with the Profound, Ukalta and Edson acquisitions and
subsequent development of the west central assets.
- Total operating costs decreased 11 percent to $24.9 million
($1.79 per Mcfe) for the three months ended September 30, 2010 from
$27.9 million ($1.99 per Mcfe) for the same period in 2009, due to
decreases in repair and maintenance expenses and property taxes.
Included in operating costs are expenses related to the operation of
the WGSI facility, which totaled $0.9 million for the third quarter.
Excluding gas storage expenses, operating costs decreased 14 percent
to $1.71 per Mcfe for the third quarter of 2010. Perpetual's reduced
operating costs reflect the positive results from cost reduction
initiatives at all operated fields implemented to enhance
competitiveness, profitability and efficiency.
- The Corporation's realized gas price was $6.18 per Mcfe for the three
months ended September 30, 2010, an 18 percent decrease from the
comparable quarter in 2009. The 2009 figure included realized gains
on financial instruments totaling $56.3 million as compared to gains
of $29.4 million for the current period.
Financial
- Funds flow decreased to $46.1 million ($0.32 per share) from
$59.6 million ($0.49 per share) for the third quarter of 2009
primarily due to lower revenues due to lower realized gains on
financial instruments and higher royalty expenses for the current
quarter, partially offset by a reduction in operating costs and an
increase in gas over bitumen royalty adjustments in the current
period. Funds flow netbacks for the quarter decreased 22 percent to
$3.31 per Mcfe from $4.25 per Mcfe in the third quarter of 2009.
- The Corporation reported a net loss of $1.7 million ($0.01 per basic
and diluted common share) for the three months ended September 30,
2010 as compared to a net loss of $44.7 million ($0.36 per basic and
per diluted common share) for the 2009 period. The lower net loss is
due to an increase in unrealized gains on financial instruments and
$6.2 million in gains on non-core property dispositions, partially
offset by higher depletion, depreciation and amortization charges and
lower funds flows for the current quarter.
- Net bank debt was reduced by $38.6 million during the third quarter
of 2010 to $256.9 million from $295.5 million at June 30, 2010.
Dividends
- Dividends payable for the third quarter of 2010 totaled $0.15 per
common share, comprised of $0.05 per share paid on August 16,
September 15 and October 15, representing a payout ratio of 47.3
percent of funds flow as compared to 30.7 percent for the third
quarter of 2009.
Subsequent Events
- Perpetual had an 89 percent ownership interest in Severo Energy Corp.
("Severo"), a private company engaged in oil and gas exploration in
Canada. The remaining 11 percent was owned by employees of Severo,
Perpetual and several private investors. On October 4, 2010, the
Corporation's wholly-owned subsidiary, Perpetual Operating Trust
("POT"), successfully acquired all of the issued and outstanding
shares of Severo (the "Acquisition") not already owned by POT.
Following the Acquisition, all of the assets and undertakings of
Severo Energy Corp., Severo Acquisitions Ltd. and Severo Energy
Partnership were transferred to POT. Since the Corporation has
retained control of Severo, the results, assets and liabilities of
this entity have been included in Perpetual's financial statements.
- As current and forward gas prices have reached what the Company
believes to be unsustainably low levels over the past several weeks
the Company has bought back the majority of its forward sale
positions, crystallizing gains of $37 million related to in-the-money
hedges for future periods. The mark-to-market value of the
Corporation's remaining physical forward sales arrangements at
November 8, 2010 is approximately $6.2 million. As a result of the
above activities, Perpetual's net bank debt currently stands at
approximately $225 million. A reconciliation of realized gains on
financial instruments to date in 2010 is as follows:
Realized gains on financial instruments ($ millions)
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Realized gains for the nine months ended September 30, 2010 105.6
Settlement of October and November 2010 natural gas
financial hedging contracts 12.0
Early termination gains realized on December 2010 - March
2012 financial hedging contracts 36.6
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Realized gains on financial instruments to date in 2010 154.2
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Outlook and Sensitivities
The Board of Directors of Perpetual has approved an expansion of the
Corporation's 2010 exploration and development capital expenditure budget
from $81 million to $112 million. Fourth quarter exploration and development
expenditures are expected to total approximately $35 million. The expansion
of the 2010 program is driven by Perpetual's recent success in the Wilrich
play at Edson. Plans for the fourth quarter include the drilling of three
gross (3.0 net) additional horizontal wells targeting the liquids-rich
Wilrich formation as well as expansion of the compression facility from 10
MMcf/d to 30 MMcf/d to accommodate future production increases from this
area. Additional capital will also be spent to complete the Cardium
evaluation program in the Carrot Creek/Edson area.
The Board of Directors approved the full development of the Warwick gas
storage project in June 2010. Spending in the fourth quarter of 2010 is
expected to be $7 million to complete the facility for winter withdrawals and
to drill one additional well to enhance the reservoir's deliverability
capability. Combined with the increased exploration and development spending,
Perpetual expects to spend a total of $42 million in the fourth quarter of
2010.
The following sensitivity table reflects, for the fourth quarter of 2010,
Perpetual's projected realized gas price, monthly funds flow and payout
ratio, adjusted for the current monthly dividend of $0.03 per common share
for the last two months of 2010, as well as projected ending net debt at
certain AECO natural gas price levels. These sensitivities incorporate
revenue from the Corporation's recently settled financial hedges, current
outstanding physical forward sales contracts, 2010 capital expenditures of
$112 million and related production additions, receipt of the $10 million in
additional gas storage funding that is currently held in escrow, full year
operating costs of $97 million, cash general and administrative expenses of
$34 million and an interest rate on bank debt of four percent.
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Fourth Quarter 2010 Average AECO Monthly Index Gas Price
- Funds Flow Outlook October to December 2010 ($/GJ)
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$3.00 $4.00 $5.00
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Oil and natural gas production (MMcfe/d) 142 142 142
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Realized gas price ($/Mcfe)(1) 7.24 7.50 7.75
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Funds flow from Warwick Gas Storage 3 3 3
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Total funds flow ($millions)(2)(4) 58 66 73
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Per Share ($/Share/month) 0.133 0.151 0.167
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Payout ratio (%)(2) 27 24 22
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Ending net bank debt ($millions)(2)(3) 245 237 230
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Convertible debentures outstanding
($millions) 235 235 235
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Gas storage funding arrangement liability
($millions)(4) 42 42 42
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Ending net debt ($millions)(2)(3)(4)(5) 522 514 507
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Ending net bank debt to funds flow ratio
(times)(5) 1.1 0.9 0.7
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Ending total net debt to funds flow
ratio (times)(5) 2.3 1.9 1.7
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(1) Perpetual's weighted average forward price on an average of
10,000 GJ/d for December 2010 is $7.75 per GJ. The current settled
and forward average AECO price for October to December 2010 is $3.52
per GJ.
(2) These are non-GAAP measures; see "Significant accounting policies and
non-GAAP measures" in management's discussion and analysis.
(3) Assumes fourth quarter capital spending of $35 million for
exploration and development and $7 million for Warwick gas storage.
(4) The gas storage funding arrangement reflects a future delivery
obligation of 8 Bcf of natural gas to the counterparty in the first
quarter of 2014.
(5) Calculated as ending net debt (including convertible debentures and
the gas storage funding arrangement) divided by annualized funds
flow. The Corporation's convertible debt is classified as long term
with $75 million maturing in 2012 and the remainder maturing in 2015.
In addition, the Board of Directors of Perpetual has approved a $48
million capital budget for the first quarter of 2011. First quarter
expenditures in 2011 will be directed principally toward the advancement of
Perpetual's large-scope resource-style opportunities including:
- The drilling of three gross (3.0 net) wells targeting the liquids-
rich Wilrich sand in the Edson area of west central Alberta;
- The drilling of three gross (1.8 net) horizontal wells targeting oil
in the Cardium formation in the greater Pembina area;
- Tie-in operations for the Elmworth Montney play to establish
production from the three Montney evaluation wells; and
- The drilling of 10 gross (10 net) oilsands evaluation wells in
northeast Alberta as part of the process of quantifying and
evaluating Perpetual's significant heavy oil/bitumen landholdings at
Liege, Hoole and Panny.
In addition four gross (4.0 net) strategic wells will be drilled and
approximately 50 recompletions undertaken in various areas of Perpetual's
conventional asset base.
As a result of the increased capital spending program in the fourth
quarter of 2010 Perpetual expects to exit the fourth quarter of 2010 at a
production capability of 156 MMcfe/d. First quarter 2011 production is
expected to average 143 MMcfe/d, including an estimate of up to six percent
downtime related to cold weather which generally occurs in the winter months
in Perpetual's northern shallow gas properties. Giving effect to the planned
first quarter capital program, Perpetual expects to exit the first quarter of
2011 with production capability of 162 MMcfe/d.
During the first quarter of 2011 Perpetual will make a determination as
to the extent and scope of its capital activities for the final three
quarters of 2011 based on the results of its fall 2010 and winter 2010-2011
programs and commodity prices at that time.
Forward-Looking Information
Certain information regarding Perpetual Energy in this news release
including management's assessment of future plans and operations and
including the information contained under the heading "Outlook and
Sensitivities" above may constitute forward-looking statements under
applicable securities laws. The forward looking information includes, without
limitation, statements regarding expected access to capital markets;
potential reinstatement of the Premium Dividend(TM) and Dividend Reinvestment
Plan; forecast production, production capability, operations, funds flows,
and timing thereof; forecast and realized commodity prices; forecast, funding
and allocation of capital expenditures; projected use of funds flow; planned
drilling and development and the results thereof; estimated payout ratios;
estimated ending net debt; marketing and transportation; reserve estimates;
and estimated funds flow sensitivity. 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 Paramount Energy Trust's MD&A for the year ended December 31,
2009 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.
Non-GAAP Measures
This news release contains financial measures that may not be calculated
in accordance with generally accepted accounting principles in Canada
("GAAP"). Readers are referred to advisories and further discussion on
non-GAAP measures contained in the "Significant Accounting Policies and
non-GAAP Measures" section of management's discussion and analysis.
Conference Call and Webcast
Perpetual will be hosting a conference call and webcast at 9:00 a.m.,
Mountain Time, Tuesday November 9, 2010 to review this information.
Interested parties are invited to take part in the conference call by dialing
one of the following telephone numbers 10 minutes before the start time:
Toronto and area - 1-647-427-7450; outside Toronto - 1-888-231-8191. For a
replay of this call please dial: Toronto and area - 1-416-849-0833; outside
Toronto - 1-800-642-1687, passcode 19103968 until Tuesday November 16, 2010.
To participate in the live webcast please visit
www.perpetualenergyinc.com or
webx.newswire.ca/click/?id=3ac50ec69c2a943. The webcast will also be
archived shortly following the presentation.
Perpetual Energy Inc. is a natural gas-focused Canadian energy company.
Perpetual's shares and convertible debentures are listed on the Toronto Stock
Exchange under the symbol "PMT", "PMT.DB.C", "PMT.DB.D" and "PMT.DB.E",
respectively. 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.
FINANCIAL AND OPERATING HIGHLIGHTS
($Cdn thousands Three Months Ended Nine Months Ended
except volume September 30 September 30
and per share % %
amounts) 2010 2009 Change 2010 2009 Change
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Financial
Revenue,
including
realized gains
and losses on
financial
instruments 90,626 105,274 (14) 305,943 339,741 (10)
Funds flow(1) 46,078 59,599 (23) 166,656 191,938 (13)
Per common
share(2) 0.32 0.49 (35) 1.19 1.66 (28)
Net earnings
(loss) (1,710) (44,679) (96) (8,671) 24,945 (135)
Per common
share(2) (0.01) (0.36) (97) (0.06) 0.22 (127)
Dividends 21,806 18,324 19 62,355 57,028 9
Per common
share(3) 0.15 0.15 - 0.45 0.49 (8)
Payout
ratio (%)(1) 47.3 30.7 54 37.4 29.7 26
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Total assets 1,130,424 1,099,869 3 1,130,424 1,099,869 3
Net bank and
other debt
outstanding(4) 256,908 295,549 (13) 256,908 295,594 (13)
Convertible
debentures, at
principal
amount 234,897 230,168 2 234,897 230,168 2
Gas storage
arrangement 31,703 - 100 31,703 - 100
Total net
debt(4) 523,508 525,717 - 523,508 525,717 -
Shareholders'
equity 282,740 268,611 5 282,740 268,611 5
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Capital
expenditures
Exploration
and
development 27,563 8,225 235 77,191 55,651 39
Gas storage 23,104 2,441 846 46,269 2,441 1,795
Acquisitions,
net of
dispositions (15,879) 18,723 (185) 84,906 114,376 (26)
Other 101 105 (4) 375 244 54
Net capital
expenditures 34,889 29,494 18 208,741 172,712 21
Common shares
outstanding
(thousands)
End of period 146,239 123,955 18 146,239 123,955 18
Weighted
average 144,969 121,452 19 139,706 115,861 21
Share Options
outstanding 11,444 7,201 59 11,444 7,201 59
Shares
outstanding at
November 5,
2010 147,496 147,496
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Operating
Production
Total
natural gas
(Bcfe)(7) 13.9 14.0 (1) 42.4 44.1 (4)
Daily average
natural gas
(MMcfe/d)(7) 151.0 152.4 (1) 155.2 161.6 (4)
Gas over
bitumen deemed
production
(MMcf/d)(5) 24.6 17.5 41 25.1 18.1 39
Average daily
(actual and
deemed -
MMcfe/d)(5) 175.6 169.9 3 180.3 179.7 -
Per Share
(cubic feet
equivalent/d
/Unit)(2) 1.21 1.40 (13) 1.29 1.55 (17)
Average natural
gas prices
($/Mcfe)
Before
financial
hedging and
physical
forward
sales(6) 4.03 3.41 18 4.53 4.29 6
Including
financial
hedging and
physical
forward
sales(6) 6.18 7.51 (18) 7.09 7.69 (8)
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Land (thousands
of net acres)
Undeveloped
land holdings 1,722 2,009 (14) 1,722 2,009 (14)
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Drilling (wells
drilled
gross/net)
Gas 12/11.9 4/3.8 200/213 45/41.9 42/35.2 7/19
Gas Storage -/- -/- -/- 6/6 -/- 100/100
Oil 11/10.6 -/- 100/100 11/10.6 -/- 100/100
Dry -/- -/- -/- 1/1 -/- 100/100
Total 23/22.5 4/3.8 475/492 63/59.5 42/35.2 50/69
Success
rate (%) 100/100 100/100 -/- 98/98 100/100 (2)/(2)
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(1) These are Non-GAAP measures. Please refer to "Significant Accounting
Policies and Non-GAAP Measures" included in management's discussion
and analysis.
(2) Based on weighted average common shares outstanding for the period.
(3) Based on common shares outstanding at each distribution date.
(4) Net debt includes net working capital (deficiency) before short-term
financial instrument assets and liabilities and the current portion
of convertible debentures. Total net debt includes convertible
debentures measured at principal amount and the gas storage
arrangement. Please refer to "Significant Accounting Policies and
Non-GAAP Measures" included in management's discussion and analysis.
(5) The deemed production volume describes all gas shut-in or denied
production pursuant to a decision report, corresponding order or
general bulletin of the Alberta Energy and Utilities Board ("AEUB")
or its successor, the Energy Resources Conservation Board ("ERCB"),
or through correspondence in relation to an AEUB ID 99-1 application.
This deemed production volume is not actual gas sales but represents
shut-in gas that is the basis of the gas over bitumen financial
solution which is received monthly from the Alberta Crown as a
reduction against other royalties payable.
(6) PET's commodity hedging strategy employs both financial forward
contracts and physical natural gas delivery contracts at fixed prices
or price collars. In calculating the Corporation's natural gas price
before financial and physical hedging, PET assumes all natural gas
sales based on physical delivery fixed-price or price collar
contracts during the period were instead sold at AECO monthly index.
(7) Production amounts are based on the Corporation's interest before
royalties.
For further information: Perpetual Energy Inc., Suite 3200, 605 - 5
Avenue SW, Calgary, Alberta, Canada, T2P 3H5, Telephone: +1-403-269-4400,
Fax: +1-403-269-4444, Email: info@perpetualenergyinc.com; Susan L. Riddell
Rose, President and Chief Executive Officer; Cameron R. Sebastian, Vice
President, Finance and Chief Financial Officer; Sue M. Showers, Investor
Relations and Communications Advisor
For further information: Perpetual Energy Inc., Suite 3200, 605 - 5 Avenue SW, Calgary, Alberta, Canada, T2P 3H5, Telephone: +1-403-269-4400, Fax: 403 269-4444, Email: info at perpetualenergyinc.com; Susan L. Riddell Rose, President and Chief Executive Officer; Cameron R. Sebastian, Vice President, Finance and Chief Financial Officer; Sue M. Showers, Investor Relations and Communications Advisor
Tags: Alberta, Calgary, England, November 9, Perpetual Energy Inc.
