CALGARY, May 6, 2014 /CNW/ – (TSX:PMT) – Perpetual Energy Inc. (“Perpetual” or the “Corporation” or the “Company”) is pleased to report its financial and operating results for the three months ended March 31, 2014. Overall, results show significant gains from the comparative period in 2013 and the previous fourth quarter, reflecting both positive operating results and stronger commodity prices. A complete copy of Perpetual’s unaudited interim consolidated financial statements and related Management’s Discussion and Analysis (“MD&A”) for the three months ended March 31, 2014 can be obtained through the Corporation’s website at www.perpetualenergyinc.com and SEDAR at www.sedar.com.
Perpetual is also pleased to report that an 18 percent increase in borrowing capacity from $110 million to $130 million will be made available on or before May 10, 2014 as a result of the lenders’ semi-annual borrowing base review under the Corporation’s credit facility which has now been completed.
FIRST QUARTER 2014
Operating Highlights
Financial Highlights
2014 STRATEGIC PRIORITIES
Perpetual remains focused on its top five strategic priorities for 2014:
Downside risk management
Edson Wilrich liquids-rich gas
Mannville heavy oil
Shallow gas
High impact opportunities
2014 OUTLOOK
Perpetual continues to target capital spending to be fully funded by 2014 funds flow. The Corporation’s Board of Directors has approved a $70 to $80 million capital budget for full calendar year 2014. Capital spending for the remainder of the year will be approximately $48 million. The table below summarizes expected capital spending and planned drilling activities in accordance with Perpetual’s 2014 strategic priorities for the remainder of 2014.
Capital expenditures for Q2 – Q4 of 2014 | $ millions | # of Wells | ||||
West Central liquids-rich gas | 26 | 10 (5.5 net) | ||||
Mannville heavy oil | 15 | 10 (8.8 net) | ||||
Shallow gas | 5 | – | ||||
Abandonment and reclamation | 2 | – | ||||
48 | 20 (14.3 net) |
Perpetual estimates that 2014 funds flow will total $80 to $90 million based on current forward commodity prices, with oil and liquids production averaging close to 3,400 – 3,500 bbl/d and natural gas sales averaging approximately 90 to 95 MMcf/d. The enhanced heat content of Perpetual’s liquids-rich gas in West Central Alberta results in premium pricing to AECO market prices. Perpetual expects to average 36 to 38 MMcf/d of gas production in the Edson area in 2014, where the average heat content is estimated at 1.18 GJ/Mcf.
Sensitivities
The table below highlights the sensitivities of Perpetual’s 2014 forecasted funds flow to commodity index prices:
Projected 2014 funds flow(2) ($ millions) | AECO Gas Price ($/GJ)(1) | ||||||
WTI price (US$/bbl)(1) |
$4.00 | $4.50 | $5.00 | $5.50 | $6.00 | ||
$85.00 | 80.6 | 85.4 | 90.3 | 95.1 | 99.9 | ||
$95.00 | 84.9 | 89.8 | 94.6 | 99.5 | 104.3 | ||
$100.00 | 86.6 | 91.4 | 96.3 | 101.1 | 106.0 | ||
$105.00 | 86.6 | 91.4 | 96.3 | 101.1 | 106.0 | ||
$115.00 | 82.9 | 87.8 | 92.6 | 97.5 | 102.3 |
(1) | The current settled and forward average AECO and WTI prices for April to December 2014 as of May 6, 2014 were $4.58 per GJ and US$96.82 per bbl, respectively. |
(2) | This is a non-GAAP measure; see “Non-GAAP measures” in this News Release. |
Financial and Operating Highlights | Three Months Ended March 31 | ||||||
(Cdn$ thousands except as noted) | 2014 | 2013 | % Change | ||||
Financial | |||||||
Oil and natural gas revenue | 64,754 | 42,477 | 52 | ||||
Funds flow (1) | 17,384 | 9,534 | 82 | ||||
Per share (1) (2) | 0.12 | 0.06 | 100 | ||||
Net earnings (loss) | (17,324) | 32,764 | (153) | ||||
Per share – basic (2) | (0.12) | 0.22 | (153) | ||||
Per share – diluted (2) | (0.12) | 0.21 | (157) | ||||
Total assets | 770,064 | 742,288 | 4 | ||||
Net bank debt outstanding (1) | 84,048 | 32,062 | 162 | ||||
Senior notes, at principal amount | 150,000 | 150,000 | – | ||||
Convertible debentures, at principal amount | 159,779 | 159,972 | – | ||||
Total net debt (1) | 393,827 | 342,034 | 15 | ||||
Capital expenditures | |||||||
Exploration and development (3) | 31,428 | 39,507 | (20) | ||||
Dispositions, net of Acquisitions | 151 | (76,178) | 100 | ||||
Net capital expenditures | 31,579 | (36,671) | 186 | ||||
Common shares outstanding (thousands) | |||||||
End of period | 148,944 | 147,704 | 1 | ||||
Weighted average – basic | 148,448 | 147,672 | 1 | ||||
Weighted average – diluted | 148,448 | 171,667 | (14) | ||||
Operating | |||||||
Average production | |||||||
Natural gas (MMcf/d) (4) | 92.1 | 88.6 | 4 | ||||
Oil and NGL (bbl/d) (4) | 3,451 | 3,483 | (1) | ||||
Total (boe/d) (5) | 18,794 | 18,244 | 3 | ||||
Gas over bitumen deemed production (MMcf/d) (5) | 19.5 | 25.0 | (22) | ||||
Average daily (actual and deemed – boe/d) (4) (5) | 22,036 | 22,403 | (2) | ||||
Average prices | |||||||
Natural gas, before derivatives ($/Mcf) | 4.90 | 3.18 | 54 | ||||
Natural gas, including derivatives ($/Mcf) | 4.35 | 3.28 | 33 | ||||
Oil and NGL, before derivatives ($/bbl) | 77.72 | 54.74 | 42 | ||||
Oil and NGL, including derivatives ($/bbl) | 72.06 | 56.82 | 27 | ||||
Barrel of oil equivalent, including derivatives ($/boe) | 34.51 | 26.80 | 29 | ||||
Drilling (wells drilled gross/net) | |||||||
Gas | 3/2.0 | -/- | |||||
Oil | 11/9.7 | 27/25.7 | |||||
Total | 14/11.7 | 27/25.7 | |||||
Success rate (%) | 100/100 | 100/100 |
(1) | These are non-GAAP measures. Please refer to “Non-GAAP Measures” in this News Release. |
(2) | Based on weighted average basic or diluted common shares outstanding for the period. |
(3) | Exploration and development costs include geological and geophysical expenditures and other. |
(4) | Production amounts are based on the Corporation’s interest before royalty expense. |
(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 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. |
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Forward-Looking Information
Certain information regarding Perpetual in this news release including management’s assessment of future plans and operations and including the information contained under the heading “Outlook” may constitute forward-looking statements under applicable securities laws. The forward-looking information includes, without limitation, statements regarding capital expenditure levels for 2014, 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 and anticipated funds flow; planned drilling and development and the results thereof; expected dispositions, anticipated proceeds therefrom and the use of proceeds therefrom; and commodity prices. 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, 2013 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 (“NI 51-101”), a conversion ratio for natural gas of 6 Mcf:1bbl 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.
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.
About Perpetual
Perpetual Energy Inc. is a Canadian energy company with a spectrum of resource-style opportunities spanning heavy oil, NGL and bitumen along with a large base of shallow gas assets. Perpetual’s shares and convertible debentures are listed on the Toronto Stock Exchange under the symbol “PMT”, “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.
SOURCE Perpetual Energy Inc.
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[/expand]