This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration. Need a new registration confirmation email? Click here
Dec. 18, 2012 /PRNewswire/ -
(TSX:PMT) - Perpetual Energy Inc. ("Perpetual" or the "Corporation") is pleased to announce further positive results from the Corporation's ongoing asset disposition program. Perpetual has entered into a definitive purchase and sale agreement, along with its partner Tourmaline Oil Corp., to jointly divest its Elmworth,
Alberta property for gross proceeds of
$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.
The Elmworth property consists of 3 gross (1.5 net) non-producing horizontal
Montney gas wells at Elmworth, one vertical well at Wapiti, and undeveloped land, including 20,256 net acres of
Montney rights. This disposition will have no negative effect on Perpetual's 2013 projected production or cash flow, and interest expense will be reduced by approximately
$4 million on an annual basis, assuming that the proceeds permanently reduce bank debt.
Due to the long development timeline and significant capital required to build sour gas infrastructure into the Elmworth area to establish cost-efficient production, Perpetual has chosen to build the liquids-rich gas component of its diversified portfolio around the robust inventory of Wilrich horizontal development opportunities in the greater
Proceeds from this disposition will initially be applied to reduce outstanding bank debt and, along with the interest savings on reduced bank debt, will significantly bolster Perpetual's financial flexibility to continue to deploy capital to its chosen key commodity-diversifying growth strategies in
Mannville heavy oil and
Edson liquids-rich Wilrich gas development. It will also allow Perpetual to continue to advance the Corporation's portfolio of medium and long term value and growth plays with risk-managed investment. In addition, this transaction provides added optionality for managing the Corporation's long term debt obligations.
Current drawings on the Corporation's
$130 million credit facility are approximately
$85 million. Proforma for the announced dispositions and the Corporation's planned
$40 million first quarter 2013 capital spending program, and assuming the current forward markets for commodity prices, Perpetual expects to exit the first quarter of 2013 drawn approximately
$35 to $40 million on its credit facility.
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 prospective drilling activities; forecast debt levels and credit facility draws; forecast and realized commodity prices; expected funding 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; effects of dispositions on production, cash flow, debt levels, liquidity and financial flexibility; commodity prices; and estimated interest expense. 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.
SOURCE Perpetual Energy Inc.