CALGARY, April 29, 2013 /PRNewswire/ - (TSX:PMT) - Perpetual Energy Inc. ("Perpetual" or the "Company") is pleased to announce:
1) The exercise of its option to purchase an additional 20 percent interest in Warwick Gas Storage ("WGS LP"); 2) Confirmation of funding for the Panny Bitumen Project through the Government of Alberta's Innovative Energy Technologies Program ("IETP"); and 3) Renewal of Perpetual's credit facility with a revised borrowing base of $125 million.
Warwick Gas Storage
On April 25, 2012, Perpetual sold a 90 percent interest in WGS LP for cash proceeds of $80.9 million. As part of the sale Perpetual continued to provide management and operational services to WGS LP for an annual fee. The Company also retained an option, exercisable within one year of closing, to buy back from the purchaser up to a 30 percent additional ownership interest in WGS LP at the same price as the initial sale plus working capital and other adjustments, less any dividends paid, for a final ownership interest post any exercise of the buy-back option of up to 40 percent ("WGS Call Option").In the fourth quarter of 2012, WGS LP drilled and completed two new horizontal wells to increase the working gas capacity of the storage facility from 17 Bcf to 19 Bcf. In addition, delta pressuring of the storage reservoir has now been approved to further increase the working gas capacity of the facility to 22 Bcf. On April 25, 2013, Perpetual exercised the WGS Call Option to buy back an additional 20 percent interest in WGS LP for a total interest in the gas storage facility upon closing of 30 percent. Panny Bitumen Perpetual's Low-Pressure Electro-Thermally Assisted Drive ("LEAD") project has been approved for funding through the Government of Alberta's Innovative Energy Technologies Program ("IETP"). The project is designed to develop bitumen in the Bluesky reservoir in the Panny area of Northeast Alberta that is too viscous for conventional cold production, but does not require as much heat as most current commercial thermal projects. The pilot will use three parallel horizontal wells with electrical cables to conduct heat throughout the targeted bitumen formation. Water and/or solvent will be injected concurrent with the electrical heating. This process requires less energy and less water than typical steam assisted gravity drainage (SAGD) operations. The total pilot project is estimated to cost $18.2 million, including capital and operating costs. Approved funding through the IETP allowance is 30 percent of actual eligible costs, to a maximum of $5.46 million. Perpetual intends to initiate the pilot project with the drilling of a water source well in the second half of 2013, with the majority of the capital spending on the pilot currently planned for 2014. Additional information regarding the LEAD project is available at Perpetual's website at: