PERPETUAL ENERGY INC. SIGNS PURCHASE AND SALE AGREEMENT FOR THE DIVESTITURE OF ELMWORTH PROPERTY FOR NET PROCEEDS OF $77.5 MI...
May 01 2013 - 12:31PM
OTC Markets
NEWS
RELEASE
Perpetual Energy inc. SIGNS
PURCHASE AND SALE AGREEMENT FOR the DIVESTITURE of ELMWORTH
PROPERTY FOR NET PROCEEDS OF $77.5
Million
Calgary, Alberta – December 18, 2012 (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 $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.
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
Edson area.
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.
The Toronto Stock Exchange has
neither approved nor disapproved the information contained
herein.
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
|
President and Chief Executive
Officer
|
Cameron R.
Sebastian
|
Vice President, Finance and Chief
Financial Officer
|
Claire A.
Rosehill
|
Business and Investor Relations
Analyst
|
|
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