Perpetual Energy Inc. (“Perpetual”) is pleased to announce that it has entered into a Definitive Agreement (the "Agreement") with Canadian private operator Pointbreak Resources Inc. to sell certain assets at Mannville in Eastern Alberta for gross proceeds of $35.8 million in cash, prior to customary purchase price adjustments (the "Mannville Transaction"). The Mannville Transaction is expected to close on or about November 22, 2023 with a September 1, 2023 effective date. The properties included in the Mannville Transaction comprise substantially all of the production attributed to the Company's Eastern Alberta cash-generating-unit which averaged 1,449 boe/d (65% conventional heavy oil) of sales production during the second quarter of 2023.
Perpetual is also pleased to announce it has completed the semi-annual borrowing base redetermination for its bank credit facility. The borrowing limit on Perpetual's credit facility has been reconfirmed at $30 million by the Company's bank lending syndicate, with the next borrowing limit redetermination scheduled on or prior to May 31, 2024.
Proceeds from the Mannville Transaction will be used to reduce bank debt and manage future maturities on the Company's Term Loan and Senior Notes and other obligations as they come due, as well as provide Perpetual with the liquidity to invest in its remaining assets at East Edson and pursue other new venture opportunities.
2023 UPDATED OUTLOOK
Perpetual's Board of Directors previously approved annual exploration and development capital spending(1) of $25 to $32 million for 2023, prior to acquisitions and dispositions, if any, of which $2 to $4 million was allocated for potential spending in Eastern Alberta in the second half of 2023. As a result of the Mannville Transaction, the $2 to $4 million of spending allocated for Eastern Alberta will not occur, resulting in annual exploration and development capital spending(1) of $23 - $28 million focused primarily at East Edson, unchanged from previous guidance.
During the second half of 2023, Perpetual planned to participate at its 50% working interest in an East Edson drilling program to drill, complete, equip and tie-in an additional four to six (2.0 to 2.8 net) horizontal wells to fill the West Wolf gas plant in order to optimize production and operating costs, meet transportation commitments and maximize natural gas and NGL sales through next winter.
The table below summarizes anticipated exploration and development capital spending and drilling activities for Perpetual for the full year of 2023.
West Central :
H1 2023 ($ millions): $10.4 # of wells (gross/net): 2 / 1.0
H2 2023 ($ millions): $12 - $18 # of wells (gross/net):4 - 6 / 2.0 - 2.8
2023 ($ millions): $23 - $28 # of wells (gross/net): 6 - 8 / 3.0 - 3.8
Eastern Alberta:
H1 2023 ($ millions): $0.1 # of wells (gross/net): - / -
H2 2023 ($ millions): - # of wells (gross/net): 0 / 0.0
2023 ($ millions): $0.1 # of wells (gross/net): 0 / 0.0
Total(1):
H1 2023 ($ millions): $10.5 # of wells (gross/net): 2 / 1.0
H2 2023 ($ millions): $12 - $18 # of wells (gross/net): 4 - 6 / 2.0 - 2.8
2023 ($ millions): $23.1 - $28.1 # of wells (gross/net): 6 - 8 / 3.0 - 3.8
