NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES
CALGARY, July 16, 2014 /CNW/ - (TSX:PMT) - Perpetual Energy Inc. ("Perpetual" or the "Company") is pleased to
announce that it has successfully closed the previously announced East
Edson Joint Venture (the "East Edson JV"). Proceeds to Perpetual
include $50 million for the sale of a 50 percent gross overriding
royalty on existing producing assets (the "Producing Royalty") and an
additional $70 million to fund Wilrich development activities to earn a
second royalty (the "Drilling Royalty"). In combination, in exchange
for the total acquisition and funding commitment of $120 million, the
Drilling and Producing Royalties entitle the joint venture partner to
receive on a priority basis 5.6 MMcf/d of natural gas from the East
Edson Property plus oil and associated natural gas liquids ("NGL") from
July 1, 2014 to December 31, 2022 and declining thereafter at 10
percent per year until the Drilling Royalty and the Producing Royalty
terminate on December 31, 2034. NGL yields are expected to average
approximately 23 bbl/MMcf for the duration of the East Edson JV. Upon
closing, $100 million of the total proceeds was placed in escrow
accounts for the committed development of the East Edson JV properties.
Activities are underway to execute close to $70 million in capital
projects utilizing the escrowed funds prior to the end of 2014, with
the remaining funds from escrow expected to be spent in 2015.
The capital injected by the East Edson JV is expected to increase the
operating cash flow from the East Edson property to a level where the
full development can be self-funded, thereby allowing reserve bookings
to increase to the technical level warranted. Upon closing of the East
Edson JV, the pending changes to Perpetual's Company reserves announced
on June 25, 2014 to reflect the illustrative report prepared by
McDaniel and Associates Consultants Ltd. were adopted, adding an
estimated 36.3 MMboe of additional proven and probable reserves and
increasing total Company reserves by 60 percent.
Perpetual is also pleased to announce that it intends to issue $100
million of 5-year Senior Unsecured Notes (the "Notes"). The Notes will
be direct senior unsecured obligations of Perpetual ranking pari passu with all other present and future unsecured and unsubordinated
indebtedness of the Company. The Notes are being offered in each
Province of Canada and in the United States on a private placement
basis through a syndicate of investment dealers, without the filing of
a prospectus or registration statement. Closing is expected to occur on
or about July 23, 2014 following a limited marketing process and
determination of pricing.
The net proceeds from this offering will be used for general corporate
purposes and to redeem with cash Perpetual's $100 million 7.25%
convertible debentures, due to mature on January 31, 2015. The 7.25%
convertible debentures trade on the Toronto Stock Exchange under the
symbol PMT.DB.D. Perpetual intends to provide notice for the early
redemption of the 7.25% convertible debentures shortly after closing of
the Notes offering. This offering not only provides Perpetual with the
ability to repay these debentures earlier than their maturity on
January 31, 2015, but benefits the Company by reducing exposure of
Perpetual's credit capacity to future commodity prices. Moreover, the
issuance of the Notes significantly extends the term of approximately
one-third of the Company's total debt to provide increased certainty
for funding planned capital investment projects which are expected to
grow future funds flow.
Perpetual's lenders under its credit facility have approved issuance of
the Notes, subject to an adjustment to the borrowing base from $120
million to $100 million to account for future interest payment
obligations on the Notes. Pro forma the Notes issuance and subsequent
repayment of the 7.25% convertible debenture series, Perpetual expects
to have net bank debt outstanding of approximately $31 million, as well
as $100 million of joint venture cash on hand held in escrow accounts
to be drawn exclusively for the development activities Perpetual has
committed to execute in 2014 and 2015 in the East Edson JV area.
Furthermore, close to 75 percent of Perpetual's total outstanding debt
will have a term extending into 2018 and beyond.
For additional information about Perpetual and the Notes offering please
click here or visit the Company's website at www.perpetualenergyinc.com.
The Notes have not been and will not be registered under the U.S.
Securities Act of 1933, as amended, and may not be offered or sold in
the United States absent registration or an available exemption from
such registration requirements. This news release does not constitute
an offer to sell, or the solicitation of an offer to purchase, the
Notes in the United States.
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, completion of
the offering and the use of proceeds and potential benefits to be
derived therefrom. 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 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 law.
SOURCE: Perpetual Energy Inc.
For further information:
Perpetual Energy Inc.
Suite 3200, 605 - 5 Avenue SW Calgary, Alberta, Canada T2P 3H5
Telephone: 403 269-4400 Fax: 403 269-4444 Email: email@example.com
Susan L. Riddell Rose
President and Chief Executive Officer
Cameron R. Sebastian
Vice President, Finance and Chief Financial Officer
Claire A. Rosehill
Investor Relations and Business Analyst