|By PR Newswire||
|November 12, 2012 09:14 PM EST||
CALGARY, Nov. 12, 2012 /PRNewswire/ - (TSX:PMT) - Perpetual Energy Inc. ("Perpetual" or the "Corporation") is pleased to release its financial and operating results for the three and nine months ended September 30, 2012. A copy of Perpetual's unaudited interim consolidated financial statements and related notes and management's discussion and analysis for the three and nine months ended September 30, 2012 and 2011 can be obtained through the Corporation's website at www.perpetualenergyinc.com and SEDAR at www.sedar.com.
THIRD QUARTER SUMMARY
Perpetual continued to execute effectively on its top priorities for 2012, which include:
- Profitable capital investment in two chosen proven diversifying growth strategies to increase oil and natural gas liquids ("NGL") production;
- Debt reduction;
- Advancing the assessment and value of high impact, longer term resource opportunities with risk-managed investment; and
- Managing downside risks related to commodity price volatility.
The Corporation executed a $17.9 million capital program focused
primarily on heavy oil exploration and development in the Mannville
area of eastern Alberta. Operational results continue to be positive,
and development activity in this area will continue in the fourth
quarter and throughout 2013.
In the Mannville area, Perpetual drilled 12 (11.3 net) horizontal oil
wells, 10 of which are currently on production. Two wells penetrated
new heavy oil pools which are still being evaluated.
The capital program included $2.5 million to complete two (2.0 net)
Wilrich natural gas wells (1 vertical and 1 horizontal) drilled in late
2011 and the first quarter of 2012.
Fourth quarter capital spending will be focused on continued development
at Edson and West Edson, with plans to drill up to four (2.5 net)
Wilrich gas wells and the tie-in of the horizontal well completed in
the third quarter.
- Perpetual has a 50 percent working interest in 78 sections of Montney liquids-rich natural gas-prone lands at Elmworth in west central Alberta. During the third quarter Perpetual participated in the drilling of one vertical well (0.5 net). The drilling operation was finished in October 2012 at a total cost of $1.8 million net to Perpetual.
Acquisitions and Dispositions
Net cash proceeds from dispositions increased to $16.2 million from $7.0
million for the third quarter in 2011. Dispositions included non-core
natural gas assets in northeast Alberta, shut-in gas over bitumen
reserves, and the strategic sale of a portion of a heavy oil pool in
the Mannville area to help advance the development of an enhanced oil
recovery scheme. Total gains on sale of $7.3 million were recorded in
earnings for these dispositions.
- Perpetual further enhanced financial flexibility with the disposition of non-core oil and gas properties for $16.2 million during the period, reducing net debt by $7.0 million for the quarter. Net debt decreased by $132.0 million in the first nine months of the year to $394.9 million at September 30, 2012.
Production and Pricing
The positive effects of Perpetual's commodity diversification strategy
are evident as oil and NGL production represented 17.6 percent of total
actual production in the third quarter of 2012 (16.4 percent for the
first nine months) as compared to 8.8 percent and 7.6 percent for the
respective periods in 2011.
Oil and NGL production volumes increased 67 percent from the third
quarter of 2011, and 90 percent on a nine-month basis, due primarily to
ongoing development of the Corporation's heavy oil pools at Mannville,
partially offset by the reduction in oil production linked to the heavy
oil pool strategic partnership, and reduced NGL volumes related to
property dispositions in the West Central district in the first quarter
and a facility turnaround at Edson. Heavy oil production in the
Mannville area has been maintained at over 2,600 bbl/d for two
consecutive quarters, despite the sale of 150 bbl/d of production
effective July 1, 2012.
Natural gas production volumes decreased 24 percent to 93.7 MMcf/d from
123.5 MMcf/d for the third quarter of 2011 and decreased 21 percent for
the nine month period, primarily due to property dispositions combined
with the preferential allocation of capital to heavy oil production
over the past year, which led to a decline in natural gas production in
favor of bringing higher priced heavy oil onstream. Approximately 4.2
MMcfe/d of oil and natural gas production was lost during the quarter
due to voluntary shut-ins at higher operating cost fields and a
facility turnaround at Edson in west central Alberta.
Total actual and deemed production decreased 15 percent to 139.7 MMcfe/d
from 165.3 MMcfe/d for the comparative quarter in 2011, as reduced
natural gas production from property dispositions combined with natural
declines were partially offset by increasing oil and NGL production.
For the nine month period actual and deemed production decreased 10
percent compared to 2011. The properties disposed of in the first nine
months of 2012 were producing approximately 10.9 MMcf/d of natural gas
and 735 bbl/d of oil and NGL (15.3 MMcfe/d) at the dates of
Total production and operating costs decreased to $20.7 million for the
third quarter of 2012 from $22.5 million for the same period in 2011,
due primarily to reduced labour costs and dispositions, including the
disposition of 90 percent of Perpetual's gas storage business, Warwick
Gas Storage LP ("WGS LP"), effective April 25, 2012, partially offset
by higher well suspension costs. Unit operating costs increased to
$1.98 per Mcfe and $1.83 per Mcfe for the three and nine months ended
September 30, 2012 from $1.81 per Mcfe and $1.65 per Mcfe for
comparative periods in 2011. Operating costs were higher on a
unit-of-production basis as fixed operating costs for natural gas
operations were higher relative to reduced natural gas production
volumes, and operating costs associated with increasing heavy oil
production in the Eastern district were higher relative to gas
Perpetual's realized gas prices decreased to $3.44 per Mcf and $3.28 per
Mcf, respectively for the third quarter and first nine months of 2012
(2011 - $3.75 per Mcf and $3.98 per Mcf) due to lower AECO prices which
averaged $2.19 per Mcf and $2.18 per Mcf for the three and nine month
periods respectively (2011 - $3.72 per Mcf and $3.74 per Mcf). The
impact of lower gas prices was largely offset by realized gains on
derivatives of $9.4 million and $27.0 million respectively.
Perpetual's realized oil and NGL price decreased 15 percent to $59.63
per bbl from the third quarter 2011 as a result of wider heavy oil
differentials, lower NGL prices and losses of $1.4 million on financial
- Perpetual realized a modest increase in commodity prices on a natural gas equivalent basis to $4.58 per Mcfe for the third quarter of 2012 as compared to $4.46 per Mcfe in the same period in 2011. This demonstrates that the Corporation's risk management and commodity diversification strategies are partially mitigating the negative impacts of reduced commodity prices as the percentage of higher priced oil and NGL production in Perpetual's production mix has grown.
Funds flow netbacks decreased 35 percent to $1.01 per Mcfe in the third
quarter of 2012 from $1.56 per Mcfe in the comparable period for 2011,
driven primarily by lower gas prices and production, partially offset
by higher realized gains on derivatives, lower cash costs and a 67
percent increase in oil and NGL production.
Funds flow declined to $10.8 million ($0.07 per common share) from $19.3
million ($0.13 per common share) for the third quarter of 2011. Funds
flow for the nine month period totaled $37.9 million ($0.26 per common
share) as compared to $61.1 million ($0.41 per common share) for the
first nine months of 2011. The decrease was caused primarily by lower
natural gas revenues, partially offset by higher oil and NGL
production, realized gains on derivatives, and a decrease in royalties
and general and administrative expenses.
The Corporation reported a net loss of $6.2 million ($0.04 per basic and
diluted common share) for the three months ended September 30, 2012 as
compared to a net loss of $24.3 million ($0.17 per basic and diluted
common share) for the 2011 period. The lower net loss was primarily a
result of the reclassification of $28.5 million in gas over bitumen
royalty adjustments to revenue in the quarter and gains on property
dispositions of $7.3 million, partially offset by an unrealized loss on
derivatives of $21.0 million.
Net earnings for the first nine months of 2012 increased to $6.7 million
($0.05 per basic and diluted common share) from a loss of $57.2 million
($0.39 per basic and diluted common share) in 2011 as a result of the
gain on WGS LP of $40.8 million and the reclassification of gas over
bitumen adjustments to revenue.
- Net debt decreased 25 percent or $132.0 million over the first nine months of 2012, as a result of continued success on Perpetual's asset disposition program. Net debt to trailing four quarters' funds flow increased to 8.0 times for the three months ended September 30, 2012 compared to 7.2 times for the quarter ended December 31, 2011, primarily due a decrease in funds flows for the trailing four quarters driven by lower natural gas prices.
- Subsequent to the reporting date, the Corporation entered into contracts to offset 64,250 GJ/d of fixed price sales contracts for November and December 2012 with purchases at an average price of $3.24 per GJ, crystallizing a gain of $0.6 million.
Outlook and Sensitivities
The Board of Directors has approved a $10 million expansion to the capital spending budget for the fourth quarter of 2012 to $16.4 million, bringing total capital spending to $75 million for 2012. Spending will be focused primarily on Wilrich drilling in the Edson area, where operations are underway to drill up to four (2.5 net) liquids-rich natural gas wells to further delineate the West Edson and Edson South Wilrich trends.
The Corporation has risk management contracts in place for approximately 40 percent of estimated actual plus deemed natural gas production for the fourth quarter of 2012 at an average price of $2.96 per GJ and 11 percent of projected 2013 actual plus deemed natural gas production at an average price of $3.74 per GJ. Oil price management contracts are also in place to protect average WTI floor prices of $US84.25 for the fourth quarter of 2012 and $US88.00 for 2013 on 2,000 bbl/d of production.
The following sensitivity table reflects Perpetual's projected funds flow for the fourth quarter of 2012 at various commodity price levels. These sensitivities incorporate average daily production of 3,300 bbl/d of oil & NGL, 92 MMcf/d of natural gas, operating costs of $20 million, cash general and administrative expenses of $7 million and an interest rate on bank debt of 5.4 percent.
|Projected funds flow, fourth quarter of 2012(2) ($millions)||AECO Gas Price (1) ($/GJ)|
|WTI oil price||$75.00||7||9||10||13|
The current settled and forward average AECO and WTI prices for October
2012 as of November 9, 2012 were $2.85 per GJ and $US87.23 per bbl, respectively.
These are non-GAAP measures; see "Other non-GAAP measures" in
discussion and analysis.
For 2013 Perpetual's Board of Directors has approved a capital spending plan of up to $75 million which will be highly focused on continued development of heavy oil in the Mannville area of eastern Alberta and liquids-rich natural gas at Edson. The program incorporates a two rig development drilling program for Mannville heavy oil in the first quarter, but allows flexibility to manage spending in the second half of the year, to be focused either on Mannville heavy oil or at Edson depending on commodity prices.
The following table reflects Perpetual's projected funds flow for 2013 at various commodity price levels. These sensitivities incorporate monthly settlement of existing derivatives, average daily production of 4,100 bbl/d of oil and NGL, 82 MMcf/d of natural gas, operating costs of $86 million, cash general and administrative expenses of $24 million and an interest rate on bank debt of 5.4 percent.
|Projected funds flow for 2013(2) ($ millions)||AECO Gas Price (1) ($/GJ)|
|WTI oil price (1)||$75.00||33||40||48||62|
The current forward average AECO and WTI prices for 2013 as of November
2012 were $3.19 per GJ and $US 88.98 per bbl, respectively.
These are non-GAAP measures; see "Other non-GAAP measures" in
management's discussion and analysis.
Further to the above forecasts, Perpetual will continue to pursue additional dispositions in 2013, including the potential divestiture of its Elmworth Montney assets, and anticipates consummating additional disposition transactions in the first quarter of 2013. Proceeds from the potential divestitures would be utilized to strengthen the balance sheet and to enhance the Corporation's ability to pursue further investment opportunities, depending upon the outlook for commodity prices at that time.
FirstEnergy/Societe Generale Energy Growth Conference
Perpetual also advises that management will be presenting at the FirstEnergy/Societe Generale Energy Growth Conference at the Ritz Carlton Hotel in Toronto at 8:40 a.m. Eastern Time on Wednesday, November 14, 2012. A copy of the presentation will be posted to Perpetual's website, www.perpetualenergyinc.com, shortly before the presentation and the webcast archive will also be accessible through the website following the presentation.
Certain information regarding Perpetual Energy in this news release including management's assessment of future plans and operations and including the information contained under the heading "Outlook and Sensitivities" above may constitute forward-looking statements under applicable securities laws. The forward-looking information includes, without limitation, statements regarding expected access to capital markets; prospective drilling activities; forecast production, production type, operations, funds flows, and timing thereof; forecast and realized commodity prices; expected funding, allocation 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; commodity prices; and estimated funds flow sensitivity. 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, 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.
This news release contains financial measures that may not be calculated in accordance with generally accepted accounting principles in Canada ("GAAP"). Readers are referred to advisories and further discussion on non-GAAP measures contained in the "Significant Accounting Policies and non-GAAP Measures" section of management's discussion and analysis.
Perpetual Energy Inc. is a natural gas-focused Canadian energy company with a growing base of oil and NGL assets. Perpetual's shares and convertible debentures are listed on the Toronto Stock Exchange under the symbol "PMT", "PMT.DB.D" and "PMT.DB.E", respectively. Further information with respect to Perpetual can be found at its website at www.perpetualenergyinc.com.
The Toronto Stock Exchange has neither approved nor disapproved the
information contained herein.
|FINANCIAL AND OPERATING HIGHLIGHTS||Three Months Ended September 30||Nine Months Ended September 30|
|($Cdn thousands except volume and per share amounts)||2012||2011||% Change||2012||2011||% Change|
|Funds flow (2)||10,760||19,318||(44)||37,929||61,093||(38)|
|Per share (3)||0.07||0.13||(46)||0.26||0.41||(37)|
|Net earnings (loss)||(6,158)||(24,343)||(76)||6,701||(57,229)||113|
|Per share - basic (3)||(0.04)||(0.17)||(76)||0.05||(0.39)||113|
|Per share - diluted (3)||(0.04)||(0.17)||(76)||0.05||(0.39)||113|
|Net bank debt outstanding (2)||84,925||120,304||(29)||84,925||120,304||(29)|
|Senior notes, at principal amount||150,000||150,000||-||150,000||150,000||-|
|Convertible debentures, at principal amount||159,972||234,897||(32)||159,972||234,897||(32)|
|Total net debt (2)||394,897||505,201||(22)||394,897||505,201||(22)|
|Exploration, development and gas storage||17,922||41,099||(56)||58,590||111,825||(48)|
|Acquisitions, net of dispositions||(14,498)||(1,996)||(626)||(157,840)||(31,207)||(406)|
|Net capital expenditures||3,468||39,392||(91)||(99,053)||81,109||(222)|
|Common Shares outstanding (thousands)|
|End of period||147,122||147,236||-||147,122||147,236||-|
|Shares outstanding at November 12, 2012||147,137||147,137|
|Daily average production|
|Natural gas (MMcf/d) (5)||93.7||123.5||(24)||104.1||131.3||(21)|
|Oil and NGL (bbl/d) (5)||3,336||1,995||67||3,418||1,803||90|
|Total (MMcfe/d) (5)||113.7||135.5||(16)||124.7||142.1||(12)|
|Gas over bitumen deemed production (MMcf/d) (4)||26.0||29.8||(13)||27.0||26.1||3|
|Average daily (actual and deemed - MMcfe/d) (4,5)||139.7||165.3||(15)||151.7||168.2||(10)|
|Per common share (cubic feet equivalent/d/Share) (3)||0.95||1.12||(15)||1.02||1.14||(11)|
|Natural gas, before derivatives ($/Mcf)||2.36||3.56||(34)||2.33||3.91||(40)|
|Natural gas, including derivatives ($/Mcf)||3.44||3.75||(8)||3.28||3.98||(18)|
|Oil and NGL, before derivatives ($/bbl)||64.24||70.15||(8)||65.04||71.28||(9)|
|Oil and NGL, including derivatives ($/bbl)||59.63||70.15||(15)||61.64||71.28||(14)|
|Natural gas equivalent, including derivatives ($/Mcfe)||4.58||4.46||3||4.43||4.58||(3)|
|Land (thousands of net acres)|
|Undeveloped land holdings||1,689||1,854||(9)||1,689||1,854||(9)|
|Drilling (wells drilled gross/net)|
|Oil sands evaluation||-/-||1/1.0||(100)/(100)||-/-||8/8.0||(100)/(100)|
|Success rate (%)||100/100||100/100||-/-||100/100||100/100||-/-|
|(1)||Revenue includes realized gains (losses) on derivatives.|
|(2)||These are non-GAAP measures. Please refer to "Non-GAAP Measures" included in management's discussion and analysis.|
|(3)||Based on weighted average basic or diluted Common Shares outstanding for the period.|
The deemed production volume describes all gas shut-in or denied
production pursuant to a decision report, corresponding order or
general bulletin of the Alberta Energy and Utilities Board ("AEUB"), or through correspondence in relation to an AEUB ID 99-1 application.
This deemed production volume is not actual gas sales but represents shut-in gas that is the basis of the gas over bitumen financial
solution which is received monthly from the Alberta Crown as a reduction against other royalties payable.
|(5)||Production amounts are based on the Corporation's interest before royalties expense.|
SOURCE Perpetual Energy Inc.
As operational failure becomes more acceptable to discuss within the software industry, the necessity for holding constructive, actionable postmortems increases. But most of what we know about postmortems from "pop culture" isn't actually relevant for the software systems we work on and within. In his session at DevOps Summit, J. Paul Reed will look at postmortem pitfalls, techniques, and tools you'll be able to take back to your own environment so they will be able to lay the foundations for h...
Oct. 13, 2015 11:15 PM EDT Reads: 251
Containers are revolutionizing the way we deploy and maintain our infrastructures, but monitoring and troubleshooting in a containerized environment can still be painful and impractical. Understanding even basic resource usage is difficult - let alone tracking network connections or malicious activity. In his session at DevOps Summit, Gianluca Borello, Sr. Software Engineer at Sysdig, will cover the current state of the art for container monitoring and visibility, including pros / cons and li...
Oct. 13, 2015 11:00 PM EDT Reads: 343
SYS-CON Events announced today that Super Micro Computer, Inc., a global leader in high-performance, high-efficiency server, storage technology and green computing, will exhibit at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Supermicro (NASDAQ: SMCI), the leading innovator in high-performance, high-efficiency server technology is a premier provider of advanced server Building Block Solutions® for Data ...
Oct. 13, 2015 11:00 PM EDT Reads: 273
Containers are all the rage among developers and web companies, but they also represent two very substantial benefits to larger organizations. First, they have the potential to dramatically accelerate the application lifecycle from software builds and testing to deployment and upgrades. Second they represent the first truly hybrid-approach to consuming infrastructure, allowing organizations to run the same workloads on any cloud, virtual machine or physical server. Together, they represent a ver...
Oct. 13, 2015 10:45 PM EDT Reads: 278
SYS-CON Events announced today the Containers & Microservices Bootcamp, being held November 3-4, 2015, in conjunction with 17th Cloud Expo, @ThingsExpo, and @DevOpsSummit at the Santa Clara Convention Center in Santa Clara, CA. This is your chance to get started with the latest technology in the industry. Combined with real-world scenarios and use cases, the Containers and Microservices Bootcamp, led by Janakiram MSV, a Microsoft Regional Director, will include presentations as well as hands-on...
Oct. 13, 2015 10:30 PM EDT Reads: 228
As more intelligent IoT applications shift into gear, they’re merging into the ever-increasing traffic flow of the Internet. It won’t be long before we experience bottlenecks, as IoT traffic peaks during rush hours. Organizations that are unprepared will find themselves by the side of the road unable to cross back into the fast lane. As billions of new devices begin to communicate and exchange data – will your infrastructure be scalable enough to handle this new interconnected world?
Oct. 13, 2015 10:15 PM EDT Reads: 181
Who are you? How do you introduce yourself? Do you use a name, or do you greet a friend by the last four digits of his social security number? Assuming you don’t, why are we content to associate our identity with 10 random digits assigned by our phone company? Identity is an issue that affects everyone, but as individuals we don’t spend a lot of time thinking about it. In his session at @ThingsExpo, Ben Klang, Founder & President of Mojo Lingo, will discuss the impact of technology on identity....
Oct. 13, 2015 09:00 PM EDT Reads: 504
This week, the team assembled in NYC for @Cloud Expo 2015 and @ThingsExpo 2015. For the past four years, this has been a must-attend event for MetraTech. We were happy to once again join industry visionaries, colleagues, customers and even competitors to share and explore the ways in which the Internet of Things (IoT) will impact our industry. Over the course of the show, we discussed the types of challenges we will collectively need to solve to capitalize on the opportunity IoT presents.
Oct. 13, 2015 08:30 PM EDT Reads: 165
SYS-CON Events announced today that Spirent Communications, the leader in testing navigation and positioning systems, will exhibit at SYS-CON's @DevOpsSummit Silicon Valley, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Spirent Communications enables innovations in communications technologies that help connect people. Whether it is service provider, data centers, enterprise IT networks, mobile communications, connected vehicles or the Inte...
Oct. 13, 2015 08:00 PM EDT Reads: 280
WebRTC converts the entire network into a ubiquitous communications cloud thereby connecting anytime, anywhere through any point. In his session at WebRTC Summit,, Mark Castleman, EIR at Bell Labs and Head of Future X Labs, will discuss how the transformational nature of communications is achieved through the democratizing force of WebRTC. WebRTC is doing for voice what HTML did for web content.
Oct. 13, 2015 07:00 PM EDT Reads: 1,505
Today’s connected world is moving from devices towards things, what this means is that by using increasingly low cost sensors embedded in devices we can create many new use cases. These span across use cases in cities, vehicles, home, offices, factories, retail environments, worksites, health, logistics, and health. These use cases rely on ubiquitous connectivity and generate massive amounts of data at scale. These technologies enable new business opportunities, ways to optimize and automate, al...
Oct. 13, 2015 07:00 PM EDT Reads: 287
Through WebRTC, audio and video communications are being embedded more easily than ever into applications, helping carriers, enterprises and independent software vendors deliver greater functionality to their end users. With today’s business world increasingly focused on outcomes, users’ growing calls for ease of use, and businesses craving smarter, tighter integration, what’s the next step in delivering a richer, more immersive experience? That richer, more fully integrated experience comes ab...
Oct. 13, 2015 06:15 PM EDT Reads: 1,234
For almost two decades, businesses have discovered great opportunities to engage with customers and even expand revenue through digital systems, including web and mobile applications. Yet, even now, the conversation between the business and the technologists that deliver these systems is strained, in large part due to misaligned objectives. In his session at DevOps Summit, James Urquhart, Senior Vice President of Performance Analytics at SOASTA, Inc., will discuss how measuring user outcomes –...
Oct. 13, 2015 06:00 PM EDT Reads: 556
SYS-CON Events announced today that Dyn, the worldwide leader in Internet Performance, will exhibit at SYS-CON's 17th International Cloud Expo®, which will take place on November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Dyn is a cloud-based Internet Performance company. Dyn helps companies monitor, control, and optimize online infrastructure for an exceptional end-user experience. Through a world-class network and unrivaled, objective intelligence into Internet condit...
Oct. 13, 2015 04:00 PM EDT Reads: 730
SYS-CON Events announced today that Sandy Carter, IBM General Manager Cloud Ecosystem and Developers, and a Social Business Evangelist, will keynote at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA.
Oct. 13, 2015 03:15 PM EDT Reads: 260