Perpetual Energy Inc. Releases Year End 2011 Financial and Operating Results, Updates Asset Divestiture Program, Operational Results and Commodity Price Risk Management
CALGARY, March 12, 2012 /PRNewswire/ – (TSX: PMT) - Perpetual Energy Inc. (“Perpetual” or the “Corporation”) is pleased
to:
-- report fourth quarter and year end 2011 financial and operating
results;
-- report significant progress with its planned asset disposition
program for the purpose of repaying the outstanding $75 million
6.5% convertible debentures (TSX: PMT.DB.C) due June 30, 2012;
-- announce continued success with its asset base transformation
and commodity diversification program; and
-- provide an update regarding commodity price risk management
initiatives.
A copy of Perpetual’s audited consolidated financial statements and
related management’s discussion and analysis (“MD&A”) can be obtained
through the Corporation’s website at www.perpetualenergyinc.com and SEDAR at www.sedar.com.
2011 ANNUAL HIGHLIGHTS
Corporate Activity
-- In November 2011 Perpetual announced that initiatives were
underway for the sale of certain assets in the fourth quarter
of 2011 and 2012 targeting proceeds of $75 to $150 million to
be used to strengthen the Corporation's balance sheet and
provide for the redemption of Perpetual's $75 million 6.5%
convertible debentures on June 30, 2012. In the fourth quarter
of 2011, Perpetual closed multiple non-core asset dispositions
for net proceeds of $3.8 million. Subsequent to the end of
2011, several additional non-core asset dispositions have been
closed for net proceeds of $63 million, including the
disposition of a portion of the Corporation's common shares of
TriOil Resources Ltd. The disposed assets are primarily
non-core properties located in eastern and west central Alberta
and include approximately 8 MMcf/d of gas production and oil
and NGL production of 390 bbl/d. Perpetual is continuing to
pursue additional asset sales, including the disposition of all
or a portion of its gas storage facility at Warwick, to reach
the previously announced targeted proceeds in 2012.
Production and Pricing
-- Actual and deemed production averaged 168.7 MMcfe/d in 2011,
down 5 percent from 177.4 MMcfe/d in 2010.
-- Daily average oil and NGL production increased by 782 bbl/d, or
63 percent from 2010 levels, to 2,027 bbl/d, driven by
successful heavy oil and liquids rich gas drilling during the
year.
-- Natural gas production decreased ten percent to 130.2 MMcf/d in
2011 as a result of non-core asset dispositions, the shut-in
and sale of natural gas production at Liege in November 2010
due to gas over bitumen concerns and natural production
declines, partially offset by high-impact drilling at Edson and
low cost workover and recompletion activities in the Eastern
district to mitigate decline rates.
-- The Corporation's average gas price before derivatives
decreased ten percent to $3.77 per Mcf in 2011 from $4.17 per
Mcf in 2010, in line with an 11 percent decrease in AECO
monthly index prices. Natural gas prices including derivatives
declined to $3.82 per Mcf in 2011 from $7.10 per Mcf in the
prior year due to a $151.5 million reduction in realized gains
on derivative contracts.
-- Average oil and NGL prices before derivatives increased eight
percent to $73.90 per bbl for 2011, primarily as a result of
higher reference prices. The increase in the Corporation's
price is not as pronounced as the increase in posted prices due
to the increasing percentage of heavy oil in Perpetual's oil
and NGL production portfolio. The Corporation received $3.1
million in the fourth quarter of 2011 for the sale of a forward
call option for 500 bbl/d of 2013 oil production, boosting the
realized oil and NGL price to $78.06 per bbl for the current
year.
Financial
-- Net bank debt decreased 36 percent from $214.5 million at
December 31, 2010 to $137.7 million at December 31, 2011.
-- On March 15, 2011 Perpetual issued $150 million of seven year
senior unsecured notes (the "Senior Notes"). The Senior Notes
bear interest at 8.75 percent, payable semi-annually, and
mature on March 15, 2018.
-- Production-related operating costs decreased six percent to
$84.3 million ($1.62 per Mcfe) in 2011 as compared to $89.7
million ($1.61 per Mcfe) in 2010, primarily due to lower
production levels partially offset by higher costs associated
with the increased oil volumes. Warwick Gas Storage ("WGSI")
operating costs increased to $5.0 million in 2011 from $1.5
million in 2010 as 2011 was the first full year of operations
for the WGSI facility.
-- Funds flow decreased 68 percent to $77.0 million in 2011 as
compared to $237.5 million for 2010. The decrease was primarily
due to a $151.5 million reduction in realized gains on
derivatives from year to year. Excluding the effect of
derivatives, funds flow decreased by $9.0 million due to lower
natural gas production and pricing, partially offset by growing
oil and liquids production and gas storage funds flow.
-- The average royalty rate on oil, NGL and natural gas revenues
before derivatives was consistent at 8.8 percent for both 2010
and 2011. Higher natural gas royalties caused by lower gas cost
allowance credits were offset by lower oil royalties, as the
majority of Perpetual's oil production in 2011 is from new
drills that qualify for a five percent royalty for the first
year of production.
-- Net loss for 2011 was $95.9 million, driven primarily by
reduced fund flows and impairment losses related to low natural
gas prices.
-- The Corporation declared dividends of $28.9 million or $0.195
per Common Share in 2011 as compared to $78.6 million or $0.56
per Common Share in 2010. On October 19, 2011 Perpetual
announced that, given the continued weakness in natural gas
prices, dividends would be suspended until further notice.
Reserves
-- In 2011, Perpetual added 61.1 Bcfe (10.2 MMboe) of proved and
probable reserves in 2011, excluding production and net
dispositions. The majority of the reserve additions were
related to activities driven by Perpetual's asset base
transformation and diversification strategy, adding natural gas
and liquids reserves in the Alberta deep basin and in eastern
Alberta adding Mannville heavy oil reserves. At year end 2011,
oil and NGL represent ten percent of Perpetual's total proved
and probable reserves (12 percent of proved), up from six
percent (eight percent of proved) at year-end 2010.
-- After dispositions of 12.2 Bcfe (2.0 MMboe) and production of
51.9 Bcfe (8.7 MMboe) in 2011, proved and probable reserves
decreased less than one percent from 487.7 Bcfe (81.3 MMboe) at
year-end 2010 to 484.7 Bcfe (80.8 MMboe) at December 31, 2011.
Before downward revisions related solely to changes in natural
gas pricing at year-end 2011 of 28.4 Bcfe, Perpetual's reserves
grew five percent year over year from 487.7 Bcfe to 513.1 Bcfe.
-- Including changes in future development capital ("FDC"),
Perpetual realized finding and development costs ("F&D") of
$2.86 per Mcfe ($17.16 per BOE) on a proved and probable
reserve basis in 2011.
-- Perpetual's realized finding, development and acquisition costs
("FD&A"), including changes in FDC, were $2.88 per Mcfe ($17.28
per BOE) on a proved and probable basis. Excluding downward
reserve revisions related solely to natural gas price
reductions, FD&A including changes in FDC was $1.82 per Mcfe
($10.92 per BOE) on a proved and probable basis.
Exploration and Development Capital Activity
-- Exploration and development expenditures excluding land
measured $122.8 million in 2011 as compared to $101.4 million
for 2010. Capital spending was concentrated on exploration and
development of liquids-rich natural gas in the West Central
district, heavy oil drilling at Mannville in eastern Alberta
and evaluation of the Corporation's oil sands leases in
northeast Alberta.
-- Eastern district expenditures of $65 million were concentrated
on the drilling and completion of 29 (29.0 net) heavy oil wells
at Mannville, facilities optimization projects designed to
reduce production costs, low-cost shallow gas recompletions to
maintain production levels, and evaluation of the Corporation's
oil sands leases at Panny and Liege.
-- West Central District capital spending totaled $75 million,
directed primarily to Cardium drilling in the first quarter of
2011, Wilrich delineation and development, and land
expenditures to extend Perpetual's Wilrich operations to West
Edson.
-- Perpetual drilled 62 gross wells (60.5 net) in 2011 with a 100
percent success rate, as compared to 70 gross (63.9 net) in
2010. Drilling activity included 35 gross (34.0 net) oil wells,
16 gross (15.5 net) natural gas wells, 7 gross (7.0 net) oil
sands evaluation wells and 3 gross (3.0 net) wells at the WGSI
gas storage facility.
-- Land acquisitions totaled $16.5 million in 2011, a $2.6 million
increase from 2010. Current year spending was directed
primarily towards several exploratory parcels in the West Edson
area of west central Alberta as well as expanding Perpetual's
land position in Mannville and Elmworth.
Warwick Gas Storage (‘WGSI”)
-- Gas storage expenditures decreased to $11.2 million for 2011
from $57.6 million for the prior year. Prior year costs
included construction of the storage facility, whereas 2011
expenditures were primarily directed to the drilling of three
horizontal wells designed to increase the working gas capacity
in the storage reservoir.
-- Capacity was established at 17 Bcf for the second commercial
storage cycle, which commenced April 1, 2011. This working gas
capacity has been reconfirmed for the third cycle expected to
commence with injection operations in April 2012.
-- The WGSI Facility generated net revenue of $9.0 million in
2011, based upon working gas from the test cycle and primarily
the injection portion of its second full-scale operations
cycle. It is expected that funds flow for 2012 from operations
at the WGSI facility will exceed $11 million. WGSI provides a
complementary diversified cash flow stream to the Corporation's
existing oil and natural gas assets.
Acquisitions and Dispositions
-- The Corporation disposed of non-core assets in the West Central
and Northern districts for $41.7 million, providing additional
liquidity while high-grading the Corporation's asset base. The
disposed assets are primarily non-core properties located in
eastern and west central Alberta and include approximately 8
MMcf/d of gas production and oil and NGL production of 390
bbl/d. Perpetual is continuing to pursue additional asset
sales to reach the previously announced targeted proceeds in
2012.
-- Acquisition expenditures totaling $7.7 million were focused on
adding to Perpetual's drilling inventory in Edson.
OPERATIONS UPDATE
-- Perpetual's oil and natural gas liquids (NGL) production
averaged 3,316 bbl/d in the last week of December 2011, and is
estimated to average over 3,600 bbl/d for calendar year 2012,
giving effect to the asset dispositions discussed above and
assuming a capital investment program of approximately $65
million. This activity is expected to result in oil and NGL
production representing more than 20 percent of 2012 exit
production.
-- Operational results from Perpetual's asset base diversification
strategy continue to be very positive. For 2012, Perpetual is
focused on two key priorities: heavy oil exploration and
development in the Mannville area of eastern Alberta and the
Wilrich liquids-rich gas play in the greater Edson area. With
recent further weakness in natural gas prices, Perpetual's
Wilrich drilling has been deferred pending price recovery and
all capital is currently being directed to heavy oil drilling
at Mannville.
Mannville
-- Thus far in the first quarter of 2012, Perpetual has drilled
two (2.0 net) vertical exploration wells and nine (9.0 net)
development wells for heavy oil, seven of which have been
placed on production. With positive drilling results exceeding
expectations and early production start-up from several of the
new well pads, Perpetual's eastern Alberta heavy oil production
is ahead of budgeted volumes, exceeding 2,600 bbl/d in the
first week of March 2012 reflecting full scale operations.
-- Perpetual has had a continuous heavy oil drilling program
underway since May 2011. This program has resulted in a
thirteen-fold increase in oil production from the Corporation's
eastern Alberta operating district, up from 200 bbl/d just one
year ago.
-- Prior to the end of the first quarter, an additional 8 wells
will be drilled and placed on production to further increase
Perpetual's oil production weighting. Perpetual plans to
continue to pursue the economically attractive Mannville heavy
oil, directing the vast majority of its remaining 2012 capital
spending to this exploration and development program.
Wilrich
-- In early January, the Corporation drilled one vertical
exploration well and one horizontal development well in the
Edson area which are awaiting completion. This brings the
number of horizontal Wilrich wells drilled at Edson to 12 gross
wells.
-- In addition, at West Edson, Perpetual recently completed and
tested its second Wilrich horizontal well which was rig
released in January 2012. Initial testing indicates a second
exceptional well, testing at over 15.5 MMcf/d of natural gas at
14 MPa flowing pressure. NGL yields are expected to be 40 bbl
per MMcf, consistent with the offsetting discovery well drilled
in the fourth quarter of 2011. Tie-in is scheduled for
mid-March.
-- New facility construction at West Edson is expected to add
additional gas and liquids production from the new drill as
well as from the horizontal Wilrich discovery well at West
Edson which commenced restricted production in December 2011 at
4 MMcf/d (2.0 MMcf/d net). The facility is expected to increase
production in West Edson to 12 MMcf/d (6 MMcf/d net) with 480
bbl/d (240 bbl/d net) of NGL recovered through processing at
the third party operated Edson deep cut plant.
-- The Corporation internally recognizes approximately 80 net
future horizontal drilling locations on its lands in the
Greater Edson area. At year-end 2011, 10.1 net future
development drilling locations were booked in Perpetual's
independent reserve report prepared by McDaniel and Associates
Consultants Ltd. in the Edson and West Edson areas.
-- Due to the current depressed gas price environment, no further
operations for the Wilrich play are planned for 2012 as
economic returns on investment in the Corporation's heavy oil
assets are superior at this time.
COMMODITY PRICE RISK MANAGEMENT
Increased oil and NGL production, combined with a substantial increase
in the Corporation’s 2012 hedging position, has significantly reduced
exposure to further potential weakness in natural gas prices. Financial
and physical forward natural gas sales arrangements at the AECO and
NYMEX trading hubs as at March 7, 2012 are as follows:
Volumes
at % of
Type of AECO Price Futures Market 2012E Gas
Contract Term (GJ/d)(1) ($/GJ)(1) ($/GJ)(2) Production(3)
Financial - Jan - Dec
AECO 2012 45,250 3.72 2.09 35
Financial - Mar 2012
AECO 40,000 2.20 1.97 3
Financial - Mar 2012
NYMEX 50,000 2.52 2.45 3
Financial - Apr - Oct
AECO 2012 10,000 2.85 1.84 4
Financial - Apr - Dec
AECO 2012 19,000 2.60 1.99 11
Physical - Apr - Dec
AECO 2012 25,000 2.59 1.99 14
Financial - Jan - Dec
AECO 2013 25,000 3.23 2.82 19
(1) Average price calculated using weighted average price for net
open sell contracts. NYMEX prices in $US/MMBtu.
(2) Futures market reflects AECO and NYMEX settled and forward
market prices as at March 7, 2012.
(3) Calculated using 2012 estimated gas production of 130,000 GJ/d
including gas over bitumen deemed production.
Perpetual also has in place the following costless collar oil sales
arrangements, to reduce exposure to fluctuations in the WTI index:
Floor Ceiling Futures % of 2012E
Volumes at Price Price Market Oil and NGL
Type of WTI ($US/bbl) ($US/bbl) ($US/bbl) Production
Contract Term (bbl/d) (1) (1) (2) (3)
Collar Jan - Dec
2012 500 82.00 91.00 14
Collar Jan - Dec
2012 500 80.00 89.00 14
Collar Jan - Dec
2012 500 85.00 96.75 14
Collar Jan - Dec
2012 500 90.00 109.25 14
Period Jan - Dec
Total 2012 2,000 84.25 96.50 106.46 56
(1) Average price calculated using weighted average price for net
open contracts.
(2) Futures market reflects WTI settled and forward prices at
March 7, 2012.
(3) Calculated using 2012 estimated oil and NGL production of
3,600 bbl/d.
The Corporation has entered into two contracts to fix the WTI to oil
price differential (WCS differential) on 400 bbl/d at $US17.35 per bbl
and on 500 bbl/d at US$28.75 per bbl, both for the 2012 calendar year.
In addition, the Corporation has sold oil call options exercisable and
expiring as follows:
Volumes
Type of at WTI Strike Price Futures Market
Contract Term Call Date (bbl/d) ($US WTI) ($US/bbl)(1)
Call Jan - Dec
2013 Dec 31, 2012 1,000 95.00 105.55
Call Jan - Dec
2013 monthly 1,000 105.00 105.55
Call Jan - Dec
2014 monthly 2,000 105.00 99.65
(1) Futures market reflects WTI forward prices at March 7, 2012.
The current mark to market value of these hedging transactions is
approximately $29 million.
2012 OUTLOOK AND SENSITIVITIES
Perpetual is nearing completion of a $34 million capital spending
program for the first quarter of 2012. Capital expenditures were
directed principally toward the advancement of Perpetual’s two key
commodity diversifying plays: horizontal development of the Wilrich in
greater Edson, and exploration and development of heavy oil at
Mannville.
-- One vertical and two horizontal (2.3 net) wells were drilled at
Edson, in addition to facility construction to tie-in new
production;
-- Two vertical and 17 horizontal (19.0 net) wells were drilled
and tied-in at Mannville, and tie-in operations were completed
for one well drilled in 2011.
As gas prices reached levels below $3.00 per Mcf in mid-January,
investment in all natural gas projects including the Wilrich program
was suspended and funds will be redirected to the highly profitable
Mannville heavy oil activities.
The Corporation’s Board of Directors has approved a capital spending
budget to remain within funds flow for 2012. Capital activity for the
remainder of the year will be focused on Mannville heavy oil
exploration and development.
Incorporating production additions from these capital expenditures, the
following table shows Perpetual’s estimate of funds flow for 2012 based
on its current hedging portfolio and cost estimates under several
different full year 2012 AECO gas price and WTI oil price assumptions,
and incorporating all non-core property dispositions closed to date in
2012. Perpetual estimates 2012 annual production of 3,600 bbl/d of oil
and NGL, 103 MMcf/d of natural gas, a $28 per bbl differential between
WTI and Western Canadian Select (“WCS”) reference prices, $96 million
in operating costs, $28 million in cash G&A expenses and a 5.5 percent
interest rate on long-term bank debt.
The following table outlines estimated funds flow at various assumed
commodity prices:
Funds Flow ($millions) AECOGas Price ($/GJ)
$1.75 $2.10 $2.50 $2.75 $3.00
Edmonton $80.00 30 32 34 35 36
oil price
($/bbl) $90.00 33 35 37 38 39
$100.00 37 39 40 42 43
$110.00 37 39 40 42 43
$120.00 37 39 40 42 43
Below is a table that shows sensitivities of Perpetual’s 2012 estimated
funds flow to operational changes and changes in the business
environment:
Impact on funds flow per Common
Share
Funds flow sensitivity Change Annual Monthly
analysis ($ per Common
Share)
Business environment
Natural gas price at $0.25 per Mcf 0.058 0.005
AECO
Oil price at WTI $5.00 per bbl 0.041 0.003
Interest rate on bank 1% 0.007 0.001
debt
Operational
Natural gas production 5 MMcf/d 0.012 0.001
Oil and NGL production 100 bbl/d 0.029 0.002
Operating costs $0.10 per Mcfe 0.0266 0.002
Cash general and $0.10 per Mcfe 0.0266 0.002
administrative expenses
Forward-Looking Information
Certain information regarding Perpetual 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;
forecast production, production capability, operations, funds flows,
and timing thereof; expected future funds flows generated by the gas
storage facility; forecast and realized commodity prices; forecast,
funding and allocation of capital expenditures; anticipated operating
cost sustainability; projected use of funds flow; planned drilling and
development and the results thereof; expected levels of indebtedness
under the credit facility; marketing and transportation; reserve
estimates; 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 Energy Inc.’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.
Non-GAAP Measures
This news release contains financial measures that may not be calculated
in accordance with generally accepted accounting principles (“GAAP”).
Readers are referred to advisories and further discussion on non-GAAP
measures contained in the “Non-GAAP Measures” section of management’s
discussion and analysis.
Perpetual Energy Inc. is a natural gas-focused Canadian energy company.
Perpetual’s shares and convertible debentures are listed on the Toronto
Stock Exchange under the symbol “PMT”, “PMT.DB.C”, “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.
Highlights
FINANCIAL AND Year endedDecember 31
OPERATING Three months ended
HIGHLIGHTS December 31
($CDN thousands, %
except volume and change
per Common Share %
amounts) 2011 2010 change 2011 2010
FINANCIAL
Revenue (1) (2) 63,986 111,150 (42) 253,150 417,093 (39)
Funds flow (2) 15,893 70,509 (77) 76,986 237,470 (68)
Per Common (69)
Share (2) (3) 0.11 0.48 (77) 0.52 1.69
Cash flow provided (70)
by operating
activities 9,750 80,210 (88) 60,428 199,882
Per Common (71)
Share (2) (3) 0.07 0.54 (87) 0.41 1.42
Net loss (38,691) (28,193) 37 (95,920) (100,719) (5)
Per Common (10)
Share (basic and
diluted) (3) (0.26) (0.19) 37 (0.65) (0.72)
Dividends declared - 16,273 (100) 28,865 78,628 (63)
Per Common (65)
Share (4) - 0.11 (100) 0.195 0.56
Payout ratio (%) 12
(2) - 23.1 (100) 37.2 33.1
Total assets 1,018,089 1,027,266 (1) 1,018,089 1,027,266 (1)
Net bank debt (36)
outstanding (2) (5) 137,689 214,546 (36) 137,689 214,546
Senior notes, 100
measured at
principal amount 150,000 - 100 150,000 -
Convertible -
debentures,
measured at
principal amount 234,897 234,897 - 234,897 234,897
Total net debt (2) 16
(5) 522,586 449,443 16 522,586 449,443
Shareholders' (60)
equity 81,558 203,904 (60) 81,558 203,904
Capital
expenditures
Exploration 21
and development 38,269 38,158 - 139,214 115,202
Gas storage 327 11,171 (97) 11,207 57,587 (80)
(166)
Acquisitions, net
of dispositions (2,746) (34,253) (92) (33,953) 50,958
Other 97 332 (71) 588 707 (17)
Net capital (48)
expenditures 35,947 15,408 133 117,056 224,454
SHARES OUTSTANDING
(thousands)
End of year 146,966 148,284 (1) 146,966 148,284 (1)
Weighted average - 5
basic 146,905 147,742 (1) 147,694 140,624
Diluted 146,905 147,742 (1) 147,694 140,624 5
March 1, 2012 146,990 146,990
OPERATING
Production
Average (10)
daily natural gas
(MMcf/d) (6) 126.8 135.9 (7) 130.2 145.1
Average 63
daily oil and
natural gas
liquids
("NGL") (bbl/d) (6) 2,685 1,535 75 2,027 1,245
Average (7)
daily (MMcfe/d) (6) 142.9 145.1 (2) 142.3 152.6
Gas over 6
bitumen deemed
production (MMcf/d)
(7) 27.4 24.2 13 26.4 24.8
Average (5)
daily (actual and
deemed - MMcfe/d)
(6) (7) 170.3 169.3 1 168.7 177.4
Per (10)
Common Share (cubic
feet
equivalent/d/Common
Share) (3) 1.16 1.15 1 1.14 1.26
Average prices
Natural gas (10)
- before
derivatives ($/Mcf)
(8) 3.35 3.87 (13) 3.77 4.17
Natural gas (46)
- including
derivatives ($/Mcf)
(8) 3.31 7.83 (58) 3.82 7.10
Oil and NGL 8
- before
derivatives ($/bbl)
(8) 79.16 75.88 4 73.90 68.29
Oil and NGL 14
- including
derivatives ($/bbl)
(8) 91.63 75.88 21 78.06 68.29
FINANCIAL AND
OPERATINGHIGHLIGHTSCONTINUED
Three Months Ended
December 31 YearEnded December 31
% %
2011 2010 change 2011 2010 change
RESERVES (Bcfe)
Company interest - proved
(9) (10) 235.1 250.4 (6) 235.1 250.4 (6)
Company interest - proved
and probable (9) (10) 484.7 487.7 (1) 484.7 487.7 (1)
Per Common Share
(Mcfe/Common Share) (12) 3.30 3.29 - 3.30 3.29 -
Estimated present value
before tax ($ millions) (11)
Proved 431.6 581.8 (26) 431.6 581.8 (26)
Proved and probable 722.4 928.2 (22) 722.4 928.2 (22)
LAND (thousands of net
acres)
Total land holdings 3,313 3,421 (3) 3,313 3,421 (3)
Undeveloped land holdings 1,849 1,905 (3) 1,849 1,905 (3)
DRILLING (wells
drilledgross/net)
(67)/
Gas 5/5.0 3/2.4 67/108 16/15.5 48/44.3 (65)
Oil 10/10.0 3/1.0 233/900 35/34.0 14/11.6 150/193
(50)/
Gas storage -/- -/- -/- 3/3.0 6/6.0 (50)
(100)/
Service -/- 1/1.0 (100) 1/1.0 1/1.0 -/-
Oil sands evaluation -/- -/- -/- 7/7.0 -/- 100/100
(100)/
Dry -/- -/- -/- -/- 1/1.0 (100)
(11)/
Total 15/15.0 7/4.4 114/241 62/60.5 70/63.9 (5)
Success rate 100/100 100/100 -/- 100/100 99/98 1/2
(1) Revenue includes realized gains and losses on derivatives and
call option premiums received.
(2) This is a non-GAAP measure; please refer to "Significant
accounting policies and non-GAAP measures" included in
Management's Discussion and Analysis.
(3) Based on weighted average Common Shares outstanding for the
period.
(4) Based on Common Shares outstanding at each dividend payment
date.
(5) Net bank debt is measured as at the end of the period and
includes net working capital (deficiency), excluding
short-term derivative assets and liabilities related to the
Corporation's hedging activities, the current portion of
convertible debentures, assets and liabilities held for sale
and the share based payment liability. Total net debt
includes senior notes and convertible debentures, measured at
principal amount.
(6) Production amounts are based on the Corporation's interest
before deduction of royalties.
(7) Deemed production 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 is not actual gas
sales but represents shut-in gas that is the basis of the gas
over bitumen financial solution received monthly from the
Alberta Crown as a reduction of other royalties payable. See
"Gas over bitumen royalty adjustments" in Management's
Discussion and Analysis.
(8) Perpetual's commodity hedging strategy employs both financial
forward contracts and physical commodity delivery contracts
at fixed prices or price collars.
(9) As evaluated by McDaniel & Associates Consultants Ltd.
("McDaniel") in accordance with National Instrument 51-101.
See "Reserves" included in this Management's Discussion and
Analysis.
(10) Reserves are presented on a company interest basis, including
working interest and royalty interest volumes but before
royalty burdens.
(11) Discounted at ten percent using McDaniel's forecast pricing.
Reserves at various other discount rates are located in the
"Reserves" section of Management's Discussion and Analysis.
Estimated present value amounts should not be taken to
represent an estimate of fair market value.
(12) Based on Common Shares outstanding at period end.
SOURCE Perpetual Energy Inc.
