Perpetual Energy Inc. Reports Further Success on Asset Disposition Program, Provides Operational Update at Edson and Advises on Credit Facility Borrowing Base Review

CALGARY, Dec. 14, 2012 /PRNewswire/ – Perpetual Energy Inc. (“Perpetual” or the
“Corporation”) is pleased to announce further positive results from the
Corporation’s ongoing asset disposition program. Subsequent to the end
of the third quarter Perpetual has entered into definitive purchase and
sale agreements for the divestiture of certain varied assets which will
result in net realized proceeds of $8.2 million, subject to certain
closing adjustments and transaction costs. These transactions are
scheduled to all be closed on or prior to January 7, 2013.

The disposed assets are non-core properties in northeast and east
central Alberta, including shut-in gas over bitumen reserves, and were
producing in aggregate approximately 2.3 MMcf/d of gas and 25 bbl/d of
oil and natural gas liquids net to Perpetual as at the effective dates
of the transactions. Perpetual will continue to receive the gas over
bitumen financial solution associated with the shut-in gas over bitumen
reserves. Reduced interest charges that will result from the proceeds
of these dispositions in 2013 are expected to more than offset any lost
cash flow from these assets in 2013, assuming the forward curves for
commodity prices and differentials.

Upon closing of the announced dispositions, total proceeds realized
through Perpetual’s asset disposition program, initiated one year ago
in November 2011, will total $173 million, exceeding the targeted $75
to $150 million. Funds from these announced dispositions will be
applied to reduce outstanding bank debt and will bolster Perpetual’s
flexibility to continue to pursue the Corporation’s ongoing asset base
transformation and commodity diversification strategy. In addition,
these transactions provide optionality for managing long term debt
obligations which mature in 2015 and beyond.

Operations Update – Edson Wilrich Liquids-Rich Gas

Positive operational results on the Wilrich liquids-rich gas play in the
greater Edson area continue to drive momentum in this key diversifying
growth strategy for Perpetual. During the fourth quarter, drilling
operations have been completed on three gross (1.5 net) new horizontal
wells targeting the Wilrich formation in the West Edson area of west
central Alberta. The drilling program was designed to more fully
delineate the West Edson acreage. Two of the three wells have been
completed by Perpetual and its joint venture partner at West Edson,
Tourmaline Oil Corp., and tested at final flow rates of 26 MMcf/d at 11
MPa flowing pressure and 20 MMcf/d at 4 MPa flowing pressure
respectively. Natural gas liquids are expected to be similar to the
original West Edson wells at approximately 35 to 40 bbl/MMcf. The third
well at West Edson will be completed by mid-January. These wells have
confirmed the predictability of Perpetual’s Wilrich inventory at West
Edson by stepping through Perpetual’s acreage base approximately 8
miles from the existing production. The wells have also confirmed the
presence of seismically-indicated uphole Fahler channel trends which
provide additional future inventory.

Operations are underway to construct a trunk pipeline through the West
Edson acreage to bring on production from the new wells in early 2013.
Expansion of the West Edson compressor station from its current 10
MMcf/d to 30 MMcf/d of capacity is on track for the first quarter of
2013.

One (1.0 net) additional well on the Wilrich play spud in mid-December
2012 to evaluate the performance of horizontal Wilrich development on
trend to the south of Perpetual’s original Edson development area. It
is expected that this well will be completed and tied-in via the
Perpetual-operated Edson 16-10 compressor station for production in the
first quarter of 2013.

Perpetual has identified an additional 100 net locations of a similar
caliber to the original wells for future development in the greater
Edson area. While the Corporation has moved to the development phase of
the Wilrich play in the Edson and West Edson areas, the prospect
inventory in the greater Edson area continues to grow as additional
lands are captured and evaluated and additional prospective zones are
delineated and evaluated. In addition, further technical analysis is
also underway to understand the optimal spacing parameters for maximum
economic recovery of the Wilrich liquids-rich gas resource.

Credit Facility Borrowing Base Review

Perpetual further advises that its semi-annual credit facility borrowing
base review was completed on November 30, 2012 as scheduled. As a
result of this review, the lenders have established a revised borrowing
base of $130 million. The $10 million reduction from the previous
borrowing base of $140 million is due to dispositions and lower natural
gas price forecasts used in lender evaluations, offset by increased
lending values attributable to higher oil and NGL reserves. Current
drawings on the Corporation’s credit facility are approximately $85
million. The next semi-annual redetermination of the Corporation’s
borrowing base remains scheduled for April 30, 2013.

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 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.
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.

SOURCE Perpetual Energy Inc.