Last updated on April 24, 2014 at 12:10 EDT

Perpetual Energy Inc. Releases Year End 2012 Financial and Operating Results and Announces West Edson Development Plan

March 12, 2013

CALGARY, March 11, 2013 /PRNewswire/ – (TSX:PMT) – Perpetual Energy Inc. (“Perpetual” or the “Corporation” or the
“Company”) is pleased to report fourth quarter and year end 2012
financial and operating results. Detailed results are presented in
Perpetual’s audited consolidated financial statements and related
Management’s Discussion and Analysis (“MD&A”) which can be obtained
through the Corporation’s website at www.perpetualenergyinc.com and SEDAR at www.sedar.com.

Perpetual is also pleased to announce that it is enhancing its area
development plans in the West Edson area to include the construction of
sales gas facilities and a pipeline. Further to this, Perpetual has
entered into agreements with Aux Sable Canada and Alliance Pipeline
Limited Partnership (“Alliance Canada”) that provide access to premium
markets in the midwest United States for its natural gas and natural
gas liquids (“NGL or liquids”) from the West Edson area.


Perpetual focused on four key strategic objectives in 2012:

        --  Profitable capital investment in two chosen proven diversifying
            growth strategies to increase oil and NGL production;
        --  Debt reduction;
        --  Advancing the assessment and growing the value of other large
            scope, high impact resource opportunities with risk-managed
            investment; and
        --  Managing downside risks related to commodity price volatility.

Significant progress was made towards these strategic priorities, the
results of which are highlighted below.

Corporate Activity

        --  In November 2011 Perpetual announced an asset disposition
            program 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 $74.9 million 6.50% unsecured
            convertible debentures (the "6.50% Debentures"). Proceeds from
            dispositions in 2012 totaled $167.2 million, providing
            additional liquidity while high-grading the Corporation's asset
            base. The disposed assets included approximately 13.2 MMcf/d of
            gas production and oil and NGL production of 744 bbl/d.

        --  Perpetual repaid its $74.9 million 6.50% Debentures at maturity
            on June 30, 2012.


        --  Total actual and deemed production decreased 12 percent to
            147.6 MMcfe/d from 168.4 MMcfe/d in 2011, as lower natural gas
            production due to dispositions, shut-ins, third party facility
            downtime and natural declines was partially offset by higher
            oil and NGL production and higher deemed production related to
            the full year impact of additional gas over bitumen shut-ins.
            Total actual production was 120.9 MMcfe/d, down 15 percent from
            142.0 MMcfe/d in 2011.

        --  Average daily oil and NGL production increased 1,472 bbl/d to
            3,448 bbl/d, a 74 percent increase from 2011 levels, driven by
            the Company's commodity diversification strategy and targeted
            heavy oil drilling in the Mannville area, and despite the
            disposition of 744 bbl/d of oil and NGL production from
            non-core assets.

        --  Natural gas production decreased 23 percent to 100.2 MMcf/d as
            a result of non-core asset dispositions, shut-ins, third party
            facility downtime and limited capital spending on gas-focused
            projects, partially offset by the establishment of production
            in West Edson in the second quarter of 2012.

        --  Total production from the greater Edson area increased 15
            percent over 2011 to 24.1 MMcfe/d. Volumes are expected to
            continue to grow as facilities are expanded and wells drilled
            in the fourth quarter of 2012 are brought online. By the end of
            first quarter of 2013, production is expected to be
            approximately 31.2 MMcfe/d.

Commodity Prices

        --  The average gas price before derivatives decreased 34 percent
            to $2.48 per Mcf from $3.77 per Mcf in 2011, in line with a 35
            percent decrease in AECO Monthly Index prices. Natural gas
            prices including derivatives declined to $3.34 per Mcf from
            $3.82 per Mcf in the prior year due to the impact of lower
            market prices.

        --  The average oil and NGL price before derivatives decreased
            $9.41 per bbl to $64.26 per bbl primarily as a result of wider
            Canadian heavy oil price differentials (Western Canadian Select
            ("WCS") to WTI price differential ("WTI-WCS differential")).


        --  Total net debt was reduced 25 percent to $396.6 million on
            December 31, 2012 from $526.9 million at year-end 2011. Net
            debt decreased by $130.3 million in 2012 through successful
            execution of the asset disposition program announced in late
            2011. Disposition proceeds, net of acquisitions, of $164.8
            million was offset by capital spending that exceeded funds flow
            to enhance the asset base transformation and commodity
            diversification strategy. Net bank debt outstanding was $86.6
            million on a borrowing base of $130 million as of December 31,

        --  Production-related operating costs decreased six percent to
            $79.7 million ($1.80 per Mcfe) in 2012 as compared to $85.0
            million ($1.64 per Mcfe) in 2011, primarily due to reduced
            labour costs and dispositions. Decreases were partially offset
            by increased well suspension costs and higher costs associated
            with Mannville oil operations. Gas storage business operating
            costs decreased 59 percent to $2.0 million from $5.0 million in
            2011 as a result of the disposition of 90 percent of the
            Warwick Gas Storage business ("WGS LP") effective April 25,
            2012 as well as reduced power and well workover costs.

        --  Cash general and administrative ("G&A") expense totaled $27.1
            million as compared to $32.3 million for the comparable period
            in 2011 primarily due to reduced staffing levels, lower
            consulting fees and reduced information technology costs,
            offset by lower overhead recoveries due to reduced capital
            spending in 2012.

        --  Royalty expense decreased $7.9 million due to lower natural gas
            production volumes and lower commodity prices. The average
            royalty rate on oil, NGL and natural gas revenues before
            derivatives was 7.4 percent compared to 8.9 percent in 2011.
            Perpetual's royalty rate has decreased as natural gas prices
            decreased to lower levels on the price-adjusted sliding scale
            used for provincial royalty calculations.

        --  Funds flow decreased 32 percent to $49.1 million ($0.33 per
            Common Share) from $72.7 million ($0.49 per Common Share) for
            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
            G&A expenses.

        --  The Corporation recorded a net loss of $46.2 million or $0.31
            per basic and diluted Common Share in 2012 as compared to a net
            loss of $100.2 million or $0.68 per basic and diluted Common
            Share in 2011. The decrease in the net loss was due to lower
            depletion and depreciation expense combined with increased
            gains on dispositions, partially offset by an increase in
            impairment losses related to lower forecast natural gas prices.

Exploration and Development Capital Activity

        --  Exploration and development capital spending decreased to $79.7
            million from $139.2 million in 2011 as Perpetual focused on its
            key strategic priorities; balancing investment for oil and NGL
            growth with overall debt reduction. A total of 44 (40.1 net)
            wells were drilled with 100 percent success, compared to 62
            (60.5 net) wells in 2011.

        --  In 2012, Perpetual invested minimal capital for drilling or
            recompletions in its legacy shallow gas properties, as capital
            was deployed to the Mannville heavy oil and Edson Wilrich plays
            to grow heavy oil and NGL production.

        --  Conventional heavy oil expenditures of $45.8 million were
            concentrated on the drilling and completion of 35 (34.3 net)
            horizontal wells in the Mannville play of which 30 (29.3 net)
            are producing oil, two (2.0 net) are shut-in, and three (3.0
            net) were standing awaiting facilities and start-up operations
            at year end.

        --  Deep basin capital spending totaled $24.9 million, focused on
            further delineating the potential of the Wilrich play in the
            greater Edson area and constructing infrastructure to establish
            production at West Edson. Total capital activity on the Wilrich
            play consisted of six (4.0 net) wells and construction of a
            compression facility at West Edson. During the fourth quarter
            of 2012 and early 2013, three (1.5 net) horizontal wells
            targeting the Wilrich formation were drilled and completed to
            more fully delineate the West Edson acreage. Test rates on the
            wells exceeded the established type curves, ranging from 20 to
            26 MMcf/d at flowing pressures higher than estimated initial
            pipeline flow conditions, with associated NGL of 10 to 27 bbl
            per MMcf.

        --  Perpetual continued to advance evaluation of the Colorado shale
            shallow dry gas play in eastern Alberta with risk-managed
            spending in 2012. Vertical recompletions were performed in
            several zones within the Colorado formation to assess
            geological, geotechnical and geophysical characteristics as
            they relate to hydraulic fracture growth and flow parameters.
            Based on this, and monitoring of competitor activity, an
            eight-well pilot project is being designed for horizontal
            development of the Colorado and potentially the Viking
            formations. The program will aim to confirm well orientation,
            fracture techniques and play type curves to assess the expected
            economic returns of this material natural gas resource.

        --  Perpetual has advanced pilot projects to test two unique
            recovery technologies in its Panny and Marten Hills bitumen
            properties. Approval has been received for Marten Hills and is
            expected imminently for Panny. Perpetual has entered into a
            joint venture arrangement on the Marten Hills project which is
            designed to test conductive heating in a thick Clearwater sand
            facies. The Panny pilot is designed to test electrical heat in
            combination with water and potentially solvent injection in a
            Bluesky sand reservoir. Both reservoirs are saturated with
            bitumen that is lower viscosity than conventional bitumen
            reservoirs, and as such, requires less heat to establish flow.
            Limited capital is required for these projects in 2013.

Warwick Gas Storage

        --  On April 25, 2012, Perpetual sold a 90 percent interest in WGS
            LP for cash proceeds of $80.9 million, recording a gain on sale
            of $40.6 million.

        --  As part of the sale Perpetual retained an option, exercisable
            within one year of closing, to buy back from the purchaser up
            to a 30 percent additional ownership interest in WGS LP at the
            same price as the initial sale plus working capital and other
            adjustments, less any dividends paid, for a final ownership
            interest post any exercise of the buy-back option of up to 40
            percent ("WGS Call Option").

        --  Gas storage revenue decreased to $4.2 million from $14.0
            million in 2011 as after the sale WGS LP revenues were no
            longer accounted for on a consolidated basis. After the sale,
            Perpetual included dividends of $0.9 million from WGS LP in
            cash flows from operating activities and funds flow.

        --  At the time of the sale, Perpetual entered into a Management
            Services and Operations Agreement to provide management and
            operational services to WGS LP for an annual fee, over an
            initial two-year term.

        --  In the fourth quarter of 2012, WGS LP finished drilling and
            completed two new horizontal wells to increase the working gas
            capacity of the storage facility from 17 Bcf to 19 Bcf.
            Application has been made for delta pressuring to further
            increase the working gas capacity of the facility in 2013.

Acquisitions and Dispositions

        --  Proceeds for asset sales in 2012 totaled $167.2 million.
            Disposition of non-core natural gas and oil properties in the
            West Central and Eastern districts generated net proceeds of
            $86.3 million, with the remaining sale proceeds of $80.9
            million attributable to the disposition of the Corporation's 90
            percent interest in WGS LP. Twenty-three transactions were
            closed for total gains on dispositions of $49.0 million.

        --  Acquisitions of $2.4 million (2011 - $7.7 million) were focused
            on expanding Perpetual's horizontal drilling inventory in the
            Wilrich in the Edson area.

        --  On December 18, 2012, Perpetual announced the Company had
            entered into a definitive purchase and sale agreement, along
            with its partner, to jointly divest its Elmworth Montney assets
            for gross proceeds of $155 million, $77.5 million net to
            Perpetual, subject to certain closing adjustments and
            transaction costs. There is currently no production or cash
            flow from operations at the Elmworth property. This transaction
            is expected to close on or prior to March 15, 2013.

Reserves and Resource Estimates

        --  As previously disclosed on February 5, 2013, Perpetual added
            19.5 MMboe of proved and probable reserves in 2012, excluding
            production, net dispositions and downward technical revisions
            related to lower commodity price forecasts. Reserve additions
            and net positive technical revisions due to performance offset
            2012 production of 7.4 MMboe by 265 percent.

        --  After net dispositions of 11.3 MMboe, production of 7.4 MMboe
            and negative revisions due to commodity prices of 6.6 MMboe in
            2012, proved and probable reserves decreased just 5.8 MMboe
            (seven percent) from 80.8 MMboe at year-end 2011 to 75.0 MMboe.
            Proved reserves also decreased seven percent to 36.3 MMboe at
            year-end 2012.

        --  Including changes in future development capital ("FDC"),
            Perpetual realized finding and development ("F&D") costs of
            $13.06 per boe on a proved and probable reserve basis. Since
            proceeds from dispositions exceeded exploration and development
            capital spending, Perpetual's realized finding, development and
            acquisition ("FD&A") costs, including changes in FDC, was
            ($12.75) per boe on a proved and probable basis.

        --  Perpetual's reserve-based net asset value at year-end 2012 was
            estimated at $1.84 per Common Share discounted at eight

        --  Independent contingent resource assessment reports were
            prepared by McDaniel & Associates Consultants Ltd. "McDaniel"
            in 2011 and partially updated in the first quarter of 2013,
            resulting in the assignment of 1.36 billion barrels of
            discovered bitumen initially in place (best estimate) and 1.88
            billion barrels of undiscovered bitumen initially in place
            (best estimate) on 27,113 acres of Perpetual's oil sands
            leases, primarily in the Panny Bluesky sandstone and Liege
            Grosmont and Leduc carbonate reservoirs.

        --  Perpetual's best estimate Contingent Resource was estimated at
            278.7 MMbbl at year end 2012, up 31 percent from 212.5 MMbbl at
            December 31, 2011. Additionally, best estimate Prospective
            Resource increased 12 percent to 467.0 MMbbl (2011 -


Perpetual is focused on five key strategic priorities for 2013:

      1. Maximize value of Mannville heavy oil;
      2. Position for growth of Edson liquids-rich gas;
      3. Manage downside risk and reduce debt;
      4. Advance and broaden the portfolio of high impact opportunities
         with risk-managed investment; and
      5. Prepare to maximize value from shallow gas base assets in gas
         price recovery.

The Corporation’s Board of Directors has approved a capital spending
plan of up to $75 million which will be highly focused on its commodity
diversification strategy. The capital spending plan 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 by focusing on either Mannville heavy oil or liquids-rich
gas at Edson depending on commodity prices.

Mannville heavy oil

Through the first quarter of 2013, 19 (18.7 net) heavy oil wells have
been drilled in the Mannville area with an additional 6 to 8 (5.3 to
7.0 net) wells planned prior to spring break up. Depending on commodity
prices, up to 12 (11.3 net) additional Mannville heavy oil wells are
planned in the second half of 2013, including infill drilling in the
Mannville I2I pool to prepare for the potential implementation of an
enhanced recovery scheme in this Sparky pool in 2014.

Edson Wilrich liquids-rich gas

First quarter 2013 activity has been focused on completion and tie in of
the fourth quarter 2012 drilling program. Perpetual and its partner are
continuing to expand the production capability of the West Edson area.
Expansion of the West Edson compressor station from its current 10
MMcf/d to 30 MMcf/d of gross capacity (50 percent net to Perpetual) is
underway as planned. Construction is in progress on a trunk pipeline
system through the West Edson acreage to bring on production from new
wells in the first quarter of 2013. Two of the three new wells have
commenced production at restricted rates, with the third well scheduled
to be tied in prior to the start-up of the expanded compressor station
in mid-March.

In early March, Perpetual entered into rich gas premium agreements with
Aux Sable Canada and an interconnection agreement with Alliance Canada
to allow access to a premium market in the mid-west United States.
Further to these arrangements, Perpetual and its partner will enhance
the West Edson compressor station with the installation of
refrigeration and other related components to produce sales quality
gas. In addition, a sales pipeline will be constructed beginning in the
second quarter of 2013 to tie-in to the Alliance pipeline system.
Start-up of the gas plant and sales pipeline is expected to commence
prior to November 1, 2013. These actions are expected to alleviate
uncertainty with respect to natural gas processing and NGL
transportation and extraction capacity for development of the West
Edson reserves, reduce operating costs, improve run times and provide
competitive netbacks for NGL.

Depending on commodity prices and West Edson plant and sales gas
pipeline construction timelines, Perpetual has plans in place to drill
2 to 6 (1.0 to 3.5 net) wells in the deep basin during the second half
of 2013, primarily targeting the Wilrich formation at West Edson.

2013 Dispositions

Perpetual will continue to pursue dispositions in addition to the
previously announced divestiture of its Elmworth Montney assets for
$77.5 million scheduled to close on or prior to March 15, 2013.
Proceeds from any potential divestitures will 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.

Warwick Gas Storage

Perpetual is in the process of evaluating alternatives for the WGS LP
Call Option which will expire on April 25, 2013. The exercise of the
WGS LP Call Option is predicated on the impact of recent drilling and
plans for delta pressuring that will increase storage capacity, and a
view to improving seasonal spreads translating into increased future
cash flows from the facility.


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 & NGL, 82.8 MMcf/d of natural gas, operating expense
of $86 million, cash G&A expense of $24.0 million and an interest rate
on long-term bank debt of 5.4 percent.

    2013 Projected Funds Flow (1)(2) ($     AECO Gas Price ($/GJ)

                   $3.00       $3.25        $3.50    $3.75   $4.00

            $55.00   25           32           41      47      55

    WCS oil $65.00   40           47           55      62      70
    ($/bbl) $75.00   55           62           70      77      85

            $85.00   70           77           85      92     100

    (1) The current settled and forward average AECO, WTI and WCS
        differential prices for 2013 as of March 11, 2013 were $3.28 per
        GJ, $US92.55 per bbl and $US23.23, respectively. $US to $CDN
        exchange rate assumed at par.

    (2)  These are non-GAAP measures; see "Other non-GAAP measures" in this

Below is a table that shows sensitivities of Perpetual’s 2013 estimated
funds flow to operational changes and changes in the business

                                                     Impact on funds flow

    Funds flow sensitivity             Change Annual              Monthly
    analysis ($ thousands)

    Business Environment                                                 

    Natural gas price at AECO   $0.25 per Mcf  7,560                  630

    Oil price at WTI            $5.00 per bbl  7,213                  601

    Interest rate on long-term             1%    372                   31
    bank debt


    Natural gas production           5 MMcf/d  5,767                  481

    Oil and NGL production          100 bbl/d  2,170                  181

    Operating expense          $0.10 per Mcfe  3,890                  324

    Cash G&A expenses          $0.10 per Mcfe  3,890                  324


    Financial and Operating        Three months ended
    Highlights                            December 31     Year ended December 31

    ($CDN thousands, except     2012
    volume and per Share                            %                          %
    amounts)                              2011 change      2012      2011 change


    Revenue (1) (2)           52,156    62,431   (16)   207,619   251,591   (17)

    Funds flow (2)            11,158    11,586    (4)    49,087    72,679   (32)

      Per Common Share (2)
      (3)                       0.08      0.08      -      0.33      0.49   (33)

    Cash flow provided by     17,375
    operating activities                 5,902    194    48,599    56,580   (14)

      Per Common Share (2)
      (3)                       0.12      0.04    200      0.33      0.38   (13)

    Net loss                (52,879)  (42,998)     23  (46,178) (100,227)   (54)

      Per Common Share (3)    (0.36)    (0.29)     24    (0.31)    (0.68)   (54)

    Dividends declared             -         -      -         -    28,865  (100)

      Per Common Share (4)         -         -      -         -     0.195  (100)

    Payout ratio (%) (2)           -         -      -         -      37.2  (100)

    Total assets             721,104 1,016,694   (29)   721,104 1,016,694   (29)

    Net bank debt             86,611
    outstanding (2) (5)                141,996   (39)    86,611   141,996   (39)

    Senior notes, measured   150,000
    at principal amount                150,000      -   150,000   150,000      -

    Convertible debentures,  159,972
    measured at principal
    amount                             234,897   (32)   159,972   234,897   (32)

    Total net debt (2)       396,583   526,893   (25)   396,583   526,893   (25)

    Total equity              36,062    77,251   (53)    36,062    77,251   (53)

    Capital expenditures                                                        

      Exploration and
      development             21,185    38,269   (45)    79,724   139,214   (43)

      Gas storage                  -       327  (100)        51    11,207  (100)

      Acquisitions, net of
      dispositions           (6,923)   (2,746)    152 (164,763)  (33,953)    385

      Other                       23        97   (76)       220       588   (63)

      Net capital
      expenditures            14,285    35,947   (60)  (84,814)   117,056  (172)

    Common Shares
    Outstanding (thousands)                                                     

    End of year              147,455   146,966      -   147,455   146,966      -

    Weighted average         147,184   146,905      -   147,085   147,694      -

    March 11, 2013                                                              



      Natural gas (MMcf/d)
      (6)                       88.3     126.8   (30)     100.2     130.2   (23)

      Oil and NGL (bbl/d)
      (6)                      3,536     2,481     43     3,448     1,976     74

      Total (MMcfe/d) (6)      109.5     141.7   (23)     120.9     142.0   (15)

      Gas over bitumen
      deemed production
      (MMcf/d) (7)              25.1      27.4    (8)      26.7      26.4      1

      Average daily (actual
      and deemed - MMcfe/d)
      (6) (7)                  134.6     169.1   (20)     147.6     168.4   (12)

      Per Common Share
      (cubic feet                                                               

        equivalent/d/Common                                                 (13)
        Share) (3)              0.91      1.15   (21)      1.00      1.15

    Average prices                                                              

      Natural gas - before
      derivatives ($/Mcf)
      (8)                       2.99      3.35   (11)      2.48      3.77   (34)

      Natural gas -
      including derivatives
      ($/Mcf) (8)               3.56      3.30      8      3.34      3.82   (13)

      Oil and NGL - before
      derivatives ($/bbl)
      (8)                      62.02     78.84   (21)     64.26     73.67   (13)

      Oil and NGL -
      including derivatives
      ($/bbl) (8)              71.29     92.52   (23)     64.13     78.00   (18)


                    Three Months Ended December      Year Ended December 31

    except volume
    and per Share
    amounts)          2012    2011    % change    2012    2011    % change

    Reserves (Mboe)                                                        

    Company          36,278  39,175         (7)  36,278  39,175         (7)
    interest -
    proved (9) (10)

    Company          75,048  80,784         (7)  75,048  80,784         (7)
    interest -
    proved and
    probable (9)

      Per Common       0.51    0.55         (7)    0.51    0.55         (7)
      Share) (12) 

    present value
    before tax ($
    millions) (11)

      Proved          264.0   431.6        (39)   264.0   431.6        (39)

      Proved and      493.0   722.4        (32)   493.0   722.4        (32)

    Land (thousands
    of net acres)

    Total land        2,911   3,313        (12)   2,911   3,313        (12)

    Undeveloped       1,590   1,849        (14)   1,590   1,849        (14)
    land holdings 

    Drilling (wells

      Gas             4/2.5   5/5.0   (20)/(50)   8/5.5 16/15.5   (50)/(65)

      Oil             1/1.0 10/10.0   (90)/(90) 36/34.6 35/34.0         3/2

      Gas storage     2/0.2     -/-      200/20   2/0.2   3/3.0   (33)/(93)

      Service           -/-     -/-         -/-     -/-   1/1.0 (100)/(100)

      Oil sands                 -/-         -/-     -/-   7/7.0 (100)/(100)
      evaluation        -/-

      Dry               -/-     -/-         -/-     -/-     -/-         -/-

      Total           5/3.5 15/15.0   (67)/(77) 44/40.1 62/60.5   (29)/(34)
      gas storage)

    Success rate    100/100 100/100         -/- 100/100 100/100         -/-

    (1)       Revenue includes realized gains and losses on derivatives and
              call option premiums received.

    (2)       This is a non-GAAP measure; please refer to "non-GAAP
              measures" included in the MD&A.

    (3)       Based on weighted average Common Shares outstanding for the

    (4)       Based on Common Shares outstanding at each dividend payment

    (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 the MD&A.

    (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 in accordance with National
              Instrument 51-101. See "Reserves" included in the MD&A.

    (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 the MD&A. 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.

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 “2013 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, 2012 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.

In accordance with NI 51-101, an Mcfe and boe conversion ratio for crude
oil and natural gas of 1 bbl: 6 Mcf has been used, which is based on an
energy equivalency conversion method primarily applicable at the burner
tip and does not necessarily represent a value equivalency at the
wellhead. Given that the value ratio based on the current price of
crude oil as compared to natural gas is significantly different from
the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis
may be misleading as an indication of value.

Under NI 51-101, the methodology to be used to calculate F&D and FD&A
costs includes incorporating changes in FDC required to bring the
proved undeveloped and probable reserves to production. For continuity,
Perpetual has presented herein and/or in the MD&A F&D and FD&A costs
calculated both excluding and including FDC. Changes in forecast FDC
occur annually as a result of development activities, acquisitions and
disposition activities, undeveloped reserve revisions and capital cost
estimates that reflect the independent evaluator’s best estimate of
what it will cost to bring the proved and probable undeveloped reserves
on production

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 the MD&A.

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.D” and “PMT.DB.E”,
respectively. Further information with respect to Perpetual can be
found at its website at www.perpetualenergyinc.com.

Conference Call and Webcast

Perpetual will be hosting a conference call and webcast at 9:30 a.m.,
Mountain Time, Tuesday, March 12, 2013 to review this information.
Interested parties are invited to take part in the conference call by
dialing one of the following telephone numbers 10 minutes before the
start time: Toronto and area – (647) 427-7451; outside Toronto – (888)
231-8192. For a replay of this call please dial: (855) 859-2056,
passcode: 93528537 until Tuesday, March 19, 2013.

To participate in the live webcast please visit www.perpetualenergyinc.com or http://event.on24.com/r.htm?e=578903&s=1&k=97C5FB900DCC228D56105530CA184483. The webcast will be archived and the webcast presentation will be
posted on Perpetual’s website shortly following the presentation. The
Toronto Stock Exchange has neither approved nor disapproved the
information contained herein.



SOURCE Perpetual Energy Inc.

Source: PR Newswire