CALGARY, AB, July 31, 2020
/CNW/ - (TSX: PMT) Perpetual Energy Inc. ("Perpetual" or the
"Company") herein releases its second quarter 2020 financial and
operating results. A complete copy of Perpetual's unaudited
condensed interim consolidated financial statements and related
Management's Discussion and Analysis ("MD&A") for the three and
six months ended June 30, 2020 can be
obtained through the Company's website at
www.perpetualenergyinc.com and SEDAR at www.sedar.com.
EAST EDSON
TRANSACTION
On April 1, 2020, the Company sold
a 50% working interest in its East
Edson property in West Central Alberta to a third-party
purchaser for consideration including a cash payment of
$35 million and the carried interest
funding of the drill, complete and tie-in costs for an eight-well
drilling program (the "East Edson Transaction"). A minimum of two
horizontal wells targeting development of the Wilrich formation are
required to be drilled, completed and tied-in during the third
quarter of 2020. The purchaser is required to complete the
eight-well horizontal drilling program by April 1, 2022. The cash proceeds from the East
Edson Transaction were used to repay bank debt. The eight-well
development capital carry at East
Edson is anticipated to restore gross production levels to
more fully utilize the existing processing capacity, improve
operating netbacks given the largely fixed operating cost base, and
result in improved capital spending efficiency.
SECOND QUARTER 2020 HIGHLIGHTS
Capital Spending, Production and Operations
- In response to the significant decline in global oil prices
which began in early-March, all capital investment for the second
quarter of 2020 was deferred, resulting in nominal exploration and
development capital spending. Expenditures on decommissioning
obligations were also suspended, enabled by the Alberta Energy
Regulator's ("AER") cancellation of area-based closure expenditure
requirements for 2020.
- Second quarter production averaged 3,662 boe/d, down 61% from
9,370 boe/d in the comparative period of 2019, due primarily to the
temporary suspension of heavy oil production in response to low oil
prices, and the sale of a 50% working interest in the East Edson property in West Central Alberta,
effective April 1, 2020. Compared to
the first quarter of 2020, production declined by 51% or 3,817
boe/d. The closing of the East Edson Transaction on April 1, 2020, combined with natural declines at
East Edson of 6%, reduced West
Central production by 3,062 boe/d or 80% of the total production
decline from the first quarter. The shut-in of Eastern Alberta heavy oil production due to
low oil prices contributed the remaining 755 boe/d decrease. As
Western Canadian Select prices improved materially from their April
lows, the Company began reactivating certain low-cost heavy oil
production in mid-May 2020 and has
continued to ramp up production as oil prices recover. By mid-July,
Perpetual had restarted all heavy oil production with the exception
of approximately 250 bbl/d of higher cost production in certain
pools at Mannville.
- Total production and operating expenses were down 5% on a
unit-of-production basis to $5.50/boe
for the second quarter of 2020, compared to $5.76/boe for the comparable period of 2019. On
an absolute dollar basis, production and operating costs were down
by $3.1 million (63%) due to the
temporary shut-in of heavy oil production, the East Edson
Transaction and cost mitigation initiatives.
Financial Highlights
- Realized revenue was $13.15/boe
in the second quarter of 2020, 38% lower than the comparative
period of 2019 ($21.26/boe). The
decrease was due largely to the 88% decrease in Perpetual's
realized natural gas price to $0.28/Mcf driven by hedging losses, combined with
a 66% decline in realized NGL prices.
-
- Perpetual's realized natural gas price, including derivatives,
decreased 88% to $0.28/Mcf for the
second quarter of 2020 from $2.25/Mcf
in the comparative period of 2019, and represented only 14% of the
AECO Daily Index price compared to 218% in the prior year period.
Lower realized natural gas prices were the result of AECO-NYMEX
basis hedging losses which have occurred as NYMEX prices weakened
relative to AECO prices during the second quarter. During the
second quarter of 2020, the remaining AECO-NYMEX basis hedge
positions were closed out by entering into offsetting hedge
arrangements for the remainder of 2020 ($5.1
million unrealized loss) and 2021 ($3.4 million unrealized loss).
- Perpetual's realized oil price of $67.56/bbl was 35% higher than the second quarter
of 2019, and included realized hedging gains on crude oil
derivative contracts of $2.3 million
or $44.32/bbl (Q2 2019 – realized
hedging losses of $1.2 million or
$11.30/bbl) on second quarter
production. Excluding realized hedging gains and losses,
Perpetual's realized oil price was $23.24/bbl in the second quarter of 2020, down
62% from $61.31/bbl in the prior year
period. During the second quarter of 2020, WTI and WCS hedge
positions for the remainder of 2020 were substantially offset by
similar arrangements, resulting in a $6.5
million unrealized gain as at June
30, 2020. WTI-WCS differential hedges remain in place for
the remainder of 2020 on an average of 567 bbl/d at a fixed
differential of US$19.50/bbl.
- Perpetual's realized NGL price for the second quarter of 2020
was $17.35/bbl, down 66% from the
second quarter of 2019, reflecting a decrease in all NGL component
prices which moved lower in concert with lower WTI light oil
prices. Realized prices in the second quarter of 2020 were also
impacted by realized hedging losses of $1.15/bbl (Q2 2019 – realized losses of
$0.15/bbl) on Perpetual's 350 bbl/d
basis differential hedge between WTI and Edmonton condensate pricing that expired on
June 30, 2020.
- Cash costs were down 49% to $7.3
million (Q2 2019 – $14.4
million), but up 30% on a unit-of-production basis to
$21.93/boe (Q2 2019 – $16.93/boe) due to the impact of the 61% decrease
in production. Cash costs decreased by $7.1
million from the prior year period and $5.3 million from the first quarter of 2020 due
to the temporary shut-in of heavy oil production from late-March to
mid-May, the closing of the East Edson Transaction on April 1, 2020, the reduction in employee
compensation and work hours to 80% effective April 1, 2020, and payments received from the
Canada Emergency Wage Subsidy
("CEWS") program. Managing through the COVID-19 pandemic saw
Perpetual's corporate staff working remotely in the second quarter
before transitioning back to a hybrid office protocol in late June.
Field employees have continued to work on site, following strict
social distancing and other health and safety measures.
- Net loss for the second quarter of 2020 was $8.8 million ($0.15/share), compared to a net loss of
$36.3 million ($0.60/share) in the comparative period of 2019.
The decrease in net loss from the prior year period was due
primarily to an impairment charge of $22.6
million and the $6.6 million
decrease in the fair value of the TOU share investment recognized
during the second quarter of 2019.
- Cash flow used in operating activities in the second quarter of
2020 was $2.8 million ($0.05/share), down $7.1
million from the prior year period (Q2 2019 – cash flow from
operating activities of $4.3 million
and $0.07/share) due to the combined
impact of the 38% decrease in realized revenue per boe and the 61%
decrease in production caused by heavy oil shut-ins and the sale of
East Edson production.
- Adjusted funds flow in the second quarter of 2020 was negative
$3.3 million ($0.05/share), down $7.0
million (191%) from the prior year period of $3.6 million ($0.06/share) due primarily to lower commodity
prices and hedging losses, as well as reduced production as a
result of the East Edson Transaction and heavy oil shut-ins.
Compared to the first quarter of 2020, adjusted funds flow improved
by $0.3 million or 8% (Q1 2020 –
negative adjusted funds flow of $3.6
million).
- At June 30, 2020, Perpetual had
total net debt of $98.5 million, down
$30.1 million (23%) from March 31, 2020 and $19.5
million (17%) from December 31,
2019. The decrease in net debt was attributable to the
closing of the East Edson Transaction on April 1, 2020 for consideration including a cash
payment of $35 million. The cash
proceeds from the East Edson Transaction were used to repay bank
debt.
- Perpetual has a first lien, reserve-based credit facility (the
"Credit Facility"). Perpetual had available liquidity at
June 30, 2020 of $6.6 million, comprised of the Credit Facility's
$20 million Borrowing Limit, less
current borrowings and letters of credit of $11.1 million and $2.3
million, respectively. Subsequent to quarter end, Perpetual
has reduced its outstanding letters of credit to $1.3 million. The next Borrowing Limit
redetermination has been extended from July
31, 2020 to August 10, 2020 to
provide the lenders additional time to complete their review. If
not extended, the Credit Facility will cease to revolve, and all
outstanding advances will be repayable on November 30, 2020.
SEQUOIA LITIGATION UPDATE
On January 13, 2020, the Court of
Queen's Bench (the "Court") issued its written decision related to
the Statement of Claim filed on August 3,
2018 against Perpetual and its President and Chief Executive
Officer ("CEO") with respect to the Company's disposition of
shallow gas assets in Eastern
Alberta to an unrelated third party on October 1, 2016 (the "Sequoia Litigation"). The
decision dismissed and struck all claims against the Company's CEO
and all but one of the claims filed by PricewaterhouseCoopers Inc.
LIT in its capacity as trustee in bankruptcy (the "Trustee")
against Perpetual. The Court did not find that the test for summary
dismissal relating to whether the transaction was an arm's length
transfer for purposes of section 96(1) of the Bankruptcy and
Insolvency Act (the "BIA") was met, on the balance of
probabilities. Accordingly, the BIA claim was not dismissed or
struck and only that part of the claim can continue against
Perpetual. The Trustee filed a notice of appeal with the Court of
Appeal of Alberta, challenging the
entire decision, and Perpetual and its CEO filed a similar notice
of appeal contesting the BIA claim portion of the decision. The
appeal proceedings are scheduled to be heard in December 2020.
On September 24, 2019, Perpetual
filed an application for security for costs of the appeal. On
January 28, 2020, the Court of Appeal
issued its decision with respect to Perpetual's security for costs
application, requiring the Trustee to post security with the Court
of Appeal in the amount of $0.2
million. Applications filed by the Trustee to appeal the
security for costs decision and alter the reasons for the decision
were dismissed at a hearing held on June 18,
2020. Costs of $0.1 million
were awarded by the Court of Appeal on July
1, 2020.
On February 25, 2020, Perpetual
filed a second application to strike and summarily dismiss the BIA
claim on the basis that there was no transfer at undervalue, and
Sequoia was not insolvent at the time of the transaction nor caused
to be insolvent by the transaction. Applications for security for
costs for future litigation were also filed at that time. In
July 2020, the Orphan Well
Association ("OWA"), certain oil and gas companies, and six
municipalities applied to intervene in the second BIA dismissal
application proceedings. The OWA and certain oil and gas companies
will be permitted to intervene in the proceedings which will take
place on October 1 and 2, 2020.
Management expects that the Company is more likely than not to
be completely successful in defending against the Sequoia
Litigation such that no damages will be awarded against it, and
therefore, no amounts have been accrued as a liability in
Perpetual's financial statements.
OUTLOOK
Perpetual currently anticipates that five wells of the
eight-well carried interest drilling program at the 50% owned
East Edson property will be
drilled in the second half of 2020, with two wells tied-in to
production late in the third quarter followed by three wells
commencing production early in the first quarter of 2021. While oil
prices have recovered from their second quarter lows, capital
expenditures for the remainder of 2020 in Eastern Alberta at Ukalta have been deferred,
pending a sustained recovery of WTI oil prices to the US$45.00/bbl level.
With the reactivation of shut-in heavy oil production and the
contribution from the first two carried interest wells at
East Edson in late-September,
production is forecast to increase in the third quarter to 4,500 to
4,700 boe/d (32% liquids). Fourth quarter production is anticipated
to increase to 5,200 to 5,400 boe/d (28% liquids) with the full
impact of the two East Edson
wells. An additional 250 bbl/d of heavy oil production could be
re-started if WTI oil prices increase above the US$45.00/bbl level.
Abandonment and reclamation expenditures will also remain
suspended for the second half of the year, enabled by the AER's
cancellation of area-based closure expenditure requirements for
2020. We are optimistic that funding from the Alberta Site
Rehabilitation program may facilitate the advancement of
abandonment and reclamation projects previously planned for 2020,
with $0.3 million of applications
approved to date.
Minimization of operating and corporate costs will remain a
priority, as will ensuring employees remain safe and healthy amid
the COVID-19 pandemic.
Financial and
Operating Highlights
|
Three months
ended June
30
|
Six months
ended June
30
|
(Cdn$
thousands,
except volume and
per share amounts)
|
2020
|
2019
|
Change
|
2020
|
2019
|
Change
|
Financial
|
|
|
|
|
|
|
Oil and natural gas
revenue
|
3,722
|
19,235
|
(81%)
|
14,219
|
41,434
|
(66%)
|
Net loss
|
(8,831)
|
(36,276)
|
76%
|
(68,549)
|
(41,168)
|
(67%)
|
Per share – basic and
diluted(2)
|
(0.15)
|
(0.60)
|
75%
|
(1.13)
|
(0.68)
|
(66%)
|
Cash flow from (used
in) operating activities
|
(2,777)
|
4,295
|
(165%)
|
(5,891)
|
13,587
|
(143%)
|
Adjusted funds
flow(1)
|
(3,328)
|
3,649
|
(191%)
|
(6,929)
|
10,011
|
(169%)
|
Per share – basic and
diluted(2)
|
(0.05)
|
0.06
|
(183%)
|
(0.11)
|
0.17
|
(165%)
|
Total
assets
|
132,772
|
292,827
|
(55%)
|
132,772
|
292,827
|
(55%)
|
Revolving bank
debt
|
11,080
|
37,806
|
(71%)
|
11,080
|
37,806
|
(71%)
|
Term loan, principal
amount
|
45,000
|
45,000
|
–
|
45,000
|
45,000
|
–
|
TOU share margin
demand loan, principal amount
|
–
|
13,515
|
(100%)
|
–
|
13,515
|
(100%)
|
Senior notes,
principal amount
|
33,580
|
33,580
|
–
|
33,580
|
33,580
|
–
|
TOU share
investment
|
–
|
(27,635)
|
(100%)
|
–
|
(27,635)
|
(100%)
|
Net working capital
deficiency(1)
|
8,873
|
10,251
|
(13%)
|
8,873
|
10,251
|
(13%)
|
Net
debt(1)
|
98,533
|
112,517
|
(12%)
|
98,533
|
112,517
|
(12%)
|
Capital
expenditures
|
(11)
|
5,200
|
(100%)
|
5,222
|
6,438
|
(19%)
|
Net proceeds on
acquisitions and dispositions
|
(34,661)
|
–
|
100%
|
(34,661)
|
–
|
100%
|
Net capital
expenditures
|
(34,672)
|
5,200
|
767%
|
(29,439)
|
6,438
|
557%
|
Common shares
outstanding (thousands)(3)
|
|
|
|
|
|
|
End of
period
|
60,894
|
60,337
|
1%
|
60,894
|
60,337
|
1%
|
Weighted average –
basic and diluted
|
60,776
|
60,154
|
1%
|
60,725
|
60,133
|
1%
|
Operating
|
|
|
|
|
|
|
Daily average
production
|
|
|
|
|
|
|
Natural gas
(MMcf/d)
|
16.9
|
44.5
|
(62%)
|
25.2
|
47.2
|
(47%)
|
Oil
(bbl/d)
|
573
|
1,207
|
(53%)
|
946
|
1,164
|
(19%)
|
NGL
(bbl/d)
|
268
|
754
|
(64%)
|
437
|
770
|
(43%)
|
Total
(boe/d)
|
3,662
|
9,370
|
(61%)
|
5,570
|
9,803
|
(43%)
|
Average
prices
|
|
|
|
|
|
|
Realized natural gas
price ($/Mcf)
|
0.28
|
2.25
|
(88%)
|
0.86
|
2.93
|
(71%)
|
Realized oil price
($/bbl)
|
67.56
|
50.01
|
35%
|
43.18
|
45.76
|
(6%)
|
Realized NGL price
($/bbl)
|
17.35
|
51.34
|
(66%)
|
30.62
|
41.61
|
(26%)
|
Wells drilled –
gross (net)
|
|
|
|
|
|
|
Natural gas
|
–
(–)
|
– (–)
|
|
–
(–)
|
– (–)
|
|
Oil
|
–
(–)
|
3 (3.0)
|
|
4
(4.0)
|
3 (3.0)
|
|
Total
|
–
(–)
|
3 (3.0)
|
|
4
(4.0)
|
3 (3.0)
|
|
(1)
|
These are non-GAAP
measures. Please refer to "Non-GAAP Measures" below.
|
(2)
|
Based on weighted
average basic common shares outstanding for the period.
|
(3)
|
All common shares are
net of shares held in trust (June 30, 2020 – 0.6 million; June 30,
2019 – 0.8 million). See "Note 14 to the condensed interim
consolidated financial statements".
|
ADDITIONAL INFORMATION
About Perpetual
Perpetual is an oil and natural gas exploration, production and
marketing company headquartered in Calgary, Alberta. Perpetual owns a diversified
asset portfolio, including liquids-rich natural gas assets in the
deep basin of west central Alberta, heavy oil and shallow natural gas in
eastern Alberta, with longer term
opportunities through undeveloped oil sands leases in northern
Alberta. Additional information on
Perpetual can be accessed at www.sedar.com or from the
Corporation's website at www.perpetualenergyinc.com.
The Toronto Stock Exchange has neither approved nor disapproved
the information contained herein.
Forward-Looking Information
Certain information regarding Perpetual in this news release
including management's assessment of future plans, operations, and
certain of the information contained under the heading "2020
Outlook" in this news release, may constitute forward-looking
information or statements under applicable securities laws. The
forward looking information includes, without limitation, the
potential outcome of the Sequoia Litigation, the ability to extend
the Credit Facility or to refinance its term debt on favorable
terms, the use of cash proceeds from the East Edson Transaction
including the repayment of bank debt and the funding of profitable
investment in the Clearwater play
in Eastern Alberta, the future
recovery and stabilization of oil prices, any benefits to be
derived from the East Edson Transaction including that the
eight-well capital carry at East
Edson will restore gross production levels to more fully
utilize the existing processing capacity, improve operating
netbacks and result in improved capital spending efficiency, the
nature of the capital spending in 2020 at the 50% owned
East Edson property, the deferral
and suspension of oil capital expenditures in 2020 including heavy
oil production and the anticipated timing of an oil price recovery
and production restart, anticipated average 2020 sales volumes, the
ability to minimize operating and corporate costs, abandonment and
reclamation expenditure forecasts for 2020 and ability to decrease
fixed operating costs associated with non-producing wells,
anticipated amounts and allocation of capital spending; statements
regarding estimated production and timing thereof; forecast average
production; completions and development activities; prospective oil
and natural gas liquids production capability; projected realized
natural gas prices and adjusted funds flow; estimated
decommissioning obligations; commodity prices and foreign exchange
rates; and commodity price management.
Various assumptions were used in drawing the conclusions or
making the forecasts and projections in the forward-looking
information contained in this news release, which assumptions are
based on management's 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 known and unknown risks,
including, without limitation, the impact of the ongoing oil price
war between Russia and
Saudi Arabia and COVID-19 as
further described below, 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 news release. In particular and without
limitation of the foregoing, the recent outbreak of COVID-19 has
had a negative impact on global financial conditions. Perpetual
cannot accurately predict the impact COVID-19 will have on its
ability to execute its business plans in response to government
public health efforts to contain COVID-19 and to obtain financing
or third parties' ability to meet their contractual obligations
with Perpetual including due to uncertainties relating to the
ultimate geographic spread of the virus, the severity of the
disease, the duration of the outbreak, and the length of travel and
quarantine restrictions imposed by governments of affected
jurisdictions; and the current and future demand for oil and gas.
In the event that the prevalence of COVID-19 continues to increase
(or fears in respect of COVID-19 continue to increase), governments
may increase regulations and restrictions regarding the flow of
labour or products, and travel bans, and Perpetual's operations,
service providers and customers, and ability to advance its
business plan or carry out its top strategic priorities, could be
adversely affected. In particular, should any employees,
consultants or other service providers of Perpetual become infected
with COVID-19 or similar pathogens, it could have a material
negative impact on Perpetual's operations, prospects, business,
financial condition and results of operations. 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 herein
and under "Risk Factors" in Perpetual's Annual Information Form and
MD&A for the year ended December 31,
2019 and in other reports on file with Canadian securities
regulatory authorities which may be accessed through the SEDAR
website (www.sedar.com) and at Perpetual's website
(www.perpetualenergyinc.com). Readers are cautioned
that the foregoing list of risk factors is not exhaustive.
Forward-looking information is based on the estimates and opinions
of Perpetual's management at the time the information is released,
and Perpetual disclaims any intent or obligation to update publicly
any such forward-looking information, whether as a result of new
information, future events or otherwise, other than as expressly
required by applicable securities law.
Non-GAAP Measures
This news release contains the terms "adjusted funds flow",
"adjusted funds flow per share", "adjusted funds flow per boe",
"available liquidity", "cash costs", "net working capital
deficiency", "net debt", "net bank debt", "net debt to adjusted
funds flow ratio", "operating netback", "realized revenue" and
"enterprise value" which do not have standardized meanings
prescribed by GAAP. Management believes that in addition to net
income (loss) and net cash flows from (used in) operating
activities as defined by GAAP, these terms are useful supplemental
measures to evaluate operating performance. Users are cautioned
however that these measures should not be construed as an
alternative to net income (loss) or net cash flows from (used in)
operating activities determined in accordance with GAAP as an
indication of Perpetual's performance and may not be comparable
with the calculation of similar measurements by other
entities.
Adjusted funds flow: Adjusted funds flow is calculated based
on cash flows from (used in) operating activities, excluding
changes in non-cash working capital and expenditures on
decommissioning obligations since Perpetual believes the timing of
collection, payment or incurrence of these items is variable.
Expenditures on decommissioning obligations may vary from period to
period depending on capital programs and the maturity of the
Company's operating areas. Expenditures on decommissioning
obligations are managed through the capital budgeting process which
considers available adjusted funds flow. The Company has added back
non-cash oil and natural gas revenues in-kind, equal to retained
East Edson royalty obligation
payments taken in-kind, to present the equivalent amount of cash
revenue generated. The Company has also deducted payments of the
gas over bitumen royalty financing from adjusted funds flow to
present these payments net of gas over bitumen royalty credits
received. These payments are indexed to gas over bitumen royalty
credits and are recorded as a reduction to the Corporation's gas
over bitumen royalty financing obligation in accordance with IFRS.
Additionally, the Company has excluded payments of restructuring
costs associated with employee downsizing costs, which management
considers to not be related to cash flow from operating activities.
Management uses adjusted funds flow and adjusted funds flow per boe
as key measures to assess the ability of the Company to generate
the funds necessary to finance capital expenditures, expenditures
on decommissioning obligations, and meet its financial
obligations.
Adjusted funds flow per share is calculated using the same
weighted average number of shares outstanding used in calculating
net income (loss) per share. Adjusted funds flow is not intended to
represent net cash flows from (used in) operating activities
calculated in accordance with IFRS.
Adjusted funds flow per boe is calculated as adjusted funds
flow divided by total production sold in the period.
Available Liquidity: Available Liquidity is defined as
Perpetual's reserve-based credit facility (the "Credit Facility")
borrowing limit (the "Borrowing Limit"), less borrowings and
letters of credit issued under the Credit Facility. Management uses
available liquidity to assess the ability of the Company to finance
capital expenditures and expenditures on decommissioning
obligations, and to meet its financial obligations.
Cash costs: Cash costs are comprised of royalties, production
and operating, transportation, general and administrative, and cash
finance expense. Cash costs per boe is calculated by dividing cash
costs by total production sold in the period. Management believes
that cash costs assist management and investors in assessing
Perpetual's efficiency and overall cost structure.
Realized revenue: Cash costs are comprised of royalties,
production and operating, transportation, general and
administrative, and cash finance expense. Cash costs per boe is
calculated by dividing cash costs by total production sold in the
period. Management believes that cash costs assist management and
investors in assessing Perpetual's efficiency and overall cost
structure.
Operating netback: Operating netback is calculated by
deducting royalties, production and operating expenses, and
transportation costs from realized revenue. Operating netback is
also calculated on a per boe basis using production sold for the
period. Operating netback on a per boe basis can vary significantly
for each of the Company's operating areas. Perpetual considers
operating netback to be an important performance measure as it
demonstrates its profitability relative to current commodity
prices.
Net working capital deficiency: Net working capital
deficiency includes total current assets and current liabilities
excluding short-term derivative assets and liabilities related to
the Corporation's risk management activities, Tourmaline Oil Corp.
("TOU") share investment, TOU share margin demand loan, revolving
bank debt, term loan, current portion of royalty obligations,
current portion of lease liabilities, and current portion of
provisions.
Net bank debt, net debt and net debt to adjusted funds flow
ratio: Net bank debt is measured as current and long-term revolving
bank debt including net working capital deficiency. Net debt
includes the carrying value of net bank debt, the principal amount
of the term loan, the principal amount of the TOU share margin
demand loan and the principal amount of senior notes, reduced for
the mark-to-market value of the TOU share investment. Net debt, net
bank debt, and net debt to adjusted funds flow ratios are used by
management to assess the Corporation's overall debt position and
borrowing capacity. Net debt to adjusted funds flow ratios are
calculated on a trailing twelve-month basis.
Enterprise value: Enterprise value is equal to net debt plus
the market value of issued equity, and is used by management to
analyze leverage.
For additional reader advisories in regards to non-GAAP
financial measures, including Perpetual's method of calculation and
reconciliation of these terms to their corresponding GAAP measures,
see the section entitled "Non-GAAP Measures" within the Company's
MD&A filed on SEDAR.
BOE Equivalents
Perpetual's aggregate proved and probable reserves are
reported in barrels of oil equivalent (boe). Boe may be misleading,
particularly if used in isolation. In accordance with NI 51-101, a
boe conversion ratio for natural gas of 6 Mcf: 1 boe 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. As the value ratio between
natural gas and crude oil based on the current prices of natural
gas and crude oil 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.
The following abbreviations used in this news release have
the meanings set forth below:
bbls
|
barrels
|
boe
|
barrels of oil
equivalent
|
Mcf
|
thousand cubic
feet
|
MMcf
|
million cubic
feet
|
SOURCE Perpetual Energy Inc.