CALGARY, AB, July 16, 2021 /CNW/ - (TSX: PMT) –
Perpetual Energy Inc. ("Perpetual" or the "Company") is pleased to
announce the creation of Rubellite Energy Inc. ("Rubellite"), a new
high growth, pure play Clearwater
oil company.
Rubellite will: (i) acquire all of Perpetual's Clearwater lands, wells, roads and related
facilities in northeast Alberta
(the "Clearwater Assets") for total consideration of $60 million, including $58
million in cash and the issuance of an option to purchase
four million common shares ("Rubellite Shares") of Rubellite (the
"Acquisition"); (ii) participate in a proposed plan of arrangement
under the Business Corporations Act (Alberta) involving Perpetual, the
shareholders of Perpetual and Rubellite (the "Plan of
Arrangement"); and (iii) raise a minimum of $72.8 million through a combination of equity
financings.
Pursuant to the Plan of Arrangement, Perpetual shareholders will
receive Rubellite Shares and arrangement warrants (the "Arrangement
Warrants") of Rubellite. The Arrangement Warrants effectively
provide for a "rights offering" whereby all shareholders of
Perpetual will have an equal opportunity to purchase Rubellite
Shares. Rubellite will raise $32.3
million, through the fully back-stopped exercise of the
Arrangement Warrants at $2.00 per
Arrangement Warrant (the "Arrangement Warrant Financing").
Rubellite has closed a $30 million
subscription receipt financing, at $2.00 per subscription receipt ("Subscription
Receipt"), to a number of arm's length institutional investors (the
"Sub-Receipt Financing"). To complete the capitalization of
Rubellite, upon expiry of the Arrangement Warrants, Rubellite
intends to close a committed, minimum $10.5
million non-brokered private placement at $2.00 per share, which may be expanded to
$20 million (the "Non-Brokered
Placement") (the Arrangement Warrant Financing, Sub-Receipt
Financing and the Non-Brokered Placement are collectively, the
"Financings" and the Acquisition, the Plan of Arrangement and the
Financings are collectively, the "Transactions").
In connection with the Acquisition, Rubellite has entered into
an agreement with Freehold Royalties Ltd. whereby it has sold a 3%
to 5% gross overriding royalty on certain lands at Figure Lake (the
"Figure Lake GORR Financing") for gross proceeds of up to
$7.9 million to be paid in accordance
with a drilling commitment agreement. It is expected that 100% of
Rubellite's costs for the drilling, completion and equipping of
four commitment wells and a portion of the costs for twelve
additional wells on the Figure Lake royalty lands will be funded by
the Figure Lake GORR Financing. The first of the four Figure Lake
commitment wells is expected to spud in mid-July.
Perpetual is also pleased to announce it has entered into a debt
settlement arrangement with its second lien lender to settle all
outstanding obligations under its term loan, which will eliminate
all but $2.7 million of the Company's
second lien secured debt and extend the remaining second lien
secured debt's maturity to December 31,
2024.
"We are very excited about the creation of Rubellite Energy"
said President and CEO Sue Riddell
Rose. "Since 2018, the Perpetual team has executed over 30
separate transactions to assemble our Clearwater position. The Transactions position
Perpetual shareholders to benefit through Rubellite to unlock the
value of these high quality assets while at the same time providing
a full capital solution, reducing Perpetual's leverage and
improving its liquidity to surface value from Perpetual's remaining
asset base. The Transactions will put Rubellite in an enviable
position of having no debt, cash on the balance sheet and a large
inventory of prospective drill ready locations to fuel a robust
growth plan."
"The Transactions we are announcing today are a win-win-win for
all of Perpetual's stakeholders. Perpetual receives a substantial
amount of cash that it will use to restructure its balance sheet
and provide the liquidity for operating subsidiaries in the
Perpetual group to invest capital to capture value at Edson, boosting the Company's credit
worthiness and thereby improving the position of Perpetual's
creditors. Perpetual will remain exposed to value appreciation of
the Clearwater Assets through its five-year option to purchase four
million Rubellite Shares. Importantly too, Perpetual shareholders,
through direct ownership of initial capitalization Rubellite Shares
and participation in the Arrangement Warrant "rights offering",
will own approximately 45.6% of Rubellite in aggregate." added
Sue Riddell Rose.
Strategic Rationale
Over the past number of years, Perpetual has been subject to
limited liquidity and imminent debt maturities which have hampered
its ability to fund the capital required to further expand and
develop its Clearwater lands,
offset production declines in its legacy Mannville heavy oil asset and invest in the
development of its Wilrich liquids-rich natural gas reserves at
East Edson. The sale of the
Clearwater Assets deleverages Perpetual's balance sheet and allows
the Company to meet its loan obligations. The net cash proceeds
from the sale of the Clearwater Assets are intended to settle all
but $2.7 million of Perpetual's
existing second lien term loan and repay a substantial portion of
the outstanding balance on the first lien credit facility, leading
to a normalization of Perpetual's leverage ratios and a significant
improvement of its liquidity.
At the close of the Transactions, Perpetual's liquidity will be
sufficient to keep pace with its joint venture partner and fund its
share of drilling programs at Edson, continue to optimize its Mannville heavy oil assets, pursue other
diversifying new ventures and settle its debt and other obligations
as they come due. Simultaneously, Rubellite will be well positioned
to fund the development capital required to realize the full
potential of the Clearwater Assets and further expand its position
in the emerging Clearwater heavy
oil play.
The Transactions provide for Perpetual and its shareholders to
participate directly and indirectly through Rubellite in the value
creation opportunities inherent in the Clearwater Assets. This is
achieved through the initial capitalization Rubellite Shares
received by Perpetual shareholders along with the right to
participate in the Arrangement Warrant Financing, and through
Perpetual's five-year option to purchase four million Rubellite
Shares at $3.00 per share (the
"Rubellite Share Purchase Options").
In addition, Perpetual will manage Rubellite cost-effectively
through a Management Services Agreement (the "MSA"), sharing
people, office and information technology related general and
administrative costs on a relative production split basis. Unique
professional fees and expenses, such as public company and legal
costs, will be borne separately by each of Perpetual and Rubellite.
The MSA provides for optimization of Perpetual's technical,
administrative and management capacity which, in conjunction with
interest cost savings, serves to establish a more sustainable cost
structure.
Rubellite Energy Inc.
Rubellite will initially be exclusively focused on Clearwater oil exploration and development
utilizing multi-lateral horizontal drilling technology. The
Clearwater is a high rate of
return play with compelling economics at current forward market
prices for Western Canadian Select crude oil. The Clearwater Assets
comprise 104.5 net sections of acreage highly prospective for heavy
crude oil in the Clearwater
formation with over 370 identified multi-lateral drilling
locations. Currently there are seven (7.0 net) producing wells and
six (5.0 net) additional wells are expected to have been drilled
and on production prior to the anticipated close of the Financings
in mid-September 2021. The
Acquisition also includes proprietary 2D and 3D seismic and an
extensive road network of approximately 40 km. Additionally, there
are no asset retirement obligations except those associated with
the producing wells. Based on an independent reserve report
prepared by McDaniel and Associates Consultants Ltd. effective
June 1, 2021, the Clearwater Assets
have booked proved and probable heavy crude oil reserves of 3.6
MMbbls with 25 booked undeveloped drilling locations. The remaining
345 identified drilling locations are unbooked. Rubellite will
control and operate 100% of the Clearwater Assets.
Drilling activity is planned in three core development areas in
the second half of 2021 with two (1.0 net) eight-leg multi-lateral
wells recently rig released on July
14 at Marten Hills, four (4.0 net) wells planned at Figure
Lake in July and August, 100% funded by the Figure Lake GORR
Financing, and eight (8.0 net) wells at Ukalta following the close
of the Financings. Preliminary plans include a 20 net well drilling
program in 2022 and 24 net wells in 2023. The drilling activity is
forecast to drive rapid production growth from current production
levels of approximately 350 bbl/d of conventional heavy crude oil
to an estimated average of over 2,000 bbl/d in 2022. In the context
of current strip pricing, Rubellite's organic growth business plan
is expected to be fully funded, drive material adjusted funds flow
growth over the next two years and has the potential to generate
significant free funds flow by 2022.
Rubellite also plans to continue exploration activities to
pursue additional prospective land and de-risk existing acreage,
including the delineation of exploratory lands that have been
secured in the West Dawson and Cadotte areas.
Rubellite will not have any staff and will be managed by
Perpetual through the MSA and as such, will not have the start-up
costs of a new multi-disciplinary operating company. Upon
completion of the Plan of Arrangement, Rubellite will have a Board
of Directors comprised of a majority of independent directors, each
of whom will be unique from Perpetual's board, establishing a
strong governance model and clear shareholder and management
alignment.
Rubellite is expected to begin operations with zero debt and
positive working capital of approximately $12 million. Rubellite has entered into a
commitment with its lead bank for the establishment of a new
$3 million revolving credit facility
(subject to usual and customary conditions precedent to closing)
with an initial term to May 31, 2022
and which may be extended for a further twelve months subject to
approval. If not extended, on or before May
31, 2022, all outstanding advances will be repayable on
May 31, 2023.
Perpetual Second Lien Term Loan Repayment and Credit
Facility
Perpetual has reached an agreement with Alberta Investment
Management Corporation ("AIMCo") for the settlement, upon closing
of the Financings, of its $45 million
second lien term loan principal plus outstanding interest for the
payment of approximately $38.5
million in cash, a new second lien term loan of $2.7 million (the "New Second Lien Term Loan"),
delivery by Perpetual of 680,485 shares of Rubellite valued at
$2.00 per share and up to
$4.5 million in contingent payments
in the event that Perpetual's annual average realized crude oil and
natural gas prices exceed certain thresholds over the three year
period ended December 31, 2023 (the
"Second Lien Loan Settlement"). The New Second Lien Term Loan will
bear interest at 8.1% annually, which Perpetual may elect to
pay-in-kind, and will mature on December 31,
2024. Perpetual will have the ability to prepay any or all
of the New Second Lien Term Loan at any time without penalty.
Closing of the Second Lien Loan Settlement is contingent on the
Transactions closing on or before November
30, 2021.
As part of the Second Lien Loan Settlement, AIMCo has committed
to fully exercise the Arrangement Warrants it will receive under
the Plan of Arrangement associated with its approximately 4.1%
equity ownership of Perpetual. In addition, AIMCo has agreed to
subscribe for $4.45 million of the
Non-Brokered Placement and upon completion of the Transactions is
expected to own approximately 9.5% of the Rubellite Shares.
Perpetual has entered into an agreement with its syndicate of
lenders to extend its revolving bank debt facility ("First Lien
Credit Facility") upon closing of the Financings. The First Lien
Credit Facility will have a borrowing limit of $17 million, reduced from the current borrowing
limit of $20 million, upon completion
of the Financings, with an initial term to November 30, 2022 unless the revolving period is
extended for a further six months subject to approval by the
syndicate. If not extended on or before November 30, 2022, all outstanding advances will
be repayable on May 31, 2023. The
next Borrowing Limit redetermination is scheduled on or before
November 30, 2021. If the
Transactions do not close, the First Lien Credit Facility will
cease to revolve and will mature on November
15, 2021.
Perpetual Energy Inc.
With the sale of the Clearwater Assets to Rubellite, Perpetual
will receive cash proceeds of approximately $52 million, net of transaction costs and other
payments required under the Plan of Arrangement and non-cash
consideration of four million Rubellite Share Purchase Options.
Following the closing of the Transactions, the net cash proceeds
will be used to settle its second lien term debt under the terms of
the Second Lien Loan Settlement and reduce its first lien bank
debt. Total outstanding net debt at the close of the Transactions
is estimated to be approximately $59
million, down from $107.4
million at the end of the first quarter of 2021. As a result
of the reduction of the first and second lien loans, Perpetual will
decrease its annual cash interest costs by approximately
$4 million. The Transactions
materially strengthen Perpetual's overall financial position,
stabilizing the balance sheet, reducing debt and improving
liquidity.
Perpetual will divest approximately 6% of its current production
and 8% of its proved plus probable reserves. However, Perpetual's
production will grow as a result of the Company's increased ability
to participate as to its 50% interest in the Edson development program in the fourth
quarter of 2021. Perpetual will be well positioned to capture the
inherent value of its assets by investing in the continued
development of the Wilrich and other secondary zones at
Edson, optimizing its Mannville heavy oil assets and advancing other
diversifying new ventures.
With improved liquidity and reduced debt, Perpetual's business
plan will continue to be focused on growing production, reserves,
cash flow and value through exploration and development and the
application of innovative technologies. The Company's strategic
priorities for the remainder of 2021 remain to:
- Optimize the value of Edson;
- Maximize adjusted funds flow and the value of Mannville;
- Stabilize the balance sheet, improve liquidity and reduce debt;
and
- Advance technology-driven diversifying new ventures.
Transaction Details
Plan of Arrangement
Under the terms of the Plan of Arrangement, Perpetual
shareholders will receive one Rubellite Share for every 46 common
shares of Perpetual held, and for every Rubellite Share received,
Perpetual shareholders, under the Plan of Arrangement, will receive
12 Arrangement Warrants. Each Arrangement Warrant will entitle the
holder to subscribe for one Rubellite Share at a price of
$2.00 per share.
Perpetual estimates that there will be approximately 1,346,094
Rubellite Shares issued to Perpetual shareholders. In addition,
Perpetual will receive 680,485 Rubellite Shares as part of the
initial capitalization of Rubellite, which will be delivered to
AIMCo as part of the Second Lien Loan Settlement. Only the
1,346,094 Rubellite Shares issued to Perpetual shareholders will
receive Arrangement Warrants. At the close of the Plan of
Arrangement, there will be an estimated: (i) 2,026,579 Rubellite
Shares outstanding; (ii) 16,153,132 Arrangement Warrants
outstanding; (iii) 15,000,000 Subscription Receipts outstanding;
(iv) a minimum of 5,225,000 to a maximum of 10,000,000 Rubellite
Shares to be issued through the Non-Brokered Placement; and (v)
Rubellite Share Purchase Options owned by Perpetual providing the
option to purchase 4,000,000 Rubellite Shares exercisable at
$3.00 per share for a period of five
years. On a pro forma basis after giving effect to the
Transactions, Rubellite will have approximately 38.4 to 43.4
million shares outstanding and 4.0 million Rubellite Share Purchase
Options owned by Perpetual.
In addition, in connection with the Plan of Arrangement,
Perpetual will consolidate its shares at a number between 500 and
1,000 to 1 ("the Ratio") and subsequently will split its shares at
the same Ratio. The Ratio will be determined and press released
prior to the meeting of Shareholders currently expected to be in
late August. Shareholders of Perpetual who own a number of shares
less than the Ratio will have their shares acquired by Perpetual
for cash, based on the volume weighted average trading price of the
Perpetual common shares on the Toronto Stock Exchange ("TSX") for
the 20-day period prior to the effective date of the Plan of
Arrangement. Perpetual has a large number of shareholders owning
less than the Ratio and this odd lot consolidation provides those
shareholders with the opportunity for liquidity they would
otherwise not have on a cost-efficient basis.
Arrangement Warrant Financing
Rubellite will apply to have the Rubellite Shares and the
Arrangement Warrants listed on the TSX. Listing such securities on
the TSX is subject to the approval of the TSX and Rubellite
satisfying the TSX's listing conditions. The Arrangement
Warrants are expected to trade for approximately two to three weeks
prior to expiry assuming TSX listing approval is obtained from the
TSX. Holders of the Arrangement Warrants may sell or exercise their
Arrangement Warrants, or let them expire. Holders of the
Arrangement Warrants may also oversubscribe for additional
Arrangement Warrants that remain unexercised, subject to pro
ration.
Perpetual and Rubellite have entered into a Standby Purchase
Agreement with a corporation controlled by Sue Riddell Rose, Perpetual's President and
Chief Executive Officer, that ensures that all Arrangement Warrants
issued under the Plan of Arrangement are fully exercised (the
"Backstop") to the extent they are not otherwise exercised by other
Perpetual shareholders. Upon closing, the Arrangement Warrant
Financing will raise approximately $32.3
million cash in consideration for the issuance of 16,153,132
Rubellite Shares.
Subscription Receipt Financing
Pursuant to the terms of an agency agreement entered into by
Peters & Co. Limited and Rubellite, the Sub-Receipt Financing
for gross proceeds of $30.0 million
at a price of $2.00 per Subscription
Receipt has been completed. The funds are being held by a
third-party trustee, as escrow agent, until the earlier of the
satisfaction of the Escrow Release Conditions or the Termination
Date. On the satisfaction of the Escrow Release Conditions which
include, among other things, the completion of the Acquisition, the
Plan of Arrangement and the concurrent completion of the
Arrangement Warrant Financing and the Non-Brokered Placement, each
Subscription Receipt issued under the Sub-Receipt Financing will
automatically be exchanged on a one-to-one basis for common shares
of Rubellite concurrently with the other Financings.
If the Escrow Release Conditions are not satisfied on or before
November 30, 2021 (the "Outside Time"
under the Plan of Arrangement), or if either of the definitive
agreements governing the Plan of Arrangement or the Acquisition are
terminated at any earlier time pursuant to the terms and conditions
thereof (in either case, the "Termination Date"), holders of
Subscription Receipts will have the full purchase price of the
Subscription Receipts, plus any accrued interest thereon, returned
to them.
Non-Brokered Private Placement
In addition, Rubellite will complete the Non-Brokered Placement
for a minimum of $10.5 million, which
may be expanded up to $20 million, at
$2.00 per Rubellite Share. AIMCo has
committed to purchase $4.45
million and pursuant to the Standby Purchase Agreement,
Sue Riddell Rose has committed to
directly or indirectly purchase a minimum of $6.0 million of the Non-Brokered Placement, which
will close concurrently with the Arrangement Warrant Financing and
the release of proceeds from the Sub-Receipt Financing by the
escrow agent.
In aggregate, the Financings will raise a minimum of
approximately $72.8 million in
equity, all priced at $2.00 per
share. Upon closing of the Plan of Arrangement and the minimum
Financings, Rubellite will have approximately 38.4 million shares
outstanding. AIMCo will own approximately 9.5% of the Rubellite
Shares and Sue Riddell Rose will
directly or indirectly own between 27% and 49% of the Rubellite
Shares, depending on the degree to which the Backstop is required.
Perpetual will own 4,000,000 Rubellite Share Purchase Options.
An Information Circular outlining the transaction details is
expected to be mailed to shareholders of Perpetual in advance of a
special meeting of Perpetual shareholders to consider the Plan of
Arrangement. Completion of the Plan of Arrangement is subject to
the requisite approval of the Perpetual shareholders voting at a
special meeting scheduled to be held during the last week of
August. The Financings are expected to close in mid-September,
being two to three weeks after shareholder approval and final Court
approval of the Plan of Arrangement. Completion of the proposed
Transactions are conditional on, among other things, shareholder
approval, closing of the Financings and customary regulatory and
Court approvals.
Perpetual Board of Director Recommendation
The Board of Directors of Perpetual, with the unanimous
recommendation of Perpetual's Special Committee of independent
Board members, has unanimously approved the Transactions. Based in
part on the financial advice provided by ATB Capital Markets Inc.,
the Special Committee of Perpetual's Board of Directors determined
that the Transactions are in the best interest of Perpetual and all
its stakeholders and is fair from a financial point of view to
Perpetual shareholders. The Perpetual Board of Directors has also
unanimously resolved to recommend that Perpetual shareholders vote
their common shares in favour of the Plan of Arrangement. All the
directors and officers of Perpetual, and certain entities
controlled by Sue Riddell Rose,
holding approximately 44.7% of the outstanding common shares of
Perpetual, have indicated their intention to vote their Perpetual
common shares in favor of the Plan of Arrangement. In addition, as
part of the Second Lien Loan Settlement, AIMCo, holding
approximately 4.1% of the outstanding common shares of Perpetual,
has committed to vote its Perpetual common shares in favour of the
Plan of Arrangement and fully exercise the Arrangement Warrants it
receives under the Plan of Arrangement.
Advisors
ATB Capital Markets Inc. is acting as exclusive financial
advisor to the Special Committee of the Board of Directors of
Perpetual. Peters & Co. Limited. is the exclusive agent for the
Subscription Receipt Financing. Burnet Duckworth & Palmer LLP
is acting as Perpetual's legal advisors and Felesky Flynn LLP is
acting as tax counsel for the Transactions.
Webcast
Perpetual will be hosting a Webcast to discuss the transactions
on Monday, July 19, 2021 at
9:00 a.m. Mountain Time.
Webcast
Link: https://78449.themediaframe.com/dataconf/productusers/ppe/mediaframe/46036/indexl.html
Participant Dial-In: 877-407-9221 / 201-689-8597 (dial
in only necessary if not attending via the webcast link)
Related presentation materials will be available on Perpetual's
website at www.perpetualenergyinc.com. A replay will be made
available on the Company's website following the webcast.
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 conventional natural gas
assets in the deep basin of West Central Alberta, heavy crude oil
and shallow conventional natural gas in Eastern Alberta, including undeveloped bitumen
leases in Northern Alberta and
prospective undeveloped acreage in the emerging Clearwater play fairway through Rubellite
Energy Inc. 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 in this news release may constitute
forward-looking information or statements (together
"forward-looking information") under applicable securities laws.
The forward-looking information includes, without limitation,
statements with respect to: the anticipated benefits of the
Transactions to Perpetual's shareholders, including the expected
ability of the Company to fund its future drilling and development
programs and an expected resumption of growth in shareholder value;
the planned acquisition by Rubellite of the Clearwater Assets and
the consideration and timing related thereto; the characteristics
and plans in respect of the Clearwater Assets; the expected terms
and conditions and timing with respect to Rubellite's Revolving
Credit Facility; the anticipated terms of the extension of
Perpetual's revolving bank debt facility and the timing thereof;
anticipated terms and steps of the Plan of Arrangement including
the consideration to be received by Perpetual shareholders and the
timing thereof, the anticipated Ratio and the number of Rubellite
Shares and Arrangement Warrants expected to be issued in connection
with the Plan of Arrangement; the anticipated terms of the
Arrangement Warrants and the expected proceeds with respect to the
exercise of such Arrangement Warrants; Rubellite's intention to
complete the Non-Brokered Private Placement and the anticipated
proceeds and timing thereof; the expected source of funding for
Rubellite's operational costs related to drilling commitments in
connection with the Figure Lake GORR Financing; the anticipated net
cash proceeds from the sale of the Clearwater Assets and the
Company's intended use thereof; the anticipated financial position
of the Company at the close of the Transactions; expectations
respecting Rubellite's future exploration, development and drilling
activities; expectations with respect to the Company's management
of Rubellite under the MSA; expected composition of the Rubellite
Board of Directors; the expected initial working capital of
Rubellite; the expected exercise by AIMCo of its Arrangement
Warrants and AIMCO's anticipated subscription for $4.45 million under the Non-Brokered Private
Placement (subject to its beneficial ownership restrictions); the
anticipated focus of Perpetual's business plan following the
completion of the Transactions; the expected listing of the
Rubellite Shares and Arrangement Warrants on the TSX, the
submission of the related TSX listing application, and the timing,
terms and conditions thereof; the expected timing of the issue of
the Rubellite Shares underlying the Subscription Receipts pursuant
to the Sub-Receipt Financing; expectations with respect to the
mailing of an Information Circular to Perpetual's shareholders in
connection with the Plan of Arrangement; expected timing of the
special meeting of Perpetual Shareholders to be held to consider
the Plan of Arrangement; and other similar statements.
Statements relating to "reserves" and "resources" are also
deemed to be forward-looking information, as they involve the
implied assessment, based on certain estimates and assumptions,
that the reserves or resources described exist in the quantities
predicted or estimated and that the reserves or resources can be
profitably produced in the future. Actual reserves may be
greater than or less than the estimates provided herein. The
estimated future net revenue from the production of the disclosed
oil, natural gas liquids and natural gas reserves does not
represent the fair market value of these reserves.
Forward-looking information is based on current expectations,
estimates and projections that involve a number of known and
unknown 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
news release. In particular and without limitation of the
foregoing, material factors or assumptions on which the
forward-looking information in this news release is based include:
the successful completion of each of the Transactions, including
obtaining necessary shareholder, Court and regulatory approvals, as
applicable, and satisfying all other conditions to completion
within expected timelines; completion of the Plan of Arrangement on
the expected terms; anticipated benefits to Perpetual's
shareholders; the ability of Perpetual to continue as a going
concern in the event the Transactions are not completed; the
ability of Rubellite to successfully operate the Clearwater Assets;
forecast commodity prices and other pricing assumptions; forecast
production volumes based on business and market conditions; foreign
exchange rates; near-term pricing and continued volatility of the
market; Rubellite's and Perpetual's capacity and continued
operations; estimates of quantities of crude oil from properties
and other sources not currently classified as proved; accounting
estimates and judgments; future use and development of technology
and associated expected future results; the ability to obtain
regulatory approvals; the successful and timely implementation of
capital projects; ability to general sufficient cash flow to meet
current and future obligations; estimated abandonment and
reclamation costs, including associated levies and regulations
applicable thereto; Rubellite's ability to operate under the
management of Perpetual pursuant to the MSA; the ability of
Rubellite and Perpetual to obtain and retain qualified staff and
equipment in a timely and cost-efficient manner, as applicable; the
successful listing of the Rubellite Shares and Arrangement Warrants
on the TSX; the retention of key properties; forecast inflation and
other assumptions inherent in Perpetual's current guidance and
estimates; the continuance of existing tax, royalty, and regulatory
regimes; the accuracy of the estimates of reserves volumes; ability
to access and implement technology necessary to efficiently and
effectively operate assets; and the ongoing and future impact of
the coronavirus on commodity prices and the global economy, among
others.
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, 2020 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.
Reserves Data
There are numerous uncertainties inherent in estimating
quantities of crude oil, natural gas and natural gas liquids
reserves and the future cash flows attributed to such reserves. The
reserve information set forth above are estimates only. In general,
estimates of economically recoverable crude oil, natural gas and
natural gas liquids reserves and the future net cash flows
therefrom are based upon a number of variable factors and
assumptions, such as historical production from the properties,
production rates, ultimate reserve recovery, timing and amount of
capital expenditures, marketability of oil and natural gas, royalty
rates, the assumed effects of regulation by governmental agencies
and future operating costs, all of which may vary materially. For
those reasons, estimates of the economically recoverable crude oil,
natural gas liquids and natural gas reserves attributable to any
particular group of properties, classification of such reserves
based on risk of recovery and estimates of future net revenues
associated with reserves prepared by different engineers, or by the
same engineers at different times, may vary. The Company's actual
production, revenues, taxes and development and operating
expenditures with respect to its reserves will vary from estimates
thereof and such variations could be material.
Certain Abbreviations
The following abbreviations used in this news release have
the meanings set forth below:
bbls barrels
bbl/d barrels per day
MMbbls million barrels
Oil and Gas Metrics
This news release contains certain oil and gas metrics which
do not have standardized meanings or standard methods of
calculation and therefore such measures may not be comparable to
similar measures used by other companies and should not be used to
make comparisons. Such metrics have been included in this document
to provide readers with additional measures to evaluate the
Company's performance; however, such measures are not reliable
indicators of the Company's future performance and future
performance may not compare to the Company's performance in
previous periods and therefore such metrics should not be unduly
relied upon.
Estimates of Drilling Locations
Unbooked drilling locations are the internal estimates of
Perpetual based on the Clearwater Assets prospective acreage and an
assumption as to the number of wells that can be drilled per
section based on industry practice and internal review. Unbooked
locations do not have attributed reserves or resources (including
contingent and prospective). Unbooked locations have been
identified by Perpetual's management as an estimation of
Rubellite's multi-year drilling activities based on evaluation of
applicable geologic, seismic, engineering, production and reserves
information. There is no certainty that Rubellite will drill all
unbooked drilling locations and if drilled there is no certainty
that such locations will result in additional oil and natural gas
reserves, resources or production. The drilling locations on which
Rubellite will actually drill wells, including the number and
timing thereof is ultimately dependent upon the availability of
funding, regulatory approvals, seasonal restrictions, oil and
natural gas prices, costs, actual drilling results, additional
reservoir information that is obtained and other factors. While a
certain number of the unbooked drilling locations have been
de-risked by Perpetual by drilling existing wells in relative close
proximity to such unbooked drilling locations, the majority of
other unbooked drilling locations are farther away from existing
wells where management of Perpetual has less information about the
characteristics of the reservoir and therefore there is more
uncertainty whether wells will be drilled in such locations and if
drilled there is more uncertainty that such wells will result in
additional oil and gas reserves, resources or production.
SOURCE Perpetual Energy Inc.