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Alberta-based Perpetual Energy Inc. is selling certain assets at Mannville in Eastern Alberta to Canadian private operator Pointbreak Resources Inc. for gross proceeds of $26.07 million (CAD 35.8) million in cash, before customary purchase price adjustments.
The properties included in the transaction comprise substantially all the production attributed to the Perpetual’s Eastern Alberta cash-generating unit, which averaged 1,449 barrels of oil equivalent per day (boepd) of sales production during the second quarter, measured at 65 percent conventional heavy oil.
The transaction is expected to close on or about November 22, with an effective date of September 1, Perpetual said in a news release Tuesday.
Perpetual said it plans to use the proceeds from the transaction to reduce bank debt and manage future maturities on the company’s term loan and senior notes and other obligations as they come due, as well as provide it with the liquidity to invest in its remaining assets at East Edson in Alberta and “pursue other new venture opportunities”.
Perpetual has also completed the semi-annual borrowing base redetermination for its bank credit facility. The borrowing limit on the facility has been reconfirmed at $21.85 million (CAD 30 million) by the company’s bank lending syndicate, with the next borrowing limit redetermination scheduled on or before May 31, 2024, the company said.
Meanwhile, Perpetual said its previously approved allocation of $1.46 million to $2.91 million (CAD 2 million to 4 million) for potential spending in Eastern Alberta will not occur due to the planned transaction. This will result in an annual exploration and development capital spending of $16.75 million to $20.39 million (CAD 23 million to 28 million) focused primarily at East Edson, unchanged from its previous guidance.
Perpetual has adjusted its 2023 guidance from an average production of 6,400 to 6,600 boepd, to an average production of 6,200 to 6,400 boepd, which is 22 percent oil and NGLs.
In the second half of the year, the company plans to participate at its 50 percent working interest in an East Edson drilling program to drill, complete, equip, and tie-in an additional four to six horizontal wells to fill the West Wolf gas plant to optimize production and operating costs, meet transportation commitments and maximize natural gas and natural gas liquid (NGL) sales through next winter, according to the release.
Perpetual reported a net loss of $3.06 million (CAD 4.2 million) in the second quarter, a decline of 194 percent compared with a net income of $3.26 million (CAD 4.47 million) in the prior-year period. Oil and gas revenues were recorded at $11.05 million (CAD 15.17 million) for the quarter, down 54 percent from the previous-year figure of $24.1 million (CAD 33.09 million).
Perpetual’s second-quarter production averaged 6,532 boepd with production increases from two (wells drilled in East Edson, offset by approximately 574 boepd of curtailed production related to the Alberta forest fires, according to an earlier earnings release.
The company said it “remains on track” track to achieve its previous 2023 production guidance due to strong well performance from the new East Edson drills.
Perpetual is an oil and natural gas exploration, production, and marketing company headquartered in Calgary, Alberta. The company 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, and undeveloped bitumen leases in Northern Alberta.
To contact the author, email rocky.teodoro@rigzone.com
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