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Perpetual Energy Reports Q3 2017 Results, Production

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Perpetual Energy reported its Q3 2017 results.

Highlights:

Production and Operations

• Exploration and development spending totaled $25.4 million in the third quarter ($53.9 million year to date), a significant increase over prior year spending of $1.4 million ($7.0 million year to date). 
  
  
• Drilling and completion activity was focused in West Central Alberta at East Edson during the third quarter of 2017, and included the drilling of four (4.0 net) Wilrich horizontal wells and the completion of seven (7.0 net) wells, four of which were drilled in the first half of 2017. An additional one (0.4 net) exploration well was rig released in the third quarter in the Columbia/Brazeau area within West Central Alberta, with frac and follow on evaluation activities taking place in October. 
  
  
• Third quarter average production of 10,330 boe/d was driven by positive results from the Company's focused capital program to develop Wilrich reserves, and more than offset the average 450 boe/d of voluntary shut-ins that the Company opportunistically implemented to maximize value with minimal impact on adjusted funds flow. This price optimization strategy was set up by transportation constraints created by pipeline maintenance activities in Alberta during the quarter and has continued into the fourth quarter. 
  
  
• Production growth was focused in West Central, which comprised 80% of total production, and increased 17% (1,190 boe/d) over the second quarter. New wells are performing at or above projected type curves. West Central production was constrained by Perpetual's firm transportation capacity as well as the voluntary shut-ins implemented through temporary restriction of select wells. Third quarter exit production rates were more than 40% higher than second quarter exit rates. 
  
  
• Oil and natural gas liquid ("NGL") production averaged 1,711 bbl/d, virtually flat to the second quarter and representing 16% of total production. 
  
  
• Perpetual's average realized natural gas price in the third quarter of $3.11/Mcf decreased by 2% from second quarter prices compared to a 27% decrease in the average AECO Monthly Index for the same period. Key factors contributing to the premium to AECO include:
  
  
• Approximately 50% of third quarter production was sold under contracted physical and financial arrangements at an average price of $3.14/GJ;
  
  
• Price optimization strategies were applied to prompt month physical settlements which included a $0.10/GJ contribution to Perpetual's average realized price associated with the voluntary shut-in of production during the quarter to take advantage of temporary situations when natural gas could be purchased at nominal cost and delivered against pre-sold volume commitments at attractive margins while retaining reserves; and
  
  
• Over 80% of Perpetual's natural gas is produced from East Edson which yields higher heat content gas, (GJ to Mcf ratio of 1.17) translating into higher realized natural gas prices.