FirstEnergy Global Energy Conference September 15, 2014
Perpetual Energy Inc. DIVERSIFIED RESOURCE STYLE GROWTH ORIENTED Conventional ENTREPRENEURIAL Shallow Gas EXPLORER, PRODUCER & MARKETER Distributing Trust BUILT TO GROW BUILT TO PROSPER BUILT TO LAST 3
70% 62% OF RESERVE VALUE 59% OF REVENUE 52% OF RESERVES OF PRODUCTION
Perpetual Energy TSX:PMT Common shares outstanding 149.9 million Management ownership 25.4% Share price(1) 2.02 Trading volume(2) 288,000 shares/day Market capitalization 303 million Total Net debt(3) (4) 310 million Net bank debt(3)…
Operating profile Conventional Shallow Gas Mannville Heavy Oil Eastern Alberta Bitumen Warwick Gas Storage Viking/Colorado Shallow Shale Gas Edson Wilrich Deep Basin Multi-Zone Liquids-Rich Gas Tight Oil and Gas Exploration…
Diversified portfolio Built to prosper SHALLOW GAS LIQUIDS-RICH HEAVY OIL BITUMEN OTHER GAS Eastern Edson Wilrich Mannville Panny Warwick Gas Alberta Greater Edson Mannville Bluesky Storage Conventional Multi-zone EOR Liege GOB…
Portfolio management strategy CASH FLOW GENERATORS Maximize cash flow Conventional shallow gas Warwick gas storage 26% of 2P reserves 21% of 2P NPV 53% of H1 2014 production PROVEN MEDIUM AND DIVERSIFYING LONG TERM GROWTH…
2014 Top five strategic priorities 1. Grow Edson Liquids-Rich Gas Production, Reserves, Cash Flow, Inventory and Value 2. Maximize Value of Mannville Heavy Oil 3. Maximize Cash Flow from Shallow Gas 4. Reduce Debt and Manage…
1. Key Priority Grow Edson liquids-rich gas production, reserves, cash flow, inventory and value 10
Edson Wilrich liquidsrich gas To Rosevear Plant (15% WI) Sales Pipeline to Alliance Constructed 2013 Pipeline To Edson Deep Cut Plant 10-3 Gas Plant 1-34 Gas Plant (2015 Construction) 16-10 Compressor Capacity 60 MMcf/d…
Edson Wilrich type curves East Edson and West Edson Production 20,000 18,000 East Edson SW Wells (2 Wells) 16,000 East Edson NE Wells (12 Wells) West Edson Wells (10 Wells) 14,000 McD East Edson SW Type Curve Daily Gas…
Wilrich value potential West Edson West Edson Production Projected Economics per 25,000 Drilling Location 00/01-29-051-18W5/0 (14-29) Capital (D,C & T) 6.4 MM gross 00/08-17-051-18W5/2 (04-20) 00/15-34-051-18W5/0 (01-34) NPV 10 %…
East Edson JV type curve economics Projected Economics per South West Projected Economics per North East Drilling Location Drilling Location Capital (D,C & T) 5.1 MM Capital (D,C & T) 5.0 MM NPV 10 % 5.3 MM NPV 10 % 3.4 MM ROR 50 % BT…
East Edson JV transaction details Granted two royalties that work in combination to create a fixed, first-out wedge production GORR Flat 5.6 MMcf/d plus associated liquids of 150 bbl/d until 2022 Declining at 10% per year from…
East Edson JV transaction rationale Facilitates significant production and cash flow growth East Edson property becomes self-funding with kick start of capital to grow production Capital infusion allows for technically recognized…
Greater Edson liquids-rich gas play performance 12,000 14,000 40% net production growth in 2014 12,000 Driven by West Edson capacity expansion 10,000 Flat production forecast at Edson Production growth from JV drilling offset…
2. Key Priority Maximize value of Mannville heavy oil 18
Eastern Alberta Conventional heavy oil Discovered 14 Mannville pools 8 Lloyd, 5 Sparky, 1 Basal Quartz 200 MMbbl Original Oil in Place 10 MMbbl 5% recovery factor Current Production 2.750bbl/d Low cost HZ development 1.1 MM single…
Mannville heavy oil value potential Projected Economics Per Well Assumptions Lloyd Sparky (McDaniel Year End 2013) Capital (D,C & T) 1.2 MM 1.2 MM 68.90/bbl Wellhead heavy price 2014 Pricing WTI US95/bbl, WCS US23.5/bbl, offset…
Waterflood and enhanced oil recovery Mannville I2I Working Interest 66.7% Waterflood Pilot Pool OOIP: 53 MMbbl Cum Prodn + McDaniel P+P: 1.7 MMbbl (3.1% recovery) Sparky Mid Type Log 17 Horizontals to date (100 m spacing)…
Waterflood and enhanced oil recovery scope Select Pools OOIP Cumulative P+P Implied Expected Potential with production Reserves Recovery Primary Secondary to YE 2013 booked at Factor Recovery Recovery and EOR YE 2013 (5-8% (10-15%)…
Mannville heavy oil play performance 60 180 50 Cumulative Capital 130 Capital (MM) 40 Transitioning from (MM) 30 80 20 growth to 30 10 sustaining 0 2009 2010 2011 2012 2013 2014E -20 production in 2014…
3. Key Priority Maximize cash flow from shallow gas 24
Conventional shallow gas East Central and Northeast Alberta Cretaceous and Devonian sweet shallow gas Current production: 60 - 65 MMcf/d Belly River Base declines < 15% Multiple stacked zones and play types Viking Extensive…
4. Key priority Reduce debt and manage downside risk 26
Debt reduction 100 Million Target Set in November 2013 Closed 2014 West Central AB undeveloped land 3 million Gas over Bitumen Monetization 20.5 million East Edson JV Net Proceeds 120 million Producing Royalty sale 50 million D…
Balance sheet Net Bank Debt: (25) million Borrowing base on credit facility - 100 million post new Senior Notes issuance Next semi-annual redetermination - October 2014 30 million of restricted cash in escrow (partial proceeds of East…
2014 Capital spending Total Capital: 172 million 65 to 70 million of capital spending will be funded by JV Partner escrow account and not reported by Perpetual H1 2014 H2 2014 Total Wells Capital Wells Capital Wells Capital West…
2014 funds flow 2014 Capital spending of 172 million 107 million reported net to Perpetual Production of 20,100 boe/d (19,500 boe/d net of East Edson JV Royalty) 2014 Funds Flow AECO (/GJ) 3.50 4.00 4.50 5.00 5.50 85 76 80 83…
2015 funds flow 2015 Capital spending of 120 million Production of 24,500 boe/d (23,400 boe/d net of East Edson JV Royalty) 2015 Funds Flow AECO (/GJ) 3.50 4.00 4.50 5.00 5.50 85 87 108 129 151 172 WTI (US/BBL) 90 93 114…
5. Key Priority Advance and broaden portfolio of high impact opportunities with risk-managed investment Viking/Colorado Shallow Shale Gas Bitumen Exploration 33
Viking/Colorado shallow shale gas Viking Belly River Play Fairway Booked reserves Cardium/ Colorado Wells Perpetual Lands 12 Bcf PNP booked in recompletions Viking Proved Undeveloped Historical 2P reserves of 100+ Bcf removed…
Colorado technical advancement Colorado group free gas in place Total Resource in Place 130 Tcf OGIP estimated to average 16 Bcf/section Proven recovery from Cardium equivalent Potential in up to 6 zones within 300m shale 2012 -…
Bitumen 527net sections (329,000 net acres) of oil sand leases Variousformation targets and ultimate recovery methods 7potential project areas with varying potential Over 3 billion bbls OBIP independently recognized at Liege…
Bitumen Panny Bluesky Low rate cold flow without 8 m Bitumen 10 m Bitumen solvent or thermal assistance Average pay thickness 11 m Low viscosity bitumen 15,000 cp 25oC 50,000 cp at 11oC reservoir temp Highly mobile at 70oC…
LEAD process technology pilot Low pressure electro-thermally assisted drive First stage of pilot planned for 2015 5 million expected capital net of 30% IETP funding Evaluating heater technology and validating reservoir model Second…
Bitumen Liege carbonates AOC Shell Excellent reservoir quality vuggy porosity in Grosmont 3 Grosmont carbonate / Leduc OV wells drilled Combined with legacy gas wells to evaluate and map resource Stacking of 3 Grosmont…
Investment Thesis
Strong annual growth forecast 2014 Key diversifying plays production growth of 22% Growth focused at West Edson Funds flow and funds flow per share growth of 50% Disposition program targeting 100 million in debt reduction Monetized…
Sum of the parts NAV Per Share (1) WGS LP valued at prorata 2013 buyback acquisition 28 million (2) McDaniel April 2014 Assumptions Trading at
Future growth and value creation 2016 - 2020 Edson expansion for additional inventory development West and/or East Edson additional downspacing LIQUIDS-RICH Development of secondary targets including Belly River, Cardium, Second…
Future production growth potential Illustrative Production Inventory captured and risk assessment on track for future production growth 45 Growth trajectory depends on commodity prices, capital and play performance
Key investment highlights Asset base repositioning for resource-style & diversification successful Mannville heavy oil delivering strong cash flow with material secondary recovery growth potential Edson Wilrich liquids-rich gas…
FOR ADDITIONAL INFORMATION Additional Susan L. Riddell Rose Information President & CEO Cameron R. Sebastian Vice President, Finance & CFO 3200, 605 5 Avenue SW Calgary, Alberta Canada T2P 3H5 800.811.5522 TOLL FREE 403.269.4400 PHONE…
Appendix
Diversification Warwick Gas Storage 40 Bcf Storage Reservoir Delta Pressure to 47 Bcf 10 Bcf base reserves cushion gas Commercial Park and Loan in place Up to 25 Bcf potential working business gas capacity 30 to 50 year life…
Commodity price risk management strategy Enhance or protect funds flow and balance sheet Enhance or protect the economics of an acquisition Enhance or protect capital program economics Capitalize on perceived market anomalies 200…
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