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 148.9 million Management ownership 25.6% Share price(1) 1.67 Trading volume(2) 432,000 shares/day Market capitalization 249 million Net debt 394 million Net bank debt(3) 84 million…
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 PROVEN MEDIUM AND CASH FLOW DIVERSIFYING LONG TERM GENERATORS GROWTH STRATEGIES VALUE STRATEGIES Maximize cash flow Invest for growth Optimize and Advance Conventional shallow gas Eastern Alberta…
Commodity diversification Oil and NGL Production Revenue from Oil and NGL 120 50% 4,500 25% 45% 2014 Forecast Revenue 4,000 100 Warwick 40% Gas Storage 20% Percentage of total production (%) 3,500 Oil and NGL Production…
Asset base transformation 100% 12,000 90% Resource-style growth assets 10,000 80% 43% of production in 2013 growing to 52% in 2014 Growth Asset Production (boe/d) 70% 8,000 Production (% of total) 60% 50% Absolute…
2014 Top five strategic priorities 1. Reduce Debt and Manage Downside Risk 2. Grow Edson Liquids-Rich Gas Production, Reserves, Cash Flow, Inventory and Value 3. Maximize Value of Mannville Heavy Oil 4. Maximize Cash Flow from…
1. Key priority Reduce debt and manage downside risk 12
Balance sheet Net Bank Debt: 84 million (March 31, 2014) Borrowing base on credit facility 130 million Next semi-annual redetermination October 2014 Senior Unsecured Notes: 150 million Coupon rate - 8.75% Maturity date - March 2018…
Debt Reduction 2012: 23 Transactions Closed 2012 Total Net Proceeds: 167 million 2013: 4 Transactions Closed 2013 Net Asset Sale Proceeds: 79 million Production 16 Boe/d P+P Reserves 13.1 MMBoe Reduction in FDC 123 million…
Diversification Warwick Gas Storage 40 Bcf Storage Reservoir Commercial Park and Loan Delta Pressure to 47 Bcf business 10 Bcf base reserves cushion gas in place 30 to 50 year life Up to 25 Bcf potential working Grass Roots…
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…
Commodity price risk management sensitivities Downside risk to funds flow mitigated with significant 2014 hedges in place Average of 55% of natural gas hedged Average of 65% of oil hedged Exposed to gas price risks and rewards in…
2. Key Priority Grow Edson liquids-rich gas production, reserves, cash flow, inventory and value 18
Edson Wilrich liquids-rich gas To Rosevear Plant (15% WI) Sales Pipeline to Alliance Constructed in 2013 Pipeline To Edson Deep Cut Plant 1-34 Gas Plant 16-10 Compressor Expanding to 60 MMcf/d Capacity 30 MMcf/d Edson Type…
Wilrich value potential West Edson Projected Economics per Drilling Location Capital (D,C & T) 6.4 MM gross NPV 10 % 10.7 MM BT gross ROR 168% BT F&D 6.83/boe Capital Efficiency 8,300 boe/d (first 12 months) Payout 0.8…
Wilrich value potential Edson Projected Economics per Drilling Location Capital (D,C & T) 5.1 MM NPV 10 % 3.3 MM ROR 47% BT F&D 11.30/boe Capital Efficiency 13,850 boe/d (first twelve months) Payout 1.9 Years Recycle Ratio…
Greater Edson liquids-rich gas play performance 7,000 8,000 80 160 40% production growth 7,000 expected in 2014 6,000 70 140 Driven by West Edson capacity expansion in 2014 Cumulative Production (MBoe) Cumulative Cash…
3. Key Priority Maximize value of Mannville heavy oil 23
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 3,100 bbl/d Low cost HZ development 1.1 MM…
Upper Mannville A pool Lloyd Channel OOIP = 30.5 MMbbl Cumulative production to date 1.0 MMbbl ( 3% RF) Booked Reserves (year end 2013) 1.4 MMbbl (7% RF) 24 wells drilled to date 4 additional multi-laterals in inventory 100m…
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 Working Interest 66.7% Mannville I2I OOIP: 53 MMbbl Waterflood Pilot Pool Cum Prodn + McDaniel P+P: 1.7 MMbbl (3.1% recovery) 17 Horizontals to date (100 m spacing) Sparky Mid Type Log 3…
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%…
Mannville heavy oil play performance 60 180 50 Transitioning from Cumulative Capital 130 growth to Capital (MM) 40 (MM) 30 80 sustaining 20 30 production in 2014 10 Drilling capital reduced 0 -20 2009 2010…
4. Key Priority Maximize cash flow from shallow gas 30
Conventional shallow gas East Central and Northeast Alberta Cretaceous and Devonian sweet shallow gas Belly River Current production: 60 - 65 MMcf/d Base declines < 15% Viking Multiple stacked zones and play types Extensive…
5. Key Priority Advance and broaden portfolio of high impact opportunities with risk-managed investment Viking/Colorado Shallow Shale Gas Bitumen Exploration 32
Viking/Colorado shallow shale gas Belly River Play Fairway Viking Cardium/ Colorado Wells Booked Reserves Perpetual Lands 12 Bcf PNP booked in recompletions Viking Proved Undeveloped Historical 2P reserves of 100+ Bcf Viking…
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 290m shale group…
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 Pilot planned for 2015 Approvals pending 18.2 million expected capital and operating costs over pilot life (3 years) IETP funding (30%) 5.5 million Modelled…
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…
2014 Capital Budget
2014 Capital spending Total Capital: 80 million Plan to spend within funds flow Q1 2014 Q2-Q4 2014 Total Wells Capital Wells Capital Wells Capital West Central Deep 3 gross 7 10 19 MM 26 MM 45 MM Basin (2.0 net) (3.5 net) (5.5…
Investment Thesis
Strong annual growth forecast 2013 Oil and NGL production growth of 12% Mannville oil production growth of 41% Deep basin production growth of 21% Funds flow and funds flow per share growth of 19% 2014 Key diversifying plays…
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 44 Growth trajectory depends on commodity prices, capital and play performance
Sum of the parts NAV Per Share 1,250 8.50 Unrisked NAV 7.19/Share Undeveloped Land 1,000 6.80 Bitumen Mannville PI Risked NAV 4.91 /Share 750 5.10 Viking/Colorado PI Conventional Shallow Gas PI NPV 8% ( millions) Reserve…
PMT investment thesis Asset base repositioning for resource-style & diversification successful Mannville heavy oil delivering results with material secondary recovery growth potential Edson Wilrich liquids-rich gas inventory proven and…
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 2013 Annual Results
2013 Top 5 strategic priorities 1. Maximize value of Mannville heavy oil 2. Position for growth of Edson liquids-rich gas 3. Manage downside risk 4. Advance and broaden portfolio of high impact opportunities with risk managed…
2013 Top strategic priorities 1. Maximize Value of Mannville Heavy Oil 13 Mannville oil pools discovered by year end 2013 (7 Lloyd; 5 Sparky; 1 Basal Quartz) Drilled 37 horizontal wells (35.7 net) for 49 million Increased heavy oil…
2013 Top strategic priorities 2. Position for Growth of Edson Liquids-Rich Gas Drilled 5 (2.5 net) horizontal wells Increased gas and NGL production 12% to 4,894 boe/d (29.4 MMcfe/d) Reserve additions of 13.64 MMboe offsetting…
2013 Top strategic priorities 3. Advance and Broaden Portfolio of High Impact Opportunities with Risk-Managed Investment Elmworth Sold for 77.5 MM to Crystallize Value Drilled and completed vertical well to continue majority of South…
2013 Top strategic priorities 4. Manage Downside Risk and Reduce Debt Decrease Costs Operating costs down 5% from 2012 (2013 - 75.4 MM) Interest expense decreased 11% from 2012 (2013 - 28.9 MM) G&A down 10% from 2012 (2013 - 24.5…
2013 Top strategic priorities 5. Prepare to Maximize Value from Shallow Gas in Gas Price Recovery Operating Costs Shallow gas op costs reduced 7.4MM (12.9%) from 2012 Suspended shut-in wells and pipelines and removed unused onsite…
Full year capital spending Total Capital: 96.7 Total 2013 Wells Capital Mannville Heavy Oil 37 (35.7 net) 49 MM (1) West Central Deep Basin 6 (3.0 net) 35 MM Land, Seismic, ARO & Other 12 MM Total 96 MM 1)…
Production highlights Oil& NGL production 412 bbl/d to 3,860 bbl/d, a 12% from 2012 levels Mannville heavy oil grew 24% Change in processing at Edson reduced NGL Natural gas production 11% to 88.9 MMcf/d due to shallow gas declines…
Funds flow Change Year Ended December 31 from 2012 Oil & Gas Price 32.0 MM % ( Millions) 2013 2012 Change Oil & NGL Production 9.7 MM Revenue 210.9 206.5 2 Hedging Gains 24.3 MM GOB Royalty 8.9 6.9 29 Gas Production 10.2 MM…
Balance sheet reconciliation Year Ended December 31 ( Millions) 2013 2012 % Change Exploration & Development 96.7 79.7 21 Acquisitions, net of Dispositions (51.6) (164.5) (67) Total Capital Expenditures 45.1 (84.8) (153) Funds…
Reserve distribution PNP/PUD 2PNP/2PUD 2PDP Total Reserves = 62.4 MMbbl Mannville Heavy Oil PDP Deep Basin PDP Eastern Shallow Gas 2PNP/2PUD 2PDP PNP/PUD 2PDP PDP - Proved Developed Producing PDP 2PNP/2PUD…
Reserve value distribution PNP/PUD Total NPV 10 = 622 million 2PNP/2PUD Mannville Heavy Oil 2PDP Deep Basin PDP PDP Eastern Shallow Gas 2PDP 2PNP/2PUD PNP/PUD 2PNP/2PUD PDP PDP - Proved Developed Producing…
Gas price risk management Volumes Fixed Price Futures Price(1) % of 2014 Type of Contract Term (GJ/d) (/GJ) (/GJ) Natural Gas Production(2) AECO Fixed Price May 2014 64,839 4.04 4.49 52% Financial AECO Fixed Price June 2014…
Oil price risk management Fixed or Floor Ceiling Price Futures % of 2014 Type of Volumes Term Price (/GJ) Price(1) Oil & NGL Contract (bbl/d) (/bbl) (/bbl) (/bbl) Production(2) WTI collars May Dec 2014 1,500 US 86.67 US 95.15 US…
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