CALGARY, May 11, 2016 /CNW/ - (TSX:PMT) - Perpetual
Energy Inc. ("Perpetual", the "Corporation" or the "Company") is pleased to announce the signing of a definitive agreement to sell
its 30 percent partnership interest in Warwick Gas Storage LP ("WGS LP") for $20 million. The
transaction includes the disposition of Perpetual's share of WGS LP's approximately $8.3 million of
debt net of working capital held by the partnership. In addition, Perpetual will receive a net dividend of $0.5 million at closing, for effective total value of approximately $23
million. The transaction includes the gas storage reservoir and facility as well as 9,207 net acres of surrounding
lands and associated wells and infrastructure with current net production of 470 Mcf/d (the "Buffer Land Assets", collectively with
WGS LP, the 'Disposed Assets'). Closing is expected to occur on or around May 25, 2016 and is subject
to customary closing conditions.
Based on the Company's third party engineering report prepared by McDaniel and Associates Consultants Ltd. ("McDaniel"), as at
December 31, 2015, the Buffer Land Assets include 316 Mboe of recognized proved and probable natural
gas reserves valued at $37 thousand.
Estimated 2016 funds flow from the Disposed Assets is forecast to be $2.9 million, virtually all
of which is attributable to funds flow from the gas storage business in WGS LP and previously expected to reduce Perpetual's share
of debt within the partnership. As such Perpetual does not anticipate 2016 funds flow to be impacted by the disposition.
The transaction strengthens Perpetual's present financial situation, augmenting the Company's ability to manage near term
liquidity and downside risks associated with the current uncertain and volatile commodity price environment.
As the WGS LP disposition provides improved liquidity, Perpetual is further extending the acceptance date for its previously
announced proposal to swap its senior notes (the "Securities Swap Proposal") to 5:00 p.m.
(Toronto time) on May 25, 2016, or such later time and date on which
the Securities Swap Proposal may be further extended by Perpetual.
Certain information regarding Perpetual in this news release including management's assessment of future plans and operations
may constitute forward-looking statements under applicable securities laws. The forward-looking information includes, without
limitation, statements regarding the expected timing for the closing of the sale of its interest in WGS LP and the Buffer Land
Assets, the ability of the Company to manage near term liquidity. Various assumptions were used in drawing the conclusions or
making the forecasts and projections contained in the forward-looking information contained in this press release, which
assumptions are based on management analysis of historical trends, experience, current conditions, and expected future developments
pertaining to Perpetual and the industry in which it operates as well as certain assumptions regarding the matters outlined above.
Forward-looking information is based on current expectations, estimates and projections that involve a number of 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 press release. 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 under "Risk Factors" in Perpetual's Annual Information Form and MD&A for the year ended December 31, 2015 and those included 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
laws.
About Perpetual
Perpetual Energy Inc. is a Canadian energy company with a spectrum of resource-style opportunities spanning heavy oil, natural
gas liquids and bitumen along with a large base of shallow gas assets. The Common Shares are listed on the Toronto Stock Exchange
under the symbol "PMT". Further information with respect to Perpetual can be found at its website at www.perpetualenergyinc.com.
The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.
SOURCE Perpetual Energy Inc.
