Perpetual Energy Inc. (Perpetual or the company or corporation), 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, has announced the signing of a definitive agreement to sell its 30% partnership interest in Warwick Gas Storage LP (WGS LP) for CAN$20 million. The transaction includes the disposition of Perpetual's share of WGS LP's approximately CAN$8.3 million of debt net of working capital held by the partnership. In addition, Perpetual will receive a net dividend of CAN$0.5 million at closing, for effective total value of approximately CAN$23 million.
The transaction includes the gas storage reservoir and facility as well as 9207 net acres of surrounding lands and associated wells and infrastructure with current net production of 470 million ft3/d (the Buffer Land Assets, collectively with WGS LP, the Disposed Assets). Closing is expected to occur on or around 25 May 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 31 December 2015, the Buffer Land Assets include 316 million bbls of recognised proved and probable natural gas reserves valued at CAN$37 000.
The estimated 2016 funds flow from the disposed assets is forecast to be CAN$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.
Adapted from press release by Francesca Brindle
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