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Be the first with the news that moves the market- Oil and gas company, Perpetual Energy Inc (TSX:PMT) has sold a 50 per cent interest in the East Edson property for C$35 million
- The sale as made to an undisclosed third party who is also required to fund an eight-well drill program at the property
- Due to the recent oil-price crash, Perpetual Energy will use some of the generated funds to repay its revolving credit facility
- The company is also deferring any planned capital expenditures and drill programs until after the market recovers
- Perpetual Energy Inc (PMT) is up 100 per cent, with shares trading for $0.06 and a market cap of $3.68 million
Oil and gas company, Perpetual Energy Inc (TSX:PMT) has sold a 50 per cent interest in the East Edson property in Alberta.
The company sold the interest to an undisclosed third party for C$35 million in cash. As part of the deal, Perpetual Energy is receiving funding for an eight-well drill program at the property.
The East Edson property is estimated to hold 60 million barrels of oil equivalent in reserves.
Two of the wells are due to be drilled after this year’s spring-breakup. The following six wells must be completed by April 1, 2022.
Perpetual Energy will use the new cash to repay debt and fund further investments in eastern oil regions of Alberta.
This cash injection could not have come at a better time. Historically low oil prices and ongoing uncertainty surrounding the COVID-19 pandemic has caused numerous oil companies to aggressively cut costs and adjust budgets.
Similarly, Perpetual Energy is suspending its heavy oil production until oil prices recover. The company is also deferring all further capital spending until 2020.
Furthermore, to retain capital the planned eight-well drill program is the only planned expansion at East Edson thus far.
The company is expecting oil prices to recover sometime around the middle of the year. If this happens, Perpetual Energy has forecast the average production in 2020 to be around 5,500 barrels of oil a day.
Given the poor market and reduction in production, Perpetual Energy has used the proceeds from the East Edson sale to improve its revolving credit facility. The facility is now set at $20 million, with $12 million currently available to the company.
Perpetual Energy Inc (PMT) is up 100 per cent, with shares trading for $0.06 at 2:38pm EST.
