Ms. Susan Riddell Rose reports

PERPETUAL ENERGY INC. REPORTS FIRST QUARTER 2023 FINANCIAL AND OPERATING RESULTS AND CONFIRMS 2023 GUIDANCE

Perpetual Energy Inc. has released its first quarter 2023 financial and operating results, and confirmed 2023 guidance. Select financial and operational information is outlined below, and should be read in conjunction with Perpetual's unaudited condensed interim consolidated financial statements and related management's discussion and analysis (MD&A) for the three months ended March 31, 2023, which are available through the company's website and SEDAR.

This news release contains certain specified financial measures that are not recognized by GAAP and used by management to evaluate the performance of the Company and its business. Since certain specified financial measures may not have a standardized meaning, securities regulations require that specified financial measures are clearly defined, qualified and, where required, reconciled with their nearest GAAP measure.

FIRST QUARTER 2023 HIGHLIGHTS

• First quarter production averaged 6,655 boe/d, inline with expectations for 2023 annual production guidance of 6,400 to 6,600 boe/d (22% oil and NGL).
• Adjusted funds flow(1) was $8.9 million ($0.13/share) in the first quarter of 2023. On a unit-of-production basis, adjusted funds flow was $14.82/boe, a 36% decrease from the $23.06/boe in the first quarter of 2022, driven by a decrease in commodity prices, lower production volumes and higher cash costs(1). Net cash flows from operating activities were $7.4 million.
• Perpetual invested $9.1 million in exploration and development spending(1) to drill, complete, equip and tie-in a two (1.0 net) well pad at East Edson, targeting the Wilrich formation, and install related pipeline infrastructure. The one (0.5 net) Notikewin well drilled and completed in the second half of 2022 was also placed on production. In addition, $0.3 million was spent on asset retirement obligations ("ARO") to abandon wells that had reached their end of life and execute surface lease reclamation activities.
• Cash costs(1) were $10.1 million or $16.81/boe in the first quarter of 2023, inline with expectations for annual cash cost guidance of $16 to $18 per boe for 2023.
• Net loss for the first quarter of 2023 was $0.2 million.
• Net debt(1) was $55.4 million at March 31, 2023, a decrease of $0.3 million from $55.7 million at December 31, 2022.
• Perpetual had available liquidity(1) at March 31, 2023 of $18.0 million, comprised of the $30.0 million borrowing limit of Perpetual's first lien credit facility, less current borrowings and letters of credit of $10.8 million and $1.2 million, respectively.

(1) Non-GAAP financial measure, non-GAAP ratio or supplementary financial measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. See "Non-GAAP and Other Financial Measures" in this news release.

2023 OUTLOOK

Perpetual's Board of Directors previously approved annual exploration and development capital spending(1) of $25 - $32 million for 2023. As planned, two (1.0 net) wells were drilled at East Edson in the first quarter. The remainder of the 2023 capital program is expected to be concentrated in the third quarter of 2023 and focused primarily at East Edson. The 2023 capital program is forecast to be fully funded from the Company's credit facility and adjusted funds flow(1).

During the second half of 2023, Perpetual is planning to participate at its 50% working interest in an East Edson drilling program to drill, complete, equip and tie-in an additional four to six (2.0 to 3.0 net) horizontal wells to fill the West Wolf gas plant in order to optimize production and operating costs, meet transportation commitments and maximize natural gas and NGL sales through next winter.

At Mannville in Eastern Alberta, Perpetual continues to monitor performance of the horizontal, multi-lateral wells drilled in 2022 targeting heavy oil in the Sparky formation, and is operationally prepared to drill up to one follow-up multi-lateral well in the second half of 2023. Perpetual will also continue to focus on waterflood optimization and battery consolidation projects as well as abandonment and reclamation activities at the Mannville property.

Exploration and development capital spending for Perpetual for full year 2023 continues to be forecast at $25 to $32 million. The table below summarizes anticipated capital spending and drilling activities for Perpetual for the full year of 2023.

Total Company average production is expected to be stable year over year at 6,400 to 6,600 boe/d (22% oil and NGL) in 2023. Cash costs(1) are expected to be similar to 2022 levels with an average between $16 and $18 per boe for the calendar year.

2023 guidance assumptions, which are unchanged are as follows:

Perpetual will continue addressing end of life ARO, with total abandonment and reclamation expenditures of approximately $1.5 to $2.0 million planned for 2023. This exceeds the Company's annual area-based closure mandatory spending requirement of $1.4 million as calculated by the Alberta Energy Regulator ("AER") .

(1) Non-GAAP measure or ratio.

About Perpetual

Perpetual is an oil and natural gas exploration, production and marketing company headquartered in Calgary, Alberta. Perpetual owns a diversified asset portfolio, including liquids-rich conventional natural gas assets in the deep basin of West Central Alberta, heavy crude oil and shallow conventional natural gas in Eastern Alberta and undeveloped bitumen leases in Northern Alberta.

We seek Safe Harbor.