Ms. Susan Rose reports

PERPETUAL ENERGY INC. ANNOUNCES ASSET DISPOSITION AND UPDATED 2023 GUIDANCE

Perpetual Energy Inc. has entered into a definitive agreement with Canadian private operator Pointbreak Resources Inc. to sell certain assets at Mannville in Eastern Alberta for gross proceeds of $35.8-million in cash, prior to customary purchase price adjustments. The Mannville transaction is expected to close on or about Nov. 22, 2023, with a Sept. 1, 2023, effective date. The properties included in the Mannville transaction comprise substantially all of the production attributed to the company's Eastern Alberta cash-generating unit which averaged 1,449 boe/d (barrels of oil equivalent per day) (65 per cent conventional heavy oil) of sales production during the second quarter of 2023.

Perpetual is also pleased to announce it has completed the semi-annual borrowing base redetermination for its bank credit facility. The borrowing limit on Perpetual's credit facility has been reconfirmed at $30-million by the company's bank lending syndicate, with the next borrowing limit redetermination scheduled on or prior to May 31, 2024.

Proceeds from the Mannville transaction will be used to reduce bank debt and manage future maturities on the company's term loan and senior notes and other obligations as they come due, as well as provide Perpetual with the liquidity to invest in its remaining assets at East Edson and pursue other new venture opportunities.

2023 updated outlook

Perpetual's board of directors previously approved annual exploration and development capital spending (1) of $25-million to $32-million for 2023, prior to acquisitions and dispositions, if any, of which $2-million to $4-million was allocated for potential spending in Eastern Alberta in the second half of 2023. As a result of the Mannville transaction, the $2-million to $4-million of spending allocated for Eastern Alberta will not occur, resulting in annual exploration and development capital spending (1) of $23-million to $28-million focused primarily at East Edson, unchanged from previous guidance.

During the second half of 2023, Perpetual planned to participate at its 50-per-cent working interest in an East Edson drilling program to drill, complete, equip and tie-in an additional four to six (2.0 to 2.8 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 (natural gas liquids) sales through next winter.

The attached table summarizes anticipated exploration and development capital spending and drilling activities for Perpetual for the full year of 2023.

Prior to giving effect to the Mannville transaction, the company was on track to deliver results in line with previous 2023 guidance. 2023 updated guidance assumptions, adjusted for the Mannville transaction, are as shown in the attached table.

Perpetual will continue to address end of life asset retirement obligations, with total abandonment and reclamation expenditures of approximately $1.5-million to $1.6-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).

About Perpetual Energy Inc.

Perpetual is an oil and natural gas exploration, production and marketing company headquartered in Calgary, Alta. 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.