Ms. Susan Riddell Rose reports

PERPETUAL ENERGY INC. COMPLETES NOTE EXCHANGE AND MAKES PIK INTEREST PAYMENT

Perpetual Energy Inc. has completed its previously announced arrangement involving the exchange of its 8.75 per cent senior unsecured notes due Jan. 23, 2022, for new 8.75 per cent secured third-lien notes due Jan. 23, 2025, pursuant to a court-approved plan of arrangement.

The new notes have been issued under a new trust indenture that contains substantially the same terms as the old notes other than that the new notes are secured on a third-lien basis subordinate to the company's senior indebtedness and allow for semi-annual interest payments to be paid either in cash, in additional new notes (a PIK (payment-in-kind) interest payment) or a combination thereof, at the company's election. The company has elected to make a PIK interest payment on the new notes for the Jan. 23, 2021, interest payment. Holders of new notes will receive $43.75 per $1,000 principal amount of new notes in a PIK interest payment, representing all accrued and unpaid interest outstanding from July 23, 2020, up to, but excluding, Jan. 23, 2021, being the first interest payment of the new notes, which, for greater certainty, such amount includes all accrued and unpaid interest on the notes.

The note exchange arrangement is designed to strengthen the company's overall financial position and maximize value for all stakeholders, including noteholders and shareholders. In addition to providing the noteholders with security over the company's assets, it is also anticipated to provide noteholders with greater certainty that the company will continue to make regular semi-annual interest payments on the notes and will be able to repay the new notes when due. The note exchange arrangement has not resulted in any dilution to the company's shareholders as no shares were issued in connection with the note exchange arrangement and shareholders continue to own the same number of shares, nor will the security granted under the new notes negatively affect shareholders.

At a special meeting of noteholders and a special meeting of shareholders held today, the note exchange arrangement was overwhelmingly approved by 99.85 per cent of votes cast by noteholders and 99.77 per cent of votes cast by shareholders. Following the meetings, Perpetual obtained the final order of the court approving the note exchange arrangement.

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 natural gas assets in the Deep basin of west-central Alberta and heavy oil and shallow natural gas in eastern Alberta, with longer-term opportunities through undeveloped oil sands leases in Northern Alberta.

We seek Safe Harbor.