CALGARY, AB, May 7, 2024 /CNW/ - (TSX:PMT) – Perpetual Energy Inc. ("Perpetual", or the "Company") is pleased to report its first quarter 2024 financial and operating results and 2024 outlook. 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, 2024, which are available through the Company's website at www.perpetualenergyinc.com and SEDAR+ at www.sedarplus.ca. 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. See "Non GAAP and Other Financial Measures" in this news release and in the MD&A for further information on the definition, calculation and reconciliation of these measures. This news release also contains forward-looking information. See "Forward-Looking Information". Readers are also referred to the other information under the "Advisories" section in this news release for additional information. FIRST QUARTER 2024 HIGHLIGHTS First quarter average sales production of 4,597 boe/d(1), was down 20% from the fourth quarter of 2023 (Q4 2023 – 5,749 boe/d) and down 31% from the first quarter of 2023 (Q1 2023 – 6,655 boe/d) as a result of the Mannville Disposition(2) in the fourth quarter of 2023 and natural declines at East Edson. First quarter sales production results were at the high end of the first quarter guidance of 4,300 boe/d to 4,600 boe/d. Exploration and development capital expenditures(3) in the first quarter of 2024 were nominal as there were no wells drilled at East Edson. In addition, $0.1 million was spent on land purchases at East Edson and $1.2 million was spent on asset retirement obligations ("ARO") to abandon wells that had reached their end of life and execute surface lease reclamation activities. Adjusted funds flow(3) in the first quarter of 2024 was $2.4 million ($0.03/share) a decrease from $8.9 million ($0.13/share) in the first quarter of 2023. Adjusted funds flow on a unit-of-production basis was $5.62/boe, a 62% decrease from the $14.82/boe in the first quarter of 2023, driven by lower commodity prices and lower production volumes, partially offset by lower costs in all areas. Cash costs(3) were $6.4 million or $15.32/boe in the first quarter of 2024 (Q1 2023 – $10.0 million or $16.65/boe). Net loss was $31.9 million in the first quarter of 2024 (Q1 2023 - $0.2 million net loss) driven by the $28.0 million provision expense related to the Sequoia Ligation and also included unrealized losses on commodity risk management contracts. As previously announced on March 22, 2024, after several years of litigation, Perpetual entered into an agreement to resolve the Sequoia Litigation without any party involved admitting liability, wrongdoing or violation of law, regulations, public policy or fiduciary duties (the "Settlement Agreement"). Pursuant to the Settlement Agreement, and subject to Court approval, the Company will make an aggregate payment of $30.0 million (the "Settlement Principal") spread out over several years, consisting of an initial payment of $10.0 million which was paid into escrow on March 22, 2024 and annual installments of $3.75 million until the total amount of the Settlement Principal is paid. Concurrent with entering into the Settlement Agreement, as of March 22, 2024, Perpetual repaid and cancelled its $2.7 million second lien term loan and provided notice for the early redemption of its $33.2 million 8.75% senior secured third lien notes maturing January 23, 2025. Senior Notes with a face value of $7.0 million were redeemed for payment of principal and interest of $7.2 million, while Senior Notes with a face value of $26.2 million remain outstanding, are subject to the new supplemental indenture and have a maturity date of January 23, 2025. As at March 31, 2024, net debt(3) was $19.9 million, inclusive of $3.0 million of cash on hand and the $10.0 million Settlement Agreement deposit held in escrow, a decrease of $1.7 million from $21.6 million at December 31, 2023. Perpetual had available liquidity at March 31, 2024 of $31.7 million, comprised of the $30.0 million borrowing limit of Perpetual's first lien credit facility ("Credit Facility Borrowing Limit") and cash on hand of $3.0 million less letters of credit of $1.3 million. (1) See "Financial and Operating Highlights" for breakdown by product type. (2) On November 22, 2023, the Company closed the disposition of certain assets at Mannville in Eastern Alberta ("the Mannville Disposition"), which comprised substantially all of the production attributed to the Eastern Alberta cash-generating unit ("CGU"s). (3) 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. 2024 OUTLOOK Perpetual's Board of Directors have approved annual exploration and development capital spending(1) of $7.0 to $8.0 million for 2024, excluding land purchases and acquisitions, if any. Exploration and development capital spending will be focused almost exclusively at East Edson. During the second half of 2024, Perpetual plans to participate at its 50% working interest in an East Edson drilling program to drill, complete, equip and tie-in an additional two (1.0 net) horizontal Wilrich wells, to partially offset production declines through the West Wolf gas plant in order to optimize production and operating costs and meet transportation commitments. 2024 guidance is as outlined in the table below:  2024 Guidance Exploration and development expenditures ($ millions)(1)(2) $7.0 - $8.0 # of wells (gross/net) 2 / 1.0 Cash costs ($/boe)(1) $13 - $14 Royalties (% of revenue)(1) 16 - 17% Average daily production (boe/d) 4,200 - 4,350 Production mix (%) 10% NGL (1) Non-GAAP measure or ratio. See "Non-GAAP and Other Financial Measures". (2) Excludes abandonment and reclamation spending and acquisitions or land expenditures. Perpetual continues to address end of life ARO, with total abandonment and reclamation of $1.3 to $1.5 million planned for 2024, $1.2 million of which was spent in the first quarter. The Company's area-based mandatory spending requirement for 2024 is $1.3 million, as calculated by the Alberta Energy Regulator ("AER"). (1) Non-GAAP financial measure, non-GAAP ratio or supplementary financial measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. See "Non-GAAP and Other Financial Measures" contained within this news release. (2) Excludes abandonment and reclamation spending and acquisitions or land expenditures. SUMMARY OF QUARTERLY RESULTS Three months ended March 31, (CAD$ thousands, except volume and per share amounts) 2024 2023 Change Financial Oil and natural gas revenue 8,890 17,811 (50) % Net (loss) and comprehensive (loss) (24,564) (265) 9169 % Per share – basic(2) (0.36) 0.00 100 % Per share – diluted(2) (0.36) 0.00 100 % Cash flow from (used in) operating activities (5,268) 7,436 (171) % Adjusted funds flow(1) 2,351 8,876 (74) %    Per share(1)(3) 0.03 0.13 (77) % Total assets 192,076 216,206 (11) % Revolving bank debt —