CALGARY, AB, Aug. 1, 2024 /CNW/ - (TSX:PMT) – Perpetual Energy Inc. ("Perpetual", or the "Company") is pleased to report its second 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 and six months ended June 30, 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. SECOND QUARTER 2024 HIGHLIGHTS Second quarter average sales production of 4,039 boe/d(1), was down 12% from the first quarter of 2024 (Q1 2024 – 4,597 boe/d) and down 38% from the second quarter of 2023 (Q2 2023 – 6,532 boe/d) as a result of the Mannville Disposition(2) in the fourth quarter of 2023 and natural declines at East Edson as no new wells were placed on stream during the first half of 2024. Exploration and development capital expenditures(3) in the second quarter of 2024 were $2.7 million, of which $2.0 million was spent to drill one gross (0.5 net) well at East Edson with an additional gross well (0.5 net) drilling over quarter end. Additional spending in the quarter related to facility overhauls and lease construction to support the drilling program, $0.8 million on crown land purchases and $0.1 million 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 second quarter of 2024 was $2.5 million ($0.04/share) an 8% increase from the first quarter of 2024 (Q1 2024 - $2.4 million; $0.03/share) driven by a reduction in G&A expenses. Adjusted funds flow decreased 31% from the second quarter of 2023 driven by lower commodity prices and lower production volumes as a result of the Mannville Disposition and natural declines, partially offset by lower costs. Cash costs(3) were $4.0 million or $11.01/boe in the second quarter of 2024 (Q2 2023 – $10.0 million or $16.88/boe). On a per boe basis, the reduction in costs were driven by changes in the cost structure due to the difference in the production mix after the sale of mature heavy oil-focused production with the Mannville Disposition which historically recorded higher operating costs on a per boe basis. Net income was $3.3 million in the second quarter of 2024 (Q2 2023 - $4.2 million net loss) driven by lower depletion as a result of the Mannville Disposition and $2.0 million of unrealized gains on risk management contracts. As previously announced, on May 16, 2024, the Alberta Court of King's Bench approved the settlement agreement with PricewaterhouseCoopers Inc., LIT in its capacity as trustee in bankruptcy (the "Trustee") of Sequoia Resources Corp. ("Sequoia") related to the Sequoia litigation (the "Settlement"). After several years of litigation, on March 22, 2024, Perpetual entered into the Settlement to resolve the Sequoia litigation without any party admitting liability, wrongdoing or violation of law, regulations, public policy or fiduciary duties. The Trustee registered its second lien security for the Settlement obligations and the Company entered into a new inter-creditor agreement between its existing Credit Facility lenders, the Trustee, and the trustee for the holders of the 2025 Senior Notes. The $10.0 million initial payment held in escrow since the execution of the Settlement agreement, plus all accrued interest, was released to the Trustee and applied against the Settlement amount owing, with a remaining obligation outstanding of $19.9 million to fund end-of-life obligations related to the assets of Sequoia. During Q2 2024, the Company paid the $2.8 million other liability in full and partially redeemed Senior Notes with a face value of $7.0 million for payment of principal and interest of $7.2 million. As at June 30, 2024, net debt(3) was $24.7 million, an increase of $3.1 million from $21.6 million at December 31, 2023 and an increase of $4.8 million from $19.9 million at March 31, 2024. Net debt as at June 30, 2024 was inclusive of $26.2 million of Senior Notes and reflected the release of the $10.1 million initial payment plus accrued interest related to the Settlement previously held in escrow. Perpetual had available liquidity at June 30, 2024 of $27.2 million, comprised of the $30.0 million borrowing limit of Perpetual's first lien credit facility less borrowings of $1.5 million and letters of credit of $1.3 million. (1) See "Summary of Quarterly Results" 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. (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 $8.0 million for 2024, excluding land purchases and acquisitions, if any. Exploration and development capital spending will be focused almost exclusively at East Edson. During the second half of 2024, Perpetual plans to participate at its 50% working interest in the remainder of the two-well (1.0 net) East Edson drilling program to finish drilling operations on the second well, and to complete, fracture stimulate, equip, and tie-in the horizontal Wilrich wells. Production additions from the new wells are expected to partially offset production declines through the West Wolf gas plant in order to optimize production and operating costs and meet transportation commitments. 2024 guidance is relatively unchanged from the Company's guidance contained in its May 7, 2024 news release is included in the table below:  2024 Guidance Exploration and development expenditures ($ millions)(1)(2) $7.0 - $8.0 # of wells (gross/net) 2 / 1.0 Cash costs ($/boe)(1)(3) $12 - $13 Royalties (% of revenue)(1)(4) 15 - 16% 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. (3) Updated from previous guidance of $13/bbl - $14/bbl. (4) Updated from previous guidance of 16% - 17%. Perpetual continues to address end of life ARO, with total abandonment and reclamation of $1.5 to $1.6 million planned for 2024, $1.3 million of which was spent in the first half of 2024. The Company's area-based mandatory spending requirement for 2024 is $1.3 million, as calculated by the Alberta Energy Regulator ("AER"). (1) Non-GAAP financial measure, non-GAAP ratio or supplementary financial measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. See "Non-GAAP and Other Financial Measures" contained within this news release. (2) Excludes abandonment and reclamation spending and acquisitions or land expenditures. SUMMARY OF QUARTERLY RESULTS Three months ended June 30, Six months ended June 30, (CAD$ thousands, except volume and per share amounts) 2024 2023 Change 2024 2023 Change Financial Oil and natural gas revenue 4,855 15,167 (68) % 13,745 32,978 (58) % Net income (loss) and comprehensive income (loss) 3,336 (5,115) (165) % (21,228) (5,380) 295 % Per share – basic(2) 0.05 (0.06) (182) % (0.31) (0.07) 343 % Per share – diluted(2) 0.05 (0.06) (175) % (0.31) (0.07) 343 % Cash flow from (used in) operating activities 9,354 8,295 13 % 4,086 15,731 (74) % Adjusted funds flow(1) 2,547 3,687 (31) % 4,898 12,563 (61) %    Per share(1)(3) 0.04 0.05 (25) % 0.07 0.19 (63) % Total assets 175,655 208,840 (16) % 175,655 208,840 (16) % Revolving bank debt 1,478 12,927 (89) % 1,478 12,927 (89) % Term loan, principal amount — 2,671 (100) % — 2,671 (100) % Other liability — 2,563 (100) % — 2,563 (100) % Senior ...