Perpetual Energy Inc. reported operating results for the third quarter of 2019. Production averaged 8,383 boe/d in the third quarter of 2019, down 12% from the comparable period in 2018. Perpetual temporarily shut-in an average 925 boe/d of East Edson production (11% of third quarter production) to take advantage of short-term situations when natural gas could be purchased at minimal cost to satisfy pre-sold volume commitments at attractive margins, resulting in an increase in realized revenue of $0.17/Mcf ($0.6 million) while retaining reserves for future production. Realized revenue was $24.34/boe in the third quarter of 2019, and included $2.7 million ($3.50/boe or $0.77/Mcf) of realized gains on derivatives received from the monetization of the market diversification contract for the December 2019 to October 2020 period. Excluding the impact of the market diversification contract monetization, realized revenue in the third quarter of 2019 was $20.84/boe, down 11% from the prior year period, due to lower prices for all products despite an increased proportion of higher value oil and natural gas liquids ("NGL") in the production mix. Third quarter natural gas production averaged 38.2 MMcf/d, down 19% from 46.9 MMcf/d in the comparative period of 2018. While the base assets have performed well, natural gas production was impacted by shut-ins of 6.8 MMcf/d as well as limited capital investment throughout 2018 and 2019 in response to low AECO natural gas prices. Crude oil production in Eastern Alberta was 28% higher than the third quarter of 2018, reflecting increased production from the drilling program conducted during the second and third quarters of 2019 and lower base declines at Mannville due to positive waterflood performance. Compared to the second quarter of 2019, Eastern Alberta crude oil production was 8% higher. Crude oil production in Eastern Alberta is expected to increase in the final quarter of 2019 as production continues to ramp up from the two new wells which came onstream at Ukalta late in the third quarter.

Average 2019 production of 9,000 to 9,200 boe/d is anticipated, down from Previous Guidance of 9,200 to 9,500 boe/d. Reduced guidance reflects third quarter production shut-ins at East Edson averaging 925 boe/d in response to weak AECO natural gas prices, as well as 300 boe/d that was shut-in at Panny and will remain offline indefinitely or until the property tax burden is reduced. Production guidance also reflects lower anticipated fourth quarter production due to the deferral of drilling at East Edson. Fourth quarter production is expected to decrease marginally from third quarter levels as increased heavy oil production from the third quarter drilling program at Ukalta is anticipated to be more than offset by natural production declines at East Edson. Oil and NGL production is forecast to comprise approximately 25% of the production mix in the fourth quarter.