Terra Energy Corp.

Terra Energy Corp.

February 16, 2010 13:55 ET

Terra Energy Completes Asset Exchange

CALGARY, ALBERTA--(Marketwire - Feb. 16, 2010) - Terra Energy Corp. (TSX:TT) ("Terra Energy" or the "Company") is pleased to announce that it has now completed the asset exchange arrangement (the "Arrangement") previously announced in its media release dated February 1, 2010. Terra Energy and its counterparty, a large producer, have negotiated and executed a formal Asset Exchange Agreement (the "Agreement"), and have now completed the assignment and conveyance of assets contemplated under the terms of the Agreement. The Arrangement involved an exchange of oil and gas assets, with cash forming no part of the consideration. The Effective Date of the Arrangement was November 1, 2009.

"Terra has been actively pursuing several non-conventional gas plays over the past three years. Our nonconventional Montney gas play in Northeast British Columbia is just one of these plays." said Cas H. Morel, President and CEO of Terra Energy. "This Asset Exchange allows Terra Energy to crystallize the value of one of the other lesser-known nonconventional gas plays in our stable, and in exchange substantially increase the overall size and scope of the Company's Montney play. The net result is that the Company will be far more focused on the Montney going forward."

Under the terms of the Arrangement, Terra Energy has acquired approximately 120 gross (70 net) sections of land located in several key areas of high activity in Northeast British Columbia, including Altares/Farrell Creek, Wilder/Monias, Groundbirch and Inga/Fireweed. The lands acquired by the Company are in close proximity to the Company's existing core area of operations.

In consideration for the assets acquired under the Arrangement, Terra Energy assigned and conveyed to the counterparty all of its rights and interests in a specified resource play which has been under development by the Company for more than two years. This specified resource play consists of "tight" siltstones and shales which encase a porous and laterally-continuous sandstone "body" of approximately two metres in thickness. The sandstone body and adjacent shales and siltstones are charged with natural gas. Accordingly, the rights and interests assigned by Terra Energy under the Agreement were limited to only a designated geological interval of approximately 35 meters in thickness (embodying the entire resource play), extending across approximately 77 gross (69 net) sections of land. Terra Energy retained the balance of its rights and interests to all other geological units owned by Terra Energy in these 77 sections of land. The rights and interests assigned by Terra Energy did not include any wells or tangible assets, and were comprised entirely of Petroleum and Natural Gas Rights. At the Effective Date, the assets assigned by the Company under the Arrangement were not contributing to the Company's overall production base or cash flow.

With the completion of the Arrangement, the Company will now be setting its 2010 Capital Plan and Budget. Further details of the Company's development plans for 2010, including drilling plans for both vertical and horizontal wells in the Montney, will be forthcoming in the coming weeks.

Terra Energy's latest presentation can be viewed at the Company's corporate website at www.terraenergy.ca., including a map of Terra Energy's landholdings in the Montney Fairway in British Columbia. Also included in the presentation is a snapshot of the Company's capitalization metrics (approx. 88 MM shares outstanding and approx. $59 MM of total net debt) and operating metrics (producing more than 7,000 boed).


All amounts in Canadian dollars unless otherwise specified

A boe conversion ratio of six thousand cubic feet per barrel (6mcf/bbl) of natural gas to barrels of oil equivalence is based upon an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency for the individual products at the wellhead. Such disclosure of boe's may be misleading, particularly if used in isolation.

This media release contains certain statements which constitute forward-looking statements or information ("forward-looking statements"), including the Company's focus on the Montney, the setting of the Company's Capital Plan and Budget, and the provision of details of the Company's development and drilling plans. Although Terra Energy believes that the expectations reflected in our forward-looking statements are reasonable, our forward-looking statements have been based on factors and assumptions concerning future events which may prove to be inaccurate. Those factors and assumptions are based upon currently available information. Such statements are subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward-looking statements. As such, readers are cautioned not to place undue reliance on the forward-looking statements, as no assurance can be provided as to future results, levels of activity or achievements. Risks include, but are not limited to: the risks associated with the oil and gas industry (eg., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price, price and exchange rate fluctuation and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. The risks, uncertainties, material assumptions and other factors that could affect actual results are discussed in more detail in our Annual Information Form and other documents available at www.sedar.com. Furthermore, the forward-looking statements contained in this document are made as of the date of this document and, except as required by applicable law, Terra Energy does not undertake any obligation to publicly update or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.

Terra Energy is a junior oil and gas company engaged in the exploration for, and development and production of, natural gas and oil in Western Canada. Terra Energy's common shares trade on the Toronto Stock Exchange under the symbol 'TT'.

Contact Information

  • Terra Energy Corp.
    Mr. Bud Love
    Vice President of Finance and Chief Financial Officer
    (403) 699-7777