Terra Energy Corp.
TSX : TT

Terra Energy Corp.

March 30, 2010 22:02 ET

Terra Energy Releases 2009 Year-End Results

CALGARY, ALBERTA--(Marketwire - March 30, 2010) - Terra Energy Corp. ("Terra Energy" or the "Company") (TSX:TT) is pleased to release its 2009 audited and consolidated financial statements and management's discussion and analysis ("MD&A") and information relating to its 2009 - fourth quarter and year-end results. The Company has also filed its annual information form for the year ended December 31, 2009 which includes the disclosure and reports relating to reserves data and other oil and gas information required pursuant to National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities of the Canadian Securities Administrators. Access to Terra Energy's 2009 year-end financial results and annual information form may be obtained at www.sedar.com or www.terraenergy.ca.

"As a result of a changing landscape in our oil and gas industry, the Company announced various strategic objectives during 2009. Included in these objectives was the desire to become an intermediate sized company, to move its conventional oil/gas commodity mix closer towards a 50% - 50% balance, to increase the non-conventional component of its operations going forward and to maintain a strong balance sheet. The acquisition of the shares of Tecton Energy Canada and the Peace River Arch assets by the Company during 2009 advanced each of these objectives." stated Cas H. Morel, President and CEO of Terra Energy. "The more recent Asset Exchange Agreement whereby the Company substantially increased its position in the highly prospective Montney Fairway, has further advanced these objectives and has positioned the Company as a major player in this important resource play. The Company is now well positioned with both a strong conventional production base of over 7,000 boed and major position in a resource play which rivals most shale gas plays across North America."

Highlights of the full year 2009:

  • Average daily production increased 35.2% year over year to 5,946 boe/day
  • As result of declining natural gas prices, cash flow from operations decreased 38.7% year over year to $25,813,616
  • Operating expense on a boe basis decreased 15.4% year over year to $8.99 per boe
  • Proved plus probable reserves increased 27.9% to 24,003,000 boe in 2009
  • Finding and Development Costs on a P+P basis (inclusive of future capital) for the previous five years was $11.16 per boe
  • The Company acquired all of the shares in the capital stock of Tecton Energy Canada
  • The Company acquired assets in the Peace River Arch regions of northeast British Columbia and northwest Alberta
  • Undeveloped land holdings increased 151% to 495,558 net acres providing greater opportunity for exploration and development activity
  • The Company had total indebtedness at year-end of $56,836,964

Recent Events and 2010 Guidance

At the same time as Terra Energy advances its Montney play, the Company will continue to drill up its conventional prospects with a view towards maintaining and enhancing its production and cash flow base. The Company recently announced its 2010 Capital Expenditure Plan and Budget (the "2010 Capex Plan"), which was designed to maintain production levels (from its conventional operations) for the year at approximately 7,100 boe/d, on average. The Company anticipates production for 2010-Q1 to be as expected and to average approximately 7,000 boe/d. In our conventional operations, the Company has been and will be targeting 'oilier' prospects, with a view towards incrementally increasing its oil/gas ratio. The Company will continue in its search for an 'oil' resource play, with a view towards balancing its future growth potential in both commodities. To this end, Terra Energy continues to be a large acquisitor of lands in the Province of Alberta. At the present time, the Company owns aproximatly 550,000 net undeveloped acres of land in Alberta and British Columbia.

On March 24, 2010, the Company closed a "bought–deal" financing of 5 million common shares at $1.80 per common share and 6.25 million flow-through common shares at $2.16 per flow-through common share (the "Financing"), for aggregate gross proceeds of $22,500,000. The net proceeds of the Financing have been applied by the Company to temporarily reduce indebtedness under the Company's credit facility, and will be subsequently redrawn and applied as needed to fund ongoing expenditures under the 2010 Capex Plan, including in the case of proceeds from the issuance of the flow-through common shares, the incurring of Canadian exploration expenses before December 31, 2011 and for general corporate purposes.

Option Agreement

Upon due consideration, the Board of Directors of Terra Energy has determined that it is not in the best interests of the shareholders of the Company to exercise the option to purchase, referred to in the media release dated February 1, 2010 (the "Option"), in its current form. Accordingly, the Option will be allowed to expire on March 31, 2010. The expiration of the Option will not give rise to any penalty or adverse consequences for the Company. 

Outlook

Terra Energy is well-positioned with both a solid "conventional" production base of 7,000 boe/d and a major position of over 100 net sections of land within the highly prospective Montney Fairway in northeastern British Columbia. Our conventional production base will provide us with the means to advance our Montney play in each of our individual fields. Development drilling of horizontal wells is already happening at our Groundbirch property, with as many as six wells slated for 2010. Drilling and production testing is now underway at our Altares property, where Terra Energy owns 17 net sections of land adjacent to the planned Talisman Montney development. Drilling (no less than six wells) and production testing will occur across the Greater Wilder area where Terra Energy owns a sizeable land position of more than 40 net sections. All in all, we anticipate this activity to result in a substantial increase in the Company's reserves base for 2010, as well as providing the Company with the necessary technical support for a resource study for our entire Montney position by year-end. 

Of particular importance are the various operations now underway, and planned for mid-summer, at our Altares property. With positive drilling and production testing results, the Company will be positioned to "pull the trigger" on commercial development of its Altares property by proceeding with drilling programs of 10 to 12 horizontal wells at a time. Any sizeable commercial development by Terra Energy in the Montney will most likely be coupled with a hedging strategy with a view towards locking-in higher gas prices available in the futures market and ensuring our targeted return on investment. 

Terra Energy's latest presentation can be viewed at the Company's corporate website at www.terraenergy.ca.

READER ADVISORY

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 may contain forward-looking statements and information ("forward-looking statements") including statements regarding expectations of future production, cash flow, capital expenditures and use of financing proceeds, opportunity for exploration and development activity, earnings, future drilling and testing results, increase in reserve base, acquisitions of land, maintenance of production levels, balancing future growth, and the positioning of the Company as a major player in the Montney resource play. These statements are based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ from those anticipated. These 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. Additional information on these and other factors that could affect Terra Energy's operations or financial results are included in Terra Energy's reports on file with Canadian securities regulatory authorities. 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 information. As such, readers are cautioned not to place undue reliance on the forward looking information, as no assurance can be provided as to future results, levels of activity or achievements. The risks, uncertainties, material assumptions and other factors that could affect actual results are discussed 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.

The information under the heading "Recent Events and 2010 Guidance" is "financial outlook" within the meaning of applicable securities laws. The purpose of this financial outlook is to provide readers with disclosure regarding Terra Energy's reasonable expectations as to the anticipated results of the proposed business activities of Terra Energy for 2010. Readers are cautioned that this financial outlook may not be appropriate for their purposes.

The reader is further cautioned that estimating reserves requires judgments and decisions based upon available geological, geophysical, engineering and economic data. These estimates may change, having either a positive or negative effect on the net earnings of the Company as further information becomes available and as the economic environment changes.

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, Finance & Chief Financial Officer
    403 699 7777