Terra Energy Corp.

Terra Energy Corp.

August 10, 2012 14:17 ET

Terra Energy Announces Further Extension of Lending Facility

CALGARY, ALBERTA--(Marketwire - Aug. 10, 2012) - Terra Energy Corp. ("Terra" or the "Company") (TSX:TT) announces that in agreement with its Syndicate of Lenders (the "Syndicate"), including the Canadian Imperial Bank of Commerce and ATB Financial, it will extend its current lending facility (the "Facility") through to October 16, 2012.

The Company successfully closed the sale of a non-producing oil and gas property located in the Wembley area of Alberta for gross proceeds of $6.1 Million, and has applied the net proceeds of the sale to the Facility, thereby reducing it from $94 Million to $88 Million.

Weakness in both current spot pricing and the future natural gas pricing strip has resulted in a reduction to the Company's borrowing base. Accordingly, the current extension of the Facility is predicated on the Company obtaining a commitment of additional financing in the amount of $40 million either through one or more of subordinated debt, further asset sales, capital infusion or other sources acceptable to both the Company and the lenders by August 31, 2012, with a closing date on or before September 15, 2012.

In support of this extension to the Facility, the Board of Directors of Terra has authorized management to undertake a broad based and structured sales process through one or more senior advisers, which could include the sale of all of the shares of the Company, all of the assets of the Company, or any significant division thereof. Such a sales process would be designed and timed to allow for the ongoing advancement of the Montney sales process currently underway, with an anticipated bid date on or before October 15, 2012.

The current extension to the Facility contemplates that in the event that Terra is not in receipt of a commitment of additional financing on or before August 31, 2012, the Company would be required to proceed with the broad based and structured sales process.

Terra and its advisors continue to actively market three assets packages, including its undeveloped lands in Alberta, its Alberta Peace River Arch assets, and its over 130,000 net acres of world-class unconventional Montney gas/gas liquids and petroleum assets. In addition to these active sales processes, Terra has been and continues to seek alternative sources of investment capital, including both forms of equity and subordinated debt.

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

Reader Advisory

All amounts in Canadian dollars unless otherwise specified.

Contact Information

  • Terra Energy Corp.
    Bud Love
    Vice President of Finance, & Chief Financial Officer

    Terra Energy Corp.
    Berk Sumen
    Manager, Corporate Affairs
    403.264.7189 (FAX)