Terra Energy Corp.
TSX VENTURE : TTR

Terra Energy Corp.

October 24, 2005 19:58 ET

Terra Energy Announces Production Gains at Boudreau

CALGARY, ALBERTA--(CCNMatthews - Oct. 24, 2005) -

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Terra Energy Corp. (TSX VENTURE:TTR) ("Terra Energy" or the "Company") is pleased to provide this release of information concerning ongoing developments at the Company's Boudreau Field. The Boudreau Field contains one of the Company's five high impact plays, and certain preliminary drilling information concerning the Boudreau Baldonnel play was recently released on October 3, 2005.

The Boudreau Field is one of several fields within the Company's Fort St. John Core Area, and it is located due west of the City of Fort St. John, British Columbia. The Boudreau Field is, in turn, divided into three parts, including West Boudreau, Central Boudreau and East Boudreau. The Company currently owns approximately 23,220 gross acres or 32.75 sections of land at Boudreau, at an average working interest of approximately 90%.

Highlights

- 8-26-84-21W6M well production tests at approximately 2.7 MMcf/day, expected to produce at 300 BOE/day

- 10-23-84-21W6M well production tests at 2.2 MMcf/day, expected to produce at 300 BOE/day

- Pipeline interconnection between the Central Boudreau Field and the Red Creek plant is now completed

- Tie-in of 8-26 well scheduled for completion by the end of November, 2005

- A new compressor at the Red Creek plant will increase total plant throughput capacity to approximately 8 MMcf/day, depending upon desired field pressure, and construction is scheduled to be completed in early December, 2005

- Two new locations to be drilled in 2005 where the Company has mapped high porosity potential in the 'upper' Baldonnel formation

- All of the above, are 100% working interest to Terra Energy

- 10-23 well recently placed on production and total production from Boudreau increased by 375 BOE/day, with additional tie-ins under construction

Central Boudreau Field

Earlier this year, Terra Energy enjoyed success with recompletions in its Central Boudreau Field. One of the highlights was the Company's recompletion of the Baldonnel formation in the 1-23-84-21W6M well, which led the Company to redefine its understanding of the size, extent and potential of the Baldonnel pool at Boudreau. The known or 'upper' Baldonnel reservoir is composed of a carbonate and ranges from 2 meters to 4 meters in thickness. The Company has mapped, using geology and seismic data, an area of limited size having potential for high porosity.

The Company's earlier success led to the drilling of the 8-26-84-21W6M well during the month of September, 2005, with a view towards testing the play in the area mapped for higher porosity potential. This well was drilled on a 100% interest basis into the Charlie Lake formation to a total depth of 1,528 meters KB. Log analysis indicates that the Company encountered over 4 metres of net gas pay in the 'upper' Baldonnel, with very high porosity (exceeding 18%) and good permeability, and no underlying water. The 8-26 well was perforated in the 'upper' Baldonnel and acid stimulated on September 28, 2005. Immediately following, a forty-eight hour production test was performed on the 'upper' Baldonnel formation. The formation flowed at a production test rate of approximately 2.7 MMcf/day, through a 1/2 inch choke and at a flowing pressure of 3,000 Kpa. This well is expected to produce at a rate of 300 BOE/day.

In addition to the 'upper' Baldonnel, the Company found a 'lower' Baldonnel interval in the 8-26 well, where log analysis shows approximately one (1) meter of net gas pay. The average porosity across this lower interval is calculated to be 9%. The interval was perforated and acid stimulated. This 'lower' Baldonnel formation was production tested and flowed oil and gas at modest rates of production of approximately 20 BOE/day.

The Company proceeded to drill the 10-23-84-21W6M well in late September, 2005 on a 100% working interest basis. This well was drilled to a total depth of 1,400 meters KB, into the top of the Charlie Lake formation. This well was logged and cased as a Baldonnel gas well. Log analysis shows that the 10-23 well has more than 4 meters of net gas pay in the 'upper' Baldonnel formation, with very high porosity (exceeding 20%) and good permeability, and no underlying water. The 10-23 well was perforated in the 'upper' Baldonnel and acid stimulated on October 15, 2005. A five day 'in-line' production test was then performed on the 'upper' Baldonnel formation. The final flow rate for the formation was 2.2 MMcf/day, at a flowing pressure of 5,100 Kpa. This well is expected to produce at a rate of 300 BOE/day.

The Company has recently negotiated a farmin agreement with an industry participant, whereby the Company has the right to earn a 100% working interest in two sections of land. These two sections are immediately adjacent to the Company's recent successes in the Central Boudreau Field in the Baldonnel. The Company plans to drill an exploration well, testing the deeper Doig, Belloy and perhaps the Kiskatinaw formation. The Company will have the 'upper' Baldonnel formation as a secondary target. The farmor has reserved a 12.5% non-convertible gross overriding royalty on the two sections comprising the farmout lands. A further well is being licenced as an exploration well targeting several formations, including Charlie Lake, Doig, Belloy, as well as Baldonnel. These two wells are planned to be spudded in 2005.

Earlier this month, the Company completed construction of a pipeline connecting
the Boudreau Field with the Company's Red Creek plant to the north. The Boudreau Field has been constrained by infrastructure limitations, and this interconnection with the Red Creek plant is viewed as the most cost efficient means of alleviating limitations. Prior to the interconnection, the Red Creek plant had excess gas processing capacity of approximately 2.5 MMcf/day. In addition to the interconnection, the Company has sourced a new gas compressor for the Red Creek plant, rated at 815 brake horsepower and capable of approximately 5 MMcf/day of gas throughput, bringing the total plant throughput capacity at Red Creek to approximately 8 MMcf/day. This new compressor is scheduled to be installed during the month of November, 2005, at a total cost of approximately $1.6 MM.

The Company is currently constructing a pipeline designed to tie-in its 8-26 well into the gathering system at 9-23, which is approximately one kilometer in distance. Construction of this tie-in is scheduled to be completed early in November and it is anticipated that the 8-26 well will commence production upon completion of this tie-in and upon installation of the new gas compressor at the Red Creek plant.

Three additional Baldonnel development locations are planned for the Central Boudreau Field, to be drilled during 2006.

East Boudreau Field

The Company successfully re-entered and completed the 7-2-84-20W6M well as a Baldonnel gas well during the month of October, 2005. The Company has only a 50% working interest in this well. Log analysis of this well shows approximately 2 meters of net gas pay in the 'upper' Baldonnel, with average porosity and poor permeability. The 7-2 well was perforated in the 'upper' Baldonnel and acid stimulated in October, 2005. A forty-eight hour production test was then performed on the 'upper' Baldonnel formation. The formation flowed at a production test rate of 500 Mcf/day, through a 1 1/2 inch choke and at a flow pressure of only 200 Kpa. In addition to natural gas, the well produced limited amounts of oil.

The Company has licenced a new location at 8-3-84-20W6M, and plans to drill an exploration well targeting several formations within the Triassic period. The Company owns a 50% working interest in section 3.

The Company plans on re-entering and completing the 16-9-84-20W6M well, with a view towards completing the well as a Baldonnel gas well. The Company owns 100% interest in section 9.

Several other development locations have been identified in the East Boudreau Field. However, all such wells are contingent upon the results of the 8-3 well and the 16-9 well.

Production from East Boudreau is not planned to be brought onstream during 2005.

West Boudreau Field

At West Boudreau, the Company plans to drill an exploration well on Section 30, Township 84, Range 21W6M. The Company plans on targeting the Charlie Lake, the Baldonnel and the Doig formations. Success with the Baldonnel formation will result in up to five additional Baldonnel development locations during 2006. All six sections are owned 100% by the Company.

The Company will endeavor to drill the Section 30 well during 2005, but there is no assurance that time will permit this well to be drilled this year. Production from West Boudreau is not anticipated to be brought onstream during 2005.

Production from Central Boudreau adds to Company Total

With the completion of the interconnection of the Boudreau Field and the Red Creek plant, and with the production from the 10-23 Baldonnel gas well, the Company's total production is currently approximately 2600 BOE/day. Upon installation of the new gas compressor at the Red Creek plant and completion of the tie-in of the 8-26 Baldonnel gas well, the Company's total production is anticipated to increase to approximately 2900 BOE/day. Additional production from the Central Boudreau Field this year is planned to add an additional 400 to 500 BOE/day to the Company's total production at year end.

Production is not planned to be brought onstream from either the East Boudreau Field or the West Boudreau Field during 2005. Additional production from other fields within the Company, including the Wilder Field and the Septimus Field, are anticipated to bring the Company's total production to the 4,000 BOE/day level at or about year end.

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 TSX Venture Exchange under the symbol 'TTR'.

Forward Looking Statements:

Certain information set forth in this media release contains forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond Terra Energy's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Terra Energy's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and , accordingly, no assurance can be given that any of the events anticipated by the forward looking-statements will transpire or occur, or if any of them do so what benefits Terra Energy will derive there from. Terra Energy disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Terra Energy Corp.
    Mr. Bud Love
    Vice-President of Finance and Chief Financial Officer
    (403) 699-7777
    (403) 264-7189 (FAX)