Terra Energy Corp.
TSX : TT

Terra Energy Corp.

August 12, 2009 09:00 ET

Terra Energy Announces Results of Second Quarter 2009

CALGARY, ALBERTA--(Marketwire - Aug. 12, 2009) - Terra Energy Corp. ("Terra Energy" or the "Company") (TSX:TT) is pleased to release its Financial Statements and related Management's Discussion and Analysis for the three and six month periods ended June 30, 2009. Copies of Terra Energy's second quarter 2009 results may be obtained at www.sedar.com or www.terraenergy.ca.

Second Quarter 2009 Highlights

- Average production per day increased 58.5 percent to 5,412 barrels of oil equivalent ("boe") per day compared to 3,414 boe per day in the second quarter 2008.

- During the second quarter, the Company generated positive cash flow from operations of $4,794,358 ($0.06 per basic and diluted share) and an operating netback of $13.70 per boe.

- Gross revenue for the second quarter 2009 decreased 42.1 percent to $12,050,351 from $20,807,645 in the same period of 2008. The decrease was largely attributable to falling natural gas prices.

- Production expense decreased by 38.6 percent to $7.42 per boe in the second quarter 2009 compared to $12.08 per boe during the same period in 2008.

- On June 19, 2009, Terra Energy announced the closing of the acquisition of Tecton Energy Canada ULC for total consideration of $8 million comprised of $4 million cash and $ 4 million of common shares of the Company.

- During the second quarter, the Company announced its intention to acquire approximately 2,200 boe per day of production, 8.5 million boe of proved plus probable reserves and 46,000 net acres of undeveloped land for total consideration of approximately $76.6 million, prior to closing adjustments (the "Peace River Arch Acquisition"). The Peace River Arch Acquisition was closed subsequent to the second quarter on July 15, 2009.

- Concurrent with the announcement of the Peace River Arch Acquisition, the Company announced a bought-deal equity financing which closed subsequent to the second quarter on July 7, 2009 and resulted in gross proceeds of $20.3 million.

"With the closing of the Peace River Arch Acquisition, Terra Energy has begun its transformation to a more balanced intermediate producer." stated Cas Morel, President & CEO of Terra Energy, "I am satisfied with our performance year-to-date given the condition of the current operating environment. However, I remain concerned about the many challenges facing natural gas producers in Canada, including limited access to capital markets, a tightening supply of credit, a persistently high Canadian dollar, and most importantly, the uncertainty regarding supply and demand for, and the pricing competitiveness of, natural gas in western Canada. Despite these concerns, I continue to believe that Terra Energy is well positioned to face these challenges and take advantage of the opportunities presented by the current downturn in markets."

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'.

READER ADVISORY

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, including Terra Energy's transformation to an intermediate producer, the positioning of the Company to face challenges and take advantage of opportunities in current markets. 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. 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 or information 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 or information, whether as a result of new information, future events or otherwise. The forward-looking statements or information contained in this document are expressly qualified by this cautionary statement.

Contact Information

  • Terra Energy Corp.
    Dean N. Morrison, CFA
    Manager, Corporate Affairs
    (403) 699-7777
    Website: www.terraenergy.ca