Terra Energy Corp.

Terra Energy Corp.

November 19, 2008 23:59 ET

Terra Energy Announces Results of Third Quarter 2008

CALGARY, ALBERTA--(Marketwire - Nov. 19, 2008) - Terra Energy Corp. ("Terra Energy" or the "Company") (TSX VENTURE:TTR) is pleased to release its Financial Statements and related Management's Discussion and Analysis for the three and nine month period ended September 30, 2008. Copies of Terra Energy's third quarter 2008 results may be obtained at www.sedar.com or www.terraenergy.ca.

"With the previously announced completion of the Sunrise and Eight Mile pipelines and the expansion project at the Tower Compression and Dehydration Facility now in the commissioning phase, the Company is currently producing at rates at or above its targeted exit rate for 2008 of 5,700 BOED." stated Cas H. Morel, President and CEO of Terra Energy. "The Company is continuing with our Capital Expenditure Plan for the year and we are hopeful of achieving even higher rates."

Highlights for 2008 - Q3:


- Net income increased year over year from a loss of $2.7 million in

the nine month period ended September 30, 2007, to net income of

$18.5 million for the nine month period ended September 30, 2008.

- Average production per day increased 17.9% to 4,370 BOED during the

three month period ended September 30, 2008 compared to 3,706 BOED

during the same period in 2007. The 4,370 BOED level was achieved

despite continued operational difficulties with the third party

operated West Doe plant.

- Gross revenue increased 70.4% year over year from $12.4 million to

$21.2 million during the three month periods ended September 30, 2007

and 2008.

- Cash flow from operations rose 139.5% year over year from

$3.7 million to $12.5 million during the three month periods ended

September 30, 2007 and 2008.

- Operating expense per unit of production decreased 23.2% year over

year from $13.05per boe to $10.02 per boe in the three month periods

ended September 30, 2007 and 2008.

- The balance sheet of the Company remains strong with net debt as at

September 30, 2008 of $4.4 million, excluding provision for financial

instrument liability as at September 30, 2008 which was reversed post


Guidance for 2008 - Q4

Terra Energy is currently producing at rates in excess of its 2008 target exit rate of 5,700 BOED. This is a result, in part, from an acceleration of the 2008 Capital Expenditure Plan in the third quarter. Accelerated production for Q4-2008 is anticipated to be offset by softer natural gas prices than previously forecast and therefore is not expected to substantially impact forecasted cash flow.

The provision for unrealized financial instrument liability of $1.235 million as at September 30, 2008, relating to forward oil hedges, will be reversed in Q4-2008 through the windup of the 2009 forward sale and the decrease in prevailing oil prices in respect of the remaining 2008 forward sales, giving rise to our expectation of an actual gain for the quarter.

The process undertaken by the Company in September 2008, wherein the Company retained the services of Scotia Waterous Inc., is underway. Both a physical data room and a virtual data room have been set up and are now open for interested parties who have signed a Confidentiality Agreement. The Company has selected December 9, 2008 as the date for receipt of non-binding letters of intent, in accordance with the process.


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 expectations of future production, hedging gains and losses, forecasted cash flow and earnings. These statements are based on current expectations that involve a number of assumptions, risks and uncertainties, which could cause actual results to differ from those anticipated. These assumptions, risks and uncertainties 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 Annual Information Form and other documents are on file with Canadian securities regulatory authorities 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 TSX Venture Exchange under the symbol 'TTR'.

Contact Information

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