Terra Energy Corp.
TSX : TT

Terra Energy Corp.

August 14, 2012 18:14 ET

Terra Energy Announces Second Quarter 2012 Financial Results

CALGARY, ALBERTA--(Marketwire - Aug. 14, 2012) - Terra Energy Corp. ("Terra" or the "Company") (TSX:TT) announces its financial and operating results for the three and six month periods ended June 30, 2012. Complete copies of Terra's second quarter 2012 financial results may be obtained at www.sedar.com or www.terraenergy.ca.

The bearish trend in natural gas prices in North America continued during the second quarter of 2012, hitting a ten year low in late April, when AECO spot prices traded below $1.50 per mcf. Spot prices have recovered approximately 50% off their lows since such time, resulting in a level of cautious optimism. As a result of low natural gas prices, particularly during the months of March, April and May, the Company has realized two consecutive quarters of negative cash flows from operations. The average price for natural gas realized by the Company during the first quarter of 2012 was $2.15 per mcf and the average price realized during the second quarter was $1.84 per mcf. As a result, the Company reported average daily production of 5,438 boe/d for the quarter, a net loss of $2.1 million and negative cash flows from operations in the amount of $4.1 million.

In relation to oil pricing, the Company was able to take advantage of the downturn in oil prices experienced during the second quarter of 2012 to unwind its two oil hedges at no cost, resulting in the reversal of the $4.3 million unrealized loss which was recorded by the Company at the end of the first quarter.

Subsequent to the second quarter, the Company successfully closed the sale of a non-producing oil and gas property in the Wembley area of Alberta for gross proceeds of $6.1 million. The net proceeds of this sale were used to reduce the lending facility from $94 million to $88 million.

The Company's first priority will remain to address the weakness in its balance sheet. At over 500,000 net acres of undeveloped land, Terra is amongst the largest holders of undeveloped lands amongst its peers of Canadian junior oil and gas companies. The opportunities that are represented by the Company's unconventional Montney resource of over 130,000 net acres, together with the size and quality of its other oil and gas properties and land holdings, are immense yet can only be pursued through the investment of significant amounts of capital. The Company remains in search of investment capital to advance or monetize these projects, and more generally as part of its efforts to address its balance sheet.

The Company would also like to announce the departure of Tim Beatty, Executive Vice President of Operations effective August 31, 2012. Mr. Beatty has been with the Company for 10 years and has made significant contributions to the growth of the organization. Terra and its Board of Directors would like to thank Mr. Beatty and wish him all the best in his future endeavours. Mr. Beatty will be moving to a major Montney gas operator and will assume the role of "Director of Drilling and Completions".

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.

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.

Forward-Looking Statements

This media release may contain certain statements which constitute forward-looking statements or information ("forward-looking statements"). The Company cautions that there are no guarantees that the various marketing processes and efforts to seek investment capital will result in a transaction or, if a transaction is undertaken, the terms or timing of such transaction. Although Terra 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 available to the Company. 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 statements. As such, readers are cautioned not to place undue reliance on the forward-looking statements, 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 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.

Contact Information

  • Terra Energy Corp.
    Bud Love
    Vice President of Finance & Chief Financial Officer
    403.699.7777

    Terra Energy Corp.
    Berk Sumen
    Manager, Corporate Affairs
    403.699.7777
    403.264.7189 (FAX)