Terra Energy Corp.

Terra Energy Corp.

May 24, 2011 17:02 ET

Terra Energy Provides Update on Private Equity Financing Process

CALGARY, ALBERTA--(Marketwire - May 24, 2011) - Terra Energy Corp. ("Terra" or the "Company") (TSX:TT) is pleased to announce that its previously announced private equity financing process, targeting development funds for its Montney unconventional gas play is well under way.

On November 15, 2010, Terra announced that it had engaged GMP Securities LP and Scotia Capital Inc., as joint financial advisors, to assist the Company in raising private equity for the Company's unconventional Montney gas play. Terra owns approximately 157 net sections of land with Montney rights within the Montney Fairway in northeast British Columbia, representing over 100,000 net acres of land. In addition, Terra's Montney lands have been assessed by GLJ Petroleum Consultants Ltd., in September of 2010, indicating a total resource best estimate of 11.90 Tcf net to the Company, comprised of 5.48 Tcf Discovered Petroleum Initially in Place (DPIIP) and 6.42 Tcf Undiscovered Petroleum Initially in Place (UDPIIP).

Since our November announcement, Terra's "Montney" team has prepared for this financing process by developing a detailed information package for potential investors, outlining the geo-technical characteristics of the play, various valuation metrics, and the ongoing development work required to be carried out over a three year development horizon, all leading to the ultimate commercialization of the Montney resource.

Initial meetings began in mid-April 2011. Detailed geotechnical presentations have recently commenced. As a result of the high level of interest, it is anticipated that the overall process will continue into the month of July 2011, with a definitive outcome not expected to be announced by the Company until later in the third quarter of 2011.

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.

Information Regarding Discovered and Undiscovered Petroleum Initially-In-Place

This news release contains references to estimates of gas classified as discovered and undiscovered petroleum initially in place (DPIIP and UDPIIP) in the Montney Fairway of northeast British Columbia which are not, and should not be confused with, oil and gas reserves.

"Best estimate" is defined in the COGE Handbook with respect to entity-level estimates, as the value derived by an evaluator using deterministic methods that best represent the expected outcome with no optimism or conservatism. If probabilistic methods are used, there should be at least a 50 percent probability (P50) that the quantities actually recovered will equal or exceed the best estimate.

"Discovered Petroleum Initially-in-Place" ("DPIIP") (equivalent to discovered resources) is defined in the COGE Handbook as that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of DPIIP includes production, reserves, and contingent resources; the remainder is unrecoverable. A recovery project cannot be defined for this volume of DPIIP at this time. There is no certainty that it will be commercially viable to produce any portion of the resources.

"Undiscovered Petroleum Initially-In-Place" ("UDPIIP") (equivalent to undiscovered resources) is defined in the COGE Handbook as that quantity of petroleum that is estimated, on a given date, to be contained in accumulations yet to be discovered. The recoverable portion of UDPIIP is referred to as "prospective resources," the remainder as "unrecoverable." A recovery project cannot be defined for this volume of UDPIIP at this time. There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.

There is no certainty that it will be economically viable or technically feasible to produce any portion of this DPIIP and UDPIIP. Resources do not constitute, and should not be confused with, reserves.

This estimate of remaining recoverable resources (unrisked) includes contingent resources that have not been adjusted for risk based on the chance of development. It is not an estimate of volumes that may be recovered. Actual recovery may be less.

Forward-Looking Statements

This media release may contain certain statements which constitute forward-looking statements or information ("forward-looking statements") including, the private equity funding of the Company's Montney unconventional gas play, the timing of development work leading to commercialization of the resource and the timing of the financing process. There is a risk that the financing process may not occur within the expected timeframe or at all. 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.
    Berk Sumen
    Manager, Corporate Affairs
    403.264.7189 (FAX)