Terra Energy Corp.

Terra Energy Corp.

August 16, 2007 07:00 ET

Terra Energy Releases Q2-2007 Results

CALGARY, ALBERTA--(Marketwire - Aug. 16, 2007) - Terra Energy Corp. (TSX VENTURE:TTR) ("Terra Energy" or the "Company") is pleased to release its consolidated financial statements and Management's Discussion and Analysis for the three and six month periods ended June 30, 2007. Copies of Terra Energy's financial statements and Management's Discussion and Analysis may be obtained via SEDAR at www.sedar.com or at the Company's website at www.terraenergy.ca.


The Company produced an average of 3,005 BOED three month period ended June 30, 2007. On May 2, 2007, the Company announced the completion of the Tower-Septimus pipeline project. Two wells were tied-in through the pipeline increasing production by approximately 500 BOED. Full benefit from the incremental production volumes from the completed Tower - Septimus pipeline were not realized during the quarter as a result of a bottleneck at Terra Energy's Wilder facility, which prevented full production volumes to be processed through the pipeline until the month of June 2007. The Company's exit rate for the second quarter exceeded 3,200 BOED.


Terra Energy increased cash flow from operations to $4,659,989, up 35.1% quarter over quarter as a result of higher production volumes. Net income rose to $618,863 during the quarter as a result of higher revenues and stabilized operating costs. Production expenses on a per unit of production basis fell 8.9% quarter over quarter as higher production volumes being processed at Terra Energy owned facilities are beginning to provide operational advantages.


Terra Energy has previously announced its capital expenditure plans for 2007, including four major infrastructure projects, each of which is intended to bring on incremental production from "behind-pipe" reserves.

On May 2, 2007, the Company announced the completion of the first of these projects, namely the Tower-Septimus pipeline. The completion of the Tower - Septimus pipeline was expected to result in an addition of approximately 500 BOED of incremental production, which has been the case. Following the commissioning and debottlenecking activities at the Wilder gas plant, the Company's exit rate for the second quarter exceeded 3,200 BOED.

The Company anticipates over the next few weeks to announce the completion of its East Boudreau pipeline project, connecting the East Boudreau gas field to the Company's Red Creek gas plant. The Company will tie-in the 9 of 3 well in East Boudreau, which had production tested natural gas at rates in excess of 6 Mmcf per day. This well will add an incremental 500 BOED of production, bringing the Company's total production rate to approximately 3,700 BOED.

The third major infrastructure project planned for 2007 is under way. As previously announced, a third party midstreamer has committed to develop a sour gas processing plant at Doe Creek in British Columbia together with pipelines tie-ing the Eight Mile South gas field. Terra Energy has committed 3.25 MMcf per day of firm service at this plant commencing with start-up, on or about September 2007. The Company has been advised by the midstreamer that the processing plant has been licensed and that construction is currently underway, but that the start-up may be delayed until later October instead of September. The Company has substantially more than the 3.25 MMcf per day (approximately 525 BOED) of gas awaiting tie-in at Eight Mile South, but it is likely that the Company will be limited to its firm service commitment.

The fourth major infrastructure project planned for 2007 is also under way. The Company has acquired a site and is in the process of licensing a dehydration and compression facility at its Tower gas field, which is intended to be tied into the Peace River crossing currently under construction. The Company's dehydration and processing facility will be designed for 10 to 12 Mmcf per day of gas, with expansion potential up to 20 MMcf per day. The Company currently has committed to 10 MMcf per day of firm service through the Peace River Crossing and at the McMahon gas plant. Start up of the dehydration and compression facility will depend upon the completion of the crossing itself, which is currently scheduled for the fourth quarter of 2007.

In addition to infrastructure projects, the Company's 2007 capital expenditure plans include approximately $14 million of exploration activity. The Company has commenced its 2007 summer drilling program and is currently engaging one drilling rig. Several high impact plays are being targeted in the Company's Fort St. John core operating area, including one deep well targeting a Devonian horizon. The results of the Company's drilling program will be made known upon completion in Q4 2007.


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.

The media release may contain forward-looking statements including expectations of future production, cash flow and earnings. These statements are based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ from those anticipated. These risks include, but are not limited to: the risks associated with the oil and gas industry (e.g., 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 reports on file with Canadian securities regulatory authorities.

Cash flow from operations ("Cash Flow"), representing cash generated from operating activities before changes in non-cash working capital items, is a non-GAAP measure. Management utilizes Cash Flow as a key measure to assess the ability of the Corporation to finance operating activities and capital expenditures. Additionally, Cash Flow has been described and presented in order to provide shareholders and potential investors with information regarding the Corporation's liquidity and its ability to generate funds to finance its operations. This performance indicator may not be comparable to similar measures used by other companies.

The reader is further cautioned that estimating reserves requires judgments and decisions based upon available geological, geophysical, engineering and economic data. These estimates may change, having either a positive or negative effect on the net earnings of the Company as further information becomes available and as the economic environment changes.

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'.

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, Finance and Chief Financial Officer
    (403) 699-7777