Terra Energy Corp.

Terra Energy Corp.

November 15, 2010 18:58 ET

Terra Energy Releases Results for Third Quarter 2010 and Announces Engagement of Advisors for Private Equity Raise

CALGARY, ALBERTA--(Marketwire - Nov. 15, 2010) - Terra Energy Corp. ("Terra" or the "Company") (TSX:TT) is pleased to announce its financial and operating results for the three and nine month periods ended September 30, 2010. Copies of Terra's third quarter 2010 results may be obtained at www.sedar.com or www.terraenergy.ca.

Third Quarter 2010 Highlights

  • Average production per day increased 7.6% to 6,581 barrels per day compared to the same quarter last year.
  • Gross revenue increased 29.4% to $17,579,730 from $13,583,659 compared to the same quarter last year.
  • Generated an operating netback of $6,822,942 ($11.27/bbl) resulting in cash flow from operations of $3,013,682 and a net loss of $3,732,522.
  • Increased long-term debt facility with syndicate of senior lenders from $90 million to $100 million.
  • Successfully drilled the Company's first Montney horizontal well in the Altares area, resulting in a production test rate of 13.2 mmcf/d at a flowing pressure of 1,200 psi.
  • Completed the acquisition of certain oil and natural gas assets, including 100% of the Square Creek gas field at metrics lower than Terra's historic F&D costs.
  • GLJ Petroleum Consultants Ltd. provided an initial independent resource assessment dated September 30, 2010 for the Company's Montney landholdings, indicating a total resource 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).

The independent resource assessment demonstrates the quality and size of Terra's Montney resource play and confirms Terra's belief that the Company's Montney play represents a very significant asset. Terra has one of the very few resource positions capable of reaching the requisite reserve numbers to give rise to export opportunities to Asia.

Terra remains on track with its capital expenditure plan for 2010, including the Montney drilling program. The Company currently has two rigs working in the Monias/Greater Wilder area drilling the eighth location and spudding the ninth, in a planned program of seven to nine vertical Montney test wells. Data and information from the vertical wells drilled to date will advance the Montney resource play across the Company's land base, and at the same time, the preliminary results are encouraging for plays in various other formations. These are promising indications as many of these vertical Montney test wells will be potential completion targets in the Company's 2011 capital expenditure plan.

The Company's Montney asset will require additional capital in order to continue the "de-risking" process of the Company's lands in anticipation of commercialization. At the same time, the size and scope of the Company's Montney asset should be able to support the requisite, targeted funding. The Company intends to actively seek out private equity financing, farmout opportunities, and possible joint ventures, as various alternative methods of funding the advancement of the Montney unconventional gas play on its lands. 

In this regard, Terra is pleased to announce that it has formally engaged GMP Securities LP and Scotia Capital Inc., jointly, as financial advisors to assist the Company in raising private equity for the Company's Montney operations.

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.

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. 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 media release may contain forward-looking statements and information ("forward-looking statements") including statements regarding seeking alternatives to advance Terra's Montney play, Terra's Montney resource presenting a significant development opportunity, Montney test wells being potential completion targets for the 2011 capital expenditure plan, the Montney asset being able to support the requisite targeted funding and the ability to raise private equity for the Company's Montney operations. 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 (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's operations or financial results are included in Terra's reports on file with Canadian securities regulatory authorities. 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. 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. 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.

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.

Contact Information

  • Terra Energy Corp.
    Bud K. Love
    Vice-President Finance & Chief Financial Officer
    403.264.7189 (FAX)
    Terra Energy Corp.
    Berk Sumen
    Manager, Corporate Affairs
    403.264.7189 (FAX)