Terra Energy Corp.
TSX VENTURE : TTR

Terra Energy Corp.

March 01, 2007 13:23 ET

Terra Energy Releases Update on Infrastructure Projects

CALGARY, ALBERTA--(CCNMatthews - March 1, 2007) - Terra Energy Corp. ("Terra Energy" or the "Company") (TSX VENTURE:TTR) is pleased to provide this market update concerning Terra Energy's major infrastructure projects for 2007. The Company has budgeted to spend approximately $16.1 million for infrastructure projects in calendar 2007, and the majority of this spending will be focused on three pipeline projects, all located within the Company's Fort St. John core operating area.

The Company has recently released its estimate of cash flow for 2007 of $24.1 million, based upon an estimated average gas price of $7.50 per MCF. This cash flow estimate is also based upon an estimated average production of 3,600 boed for the year. More specific information concerning these estimates, including the anticipated timing of production additions, is now available on the Company's website at www.terraenergy.ca.

South Peace Gathering System

The Company previously announced its plans to develop the South Peace Gathering System in its media release dated June 9, 2006. Since such time, Terra Energy has been carrying out preliminary work, surveys and various geotechnical studies. Over the past twelve months, the Company has endeavored to involve midstream companies and other gas producers in this gathering system.

The Company is pleased to announce that construction commenced this week on the Tower-Septimus pipeline segment, with a target completion date prior to the spring break-up. This pipeline segment represents the longest remaining portion of the South Peace Gathering System and upon completion, will connect the Company's Tower gas field with its Septimus and Wilder gas fields located to the west. This new pipeline is comprised of approximately 19 kilometers of 6 inch diameter pipe, and includes one major boring contract (approx. 1,400 metres). The cost of the Tower-Septimus pipeline has been estimated at $6.1 million.

The short term benefit of the Tower-Septimus pipeline will be the immediate addition of incremental production from the Tower gas field which will increase the Company's production to approximately 3,200 boed when the pipeline is complete. The major benefit of the Tower-Septimus pipeline will only occur at such time as the actual Peace River Crossing is constructed, at which time the Tower-Septimus pipeline will serve as a gathering line across the Tower gas field bringing all of the Company's production in Tower to market. The Company estimates that it has a combined total of approximately 10 MMCF per day (1,500 boed) of production capability at Tower, with any and all remaining wells in the Tower gas field to be placed on production upon the completion of the river crossing. The long term benefit of the Tower-Septimus pipeline is that it will complete the linkage between three of the Company's major gas fields with a single 6 inch diameter pipeline, having a combined total length of approximately 40 kilometres, thus ensuring that all new wells drilled and developed in these gas fields will have immediate access to processing and to market.

The Company is also pleased to announce that progress continues to be made on the Peace River crossing. Another gas producer in the South Peace area has recently (February 22, 2007) announced its plans to construct the crossing to the McMahon plant, with an expected completion date late in the third quarter of 2007. The Company continues to be a very strong advocate of the Peace River crossing, and will continue to work with midstreamers and third party producers in order to ensure the expeditious completion of the river crossing.

East Boudreau Pipeline

The Company is pleased to announce that its East Boudreau pipeline project to the British Columbia Oil and Gas Commission on or about March 9, 2007. Preparatory work has taken longer than anticipated on this project as a result of the Company having to take into consideration various inputs by affected land owners along the proposed pipeline right-of-way. This preparatory work has included moving the project forward through the mediation and arbitration process with a view towards obtaining necessary authorizations to enter, survey and construct the pipeline.

The East Boudreau pipeline is a combination of 4 inch and 6 inch diameter pipe, stretching approximately 19.5 kilometres from the Company's East Boudreau gas field to its Red Creek gas plant. The cost of the East Boudreau pipeline has been estimated at $5 million.

The Company is endeavoring to develop its infrastructure away from local residences in the Old Hope Road area (an outlying neighbourhood of Fort St. John) and to concentrate its field processing and compression activities at its Red Creek gas plant. By building the East Boudreau pipeline in a north and north-west direction, the Company will eliminate the potential for any land use issues with existing and prospective Old Hope Road residential developments. By moving its raw gas production to the Red Creek gas plant, the Company should benefit by reducing its operating costs on a "per BOE" basis.

Subject to receiving the requisite approvals from the British Columbia Oil and Gas Commission, construction work will now take place immediately following the spring break-up, with a target completion date of July 2007. Upon completion, the Company anticipates incremental production of approximately 3 MMCF per day (500 boed).

Eight Mile Gas Field

Terra Energy has had considerable success at its new Eight Mile gas field, located south of the Kiskatinaw River. The Company has established proved gas reserves behind pipe in this field and is planning to drill additional wells during 2007. The Company has entered into agreements with a midstreamer, whereby the Company has committed a total of 3.25 MMCF per day (525 boed) of natural gas production from its Eight Mile field for a period of 3 years in exchange for the development by the midstreamer of a new gas processing facility and a connecting gas pipeline. Start up of the new processing plant is anticipated to occur in the third quarter of 2007, and Terra Energy is proceeding with plans to develop field gathering and compression facilities at Eight Mile in order to coincide with the facilities being developed by the midstreamer.

READER ADVISORY

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 (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 reports on file with Canadian securities regulatory authorities.

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 of Finance and Chief Financial Officer
    (403) 699-7777
    Website: www.terraenergy.ca