Terra Energy Corp.
TSX VENTURE : TTR

Terra Energy Corp.

October 03, 2005 12:41 ET

Terra Energy Summer Drilling Program Highly Successful

CALGARY, ALBERTA--(CCNMatthews - Oct. 3, 2005) -

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Terra Energy Corp. (TSX VENTURE:TTR) ("Terra Energy" or the "Company") is pleased to announce the preliminary internal results of its summer drilling program. Earlier this year, Terra Energy announced its capital expenditure program including plans to drill and test five high impact plays situated within five of the fields where the Company has an established land position. Four of these fields (Tower, Septimus, Eight Mile and Boudreau) are located within the Company's Fort St. John core area in north eastern British Columbia, and the fifth is located at Grande Prairie, Alberta. Since late July of this year, the Company has been drilling continuously to prove up these high impact plays and has been evaluating the results. The Company currently has three drilling rigs engaged, along with four service rigs. Although the Company's summer drilling program continues, management believes that the drilling results to date are significant.

As a result of the highly competitive environment which exists within these operating arenas and as a result of upcoming Crown land sales, Terra Energy wishes to continue to protect the confidentiality of some of its drilling and testing results. Accordingly, some of the results are being released using vague formation/location descriptions and project names.

The combined success in each of the Company's five high impact plays has made it increasingly more difficult to maintain the confidentiality of the results. With the level of success being achieved and the resulting impact to the underlying value of Terra Energy, management and the Board of Directors believe there is a need to disclose these preliminary internal results to the investment community in an orderly, fair and timely manner.

HIGHLIGHTS

- Summer drilling program has been highly successful

- All five high impact plays have been proved up or advanced

- Tower: Play now established in the field across two separate formations

- Sustained flow rate of 2.6 mmcf/d from one formation / Halfway formation awaits stimulation and testing

- Minimum of three follow-up wells to be drilled

- Septimus: Play now established in the field and secondary target found

- Halfway formation awaits stimulation and testing

- Minimum of two follow-up wells to be drilled, 16-33 well currently drilling

- Eight Mile: Play advanced and Doig well cased

- Three or four delineation wells to be drilled, with more than 20 potential development wells

- Boudreau: Play now established in the field

- Production test rate in excess of 1.5 mmcf/d from 8-26 well

- 10-23 well being drilled

- Minimum of three follow-up wells to be drilled

- Grande Prairie: Play advanced in the field and a secondary target found

- Lower Charlie Lake oil well with anticipated rates of 50 - 60 bbls/d

- Three or four delineation wells to be drilled, with more than 20 potential development wells

- New discovery play with significant potential

- Two separate intervals, each with 4m of 15% porosity and potentially large aerial extent

- Test rates of 1.5 mmcf/d and 0.75 mmcf/d, prior to stimulation

- Increase of 30 sections in gross land holdings in core area of Fort St. John and two sections in Grande Prairie

TOWER FIELD

Terra Energy spudded the Terra Parkland 12-25-81-17 W6M well on July 23, 2005. The Company was targeting an anticline running (approximately) east/west above the Septimus normal fault, which is the south boundary of the Fort St. John graben. The well was drilled by the Company on a 100% basis to a total depth of 2,471 metres KB. This exploration well had two primary target formations including the Halfway formation and a 'Second Targeted' formation. The Company's mapping was based upon geological controls and seismic data, and resulted in each of the two primary formations being mapped by the Company as extending across four Sections of the Company's lands.

From log analysis, the Halfway formation appears to have 12 metres of reservoir sand and six metres of net gas pay, with no apparent underlying water. The interval tested at a pressure of approximately 15,500 kpa. The average porosity across the interval is calculated to be 10%. The Halfway interval is awaiting perfing and fracture stimulation, which is scheduled for the first week of October, 2005. Similar wells in the Fort St. John area have experienced initial production rates from the Halfway formation of between 2 MMcf/day and 3 MMcf/day. The Halfway formation in this area typically has
hydrogen sulfide ("H2S") content of approximately 2%.

Log analysis on the 12-25 well shows that the 'Second Targeted' formation has three metres of net gas pay, with no apparent underlying water. The interval tested at a maximum rate of 2.7 MMcf/day in its drill stem test, with reservoir pressures in excess of 15,000 kpa. The average porosity across the interval is calculated to be 10%. The interval was perforated, however the planned acid stimulation was cancelled as a result of high flow rates. The formation was subsequently subjected to a 48 hour production test, and flowed at a stabilized rate of 2.6 MMcf/day through a one-half inch choke, with flowing pressures building throughout the test. This 'Second Targeted' formation appears from the
flow test to be 'sweet' and free of any appreciable H2S content.

The Company is planning follow-up wells on each of the three Sections over which the two formations have been mapped. This will include at least one additional exploration well to be located on Section 26 which, in addition to the two formations described above, is targeting both a shallower formation and a much deeper formation. All four Sections are owned 100% by the Company and all three follow-up wells will be drilled 100% by the Company. The next of these follow-up wells is licensed at 13-26-81-17 W6M.

The Company is planning to place the Halfway formation from the 12-25-81-17 W6M well on production as soon as possible, and this will require construction of approximately three and one-half miles of pipeline.

SEPTIMUS FIELD

Terra Energy spudded the Terra Septimus 15-34-81-19 W6M well on August 25, 2005. The Company was targeting an anticline running (approximately) east/west above the Septimus normal fault, which is the south boundary of the Fort St. John graben. The well was drilled by the Company on a 100% basis to a total depth of 1,752 metres KB. This exploration well had two primary target formations including the Halfway formation and an 'upper' Doig formation. The Halfway formation in this well was a developmental target, inasmuch as the 15-34 well offsets existing Halfway production located approximately one mile to the east. The Company's mapping was based upon geological controls and seismic data, and resulted in the Halfway formation being mapped by the Company as extending across three Sections of the Company's lands.

Log analysis shows that the Halfway formation in the 15-34 well has 12 metres of net gas pay, with no apparent underlying water. The interval was not drill stem tested, as it is the intention of the Company to complete the interval immediately. The average porosity across the interval is calculated to be 11%. The Halfway interval is awaiting perforating and fracture stimulation, which is scheduled for the second week of October, 2005. Similar wells in the Fort St John area have experienced initial production rates from the Halfway formation of between 2 MMcf/day and 4 MMcf/day.

Log analysis shows that the 'upper' Doig formation in the 15-34 well has two and one-half metres of net gas pay, with no apparent underlying water. The interval was not drill stem tested, as it is the Company's intention to complete the formation immediately. The average porosity across the interval is calculated to be 11%. The interval was perforated and subjected to a five tonne frac which 'sanded off'. The well was refraced in the 'upper' Doig interval on September 30, 2005 and the Company is currently gathering flow and pressure data.

The Company is planning follow-up wells on each of the two Sections over which the Halfway formation has been mapped. This will include at least one additional exploration well to be located on Section 33 which, in addition to the Halfway formation described above, is targeting both a shallower formation and a 'middle' Doig formation. All three Sections are owned 100% by the Company and both (2) follow-up wells will be drilled 100% by the Company. The Company spudded the first of the follow-up wells, the Terra Septimus 16-33-81-19 W6M well, on September 21, 2005 and this well is currently in the process of being drilled.

Immediately upon confirming the results of the 15-34 well, the Company commenced construction of a pipeline connecting the Septimus Field with the Company's Wilder Field to the north. This pipeline construction project is anticipated to cost approximately $3.5 Million and will involve a river crossing of the Pine River. Completion of the pipeline construction project is scheduled for the first week of December. The Company is planning to place the Halfway formation from the 15-34-81-19 W6M well and the 16-33-81-19 W6M well on production as early as December of this calendar year.

EIGHT MILE FIELD

Terra Energy spudded the Terra Septimus 4-12-81-18 W6M well on its Eight Mile lands on July 6, 2005. The Company was targeting a middle Doig shoreface which has been mapped running through the Company's Eight Mile lands. The Company's mapping was based upon a combination of geological controls and seismic data. This middle Doig shoreface, appears as an anomaly on seismic. The seismic anomaly ranges from one mile to two miles in width and has been mapped by the Company as extending across 14 Sections of the Company's lands, all of which are owned 100%. This exploration well had only the one primary target formation, however other formations are prospective in the area including Paddy/Cadotte, Charlie Lake and Halfway.

Similar Doig sands have been drilled and exploited in the area, and are typically 'tight', requiring a significant fracture stimulation.

The 4-12 well was drilled by the Company on a 100% basis to a total depth of 2,015 metres KB. Log analysis shows that the Doig sands in the 4-12 well has 19 metres of thickness, with no apparent water. The well was cased and perforated, with an initial reservoir pressure of approximately 17,400 kpa. The average porosity across the interval is calculated to be 6% across a four metre interval. The well appears to be 'tight' and have low permeability requiring fracture stimulation.

The Company has plans to drill three or four additional Doig wells on its Eight Mile lands in the near future all at 100%. In addition, one well is to be drilled later this year at 3-3-80-17 W6M at a 25% working interest cost share. A 24 kilometer 2D seismic program is planned for the coming winter season to assist in identifying drilling locations. Following further drilling results, the Company will evaluate this resource play, and will prepare a development strategy for the entire Eight Mile Field. This development strategy may involve downspacing and the drilling of more than 20 potential development wells.

BOUDREAU FIELD

Terra Energy spudded the Terra Boudreau 8-26-84-21 W6M well on September 9, 2005. The Company has experienced high success with recompletions of the Baldonnel formation in several wells located within its Boudreau field conducted earlier this year. These recompletions have resulted in production test rates ranging from .75 MMcf/day to in excess of 1.5 MMcf/day. The known or 'upper' Baldonnel reservoir is composed of dolomite and ranges from two metres to four metres in thickness.

The Boudreau field is directly on trend with established Baldonnel gas fields in the Fort St John area. Geological mapping by the Company based upon geological controls and seismic data indicates the size of the Baldonnel gas reservoir in Boudreau to be extensive and extending across Section 18 of Township 84 Range 20 W6M and Sections 13, 14, 23 and 26 of Township 84 Range 21 W6M, all part of the Company's lands.

The 8-26 well was drilled by the Company on a 100% basis into the Charlie Lake formation at a total depth of 1,528 metres KB., targeting the 'upper' Baldonnel formation as well as several deeper formations.

Log analysis shows that the 'upper' Baldonnel formation in the 8-26 well has over two and one-half metres of net gas pay, with no apparent underlying water. The interval was not drill stem tested, as it is the intention of the Company to complete the interval immediately. The average porosity across the interval is calculated to be 15%. The 'upper' Baldonnel interval was perforated and acid stimulated on September 28, 2005, and is currently being flow tested at rates approximately 2.7 MMcf/day.

Log analysis shows that the 'lower' Baldonnel formation in the 8-26 well has one metre of net gas pay. The average porosity across the interval is calculated to be 9%. The interval was perforated and acid stimulated. The 'lower' Baldonnel formation has production tested oil and gas at modest rates of production of approximately 20 BOE/day.

The Company is planning follow-up wells on Sections 12 and 23. Sections 12 and 23 are owned 100% by the Company. The Company spudded the Terra Boudreau A9-23-84-21 W6M well on September 8, 2005, and this well is currently in the process of being drilled.

The Company has commenced construction of a pipeline connecting the Boudreau Field with the Company's Red Creek Field to the north. This pipeline construction project is anticipated to cost approximately $400,000. Completion of the pipeline is scheduled for the first week of October. The Company is planning to place the 'upper' Baldonnel formation in the 8-26-84-21 W6M well and the A9-23-84-21 W6M well on production as soon as possible.

GRANDE PRAIRIE FIELD

Terra Energy spudded the Terra Dimsdale 6-7-71-6 W6M well on August 1, 2005. The Company was targeting an 'upper' Charlie Lake formation. The Company has mapped this 'upper' Charlie Lake formation to extend approximately five miles from its 13-12-71-7 W6M well in the west to an abandoned 2-15-71-6 W6M well in the east. This 'upper' Charlie Lake formation is a dolomitic sandstone subcropping up against the Nordegg Shale formation which serves as both a source rock for the reservoir and a top seal. The Company's mapping was based upon geological controls and seismic data, and resulted in the 'upper' Charlie Lake formation being mapped by the Company as extending across as many as nine gross Sections of the Company's lands.

The Company's 13-12 well, which was drilled last year, tested as a high GOR oil well, with approximately 100 BOED capability from this 'upper' Charlie Lake formation which is two metres of net pay in this well. An abandoned 9-12-71-7 W6M well located one half mile to the east of the 13-12 indicates two and one-half metres of net pay thickness in this formation.

The 6-7 exploration well had two primary target formations including the 'upper' Charlie Lake formation and the deeper Montney formation. The 'upper' Charlie Lake formation in this well was a developmental target, inasmuch as the 6-7 well delineates existing 'upper' Charlie Lake production capability located approximately one mile to the west. The 'lower' Charlie Lake was a secondary target, as production exists from this formation approximately three miles to the north. The 6-7 well was drilled by the Company on a 100% basis to a total depth of 2,237 metres KB., reaching into the Montney formation.

Log analysis shows that the 'upper' Charlie Lake formation in the 6-7 well has three and one-half metres of net pay. The average porosity across the interval is calculated to be 12%. The 'upper' Charlie Lake interval is awaiting perfing and fracture stimulation, which is scheduled for the second week of October, 2005.

Log analysis shows that the 'lower' Charlie Lake formation in the 6-7 well has one metre of net oil pay. The average porosity across the interval is calculated to be 12%. The interval was perforated and stimulated with a 20 tonne fracture stimulation. The well was swabbed and indications are that initial production rates will be approximately 50 to 60 BOPD.

The Company is planning follow-up delineation wells on three or four of the Sections in the near future over which the 'upper' Charlie Lake formation has been mapped. This will include at least one additional exploration well to be drilled into Section 15, Township 71 Range 6 W6M, which, in addition to the 'upper' Charlie Lake formation described above, is targeting the Halfway formation. Seven of the nine Sections at Grande Prairie are owned 100% by the Company and the remaining two Sections are owned 60%. Following further drilling results, the Company will evaluate this resource play, and will prepare a development strategy for the entire Grande Prairie Field. This development strategy may involve the drilling of more than 20 potential development wells.

NEW DISCOVERY WITH SIGNIFICANT POTENTIAL

The Company has made a new discovery with significant potential in one of the recent wells which it has drilled. The Company was targeting this discovery zone as a result of a combination of geological mapping and seismic analysis. The discovery well encountered net gas pay across two separate intervals within this zone. Log analysis on the first interval showed four metres of net gas pay and an average porosity of 15%. This first interval tested gas at a maximum rate of 1.5 MMcf/day. Log analysis on the second interval showed four metres of net gas pay and an average porosity of 15%. This second interval tested gas at a maximum rate of 750 Mcf/day. The tests indicated that both of the intervals were damaged as a result of drilling muds, such that it is anticipated that the tested intervals will produce at higher rates with further stimulation.

Management believes that this new discovery has significant potential, as the Company already owns 100% of more than seven Sections of land which are prospective. The Company has also mapped the potential of this discovery zone to extend onto as many as a dozen more Sections of land.

LAND HOLDINGS

Since January 1 of 2005, the Company has endeavored to improve its land holdings in its Fort St. John Core Area, as well as its Grande Prairie field. The total gross acreage of the Company at January 1, 2005, both developed and undeveloped, was 73,500 acres or 107 Sections. As at September 29, 2005, the total gross acreage of the Company, both developed and undeveloped, is 93,150 acres, or 137 Sections. The Company will continue to acquire land in its focus areas with a view to protecting its plays and maximizing shareholder value.

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'.

Reader Cautionary:

BOE's or Mcf or other applicable units of equivalency may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf :1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a valve equivalency at the wellhead.

Forward Looking Statements:

Certain information set forth in this media release contains forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond Terra Energy's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Terra Energy's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward looking-statements will transpire or occur, or if any of them do so what benefits Terra Energy will derive there from.

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