Terrace Energy Corp.
TSX VENTURE : TZR

Terrace Energy Corp.

August 07, 2012 06:00 ET

Terrace Energy Corporation Provides Operational Update

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 7, 2012) - Terrace Energy Corp. (TSX VENTURE:TZR) (the "Company" or "Terrace") announces that it has successfully executed an aggressive drilling program on both of its major projects, drilling two new wells on each project. These wells resulted in a major Eagle Ford discovery on our Cutlass Project in Dimmit and LaSalle Counties, with an equally successful confirmation well over nine miles east of the initial discovery. The Company also drilled two highly significant confirmation wells on its previously reported Olmos discovery in McMullen County Texas, extending the known productive limits of the field by over five miles to the southwest. Completion operations are currently being scheduled with significant new production anticipated in late third quarter and early fourth quarter.

Drilling Operations:

Eagle Ford Project - Cutlass

Our Cutlass Eagle Ford project has achieved positive results. The Cutlass West #1A well was drilled vertically to a depth of 9200' with extensive coring and logging operations to confirm the key objective horizons, including an excellent Eagle Ford Shale section which was the primary objective of the project. The pilot hole was subsequently plugged back in order to drill the objective Eagle Ford Shale section horizontally. We successfully drilled and cased a 5300' horizontal within the highest indicated productive section of the Eagle Ford with excellent hydrocarbon shows throughout the drilling process. The Eagle Ford section in this well is comparable to the best quality wells drilled by several major companies in the immediately surrounding area. The drilling phase of the Cutlass West #1A was accomplished on schedule and below budget.

Upon conclusion of the drilling phase of the Cutlass West #1A well, the rig was repositioned to the eastern portion of the project leasehold in order to drill the Cutlass East #1 evaluation well. This well has just reached total depth and extensive petrophysical analysis is currently underway. Results to date, including mudlogs and field observations of the conventional cores indicate that the Eagle Ford exhibits very similar qualities to the excellent results seen in the Cutlass West #1A well. Additional hydrocarbon indicators similar to those observed in the Cutlass West #1A have been observed throughout the deeper section as well. These preliminary results are especially significant, given the distance between these initial wells of approximately 9 miles.

Subsequent to concluding the drilling and evaluation work on the Cutlass East #1 evaluation well, completion operations for the West #1A are expected to commence in early September 2012. The Company is also currently evaluating several alternatives for gas sales infrastructure. We anticipate first production from the project in early October.

Olmos Project - STS

On our South Texas Syndicate Olmos Development Project, the company has completed the drilling phase of its two-well program. Both wells achieved highly significant geological results, confirming the extension of the field by approximately 5 miles to the southwest of the STS 1-667H discovery well.

The drilling phase of these wells, the SP5 1-47H and SP5 2-47H, have been completed on schedule and on budget, while encountering the productive horizon precisely where anticipated with correlative pay quality and thickness as encountered in the STS 1-667H well. The wells were drilled to a target depth of approximately 8900' vertically with horizontal sections of approximately 5200'.

Our operating partner is currently completing construction on an extension of their gas gathering system into the "Teak" gas gathering and processing facilities. Construction on this project has been slightly delayed due to severe weather in South Texas, but final tie-ins are expected in mid-August. Upon completion of the gas system, completion operations on both wells will commence in mid-August. First production from these new completions is expected in September.

Certain of the statements made in this news release may contain forward-looking statements within the meaning of the United States Securities Exchange Act of 1934 and forward-looking information within the meaning of applicable Canadian securities law (together, "forward-looking statements"). Forward-looking statements include, but are not limited to statements or information with respect to the expected timing of drilling, production, and completion of infrastructure. Users of forward-looking statements are cautioned that actual results may vary from the information disclosed in this press release. The material risk factors that could cause actual results to differ materially from the forward-looking statements contained in this press release include: lack of availability of goods and services, regulatory changes, poor weather conditions, and all of the other risks and uncertainties normally associated with the exploration for and development and production of oil and gas. The forward-looking statements contained in this press release represent management's best judgment of future events based on information currently available. The material assumptions used to develop the forward-looking statements include: that necessary goods and services will be available on reasonable terms, that regulatory requirements will not change in any material respect, that weather conditionals will be favorable, and that other aspects of the Company's operations will not be affected by unforeseen events. The Company does not assume the obligation to update any forward-looking statements, except as required by applicable law.

Contact Information