CALGARY, ALBERTA–(Marketwired – Nov. 14, 2013) – Terra Energy Corp. (“Terra” or the “Company”) (TSX:TT) announces its financial and operating results for the three and nine month periods ended September 30, 2013. Copies of Terra’s third quarter results may be obtained at www.sedar.com or www.terraenergy.ca.
Third Quarter 2013 Results
- The Company recorded net income of $6,155,000 as compared to a net loss of $5,366,000 in the same period last year as a result of improved economics and the gain on the disposition of assets during the third quarter.
- Revenues decreased by 5% to $10,257,000 as compared to the same period last year as result of lower production volumes having been partially offset by increased commodity prices realized during the quarter.
- Production during the third quarter decreased to 3,786 boe/d as compared to 4,873 boe/d in the same period last year. Production was impacted by the Company’s limited ability to reinvest capital to offset declines, targeted shut-in of certain non-economic dry gas properties and maintenance disruptions in Hamelin, Wilder and Ladyfern.
- Production expenses decreased by 32% to $5,182,000 from $7,607,000 for the same period last year, mainly due to improved operational efficiencies, continued expense reduction program and lower production volumes.
- Field netbacks have increased by 58% to $3,215,000 compared to $2,030,000 for the same period last year due to strengthened commodity prices and lower production expenses.
- The Company generated cash flow from operations of $1,757,000 compared to negative cash flow from operations of $569,000 in the prior year period as a result of reduced operating costs and G&A expenses coupled with an increase in realized commodity prices.
During the third quarter the Company completed the sale of the remainder of its Montney assets in northeastern British Columbia. Total gross proceeds from the three Montney sale packages were $78 million. The net proceeds from the sales, together with the net proceeds received from the sale of certain non-core assets, were used to reduce the Company’s indebtedness. Accordingly, the Company’s bank debt has been reduced from approximately $100 million to approximately $15 million. This reduction in bank debt has been achieved with the sale of virtually no producing assets, leaving Terra with a strong production base, and improved balance sheet. The Company’s first priority remains the refinancing of its remaining indebtedness in order to provide the necessary working capital flexibility to undertake its capital program going forward.
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’.
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. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1; utilizing a conversion of a 6:1 basis may be misleading as an indication of value.
This media release may contain certain statements which constitute forward-looking statements or information (“forward-looking statements”), including the consideration of various alternatives in order to ensure that the capital structure going forward remains healthy, including short term and long term needs, various other sources of debt capital, raising capital through continued sale of assets, possible issues of notes, convertible debt and equity. Although Terra believes that the expectations reflected in our forward-looking statements are reasonable, our forward-looking statements have been based on expectations, factors and assumptions concerning future events which may prove to be inaccurate. Those expectations, factors and assumptions are based upon currently available information available to the Company. 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 statements. As such, readers are cautioned not to place undue reliance on the forward-looking statements, 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.
Vice President of Finance, & Chief Financial Officer
Terra Energy Corp.
Manager, Corporate Affairs