CALGARY, ALBERTA–(Marketwired – Feb. 14, 2014) – Terra Energy Corp. (“Terra” or the “Company”) (TSX:TT) is pleased to announce its Capital Expenditure Plan and Budget for 2014 (“2014 Capex Plan”). Initial total capital spending on exploration and development projects for the year is approved at approximately $14.3 million.
Following the various asset marketing and divestment processes which have been undertaken by the Company over the past year, the Company continues to have a sizeable production base centered on the Peace River Arch area of British Columbia and Alberta. Updated reserves volumes and net asset valuation estimates, for year end 2013 will be released by the Company in March of 2014 in a manner consistent with our annual redetermination and reporting of reserves. The following table summarizes the impact of our 2012 year end reserves volumes, as evaluated by GLJ Petroleum Consultants Ltd., adjusted for the disposition of the Montney and other asset which took place during 2013 (without adjustments for 2013 production, reserves additions or technical revisions):
|Proved + Probable Reserves|
|Balance at January 1, 2013||128,303||2,314||2,873||26,571|
|Dispositions during year||(51,862||)||(48||)||(1,432||)||(10,124||)|
|January 31, 2013 reserves adjusted for dispositions||76,441||2,266||1,441||16,447|
For additional information regarding Terra’s reserves as at December 31, 2012, please see Terra’s Annual Information Form dated March 26, 2013 which is available under the Company’s profile at www.sedar.com.
Terra’s business strategy going forward will be to focus on oil and natural gas liquids with a view towards increasing the oil and liquids content of the Company’s production stream over time and increasing the Company’s netbacks. The 2014 Capex Plan will largely consist of a number of pipeline projects to tie-in existing wells and otherwise to target plays with oil and natural gas liquids. Two key oil plays will be pursued in particular, namely a light oil play at Stoddart, B.C. and a light oil play at Red Creek, B.C. In addition to these two key oil plays, the Company will also test a number of other oil/liquids plays during the year.
The 2014 Capex Plan has been designed to reverse the trend in declining production experienced by the Company over the past two years and to develop a “platform for growth” focusing on two key oil plays. Moreover, the Company plans to primarily utilize cashflows from operations to meet its 2014 objectives. The target production exit rate for year end 2014 is set at 4,900 boe/d, comprised of approximately 39% oil/liquids and 61% gas.
Cash flow from operations has been forecasted by the Company at approximately $20.8 million for 2014, based upon an estimated average natural gas price of $3.81 per mcf for the calendar year, an estimated average oil price of $86.27 per barrel and an average 2014 production rate of approximately 4,470 boe/d.
Certain information set out herein may be considered as “financial outlook” within the meaning of applicable securities laws. The purpose of this financial outlook is to provide readers with disclosure regarding Terra’s reasonable expectations as to the anticipated results of its proposed business activities for the periods indicated. Readers are cautioned that the financial outlook may not be appropriate for other purposes. The financial outlook information contained herein has been prepared based on a number of assumptions including the assumptions discussed above. The actual results of operations and the resulting financial results will likely vary from the amounts set forth herein and such variation may be material.
Terra is a junior oil and gas company engaged in the exploration for, and the 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”.
Forward Looking Statements
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. Additionally, given the value ratio based on the current price of crude oil compared to natural gas is significantly different from the energy equivalent of 6:1, utilizing a conversion ratio of 6:1 may be misleading as an indication of value.
This media release contains certain information and statements which constitute forward-looking information or statements (“forward-looking statements”) within the meaning of applicable securities laws, including, without limitation, the amount and details of its 2014 Capex Plan, the anticipated release of year end reserves information, its future business strategy, results of operations, its business plan, commodity focus, planned tie-ins, drilling potential and plans, plans to primarily utilize cashflows from operations to meet its 2014 objectives, targeted production exit rates, expected commodity mix, forecasted cash flow and estimated commodity pricing. All forward-looking statements contained herein that are not clearly historical in nature constitute forward-looking statements, and the words “may”, “will”, “should”, “could”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “propose”, “predict”, “potential”, “continue”, or the negative of these terms or other comparable terminology are generally intended to identify forward-looking statements. 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 and are subject to numerous risks and uncertainties, certain of which are beyond the Company’s control, including, without limitation: volatility in the market prices for oil and natural gas; liabilities inherent in oil and natural gas operations; uncertainties associated with estimating oil and natural gas reserves; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions; geological, technical, drilling and processing problems; fluctuations in foreign exchange or interest rates; health, safety and environmental risks; stock market volatility; global economic events or conditions; and other factors, many of which are beyond the control of the Company. We caution that the forgoing list of risks and uncertainties is not exhaustive.
Terra’s actual results, performance or achievement could differ materially from those anticipated in these forward-looking statements and accordingly, no assurance can be given that any events anticipated by the forward-looking statements will transpire or occur. 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 further detail in our Annual Information Form and other documents available at www.sedar.com.
The reader is cautioned that historical results are not necessarily indicative of future performance. 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 Company and its management believe that the financial outlook information contained herein has been prepared on a reasonable basis, reflecting the best estimates and judgements, and represent, to the best of management’s knowledge and opinion, the Company’s expected expenditures and results of operations. However, because this information is highly subjective and subject to numerous risks, including the risks discussed herein and in Terra’s Annual Information Form and Management’s Discussion and Analysis, it should not be relied on as necessarily indicative of future results. Except as required by applicable law, Terra undertakes no obligation to update any financial outlook information.
Vice President of Finance, & Chief Financial Officer