CALGARY, ALBERTA–(Marketwired – March 27, 2014) – Terra Energy Corp. (“Terra” or the “Company”) (TSX:TT) announces its 2013 year-end financial results. Terra’s 2013 Audited Financial Statements and Management’s Discussion and Analysis may be viewed at www.sedar.com or www.terraenergy.ca.
During 2013, the Company was primarily focused on the reduction of its total net debt and the sale of its Montney unconventional gas assets. The period was characterized by continued low natural gas prices in Canada and capital constraints imposed on the Company. As a result, Terra’s 2013 financial and operating results were impacted by limited cashflows and the Company’s efforts to improve its balance sheet. Proceeds from the sale of assets during the year were used to reduce the Company’s indebtedness.
2013 Financial and Operating Summary
| Year ended December 31 | ||||||||
| ($ in thousands, except per share and boe amounts) | 2013 | 2012 | 2013 | 2012 | ||||
| $ | $ | ($/boe) | ($/boe) | |||||
| Revenue before Royalties | 42,361 | 45,413 | 29.95 | 24.43 | ||||
| Royalties | (7,251 | ) | (4,286 | ) | (5.13 | ) | (2.31 | ) |
| Revenue after Royalties | 35,110 | 41,127 | 24.82 | 22.13 | ||||
| Production Expenses | (21,238 | ) | (35,560 | ) | (15.01 | ) | (19.13 | ) |
| Operating Netback | 13,872 | 5,567 | 9.81 | 3.00 | ||||
| General and Administrative Expenses | (7,503 | ) | (9,009 | ) | (5.30 | ) | (4.85 | ) |
| Financing Costs | (3,102 | ) | (6,095 | ) | (2.19 | ) | (3.28 | ) |
| Realized Gain (Loss) on Derivatives | (455 | ) | (487 | ) | (0.32 | ) | (0.26 | ) |
| Unrealized Gain (Loss) on Derivatives | 759 | 4,291 | 0.54 | 2.31 | ||||
| Realized Foreign Exchange Gain | 3 | 1,823 | – | 0.98 | ||||
| Unrealized Foreign Exchange Gain (Loss) | (3 | ) | 56 | – | 0.03 | |||
| Non-cash Expenses | (13,982 | ) | (80,377 | ) | (9.88 | ) | (43.25 | ) |
| Loss before Income Taxes and Other Income | (10,411 | ) | (84,231 | ) | (7.36 | ) | (45.32 | ) |
| Gain on Disposition of Other Assets | 12,302 | 12,955 | 8.70 | 6.97 | ||||
| Income Tax Recovery | – | 21,299 | – | 11.46 | ||||
| Net Income (Loss) | 1,891 | (49,977 | ) | 1.34 | (26.89 | ) | ||
After having sold its Montney unconventional gas assets in a series of three transactions dating from October of 2012 to July of 2013, Terra Energy is well-positioned with a stronger balance sheet and a substantial “conventional” asset base located in the Peace River Arch areas of British Columbia and Alberta. The recent refinancing of the Company’s bank indebtedness, with a new senior lender, will result in greater certainty in the execution of our plans and a general reduction of general administrative expenses in 2014. The existing asset base will provide the Company with the means to reinvest cash flows into plays and projects which are generally targeting oil and natural gas liquids, with the objective of improving the overall corporate oil-gas production ratio over time and also increasing the average netbacks/cash flows in future years. This strength is reflected in the Company’s reserves and relatively high net asset valuation at year-end 2013.
Strategically, Terra Energy is relying on commodity hedging in order to ensure that cash flows are sufficient to fund and execute on our overall plans. To that end, Terra has hedged 8,000 Gj/day at an average price of $4.05 Cdn from April 1, through October 31, 2014.
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’.
[expand title=”Advisories & Contact”]Reader Advisory
All amounts in Canadian dollars unless otherwise specified.
Information Regarding Disclosure in Oil and Gas Reserves and Operational Information
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.
Forward-Looking Statements
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 judgments, 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.
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