Terrex Energy Inc. - Announces $14.7 Million Financing Through Execution of Hydrocarbon Purchase Agreement
March 21 2011 - 7:30AM
PR Newswire (Canada)
CALGARY, March 21 /CNW/ -- CALGARY, March 21 /CNW/ - Terrex Energy
Inc. ("Terrex" or the "Company") (TSXV: TER) announces that the
Company has entered into a Hydrocarbon Purchase Agreement with
Sandstorm Metals & Energy Ltd. ("Sandstorm") for an initial up
front deposit of $14.7 million. Proceeds from the transaction will
be used, in part, to finance the $13 million acquisition of the Two
Creek property announced on March 7, 2011 and scheduled to close on
March 31, 2011. "This agreement provides a unique financing
arrangement, essentially on a non-dilutive basis, for the
acquisition of the property at Two Creek." said Kim Davies,
President and CEO. "Subsequent to closing, Terrex will have
approximately $10 million of working capital available to pursue
the development of our properties. We see significant value in our
enhanced oil recovery projects and believe the acquisition by a
third party, of approximately 20% of our production for an initial
payment of $14.7 million substantiates this." Under the Hydrocarbon
Purchase Agreement Sandstorm will acquire 15% of all hydrocarbons
produced from the Company's Strathmore property; and 25% of
hydrocarbons produced from the Two Creek Jurassic A pool and, for
five years, 25% of all hydrocarbons produced from the Two Creek
Jurassic B pool. The Two Creek Jurassic A and B pools comprise the
Two Creek property being purchased by the Company. As consideration
for the forward production purchased under the agreement, Terrex
will receive an upfront deposit of $14.7 million together with
ongoing per unit payments of $15.00/bbl of crude oil, $1.00/mcf of
natural gas, and $8.00/bbl of natural gas liquids delivered to
Sandstorm. The agreement stipulates that Sandstorm is responsible
for royalties associated with the purchased production, and that
Terrex will implement chemical flood programs within 24 months and
36 months of the effective date, at Strathmore and Two Creek
respectively. The transaction is subject to approval by the TSX
Venture Exchange ("TSXV") and the upfront deposit is payable to
Terrex upon approval. Terrex believes optimization and enhanced oil
recovery programs at both the Two Creek and Strathmore properties
can significantly increase production and recoverable reserves. On
January 21, 2011 the Alberta Energy Resources Conservation Board
approved the Company's plans for an Enhanced Oil Recovery ("EOR")
program at Strathmore. Terrex intends to commence the planning,
evaluation and development of such programs at Two Creek
immediately following closing of the acquisition. Subsequent to
closing the Two Creek acquisition, Terrex will be producing
approximately 350 barrels of oil equivalent per day. Terrex Energy
Inc. is a Calgary-based junior oil company that specializes in the
application of proven Enhanced Oil Recovery (EOR) methods to
improve oil production from mature pools. Terrex targets
underexploited and undercapitalized light-to-medium oil reservoirs
in Western Canada. Terrex shares are listed on the TSX Venture
Exchange under the symbol 'TER' Neither the TSV Venture Exchange
nor its Regulation Service Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release. Forward-Looking
Statements This news release contains certain forward-looking
statements and forward-looking information (collectively referred
to herein as "forward-looking statements") within the meaning of
Canadian securities laws. All statements other than statements of
historical fact are forward-looking statements. In particular, this
press release contains forward-looking statements pertaining to
expectations of management regarding the sale of hydrocarbons by
the Company to Sandstorm including: the prices to be received for
the sale of hydrocarbons the closing date of such agreement; the
use of the upfront deposit, the closing date of the Two Creek
property acquisition; the characteristics of the Two Creek and
Strathmore properties; the expected timing of the planning,
evaluation and development of the programs, and the success of such
program. Undue reliance should not be placed on forward-looking
statements, which are inherently uncertain, are based on estimates
and assumptions, and are subject to known and unknown risks and
uncertainties (both general and specific) that contribute to the
possibility that the future events or circumstances contemplated by
the forward-looking statements will not occur. Assumptions are
based in part on the terms of the hydrocarbon purchase agreement
and include, among other things: future capital expenditure levels;
the ability to secure regulatory approval, the ability to obtain
financing on acceptable terms to finance the acquisition; future
oil and natural gas prices; future oil and natural gas production
levels; the success of IOR and EOR programs; the ability to obtain
equipment in a timely manner to carry out development activities;
the ability to market oil and natural gas successfully; and the
impact of increasing competition. Although Terrex believes
that the expectations reflected in the forward looking statements
contained in this press release, and the assumptions on which such
forward-looking statements are made, are reasonable, there can be
no assurance that such expectations will prove to be correct.
Readers are cautioned not to place undue reliance on
forward-looking statements included in this document, as there can
be no assurance that the plans, intentions or expectations upon
which the forward-looking statements are based will occur. By their
nature, forward-looking statements involve numerous assumptions,
known and unknown risks and uncertainties that contribute to the
possibility that the predictions, forecasts, projections and other
forward-looking statements will not occur, which may cause Terrex's
actual performance and results in future periods to differ
materially from any estimates or projections of future performance
or results expressed or implied by such forward-looking statements.
These risks and uncertainties include, among other things, the
following: that the acquisition may not close when planned or at
all or on the terms and conditions set forth herein; the failure of
Terrex to obtain the necessary regulatory approval required in
order to proceed with the acquisition; volatility in market prices
for oil and natural gas; failure to complete planned financing
activities; incorrect assessment of the value of the acquisition;
failure to realize the anticipated benefits of the acquisition;
general economic conditions in Canada; and the other factors.
Readers are cautioned that this list of risk factors should not be
construed as exhaustive. The forward-looking statements contained
in this news release are made as of the date hereof and Terrex does
not undertake any obligation to update publicly or to revise any of
the included forward-looking statements, except as required by
applicable law. The forward-looking statements contained herein are
expressly qualified by this cautionary statement. To view this news
release in HTML formatting, please use the following URL:
http://www.newswire.ca/en/releases/archive/March2011/21/c4784.html
p Kim Davies, President & CEO, or Norm Knecht, VP Finance &
CFO, at (403) 264-4430, or visit Terrex's website at a
href="http://terrexenergy.ca"terrexenergy.ca/a. /p
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