Terrex Energy Inc. - Announces Closing of Hydrocarbon Purchase Agreement
March 28 2011 - 7:30AM
PR Newswire (Canada)
CALGARY, March 28 /CNW/ -- CALGARY, March 28 /CNW/ - Terrex Energy
Inc. ("Terrex" or the "Company") (TSX-V: TER) announces the
closing of the Hydrocarbon Purchase Agreement with Sandstorm Metals
& Energy Ltd. ("Sandstorm") previously announced on March 21,
2011. 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. The Company's initial evaluation of the Two Creek property
indicates that the property is a good candidate for optimization
and Enhanced Oil Recovery (EOR) programs. These programs have the
potential to significantly increase production and recoverable
reserves from the property. Pool optimization, including the
likelihood of drilling at least one well, is expected to commence
in the second half of 2011 together with planning of an EOR program
for the Two Creek property. At Strathmore, the Company's first EOR
project, chemical injection is scheduled to commence in the fall of
2011. Under the Hydrocarbon Purchase Agreement, Sandstorm has
acquired 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 to be
purchased by the Company. As consideration for the forward
production purchased under the agreement, Terrex received an
upfront deposit of $14.7 million and will receive 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.
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 use of the upfront deposit, the closing date of the
Two Creek property acquisition; the characteristics of the Two
Creek property and; the expected timing of the planning, evaluation
and development of the EOR programs, and the success of such
programs. 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 oil and natural gas prices;
future oil and natural gas production levels; the success of 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:
the failure of Terrex to obtain the necessary regulatory approval
required in order to proceed with the acquisition of the Two Creek
property; 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/March2011/28/c6841.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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