CALGARY, April 27 /CNW/ -- CALGARY, April 27 /CNW/ - Terrex Energy
Inc. ("Terrex" or the "Company") (TSXV: TER) reports financial and
operating results for the year and fourth quarter ended December
31, 2010, together with the independent evaluation of the Company's
reserves at December 31, 2010. The full text of Management's
Discussion and Analysis and the Company's audited financial
statements are available on the Company's website at
www.terrexenergy.ca and on SEDAR at www.sedar.com. A Statement of
Reserves, prepared in accordance with National Instrument 51 -101
("NI 51-101") is contained in the Company's 2010 Annual Information
Form, which is also available on the Company's website and on
SEDAR. "Our goal in creating Terrex was that of building a unique
oil company focused on Enhanced Oil Recovery (EOR) and to extend
the life of existing mature oil fields through the application of
proven technologies", stated Ms. Kim Davies, President and CEO of
Terrex. "Although December 31, 2010 marks the first year of
operations for Terrex, it is really just six months since our
initial private placement and listing on the TSX Venture exchange
in late June. During this period, we have made significant steps
toward realizing on our goal and we look forward to reporting
continued progress throughout 2011". 2010 Highlights -- Building an
experienced management team and technical group; -- Establishing a
strong Board of Directors; -- Acquiring and commencing development
of the Company's first EOR project; -- Securing $15 million of
equity financing; and -- Listing on the TSX Venture Exchange. 2010
activities have positioned Terrex to pursue its business plan and
strategy into 2011 as evidenced by the previously announced
acquisition of its second EOR project at Two Creek in west central
Alberta on March 31, 2011 and the closing of a creative $14.7
million financing through the Hydrocarbon Purchase Agreement
announced on March 21, 2011. Operations During 2010, Terrex
focused on the design of a chemical alkaline-surfactant-polymer
(ASP) flood for the Strathmore property and the Company's plans
were approved by the Alberta Energy Resources Conservation Board
(ERCB) on January 21, 2011. In the field, Terrex concentrated on
field rehabilitation activities, including the re-activation of
well bores and pipelines, injector well conversions and
modifications and repairs of existing facilities in preparation for
the EOR project scheduled to commence with the injection of
chemicals during the second half of 2011. Operational and Financial
Summary
____________________________________________________________
|Periods ended December 31, 2010 |Three Months|Eleven Months|
|_________________________________|____________|_____________|
|Average production, boe/d | 105| 82|
|_________________________________|____________|_____________|
|Capital expenditures | $1,105,703| $2,720,590|
|_________________________________|____________|_____________|
|Revenue, net of royalties | $554,834| $1,425,367|
|_________________________________|____________|_____________|
|Funds flow from operations (1) | $(556,012)| $(1,506,911)|
|_________________________________|____________|_____________| |
Per share, basic and diluted| $(0.007)| $(0.029)|
|_________________________________|____________|_____________|
|Operating loss (1) | $599,968| $1,653,908|
|_________________________________|____________|_____________| |
Per share, basic and diluted| $0.007| $0.029|
|_________________________________|____________|_____________| |Net
loss | $669,862| $2,403,096|
|_________________________________|____________|_____________| |
Per share, basic and diluted| $0.008| $0.042|
|_________________________________|____________|_____________| (1)
Funds flow from operations and operating loss are non-GAAP measures
and are addressed in the "Advisories" section. As anticipated, the
Company has incurred losses during its initial start-up year.
Throughout the year, the Company's only revenue producing property
was the Strathmore field which, prior to the implementation of the
planned EOR program, does not produce sufficient revenue to offset
expenses due to low production rates and high operating costs
typical of a very mature field. 2010 Reserves All of the Company's
reserves were evaluated by GLJ Petroleum Consultants Ltd. ("GLJ")
as at December 31, 2010 in accordance with NI 51-101 and the
reserve evaluation has been approved by the Board of Directors of
Terrex. Strathmore All of Terrex's reserves as at December 31,
2010, as summarized below, are located in the Strathmore area of
southern Alberta. Proved and probable reserves relate to
existing and ongoing operations at Strathmore and are referred to
as "conventional reserves". Possible reserves totalling
approximately 1.3 million barrels of oil equivalent have been
assigned by GLJ to the planned ASP flood at Strathmore due to the
early stage of its development. Possible reserves, under NI 51-101,
are defined as those additional reserves that are less certain to
be recovered than probable reserves. There is a 10%
probability that the quantities actually recovered will equal or
exceed the sum of proved plus probable plus possible reserves.
Strathmore Reserve Summary Net Present Value Before December Tax,
31, 2010 Oil, Mbbl Gas, MMcf Total, Mboe M$ Gross Net Gross Net
Gross Net 5% 10% 15% Proved Producing 78 72 266 250 123 114 401 363
329 Total 78 72 266 250 123 114 401 363 329 Proved Probable 289 266
107 100 307 283 2,309 1,417 796 Total, Proved & 368 338 373 350
430 396 2,710 1,780 1,125 Probable Possible 1,158 958 1,120 1,028
1,344 1,130 16,573 8,152 3,174 Total Proved, Probable &
Possible 1,526 1,296 1,493 1,378 1,774 1,526 19,283 9,932 4,299 Two
Creek On March 31, 2011, effective as at January 1, 2011, the
Company acquired certain producing assets in the Two Creek area of
west central Alberta. As at December 31, 2010, the Two Creek assets
were evaluated by GLJ. The assets were evaluated effectively on a
"blow down" basis without any assignment of reserves resulting from
planned future optimization and EOR activities. The following table
summarizes the Two Creek reserve evaluation: Two Creek Reserve
Summary Net Present Value Before December Oil & NGL's, Tax, 31,
2010 Mbbl Gas, MMcf Total, Mboe M$ Gross Net Gross Net Gross Net 5%
10% 15% Proved Producing 402 315 371 334 464 370 9,002 7,915 7,065
Total 402 315 371 334 464 370 9,002 7,915 7,065 Proved Probable 112
87 91 82 125 102 2,242 1,648 1,256 Total, Proved & Probable 513
402 462 416 589 472 11,244 9,563 8,321 Combined Strathmore/Two
Creek Reserves The following table reflects the impact of the Two
Creek acquisition on the Company's reserves on a pro forma basis as
though the Company acquired the Two Creek properties on December
31, 2010. Combined Pro Forma Strathmore and Two Creek Reserve
Summary Net Present Value Before December Oil & NGL's, Tax, 31,
2010 Mbbl Gas, MMcf Total, Mboe M$ Gross Net Gross Net Gross Net 5%
10% 15% Proved Producing 481 387 637 584 587 484 9,403 8,278 7,394
Total 481 387 637 584 587 484 9,403 8,278 7,394 Proved Probable 401
353 198 182 432 385 4,551 3,065 2,052 Total, Proved & 882 741
835 766 1,019 868 13,954 11,343 9,446 Probable Possible 1,158 958
1,120 1,028 1,344 1,130 16,573 8,152 3,174 Total Proved, Probable
& Possible 2,039 1,698 1,955 1,794 2,363 1,998 30,527 19,495
12,620 Hydrocarbon Purchase Agreement : $14.7 Million Financing On
March 24, 2011, the Company entered into a Hydrocarbon Purchase
Agreement (the "Agreement") effective April 1, 2011, with Sandstorm
Metals & Energy Ltd. ("Sandstorm"). Under the Agreement, the
Company sold forward 15% of hydrocarbons produced from the
Strathmore property, 25% of hydrocarbons produced from the Two
Creek Jurassic A pool, and 25% of hydrocarbons produced from the
Two Creek Jurassic B pool for a period of five years. As
consideration, Terrex received an up-front deposit of $14.7
million, which was used in part to purchase the Two Creek property.
Additionally, the Company will receive ongoing per unit payments of
$15.00/bbl of crude oil, $8.00/bbl of natural gas liquids and
$1.00/mcf of natural gas delivered to Sandstorm. Sandstorm is
responsible for royalties and direct transportation costs
associated with purchased production. Terrex has provided Sandstorm
with a guarantee that Sandstorm will receive minimum before tax
payments of $0.5 million in 2011, $1.1 million in 2012, $1.8
million in 2013, $2.2 million in 2014, $2.6 million in 2015, $2.4
million in 2016, $2.2 million in 2017, and $1.9 million in
2018. Under the Agreement, Terrex has the right to buy back
half of the future production, for a period of 24 months upon
payment to Sandstorm of $9.55 million. The Agreement does not
affect GLJ's estimate of the combined Strathmore and Two Creek
reserves. The Agreement does, however, affect the valuation of the
combined Strathmore and Two Creek reserves as disclosed above.
Based upon an evaluation conducted by GLJ with an effective date as
of December 31, 2010, the Agreement has the impact of reducing the
net present value of future net revenue before income taxes from
the combined Strathmore and Two Creek properties, discounted at 10%
per year, by $6.6 million to $12.9 million. Board of Directors On
April 21, 2011, Mr. James Hutton resigned from the Board of
Directors of Terrex. Mr. Hutton, as Chairman of Terra Ventures Inc.
("Terra") was instrumental in the formation of Terrex through
establishing the Company as a subsidiary of Terra. With the
successful spin-out of Terrex from Terra, Mr. Hutton has chosen to
devote his attention and efforts to other ventures. Management and
the Board wish to thank Mr. Hutton for his contribution, advice and
guidance in the formation of the Company and look forward to his
ongoing support. The Board of Directors has determined not to
replace Mr. Hutton with a new director and the Company will
continue with five directors: being Harry L. Knutson (Chairman),
Tony Angelidis, R. James Brown, Kim N. Davies, and Jonathan Lexier.
Terrex Energy Inc. is a Calgary based junior oil company that
focuses on the application of proven Enhanced Oil Recovery (EOR)
methods to improve oil production from existing mature fields.
Terrex targets underexploited and undercapitalized light to medium
oil reservoirs in Western Canada. Terrex shares are listed on the
TSX Venture Exchange under the trading symbol "TER". Neither the
TSX 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. Advisories Reserve Information and Barrels of Oil
Equivalent Information relating to reserves of petroleum and
natural gas contained herein represent estimates, which were
prepared by the vendor's independent reserve evaluators in
accordance with National Instrument 51-101. Estimating quantities
of proved petroleum and natural gas reserves is a subjective,
complex process that is dependent on a number of assumptions and
variable factors. Estimates of proved plus probable reserves are
made assuming the development of the property, without
consideration as to the availability of funding necessary for that
development. Production volumes and reserve information are
commonly expressed on a barrel of oil equivalent ("Boe") basis
whereby natural gas volumes are converted at the ratio of six
thousand cubic feet of natural gas to one barrel of oil based on an
energy equivalency at the burner tip and does not represent a value
equivalency at the well head. Used in isolation, barrels of oil
equivalent may be misleading. Non-GAAP Information Included in this
news release are references to terms commonly used in the oil and
gas industry including funds flow from operations and operating
loss. Such terms do not have standard meaning as prescribed by
Canadian generally accepted accounting principles ("GAAP") and
therefore may not be comparable with the determination of similar
measures for other entities. As used in this news release funds
flow from operations is calculated as cash flow from operating
activities less changes in non-cash working capital an, operating
loss is calculated as net loss before stock based compensation and
accretion of asset retirement obligations. Funds flow from
operations is used by management in assessing the Company's ability
to fund capital programs and operations and operating loss provides
a comparison of operating results between periods, excluding
non-cash items subject to significant volatility. The foregoing
Non-GAAP measures should not be considered an alternative to, or
more meaningful than cash provided by operating activities and net
loss determined in accordance with GAAP. Forward-Looking Statements
Certain statements contained in this news release constitute
forward-looking statements and forward-looking information
(collectively referred to herein as "forward-looking statements")
within the meaning of applicable Canadian securities laws.
Such forward-looking statements relate to future events or future
performance and are based on Terrex's current internal
expectations, estimates, projections, assumptions and beliefs,
including, among other things, assumptions with respect to
production, future capital expenditures and cash flow.
Readers are cautioned that the assumptions used in the preparation
of such information may prove incorrect. All statements other
than statements of historical fact may be forward-looking
statements. Such forward-looking statements are often, but
not always, identified by the use of words such as "seek",
"anticipate", "budget", "plan", "continue", "estimate", "expect",
"forecast", "may", "will", "project", "predict", "potential",
"targeting", "intend", "could", "might", "should", "believe" and
similar expressions. These statements involve known and
unknown risks, uncertainties and other factors that may cause
actual results or events to differ materially from those
anticipated in such forward-looking statements. Terrex
believes the expectations reflected in those forward-looking
statements are reasonable but no assurance can be given that these
expectations will prove to be correct and such forward-looking
statements included in, or incorporated by reference into, this new
release should not be unduly relied upon. These
forward-looking statements speak only as of the date of this news
release. In particular, this news release contains forward-looking
statements pertaining to the following: -- business strategies --
exploration and development plans -- the characteristics of the
Strathmore Property and the Two Creek Property -- implementation,
benefits and timing of enhanced oil recovery ("EOR") programs --
the quantity and value of oil and natural gas reserves -- net
present values of future net revenues from reserves -- other
expectations, beliefs, plans, goals, objectives, assumptions or
statements about future events or performance Statements relating
to "reserves" are forward-looking statements, as they involve the
implied assessment, based on certain estimates and assumptions that
the reserves described exist in the quantities predicted or
estimated and can profitably be produced in the future.
Forward-looking statements are based on Terrex's current beliefs as
well as assumptions made by, and information currently available
to, Terrex concerning business prospects, strategies, regulatory
developments, the ability to obtain equipment in a timely manner to
carry out development activities, the ability to obtain financing
on acceptable terms, the benefits of IOR and EOR programs and the
terms of the Hydrocarbon Purchase Agreement. Although
management considers these assumptions to be reasonable based on
information currently available to it, they may prove to be
incorrect. 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. There can be
no assurance that the plans, intentions or expectations upon which
forward-looking statements are based will in fact be
realized. Actual results will differ, and the difference may
be material and adverse to Terrex and its shareholders. These
factors include, but are not limited to risks associated with oil
and natural gas exploration, financial risks, the history of
losses, substantial capital requirements, political and government
risks, government regulation, environmental, prices, dependence on
key personnel, availability of drilling equipment and access, risks
may not be insurable, licenses, resource estimates, variations in
exchange rates. Further information regarding these factors
may be found under the heading "Risk Factors" in the company's
Annual Information Form. Readers are cautioned the foregoing
list of factors that may affect future results is not 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/April2011/27/c7130.html
p Kim Davies, President & CEO, or Norm Knecht, VP Finance and
CFO, at (403) 264-4430, or visit the Company's website at a
href="http://www.terrexenergy.ca"www.terrexenergy.ca/a. /p
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