Terrex Energy Inc. reports Q3 2012 operational and financial
results
CALGARY,
Nov. 26, 2012 /CNW/ - Terrex Energy
Inc. ("Terrex" or the "Company") (TSX-V: TER) reports its
operational and financial results for the three and nine months
ended September 30, 2012. The Company
has filed its unaudited condensed interim financial statements and
related management's discussion and analysis ("MD&A") for the
three and nine months ended September 30,
2012 on SEDAR at www.sedar.com and on the Company's website
at www.terrexenergy.ca. Certain selected financial information for
the period, as set out below, should be read in conjunction with
the Company's unaudited condensed financial statements and related
MD&A for the period ended September 30,
2012.
PRESIDENT'S MESSAGE
The third quarter has been a trying time for
Terrex as we struggled to find a viable option to preserve
shareholder value given our dwindling cash resources. To compound
this situation, production has dropped significantly due to
mechanical issues in our field operations which we cannot remedy at
this time due to a lack of finances. On September 28, 2012, Sandstorm Metals and Energy
Ltd. ("Sandstorm") served Terrex with a notice of default pursuant
to the Hydrocarbon Purchase Agreement ("the Purchase Agreement")
between the Company and Sandstorm. This allows Sandstorm to take
action to realize on their security under that agreement unless the
default conditions are remedied, to Sandstorm's satisfaction, on or
before November 26, 2012.
Further to the Company's news release of
October 1, 2012, we continue to
negotiate in good faith towards a business combination with another
public company, which if consummated in accordance with its
proposed terms, will allow Terrex to cure the default under the
Purchase Agreement and provide funding for our excellent projects
through a strong, well-capitalized, larger junior oil and gas
company.
OPERATIONS AND OUTLOOK
Field activities during the third quarter of
2012 were severely limited due to the Company's current financial
position. At Strathmore, an
overall EOR field plan has been finalized and the design and
development of a chemical alkaline surfactant-polymer ("ASP")
flood, including final fluid and core flood analyses and reservoir
simulations are complete. This plan is currently in abatement as
the project is not economic on a risk adjusted basis, in the
current commodity price environment. Alternatively, management has
identified an investment program of phased infill drilling, and
water flood modifications. This plan is more fiscally prudent and
achievable at a lower risk and with a more modest capital exposure.
At Two Creek the Company has identified locations for a possible
four in-fill well drill program in the Jurassic A Pool and is
proceeding with the design of a water flood optimization program.
Based on the success of this activity, additional development
opportunities would available. Additionally, at Two Creek, analyses
have commenced and cores have been delivered for laboratory testing
as the Company continues to evaluate an optimum EOR plan for the
Jurassic A Pool. At the Two Creek B Pool, a low pressure water
flood plan has been developed and an application is being prepared
for submission to the Energy Resources Conservation Board.
The implementation of these optimization
programs and EOR plans, both at Strathmore and Two Creek, will not be
implemented until sufficient funding is secured.
The Company has elected not to provide market
guidance at this time for 2012.
OPERATIONAL AND FINANCIAL SUMMARY
|
Periods ending
September 30, |
|
Three Months |
|
Nine Months |
($000's except as noted) |
2012 |
|
2011 |
|
2012 |
2011 |
Average production, Boe/d |
263 |
|
332 |
|
291 |
343 |
Capital expenditures, including
acquisitions |
$ |
81 |
|
$ |
1,410 |
|
$ |
1,052 |
|
$ |
18,429 |
Revenue, net of royalties, |
$ |
1,227 |
|
$ |
1,551 |
|
$ |
4,096 |
|
$ |
4,892 |
Funds flow from operations (1) |
$ |
(365) |
|
$ |
(159) |
|
$ |
(1,097) |
|
$ |
(571) |
|
Per share, basic and diluted |
$ |
(0.004) |
|
$ |
(0.002) |
|
$ |
(0.013) |
|
$ |
(0.007) |
Operating (loss) (1) |
$ |
(504) |
|
$ |
(477) |
|
$ |
(1,812) |
|
$ |
(1,488) |
|
Per share, basic and diluted |
$ |
(0.006) |
|
$ |
(0.005) |
|
$ |
(0.022) |
|
$ |
(0.018) |
Net (loss) |
$ |
(1,336) |
|
$ |
(780) |
|
$ |
(2,738) |
|
$ |
(1,825) |
|
Per share, basic and diluted |
$ |
(0.016) |
|
$ |
(0.009) |
|
$ |
(0.033) |
|
$ |
(0.022) |
(1) Funds flow from operations and operating loss are
non-IFRS measures. |
Production for the three months ended
September 30, 2012 decreased from the
comparable period in 2011 primarily as the result of down-hole
mechanical problems at significant oil and gas producing wells in
both the Two Creek and Strathmore
fields. Due to the current financial constraints of the Company all
well repairs have been deferred until further financial resources
are secured. Total revenues for the quarter also decreased as a
result of reduced oil and gas production and lower realized natural
gas and crude oil prices.
As expected, the Company has continued to incur
losses in advance of the implementation of optimization and EOR
projects. As the Company's EOR and optimization projects progress,
production and revenue are anticipated to increase
significantly.
ABOUT TERREX
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. The
Company's 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
Forward-looking Information - Certain
information as set out herein constitutes forward-looking
information within the meaning of applicable Canadian securities
laws. All information other than historical fact is forward-looking
information. Forward-looking information relates to future events
or future performance and is based on Terrex's current internal
expectations, estimates, projections, assumptions and beliefs.
Forward-looking information is often, but not always, identified by
the use of words such as "expect", "project", "proposed", "intend",
"seek", "anticipate", "budget", "plan", "continue", "estimate",
"forecast", "may", "will", "predict", "potential", "targeting",
"could", "might", "should", "believe" and similar expressions.
Although management considers the assumptions
and estimates, reflected in forward-looking information, to be
reasonable, based on information currently available, there can be
no assurance that such information will prove to be correct. As a
consequence, actual results may differ materially from those
anticipated.
In particular, this News Release contains
forward-looking information relating to possible transactions,
including a business combination.
Undue reliance should not be placed on
forward-looking information which is inherently uncertain, and
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
information will not occur. These risks include, but are not
limited to risks associated with oil and natural gas exploration,
development and production, financial risks, the history of losses,
substantial capital requirements, political and government risks,
government regulations, environmental, prices, dependence on key
personnel, availability and access to equipment, 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.
Boe Presentation - Production volumes and
reserves 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 to one barrel of oil based on an
energy equivalency at the burner tip and does not represent a value
equivalency at the wellhead. Used in isolation, barrels of oil
equivalent may be misleading.
Non-IFRS Measures - This News Release makes
reference to terms commonly used in the oil and gas industry
including funds flow, funds flow from operations and operating
earnings (loss). Such terms do not have a standard meaning as
prescribed by International Financial Reporting Standards ("IFRS")
and therefore may not be comparable with the determination of
similar measures for other entities. These measures are identified
as non-IFRS measures and are used by management to analyze
operating performance and leverage. These measures should not be
construed as an alternative to, or more meaningful than measures
determined in accordance with IFRS.
SOURCE Terrex Energy Inc.