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Terra Energy Announces Completion of Initial Montney Asset Sale
By: Marketwired .
Dec. 18, 2012 04:05 PM
CALGARY, ALBERTA -- (Marketwire) -- 12/18/12 -- Terra Energy Corp. ("Terra" or the "Company") (TSX:TT) is pleased to announce that the initial portion of the $78.0 million Montney sale transaction was successfully completed on December 14, 2012 for a cash consideration of $22.0 million, plus adjustments, for the Company's Montney assets located in Monias and Groundbirch, British Columbia. Proceeds received have been utilized by the Company to reduce its total indebtedness including the reduction of the Company's credit facility to $70.0 million.
The second portion of the transaction consists of the granting by Terra to the purchaser of an option to purchase the remaining approximately 123 net sections of Montney assets in northeast British Columbia for a purchase price of $56.0 million, including the Company's Farrell Creek, Altares, Attachie and Hudson areas. The purchase price may include a combination of cash and shares of the purchaser, at the discretion of the purchaser, provided that the consideration must include a minimum of $20.0 million in cash. The purchaser has been granted the alternative option to acquire only the Company's Montney assets located in the Attachie area, which consist of approximately 31 net sections, for a purchase price of $20.0 million in cash. The two alternative options remain exercisable by the purchaser on or before March 15, 2013.
Additionally, the Company has completed or is scheduled to complete various minor asset transactions with various purchasers in the Karr area of Alberta, Steelman area of Saskatchewan and Inga area of British Columbia, for total consideration of approximately $2.7 million in cash, making up the remainder of the originally announced transaction opportunities totaling in excess of $80.0 million referenced in our media release on November 6, 2012. The lands sold in the Karr area of Alberta were facing upcoming expiries early in 2013. Terra still owns approximately 45 net sections of lands having potential in both the Duvernay and Montney formation in the Karr and North Ante Creek areas of Alberta.
Terra's production base will be kept intact, as the above mentioned asset transactions have associated production of only approximately 50 boe/d . Additionally, Terra will continue to own over 350,000 net acres of undeveloped land.
In conjunction with the completion of these asset dispositions, the Company's senior lenders have granted a further extension to the Company's credit facility until January 31, 2013.
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'.
All amounts in Canadian dollars unless otherwise specified.
The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil (6 mcf/bbl.) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions in this report are derived from converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil. 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 on a 6:1 basis may be misleading as an indication of value.
This media release may contain certain statements which constitute forward-looking statements or information ("forward-looking statements") including the completion of various minor non-producing asset transactions. There is no assurance that either of the alternative options will be exercised or the timing of exercise. 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. 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 our Annual Information Form and other documents available at www.sedar.com. 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.
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