Terra Energy Closes on Additional $20 Million Montney Sale
CALGARY, ALBERTA -- (Marketwire) -- 03/01/13 -- Terra Energy Corp.
("Terra" or the "Company") (TSX:TT) is pleased to announce that the
Company has closed on an additional $20 million sale of Montney
assets to Crew Energy Inc. ("Crew").
Pursuant to an Option Agreement dated December 3, 2012, as amended,
Crew elected to exercise its option to purchase additional Montney
assets from Terra at an exercise price of $20 million cash. The
resulting sale transaction was successfully completed on February 28,
The Company initially closed on the sale of Montney assets to Crew in
December 2012, for cash consideration of $22 million, after
adjustments, and included Montney assets in Monias and Groundbirch,
northeast British Columbia (the "Initial Sale"). Concurrently with
signing the Initial Sale, the Company entered into an Option
Agreement and granted options for Crew to acquire additional Montney
assets, exercisable on or before March 15, 2013. Under the terms of
the Option Agreement, Crew had the option to purchase either all of
the remaining Montney assets of the Company located in northeast
British Columbia for $56 million or the option to purchase only
certain designated Montney assets located in the Attachie area, for a
purchase price of $20 million. These two alternative options were
required to be exercised by Crew on or before March 15, 2013.
On February 28, 2013, Crew formally notified the Company that it
would exercise its option to purchase the $20 million package of
Montney assets early, in return for the granting by the Company to
Crew of an additional option to purchase the balance of the Company's
Montney assets in British Columbia for $36 million (the "Additional
Option"). At the same time, the terms of the original Option
Agreement were amended to include certain Montney assets located in
Stoddart and Eagle to those Montney assets located in Attachie,
bringing the total Montney lands under consideration to approximately
60 net sections. On February 28, 2013, Terra and Crew executed an
Agreement of Purchase and Sale in respect to this option, and the two
parties successfully completed the transaction. Assets included in
this option package had no production or reserves attributed to them.
Under the terms of the Additional Option, the Company granted Crew
the option to acquire the balance of its Montney assets located in
northeast British Columbia for a price of $36 million. The price may
consist of any combination of cash or Crew shares, with a minimum
cash component of $10 million. The option does have restrictions on
assignment and must be exercised by Crew on or before June 3, 2013,
with a closing to occur on or before July 9, 2013.
Following the completion of the sale on February 28, 2013, Terra
continues to hold approximately 80 net sections of highly prospective
Montney lands in the Farrell Creek/Altares, Hudson, and Mica areas of
northeast British Columbia. These remaining Montney assets contain
the bulk of the Company's booked Montney reserves and the most
prospective/lowest risk segment of its original Montney asset
package. These remaining Montney Assets also include the highly
successful 10-22-84-25W6 horizontal well in Altares, which was
drilled by Terra in 2010 and tested continuously for 41.5 hours at
flow rates in excess of 13 mmcf/day with a wellhead pressure of 1,200
pounds per square inch (or 8,500 kilo pascals).
Net proceeds from the sale will be utilized by the Company to reduce
Terra's bank facility initially from $70 million to $51.5 million
with a further reduction to $49.9 million by March 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.
This media release may contain certain statements which constitute
forward-looking statements or information ("forward-looking
statements") including: net proceeds from the sale will be utilized
by the Company to reduce Terra's bank facility initially from $70
million to $51.5 million with a further reduction to $49.9 million by
March 31, 2013. There is no assurance that the Additional Option 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. Those expectations, factors and
assumptions are based upon currently available information available
to the Company. Such statements are subject to known and unknown
risks, uncertainties and other factors that could influence actual
results or events and cause actual results or events to differ
materially from those stated, anticipated or implied in the
forward-looking statements. 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
Information contained in this media release regarding the well test
result is not necessarily indicative of long-term performance or of
Terra Energy Corp.
Vice President of Finance & Chief Financial Officer
Terra Energy Corp.
Manager, Corporate Affairs
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