Terrex Energy Inc. Reports Third Quarter 2011 Results

CALGARY, Nov. 29, 2011 /CNW/ - Terrex Energy Inc. ("Terrex" or the "Company") (TSX-V: TER) announces its financial and operating results for the three and nine months ended September 30, 2011.

The Company has filed its unaudited interim financial statements and related management's discussion and analysis ("MD&A") for the three and nine month periods ended September 30, 2011 on SEDAR at www.sedar.com and on the Company's website at www.terrexenergy.ca. Certain selected financial and operational information for the period is set out below and should be read in conjunction with the Company's interim financial statements and related MD&A for the period ended September 30, 2011.

OPERATIONS AND OUTLOOK

Terrex currently owns two oil properties with, on a combined basis, over 40 million barrels of original oil in place ("OOIP"). Technical analyses of these properties have identified their potential for improved oil recovery ("IOR") and enhanced oil recovery ("EOR") programs which could add considerable reserves and production.

The Strathmore property contained approximately 20 million barrels OOIP with 4.8 million bbls recovered to date.  When acquired by Terrex in 2010, the pool was producing about 40 bbls/d of oil and 200 mcf/d of gas, for a total of 70 boe/d. Geological and geophysical mapping, including 3D seismic, combined with reservoir simulations indicate that this pool is a strong candidate for a chemically enhanced water flood program. Analogous pools, where similar programs have been implemented, have recovered an additional 7% to15% of original oil in place.  Similar results from an EOR program at Strathmore could result in the recovery of 1.5 to 3 million barrels of additional oil.

At Strathmore, Terrex has recently completed a number of field operations in preparation for a planned EOR program. These activities have doubled the production from the pool to approximately 140 boe/d. The majority of future production gains, however, are expected to come from the planned EOR program and during the third quarter, activities continued to focus on the development of the chemical alkaline-surfactant-polymer ("ASP") flood for the property. Final fluid and core flood analyses and reservoir simulations are nearing completion, and the overall EOR field plan has been finalized. Construction of the Strathmore ASP facilities is complete with delivery from Wyoming is waiting on completion of site preparations. Once the facilities are on site, commissioning will commence and chemical injection and restart of the water flood is expected to begin in early 2012.

As planning of the EOR program has progressed, the Company has identified operational efficiencies and the potential for an earlier production response time. In order to capitalize on these efficiencies, the Company plans to accelerate capital expenditures relating to the overall project.   The Company is currently considering various financing options in order to fund this accelerated capital program.

At Two Creek, Terrex has commenced the planning of a second IOR/EOR project on the Company's Jurassic A and B pools. Approval of an application for an EOR program on the A pool has been received from the Energy Resources Conversation Board and the Company is working on the design of an optimal EOR program. Specialized technical EOR analysis work has commenced and laboratory analyses, reservoir simulations and cost estimates are underway. The A Pool also appears to have good IOR optimization potential and the Company plans to drill two horizontal in-fill wells and re-align the water flood in 2012 prior to the implementation of an EOR program. Additionally, at Two Creek, Terrex has  commenced reservoir assessments of the B pool.

The Company has also identified and is actively pursuing other properties for IOR and EOR potential consistent with the criteria developed by the company.

The Company has elected not to provide market guidance at this time for 2012.

OPERATIONAL AND FINANCIAL
SUMMARY
   
             
Three month periods ended September 30            2011 2010
Average production, boe/d             332.3 72.0
Capital expenditures, including acquisitions $     1,409,845 $        541,320
Revenue, net of royalties     $     1,551,459 $        297,045
Funds flow from operations (1)   $(      159,271) $(      449,054)
  Per share, basic and diluted   $(          0.002) $(          0.006)
Operating (loss) (1)     $(      477,481) $(      468,141)
  Per share, basic and diluted   $(          0.005) $(          0.006)
Net (loss)       $(      779,526) $(      960,746)
  Per share, basic and diluted   $(          0.009) $(          0.012)
             
  (1) Funds flow from operations and operating loss are non-IFRS measures as
outlined in this document
         
             
Nine and Eight month Periods ended
September 30
           2011 2010
Average production, boe/d             342.6 73.7
Capital expenditures, including acquisitions $   18,429,192 $     1,539,053
Revenue, net of royalties     $     4,891,569 $        870,533
Funds flow from operations (1)   $(      570,847) $(      950,899)
  Per share, basic and diluted   $(          0.007) $(          0.020)
Operating (loss) (1)     $(   1,488,345) $(   1,004,735)
  Per share, basic and diluted   $(          0.018) $(          0.021)
Net (loss)       $(   1,824,981) $(   2,452,794)
  Per share, basic and diluted   $(          0.022) $(          0.052)
             
  (1) Funds flow from operations and operating loss are non-IFRS measures as
outlined in this document
         

Comparative figures for 2010 are for the three and eight month periods ended September 30, 2010 and have been restated to reflect International Financial Reporting Standards ("IFRS") adopted in 2011.

Production and revenue for the three and nine month periods ended September 30, 2011 increased significantly over the comparable periods in 2010, primarily as a result of the acquisition of the Two Creek property, as of January 1, 2011. Production averaged 332 boe/d during the third quarter of 2011, an increase of 260 boe/d over the third quarter of 2010. Production for the nine month period ended September 30, 2011 averaged 343 boe/d, an increase of 269 boe/d over 2010. This increase in production together with increased commodity prices is reflected in the year over year increase in revenue. Realized 2011 commodity prices, on a boe basis, increased approximately 24% over 2010.

As expected, the Company has continued to incur losses in advance of the implementation of optimization and EOR projects. Net losses for the three and nine month periods ended September 30, 2011 were $779,526 and $1,824,981 respectively as compared to $960,746 and $2,452,794 for the comparable periods in 2010. 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

Barrels of Oil Equivalent

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-IFRS 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 under International Financial reporting Standards ("IFRS") 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 and, 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-IFRS measures should not be considered an alternative to, or more meaningful than cash provided by operating activities and net loss determined in accordance with IFRS.

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 news 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
  • implementation, anticipated benefits and timing of enhanced oil recovery ("EOR") programs
  • other expectations, beliefs, plans, goals, objectives, assumptions or statements about future events or performance

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.

 

 

 

 

 

SOURCE Terrex Energy Inc

For further information:

For additional information please contact Kim Davies, President & CEO, or Norman Knecht, VP Finance and CFO, at (403) 264-4430, or visit the Company`s website at www.terrexenergy.ca

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Terrex Energy Inc

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