VANCOUVER, Nov. 26, 2013 /CNW/ - Terrace Energy Corp. (the "Company") (TSXV:TZR), (OTCQX:TCRRF), (FRANKFURT:2TR) is pleased to announce it has reached an agreement to earn a significant block of additional acreage in McMullen County, Texas which is on trend with its highly successful STS Olmos Project. The Company has entered into a contract to acquire 33.34% working interest, 24% net revenue interest in 3,616 net mineral acres. Upon satisfaction of the earning provisions of this agreement, this acquisition will bring the Company's net mineral acreage position from 5,105 net acres to 6,310 net acres.
The Company has reached an agreement to acquire 33.34% working interest in an initial tract of 199.05 net mineral acres in exchange for a payment of US$33,173.00 and funding its proportionate share of an initial horizontal well into the Olmos formation at an estimated net cost to the Company of $1.8 million. Upon successful completion of the initial well, the Company will have 90 days in which to exercise its option to acquire at least 33.34% working interest in an additional 3,416.95 net mineral acres for an additional cash payment of approximately US$700,000.00.
In addition to the initial well, the Company expects that this acreage position will support 10 - 20 additional drilling locations in the Olmos formation.
As previously reported the Company and its partner, BlackBrush Oil & Gas have drilled 8 successful wells in the STS Olmos Project and have identified approximately 160 gross additional locations on the existing leasehold. Results to date have been extremely encouraging. The most recent 4 wells have generated 30 day IP rates averaging nearly 600 BOPD (over 1000 BOEPD*) and have produced over 100,000 barrels of oil to date. These 4 wells are currently flowing at a combined rate of over 3,000 BOEPD*.
The Company and its partner are currently finalizing drilling plans and budgets to move the project from delineation into development phase early in Q1 2014 which will include multi-well drilling pads designed to optimize capital costs and improve infrastructure efficiencies. In preparation for this program, the partners have also reached agreement to rationalize leasehold interests throughout the existing project area to affect an overall 33% working interest in favor of the Company, proportionately reduced by third party interests in a portion of the project area. In total, the Company owns approximately a 30% working interest in the current project acreage. As the project expands, the Company and its partner will participate in new acreage at 50% working interest each, adjusted for third party interests.
George Morris, the Company's Chief Operating Officer, commented: "This acquisition is a continuation of our program to expand our acreage in this project area through a series of similar negotiations focusing on "drill-to-earn" contracts rather than traditional acquisitions. This is a core focus area for our Company and we are extremely pleased with the results achieved to date. We are planning an aggressive expansion of our drilling program in the area for 2014 and look forward to continuing success."
About Terrace Energy
Terrace Energy is an oil & gas development stage company that is focused on unconventional oil extraction in onshore areas of the United States.
ON BEHALF OF THE BOARD OF DIRECTORS
Dave Gibbs, CEO
* BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 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.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
This press release includes forward-looking information and forward-looking statements (together, "forward-looking information") within the meaning of applicable Canadian and United States securities laws. Forward-looking information includes, but is not limited to: information regarding the development of the STS Olmos project and the timing thereof. Users of forward-looking information are cautioned that actual results may vary from the forward-looking information disclosed in this press release. The material risk factors that could cause actual results to differ materially from the forward-looking information contained in this press release include changes to the Company's ability to access infrastructure in the vicinity of STS Olmos Project at a reasonable price, costs for and availability of required goods and services, regulatory changes and all of the other risks and uncertainties normally associated with the exploration for and development and production of oil and gas, including geologic uncertainties, unforeseen drilling hazards, accidents and adverse weather conditions. The forward-looking information contained in this press release represents management's best judgment of future events based on information currently available. The material assumptions used to develop the forward-looking information include: that production from the wells at the STS Olmos Project will continue as projected, that the Company will be able to access infrastructure in the vicinity of the STS Olmos Project on reasonable terms, that the Company will be able to access the goods and services necessary in order to conduct further exploration, development and production at the STS Olmos Project on reasonable terms, that regulatory requirements will not change in any material respect and that other aspects of the Company's operations will not be affected by unforeseen events. Statements regarding future drilling locations are based on geologic interpretations which are subject to revision as further data is developed. The Company does not assume the obligation to update any forward-looking information, except as required by applicable law.
SOURCE: Terrace Energy Corp.
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