VANCOUVER, Nov. 10, 2014 /CNW/ - Terrace Energy Corp. (the "Company") (TSXV: TZR, OTCQX: TCRRF, FRANKFURT: 2TR) reports that the development drilling program is well underway on the Company's STS Olmos Development Project, McMullen and LaSalle Counties, Texas. Drilling operations are complete on the project's first three-well pad, the STS Section 6 pad, in McMullen County with each well encountering the targeted zone. Horizontal laterals of approximately 5,200' have been drilled and cased in each well and operations are in progress to simultaneously complete all three wells by hydraulic fracture stimulation using a "zipper frac" process. Test results are expected in early December. Based on data obtained during drilling operations, the Company expects these wells to perform similarly to the seven delineation wells previously completed in the project, which averaged 30 day IP rates of over 1000 BOEPD*.
Contemporaneous with completion operations on the Section 6 pad, drilling operations are advancing on schedule at the second three-well pad site, the STE Section 5 pad, in LaSalle County. Surface casing has been set on each of the three wells at approximately 5,000' and lateral drilling is in progress on the STE 3-5H at present. Drilling operations are expected to be finished by late December with completion operations scheduled for January. Further, construction operations have been initiated on the third multi-well pad, the STS Section 17 pad. The rig will move to this site in late December immediately following drilling operations on the STE Section 5 pad. Current plans are to develop the STS Section 17 pad as a six-well site.
The STS Project contains approximately 145 gross potential drilling locations on approximately 17,000 gross mineral acres. The Company plans continuous drilling operations with the current rig. Additional rigs are planned to augment the program in 2015 and 2016. The Company's capital commitments for all activities are fully funded under its previously announced $75 million development drilling facility. The Company controls a 27% working interest in the project.
Based on the economic model built for the purpose of securing the $75,000,000 drilling facility for the STS Olmos Project (announced on June 9th 2014) the following economic sensitivities are projected on the project. Using the benchmark WTI price and modeling 30 day IP rates of 800 BOEPD, the type curve model projects a 50% IRR at $100.00 USD per barrel, 41% IRR at $90.00 USD per barrel, 32% IRR at $80.00 USD per barrel, 23% IRR at $70.00 USD per barrel and positive economic returns at prices below $50.00 per barrel. The project also continues to enjoy a significant premium to the benchmark prices due to its desirable crude quality and favorable location within the marketing infrastructure.
Dave Gibbs, the Company's President and CEO commented; "Based on the consistency of the historical production results to date, we expect this project to be the primary driver to continue building production volumes, reserves and asset value for the next several years. Additionally, we are working closely with our partner to optimize capital efficiencies, completion techniques and frac design with a goal of further enhancing well performance and economic returns."
Additionally, the first well at the NW AWP Olmos Development Project, Quintanilla #1-H well, initially tested at 986 BOEPD* on October 14, 2014, as previously announced. The Company holds a 33% working interest in 199 acres including this well and has also earned an option to acquire a 33% working interest in 3400 adjacent mineral acres, which contains several potential drilling locations in the Olmos formation. This project is part of the Company's ongoing strategy to expand its leasehold interests in the Olmos fairway. Due to the close correlation of geological characteristics and well performance to the STS Project, development drilling capital for the NW AWP Project is also being funded through the $75 million development drilling facility.
The company will provide further updates in due course.
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 plans for the development of the Company's projects and the timing thereof, including the expected economic rates of return projected by the Company's internal models, potential number of drilling locations on the STS and NW AWP Olmos Development Projects and expectations regarding achieving key successes and milestones over the next several months. Users of forward-looking information are cautioned that actual results may vary materially 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 its projects at a reasonable price; changing costs for and availability of required goods and services; regulatory changes; risks relating to disagreements or disputes with joint venture partners, including any failure of a joint venture partner to fund its obligations; volatility in market prices for oil and natural gas; 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, geological, technical, drilling and processing problems, 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; however, there can be no assurances that the project will achieve the economic returns cited nor that initial test results are indicative of long term stable production rates. The material assumptions used to develop the forward-looking information include: that the Company will be able to access infrastructure in the vicinity of its projects 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 its projects 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.
For further information: [email protected]; www.terraceenergy.net; Canadian Address, Suite 1012-1030 W Georgia St., Vancouver B.C., V6E 2Y3, Ph: 604 282-7897, Fax: 604 629-0418; US Address, Suite 400-202 Travis Street, Houston, Texas, 77002, Ph: 713 227-0010