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, 2013.
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 statement.
Information contained in this media release regarding the well test result is not necessarily indicative of long-term performance or of ultimate recovery.
Terra Energy Corp.
Vice President of Finance & Chief Financial Officer
Terra Energy Corp.
Manager, Corporate Affairs
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