CALGARY, ALBERTA -- (Marketwire) -- 04/01/13 -- Terra Energy Corp. ("Terra" or the "Company") (TSX: TT) announces its 2012 audited consolidated financial statements, management's discussion and analysis and its reserves evaluation, as prepared by GLJ Petroleum Consultants Ltd. ("GLJ") at December 31, 2012 (the "GLJ Report").
The Company's focus for 2012 was centered on the disposition of mainly non-producing assets during a period of continued low natural gas prices. The Company's 2012 financial and operating results were generally impacted by limited cashflows and the Company's efforts to reduce capital expenditures. Proceeds from asset sales during the year were used to reduce the Company's credit facility (the "Credit Facility").
Terra's 2012 year-end financial results may be obtained at www.sedar.com or www.terraenergy.ca.
2012 Financial and Operating Summary
-- The Company realized a gain from asset sales of $13.0 million from proceeds of $38.7 million. Net proceeds were used by the Company to reduce its Credit Facility from $100.0 million at December 31, 2011 to $70.0 million at Dec 31, 2012.-- Average daily production for the year was 5,078 boe/d.-- Revenue for the year decreased from $71.1 million to $45.4 million as a result of weakness in natural gas prices and reduced production arising from the Company not having available capital to support production.-- As a result of declining natural gas prices and the reclassification of reserves associated with assets held for sale, the Company recognized a $57.8 million impairment expense.-- At year-end, the Company had an undeveloped land position of 527,954 net acres.-- Subsequent to year-end the Company entered into a sale and option agreement whereby the Company sold additional assets for net proceeds of approximately $20.0 million which was used to further reduce the Company's Credit Facility to $49.9 million. The option on the remaining Montney assets must be exercised by June 3, 2013 for additional gross proceeds of $36.0 million, less standard industry adjustments and commissions.
Reserves Evaluation and Related Metrics
The GLJ reserves evaluation was performed in accordance with the requirements of National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). Additionally, the Company would like to announce the results of its independent evaluation of undeveloped lands, as prepared by Seaton-Jordan & Associates Ltd. ("Seaton-Jordan") as presented below.
Oil and Gas Reserves
Total proved and probable reserves, net of 2012 production decreased by 22% from 33,945 mboe to 26,571 mboe at December 31, 2012, based upon forecast prices and costs. The breakdown of the Company's reserves consisted of 80% natural gas, 9% crude oil and 11% natural gas liquids as at December 31, 2012.
The following tables summarize certain information contained in the GLJ Report effective December 31, 2012. Detailed reserves information as required under NI 51-101 is included in Terra's Annual Information Form filed on SEDAR. Oil equivalent amounts have been calculated using a conversion rate of 6,000 cubic feet of natural gas to one barrel of oil.