Terra Energy Announces 2011 Capital Expenditure Plan
Monday, January 31, 2011 9:43 PM
CALGARY, ALBERTA, Jan. 31, 2011 (Marketwire) --
Terra Energy Corp. ("Terra" or the "Company") (TSX:TT) is pleased to announce its Capital Expenditure Plan and Budget for
2011 ("2011 Capex Plan"). Total capital spending on exploration and development is targeted at approximately $29 million.
Cash flow from operations has been forecasted by the Company at approximately $32.5 million for 2011, based upon an
estimated average natural gas price of $3.50 per mcf for the calendar year, an estimated average oil price of $85.00 per barrel
and an average 2011 production rate of approximately 6,800 boe/d.
"2010 saw Terra advance our unconventional Montney gas play into a world class asset. Terra's focus during 2011 will continue
to be on moving this play forward at an accelerated pace of development. The immediate challenge will be to unlock the
tremendous upside in our Montney play, which, in turn, should unlock the potential of Terra's capital stock." said Cas H. Morel,
President and CEO. "What has changed for 2011 is the recognition that the play is now big enough to carry itself going forward.
To this end, the Company will be seeking new capital, from private equity sources or through possible joint venture
arrangements, which will allow quicker development. Not simply to develop higher levels of commercial production and cash
flows, but to continue de-risking the play and proving up the resource. Our ability to raise new capital by finding a partner for our Montney play will, in turn, allow Terra to direct the cash flows from our non-Montney operations towards oilier projects and towards the development of new unconventional/resource plays within our substantial land base across Alberta and British Columbia."
The 2011 Capex Plan has been designed to maintain the Company's current daily average production rate through 2011 and
limit capital spending to cash flows received from operations. The Company will primarily pursue projects having one or more
oil (or liquids rich) targets while continuing to advance its Montney unconventional gas play. Approximately 90 percent of the
2011 Capex Plan is directed at non-Montney operations which can and should foster a new cycle of growth opportunities.
On November 15, 2010, the Company announced that it had engaged GMP Securities LP and Scotia Capital Inc., as joint
financial advisors, to assist the Company in raising private equity for the Company's Montney operations. Successful
completion of the targeted funding will certainly have a significant impact on that portion of the 2011 Capex Plan allocated towards Montney operations, and may also result in the Company re-visiting that portion of the 2011 Capex Plan allocated
towards non-Montney operations. The Company continues to work with its financial advisors in this regard and will provide
appropriate updates to the market during the coming months.
The Montney consistently ranks among the best shale gas plays in North America in terms of technical merits, size and economics.
