CALGARY, Nov. 29, 2011 /CNW/ - Terrex Energy Inc. ("Terrex" or the
"Company") announces its financial and operating results for the
three and nine months ended September 30, 2011. The Company has
filed its unaudited interim financial statements and related
management's discussion and analysis ("MD&A") for the three and
nine month periods ended September 30, 2011 on SEDAR at
www.sedar.com and on the Company's website at www.terrexenergy.ca.
Certain selected financial and operational information for the
period is set out below and should be read in conjunction with the
Company's interim financial statements and related MD&A for the
period ended September 30, 2011. OPERATIONS AND OUTLOOK Terrex
currently owns two oil properties with, on a combined basis, over
40 million barrels of original oil in place ("OOIP"). Technical
analyses of these properties have identified their potential for
improved oil recovery ("IOR") and enhanced oil recovery ("EOR")
programs which could add considerable reserves and production. The
Strathmore property contained approximately 20 million barrels OOIP
with 4.8 million bbls recovered to date. When acquired by
Terrex in 2010, the pool was producing about 40 bbls/d of oil and
200 mcf/d of gas, for a total of 70 boe/d. Geological and
geophysical mapping, including 3D seismic, combined with reservoir
simulations indicate that this pool is a strong candidate for a
chemically enhanced water flood program. Analogous pools, where
similar programs have been implemented, have recovered an
additional 7% to15% of original oil in place. Similar results
from an EOR program at Strathmore could result in the recovery of
1.5 to 3 million barrels of additional oil. At Strathmore, Terrex
has recently completed a number of field operations in preparation
for a planned EOR program. These activities have doubled the
production from the pool to approximately 140 boe/d. The majority
of future production gains, however, are expected to come from the
planned EOR program and during the third quarter, activities
continued to focus on the development of the chemical
alkaline-surfactant-polymer ("ASP") flood for the property. Final
fluid and core flood analyses and reservoir simulations are nearing
completion, and the overall EOR field plan has been finalized.
Construction of the Strathmore ASP facilities is complete with
delivery from Wyoming is waiting on completion of site
preparations. Once the facilities are on site, commissioning will
commence and chemical injection and restart of the water flood is
expected to begin in early 2012. As planning of the EOR program has
progressed, the Company has identified operational efficiencies and
the potential for an earlier production response time. In order to
capitalize on these efficiencies, the Company plans to accelerate
capital expenditures relating to the overall project.
The Company is currently considering various financing options in
order to fund this accelerated capital program. At Two Creek,
Terrex has commenced the planning of a second IOR/EOR project on
the Company's Jurassic A and B pools. Approval of an application
for an EOR program on the A pool has been received from the Energy
Resources Conversation Board and the Company is working on the
design of an optimal EOR program. Specialized technical EOR
analysis work has commenced and laboratory analyses, reservoir
simulations and cost estimates are underway. The A Pool also
appears to have good IOR optimization potential and the Company
plans to drill two horizontal in-fill wells and re-align the water
flood in 2012 prior to the implementation of an EOR program.
Additionally, at Two Creek, Terrex has commenced reservoir
assessments of the B pool. The Company has also identified and is
actively pursuing other properties for IOR and EOR potential
consistent with the criteria developed by the company. The Company
has elected not to provide market guidance at this time for 2012.
OPERATIONAL AND FINANCIAL SUMMARY Three month periods ended
September 30 2010 2011 Average production, boe/d 72.0 332.3 Capital
expenditures, including acquisitions $ $ 1,409,845 541,320 Revenue,
net of royalties $ $ 1,551,459 297,045 Funds flow from operations
(1) $( $( 159,271) 449,054) Per share, basic and diluted $( $(
0.002) 0.006) Operating (loss) (1) $( $( 477,481) 468,141) Per
share, basic and diluted $( $( 0.005) 0.006) Net (loss) $( $(
779,526) 960,746) Per share, basic and diluted $( $( 0.009) 0.012)
(1)Funds flow from operations and operating loss are non-IFRS
measures as outlined in this document Nine and Eight month Periods
ended September 30 2011 2010 Average production, boe/d 73.7 342.6
Capital expenditures, including acquisitions $ 18,429,192 $
1,539,053 Revenue, net of royalties $ $ 4,891,569 870,533 Funds
flow from operations (1) $( $( 570,847) 950,899) Per share, basic
and diluted $( $( 0.007) 0.020) Operating (loss) (1) $( $(
1,488,345) 1,004,735) Per share, basic and diluted $( $( 0.018)
0.021) Net (loss) $( $( 1,824,981) 2,452,794) Per share, basic and
diluted $( $( 0.022) 0.052) (1)Funds flow from operations and
operating loss are non-IFRS measuresas outlined in this document
Comparative figures for 2010 are for the three and eight month
periods ended September 30, 2010 and have been restated to reflect
International Financial Reporting Standards ("IFRS") adopted in
2011. Production and revenue for the three and nine month periods
ended September 30, 2011 increased significantly over the
comparable periods in 2010, primarily as a result of the
acquisition of the Two Creek property, as of January 1, 2011.
Production averaged 332 boe/d during the third quarter of 2011, an
increase of 260 boe/d over the third quarter of 2010. Production
for the nine month period ended September 30, 2011 averaged 343
boe/d, an increase of 269 boe/d over 2010. This increase in
production together with increased commodity prices is reflected in
the year over year increase in revenue. Realized 2011 commodity
prices, on a boe basis, increased approximately 24% over 2010. As
expected, the Company has continued to incur losses in advance of
the implementation of optimization and EOR projects. Net losses for
the three and nine month periods ended September 30, 2011 were
$779,526 and $1,824,981 respectively as compared to $960,746 and
$2,452,794 for the comparable periods in 2010. As the Company's EOR
and optimization projects progress, production and revenue are
anticipated to increase significantly. ABOUT TERREX Terrex Energy
Inc. is a Calgary based junior oil company that focuses on the
application of proven enhanced oil recovery ("EOR") methods to
improve oil production from existing mature fields. Terrex targets
underexploited and undercapitalized light to medium oil reservoirs
in Western Canada. The Company's shares are listed on the TSX
Venture Exchange under the trading symbol "TER". Neither the TSX
Venture Exchange nor its Regulation Service Provider (as that term
is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
ADVISORIES Barrels of Oil Equivalent Production volumes and reserve
information are commonly expressed on a barrel of oil equivalent
("Boe") basis whereby natural gas volumes are converted at the
ratio of six thousand cubic feet of natural gas to one barrel of
oil based on an energy equivalency at the burner tip and does not
represent a value equivalency at the well head. Used in isolation,
barrels of oil equivalent may be misleading. Non-IFRS Information
Included in this news release are references to terms commonly used
in the oil and gas industry including funds flow from operations
and operating loss. Such terms do not have standard meaning as
prescribed under International Financial reporting Standards
("IFRS") and therefore may not be comparable with the determination
of similar measures for other entities. As used in this news
release, funds flow from operations is calculated as cash flow from
operating activities less changes in non-cash working capital and,
operating loss is calculated as net loss before stock based
compensation and accretion of asset retirement obligations. Funds
flow from operations is used by management in assessing the
Company's ability to fund capital programs and operations and
operating loss provides a comparison of operating results between
periods, excluding non-cash items subject to significant
volatility. The foregoing non-IFRS measures should not be
considered an alternative to, or more meaningful than cash provided
by operating activities and net loss determined in accordance with
IFRS. Forward-Looking Statements Certain statements contained in
this news release constitute forward-looking statements and
forward-looking information (collectively referred to herein as
"forward-looking statements") within the meaning of applicable
Canadian securities laws. Such forward-looking statements relate to
future events or future performance and are based on Terrex's
current internal expectations, estimates, projections, assumptions
and beliefs, including, among other things, assumptions with
respect to production, future capital expenditures and cash flow.
Readers are cautioned that the assumptions used in the preparation
of such information may prove incorrect. All statements other than
statements of historical fact may be forward-looking statements.
Such forward-looking statements are often, but not always,
identified by the use of words such as "seek", "anticipate",
"budget", "plan", "continue", "estimate", "expect", "forecast",
"may", "will", "project", "predict", "potential", "targeting",
"intend", "could", "might", "should", "believe" and similar
expressions. These statements involve known and unknown risks,
uncertainties and other factors that may cause actual results or
events to differ materially from those anticipated in such
forward-looking statements. Terrex believes the expectations
reflected in those forward-looking statements are reasonable but no
assurance can be given that these expectations will prove to be
correct and such forward-looking statements included in, or
incorporated by reference into, this news release should not be
unduly relied upon. These forward looking statements speak only as
of the date of this news release. In particular, this news release
contains forward-looking statements pertaining to the following: --
business strategies -- exploration and development plans --
implementation, anticipated benefits and timing of enhanced oil
recovery ("EOR") programs -- other expectations, beliefs, plans,
goals, objectives, assumptions or statements about future events or
performance Forward-looking statements are based on Terrex's
current beliefs as well as assumptions made by, and information
currently available to, Terrex concerning business prospects,
strategies, regulatory developments, the ability to obtain
equipment in a timely manner to carry out development activities,
the ability to obtain financing on acceptable terms, the benefits
of IOR and EOR programs and the terms of the Hydrocarbon Purchase
Agreement. Although management considers these assumptions to be
reasonable based on information currently available to it, they may
prove to be incorrect. Undue reliance should not be placed on
forward-looking statements, which are inherently uncertain, are
based on estimates and assumptions, and are subject to known and
unknown risks and uncertainties (both general and specific) that
contribute to the possibility that the future events or
circumstances contemplated by the forward looking statements will
not occur. There can be no assurance that the plans, intentions or
expectations upon which forward-looking statements are based will
in fact be realized. Actual results will differ, and the difference
may be material and adverse to Terrex and its shareholders. These
factors include, but are not limited to risks associated with oil
and natural gas exploration, financial risks, the history of
losses, substantial capital requirements, political and government
risks, government regulation, environmental, prices, dependence on
key personnel, availability of drilling equipment and access, risks
may not be insurable, licenses, resource estimates, variations in
exchange rates. Further information regarding these factors may be
found under the heading "Risk Factors" in the company's Annual
Information Form. Readers are cautioned the foregoing list of
factors that may affect future results is not exhaustive. The
forward-looking statements contained in this news release are made
as of the date hereof and Terrex does not undertake any obligation
to update publicly or to revise any of the included forward-looking
statements, except as required by applicable law. The
forward-looking statements contained herein are expressly qualified
by this cautionary statement.
Terrex Energy Inc CONTACT: For additional information please
contact Kim Davies, President &CEO,or Norman Knecht, VP Finance
and CFO, at (403) 264-4430, or visit theCompany`s website at
www.terrexenergy.ca
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