VANCOUVER, June 9,
2014 /CNW/ - Terrace Energy Corp. (the "Company"
or "Terrace") (TSXV: TZR, OTCQX: TCRRF; Germany: 2TR) is
pleased to announce that its wholly owned subsidiary, Terrace STS,
LLC, has secured a US$75 million
senior unsecured term credit facility (the "Term Credit Facility"),
which is non-recourse to Terrace, to fund the development of its
STS Olmos Project in McMullen and
LaSalle Counties in south
Texas. The facility is arranged and provided by Chambers
Energy Capital ("Chambers") of Houston,
Texas.
Dave Gibbs, the
Company's President and CEO commented: "We are extremely pleased to
work with Chambers, a highly respected capital provider to the oil
and gas industry in the United
States. This facility will allow us to accelerate our
development plans to drill and complete approximately 55 gross
wells over the next 30 months. The cash flow we expect to generate
will be the catalyst for the Company's transformation from a pure
exploration company to a robust oil producer."
Dave Gibbs further
commented: "This Credit Facility will also allow us to use the
majority of our available equity capital to expedite high potential
exploratory programs on our Maverick
County and Big Wells Projects, particularly those targeting
the naturally fractured Buda Limestone."
Rivington Holdings, LLC acted as exclusive financial advisor to
Terrace Energy Corp.
About the STS Olmos Project
As previously reported, the Company and its
development partner have drilled nine successful wells on STS
Olmos, which comprises approximately 17,000 gross acres in
McMullen and LaSalle Counties in south Texas. These wells established the viability
of the project with initial 30 day production rates approximating
1,000 BOEPD (83% liquids). With the results of these successful
delineation wells, the Company was able to identify approximately
145 additional drilling locations within our current leasehold. We
are finalizing field preparation work to launch an aggressive
drilling program in July, using pad drilling techniques that allow
for the drilling of multiple wells from a single location which
will significantly improve capital efficiency and accelerate
development of the project.
The Term Credit Facility
The Term Credit Facility contains the following
terms and conditions and such other terms and conditions that are
customary for such facilities including requiring compliance with
customary financial and reserve ratios and other covenants:
Borrower:
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Terrace STS,
LLC.
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|
|
Amount:
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US$75 million, of
which US$50 million will be available initially and the balance
with the approval of Chambers.
|
|
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Term:
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Four
years.
|
|
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Interest:
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Cash interest of
LIBOR + 7% per annum plus payment-in-kind interest ("PIK Interest")
of 5% per annum.
|
|
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Payments:
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Cash interest paid
monthly. Principal and PIK Interest paid upon
maturity.
|
|
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Prepayment:
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Permitted. If
prepaid in first three years with a "make whole premium" for
interest plus 4%. After third anniversary, pre-payable
without penalty or premium.
|
|
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Condition:
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The consent of the
mineral interest lessors to the transfer and registration of
certain leasehold working interests between the Company and its
partner, as reported on November 26, 2013.
|
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
with a particular focus on South
Texas.
ON BEHALF OF THE BOARD OF DIRECTORS
"Dave Gibbs"
Dave Gibbs, President and Chief
Executive Officer
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.
Cautionary Statements regarding use of BOEs,
Initial Production Rates and Forward-Looking Information
BOEs/boes, as used in the disclosure of
BOEPD in this news release, may be misleading, particularly if used
in isolation. A boe conversion ratio of six (6) Mcf to one
(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. As the value ratio between
natural gas and crude oil based on the current prices of natural
gas and crude oil is significantly different from the energy
equivalency of 6:1, utilizing a conversion on a 6:1 basis may be
misleading as an indication of value.
Average 30-day initial production rates disclosed
in this news release are not necessarily indicative of long-term
performance or of ultimate recovery.
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: the
Company's plans for further development of the STS Olmos project
(hereafter, the "Project"), including its plans to drill and
complete approximately 55 gross wells over the next 30 months;
field production objectives for the Project; expectations regarding
the potential number of additional drilling locations on the
Project; performance characteristics of the Project; and
expectations regarding the use of multiple well drilling pads on
the Project; and the Company's plans for exploratory activities on
its Big Wells and Maverick County
Projects. Users of forward-looking information are cautioned that
actual results may vary 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: uncertainties associated with estimating oil and natural
gas reserves; the risk that unexpected geological results are
encountered, completion techniques require further optimization or
production rates do not match the Company's assumptions; changes to
the Company's ability to access infrastructure in the vicinity of
the Project at a reasonable price; changes to the Company's ability
to access materials, equipment and services at a reasonable price;
the impact of general economic conditions; volatility in market
prices for oil and natural gas; currency fluctuations; risks and
uncertainties associated with potential changes in environmental or
other regulations, permitting processes or taxation; the risk that
the Company is unable to access required equity financing; and
other risks and uncertainties described under the heading "Risk
Factors" and elsewhere in the Company's most recent Annual
Information Form and other documents filed with Canadian securities
regulators at www.sedar.com.
Readers are cautioned that the assumptions used
in the preparation of forward-looking information, although
considered reasonable at the time of preparation, may prove to be
imprecise and, as such, undue reliance should not be placed on
forward-looking information. The material assumptions used to
develop the forward-looking information include: production from
the wells at the Project will continue as projected and modelled;
reserve recoveries are consistent with management's expectations;
the Company will be able to access infrastructure in the vicinity
of the Project on reasonable terms; the Company will be able to
access the goods and services necessary in order to conduct further
exploration, development and production at the Project on
reasonable terms; regulatory requirements will not change in any
material respect; oil and gas prices will remain in their current
range; capital markets will continue to be receptive to financing
the Company; 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.