CALGARY, April 24, 2012 /CNW/ - Terrex Energy Inc. ("Terrex" or the
"Company") is pleased to report crude oil and natural gas reserves
information for the year ended December 31, 2011 and a summary of
operational and financial results for the three months and year
ended December 31, 2011. DECEMBER 31, 2011 RESERVES SUMMARY
Highlights - Total Proved reserves (87% oil) increased to 1.01
million barrels of oil equivalent (Boe), a 724% increase over 2010.
- Total Proved plus Probable reserves (89% oil) increased by 534%
to 2.7 million Boe over 2010. - Total Proved plus Probable plus
Possible reserves (90% oil) increased by 116% to 3.8 million Boe. -
Future Development Costs, including chemicals, relating to Proved
Undeveloped reserves are $9.77 per Boe; $17.45 per Boe for Probable
reserves; and $1.62 for Possible reserves. "The significant reserve
additions recognized in 2011 by our independent reserve evaluators,
including the promotion of possible reserves to probable reserves,
with only minimal field activity, reflects the solid technical work
of the Terrex team and the economic viability of our projects"
stated Kim Davies, President and CEO. "We look forward to
additional increases in reserves and value as we execute our
development programs and realize on the worth of these projects"
added Ms. Davies. 2011 Activities At Strathmore, the Company's
first Enhanced Oil Recovery ("EOR") project, reservoir simulations
were completed to determine the optimum well patterns and resulting
production forecast. Based upon core flood analysis, the optimal
alkaline-surfactant-polymer ("ASP") chemical formulation was
finalized. In addition to field rehabilitation and optimization,
the construction of ASP facilities and a water plant were completed
and are ready for installation to begin the chemical water-flood
injection process. Activities during 2011 also focused on various
technical analyses, which included detailed fluid analysis,
specialized core flooding work in addition to coarse and fine-grid
reservoir simulations. These efforts were used in the evaluation,
design and optimization of Improved Oil Recovery ("IOR") and EOR
programs slated for the Company's properties at Two Creek.
Additionally at, Two Creek A, geological work supported by 3D
seismic identified horizontal infill drilling locations. Reservoir
simulation modeling further supported the drilling opportunities,
as well as water-flood realignment and polymer flood potential.
Work continues to define the optimal polymer flood design which
will follow the other operations. At Two Creek B, reservoir
simulations support the feasibility of utilizing existing wells for
injection in implementing a low pressure water-flood to recover
significant additional reserves with the drilling of additional
horizontal production wells. Reserves Summary GLJ Petroleum
Consultants Ltd. ("GLJ"), an independent petroleum engineering
firm, has completed a reserves assessment and evaluation of the
Company's petroleum and natural gas properties as at December 31,
2011 and presented in their report dated April 16 , 2012. Select
reserves information as presented below has been drawn from the
report. Comparative reserves information as at December 31, 2010
has been taken from a report also prepared by GLJ. The December 31,
2011 and 2010 reserves assessments and evaluations have been
prepared in accordance with National Instrument 51-101 - Standards
of Disclosure for Oil and Gas Activities ("NI 51-101") and the
Canadian Oil and Gas Evaluation Handbook ("COGEH"). Results of the
Company's technical analysis, reservoir models and simulations were
provided to GLJ to assist in their assessment and evaluation of the
properties and support the Company's development plans. No
additional reserves; proven, probable or possible, were recognized
in relation to the low pressure water flood planned for the
Jurassic B pool due to its early stage of development. Terrex has
filed its Annual Information Form on SEDAR at www.sedar.com, which
contains additional reserves information as required under
NI51-101. The following table summarizes the Company's reserves at
December 31, 2011 as compared to 2010: Reserves Summary
December 31, 2011 December 31, 2010 Reserves (1) Oil&NGLs Gas
Total % of Total Change (Mbbls) (MMcf) (Mboe) 3 - P (Mboe) % Proved
Proved 439 14% 123 producing 639 546 344% Total proved 882 795
1,014 26% 123 724% Probable 1,543 1,027 1,714 45% 307 458% Proved
& 2,425 1,822 2,728 71% 430 534% probable Possible (2) 1,022
515 1,108 29% 1,344 (2)% Proved, probable & possible (2) 3,447
2,337 3,836 100% 1,774 116% (1) Reported reserve volumes are gross
volumes (2) Possible reserves are those additional reserves that
are less certain to be recovered than probable reserves. There is a
10% probability that the quantities actually recovered will equal
or exceed the sum of proved plus probable plus possible reserves
Net Present Value of Reserves The net present value associated with
the Company's reserves at December 31, 2011 has been estimated
based upon GLJ's commodity price forecast as at January 1, 2012.
Estimated future net revenues are before the deduction of estimated
future site restoration costs but are reduced for estimated future
well abandonment costs and future capital associated with
developing the reserves. The estimated values disclosed do not
necessarily represent fair market value. Net Present Value of
Future Net Revenue Before Income Taxes Discounted at % per year -
Forecast Prices and Costs ($000s) 0% 5% 8% 10% 12% 15% Proved
Proved producing $6,664 $5,564 $5,098 $4,840 $4,614 $4,322 Total
proved 13,908 10,253 8,793 8,007 7,333 6,482 Probable 19,281 11,755
8,011 5,837 3,896 1,374 Proved & probable 33,190 22,008 16,804
13,844 11,229 7,856 Possible 21,450 15,868 13,213 11,737 10,461
8,862 Proved, probable & $54,640 $37,876 $30,017 $25,580
$21,690 $16,718 possible Future net revenue gives effect of the
2011 Hydrocarbon Purchase Agreement with Sandstorm Metals &
Energy Inc. and receipt by the Company of the $14.7 million advance
deposit relating to the forward production purchased. The following
table summarizes future capital necessary to develop the company's
reserves. Future Development Capital Reserves Proved Probable
Possible Total Future Capital ($000s) $4,580 $15,265 $1,800 $21,645
Chemical injectant costs of $14.6 million relating to the planned
EOR programs at Strathmore and Two Creek are not included in the
above Future Development Capital amounts and have been included in
operating costs for purposes of the reserves evaluation. The
following table reconciles changes in the Company's reserves at
December 31, 2010 to reserves at December 31, 2011. Reserves
Reconciliation Proved & Prov., Prob., (Mboe) Proved Probable
Probable Possible (1) & Poss. (1) Reserves, December 123 307
430 1,344 1,774 31, 2010 Infill drilling 302 110 412 268 680
Improved Recovery 190 1,230 1,420 (374) 1,046 Technical revisions
83 (59) 24 (130) (106) Acquisitions 441 126 567 - 567 Production
(125) - (125) - (125) Reserves, December 1,014 1,714 2,728 1,108
3,836 31, 2011 (1) Possible reserves are those additional reserves
that are less certain to be recovered than probable reserves. There
is a 10% probability that the quantities actually recovered will
equal or exceed the sum of proved plus probable plus possible
reserves. OPERATIONS AND OUTLOOK During the second year of
operations, field activities in Southern Alberta focused on the
design and development of a chemical ASP flood for the Strathmore
property. Final fluid and core flood analyses and reservoir
simulations were completed and the overall EOR field plan was
finalized. Construction of the EOR facilities, built in Wyoming is
complete with delivery to the Strathmore site planned once surface
preparations are complete. Other activities at Strathmore during
the year concentrated on reactivating suspended well bores and
pipelines, injector well conversions, and making repairs and
modifications to existing facilities necessary for the EOR project.
Production from the Strathmore property has doubled from 70 Boe/d
at the time of acquisition to 140 Boe/d average during the fourth
quarter of 2011. On March 31, 2011, effective January 1, 2011,
Terrex acquired its second producing property in the Two Creek area
of central Alberta for $13 million. The property consists of 100%
working interest in 4,320 acres of land including related
infrastructure. Production from Two Creek averaged approximately
230 Boe/d in 2011 comprised of 190 Bbls of oil and natural gas
liquids and 250 Mcf of natural gas. The Company commenced the
planning, evaluation and development of optimization and EOR
programs at Two Creek and during 2011 received approval from the
Energy Resources Conservation Board of its application for an EOR
program on the Jurassic A pool. Specialized analyses have commenced
and cores are undergoing laboratory testing. Specifics of the
polymer program are expected to be completed during the first half
of 2012. Additionally, the Company has identified the locations for
two horizontal in-fill wells in the Two Creek A pool and is
proceeding with a water flood realignment and optimization program.
At the Two Creek B pool, a low pressure water flood plan has been
evaluated and an application is being prepared for submission to
the Energy Resources Conservation Board. During 2011 the majority
of the technical, planning and development work relating to the
Company's EOR programs at Strathmore and Two Creek was finalized
and the projects are now ready for implementation. The Company
requires additional capital to advance these projects and is
currently and rigorously exploring various financing options
necessary to fund its ongoing capital programs. A special committee
(the "Special Committee") of the board of directors has been formed
and the Special Committee has engaged Nova Bancorp Securities Ltd.,
on a non-exclusive basis, to assist the Special Committee and
management with the identification and evaluation of various
financing strategies for the Company and its IOR and EOR programs
at Strathmore and Two Creek. The Company has elected not to provide
market guidance at this time for 2012. OPERATIONAL AND FINANCIAL
SUMMARY Terrex has filed its audited financial statements and
related management's discussion and analysis (MD&A) for the
year ended December 31, 2011 on SEDAR at www.sedar.com and the
Company's website at www.terrex.ca. Certain selected financial and
operational information for the periods ended December 31, 2011 and
2010 is set out below and should be read in conjunction with the
Company's financial statements for the year ended December 31, 2011
and the related MD&A. THREE MONTH PERIODS ENDED DECEMBER 31
$000s except as noted 2011 2010 Average production, Boe/d 344 105
Capital expenditures, including $3,369 $1,182 acquisitions,
Revenue, net of royalties, $1,695 $555 Funds flow from operations
(1) $(237) $(556) Per share, basic and diluted $(0.003) $(0.007)
Operating (loss) (1) $(578) $(574) Per share, basic and diluted
$(0.007) $(0.007) Net (loss) $(2,373) $(1,048) Per share, basic and
diluted $(0.029) $(0.013) (1) Funds flow from operations and
operating loss are non-IFRS measures. TWELVE AND ELEVEN MONTH
PERIODS ENDED DECEMBER 31 $000s except as noted 2011 2010 Average
production, Boe/d 343 82 Capital expenditures, including $21,798
$2,721 acquisitions Revenue, net of royalties $6,586 $1,425 Funds
flow from operations (1) $(808) $(1,507) Per share, basic and
diluted $(0.010) $(0.026) Operating (loss) (1) $(2,066) $(1,507)
Per share, basic and diluted $(0.025) $(0.028) Net (loss) $(4,198)
$(3,501) Per share, basic and diluted $(0.051) $(0.061)
(1) Funds flow from operations and operating loss are non-IFRS
measures. Comparative figures for 2010 are for the three and eleven
month periods ended December 31, 2010 and have been restated to
reflect International Financial Reporting Standards ("IFRS")
adopted in 2011. Production and revenue for the three month period
and year ended December 31, 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 344 Boe/d during the fourth quarter of 2011, an
increase of 239 Boe/d over the fourth quarter of 2010. Production
for the year ended December 31, 2011 averaged 343 Boe/d, an
increase of 261 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 20% over 2010. As expected, the
Company has continued to incur losses in advance of the
implementation of optimization and EOR projects. 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 common 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 Basis of Presentation Production and reserve
information is commonly expressed in units of a barrel of oil
equivalent ("Boe"). For purposes of computing such units, natural
gas is converted to equivalent barrels of crude oil using a
conversion factor of six thousand cubic feet of natural gas to one
barrel of oil. This conversion ratio of 6:1 is 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. Forward-Looking Information This News
Release contains forward-looking information within the meaning of
applicable Canadian securities laws. All information other than
historical fact is forward-looking information. Forward-looking
information relates to future events or future performance and is
based on Terrex's current internal expectations, estimates,
projections, assumptions and beliefs. Forward-looking information
is often, but not always, identified by the use of words such as
"expect", "project", "proposed", "intend", "seek", "anticipate",
"budget", "plan", "continue", "estimate", "forecast", "may",
"will", "predict", "potential", "targeting", "could", "might",
"should", "believe" and similar expressions. Although management
considers the assumptions and estimates, reflected in
forward-looking information, to be reasonable, based on information
currently available, there can be no assurance that such
information will prove to be correct. As a consequence, actual
results may differ materially from those anticipated. In
particular, this News Release contains forward-looking information
relating to estimates and values of recoverable petroleum and
natural gas reserves. Information relating to reserves is
forward-looking as it involves the implied assessment, based on
certain estimates and assumptions, that the reserves exist in the
quantities estimated and that they will be commercially viable to
produce in the future. Estimates and assumptions upon which reserve
information is based include assumptions as to future commodity
prices, currency exchange rates, well production rates, well
drainage areas, success rates for future drilling, the timing,
implementation and effectiveness of tertiary production programs,
and the availability of labour and services. Undue reliance should
not be placed on forward-looking information which is inherently
uncertain, and 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 information will not occur. These risks include, but are
not limited to risks associated with oil and natural gas
exploration, development and production, financial risks, the
history of losses, substantial capital requirements, political and
government risks, government regulations, environmental, prices,
dependence on key personnel, availability and access to equipment,
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. This news release
makes reference to terms commonly used in the oil and gas industry
including funds flow from operations and operating loss. Such
terms do not have a standard meaning as prescribed by IFRS and
therefore may not be comparable with the determination of similar
measures for other entities. These measures are identified as
non-IFRS measures and are used by management to analyze operating
performance and leverage. These measures should not be
construed as an alternative to, or more meaningful than measures
determined in accordance with IFRS. Terrex
Energy Inc CONTACT: CONTACT INFORMATIONFor 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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