VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 04/10/12 -- Terrace Energy Corp. (TSX VENTURE: TZR) (the "Company" or "Terrace") is pleased to provide the following operational update:
STS Olmos Project
The Company expects to receive its first revenue in April from February production from the initial well, the STS 1-667H well, drilled and completed on the STS Olmos Project. The well was first tested on February 10, 2012 and has produced approximately 28,000 barrels of oil through the end of March 2012. Permanent tie-in facilities were installed in late March. The well continues to outperform expectations and is currently flowing at a rate of approximately 520 BOPD (barrels of oil per day) and 0.5 MMCFD (million cubic feet per day) of liquid rich gas. Proceeds, received by the operator, from the sale of oil and gas recovered to the end of March are approximately 30% of the estimated well costs. There can be no assurance that the flow rate will stabilize at current levels over time.
Terrace holds a 16.9% working interest (12.65% Net Revenue Interest) in the STS 1-667H well. The Company's average working and net revenue interests in the leases that make up the entire STS Olmos Project are, however, 26.88% and 20.16%, respectively. A second well is planned to be spud early in the 3rd quarter and the Company's working interest in that well will likely be 33%.
The STS Olmos Project covers approximately 14,400 gross acres (3,875 net acres) in the LaSalle and McMullen Counties, Texas and has the potential to support up to 60 or more offset drilling locations.
Cutlass - Eagle Ford Project
Construction work on the access road, drilling pad and water supply well for the initial test well on the Company's Cutlass Project in Dimmit County, Texas (the "Initial Well") is nearing completion. The operator has contracted a rig for a two-well program to test each of its "West" lease in Dimmit County and its "East" lease in LaSalle County. The drill program is intended to target the Eagle Ford formation.
The Company has advanced just over US$2.1 million to the operator to meet its financial commitment to drill the Initial Well. Project initiation is expected late this month, as soon as the rig is released from its current drilling commitment. It is expected that the drilling of the second well will commence once drilling of the Initial Well is completed.
The Company owns a 30% working interest and 22.5% net revenue interest in the Cutlass Project, which is completely surrounded by property under lease to Anadarko Petroleum whereon it is actively developing the Eagle Ford formation. The Cutlass Project has the potential to support up to 28 drilling locations targeting the Eagle Ford formation as well as the potential to develop additional cretaceous horizons productive in the region.
The Company terminated the previously announced non-binding Letter of Intent covering certain acreage in Reagan and Irion Counties, Texas, as a result of issues arising from our due diligence investigations.
The Company continues to investigate other acquisition and joint development opportunities and will report should it reach a material agreement in principle.
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. It currently has two principal properties situated in Texas with targets in the "Olmos" and "Eagle Ford" formations.
APPROVED BY THE BOARD OF DIRECTORS
Eric Boehnke, Chief Executive Officer
This press release includes "forward-looking information", including the revenue to be received from the STS 1-667H well and the time when the Company receives that revenue, the production rate of that well, the timing of exploration drilling and the potential for the Company's projects to support additional drilling locations. 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, lack of availability of goods and services, regulatory changes and all of the other risks and uncertainties normally associated with the exploration for and development and production of oil and gas. The forward-looking information contained in this press release represents management's best judgment of future events based on information currently available. The material assumptions used to develop the forward-looking information include: that necessary goods and services will be available on reasonable terms, that regulatory requirements will not change in any material respect and that other aspects of the Company's operations will not be affected by unforeseen events. The Company does not assume the obligation to update any forward-looking information, except as required by applicable law.
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.
Terrace Energy Corp.
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