Terrex Energy Inc. reports Q2 2012 operational, and financial results

    




 CALGARY, Aug. 16, 2012 /CNW/ - Terrex Energy Inc. ("Terrex" or the  "Company")  reports its operational and financial results  for the three and six months ended June 30, 2012. 

 The Company has filed its unaudited condensed interim financial  statements and related management's discussion and analysis ("MD&A")  for the three and six months ended June 30, 2012 on SEDAR at www.sedar.com and on the Company's website at www.terrexenergy.ca. Certain selected financial information for the period, as set out  below, should be read in conjunction with the Company's unaudited  condensed financial statements and related MD&A for the period ended  June 30, 2012. 

 PRESIDENT'S MESSAGE 

 From inception, Terrex has focused on growing reserves and production  through applying proven technologies for improved reservoir performance  and enhanced oil recovery ("EOR") to under-exploited, mature, oil  reservoirs with significant remaining original oil-in-place. From the  outset, execution of the Company's business plan has been dependent on  access to capital. Consistent with its business plan, the mature  Strathmore and Two Creek properties were acquired. To date, a  significant amount of the technical analyses, evaluation, planning and  preparatory work relating to optimization and EOR projects, including  reservoir and production simulations under various parameters has been  completed. The programs are now largely ready for implementation but  require significant additional capital to proceed. 

 Second quarter 2012 operations, as expected, continued to result in a  loss. As outlined above, our properties were acquired with the  objective of enhancing production, cash flow and revenue through the  development of the properties subsequent to their acquisition. Various  actions have been taken to control and change our cost structure;  however, further losses are expected until our production profile is  enhanced through implementation of a capital program. 

 Current economic conditions have eroded investor confidence creating  serious liquidity concerns for many companies and creating an extremely  challenging environment for capital raising activities. Traditional  equity capital, particularly for small companies like Terrex has been  severely curtailed. In such times, companies must evaluate their  options and also their long-term goals. We have undertaken a  re-evaluation of our properties and are fortunate that both Two Creek  and Strathmore, in addition to their EOR potential, provide us with  conventional in-fill drilling and water flood realignment  opportunities. These activities, in advance of more extensive EOR  programs and at a much more modest level of capital spending, would  have a positive and immediate impact on production and cash flow.  Terrex, however, currently has limited cash reserves and requires an  infusion of new development and working capital to proceed with such a  program. Additionally, pursuant to the Hydrocarbon Purchase Agreement  with Sandstorm Metals & Energy Ltd., the Company is required to incur  certain capital expenditures during the third quarter of 2012.  Currently, Terrex does not have the financial resources to meet these  requirements and may default under the agreement. 

 Management and the Board of Directors continue to work with our  financial advisors, Nova Bancorp, to seek all reasonable means of  financing in order to improve production, develop new reserves and  realize on our potential. We have canvassed traditional and  non-traditional sources of capital, evaluated dispositions, and  discussed with various parties, a mutual interest in our properties,  projects and opportunities. These efforts continue as we work with all  our stakeholders to build a future for Terrex. 

 OPERATIONS AND OUTLOOK 

 Field activities during the first half of 2012 were limited due to the  Company's current financial position. At Strathmore, an overall EOR  field plan has been finalized and the design and development of a  chemical alkaline-surfactant-polymer ("ASP") flood, including final  fluid and core flood analyses and reservoir simulations are complete.  This plan is currently in abatement as the project is not economic on a  risk adjusted basis, in the current commodity price environment.  Alternatively, management has identified an investment program of  phased infill drilling, and water flood modifications. This plan is  more fiscally prudent and achievable at a lower risk and with a more  modest capital exposure. At Two Creek the Company has identified  locations for a possible three in-fill well drill program in the  Jurassic A Pool and is proceeding with the design of a water flood  optimization program. Based on the success of this activity, additional  development opportunities are available. Additionally, at Two Creek,  analyses have commenced and cores have been delivered for laboratory  testing as the Company continues to evaluate an optimum EOR plan for  the Jurassic A Pool. At the Two Creek B Pool, a low pressure water  flood plan has been developed and an application is being prepared for  submission to the Energy Resources Conservation Board. 

 The implementation of these optimization programs and EOR plans, both at  Strathmore and Two Creek, will not be implemented until sufficient  funding is assured. The Company is actively exploring various financing  options to fund these capital programs. To this end, a special  committee (the "Special Committee") of the Board of Directors has been  formed and 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. 

 The Company has elected not to provide market guidance at this time for  2012. 

 OPERATIONAL AND FINANCIAL SUMMARY 

  





                                               Periods ending June 30,

                                     Three Months             Six Months

    ($000's except as noted)       2012        2011        2012        2011

    Average production, Boe/d       274         343         305         348

    Capital expenditures,     $     387   $   1,975   $     971   $  17,019
    including acquisitions, 

    Revenue, net of           $   1,304   $   1,689   $   2,869   $   3,340
    royalties, 

    Funds flow from           $   (384)   $       9   $   (732)   $   (412)
    operations (1)

      Per share, basic and    $ (0.005)   $   0.000   $ (0.009)   $ (0.005)
      diluted

    Operating (loss) (1)      $   (674)   $   (286)   $ (1,307)   $ (1,011)

      Per share, basic and    $ (0.008)   $ (0.003)   $ (0.016)   $ (0.012)
      diluted

    Net (loss)                $   (730)   $   (345)   $ (1,401)   $ (1,045)

      Per share, basic and    $ (0.009)   $ (0.004)   $ (0.017)   $ (0.013)
      diluted










    (1) Funds flow from operations and operating loss are non-IFRS
    measures.






  

 Production for the three months ended June 30, 2012 decreased from the  comparable period in 2011 primarily as the result of down hole  mechanical problems at significant oil and gas producing wells in both  the Two Creek and Strathmore fields, and a turn around at a third party  gas processing facility at Two Creek. Repairs to several of the oil  wells were completed during the quarter and repairs to the gas wells  are being deferred until natural gas prices strengthen. Total revenues  for the quarter also decreased as a result of reduced oil and gas  production and lower realized natural gas and crude oil prices. 

 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. 

 STOCK OPTIONS 

 The grant of 4,170,000 stock options referred to in the Company's News  Release of May 24, 2012, has been ruled invalid by the TSX Venture  Exchange, due to the Company's low share price, and has since been  rescinded. 

 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 

 Forward-looking Information - Certain information as set out herein  constitutes 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. 

 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 interim report 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. 

 Boe Presentation - Production volumes and reserves 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 to  one barrel of oil based on an energy equivalency at the burner tip and  does not represent a value equivalency at the wellhead. Used in  isolation, barrels of oil equivalent may be misleading. 

 Non-IFRS Measures - Management's Discussion and Analysis makes reference  to terms commonly used in the oil and gas industry including funds  flow, funds flow from operations and operating earnings (loss). Such  terms do not have a standard meaning as prescribed by International  Financial Reporting Standards ("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:  please contact Jonathan Lexier, President & CEO, or NormanKnecht, VPFinance and CFO, at [phone], or visit the Company's websiteat www.terrexenergy.ca 


    

Copyright