Terrex Energy (TSXV:TER)
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CALGARY, Nov. 25 /CNW/ --
CALGARY, Nov. 25 /CNW/ - Terrex Energy Inc. ("Terrex" or the "Company") (TSX-V - TER) reports its financial and
operating results for the third quarter of 2010.
"We are encouraged by the progress made to date in building a unique oil
company in Western Canada focused on extending the life of mature oil
fields through technical advances," said Kim Davies, president and CEO
of Terrex. "Significant progress has been achieved during the quarter
on the development of our first Enhanced Oil Recovery (EOR) project at
Strathmore and discussions for access, through acquisition or joint
venture, of a number of additional properties with EOR potential were
initiated and are progressing."
HIGHLIGHTS
Achievements during the Company's first eight months of operations
include:
-- Securing a total of $15 million of equity financing
-- Listing on the TSX Venture Exchange
-- Developing, refining and implementing a comprehensive EOR
selection program
-- Acquiring and commencing development of the Company's first EOR
project
-- Establishing a strong Board of Directors
-- Building an experienced management team and technical group.
OPERATIONS
Terrex accelerated field operations at Strathmore during the third
quarter. Activities focused on the design of a chemical
alkaline-surfactant polymer (ASP) flood for the Strathmore property.
Much of the up-front technical work, including fluid analysis, core
flood analysis and reservoir simulations, has been completed and the
overall plan is being finalized. Additionally, Terrex has largely
completed field rehabilitation activities, including the re-activation
of well bores and pipelines, injector well conversions, and repairs and
modifications to existing facilities necessary for the EOR project. An
EOR development application has been submitted to the Energy Resources
Conservation Board (ERCB) for approval and equipment procurement has
commenced.
The 100% working interest Strathmore pool, located approximately 60
kilometers southeast of Calgary, was acquired on February 1, 2010, for
$659,791. To date the Strathmore pool has produced nearly 5 million
barrels of oil; production has declined to 50 barrels per day (b/d),
from a peak of 1,650 b/d in 1993. Terrex estimates that, with a
chemical injection program, production can be increased significantly
and recovery, based upon analogs, may be as much as an additional 15%
of the total petroleum initially in place.
Also during the quarter, Terrex initiated discussions with several
parties regarding acquisitions and joint venture arrangements relating
to properties where significant EOR potential has been identified.
Ideally, in addition to EOR potential, these projects would offer
Improved Oil Recovery (IOR) opportunities, such as in-fill drilling,
water flooding and other optimization processes. The Company intends to
implement an aggressive business plan with a long-term objective to
grow reserves to 50 million barrels over the next five years.
Operational and Financial Summary
Periods ending Sept. 30, 2010 Three Months Eight Months
Average production (boe/d) 72 74
Revenue, net of royalties $ 297,045 $ 870,534
Capital expenditures, including $ 541,320 $ 1,539,053
acquisitions
Funds flow from operations((1)) $ (412,734) $ (950,898)
Per share: basic and diluted $ (0.006) $ (0.020)
Operating loss((1)) $ 489,155 $ 1,053,940
Per share: basic and diluted $ 0.006 $ 0.022
Net loss $ 610,247 $ 1,733,234
Per share: basic and diluted $ 0.008 $ 0.037
(1) non-GAAP measures
As expected, the Company incurred losses during its initial start-up.
Losses of $610,247 and $1,733,234 respectively, for the three and nine
month periods ended September 30, 2010, include non-cash, stock based
compensation costs of $103,631 and $644,374, respectively, relating to
the Company's stock option plan instituted in June.
The company's only revenue producing property is the Strathmore field.
High operating costs and low production rates typical of a very mature
field have resulted in the field operating at losses of $53,210 and
$158,954, respectively, for the three and eight months ended Sept. 30,
2010. Operating costs reflect relatively high repair and maintenance
costs including labour costs associated with field reactivation,
totaled $49,033 and $176,570, respectively, for the three and eight
month periods ending September 30, 2010. Field operating loss is
determined as revenue less operating and transportation costs.
Capital spending during the periods, excluding acquisition of the
Strathmore property, related primarily to facility modification and
improvements in the area. Completion and facility expenditures include
$300,989 and $363,989 for the three and eight months respectively
specifically associated with preparing the property for the EOR
project.
OUTLOOK
Capital expenditures necessary to complete the initial phase of the
Strathmore EOR project are budgeted to be $6.5 million, of which $2.0
million are expected to be incurred during the fourth quarter of 2010
and the remaining $4.5 million during 2011. Currently the Company has
sufficient cash reserves to fund the first phase of the project through
to start-up. Initial EOR results are anticipated during the fourth
quarter of 2011.
In Terrex's early stage of development, uncertainties relating to future
performance are affected by timing issues, including regulatory
approvals and equipment availability, all of which are compounded by
the lack of historical corporate data. As a result, the Company is not
in a position to provide meaningful guidance for 2011.
The full text of the Company's Management Discussion and Analysis and
unaudited financial statements is available on the Company's website, www.terrexenergy.ca and on SEDAR at www.sedar.com.
Terrex Energy Inc. is a Calgary-based junior oil company that
specializes in the application of proven Enhanced Oil Recovery (EOR)
methods to improve oil production from mature pools. Terrex targets
underexploited and undercapitalized light-to-medium oil reservoirs in
Western Canada. Terrex shares are listed on the TSX Venture Exchange
under the symbol 'TER' and on the Frankfurt Exchange under the symbol
'TRX/WKN: 763600.'
Neither the TSV 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.
Forward-Looking Statements
This news release contains certain forward-looking statements and
forward-looking information (collectively referred to herein as
"forward-looking statements") within the meaning of Canadian securities
laws. All statements other than statements of historical fact are
forward-looking statements. In particular, this press release contains
forward-looking statements pertaining to the amount of oil recoverable
from the Strathmore property; Terrex receiving regulatory approval in
respect to the implementation o the chemical flood at the Strathmore
property; anticipated production in respect to the Strathmore property
and the timing thereof; the recovery rates in respect to chemical
floods; and Terrex's plans to grow reserves to more than 50 million
barrels over the next five year. 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. 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, and market conditions. Although
management considers these assumptions to be reasonable based on
information currently available to it, they may prove to be incorrect.
By their very nature, forward-looking statements involve inherent risks
and uncertainties (both general and specific) and risks that
forward-looking statements will not be achieved. The forward-looking
statements contained in this press 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.
p align="justify"bContact Information:/b/p p align="justify"Kim Davies, President & CEO, or Norm Knecht, VP Finance & CFO, at (403) 264-4430, or visit Terrex's website at a href="http://www.terrexenergy.ca"terrexenergy.ca/a for the latest news./p