CALGARY, ALBERTA--(Marketwire - Dec. 4, 2012) - Terra Energy Corp. ("Terra" or the "Company") (TSX:TT) announces that its board of directors has authorized the sale of the Company's Montney Assets in northeast British Columbia for a total consideration of $78.0 million to an industry peer.
The transaction is to occur in two parts; the first part consisting of the immediate sale of 57 net sections of Montney rights located primarily in the Monias area of northeast British Columbia for a total cash consideration of $22.0 million and is scheduled to close on December 14, 2012. The second part of the transaction consists of an option for the purchaser to acquire, exercisable by March 15, 2013, the remaining approximately 140 net sections of mineral rights in northeast British Columbia for an additional consideration of $56.0 million.
The proceeds from the sale of Terra's Monias assets will have an immediate impact in strengthening the company's balance sheet and reducing total indebtedness. Additionally, Terra's current production base will be kept intact as production from these assets is approximately 50 boe/d.
Terra is a junior oil and gas corporation engaged in the exploration for, and development and production of, natural gas and oil in Western Canada. Terra's common shares trade on the Toronto Stock Exchange under the symbol 'TT'.
All amounts in Canadian dollars unless otherwise specified.
The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil (6 mcf/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. All boe conversions in this report are derived from converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil. Given that the value ratio based on the current price of crude oil as compared to natural gas 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.
This media release may contain certain statements which constitute forward-looking statements or information ("forward-looking statements"). Although Terra believes that the expectations reflected in our forward-looking statements are reasonable, our forward-looking statements have been based on expectations, factors and assumptions concerning future events which may prove to be inaccurate. As such, readers are cautioned not to place undue reliance on the forward-looking statements, as no assurance can be provided as to future results, levels of activity or achievements. The risks, uncertainties, material assumptions and other factors that could affect actual results are discussed in our Annual Information Form and other documents available at www.sedar.com. Furthermore, the forward-looking statements contained in this document are made as of the date of this document and, except as required by applicable law, Terra does not undertake any obligation to publicly update or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.