Second Quarter Highlights
* The Company generated revenues of $18,751,432.
* Despite the major maintenance shutdown of a key processing facility, the Company produced and sold 5,993 boe per day.
* Cash flow from operations increased 14.1% to $7,923,000 from $6,946,000 compared to the same quarter last year.
* Net income increased to $3,419,722 (or $0.03 per share) compared to $216 during the same period last year.
Terra continues to take a prudent approach to capital management by limiting capital spending to cash flows received from operations. Operationally, the Company will continue to pursue the two parallel strategies as outlined in its most recent investor presentation available on the Company website. On the one hand, the Company will continue to target oilier prospects and liquids rich opportunities across its substantial land base. On the other hand, Terra will continue to advance its unconventional Montney gas play in Northeast British Columbia where the Company owns in excess of 100,000 net acres of Montney rights within the Montney Fairway.
Anticipated cash flow for 2011 is approximately $30.0 MM and is based on an estimated average natural gas price of $3.75 per mcf, an estimated oil price of $90.00 per barrel and an average production rate of approximately 6,000 boe/d.
Terra's Montney gas play is a "world class" asset, and will require substantial capital funding in order to continue the "de-risking" process in anticipation of full commercialization. At the same time, the size and scope of the Company's Montney play should be able to support the requisite, targeted funding, on its own. Accordingly, Terra will be seeking out private equity, farm-out opportunities, and possible joint ventures, as various alternative methods for funding the advancement of the Montney unconventional gas play on Terra's lands.
In addition, Terra's Montney lands have been assessed by GLJ Petroleum Consultants Ltd., in September of 2010, indicating a total resource best estimate of 11.9 Tcf net to the Company, comprised of 5.48 Tcf Discovered Petroleum Initially-In-Place (DPIIP) and 6.42 Tcf Undiscovered Petroleum Initially-In-Place (UDPIIP).
Terra previously announced that it had engaged GMP Securities LP and Scotia Capital Inc., as joint financial advisors, to assist the Company in raising private equity for the Company's unconventional Montney gas play. The Company anticipates that the overall process will continue into the month of September 2011. It is uncertain whether the current condition of capital markets will affect the timing of private equity funding. Successful completion of the targeted private equity funding will result in the Company re-visiting its 2011 capital expenditure plan.
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'.
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