Corporate Presentation

Transcription

1 Corporate Presentation August t2010

2 Certain information and statements contained in this presentation contain forward looking information or statements ( forward looking statements ) within the meaning of applicable securities laws. In particular and without limiting the foregoing, there are statements regarding Terra Energy Corp. s (the Corporation ) exploration, development, drilling and recompletion plans, growth and expansion plans, use of science and technology, facility and infrastructure construction, project and operational planning, work on both conventional and non conventional plays, the Corporation s commodity mix, expectations of future expenditures, future production, cash flow, net debt and sources of funding. All forward looking statements contained herein that are not clearly historical in nature constitute forward looking statements, and the words may, will, should, could, expect, plan, intend, anticipate, believe, estimate, propose, predict, potential, continue, or the negative of these terms or other comparable terminology are generally intended to identify forward looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or event to differ materially from those anticipated in such forward looking statements. Forward looking statements include, but are not limited to, references to oil and natural gas production levels; capital expenditure programs; the quantity and composition of oil and natural gas reserves; projections or commodity prices and costs; supply and demand for oil and natural gas; expectations regarding the Corporation s ability to raise capital and to continually add reserves through acquisition, exploration and development and treatment under governmental regulatory regimes and tax laws. Although the Corporation believes that the expectations reflected in any forwardlooking statements are reasonable, our forward looking statements have been based on factors and assumptions concerning future events which may prove to be inaccurate and the Corporation s actual results could differ materially from those anticipated in these forward looking statements. These factors are based on currently available information and include, but are not limited to: volatility in the market prices for oil and natural gas; liabilities inherent in oil and natural gas operations; uncertainties associated with estimating oil and natural gas reserves; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions; geological, technical, drilling and processing problems; fluctuations in foreign exchange or interest rates; health, safety and environmental risks; stock market volatility; global economic events or conditions; and other factors, many of which are beyond the control of the Corporation. The Corporation has made assumptions regarding: the impact of increasing competition; the general stability of the economic and political environment in which the Corporation operates; the timely receipt of any required regulatory approvals; the ability of the Corporation to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects in which the Corporation has an interest to operate the field in a safe, efficient and effective manner; the ability of the Corporation to obtain financing on acceptable terms; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development of exploration; the timing and costs of pipeline, storage and facility construction and expansion and the ability of the Corporation to secure adequate product transportation; future oil and natural gas prices; currency exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which the Corporation operates; and the ability of the Corporation to successfully market its oil and natural gas products. As such, readers are cautioned not to place undue reliance on forward looking statements as no assurance can be provided as to future results, levels of activity or achievements. This risks, uncertainties, material assumptions and other factors that could affect actual results are discussed in our Annual Information Form and other documents available under the Corporation s profile at Past performance of the Corporation referred to in this presentation is shown for illustrative purposes only, does not guarantee future results of the Corporation and is not meant to forecast, imply or guarantee the future performance of the Corporation, which will vary. References to Net Asset Value due not represent Fair Market Value. Readers are cautioned that the foregoing list of factors affecting forward looking statements is not exhaustive. Furthermore, the forward looking information and statements are made as of the date of this presentation, and the Corporation does not undertake any obligation to update publicly or to revise any of the included forward looking information or statements, whether as a result of new information, future events or otherwise, expect as required by applicable law. The forward looking statements contained in this presentation are expressly qualified by this cautionary statement. Certain information set out under the heading Growth in Per Share Value, Cash Flow and Targeted Results is financial outlook within the meaning of applicable securities laws. The purpose of the financial outlook is to provide readers with disclosure regarding the Corporation s reasonable expectations as to the anticipated results of its proposed business activities for 2010 and beyond. Readers are cautioned that this financial outlook is based upon numerous assumptions and may not be appropriate for other than indicative purposes. A boe conversion ratio of six thousand cubic feet per barrel (6mcf/bbl) of natural gas to barrels of oil equivalence is based upon an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency for the individual products at the wellhead. Such disclosure of boe s may be misleading, particularly if used in isolation. 2

3 TSX Symbol Shares Outstanding (basic) Shares Outstanding (fd) TT 99.0MM MM Recent Price $1.50 Average Daily Volume (3 month 1 ) 95,132 Market Capitalization $142.7 MM Total Net Debt 2 $51.0 MM Enterprise Value (basic) Current Bank Line 1 April 16 July 16, Including changes in working capital, March 31, 2010 unaudited financial statements $193.7 MM $80.0 MM 3

4 Consistent growth in per share value Manage and minimize risks Both strategic and opportunity driven Awareness of the time value of assets Keen sense of stewardship 4

5 Per Share Value Growth - Production 10, Av erage daily productio n (boe/d) 8,000 6,000 4,000 2, ,096 2,069 2,819 3,266 4,399 5,946 7,187 Aver rage daily production per million shares (boe/d) Q1 10 Using 6:1 conversion rate 5

6 Per Share Value Growth - Reserves 30, P+P Rese erves (Mbo oe) 25,000 20, ,000 10,000 5, ,673 14,501 15,783 17,167 18,826 24, P+P Rese rves per th ousand sha ares (boe)

7 Manage and Minimize Risks Commitment to advancing the Montney resource play which is characterized by: Lower geological risk More predictable in timing, i costs, production rates and reserve additions i Potential for steady long term production growth Lower than average F&D costs Assets predominantly focused in the Peace River Arch, known as having multi zone potential ti 7

8 Strategic and Opportunity Driven/Time Value 2008: Sale of Montney rights for $72 million : Purchase of equivalent Montney upside for $8 million : 2010: Major asset + Synergistic farm in exchange deals and crown agreement, land acquisition addition of ~ 70 net program sections of land in th M t = the Montney One of the largest prospective land holdings inthe BC unconventional Montney gas play over net sections 8

9 Stewardship Retail 25% Terra Management Institutional Management interests are aligned with shareholder interests Represents approximate holdings to the best of Terra s knowledge 9

10 Conventional & Unconventional Conventional Unconventional Strong production base 7,187 boe/d 1 Over 135 net sections within the highly prospective Montney Fairway >24 million boe (P+P) reserves 2 >8.8 year RLI (P+P) ~49% proved producing Focused operations in Peace River Arch and Other areas of multi zone potential High working interest Ownership of infrastructure Low cost producer F&D ~ $11/boe (P+P) Operating costs ~$10/boe 1 Q1 average daily production 2 Approximately 1.8 million of reserves classified as unconventional at year end 2009 Committed nearly half the capital budget towards the Montney in 2010 Recent acquisition metrics support importance of the Montney Resource play is being de risked: Announced dpositive ii results at Groundbirch in April 2010 Successfully completed 100% HZ well at Altares Wilder/Monias well program has commenced 10

11 Land Base BC AB Fringing Reef Peace River Arch Terra Lands Fort St. John Edmonton Dawson Creek Calgary Grande Prairie Over Oe 550,000 net undeveloped acres 11

12 Montney Fairway BC AB Over 136 net sections in the Montney Fairway Over mature, extreme depth and reduced porosity Terra lands with Montney rights Terra Lands with other rights iht Oil/Gas Maturation Line 12

13 2010 Capital Budget Minimum Investment of $65 Million 1 Facilities Facilities 9% 9% Gathering/ Pipelines 5% Other 3% Alberta 42% Montney 46% Completions 26% Drilling 57% B.C. Other 12% 1 Excludes capital for acquisition of lands and properties 13

14 Banks Legal Firm Auditors Transfer Agent Reserve Engineers TD Canada Trust, Canadian Imperial Bank of Commerce Borden Ladner Gervais LLP Deloitte & Touche Computershare Trust Company of Canada GLJ Petroleum Consultants Ltd. Investor Contact Berk Sumen Manager, Corporate Affairs T: E: Suite 907, th Avenue S.W. Calgary, Alberta T2P 1Z1 T: E: info@terraenergy.ca 14

15 Appendices A: Peer Comparisons B: Reserves Summary C: Land dsummary D: Board of Directors E: Executive Team F: Asset Acquisition G: Analyst Coverage

16 Peer Comparisons Recent Shares 2009 Q1 Share Issued Market Market Enterprise F&D Operating Company Symbol Q1 Prod. Price 1 (3/31/10) Cap. Net Debt Cap. + Net Debt = Value Cost Expense (boepd) ($) (M) ($MM) ($MM) ($/boepd) ($/boepd) ($/boepd) ($/boe) ($/boepd) Prospex Resources Ltd PSX-T 3, , , ,366 29, Orleans Energy Ltd OEX-T 3, , ,342 10,752 61,094 N/A Black Pearl Resources PXX-T 6, , , ,364 N/A Bellatrix Exploration Ltd BXE-T 7, , ,079 10,156 57, Vero Energy Inc VRO-T 8, , ,077 13,362 47, Delphi Energy Corp DEE-T 7, , ,300 14,812 50, Anderson Energy Ltd AXL-T 7, , ,554 9,393 38, Freehold Royalty Trust FRU.UN-T 7, , ,563 10, ,490 N/A 4.03 Angle Energy Inc NGL-T 8, , ,117 7,586 60, Storm Exploration Inc SEO-T 8, , ,308 13,333 91, Equal Energy Ltd EQU-T 9, , ,961 16,162 56, Birchcliff Energy Ltd BIR-T 10, ,359 1, ,288 22, , Zargon Energy Trust ZAR.UN-T 10, , ,739 9,478 51, Paramount Resources POU-T 11, , , , , , Crew Energy Inc CR-T 15, ,421 1, ,619 12, , Celtic Exploration Ltd CLT-T 17, , ,567 7,328 40, Average (incl. Terra) 8, , ,541 11,357 74, Terra Energy Corp TT-T 7, , ,672 7,094 27, As at July 23, 2010, recent price used for Terra 16

17 Reserves Summary December 31, 2009 Reserve Volumes and Before Tax Present Value Reserves At December 31, 2009 Oil (bbls) Gas (mmcf) Liquids (bbls) Total (BOE) Proved Producing 1,587,000 51,535 1,614,000 11,790,167 Proved Non Producing 525,000 18, ,000 4,165,500 Total Proved 2,112,000 70,324 2,123,000 15,955,667 Total Probable 649,000 38, ,000 8,048,000 Total P+P 2,762, ,975 3,079,000 24,003,000 Before Tax NetPresentValue of NetProduction Income 2009 Undiscounted Discounted Reserves At December 31, % 5% 10% 15% 20% Proved Producing $287,404,000 $219,282,000 $179,688,000 $153,790,000 $135,449,000 Proved Non Producing $92,467,000 $71,484,000 $58,545,000 $49,708,000 $43,254,000 Total Proved $379,871,000 $290,766,000 $238,233,000 $203,498,000 $178,703,000 Total Probable $205,423,000 $115,197,000 $75,551,000 $54,117,000 $40,928,000 Total P+P $585,294,000 $405,963,000 $313,784,000 $257,615,000 $219,631,000 Pricing Assumptions: GLJ Petroleum Consultants Jan 1, 2010 Price Forecast 17

18 Land Summary Gross Acreage Net Acreage Royalty Acreage Developed Undeveloped Developed Undeveloped Developed Undeveloped Total Acres 253, , , ,430 4,045 9,917 Totals 936, ,967 13,242 Total Hectares 101, ,555 45, ,299 1,618 3,679 Totals 373, ,714 5,297 Total Sections , Totals 1,463 1, Calculations are made using standard 640 acre sizing. As at May 26,

19 Board of Directors Ted S. Anderson 3,4 Founder, Pioneer Land & Environmental Services Ralph G. Evans 1,3,4 Petroleum Engineer Former board member of ERCB (AEUB) Colin P MacDonald 2 Partner, Borden Ladner Gervais, LLP Cas H. Morel 2,3,4 President and CEO, Terra Energy Corp. Chairman Robert D. Penner 1,2 Former Senior Tax Partner, KPMG Lead Director James (Jim) F. Wong 3,4 Petroleum Engineer Businessman Director of several international based companies Brian Yaworski 1,2 Broad base of business experience Counsel at Davis LLP 1 Member of Audit Committee 2 Member of Corporate Governance, Compensation and Nominating i Committee 3 Member of Engineering and Reserves Committee 4 Member of Safety and Environment Committee 19

20 Executive Team Cas H. Morel, President & CEO Businessman, founder of predecessor of Terra Energy in 1996 BSc,LL.B., MBA 25+ years experience in oil and gas industry and resource sector Bud K. Love, VP, Finance & CFO CFO and VP Finance of Rhodes Resources Corp. Former principle of BKL and Associates Inc., specializing in tax matters Former Controller Startech Energy Corp. 25+ years oil and gas accounting and tax experience Tim A. Beatty, Executive VP, B.C. Operations Professional engineer with 25+ years of professional experience in Western Canada and international PanCanadian, Apache Canada, Santos Member of APEGGA and SPE Tony Sabelli, Executive VP, Alta./Sask. Operations Over 30 years experience in oil and gas industry in Western Canada 20

21 Geoscience Team John M. Behr, VP, Exploration Professional Geophysicist with 24 years of industry experience, VP of Exploration at Terra since 2005 Successful oil and gas explorer at Shell, Renata Resources, Rio Alto, CNRL, El Paso and Dominion Canada Oii Originator of effective exploration strategies and methods John Andersen, Chief Geologist Professional geologist with over 30 years experience in Western Canada, successful oil finder, multi dimensional explorer and team leader Finder at Poco Petroleums, Petro Canada, Relentless Energy and Encor Founder of Redcliffe Energy, Exploration Manager at Progress Energy Steve Aitken, Montney Co lead PhD. in Geology with 15 years of exploration and development experience, Co lead on Terra s Montney play Both clastic and carbonate expertise, successful explorer at Amoco, Petro Canada, EBOC, El Paso and Relentless Michael Doty, Senior Geophysicist Professional geophysicist with 25 years of industry experience, expert at seismic interpretation and acquisition Explored at UNOCAL, Petrostar, Canadian Conquest and Canext as well as independent consultant Craig Smith, Geologist Professional geologist with 8 years of industry experience, involved and integral to all of Terra Energy s success Proven finder with over 65 wells of experience Michael Oforsagd, Senior Exploration Over 35 years of experience, adds valuable experience, history as well as new ideas Atlantic Richfield Canada, Petro Canada, Dome Petroleum, Amoco Canada 21

22 Senior Engineering Team Tim Beatty, Executive V.P., B.C. Operations Tony Sabelli, Executive V.P., Alta./Sask. Operations Gord Oliver, V.P. Exploitation B.C. Professional Engineer with 25 years of engineering experience in the oil and gas industry Specific strengths in exploitation and reservoir engineering Previous industry companies include Tom Brown Resources, Stellarton Energy, Jordan Petroleum Member of APEGGA and SPE Alan Bertram, V.P. Exploitation Alberta and Saskatchewan Professional Engineer with over 15 years of experience Experience in horizontal drilling and waterflood techniques Member of APEGGA and SPE Graham Collins, V.P. Production Professional Engineer with almost 33 years of experience in the energy industry Responsible for Terra Energy s Production, Field Operations, Joint Venture, Environment Health and Safety, Marketing and Emergency Response Plan Previous industry companies include Rigel Oil and Gas, Bowview Petroleum, TransCanada Pipelines, Pioneer Energy, Hunt Oil and Murphy Oil 22

23 Senior Engineering Team John Hrycyk, Manager of Facilities Professional engineer with over 17 years experience in the energy industry Experience in joint interest, process design, mechanical design, research and development and project engineering Member of APEGGA, Professional Engineers and Geoscientists of British Columbia and American Society of Mechanical Engineers Darcy Spratt, Senior Exploitation Technologist Over 29 years of oil and gas experience with specific experience in exploitation, reserve and economic evaluations Previous industry companies include Advantage Energy, Great Plains Exploration and Zapata Energy Member with the Association of Science and Engineering Technology Professionals (ASET) and a Registered Engineering Technologist (RET) Terry Mah, Engineering Consultant Professional Engineer with 25 years of engineering experience in the oil and gas industry Specific strengths in exploitation and reservoir engineering, acquisition and divestitures and horizontal drilling Previous industry companies include Rising Sky Energy, Redsky Energy, Compton Petroleum, CNRL Member ofapegga 23

24 Senior Land Team Mike Haug, Area Land Manager, B.C Chief Negotiator for British Columbia Over 30 years experience in virtually all aspects of the oil and gas and mining industries. Previously, CEO of Fernz Sulfer Works Inc. and has occupied senior executive and management positions at Canterra Energy Ltd., Husky Oil and CDC Oil & Gas Ltd. Studied Business Administration at the University of Saskatchewan Paul Lyzaniwski, Manager, Alberta Lands Chief Negotiator for Alberta Senior Mineral Landman with over 18 years of wide ranging industry experience including senior and supervisory positions in administration, contracts and negotiations at Compton Petroleum Corporation, Canadian Natural Resources and Fletcher Challenge Petroleums Inc. Studied Advanced Economics and Finance at the Universities of Regina and Calgary Kevin Wolters, Manager, Land Contracts and A&D Contracts Landman/ Lawyer with over 14 years of oil and gas industry experience including permanent and consulting land contracts and A&D positions at companies including ExxonMobil, Paramount Resources, Suncor Energy, BP Energy Canada, Canadian 88 Energy Corp. BComm B.Comm. (Corporate Finance) University of Calgary, 1988, LL.B. University of British Columbia, 1991 Particular expertise in A&D, contract drafting and freehold mineral rights Jeff Pike, Manager of Land Administration and Records Petroleum Landman with over 30 years experience in the oil and gas industry including senior management and negotiating positions at Chevron Canada Resources, and has consulted to various major industry players including EnCana and Gulf Canada Resources B.Comm., Dalhousie University, 1972, B. Ed. Dalhousie University, 1974; LL.B., Dalhousie Law School,

25 Senior Finance Team Bud Love, Chief Financial Officer Yvonne Frame Zawalykut, Controller Chartered Accountant with 14 years experience, 4 yrs in the oil and gas industry B.Comm from University of Calgary in 1994, CA designation in 1997 Articled with Coopers & Lybrand Held various senior accounting roles at TransCanada, Loblaw Companies, and Husky Energy Rosa Lyngberg, Special Projects Chartered Accountant with 15 years oil and gas experience B.Comm from University of Calgary, BA from University of British Columbia; CA designation in 1993 Articled with Price Waterhouse LLP Held various senior accounting roles as Controller at Terra Energy from and previously as Controller at Tri Link Resources Ltd. Current responsibilities include treasury, insurance, internal controls, and International Financial Reporting Standards project Federica Petraschuk, Accounting Manager +25 years experience in oil and gas accounting in various roles including Assistant Controller, Manager of Accounting, JV and Operational accounting April Vann, Operations Accountant + 18 years experience in oil and gas accounting in various roles including JV, Production and Capital accounting, as well as various systems roles B.CommfromUniversity ofsaskatchewan Saskatchewan, CMA designation in 1995, CAPPA certificate 25

26 Proposed Square Creek Asset Acquisition Production: 1,450 boe/d Reserves: 43MM 4.3 boe proved 2.7 MM boe probable 7.0 MM boe P+P Undeveloped land: over 80, net acres Total Consideration: $25.6 MM cash $9.0 MM shares MM Acquisition Metrics: Reserves: $4.92/P+P boe Production: $23,862/boe/d Fortress Lands Terra Lands Expected Close: August 31, (5 MM $1.80) 26

27 Analyst Coverage 27