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Slide 1 Building Value CAPP Symposium. Slide 2 ADVISORY: Certain information regarding Terra Energy Corp. including management’s assessment of future.

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Presentation on theme: "Slide 1 Building Value CAPP Symposium. Slide 2 ADVISORY: Certain information regarding Terra Energy Corp. including management’s assessment of future."— Presentation transcript:

1 Slide 1 Building Value CAPP Symposium

2 Slide 2 ADVISORY: Certain information regarding Terra Energy Corp. including management’s assessment of future plans and operations, may constitute forward-looking statements under applicable securities laws and necessarily involve risks associated with oil and gas exploration, production, marketing and transportation such as loss of market, volatility of prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers and ability to access sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements.

3 Slide 3 Corporate History Today, Terra Energy is a full cycle exploration and production company focused on North-East B.C. and Peace River Arch region of AB Operations initiated in 1996 as a private company Became a public company on January 30, 2004 Highlight of 2004 was acquisition of Dominion Exploration assets Completed in December 2004 ($31mm) Combined with existing lands, formed nucleus of Ft St. John Core Area Highlight of 2005 was our Summer Drilling Program 100% exploration drilling success (11 gross / 9.8 net) Over 10 new pools discovered Focus for 2006 will be developing infrastructure

4 Slide 4 Corporate Profile

5 Slide 5 Production Profile Assuming 400 boe/d of asset rationalization and completion of major infrastructure plans, Terra Energy is forecasting a target exit production rate of 4,600 – 6,000 boe/d Q1 Onstream Exit Target Range Exit Target Production Capability “Behind Pipe” Production Capability

6 Slide 6 Business Strategy Our objective is to “build value” and to be the “most attractive investment” amongst peers Based on metrics (F&D < $10.00) More than simply metrics, creating a strategic asset (concentration of land holdings and operations, operatorship, ownership of facilities, high working interest) “Most attractive investment” also synonymous with most desirable “take-out” candidate Growth through value creation / through the drill bit 100% exploration drilling success in 2005 Summer Drilling Program 87% total drilling success (all wells) Create core areas to “Focus” capital investment and control our own infrastructure

7 Slide 7 Investment Highlights Compelling valuation Current Market Capitalization - $139.3 MM ($1.95 / Share) - $43,530 per flowing BOE Enterprise Value - $183.1 MM - $57,203 per flowing BOE Debt is approx. 1.0x forward cash flow 2005 Year end NAV Per Share - $3.10 (basic) / $2.82 (diluted) Quality reserves profile High-quality reserves, RLI approx. 8.9 years We have become a “resource” play, 14.2 MMBOE of proved + probable reserves (85% / 15% gas / oil mix)

8 Slide 8 Investment Highlights (con’t) Company wide, Terra Energy operates over 90% of its production Core area of Fort St. John contains >80% of production / 86% reserves Multi-zone exploitation with large land base (115,000 total acres (gross), 185 total sections (gross)) Ownership / control of facilities creates competitive advantage and lower operating costs Year round access on most properties allows for counter-cyclical calendar and lower F&D costs 2006 CAPEX budget of $66.1mm 90% of budget targeting high impact Fort St. John core area Targeting up to 25 wells, which can be scaled back in light of changing market conditions Major infrastructure projects planned in 2006 Experienced management team

9 Slide Cashflow Forecast Based on Target 2006 Exit Rate

10 Slide 10 Management Team Over 200 years of diversified energy experience Technical expertise and proficiency in all key disciplines Management team Cas H. Morel, President & CEO B.Sc., LLB, MBA20+ years Bud K. Love, VP Finance & CFO Startech20+ years Tim A. Beatty, VP Drilling and Comp.PanCan20+ years T. A. (Tim) Blair, VP Land Acclaim Energy20+ years John Behr, VP Exploration Domin, Rio Alto20+ years Michael Oforsagd,Chief Geologist Dome, Amoco30+ years Graham Collins, Manager Prod. Ops.Rigel25+ years Gord Oliver, Manager Exploitation Stellarton20+ years John Hrycyk, Manager Facilities Design Apache13+ years Rosa Lyngberg, Controller PWC12+ years John Pantazopoulos, Manager Bus. Devel CIBC6+ years

11 Slide 11 Board of Directors Our Board is comprised mainly of independent members with extensive industry background and governance expertise Ted S. Anderson – Founder, Pioneer Land & Environmental Services Ltd. Ralph G. Evans – Petroleum engineer and former board member of the ERCB (AEUB) Anthony R. Harvey – Businessman, extensive public company experience Fluor- Daniels Colin P. MacDonald – Partner, Borden Ladner Gervais LLP Cas H. Morel – President and CEO, Terra Energy Corp. Robert D. Penner – Former senior tax partner, KPMG

12 Slide CAPEX Summary Terra Energy has an aggressive 2006 CAPEX plan which can be scaled down in light of changing market conditions $66.1mm CAPEX budget (does not include acquisitions) 2006 CAPEX budget One drilling rig for entire year One / two additional rigs July – Nov Improved Rig availability Lower drilling costs Safer / more efficient BC royalty relief $16.6mm for infrastructure to tie- in behind pipe reserves and new discoveries $34.0mm $15.5mm $16.6mm

13 Slide CAPEX Terra Energy is proceeding with several key infrastructure projects Boudreau East– 18km pipeline connecting 2005 new pool discovery scheduled Oct (500 boe/d) Three projects proceeding in Tower providing both short term and long term production solution Intermediate tie-in scheduled July (150 boe/d) East / West gaterhing line to flow gas to Terra Energy Wilder facility scheduled Nov (500 boe/d) Peace River Crossing enables full production solution as all behind pipe reserves are brought onstream scheduled Dec. (350 – 1,500 boe/d) Terra Energy will fund its capital expenditures through a combination of cash flow, credit facility (recently increased to allow for this purpose), proceeds from potential “non-core” asset rationalizations and proceeds from the exercise of outstanding warrants / options

14 Slide 14 Final Notes Compelling value Strategic asset base in Fort St. John Priority on building infrastructure in 2006 Reserves growth expected to continue Netbacks, operating costs and related metrics all expected to continue to improve in 2006

15 Slide 15 Building Value CAPP Symposium


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