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2012 news releases

Terrace Energy Options Acreage In The Mississippian Lime Trend

Vancouver, BC, December 21, 2012 – Terrace Energy Corp. (TSXV: “TZR”) (“Terrace Energy”), is pleased to announce that its wholly owned subsidiary, Terrace US Holdings, LLC (“Terrace US” and, together with Terrace Energy, “Terrace”) has entered into an agreement with Redhawk Resources, LLC (“Redhawk”) wherein Redhawk has granted Terrace US an option to acquire interests in certain mineral leases in Finney County, Kansas (the “Option”). Such leases include the right to explore and exploit the coveted Mississippi Lime formation.

Eric Boehnke, Terrace Energy’s Chief Executive Officer, commented: “We are very pleased to secure this opportunity for Terrace shareholders on such favorable terms. The project area hosts significant potential for both development and expansion in multiple zones. We are particularly excited about the prospect of exploiting the Mississippi Lime formation, which has similar characteristics to, as well as the reserve potential of the Eagle Ford shale formation with significantly lower historic well development costs.”

The Mississippi Lime trend is a well-known conventional tight limestone formation that has historically produced from over 15,000 vertical wells over approximately 17 million acres. With the emergence of horizontal drilling technology, the area has undergone a revival with such companies as Encana, Sandridge and Cheasapeake acquiring major leasehold interests. Sandridge alone has acquired leases covering approximately 1.75 million acres and drilled over 400 wells of which two were drilled and successfully completed in western Finney County.

Under the terms of the Option, Terrace US may acquire, at any time up to the close of business on April 30, 2013, an 82% working interest and a 65.6% net revenue interest in approximately 15,000 net mineral acres in Finney County, Kansas for approximately US$2.3 million on closing and a commitment to fund 100% of the drilling, development, marketing, leasehold maintenance, and other related costs of the project to a maximum of US$5,365,500. Terrace US would be designated the project’s operator upon closing. To secure the Option, Terrace paid Redhawk a US$225,150 non-refundable deposit against the purchase price. Terrace intends to complete its due diligence and capital requirements review in the first quarter of 2013.

ON BEHALF OF THE BOARD OF DIRECTORS

“Eric Boehnke”

Eric Boehnke, Chief Executive Officer

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

For further information please contact:
terrace@terraceenergy.net                 
www.terraceenergy.net

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