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2013 news releases

Terrace Provides Corporate Update

NOT FOR DISTRIBUTION TO UNITED STATES WIRE SERVICES
OR FOR DISSEMINATION IN THE UNITED STATES

Vancouver, BC April 1, 2013 – Terrace Energy Corp. (the “Company”) (TSXV: TZR, OTCQX: TCRRF; FRANKFURT: 2TR) provides the following update to shareholders.

Financing Activities

The Company has received TSX Venture Exchange approval of the non-brokered private placement of convertible notes in the aggregate amount of $25 million (the “Notes”). All required documentation has been completed and the Company expects to close the private placement on Tuesday, April 2, 2013. Net proceeds from the sale of the Notes will be primarily used to fund the Company’s unconventional oil & gas projects.

The Company was unable to conclude definitive agreements with LG in the time available, which, as previously disclosed in the Company’s press release dated March 14, 2013, was a condition of closing. There are no assurances the Company will continue negotiations or conclude any agreement with LG regarding financing in the future.

Operational Activities

South Texas Acquisition

The Company has paid a US$1.5 million deposit pursuant to the letter of intent with BlackBrush Oil & Gas, LLC (“BBOG”) to jointly acquire and manage a 50% working interest in 147,000 acres of highly prospective mineral rights in Maverick, Dimmit and LaSalle Counties, South Texas USA, from an affiliate of a major oil & gas company. A summary of the agreement terms was set out in the Company’s press release dated February 26, 2013. The Company is in the process of obtaining TSX Venture Exchange approval of the transaction and is working with BBOG on definitive documentation.

STS Olmos Project

The Company and BBOG have agreed on the 2013 drilling program for the STS Olmos Project. The Company expects to spud its first well for 2013(SP5 1-2H) in April. The SP5 1-2H well is directly offset the Company’s highly successful SP5 2-47HST1well, which was completed in October, 2012 at an initial rate of production of 1,059 barrels (gross) of oil equivalent per day.*

The new well will be stimulated using new “Gas-Frac” technology, which has been successfully deployed by BBOG to enhance recovery and flow rates of other projects with similar geology. Natural gas and liquids recovered from the field will be processed by a new, high efficiency gas processing plant, which is expected to further enhance overall cost recovery.

Cutlass Project

Tank battery construction is complete and pipeline installation is underway in anticipation of initial production from its previously drilled Cutlass West #A1 well. Completion operations have commenced with cleanout and initial perforations performed and a frac date is scheduled for April 7, 2013.

In addition, a drilling rig has been contracted to initiate the 2013 drilling program on April 25, 2013. The initial drilling commitment is a two well program designed to drill a horizontal well in the Eagle Ford Shale formation in each of the Cutlass “A” and Cutlass “B” leases in order to fulfil lease obligations.

About Terrace Energy

Terrace Energy is an oil & gas development stage company that is focused on unconventional oil extraction in onshore areas of the United States, particularly in South Texas

ON BEHALF OF THE BOARD OF DIRECTORS

“Eric Boehnke”

Eric Boehnke, Chief Executive Officer

* BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 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.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the Company's securities in the United States.  The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "1933 Act"), or any state securities laws and may not be offered or sold within the United States or to U.S. persons unless registered under the 1933 Act and applicable state securities laws, or an exemption from such registration is available.  Any public offering of securities in the United States must be made by means of a prospectus that contains detailed information about the Company and its management, as well as financial statements.

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

Canadian Address
Suite 270 - 666 Burrard St.
Vancouver B.C. V6C 2X8
Ph: 604 628-4552
Fax: 604 687-0885
US Address
Suite 407-202 Travis Street,
Houston Texas 77002
Ph: 713.227.0010